Tuesday, February 23, 2010
Today, U.S. Representative Michele Bachmann (MN-06) took part in a press conference as a cosponsor of the Accurate Accounting of Fannie and Freddie Mac Act. The bill is aimed at instituting a proper and complete accounting for the Government-Sponsored Enterprises Fannie Mae and Freddie Mac.The Obama Administration has been in the news this month with claims that Fannie and Freddie are not going to be that expensive. After projecting Treasury investments of $230 billion to prop up the two companies, the budget a few weeks ago said the investment would be $188 billion. Of that, about $97 billion is to be returned in dividends from the two firms by 2020. This does not count, alas, the $175 billion inserted into the firms by the Federal Reserve, nor the $1,250 billion of their debt -- mortgage-backed securities -- that the Fed has purchased. San Francisco Fed President Janet Yellen said yesterday that these purchases "were vital in preventing a complete financial breakdown," which might tell us Fan/Fred are still in some rough shape. I don't know that the legislation would count Fed contributions to Fan/Fred.
The Congressional Budget Office estimates that Fannie and Freddie added $291 billion to the federal deficit in 2009 and will cost an additional $389 billion to run over the next ten years. However, Fannie and Freddie are currently considered �off budget� meaning the actual cost to run these agencies is not considered by the Office of Management and Budget. By moving the activities of Fannie and Freddie Mac �on budget�, their financial obligations would then be included in the federal government�s budget and debt projections and provide a more accurate picture of our nation's precarious finances.
�The Accurate Accounting of Fannie Mae and Freddie Mac Act is a much needed remedy for a Washington that needs to come to terms with their spending addiction. One thing we know about Fannie and Freddie is that they cost the already overburdened and financially strapped taxpayer a pretty penny.
�Why should Fannie and Freddie be able to run up these numbers without the President having to reflect this risk in his budget? It just doesn�t make sense, and we owe it to the taxpayers to be transparent and forthcoming on the commitments we�re making with their credit card.�
Not to mention the fact that Fannie and Freddie are now paying off private debt holders of its MBS that are 120 days or more delinquent. It gets bad debt off the books of the two companies, but investors receiving this money are now getting money they cannot reinvest at the rates they used to get. Realizing the losses on those MBS will add to the cost of the bailout of these two firms -- it's worth remembering that the AIG bailout cost US taxpayers a relatively modest $9 billion.
Chief author of the legislation is Rep. Scott Garrett of New Jersey.
Monday, November 23, 2009
Q: Gov. Tim Pawlenty said on MSNBC that moderates need to fall in line with the conservative base of the Republican Party. Do you agree?And they chastise as "pitching softballs" a newspaper that already declared "we've had enough" of Bachmann.
A: I think that he's accurate that ...
Q: AND HAVE YOU STOPPED BEATING YOUR CHILDREN? WHY DO YOU HATE CATHOLICS?!?!?
Tuesday, November 10, 2009
So, where does Congresswoman Bachmann fit? Michele understands in her core what is at stake with the current Democrat administration in Washington, DC. She also knows how to communicate the importance of the bills working their way through Congress.
Last night, Representative Bachmann, via representative, Julie Quist, gave Bachmann's statement supporting, thanking and praising CCHC for its nationally known efforts to stop government takeover of our lives.
Thank you, Representative, for continuing to support the people you represent. You get it right.
Monday, September 21, 2009
Then editorial page editor Randy Krebs decides to reveal something about his editing. The crux of his argument:
The teacher asked our class what the purpose of television was and the overwhelming response was �entertainment.� His tart reply: �Wrong! What you see as �entertainment� is merely something to show between the commercials there to get your money.�...So when you watch Fox News or MSNBC, they are giving you entertainment, not facts, and it's because of the almighty dollar. But what motivates the newspaper if not profit? This is after all a newspaper of the Gannett chain, one that prefers smaller papers where they dominate the advertising market. As ad revenues dropped the newspaper got smaller, and as it got smaller so did the amount of news provided.
I will grant you that �objective news reporting� is a subjective term. That�s human nature. I also fully acknowledge that the business realities facing newsgathering entities can impact those efforts, especially these days. And by no means am I comparing broadcast to print media. (They are apples and oranges, but that�s another column � or a book.)
But to be blunt, the bulk of the complaints aren�t that sophisticated. They simply don�t seem to grasp that what they are watching or listening to is more about entertainment. In the words of my old teacher, �it�s there to keep you tuned in until the next commercial.�
As the person at Times Media whose job hinges largely on people understanding �it�s the Opinion Page,� I simply ask you to be a little a more discerning, and perhaps honest.Now remember, this is the newspaper that has said in its very same editorial page that "we've had enough" of Bachmann who "consistently invokes extremism."
This board has never been a supporter of Bachmann, but it was willing to treat her tactics and outlandish statements as errors in judgment and/or a need to get noticed. Sadly, we�ve had enough.I'd love to give you the whole column, but it appears to have gone down the memory hole in the Times' parlous web. No money in that, either, dontcha know!
Two straight years of her consistently spewing misleading snippets about important issues yet never stepping beyond those statements to find realistic solutions make it clear she is all about extremism and cares nothing about crafting viable public policy.
So how about, when you do a report on Bachmann and you bury the tea party story after the jump and append it to the end of the town hall story, "you be a little more discerning, and perhaps honest" yourself.
Monday, August 10, 2009
I don't know about Bachmann, but I can tell you I made the opposite journey. Voted for Carter in 1976, for John Anderson in 1980. I cannot even say that, when I voted for Reagan in 1984 that I did so with great enthusiasm; it was much later that I realized the breadth of his intelligence. But I was attracted to Friedman and Margaret Thatcher earlier, and given the disastrous fiscal policies proposed by Mondale the vote for Reagan that time was not hard.
A MinnPost reader stumbled on the fact that Clark was a former Repub and asked me to check it out. Sure enough, she grew up in a Republican family and voted Repub as a young adult, including for Ronald Reagan in 1980 and 1984 (ouch, don�t tell Walter Mondale).
Of that 1984 vote for Reagan, Clark says: �If I could take that back, I would. He [Reagan] was kind of the nail in the coffin� of her Republican sympathies.
During the Reagan years, she says, she saw her ancestral party abandoning the needs of families and failing to walk the walk on fiscal responsibility. She�s been a Dem ever since and served as deputy chair of the DFL. (An aside, because I happen to recall it, Rep. Bachmann was a Democrat as a young adult, campaigning for Jimmy Carter. The Reagan years turned Bachmann into a conservative Republican and Clark into a liberal Democrat.)
But I don't get how Clark claims the Republicans "abandoned the needs of families" and "failed to walk the walk of fiscal responsibility." The balanced-budget high-spending Republicans of the east coast are not those of her previous homes in Illinois and Virginia. Did not Reagan's foreign policy precipitate the fall of the Berlin Wall, saving us $100 billion in defense spending? The ones who squandered the peace dividend came after the fall of the USSR.
Did the budget balance that came at the end of the Clinton years come thanks to Clinton, or thanks to the 18 year run of good economic performance that came after the 1981-82 recession (with a small pause in 1990?) Didn't all that income help families? It took me a long time and perhaps some time with Robert Bartley's The Seven Fat Years to understand what Reagan had wrought. Clark failed to learn the lesson.
Clark is undoubtedly aware of the difficulties of running as a pro-choice DFLer who voted for many tax increases and a healthy stealth pay increase through per diems (you'll note I've never removed this from the blog sidebar.) First Ringer highlights the uphill fight Clark faces; even if Bachmann is a lightning rod for liberals, her district has a pretty substantial base of people who will vote for her, and gets an IP candidate that last time tanked Tink. If in a DFL highwater year with Obama at the top of the ticket Bachmann can get 49% even after sticking her foot and calf in her mouth on national TV (to the extent MSNBC can be called that), it's hard to see how Clark finds a plurality.
And the side benefit is, SD 15's state senate seat is now up for grabs unless Clark reverses field or should lose the endorsement to Dr. Maureen Reed. The latter is the longest of long shots; the only way Clark doesn't get the DFL endorsement is if she decides her party has dressed her up just to carry her up to the volcano, and declines to be tossed in.
Thursday, April 09, 2009
- Let me lead by complimenting our students. Those who disagreed with Rep. Bachmann, or with the presenter, Mr. Horner, at the St. Cloud event used their free speech rights with due respect for the speakers, were not disruptive, and made me rather proud of my university today. Don't agree with them, not sure they understood the points Mr. Horner was making (more on that in a second) but when he asked for his turn to speak they relented with the shouting of questions and gave Horner his due. I'd rather they didn't shout, but given Horner answered them when they shouted, he agreed to that format. I agree with Andy that they were restless, but largely because they were in a minority in the crowd.
- Horner is entertaining. If I could suggest one thing, it'd be to s-l-o-w d-o-w-n. The points were excellent but rattled off quickly because he had lots he wanted to do. So I agree with Muse on that one, though he did have a handout that I got that helped comprehension. (I hate handouts. I use PowerPoint often, and let me say to Mr. Horner -- watch Prof. Tufte for some tips.)
- But he did change at least one person's thinking. A couple rows ahead of where I eventually sat (finally finding Mrs. S in the crowd) was a fellow professor of another social science. An excellent professor, I am inclined to think he holds views that favor the MMGW theory. After the talk I asked him what he thought and he said that he thinks we should not do cap-and-trade. That surprised me; why? I asked. It doesn't seem to do what we want, he said, and it's not clear how it would work and not clear people can actually understand it. This has long been my point on cap-and-trade. Any estimate of "what does this cost the average citizen?" comes up against the fact that it is a hidden tax. It's so well hidden, so complex in its changing of relative costs, so shifted forward and back between producer, labor supplier, capital, and consumer, that any attempt to measure the cost has to be theoretical and contentious. Horner says this, but then throws out a number anyway. DON'T DO THAT! Your best point is that you cannot know the cost of this thing. The only solid number you can generate is what you intend to sell the initial pollution rights for. All the rest is dross. If you buy MMGW theory, you should buy it with an explicit tax, openly adopted in Congress and signed by the President. Cap and trade is bad policy because it hides costs and benefits.
The word you want is "disputed", Larry. The point I made above is that every number can be disputed. And yes, I do work as an editor from time to time, at the right price. Call my office if you would like my services.
Wednesday, December 10, 2008
Emphasis mine. There will be an opportunity to vote on the $350 billion next year; one reason for this proposal would be to not give the Obama Treasury the opportunity to use that money. And that might be right. If the bill to disburse the second $350 billion tranche were defeated, that money would not be spent.
�As American families save-up for modest holiday Christmas celebrations, Washington has continued its bailout spending binge. Not only is this continued plunge toward an $11 trillion debt failing to calm the markets, but it is also mortgaging away our children�s future.
�There are alternatives to this bailout bonanza. For instance, I am not only supporting legislation to save the second half of Congress� $700 billion bailout. I'm also supporting a plan to put the remaining $350 billion right back where it belongs: in your pocket. We�ll return the money to taxpayers in the form of a 2-month holiday on all social security and income tax.
This will give the economy a real much-needed boost and give American taxpayers much-needed relief. And, perhaps, finally cool Congress� dangerous bailout fever.�
But where does that money come from? It actually must come from additional government borrowing, since the federal budget is already in deficit. The FY 09 deficit would be reduced by $350 billion from what it might otherwise be if we anticipated that $350 billion being spent. CBO reports only those funds that have already been expended, which has been $191 billion so far from TARP. If you spend $350 billion by a tax holiday, that will have to be added to the deficit. We will not be "returning money". We will be borrowing against future tax receipts to give temporary tax relief.
Indeed, as the Tax Foundation noted last week, because TARP spends money to buy assets (though at a higher-than-market price), the cost to the budget of this tax holiday proposal is greater than the cost of TARP.
Suspending personal income and payroll taxes for two months would cost the federal government about $330 billion ...; using that money to buy more preferred stock would cost only the amount by which the government overpays, almost surely much less than $330 billion.As I recall, Rep. Bachmann opposed the gas-tax holiday last summer because it "deplet[ed] the highway trust fund we need to build bridges." It's money you would have to raise later. So why doesn't a payroll and income tax holiday deplete the budget? Besides which, it's not much different than a rebate -- households mostly end up saving the money, and it doesn't stimulate. I like many of Rep. Bachmann's ideas on fiscal policy, but this one was a clunker.
UPDATE: Link to different Bachmann statement added. What I posted was text of an actuality I received this morning.
Wednesday, August 13, 2008
The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.It might be worth noting, though, that a majority of these firms had no taxable income. For U.S. corporations, 9% had no gross profits (sales minus cost of goods sold), another 7% had no total income (gross profit plus dividend, interest, rent, royalties and capital gains or losses, and other losses.), and a clear 58% more had no taxable income before any net operating loss deductions or special deductions. 69% of that last number comes from deducting things like salaries, interest, depreciation, advertising and the like. (Source: GAO study.)
More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said.
During that time corporate sales in the United States totaled $2.5 trillion, according to Democratic Sens. Carl Levin of Michigan and Byron Dorgan of North Dakota, who requested the GAO study.
The report did not name any companies. The GAO said corporations escaped paying federal income taxes for a variety of reasons including operating losses, tax credits and an ability to use transactions within the company to shift income to low tax countries.
The Tax Foundation notes that 99.7% of the corporations in the study that paid no income tax in 2005 were large. Why did they not pay taxes?
For example, in a "clever tax dodge", American Airlines avoided income tax for 2005 by losing $862 million. General Motors lost $10.5 billion in 2005; I bet those greedy fat cats didn't pay any corporate income tax, either.What should be clear is that governments that have higher taxes induce their firms with overseas operations to move revenue to the low-tax countries. The graph below (source) comes from 2003. The Tax Foundation has shown Germany's corporate tax rate falling below ours by 2006, leaving on Japan at 0.6% more than ours. (See also the KPMG survey.)
Senator McCain's and Congresswoman Bachmann's support of cuts to corporate tax rates are in fact consistent with trends around the world. And the GAO study, if anything, shows the ineffectiveness of trying to collect taxes on multinational corporations by a high corporate tax rate.
Tuesday, July 29, 2008
Most of the letters you read these days involve the EIA's estimate of the effect of opening drilling in ANWR. As I wrote about this last week, the report assumes that the price of a barrel of oil in 2020 would be less than $60. If $140 a barrel produces a price of $4 for gasoline, what does a price of $60 a barrel for oil produce? Those of you who answered "$2" can stop now; you've just agreed with Rep. Bachmann. (Though that's 2020 versus Bachmann's forecast date of 2012; if you'd like to argue a price that stays at $140 through 2012 -- or higher -- and then falls to $60 by 2020 so that EIA is right and Bachmann is wrong, I invite you to tell that story and wish you good luck.)
So let's suppose EIA is wrong about that forecast. This kind of cuts the legs out from Gaertner's substantive claims, but let's answer her question for her anyway. What might additional drilling produce for a price change? The key lies in understanding it's about more than just additional oil production.
James Hamilton posts this evening that demand for gasoline in the US appears to be more responsive to prices now that we're at $4 than it was when we were at $3 a gallon. I have talked about this in terms of the "second law of demand": consumer responsiveness to price changes is time dependent and expectations dependent. If the price rise is temporary, you smooth your consumption of gasoline through a combination of less spending on other goods and by saving less. If on the other hand you believe it is permanent, you make bigger changes, like dumping your SUV, riding a bike or buying a more fuel-efficient car. As that shift occurs, you move from a very inelastic demand curve to a more elastic one, and that produces a snap-back of prices towards where you were before. Jim's graphs would indicate that since the beginning of 2008 we are seeing some of that. That should give one some hope that the price decline we're experiencing right now could be the beginning of a longer period of lower gas prices.
But it's also expectations-dependent for suppliers, particularly at the refinery level. There's a very interesting post on VoxEU from Lutz Kilian of U. Michigan regarding the sources of increase in gasoline prices. Most importantly, his model distinguishes the market for gasoline and the market for oil. Domestic demand for gasoline and speculation over oil futures play almost no role in the price of gas; foreign demand and supply uncertainties explain most of the change in Kilian's model. That result makes sense to most observers (it fits, for example, that CFTC report on speculators.) The price spikes following Hurricanes Katrina and Rita reflected very tight refining capacities that were upset. Those shocks went to gas prices, with negligible impact on world oil prices.
Part of the plan pushed by Rep. Bachmann is to pass HR 6139 to cut the bureaucratic hurdles that impede the construction of new refineries. Sure, they take years to produce, but the prospect of additional capacity would reduce uncertainty about gasoline supplies and reduce inventories (which, unlike crude, have been going up versus a year ago.)
Inventory uncertainty, then, can play a substantial role in gasoline prices. Easing the regulatory chokehold on gasoline production could take much more off the price of gasoline today than anyone's projection of the impact on crude oil.
Cross-posted at Outside the Beltway.
(Afterthought: Just after posting this I realize some might think I'm predicting $2 gas myself. That's not the point; the point is the plan laid out has the capacity to create a $2 price all other things equal. To actually make that forecast would require a whole lot more analysis than offered here. I don't wish to denigrate the efforts of EIA with its annual energy outlook -- just that using it to talk about prices 12 years hence is bound to be fraught with the very difficulties I used here to dismiss Gaertner's use of it. Error bands expand the further into the future you forecast.)
Tuesday, July 22, 2008
Leo suggests Mr. Ragsdale "pines for the return to the malaise of yesteryear that everyone so enjoyed during the Carter administration."
Rep. Bachmann used a word picture to describe the offlimits energy supplies in this way:
Picture the pantry being full of food and your children wanting to eat. Then picture that the pantry is locked. America has lots of energy but Congress has locked the pantry.
Mr. [Pioneer Press reporter Jim] Ragsdale started by saying that he liked the picture, then asked this question:
�What if the pantry was full and the children were already overweight. Shouldn�t we keep that pantry locked?
Friday, June 20, 2008
After reading about your comments on how the caribou have lived better in Alaska after drilling in Prudhoe Bay started, I was reminded of a paper I had to read in graduate school. Co-authored by my professor Tom Willett (along with Ryan Amacher; it's in this book if you want to read it), it talked about the preservation of the marshes in Louisiana where birds wintered over that were atop gas and oil reserves. Meanwhile let me refer you to this 2005 study by the Reason Foundation, which has a synopsis of what happened.
Deep in the marshes of Louisiana, there is living proof that oil and wildlife can mix. The Rainey Sanctuary is such an important bird sanctuary that even the public is not allowed to visit, but because they own the land, many years ago Audubon weighed the benefits of oil and gas development against the environmental hazards, and chose to go ahead. Of course, they took the precautions they thought necessary to protect the birds, but they also reasonably determined that the risks of environmental damage were outweighed by the size of the revenues from development.Here's the policy summary from which the above is taken, and the whole study. The secret is to call the Nature Conservancy or some other environmental group -- it's irrelevant economically, but I'm sure important politically -- and give them ANWR. Then turn to the exploration firms and say "you want that oil? Work it out with this group." I only use the Nature Conservancy in this example because they have experience with selling oil rights. It's time to put the power of Coase to work for energy by offering some of the proceeds to the environmental groups. Call it "free-market environmentalism". I encourage you to read the links in this paragraph.
Rainey�s 26,000 acres of brackish and freshwater marshes are a rich feeding area for wintering waterfowl. And in the early 1980s, gas wells in Rainey brought in close to a million dollars in revenues to the preserve. The wells have been in operation for decades, and the wildlife doesn�t seem to mind.
Thus, despite the National Audubon Society�s opposition to oil and gas exploration on public lands like the Arctic National Wildlife Refuge, state chapters of the Audubon Society have demonstrated that it can be done responsibly at the Rainey preserve in Louisiana and in Michigan at the Baker Sanctuary.
P.S. Notice also the principle of privatizing public lands. You could make a mark in this area.
Saturday, May 17, 2008
Our speaker was Congresswoman Michele Bachmann, mother of five, foster mom of 23. Anyone who has heard her speak knows how dynamic and accurate her talks are. Michele has a law degree and masters degree in tax law from William and Mary College. She focused on two topics today: taxes and energy.
In the early 1950's, families paid about 5% of their total income in taxes; today, they pay about 50%. In 1987, when Michele was getting her masters degree in tax law, she did a projection of what her son, then age 4, would have to pay to support all the government programs put in place by liberal baby boomers. 25% of her son's earnings in his highest earning years would be needed just to pay social security for boomers. This did not include taxes for medicare, state, estate, income, etc. In total, up to 85% of what her son would earn in his 30's and 40's would go to pay for boomer socialist programs. Breaking the backs of future generations is not wise.
Energy - open American resources.
OIL - We have oil but the greens have prevented us from accessing it (ANWR, 85% if America's coastline, etc.). Hurricane Katrina was one of the worst hurricanes ever yet the 40+ oil rigs in the Gulf of Mexico run by American companies sustained zero damage. We know how to build these drilling platforms very well. ANWR - 1995, ANWR drilling was approved by the US Congress and President Clinton vetoed it. IF he had approved of this, we would not be funneling money to those who want to destroy us or hold us hostage. The funding for so much of the world's terrorism simply would not exist.
COAL - The Chinese are operating a new coal plant every week! Our politicians and greens prevent us from mining the coal. We can burn it cleanly, definitely cleaner than the Chinese.
NUCLEAR - Again, we can build safe plants. France produces almost 80% of its power from nuclear plants. America has not built a nuclear plant in 30 years.
NATURAL GAS - In the Dakotas.
In summary, if we used our own resources, we would have cheaper gasoline, cheaper heating fuels, and significantly decrease our reliance on those who wish they ruled us.
Today's Democrats are stonewalling any movement towards energy independence. You can say all you want about ethanol but it takes oil to produce it, it is not cost effective, and uses our tax dollars to subsidize it. Same for windmills. It's time for us to take our energy requirements responsibly.
For those of you who so want the government to solve this problem I have a few questions:
1 - When did a government ever solve anything at a reasonable price? (See taxes at beginning of this post).
2 - Instead of the government, what are you personally willing to give up to save energy? Not what you want someone else to give up, but what you will give up all by yourself? I've yet to meet anyone who is eager for the government to solve this problem say what they, individually, will give up.
For those of you who are now on the "get rid of plastics" bandwagon, here's a few more points:
1 - Plastic (and nylon and Orlon and rayon and polyester) come from oil. What fabrics do you want to give up? You can replace with hemp where legal and cotton but who will farm it?
2 - Plastic was designed to replace glass because glass broke, people got very nasty cuts; plastic was safer.
3 - Are you willing to give up your Ipod? CDs? CD carriers? Computers? Backpacks? Hi-tech athletic shoes? Synthetic athletic clothing? Cars? Cell phones? DVDs? The list is endless.
Remember it was boomers and their parents who invented this stuff. If you are unhappy with it, invent something to replace it. This requires degrees in the hard sciences, real mathematics, not degrees in social engineering areas.
We can solve problems because we are a free society. Totalitarian systems, thugs, bullies, governments that allow only one way to think don't solve problems - they control their people and blame others for everything. We are a nation of doers, problem solvers. When we get government off our backs and use our own resources, all benefit.
Michele gets it, she really does.
Labels: Michele Bachmann