Voice For Liberty

Tag: Kansas fourth district

  • Pompeo to introduce ‘Energy Freedom and Economic Prosperity Act’

    This week U. S. Representative Mike Pompeo of Wichita plans to introduce the “Energy Freedom and Economic Prosperity Act,” a bill that would eliminate all tax credits related to energy.

    Tax credits, sometimes called tax expenditures, are spending accomplished through the tax code rather than by legislative appropriations. Two prominent tax credits related to energy production are the tax credit for producing and blending ethanol with gasoline, and the production tax credit for wind and solar power production. These industries have claimed that the tax credits are necessary for these forms of energy to be economically viable.

    Pompeo’s office estimates that the bill could save up to $90 billion in tax expenditures over the next ten years. The legislation proposes that these savings be used to reduce the corporate income tax rate.

    The subsidies that would be repealed include, according to Pompeo’s office: Plug-In electric and fuel cell vehicles, Alternative fuel and alternative fuel mixtures, Cellulosic Biofuel Producer Credit, Alternative fuel infrastructure, Production Tax Credit for electricity produced from renewable sources, including wind, biomass, and hydropower, Investment Tax Credit for equipment powered by solar, fuel cells, geothermal or other specified renewable sources, Enhanced oil recovery credit, and credit for producing oil and gas from marginal wells, Advanced Nuclear Power Generation Credit, and Clean coal investment credits.

    This bill targets tax credits only. Loans and loan guarantees are not a subject. This bill would not affect the programs that funded Solyndra, a high-profile example of failure. This bill would not affect the $132.4 million loan guarantee recently given to a cellulosic ethanol plant in southwest Kansas, either.

    Pompeo’s office stresses that this is not a bill targeted at renewable forms of energy like ethanol and wind. It affects all tax credits, including those that are directed at the nuclear, coal, and oil and gas. The goal is to get government out of the energy sector and let markets direct energy investment.

    This bill represents a continued effort by Pompeo to reduce government intervention and to give more freedom to markets. Politically, it puts him at odds with many in this state who favor expansion of wind energy in Kansas. In particular, Kansas Governor Sam Brownback is a proponent of wind power and ethanol. Wichita Mayor Carl Brewer is also promoting Wichita as a place for wind power companies to locate.

  • Pompeo at Pachyderm on economy, budget

    Last week U. S. Representative Mike Pompeo of Wichita addressed members and guests of the Wichita Pachyderm Club. As might be expected, major topics that members were interested in were the economy and budget issues.

    As an introduction, club vice-president John Todd played a video of a recent meeting of the House Energy and Commerce Subcommittee on Oversight where Pompeo interrogated a Department of Energy official concerning the loan guarantee made on behalf of Solyndra, a company that has ceased operations and filed for bankruptcy. That video may be viewed here.

    In his brief opening remarks, Pompeo described the Solyndra matter as just one example of the problems inherent when government — of either party, he added — tries to allocate capital. He described this problem as pervasive, existing throughout all areas of government.

    Pompeo said that President Obama’s policies are simply wrong and have been a disaster. He said the current Congress has made progress in stopping the worst of what the president wants to do.

    In response to a question, Pompeo said that while the House has been busy passing legislation, the Senate has not. The Senate has not passed a budget for three years.

    I asked a question about federal grants: If local governments refuse federal grants, could legislation already introduced by Pompeo be expanded so that all returned grant funds would be used for deficit reduction, rather than being spent by someone else? This is an important issue, as many officeholders rationalize the acceptance of grants by arguing that someone else will spend the money, and it’s our tax money.

    Pompeo said that anytime money from Kansas is returned to Washington, he will move to make sure it is used for deficit reduction, and not to go someplace else. He said these decisions are difficult ones for local officials.

    Pompeo said that citizens would “fall off their chair” to learn of the huge magnitude of grant monies that flow from Washington. Each grant comes with restrictions on the use of the funds. He mentioned the Economic Development Administration, an agency which has a budget of over $400 million per year in earmarks.

    On federal spending, Pompeo said that we think we’ve done good when we reduce the rate of growth of spending by an agency from eight percent to three percent. While it is possible to gain support for cutting grants and spending on projects in other Congressional districts, Congressmen soon find out that their constituents have benefited from federal spending programs. Support for cutting programs then fades.

    But he said that the idea of giving back grant funds for deficit reduction is an idea that might catch on. It’s an idea that is discussed everywhere, he said. The problem lies in Washington, in that the programs exist.

    On the need for tax reform, Pompeo said there is broad consensus that it is necessary. But it may not happen very quickly, especially under the current president. Tax reform under Obama, he said, would likely result in higher taxes. But when we tackle tax reform, he said everything will be impacted.

    On energy policy, he reiterated his position that government should not be trying to select which form of energy will succeed. He also repeated his opposition to the NAT GAS Act, formally known as H.R. 1380: New Alternative Transportation to Give Americans Solutions Act of 2011, which would provide subsidies to use natural gas as a transportation fuel. If natural gas is destined to be a transportation fuel, the industry will be able to figure out how to make it work, he added.

    He declined to name who he favors among the Republican presidential candidates, but he implored the audience to work hard for the eventual nominee, saying we can’t tolerate four more years of the current president.

    On foreign trade, Pompeo said we need more trade, not less. On jobs lost to foreign producers, he said it is the federal government that has created policies that make investment more effective in foreign countries, and we should not fault companies for responding these policies and the realities of the global marketplace. He said that the Kansas fourth congressional district is the third most trade-dependent district in the country, with airplanes and agricultural products being the reason. “We are enormous beneficiaries of foreign trade,” he said.

    Pompeo explained his vote for raising the debt ceiling as realizing the necessity to pay the bills for money we had already spent. Once that was realized, the goal was to get the best deal possible. The two best things that emerged, he said, was the fact that there was no tax increase, and that there will be a vote on a balanced budget amendment in both the House and Senate before the end of the year.

    He mentioned that the budget plan developed by House Budget Committee Chairman Paul Ryan will take 20 years to balance the budget, and will require raising the debt ceiling seven times by then. Ryan also voted to raise the debt ceiling.

    The votes this summer affected discretionary spending, when it is entitlements that are the “true elephant in the room.” Pompeo said we must tackle the problems of Social Security, Medicare, and Medicaid.

    [powerpress]

  • Pompeo announces reelection bid

    In what he described as an informal setting before a small group of supporters on Tuesday, U. S. Representative Mike Pompeo announced his bid for reelection to represent the fourth district of Kansas. Kansas Governor Sam Brownback appeared beside Pompeo and offered his endorsement.

    In his endorsement, Brownback praised Pompeo’s work on sensible federal regulations and controlling federal spending. Brownback said the upcoming election is very important, with the budget and the economy being the most important issues.

    In his remarks, Pompeo said that top-down direction of the economy from Washington hasn’t worked, citing high unemployment numbers specifically. He said that the good ideas he’s seen have come from governors. The requirements of states to have balanced budgets — a constraint not in effect at the federal level — is a factor, he said.

    Pompeo said he’s been doing the things that he promised to do when he campaigned for office — working for small government and controlling regulation, mentioning the Environmental Protection Agency specifically.

    Pompeo has been critical of President Barack Obama for his criticism of corporate jet owners not paying their fair share of taxes. Asked if Obama is getting the message, Pompeo said no, the president’s not getting the message. “I don’t think this president understands that just his rhetoric alone is doing tremendous damage to the aviation industry and its suppliers.”

    On the tone in Washington, Pompeo said the dialogue in Washington has changed. In the past, he said the thought was: “Can we take this agency, and instead of growing it by eight percent, grow it by three. That talk is gone. It is now about does this agency have any usefulness? Is there a functionality that remains? Should we keep it, keep it at a smaller level, can we make it more efficient, or is it something that we ought to get rid of? We have truly changed the discourse. We are now talking, for the first time in a very long time, about the proper role of our federal government, and what Americans can afford.”

    He said this change in attitude was not just his own, but that the large incoming class of new conservative representatives elected last year has shifted the conversation in this way.

    Pompeo said it it is important for voters to elect people who are willing to be specific in their plans for shrinking government. Too often candidates run on a platform of smaller government, but won’t specify the methods they will use to cut government, he said, adding that changes in the role of the federal government will affect us all.

    On Governor Brownback returning the grant for the formation of a Kansas health insurance exchange, Pompeo said that he voted to overturn Obamacare in its entirety, so he’s not in favor of spending money to implement it. He also said he’d like to see the returned money used for deficit reduction, and that he has introduced legislation that would require this.

    Pompeo’s announcement was not unexpected — photos of organizational meetings for 2012 campaign volunteers have been spotted on Facebook and he’s been successful in fundraising — so the real news will be the announcement (or rumors) of opponents. The filing deadline is in June, with the primary election in August followed by the general election in November.

  • Free market energy solutions don’t jeopardize national security

    By Mike Pompeo (R-KS) and Jeff Flake (R-AZ), Republican Members of Congress.

    This is not the first time Rep. Pompeo has spoken in favor of free markets for energy. As reported in the Wichita Eagle in May: “Rep. Mike Pompeo, R-Wichita, wants Congress to just say ‘no’ to all energy subsidies.” He has also introduced H. Res. 267, which is subtitled “Expressing the sense of the House of Representatives that the United States should end all subsidies aimed at specific energy technologies or fuels.” Following is an article by Pompeo and Rep. Flake, a version of which appeared in the Washington Examiner.

    Details of the Solyndra scandal continue to unfold, but what we know so far should teach a valuable lesson: The government should not be in the business of picking winners and losers in the energy industry. With half a billion taxpayer dollars now likely gone forever, you would think the Obama Administration would learn. Unfortunately, it has not. The Department of Energy said in a recent blog posting, “We have always recognized that not every one of the innovative companies supported by our loans and loan guarantees would succeed, but we can’t stop investing in game-changing technologies that are key to America’s leadership in the global economy.” Translation: We’re not that good at manipulating the energy industry, but we’re not going to stop anytime soon.

    By spurring development of the politically-favored alternative fuel of the moment, devotees of federal energy subsidies say that we can stop sending dollars overseas. Interests ranging from wind to solar, from propane to biodiesel, from natural gas to algae purport to provide the key to America’s energy and national security needs. Unfortunately, even some conservatives appear to have fallen for this ruse.

    We can agree that having less oil imported from the Middle East would improve America’s national security interests. However admirable that goal, having Congress and the President pick winners and losers in the energy sector is neither practical nor principled.

    Let’s begin with what we know: national security interests compel us first and foremost to get our financial house in order. We agree with Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, when he said, “Our national debt is our biggest national security threat.” With the federal debt estimated to hit $25 trillion by 2021, the United States cannot continue throwing billions of taxpayer dollars away on federal energy subsidies. In 2009 alone, the government gave over $18 billion in handouts to a wide variety of energy sources, including wind, hydrogen, natural gas, oil, and ethanol. We simply cannot keep wasting money on federal energy subsidies.

    Not only are federal energy subsidies that try to artificially inspire a market for a given product unaffordable, they simply aren’t effective. Subsidy policy toward the renewable and alternative fuels industry has been tried for more than three decades (from President Carter’s Synfuels Corporation in the early 1980s to President Obama’s Solyndra just this year) — and it has failed.

    Alternative energy producers often say that consumers have just not yet caught on to how wonderful the subsidized product is. All we need, they say, are just five years of handouts and everything will be okay. And when those five years are up? These same folks come back for more because customer demand alone will not support the industry as it becomes accustomed to relying on government handouts. It’s precisely this kind of phenomenon that led President Reagan to observe that “nothing is so permanent as a temporary government program.”

    The constant pursuit of federal tax subsidies also keeps some private capital on the sidelines that would otherwise be invested in alternative energy. What private company wants to compete with the federal government? This failed history makes the continued push for energy subsidies by some supposed-conservatives all the more puzzling.

    With gas prices continuing to skyrocket and the federal subsidy policy continuing to fail, how can we make U.S. energy policy reflect our national security interests? First, we must lift the de facto moratorium on domestic energy exploration — off the Gulf Coast, on the Outer Continental Shelf, and elsewhere. Second, we must remove other regulatory burdens, such as the threat that EPA will halt hydraulic fracturing. And finally, we have to stop using taxpayer dollars to pick winners and losers in the energy sector. With these commonsense steps, we can achieve successful energy reform.

    Phasing out market-distorting energy subsidies, preventing the expansion of existing subsidies, and stopping the creation of new ones (for the “latest, greatest” technology) must be part of the overall strategy. Many subsidies, such as fuel tax credits for ethanol, hydrogen, and natural gas, are set to expire soon. There is no reason to pile on our debt while simultaneously distorting the energy market for fuel products that can stand on their own. It is far better for government to keep its thumb off the scale and allow market competition to determine which alternative energy source or sources will succeed.

    Forking over taxpayer handouts in the name of national security does not change that simple truth. Although subsidy seekers argue that OPEC’s dominant position in the world oil market means that government intervention in the energy marketplace is warranted, there is a major flaw in that logic. If collusion by the OPEC cartel really boosts the price of oil artificially high, then alternative fuels should have an easier time competing against it without a subsidy.

    A real conservative solution to energy security requires less government, not more. Looking at our energy policy through a national security lens only strengthens the argument for relying on free-market solutions. When it comes to national security, we cannot afford to abandon free-market principles. As the Solyndra example demonstrates, the stakes are simply too high to cast aside the single best arbiter of capital allocation in human history — the free market — in favor of misguided central planning via government mandate.

  • Pompeo: No debt ceiling hike without structural changes

    In a press conference held yesterday, U.S. Representative Mike Pompeo, a Wichita Republican, said the country can’t risk continuing to spend at the present rate. There should be no agreement to raise the debt ceiling absent structural changes, he added.

    He called for “real short term savings” in 2012 and spending limitations. He also said he supported an amendment to the Constitution requiring a balanced budget.

    On federal spending, Pompeo said “I’ve been here six months now. If there’s one thing that’s become very clear, this town is a place that is addicted to spending.” He described the direction of spending as a “one-way ratchet,” saying the trend has accelerated in the last 24 months. The federal government should do what every state must do, which is to live on a balanced budget. The balanced budget amendment, Pompeo said, would require this.

    He criticized President Barack Obama for his “class warfare argument” against the corporate jet industry. Pompeo said the airplanes built in Wichita are business tools used by businesses all over the world. Two-thirds are sold outside of North America, he added.

    Pompeo characterized the president’s criticisms as a political statement. The tax provisions Obama criticizes have a cost of two to three billion dollars over ten years. Pompeo compared this to the current deficit for this year and for future years according to the president’s budget, which he said is $1.5 trillion each year.

    Pompeo said he sent the president a letter (text of the letter is here) inviting him to Kansas to see our aircraft manufacturing industry, noting that many of the workers are union workers. He added that if the president continues to talk down the industry, “making it politically incorrect to fly in a Kansas-built airplane, we’ll sell fewer all over the world, and we’ll build fewer in America.”

    On the possibility of Social Security checks not being sent if the debt ceiling is not raised, Pompeo said that there is money to pay the benefits, and the president has authority to pay. Obama is trying to scare seniors and Americans as a tactic to get the debt ceiling raised, he said.

    On the failure of H.R. 2417: Better Use of Light Bulbs Act to pass, Pompeo said he hopes this measure will come back in a form that requires only a simple majority to pass. This bill, which would overturn legislation that essentially outlaws ordinary incandescent light bulbs, was brought to the floor under suspension of the rules, and therefore required a two-thirds majority to pass. The bill received a simple majority, but failed to reach the two-thirds level.

  • Pompeo updates constituents on spending, debt, government interventionism

    This week provided an opportunity to catch up with U.S. Representative Mike Pompeo as he conducted a public forum in Andover Monday evening, and on Wednesday at a meeting in his east Wichita office. Pompeo, a Wichita Republican, is in his first term representing the Kansas fourth congressional district, which includes the Wichita metropolitan area and surrounding counties.

    As has been the case with his other forums or town hall meetings I’ve observed, it’s standing room only, and popular topics are federal spending and debt. At the forum in Andover, Pompeo presented charts showing the course of federal spending and debt under President Barack Obama’s plans, and under alternatives proposed by Republicans, specifically Paul Ryan, the Wisconsin representative who is chair of the House Budget Committee and architect of the budget that recently passed the House of Representatives, but not the Senate.

    Historically, the U.S. government has spent about 18 to 19 percent of the country’s gross domestic product (GDP). But the Obama budget calls for that percentage to rise, and that’s what causes the projected increase in debt, he said. Republicans have proposed a budget that gets the country back to historical levels of spending.

    On raising the federal debt limit, Pompeo said he voted against it once, and “I will vote no absent radical change in our spending behavior.” A questioner pressed him to vote no under any circumstance. Pompeo said that there is money that has been obligated but not yet been actually spent, so the only option is default if the debt limit is not raised at some time. “We have to acknowledge that the Congresses before us and the folks who voted them in have put us in this place.” To get us off our spending addiction, Pompeo said we need significant and real short-term spending cuts, real spending caps (he recommended 18 percent of GDP), and a balanced budget amendment to the Constitution.

    In telling the audience how the country got to this position, Pompeo said there has been a culture of “yes” in Washington. When someone walked into a Congressman’s office over the last 70 years and said I’ve got a good program, the answer was yes.

    On Medicare, Pompeo said that the president’s plan for fixing health care costs is to have a board of “really smart people” (the Independent Payment Advisory Board) be in charge of prices. But “price control isn’t cost control,” he said. Costs can’t be forced down by law, and if we try this, we’ll have worse access to care and lower quality care, he said.

    On Social Security, a questioner asked if Pompeo would support removing or increasing the limit on income which is subject to the FICA payroll tax. Currently that limit is $106,000, and income earned beyond that is not taxed under FICA. Pompeo would not agree to that, telling the audience that Social Security, as a program, has grown far beyond the original intent. It was originally designed as an anti-poverty insurance program, but now has grown to become a much larger portion of people’s retirement income. He said that this is because people have already been taxed too much, leaving them with less resources of their own for their retirement.

    Although the Republicans have not yet presented a plan for Social Security, Pompeo said he thought the plan would include no change to the present system for those 55 and over, a rise in the age at which benefits start for those presently under 55, and a change in the way cost of living adjustments are calculated. He said he would support such a plan.

    Pompeo told the audience that the practice of earmarking — allocating money to be spent on specific projects and the source of much “pork barrel” spending — is over. But he warned of a “clever creature” back in Washington, which he said is using the tax code to spend money: “Instead of earmarking money for someone, you give them a tax credit. Same effect, but different mechanism.” Pompeo said he has been at the forefront of pushing back on this practice. Engaging in social policy through taxes is disastrous, he said, because the people who will win are those with the best lobbyists, and that success in business should not depend on a benefit gained through government tax policy. He said that something like the FairTax (a tax on consumption spending rather than income) or lower marginal income tax rates with far fewer exceptions would boost the economy. Pompeo has introduced a resolution declaring that it is the “sense of the House” that no new energy subsidies or credits should be created, and that all existing should be repealed.

    In an interview in his office on Wednesday, he said that he twice voted against tax credits for ethanol production, even though ethanol is fairly important to his district. Also, he said he would vote against the tax credits for wind energy production. (Wichita Mayor Carl Brewer is courting wind power equipment manufacturers to locate in Wichita. Without the wind power production credit, industry representatives have said its future would be much smaller.)

    On natural gas, a product for which energy investor T. Boone Pickens is seeking to obtain federal subsidies to boost its use as a transportation fuel, Pompeo said that government should not pick that — or any other fuel — as a winner with taxpayer dollars. Consumers, he said, will be able to decide on which fuels are best.

    In his office, he said that what he found most disturbing about the scandal involving Representative Anthony Weiner is he did not tell the truth to the American public. Had Weiner admitted his behavior early on, events might have taken a different course, he said.

    I asked about the level of knowledge of civics among citizens today, and Pompeo said he thought that people are paying a lot of attention to what elected officials are doing, with a significant number of citizens are very well informed. Today, he said that the Internet has greatly reduced the cost of obtaining information about government, which he said is an important change in our political process.

    On the legislative process, Pompeo said that over the last 25 or 30 years Congress has been unwilling to create “substantive markers” in legislation. Instead, it creates vague laws and funds administrative agencies to implement them. These agencies are less accountable than elected officials, and Congress has handed over much authority to them.

    I asked about the deficit, which is a topic of much current interest, but also about the existing federal debt: Are we talking about paying off that debt as a goal, or is getting to a balanced budget a tough enough goal for now? Pompeo said that the debt-to-GDP ratio is the most important debt measure, and we must work to bring that down to sustainable levels.

    (According to a recent U.S. Treasury report, the debt-to-GDP ratio is now expected to rise to 1.02 this year, meaning that in order to pay off the debt, it would require all the income earned by Americans working for one year and seven days.)

    The only way to pay down the debt is to run surpluses — “and we’re not there,” Pompeo said, noting that the deficit this year is $1.5 trillion. The Ryan budget plan, which he said he voted for, still has deficits in the hundreds of billions. Growing the economy — the other part of the equation — will help get the debt-to-GDP ratio under control, and he said we need to work on both spending reduction and economic growth.

    Talking about a budget surplus brings back memories of the last time there was a budget surplus, which was the final years of the Clinton administration. Since Clinton raised income taxes during his term, liberals often argue that we should do the same now as a way to cut the deficit. But Pompeo said the foundation for the prosperity of the Clinton years — which lead to the surplus — was built during the Reagan and the first Bush presidencies. Also, Clinton faced a Republican Congress, which applied some restraint on the growth of spending. We also forget that some of the Clinton-area prosperity was due to the Internet dot-com bubble, which, like the housing bubble later on, proved to a false and unsustainable prosperity.

    On the current housing crisis, Pompeo laid its blame on many years of bad federal government policy, including the government’s goal of increased home ownership as an “article of faith,” without recognition of the economics of home ownership. He said he believes that the federal government is still propping up home prices in certain markets, so the problems with the housing market are not behind us, as markets have not been able to discover the correct prices for homes.

  • Pompeo on energy tax simplification

    In an email alert sent to members, Americans for Prosperity–Kansas calls for support for a Kansas Congressman who is fighting for free markets in energy. AFP–Kansas State Director Derrick Sontag wrote: “U.S. Representative Mike Pompeo (R-Kan.) is getting attacked for standing up for the free market principles that Kansas voters sent him to Washington to defend. You may have seen that T. Boone Pickens is trying to use out-of-state pressure from Oklahoma to lean on Pompeo. Pickens wants Pompeo to end his opposition to Pickens’ effort to get special tax treatment for natural gas vehicles. But Pompeo has it exactly right; Washington shouldn’t be picking winners and losers in the energy industry.”

    The bill in question is H.R. 1380: New Alternative Transportation to Give Americans Solutions Act of 2011, or NAT GAS act. The bill provides a variety of subsidies, implemented through tax credits, to producers and users of natural gas. Last week the Wichita Eagle printed an op-ed from T. Boone Pickens which unsuccessfully attempted to make the case that these credits are not the same as subsidies.

    Pickens also criticized Pompeo for failure to come out against all subsides, a criticism which is false and uninformed. On May 12th Pompeo introduced H. Res. 267, which is subtitled “Expressing the sense of the House of Representatives that the United States should end all subsidies aimed at specific energy technologies or fuels.”

    The summary of the bill as provided by the Congressional Research Service is: “Declares that the House of Representatives should: (1) provide by refusing any legislative proposal that includes new energy subsidy programs of any kind; (2) prohibit the expansion or extension of existing energy subsidies; (3) eliminate existing energy subsidies; and (4) begin tax simplification and reform by eliminating energy tax credits and deductions and reducing income tax rates.”

    That sounds clear and unequivocal to me: refusing … new energy subsidy programs — prohibit the expansion or extension — eliminating existing energy subsidies — eliminating energy tax credits and deductions.

    (The full text of the Pompeo resolution is below.)

    In yesterday’s Wichita Eagle, oilman Wink Hartman, who ran against Pompeo in last year’s primary election, argued against removal of tax credits currently in place for oil companies: “First, removal of tax credits for energy companies will not only hurt the intended political scapegoats — large oil companies — but will also hit small energy companies, too, including the dozens of Kansas oil producers fighting hard to find much-needed additional oil reserves and compete with the larger oil companies for their survival.”

    But as argued recently in Forbes Magazine, these oil industry subsidies, like all subsidies, “make the economy less — not more — efficient.”

    Authors Jerry Taylor and Peter Van Doren also argue that “Many conservatives argue that the elimination of these energy tax provisions and others like them for other sectors are tax increases. They are correct in a narrow sense. But in a larger sense they are incorrect because the elimination of such tax provisions makes the tax code more neutral and a more neutral tax code is a more conservative tax code.”

    They also write that these tax favors “direct private investment to the favored businesses and away from the unfavored” and that “such favors are as much a part of big government as explicit appropriated spending. Tax breaks like this constitute big government on the sly.”

    To the extent that the oil business — and any other industry — has incorporated special tax treatment into their business plan, we can support a phase-out of all tax favors instead of overnight elimination. This will give the companies time to plan for the transition. But aside from this consideration, we must end all such preferential treatment if we are to have a truly sound and robust economy.

    Those wishing to express support for Pompeo can do so at AFP’s Action Center.

    The resolution by Mike Pompeo and co-sponsors Raúl Labrador and Tom McClintock:

    Expressing the sense of the House of Representatives that the United States should end all subsidies aimed at specific energy technologies or fuels.

    Whereas companies continue to innovate and adapt to a growing and volatile energy market;

    Whereas the primary role of the Government in the energy markets is to create an economic climate where companies can continue to innovate and compete, and thereby provide value and affordability to families and businesses;

    Whereas it is not the role of the Government to favor one fuel source or energy sector over another;

    Whereas taxpayers have subsidized the energy industry with grants, direct loans and loan guarantees, and tax credits aimed at specific industries for decades;

    Whereas deductions and cost-recovery mechanisms available to all energy sectors are different than credits, loans and grants, and are therefore not taxpayer subsidies;

    Whereas a deduction of costs and cost recovery with respect to timing is not a subsidy;

    Whereas the current system of energy subsidies is opaque and unduly complex;

    Whereas energy subsidies have consistently failed to bring down the price of gasoline for consumers, and electricity and natural gas for industrial users; and

    Whereas eliminating energy subsidies from the Internal Revenue Code of 1986 will allow us to lower the overall rate of corporate income tax without increasing deficits: Now, therefore, be it

    Resolved, That the House of Representatives should —

    (1) provide no new energy subsidies by refusing any legislative proposal that includes new energy subsidy programs of any kind;

    (2) prohibit the expansion or extension of existing energy subsidies;

    (3) eliminate existing energy subsidies; and

    (4) begin tax simplification and reform by eliminating energy tax credits and deductions and reducing income tax rates.

  • In Wichita, start of a solution to federal spending

    At the Sedgwick County Commission, newly-elected commissioner Richard Ranzau voted three times against the county applying for grants of federal funds, showing a possible way that federal spending might be brought under control.

    During the meeting, Ranzau asked staff questions about where the funding for the grant programs was coming from, which, of course, is the federal government, sometimes routed through the Kansas Department of Commerce. Sometimes local spending is required by these grants.

    In opposing the programs, Ranzau said that federal government spending is too high. Also, our level of debt is too high, and that the cost of these spending programs is passed on to future generations. He also didn’t see where the U.S. Constitution authorizes activity like the commission — in partnership with the federal government — is considering undertaking.

    Ranzau offered an alternative: if the commission believes these projects are important to us as a community, we could pay for them ourselves and pay for them now.

    Commissioner Jim Skelton argued that if we don’t apply for and receive this money, the federal government will spend it anyway, and someone else will receive it. “I think we can end up screwing our constituency by opposing this on the philosophy that our government is too big.”

    He said he doesn’t agree with the “rampant spending of stimulus money” and would like to see it end, but he didn’t see how refusing this money would make a difference.

    Constitutional basis questioned

    During discussion, Skelton asked county counselor Richard Euson a question: “Can you tell me about the constitutionality of this issue? How on earth can this happen if it’s not constitutional?”

    Euson was flummoxed by the question, and admitted that he was not prepared to answer the question. This is not to be held against the county’s attorney, as questions like this are rarely asked — an indication of the novelty of Ranzau’s position and how infrequently elected officials and staff consider questions such as the fundamental role of government and its level of involvement.

    The job of a commissioner, according to Norton

    In discussion about one grant program, Commissioner Tim Norton asked a question designed to make sure that Ranzau knew that the project was located in his district. On a grant for a transportation plan, Norton again asked a question designed to make sure that Ranzau knew whose district this plan would serve, referring to former commissioner Kelly Parks’ support of the program.

    These questions by Norton highlight the problem with district-based representation, where representatives of districts are expected to bring as much government largess as possible back to their districts. At the federal level this problem is illustrated by the earmarking process. Locally, we see that Sedgwick County Commissioners are assumed to be in favor of any project that benefits their districts, regardless of the overall worth of the project or its cost.

    A bottom-up solution to federal spending?

    At a town hall meeting on Saturday, I asked Kansas fourth district Congressman Mike Pompeo, who represents all of Sedgwick County, about his opinion of ground-up opposition to federal spending and debt, rather than waiting for Congress and the President to solve the problem from the top down.

    Pompeo didn’t answer the question directly, but said that from now on, each law passed by Congress will have a section that states the constitutional authority for the legislation. He also said that the federal government is involved in many areas that it should not be involved in, adding “So many times the question is ‘should we reduce this agency’s budget by three percent,’ and the proper question is ‘why does this agency exist?’”

    While the new U.S. House of Representatives is full of enthusiasm for cutting spending, here we see an example of just how difficult cutting spending will be. Local governments are addicted to grants like the three discussed above. A congressman who voted to cut programs like these will hear from the affected constituents, and would also likely hear from the Sedgwick County staff who are advocates for these projects and spending. If more elected officials would vote against these programs, that would make it easier for Congress to cut off the flow of spending.

    We should also remember that Ranzau offered an alternative: fund the programs ourselves. The problem is that we are funding them ourselves, through the roundabout trip of tax dollars going to Washington, which then sends them back, in this case in the form of grants with many conditions and restrictions on the way the money can be spent. So Skelton is correct: the federal government will spend the money anyway. But to go along means that the hole is dug deeper. More crudely, the federal government says: implement this program in our way, because you’ve already paid for it, and you don’t want to piss away your taxes somewhere else.

    Perhaps a coalition of forward-thinking local government officeholders like Ranzau and U.S. Congressmen like Pompeo can join together to bring the spending under control. It will take courage, especially from the local officeholders.

  • Kansas and Wichita quick takes: Thursday January 20, 2011

    Pompeo to host first district event. This Saturday (January 22nd) newly-elected Kansas fourth district Congressman Mike Pompeo will hold an event billed as “Mike Pompeo’s Conversation with the Congressman.” It well be held Saturday, January 22, 2011 at 10:00 am, at the WSU Hughes Metropolitan Complex Sudermann Commons, 5015 E. 29th Street (at Oliver).

    Prognosticator Journey to address Pachyderms. Friday’s (January 21st) meeting of the Wichita Pachyderm Club features District Court Judge and former Kansas Senator Phil Journey speaking on the topic “Musings and Prognostications on State and Federal Government.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

    Feeling too good about our schools. Eric Hanushek looks at the results of U.S. students on the recent international tests and the attempts to explain away our generally poor performance. Is education important to our country’s economy? Absolutely, Hanushek explains: “Research has shown that international performance on these tests is very closely related to the economic growth of nations. Does the difference between 550 points (roughly Finland) and 500 points (roughly the U.S.) make a difference? By the historical record of growth, such a difference is consistent with one percent per year in the growth of per capita income. If we project this out over the lifetimes of children born today, the present value of economic gains from the U.S. reaching the level of Finland would be $100 trillion! These potential economic gains from improved schools should be compared to the huge political fights in the U.S. over a stimulus package of one trillion dollars, or one hundredth of the magnitude of the gains we are leaving on the table from ignoring the achievement in our schools.” Hanushek explains that the relatively free enterprise economy of the U.S. has attracted the “brightest from abroad” and has created an economy that spurs innovation. But our advantage is fading, he says, and the brightest often stay at home. We need to fix this now, or in a decade or two it may be impossible to recover.

    Obama order on regulation seen as ineffectual. The Competitive Enterprise Institute is a watchdog on federal regulation, having published Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State since 1996. On President Obama’s recent order to review the effect of regulations, CEI is not impressed. In a press release, the organization said: “The number of rules in the pipeline at agencies has surged in the past year, from 4,041 at the end of 2009 to 4,225 now, as will be detailed in CEI’s upcoming Ten Thousand Commandments report. ‘Major’ rules, those expected to cost over $100 million annually, have experienced an even greater surge. Indeed, just to get where we were a year ago, many rules would have to be cut. Yet Obama’s Wall Street Journal op-ed today announcing the Executive Order utterly glossed over the EPA CO2 rules, the FCC’s unauthorized net neutrality push, and the torrent of rules yet to come from the health care and financial reform bills.” … CEI notes that an executive order issued by President Bill Clinton, still in effect, already orders what Obama’s order does. CEI asks: “Actually confronting regulation, the crippling extent of which remains unappreciated by both parties, requires going far beyond the words of an executive order.” … Phil Kerpen of Americans for Prosperity is interviewed on this topic and notes the problem of “back door” legislation through regulation. … It should be noted that Obama inherited many regulations, as despite the claims of liberals, President George Bush greatly expanded the scope of the federal regulatory state.

    Massachusetts health care presages Obamacare. Sally Pipes of the Pacific Research Institute, writing in Investor’s Business Daily, notes the promises and the reality of health care reform in Massachusetts. The plan was implemented by Mitt Romney, a Republican, who promised, according to Pipes, “Every uninsured citizen in Massachusetts will soon have affordable health insurance, and the cost of health care will be reduced. And we need no new taxes, no employer mandate and no government takeover to make this happen.” But here’s the reality of what’s happened, again according to Pipes: “The only measure by which Massachusetts can be judged a success is the number of people enrolled in Medicaid and other government-subsidized insurance plans. Of the 410,000 newly insured in Massachusetts, three in four are either paying nothing or very little for their insurance. … Despite the near-universal insurance, the state still spends $414 million on uncompensated care, an expense that Romney and his architects promised would disappear. Emergency-room use has not dropped as predicted. From 2006 to 2008, emergency room use under Mass Care increased by 9%. And private employer insurance costs, far from dropping, have continued to increase.” … Prior to this plan, health insurance premiums in Massachusetts increased at a rate slower than the national average. Now they increase faster than average.

    Sowell on fixing America’s economic problems. Thomas Sowell has published the fourth edition of his now-classic work Basic Economics: A Common Sense Guide to the Economy. Now eighty years young, Sowell appears in an interview on the topics in his book.