No end to subsidies for favored industries?

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.

Link to related Register report:  https://www.desmoinesregister.com/story/news/2019/12/17/spending-bill-includes-long-sought-biodiesel-tax-credit-renewal/2677476001/

Our federal legislators should oppose reauthorization of the Export-Import Bank

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.

We don’t need a new mandatory federal government entitlement program.

Our population is aging and we all want to stay in our own homes as long as possible.  We definitely do have an increasing demand for in-home caregivers.  But I urge our Presidential candidates and our elected federal representatives to not support the mandatory Universal Family Care proposal as described  by Al-jen Poo in her recently published essay.  (See link below to the “Your Turn” essay by Al-jen Poo published in The Des Moines Register on 9/19/2109)
We do not need, and should not create, a new federal government sponsored, taxpayer funded entitlement program!   Such a scheme would make us even more dependent on our government.  Caregiving for family members at home should be left to family, friends and voluntary charitable efforts. This is part of being a family and accepting responsibility for ourselves and our loved ones.  Yes it is a burden, but it is one that we should accept.
LInk to Register “Your Turn” essay:

 

Time to start reducing use of government force in transportation fuels.

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.

Need to wean energy producers off of government support.

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.

Congress has the power to prohibit states from giving special incentives to specific businesses.

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.

Link to Register editorial:  https://www.desmoinesregister.com/story/opinion/editorials/2018/11/20/amazon-apple-corporate-iowa-workers-education-environment-bribing-business-workforce-jobs-money-tax/2061418002/

Farmers are doing okay.

The front page headline of the Des Moines Register on October 210, 2017 read: “Hoping To Break Even”  The sub-heading read, “Iowa farmers are facing their fourth year of possible losses as they head into this year’s harvest season”.  (See link below.)

The story mostly about the worries of some farmers.  It painted a picture of farmers on the brink of bankruptcy for reasons that were out of their control.The Register reported, “For a good number of farmers, it will be a fourth year of losses.”

I  don’t doubt that a “good number” of farmers will lose money, but it may be due to their own fault rather than factors that are out of their control… just like businesses in many other industries.  There was one telling fact that contradicted the mostly emotional report: “Since 2013 Iowa farm income has dropped from $5.72 billion to $2.6 billion in 2016…”  That fact  makes it pretty clear that a lot of farmers are still making a substantial profit, and are not losing money.

Farmers are working very hard to make sure that they don’t lose their federal subsidies, even though they have more wealth and higher incomes than most U.S. citizens.  When the current Farm Bill expires in 2018, we need to sharply reduce farm welfare subsidies.

Link to Register article: https://www.desmoinesregister.com/story/money/agriculture/2017/10/20/iowa-farmers-face-fourth-year-possible-losses-heading-into-harvest/775626001/