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.
The title to an essay by A.J. Spiker’s recently published in the Des Moines Register was, “Republicans must ignore pleas to raise our taxes”. (11/262017 – see link below.) The essay advocated for not raising tax rates on carried interest income – bonuses earned by hedge fund managers and real estate development managers. He urged our Senators to make sure the tax bill did not get rid of the special low capital gains tax rate for carried interest. Regular people who earn the same type of bonuses pay taxes at ordinary Earned Income tax rates. For years, carried interest has been tax at this lower special rate and those who benefit from it simply don’t want to lose it. (The same seems to be true for people in every special interest group that gets politically favored tax breaks. The ask our elected representatives to get rid of all the special tax breaks… except for mine… which is vitally important to job creation!)
I thought that a stated goal for tax reform is to simplify our 70,000+ page the tax code. In large part, this means getting rid of the many many special interest tax breaks, and then lowering the tax rates for all. If certain individuals lose their precious special interest tax breaks and actually have to pay more in taxes, so be it. They should feel lucky for what they got in the past. This is part of “draining the swam” that our President has called for. I urge our elected federal representatives to resist the tremendous pressure that they are under from those who received the tax breaks and their lobbyists, and proceed to get rid of the carried interest and many other special interest tax breaks, and lower general tax rates for all.
The Des Moines Register recently reported that all Iowa cattle producers will soon be forced to pay $0.50 per head into a “checkoff program. The funds will be used for beef promotion, research and other activities. 56% of the cattle producers voted for the “checkoff” program – forcing the other 44% to contribute to the scheme. In any other setting, it would be called a tax.
There are many checkoff programs for a wide variety of commodities, both nationally and in various states. They all work the same way. If a majority of the producers want to tax themselves to promote their commodity, then they get to force all producers to pay into the program.
There is not the kind of activity that should be ruled by a majority. I understand that if the programs were voluntary, which they originally were, that those who did not pay would get a “free ride” – they would get the benefits without paying for any of the costs. That is not a sufficient reason to use the force of government. There are an unlimited number of things that a majority of businesses might like to do, if they could force all competitors to help pay.
Both federal and state governments need to repeal the laws which allow checkoff programs to exist.
Link to Register article: http://www.desmoinesregister.com/story/money/2016/12/08/iowa-beef-checkoff-passes-with-56-percent-approval/95138020/