The $1 per gallon tax credit for biodiesel producers just passed the U.S. House and appears likely to become law. The credit, which expired at the end of 2017, will be extended retroactively 2 years and forward for 3 years through 2022. This tax credit started in 2005. How long must the welfare continue? Biodiesel producers are no different than most other businesses and industries in that they become dependent on subsidies and lobby heavily to prevent the subsidy from ever ending. We need to pass laws that phase out all forms of energy subsidies, as well as subsidies given to other favored industries. We need free-market capitalism, not crony capitalism.
Contrary to the Register Editorial on 12/1/2019, we should not add long-term care as a new benefit under Medicare. (See link below to The Register’s Editorial urging Medicare coverage of long-term care.) If we want to solve problems using the force of government, we should do the minimum needed to solve the problem. In this case, the problem is making sure that people receive medically necessary long-term care, not making sure that money is left to people’s heirs.
We currently have a pretty good situation: Many people voluntarily purchase private long-term care insurance. Many others who could afford insurance choose to take a risk and not buy it. Taxpayer-funded Medicaid covers the cost of long-term care for those who are unable to pay. For those in the middle – not on Medicaid, but who would struggle to pay for private long-term care insurance – Medicaid already goes a long way to help them qualify for long-term care coverage. For example, if one spouse of a married couple needs long-term care, the other spouse gets to keep a house and a car and some income, even though Medicaid pays for the long-term care of the first spouse.
The best long-term, sustainable solutions to our problems is to give voluntary, free choice to people and then expect them to be responsible for their decisions. To the extent that we allow our government to force everyone into one-size-fits-all welfare programs, there will be ongoing, unsustainable frustrations, disagreements, and dependency problems.
I urge our elected federal representatives to oppose the reauthorization of the Export-Import Bank. (The Ex-Im Bank provides taxpayer guarantees to U.S. companies that export and sell products to international customers. Authorization is set to expire on 9/30.) This has been and continues to be a quintessential example of crony capitalism. If a U.S. exporter has customers who find it difficult to find financing, the seller can always guarantee a loan and get a security position to get the asset back in a worst case. If they still cannot get financing, the seller could provide direct financing. In any case, our government should not guarantee such loan private companies.
I’m sure that small and large Iowa export companies are heavily lobbying for reauthorize the Bank. I hope our representatives resist the pressure and vote against this bad policy where taxpayers are asked to take the risk and private companies reap the profits.
The forced use of biofuels, euphemistically called the Renewable Fuel standard (RFS), was established in 2005. Then as now, the RFS requires refiners and importers of transportation fuels to add minimum amounts of ethanol or bio diesel to their fuel, or be subject to fines. The requirement has grown from 4 billion gallons in 2006 to 15 billion gallons for traditional ethanol for 2019. Existing legislation requires a completely unrealistic total of 36 billion gallons by 2022, including at least 16 billion gallons from cellulosic biofuels.
The current “rebellion” by Iowa biofuel leaders against the waivers of the FRS requirement that are being granted to small refiners is understandable. (The waivers allow small refiners to be exempt from adding bio-fuels to their gasoline or diesel.) All businesses that are dependent on government protection will fight back if they feel their favored status is being threatened. Biofuels producers and their suppliers (corn farmers), will lobby hard and loud to stop any reduction of the RFS.
Will the subsidies and use of force ever end? After 13 years of increasing subsidies, we now need to pass laws to start reducing, and over time end, the forced use of ethanol.
There has been a recent outpouring of letters to the editor and paid advertising in The Des Moines Register thanking President Trump for the EPA’s decision to allow E15 (gasoline with 15% ethanol) to be used year round. Many go on complain about the hardship waivers being granted to small refineries that exempt them from being forced to add ethanol to their gasoline under the Renewal Fuel Standard (RFS). They say the exemptions are costing corn farmers and ethanol producers billions of dollars and are undermining growth of the ethanol industry.
Since 2006, the RFS has required petroleum refiniries to add more and more ethanol to gasoline. (For 2019 the requirement is over 19 billion gallons.) Investment in and growth of the ethanol industry (and related corn purchases) have been greatly dependent on this use of government force. After 13 years, the industry has billions of dollars invested in over 200 production facilities, revenues of over $16 billion per year. Any yet, not only can it not wean itself off of government assistance, it continues to press government for more and more support.
Public Choice Theory tells us what to expect when government and special interests create an artificial market using government force. As investment and revenues reach billions of dollars, vested interests easily justify spending millions of dollars lobbying Congress to make sure the support continues. At the same time, each taxpayer pays such a relatively small amount that it is very difficult to raise money to lobby in opposition to these government programs.
But we must do what we can, so now is the time to urge Presidential candidates as well as elected representatives to work toward ending government subsidies and special support for all forms of energy.
The Des Moines Register recently published an editorial that showed how out-of control Iowa and other states are in giving incentives to businesses to locate in their state. To help reverse this situation, Congress should exercise its Constitutional power to “…regulate commerce… among the several states…” and should limit states’ ability to bribe companies to locate in their state. States should be prohibited from giving custom incentives to specific businesses to locate in their state. They should only be allowed to use schemes that provide uniform incentives to all companies that locate their business or otherwise create new jobs in that state.
In today’s Des Moines Register, the guest opinion by Kollan Kolthoff was very vague in his call for “common sense reform” of the licensing of cosmetologists. (See link below.) He wrote, “…leaders from within the industry are uniquely aware that there are problems that need to be addressed.” I presume the industry leaders he refers to are existing licensed cosmetologists and licensed schools of cosmetology. After a person has completed the 2,100 required hours of education and paid as much as $20,000, it is very understandable that they would not want to see license requirements significantly lowered – thereby indirectly lowering the value of what they have already paid for. Similarly, licensed schools of cosmetology have a very strong financial incentive to maximize the number or hours of schooling required for a license.
He also wrote Iowa needs reform that, “…protects consumers against the deregulation of licensed beauty professionals.” Deregulation does not and should not mean a lessening of regulation to keep consumers safe. Deregulation should focus on removing regulations that have the primary purpose of protecting the income of existing cosmetologists and schools of cosmetology.
The same issues apply to a large number of occupations that require a license from the state. Most calls for licensing, and opposition to deregulation, come from existing businesses and licensees, not from the general public. Our elective representatives should establish a process to review and reduce licensing requirements in Iowa so that only public safety is is taken into account when requiring Iowans to get a license from the state before being able to work in any particular job.