Government incentivizes creation and disposal of CO2

Here is a letter I just sent to The Des Moines Register:

Thank you for reporting on the proposed carbon sequestration project by Summit Carbon Solutions.  (“Iowa company plans meetings on pipeline” 8/30/21)  This company exists only because they will receive tax credits for each ton of carbon sequestered.  And the carbon will come from ethanol plants that exist only because of federal and other tax incentives and the force of government which requires the blending of ethanol into gasoline.  So taxpayers and consumers are paying for both the creation and disposal of this carbon.  What a shame.

Paid time off to get vaccines?

This is from a White House Fact Sheet:

“Thanks to President Biden’s American Rescue Plan, a paid leave tax credit will offset the cost for businesses and nonprofits with fewer than 500 employees for up to 80 hours (i.e. 10 work days) up to $511 per day of paid sick leave offered between April 1 and September 30, 2021. This tax credit will allow these employers to provide paid leave for employees to get a COVID-19 vaccination and for any time their employees may need to recover from that vaccination at no cost to the employer. ” Here’s the link: https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/21/fact-sheet-president-biden-to-call-on-all-employers-to-provide-paid-time-off-for-employees-to-get-vaccinated-after-meeting-goal-of-200-million-shots-in-the-first-100-days/

The tax credit can also be taken by self-employed people on their income tax return.

Wait, there is more in the Fact Sheet:

“Building on today’s IRS release and the American Rescue Plan’s provisions, the Administration is committed to expanding paid leave more generally. That’s why the tax credit in the American Rescue Plan will enable employers with fewer than 500 employees to claim up to $17,110 for 14 weeks of paid leave for each impacted employee not only to get vaccinated, but also to take time off if they have COVID-19 symptoms and are going to the doctor; are getting tested for COVID-19; are under quarantine or isolation order by the government or a doctor (or are caring for someone who is); or have to care for a child whose school or child care provider closed, due to COVID-19.”

If a company with less than 500 employees already provides paid family leave will they get the credit? How will they prevent fraud and abuse by small employers and self-employed individuals?

It is hard for be to believe that the President has this power. It just doesn’t seem right. It seems out of control.

The battle among the crony capitalists!

I read the report in The Des Moines Register about the questioning of Tom Vilsack by Joni Ernst during the Senate hearings on Vilsack’s nomination for Secretary of Agriculture.  (Vilsack nomination moves to full Senate” 2/3/2021)  President Biden has ordered the development of a plan to convert all federal, state, local and tribal vehicles, including Post Office vehicles, to “clean and zero-emission vehicles.”  Ernst asked Vilsack if he will direct the USDA to buy Tesla trucks that run on electricity or Ford vehicles that run on 85% ethanol.  Vilsack, like a good politician, said it’s not ” an either-or circumstance.”  It will be interesting to see how Vilsack balances the interests of farmers and biofuels producers with the interests of the zero-emissions vehicle and power producers.  One thing is for sure: lobbyists will be in high demand.

Governor Reynolds supports crony capitalists.

Governor Reynolds has proposed legislation to make, “…biofuels the clear choice for Iowa drivers…”, by mandating a minimum of 10% ethanol in all gasoline and 11% biodiesel in all diesel fuel sold in Iowa.  (See link to Register report below.)  If her proposal becomes law, it would make biofuels the clear choice – because then there would be no other choice.

This is a shining example of how government works when a law or regulation has concentrated benefits and dispersed costs.  Those who receive the concentrated benefits, (in this case farmers and biofuel producers), will lobby heavily to get their benefits, while the cost to any individual is so small that it doesn’t justify the time or money to lobby against the legislation.  Then, those who receive the benefits become dependent on them and continue to lobby to ensure that the benefits never come to an end. Don’t call it free-market capitalism.  It’s called crony capitalism.  

Link to Register report – printed 1/27/21:  https://www.desmoinesregister.com/story/money/agriculture/2021/01/26/kim-reynolds-plans-require-10-ethanol-11-biodiesel-iowa-fuel/4259109001/

Open letter to our federal legislators – please try to balance costs and benefits during this pandemic!

An open letter to our federal representatives  (I emailed this to my three federal representatives:
As you consider how much the federal government should spend in response to the current pandemic, please consider the following:
One trillion dollars equals about $3,000 per person for every man, woman, and child in the U.S., or about $12,000 per family of four!  Please be careful not to spend our tax money on anything that is not needed and not directly caused by the pandemic.  Specifically, there should be no money spent on the following:

  • Seniors and others on Medicare, disability, pensions, and other fixed incomes – they will continue to be paid.
  • People who have had no reported W-2 earnings during the past year – since they have been getting by on unearned income
  • People who have household earnings around or over $75,000 per year – they qualify for unemployment benefits.

Don’t give grants, but make low-interest rate loans available.  We can decide later whether or not to forgive any loans.  Don’t allow unrelated “riders” on any pandemic response bill.  For example, don’t’ forgive student loans, don’t add any permanent employer mandates such as child care, sick pay, paid family leave, etc.  Watch out for and deny other special-interest legislation trying to take advantage of this crisis.

Please try to balance costs versus benefits.  We have lived normally with the flu killing tens of thousands of U.S. citizens every year.  I am a senior – age 66 – and I don’t need any bailout.

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.