Time to Lower Corporate Tax Rate

I earned my undergraduate degree in tax accounting from Oral Roberts University (ORU). Upon graduation, I spent a decade working in tax accounting, both for government and the private sector.

So, in this week’s column, I want to take advantage of my education and training to write about tax law. Let me start by giving the example of how our welfare state has crippled our economy and destroyed the family unit.

Back in the day, if a girl was on welfare, she could not be married or have a male living in the house. If the girl was discovered to be in violation of these rules, she was immediately removed from the welfare rolls, even if that meant hurting her children.

So, in a perverse way, the government was rewarding single motherhood and discouraging marriage with their policy. In simple economics, if you tax (or penalize) something (marriage), you get less of it. If you reward something, you get more of it (fewer single mothers and more marriage).

In a similar manner, governments reward and punish corporations and entrepreneurs by the way they tax earnings. Some industries are more sensitive (elastic) to changes in the tax code than others (inelastic).

You raise taxes on cigarettes and sales will not drop because those who smoke are addicted and they will always find a way to get their next smoke (inelasticity—their behavior is not sensitive to price). But if you raise taxes on sodas, sales will decrease because it is considered a discretionary purchase (elastic—they can buy a cheaper fruit drink, they are very sensitive to price).

Currently, our economy is anemic in its growth, unemployment is still above 7 percent, and job creation is almost nonexistent; but just imagine if someone magically injected more than $ 2 trillion into our economy. What would happen?

Well, you don’t have to imagine this scenario because Obama and the Congress can make this a reality.

As in my earlier example, the more of something you have, the cheaper it becomes. So, if the U.S. economy is infused with $ 2 trillion, banks would have more and cheaper money to loan to small businesses (who are the biggest job creators in our economy); these businesses would hire more people; as more people begin to work, they will spend more money in our economy; thereby increasing our gross domestic product (GDP). The beginning of a growing economy.

Recently Bloomberg News analyzed the security filings of 307 multinational companies headquartered in the U.S. Bloomberg estimated that these companies have almost $ 2 trillion sitting in offshore accounts (all legal based on current tax law). Their offshore companies pay taxes in the country they operate in and those taxes are deducted from their U.S. taxes.

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Graph courtesy of Bloomberg News.

But they don’t pay U.S. taxes on their foreign profits until they bring the money into the U.S. The current tax rate for foreign income is now 35 percent, one of the highest in the world (along with China and South Korea).

So, companies are docking their profits in countries like Ireland, whose tax rate is 12.5 percent; or Bermuda whose rate is 0 percent.

According to the Congressional Research Service estimates, giving incentives for these corporations to repatriate their profits back to the U.S. would generate an additional $30-$90 billion in tax revenues.

But why pay a 35 percent tax rate to bring money into the U.S. when you can borrow money at 5 percent to expand your foreign operations; plus the interest you pay on the loan is deductible as an expense on your U.S. tax return. In essence, you are making interest on the money you will eventually have to pay U.S. taxes on. Defacto, the U.S. government is giving these corporations interest free money to play with.

Chairman of the U.S. House’s Ways and Means Committee, Dave Camp (R-MI) submitted a bill last month that would reduce the corporate tax rate from the current 35 percent down to 25 percent); unfortunately, it has absolutely no chance to pass in an election year.

Camp’s bill is a good starting point. I think consensus can be reached to lower the corporate tax rate to 25 percent in order to get companies to repatriate some of their profits back to the U.S. I would mandate that the new revenue be earmarked for an infrastructure fund that can only be used to repair our bridges, roads, etc.

This would create jobs and fix up our deteriorating infrastructure at the same time. I think both parties can agree on this.

FairTax Ushers In New Governance

Painting by Jan Matsys, 1509-1575, titled “Beim Steuereintreiber” (At the tax collector)

Eight months ago, 21 seasoned FairTax® grassroots leaders responded to an invitation from Americans For Fair Taxation® (AFFT) Vice President Leo Linbeck III, to meet in Houston and discuss the FairTax campaign.

After more than two days of spirited discussions the team, which became known as “C21”, reached consensus on a plan to transfer governance of the FairTax campaign and AFFT from the current board of directors to volunteer grassroots supporters.

Since that remarkable weekend, this dedicated team, guided by Linbeck and Steve Hayes, a member of the Florida FairTax Educational Association board of directors, hammered out a comprehensive plan embodied in a Memorandum of Understanding (MOU), License Agreement and amended bylaws.

It is now expected that governance of AFFT will be transferred by the end of April in accordance with the terms set forth in the MOU.

The C21 leaders and AFFT took great care to define fair and equitable requirements for both a state FairTax organization and the process for them to nominate delegates who may be elected as directors of AFFT. This process includes both organizational qualifications and minimum AFFT contribution requirements.

The organizational qualification requires that state FairTax organizations operate as a legally recognized, non-profit entity in compliance with state and federal laws, have written and published bylaws, and maintain a board of directors and a defined organizational structure, a checking account and operate under the AFFT umbrella.

The contribution requirement includes minimum individual donations of $10 per donor made directly to AFFT. These donations may be made online through FairTax.org, in response to an AFFT online or direct mail solicitation, or by donating to AFFT with a personal check, money order or through the banking system.

Qualified states may elect up to three delegates who will become voting directors of the AFFT board of directors. The number of state delegates will depend on the number of contributors to AFFT in 2013, and through March 31, 2014, and the total amount of money donated from the state to AFFT during this same time period.

Additionally, a state that does not meet the minimum donation requirements, but which is otherwise qualified will be able to elect a non-voting delegate. This non-voting delegate may attend AFFT board meetings, but may not vote on board matters.

It is important to note that this process is limited to the election of directors to AFFT and does not affect the way states select their own leadership.

Next Step Highlights

In early April, all donors to AFFT in 2013 and through March 31, 2014, will receive an email providing detailed next steps for the AFFT board of directors election.

If you want to want to be included, you must do two things right now. 

First, as stated, only those individuals who have donated a minimum of $10 to AFFT in 2013 or 2014 will be allowed to nominate or vote for delegates. If you have not donated and would like to you may go here to donate. Second, ensure your contact information is current at FairTax.org by logging in here.

Once delegates have been selected a national meeting will be convened in Houston to confirm the election of the AFFT board of directors.

Finally, to show their continued support and to help ensure the new grassroots board has every opportunity to succeed while assuming leadership of the FairTax campaign, the current AFFT board of directors has generously offered to establish a post-transition, dollar-for-dollar matching fund up to $100,000 for AFFT.

The FairTax is the largest, single-issue grassroots tax reform movement in the nation. It is therefore fitting that the grassroots assume governance for both AFFT and the campaign.

We want to thank everyone who has assisted AFFT and the grassroots with this massive undertaking. And on behalf of everyone who supports the FairTax, may I express our profound appreciation to the AFFT board of directors – past and present – for their steadfast leadership in founding and governing AFFT and the FairTax campaign.

Wealth Inequality: Predictably Irrational by Max Borders

Note: A new video on income inequality has gone viral. In this video, the authors want us to believe that wealth inequality is far away from our national “ideal” distribution.

[youtube]http://youtu.be/QPKKQnijnsM[/youtube]

 

The following is my response to the video and the study on which it was based:

Everyone knows the social sciences are fuzzy. Economists, political scientists, and anthropologists bring their moralistic baggage into the ivory tower as soon as they decide what to study and what not to. Social science is value-laden. But there is baggage and then there is a naked agenda. In the first case you might be a victim of selection bias or other unconscious human processes that cause you to misinterpret your data. In the latter case you simply start with a political agenda along with its (often dubious) premises, and go from there.

Michael I. Norton of Harvard and Dan Ariely of Duke fall into the latter category. In a 2010 study, Norton and Ariely appear to be engaging in a kind of democracy-by-proxy. They claim that Americans really want more “wealth redistribution,” and they have the evidence to prove it.

Here’s their own description of the findings from a Los Angeles Times piece, “Spreading the Wealth.”

We recently asked a representative sample of more than 5,000 Americans (young and old, men and women, rich and poor, liberal and conservative) to answer two questions. They first were asked to estimate the current level of wealth inequality in the United States, and then they were asked about what they saw as an ideal level of wealth inequality.

In our survey, Americans drastically underestimated the current gap between the very rich and the poor. The typical respondent believed that the top 20% of Americans owned 60% of the wealth, and the bottom 40% owned 10%. They knew, in other words, that wealth in the United States was not distributed equally, but were unaware of just how unequal that distribution was.

When we asked respondents to tell us what their ideal distribution of wealth was, things got even more interesting: Americans wanted the top 20% to own just over 30% of the wealth, and the bottom 40% to own about 25%. They still wanted the rich to be richer than the poor, but they wanted the disparity to be much less extreme.

What should we conclude from this? Norton and Ariely did succeed in proving that Americans don’t know who has how much money.

Strangely, Norton and Ariely proceed to ask the same Americans who are ignorant about the current wealth distribution what their “ideal” distribution is. Those surveyed then dreamed up what they thought would be a good breakdown, even though no such ideal exists in that great Tablet in the Sky. From all of this surveying, they conclude something that cannot readily be concluded:

[O]ur results suggest that policies that increase inequality—those that favor the wealthy, say, or that place a greater burden on the poor—are unlikely to reflect the desires of Americans from across the political and economic spectrum. Rather, they seem to favor policies that involve taking from the rich and giving to the poor. [Emphasis added.]

Notice “suggest” and “seem.”

You see, Norton and Ariely can’t claim those surveyed favor coercive redistribution. They merely infer it—and in curious fashion. Absent any context, the most ardent libertarian surveyed might wish that poor people had more resources and yet not support forced redistribution. I know I do. But even if they learned most people favor redistribution at some point, we cannot conclude such desires justify forced redistribution, much less prove that redistribution is a good thing.

And this is where Norton and Ariely’s malpractice really begins.

Academic socialists with bees in their bonnets are eager to point out which quintile has what at every turn, as if concern for the poor somehow automatically translates into worries about the assets of the rich. One reason they do this is they believe laypeople are ignorant: If they were enlightened, they would change their minds and want to alter the distribution.

Somehow, though, this self-same group of distribution-ignorant Americans—when polled about a complete abstraction like the distribution of assets over quintiles—suddenly becomes endowed with a magical insight. Again, Norton and Ariely want us to think this special insight provides justification for redistributionist policies. But why should we think that Americans factually ignorant in one area would have some sort of mystical authority on the timeless and intractable questions of justice?

In other words, Norton and Ariely conclude that asking Joe Sixpack, Jill Accountant, and Barb Waitress their thoughts about an abstraction like national income quintiles limns some great truth about right, wrong, and the good. Even the venerable soft egalitarian John Rawls would likely have bristled at this, for it is an intrusion into a discipline (philosophy) that demands more than what amounts to the naturalistic fallacy dressed up in finery of Gallup and Zogby.

I wonder: Did any of their respondents have the option of saying, “I don’t think there is such an ideal distribution”? To me the whole exercise is as meaningful as asking people what should be the ideal distribution of vehicle types. Suppose for simplicity there are five categories of vehicle: cars, pickups, buses, local trucks, and transfer trucks. Someone with no concept of the function of each vehicle might say each category should have 20 percent of all vehicles—i.e., 20 percent are cars, 20 percent are trucks, 20 percent are buses, and so on. But once we start to think about what each vehicle does, we might conclude that it makes sense for there to be a different, rather unequal, distribution. Similarly, the distribution of assets in quartiles just doesn’t tell us anything substantive about the function of wealth (e.g., opportunities, quality of life, upward mobility, or what is likely to make any given person better off). The “ideal distribution” is meaningless because it is completely divorced from much more important questions about the way wealth works, which may have much more to do with human well-being than some distribution at some slice in time.

Now, speaking of Rawls, Norton and Ariely actually start their paper by claiming their study is Rawlsian: “We take a different approach to determining the ‘ideal’ level of wealth inequality: Following the philosopher John Rawls (1971), we ask Americans to construct distributions of wealth they deem just (”Building a Better America—One Wealth Quintile at a Time,” Perspectives on Psychological Science 6, no. 9 (2011), doi: 10.1177/1745691610393524).” People may have good reasons to disagree with the late Rawls, but his theory is elegant and sophisticated. Norton and Ariely have no business hitching their wagon to Rawls’s A Theory of Justice.

Rawls’s theory was a product of a philosophical reasoning. His theory requires people to think about what sort of society they would want to be born into if they didn’t know what their own circumstances would be. Rawls thought people would want a high degree of political freedom, but also security; they would want the least well off to be cared for lest they themselves be born as the least well off. Most importantly, perhaps, Rawls’s theory—right or wrong—was a product of philosophical deliberation, not about opinion polls in which people simply come up with a distribution and have academics point to the results as Utopian. So when it comes to Rawls’s work, one can only conclude that Norton and Ariely are shrouded in a veil of ignorance.

Norton and Ariely also never consider the possibility that some of their respondents might want to see a different wealth distribution carried out through means other than forced redistribution by the state. For example, might we rid government of all the favor-seeking schemes that protect the assets of banking CEOs and agribusiness moguls and shift costs onto the poor and middle class? If people had greater information about the circumstances of time and place—like the effect of taking X dollars from businessman B means B can afford to hire fewer people—would they think differently about matters? Ask people for idealized abstractions and you’ll get idealized abstractions. After all, aren’t people “predictably irrational”?

Maslow’s Covered

In his own critique of Norton and Ariely, George Mason University economist Don Boudreaux reminds us that money ain’t everything:

That Americans “drastically” underestimate the wealth of “the very rich” compared to the wealth of “the poor” reveals that the difference in the number of dollars owned by “the very rich” compared to the number of dollars owned by “the poor” translates into a much smaller—that is, far more equal—difference in living standards. In other words, differences in monetary wealth are not the same as differences in living standards.

Indeed, maybe the reason Americans misjudge the actual wealth distribution is that most consider themselves wealthy in Boudreaux’s more subjective sense—at least when it comes to the things that matter. (Bill Gates might be able to fly in a private jet, but we can both fly. He might be able to afford $10,000-per-plate caviar, but we can both eat well.) Standard of living is different in important ways from the measure of assets distributed over a population.

As far as “the gap” is concerned, one of the major themes of this book is: If your goal is to alleviate poverty or perhaps to raise the baseline for what constitutes a minimum level of income that would allow most everyone to escape distress, that’s something reasonable people can talk about.

But that is not the same thing as worrying about what assets the wealthy control.

Suppose you asked the same Americans in the Norton-Ariely study, “If you could guarantee that every poor person in America had their basic needs met, would you agree to abandon your ‘ideal’ wealth distribution?” Their answers might surprise you. That’s because many people conflate the distribution of wealth and concern for the poor. Indeed, we don’t find any upper limit on income anywhere in Rawls, either. Rawls’s only criterion was that the least advantaged benefit from inequality. If you’ve ever been to North Korea or Cuba, it’s pretty obvious that they do.

Max Borders

Max Borders

ABOUT MAX BORDERS

Max Borders is the editor of The Freeman and director of content for FEE. He is also cofounder of the event experience Voice & Exit and author of Superwealth: Why we should stop worrying about the gap between rich and poor.

New Study: Florida Medicaid expansion is unwise

jmi policy briefAlthough a Medicaid expansion under the provisions of the Patient Protection and Affordable Care Act (PPACA) seems unlikely in the 2014 Legislative Session, Florida’s leaders will continue to grapple with the issue. A new policy brief from The James Madison Institute (JMI) explores the many problems with Medicaid and alternative solutions that can ensure those in need attain better access to timely medical care.

“Doubling down on the flaws of the current Medicaid program and its expansion are risky propositions for Florida,” said Dr. Bob McClure, JMI president and CEO. “We too want to see improved access to health care for the underinsured and the uninsured. However, simply expanding a program that is unreliable and filled with broken promises on the premise that the federal government is dangling money to the states is fool’s gold. Market reforms that put patients first instead of bureaucrats will provide better outcomes for Floridians such as quality care, lower costs and expansion of coverage.”

Alternatives to Expanding Florida’s Medicaid Program” reminds Floridians that:

  • Over the last 12 years, Medicaid in Florida has grown five times as fast as general revenue and currently accounts for 30 percent of the state budget.
  • There are flaws with the viewpoint that this is a “good deal” for Florida. The federal government’s promise to fund 100 percent of the cost is:

    – Temporary: There is no guarantee that a future Congress and administration will maintain this higher match for those added to the Medicaid program under the new eligibility guidelines (those with incomes up to 138 percent of the federally defined poverty level).
    – Only applicable to the newly eligible: The federal government’s promise does not cover the cost of patient additions to the current, state-funded Medicaid program (those that already qualify, but have not yet enrolled) Our current Medicaid program continues to grow and consume state funds that could otherwise be used for other important priorities such as education and public safety.
    – Funded by tax dollars
    : Taxpayers in Florida are still footing the bill for a Medicaid expansion; it’s not “free” money. The end result of the federal government providing funds for the program versus the state is the same for Floridians: increased costs, more taxes, slower growth and another step for the nation toward greater debt.

“The economics of the Medicaid expansion are bad, but the health care involved for the underserved is even worse,” said Jason Fodeman, M.D., JMI adjunct scholar and author of the policy brief. “Medicaid is beleaguered by bureaucracy, fraud, rising expenditures, restricted access, and compromised patient care. By applying further strain to an already strained system, expansion could very well worsen the quality of the care that current Medicaid patients receive.”
Fodeman explains that the current problems that plague the Medicaid program are deeply rooted at the core of the Medicaid statute and cannot be rectified without comprehensive Medicaid reform.  He lists several issues that leave state lawmakers with few options to constrain costs other than paying providers less. He points out that Florida Medicaid reimbursements are lower than the national averages.

“Medicaid’s business model is not a free lunch or an example of free-market economics. Rather it is centralized price controls – nothing more than the government bludgeoning prices down by fiat,” said Fodeman. “Ultimately, these price controls are passed along to Medicaid patients in the form of diminished access, long waits for appointments, and compromised care.”

The policy brief outlines health system reforms at the state and federal level that could provide an alternative to expanding the Medicaid program including:

  • Telemedicine: Implement and expand telemedicine, especially into the state’s Medicaid program. Florida could selectively incorporate telemedicine into high-cost areas where this new discipline can be used to enhance access, improve efficiency, and lower overall costs of the program.
  • Price Transparency: Pool and make public pricing data to give patients clearer insight into the costs of medical interventions, thereby giving them more tools to become smarter consumers of health care dollars. Increased public awareness would also put pressure on higher-cost suppliers to lower their prices to attract patients.
  • Pro Bono Care: Provide a malpractice haven under the Federal Tort Claims Act that would protect doctors who would like to provide “charity care.” The cost of malpractice insurance can be daunting, especially in certain specialties and in certain geographic regions of the state. Florida could consider substituting an administrative system akin to the workers’ compensation system used for patients who incur an injury or illness in the workplace. In addition, the state could arrange for forgiveness of the medical school loans for those providers who agree to “work off” the obligation by donating a stipulated amount of services during a given time period.
  • Provide Health Insurance: Provide a Health Savings Account (HSA) with a reasonable deductible. This could be considerably cheaper than placing these patients into Medicaid, and it would also be likely to provide them with better access to quality care. For those who could not pay the deductible, grants, donations, charity care and other means could be created at the local level to assist.

“Reasons abound as to why Florida and nearly half of the states in the nation have concluded that a Medicaid expansion under PPACA provisions is unwise,” said Fodeman. “Florida has an obligation to use the debate as an opportunity to reform its health care delivery system to ensure that the most financially fragile and medically vulnerable receive the care they need and deserve.”

Read the full policy brief, “Alternatives to Expanding Florida’s Medicaid Program” here.

Good Businesses Respond to Facts, Not Ads by Lawrence W. Reed

“Move here, expand here, or start a new business here and pay no taxes for ten years!” So goes the slick, nationally-broadcast television ads on which the State of New York is spending a small fortune.

Sounds like an attractive offer but the devil is in two big details the ads omit: One, when the ten years are up, you’ll get socked with the highest tax burden among the 50 states; and Two, taxes are just one of many reasons New York is too costly and unattractive to many entrepreneurs. It’s also home to high rates of unionization and a hostile regulatory environment. In the most recent study of state-by-state economic freedom from the Mercatus Center, New York places dead last. Georgia ranked a very healthy #9.

This raises yet again a longstanding question about economic development: Which is better for business, a friendly overall environment with no special favors or an unfriendly environment offset by “incentives” for particular firms or certain activities? It ought to be a no-brainer but sadly, it isn’t. Count me in the first camp.

Imagine a bad restaurant with high prices, lousy service and an awful menu. What would you think if the owner decided that the solution to declining sales was not to fix anything but to go out in the street, cherry-pick passersby and offer them a discount? For every new customer he might get, who could blame any of the old ones who would resent the discrimination and leave in a huff? If the restaurant owner really wanted to put his business on a sound footing, he would cut his high prices, improve his lousy service and replace his awful menu—for everybody, not just a favored few.

Well, New York is a bad restaurant. Expensive television ads are the politicians’ cowardly way of saying they don’t want to make the tough decisions to actually fix their state’s problems. They either think business people are dumb enough to ignore the facts and be suckered by a TV spot, or they just don’t understand the most basic lesson of economic development: The really good entrepreneurs you should want are the ones attracted by economic freedom, not by short-term favors and empty political promises.

States can foster superior and sustainable growth if they spend less energy on a few trees and care instead for the forest as a whole. Subsidies, tax breaks and other targeted, discriminatory “incentives” are not good substitutes for fixing the fundamentals. They’re also unfair to those without the political pull to get them. The states that get it right don’t have to squander money on advertisements—whether true or deceptive—because any entrepreneur worth his salt will know where to go and what places to shun.

A version of this article appeared in the Atlanta Business Chronicle.

20130918_larryreedauthorABOUT LAWRENCE W. REED

Lawrence W. (“Larry”) Reed became president of FEE in 2008 after serving as chairman of its board of trustees in the 1990s and both writing and speaking for FEE since the late 1970s. Prior to becoming FEE’s president, he served for 20 years as president of the Mackinac Center for Public Policy in Midland, Michigan. He also taught economics full-time from 1977 to 1984 at Northwood University in Michigan and chaired its department of economics from 1982 to 1984.

FP&L – No “Choice” of Meters for 36,000 Floridians

By now many of you that refused the installation of FP&L’s smart meters have received a “Dear Customer” letter telling you that you have a choice of meters. The letter goes on to say that if you don’t take their smart meter that you will be charged $95 upfront and $13/month to retain your old meter. If you haven’t received such letter, you will shortly.

On January 7, 2014 the Florida Public Service Commission (FPSC) approved this deal. Although, it is being contested by two separate citizen petitions (one of which I am leading), the rules state that FP&L can continue as planned with the stipulation that fees collected are “subject to refund”. That is, if the FPSC Order is overturned, they must return the fees charged to the customers.

Why the fees? Well you resistors are “cost causers”. It is a long-standing principle that is invoked at will when they want to get you to comply with the game plan. In 1987/1988 they invoked the same principle when they transferred the ownership of meter enclosures and associated cost burdens (maintenance/replacement) to you the customer. The order (PSC Order # 18893) stated that:

“Since self-contained meter enclosures are not a part of the utility function, but simply house the meter itself, their costs should be borne by the customer when the structure is initially wired for electric service or when it must be replaced due to obsolescence or wear. The burden of maintaining and repairing the enclosures’ must likewise rest with the customer.”

As we all know by now, a smart meter is not “simply a meter” but contains lots of additional components that are part of the utility function. It establishes a wireless Neighborhood Network and sends messages back and forth amongst neighbor meters, remotely disconnects services and monitors your usage. In the future they will turn on the second transmitter to establish your Home Area Network to connect with your Home Energy Controller or Smart Thermostat and will give your smart refrigerator the ability to text you. It collects more data than is needed to bill you for your current plan. But why fuss over details!

If you don’t enroll in their plan, they will slap a smart meter on your home. If you think you got that covered (i.e. you already caged/locked your meter or have restricted access to your meter) think again. You will be automatically enrolled and charged the fee.

The process to fight this will be long and painful. If you don’t want a smart meter you need to:

Retain your analog meter. Once they take it, you will never see it again. (Remember you will get an undefined “non-communicating” meter in the future.) You may want to send a certified letter to FP&L stating that you do not consent and that you are enrolling under duress.

File a formal compliant with the FPSC.  Here is the complaint page http://www.floridapsc.com/consumers/complaints/index2.aspx

Write/call your Florida State Senators/Representatives. They are in session right now. Make your voices heard. Senate – http://www.flsenate.gov/Senators/Find, House: http://www.myfloridahouse.gov/Sections/Representatives/representatives.aspx

Contact the Energy committees that oversee the FPSC. House Energy & Utilities Subcommittee – http://www.myfloridahouse.gov/Sections/Committees/committeesdetail.aspx?TermId=85&CommitteeId=2724 and Senate Communications, Energy, and Public Utilities  http://www.flsenate.gov/Committees/Show/CU/

Contact Gov. Scott – http://www.flgov.com/contact-gov-scott/

For those who still believe smart meters save money, ask FP&L how much net operation and maintenance savings are in the current rates you pay.

What they said in the 2009 rate case:

2009 rate case schedule

What they reported in the 2012 rate case:

2012 rate case schedule

The lack of cost savings was confirmed by the Office of Public Counsel who said on October 12, 2012 “However, to OPC’s knowledge, no studies, analyses, or quantification of the benefits or cost savings from the implementation of smart meters exist at this time. OPC is still waiting on the promised cost savings benefits of smart meters to be realized and shared with the customers.” http://www.floridapsc.com/utilities/electricgas/smartmeter/09_20_2012/WorkshopComments/OPC.pdf

Think smart meters prevent outages? Check out Northeast Utilities initial comments in a recent Massachusetts Department of Utilities investigation – “Meters do not reduce the number of outages” (page 4) http://haltmasmartmeters.org/wp-content/uploads/2014/01/NSTAR_R12-76-Comments-7986-POSTED01172014_HIGHLIGHTED.pdf

And finally, how many of you run home from work or golf and check your FP&L energy dashboard each night? Apparently not many. The last annual report from FP&L showed that as of the end of 2012 with over 4 million meter installed, only about 15% accessed the dashboard about 2 times.

Ted Cruz: Ten Policy Changes To Fundamentally Transform America Back

We agree with all of what Senator Cruz is proposing, with two exceptions – Congress needs to enforce the Constitution, not defend it and the Flat Tax proposal. Congress needs to get out of the tax business altogether and should repeal the Sixteen Amendment and replace it with the Fair Tax (HB 25).

Senator Cruz did not directly address pro-family policies and national security in his remarks. These are two key areas that must be restored if America is to be fundamentally transformed back to its former greatness.

 reports, Sen. Ted Cruz (R-TX)  today advocated “a straightforward and bold, positive agenda to inspire the young, to inspire women, to inspire Hispanics, to inspire everybody” during his speech at the Conservative Political Action Conference. Here are the ten items he called on Americans to do going forward:

1. “Defend the constitution. All of it.”

2. “We need to abolish the IRS. We need to adopt a simple flat tax that is fair [so] that every American can fill out his taxes on a postcard.”

3. “We need to expand energy in this country and create high-paying jobs all over America.”

4. “We need to expand school choice. Every child deserves an opportunity to have an excellent education, regardless of your race, your class, your creed, where you come from – every child deserves a fair chance at the American Dream.”

5. “We need to repeal Dodd-Frank.”

6. “We need to audit the Federal Reserve. Unaccountable power in Washington debasing our currency, driving up the cost of food and gas and the basic stuff of life is hurting Americans who are struggling across this country. And I’ll tell you what else it’s doing: It’s fueling the abuse of power by petro-tyrants like Putin.”

7. “We need to pass a strong balanced budget amendment. We need to stop bankrupting our country.”

8. “We need to repeal every single word of Obamacare.”

9. “We need to stop the lawlessness. This President of the United States is the first President we’ve ever had who thinks he can choose which laws to enforce and which laws to ignore. He announces just about every day one change after another after another in Obamacare. It is utterly lawless. It is inconsistent with our Constitution, and it ought to trouble everyone – Republicans, Democrats, Independents, Libertarians.”

10. “We need to end the corruption. We need to eliminate corporate welfare and crony capitalism. If you come to Washington and serve in Congress, there should be a lifetime ban on lobbying. And we need to pass a strong constitutional amendment that puts into law term limits.”

Allen West: Latest Obama budget is a “fiscal death sentence for America”

I remember being on Capitol Hill and receiving President Obama’s budget resolutions. I don’t think his budget received one vote in my two years there. And it seems that streak will continue with yesterday’s release of the next Obama budget.

Recently the Washington Post described Obama’s foreign policy as being based on fantasy — same for his budget resolution, ridiculous fantasy. Obama has proposed $3.9 trillion in his new budget, which reflects where his spending priorities lie. Obviously he doesn’t believe in fiscal discipline or responsibility and his budget proves it.

As reported by FoxNews.com, “President Obama unveiled a $3.9 trillion budget plan on Tuesday that drops earlier proposals to cut future Social Security benefits and seeks new money for infrastructure, education and jobs training — handing Democrats running for re-election a political playbook but angering Republicans who called the blueprint “irresponsible.”

There is no doubt this is nothing more than a campaign document to try and give Democrats a boost in this election year. It will be used to demonize Republicans once again – Saul-Alinsky style — as mean, rude, nasty, and uncaring. But how can anyone believe that Obama and the Democrats care about the fiscal future of our Republic?

Consider the following factoids; The President’s budget increases spending by $791 billion over the budget window and by $56 billion in 2015 above the Murray–Ryan spending agreement that he signed into law just two months ago. Just more of the typical beltway two-step.

Obama has said that we have been living in an “era of austerity” — well someone forgot to tell him that since 2009, the Obama era, we’ve added $6.8 trillion to the debt and spent $17.6 trillion. But that’s just for starters. Obama’s new budget adds $8.3 trillion more to the debt over the next 10 years and cumulative deficits would amount to $5 trillion, while gross debt climbs to $25 trillion in 2024.

And what will fuel all the new Obama spending? President Obama has already increased taxes by $1.7 trillion. Now, he wants another $1.8 trillion on top of that. Roughly half of the new tax hikes would be dedicated to new spending rather than deficit reduction.

Most damaging is the fact that the current net interest on the debt which is $223 billion a year will explode to $812 billion in 2024, ten years from now. Keep in mind, net interest on the debt is on the mandatory spending side of the US budget and cannot be touched. It is a reflection of increased fiscal borrowing. Lastly, the Obama budget NEVER balances, it just fiscally decimates these United States of America.

Obama’s budget is not worth the paper it’s written upon — it is a fiscal death sentence for America. All it provides are empty talking points for liberal progressives running for office. It is a blueprint of lies.

After 5 years this hasn’t worked which means we’re all clearly insane: continuing to do the same thing and expect different results.

EDITORS NOTE: This column with graphic originally appeared on AllenBWest.com. The featured photo is of President Barack Obama signing the Budget Control Act of 2011 in the Oval Office, Aug. 2, 2011.

A Quick Guide to Obama’s 2015 Budget

14ObamaBudget_V2_MBYesterday, Heritage experts dove into President Obama’s new budget proposal. Check out our infographic to see just a few of the disturbing things they found.

Watching Mt. Gox Collapse from the Inside

Editors’ note: A few months back, we interviewed a full-time BTC trader, who still wishes to remain anonymous. In the wake of Mt. Gox’s collapse, we reached out for comment. Here’s what he had to say:

I did lose some BTC on the collapse, enough to sting, but it’s something of a small price if it means Mt. Gox and Mark [Karpeles, CEO of Mt. Gox] are permanently out of the picture. It also seems the market has priced in the worst result, so it appears the community and markets are already moving on.

The situation is still developing and quickly, and it seems increasingly likely that Mark will suffer multiple lawsuits and potentially criminal charges. By some accounts Gox held over a billion in assets, and people with that sort of money don’t exactly roll over without a fight.

From the few discussions I’ve had, there have been/still are over-the-counter deals being struck between hedge funds and large players to buy out “Gox coins” at 10 percent or 15 percent, etc.—i.e., if I have 1,000 bitcoins on Gox, people are willing to purchase it for 100 bitcoins. A site was made a couple weeks ago that allowed people to trade on this, which was great because it helped alleviate the collapse and I believe softened the price crash.

People were wiring money to Gox to buy up until they stopped trading; I don’t imagine that being swept under the rug. There are ongoing rumors/speculation/etc. that people are interested in buying out the exchange, but it really depends on how much was lost: If Gox is out 750,000 bitcoin, no one is going to touch it, but if it’s much less, then there is still the possibility—either way the situation probably will not be resolved for some time.

Fraud occurs whether or not there is a law to say it’s illegal. I think what will be more important to see is how quickly market players adapt and change services to attract traders. When bad firms are allowed to fail, the pain can be immediate and severe, but it allows wounds to heal instead of having a prolonged uncertainty or a complex debt instrument weighing down the markets. Already, exchanges are looking into how to better broadcast their solvency; since the blockchain is a public ledger, it is easy enough to sign controlling addresses to show “proof” that an entity is in control of the bitcoins they’ve been entrusted with. The trickier issue currently is how to list liabilities (how many coins an exchange is supposed to have) without leaking too much personal information; for a more technical discussion you can start here.

The other thing to keep in mind is that a distributed network that is largely unregulated by governments does not necessarily imply a system that is chaotic and lawless. Enforceable contractual law is necessary for free markets to flourish, and I know we will see more sophisticated agreements form from out of this disaster, either insurance offers, multisignature bonds being held, or some other scheme. The power of a distributed network is in how decisions are made; there isn’t one central point of failure wherein a government regulatory body either makes good regulatory law or doesn’t. Instead many different actors create many different solutions which compete and serve different use-cases. When a thousand people all work independently on a solution, much better results are obtained. That’s the theory anyway; let’s see how it plays out. I’m betting bitcoin will continue to grow this year, see wider adoption, and likely reach new all-time highs.

Compare this recovery to the supposed 2008/2009 global downturn recovery. I suspect a dozen central bankers are a poor substitute for 10,000 innovators.

RELATED COLUMNS:

Tokyo Bitcoin Exchange Files for Bankruptcy – ABC News

Bitcoin Comes to Wall Street February 25, 2014 by Jeffrey A. Tucker

Bitcoin Exec Arrested January 28, 2014 by Michael Nolan

Bitcoin for Beginners April 02, 2013 by Jeffrey A. Tucker

Is Bitcoin a Viable Currency? It’s not a scam, but market actors will determine its staying power DECEMBER 11, 2013 by Steve Patterson

Integrity Florida calls for Investigation of Enterprise Florida

Dan Krassner, Co-Founder and Executive Director Integrity Florida, and Ben Wilcox, Research Director Integrity Florida, in an email state, “The lavish travel and wasteful government purchasing practices of Enterprise Florida, a taxpayer supported entity serving as the privatized commerce department for the State of Florida, was detailed in an investigative report by Michael Buczyner, WPEC/CBS 12 titled ‘State-run agency accused of abusing taxpayers dollars‘ on February 25.  The Department of Economic Opportunity (DEO) is responsible for the state’s contract with Enterprise Florida, but it has clearly turned a blind eye to this waste and abuse of the taxpayers’ money.”

“Enterprise Florida travel guidelines do not comply with official state travel restrictions, even though the entity is using taxpayer funds allocated by the state legislature.  According to an internal audit prepared on March 15, 2012 by McGladrey, only three Enterprise Florida executives, Secretary of Commerce Gray Swoope, Chief Operating Officer Griff Salmon and Chief Marketing Officer Melissa Medley, all former employees of the Mississippi Development Authority, gained ‘unlimited signing authority’ on February 7, 2012, to execute contracts and make significant purchases of non-economic development goods and services,” note Krassner and Wilcox.

Since the new authority was granted to these top three executives at Enterprise Florida, here is a sampling of the organization’s questionable expenses:

  • Nearly $22,000 spent on New York Yankee Luxury Suites and related purchases.
  • More than $13,000 spent at the San Diego Zoo.
  • $12,000 spent on Texas Rangers baseball.
  • More than $7,000 spent at Cowboys Stadium.
  • More than $4,000 spent on Atlanta Braves baseball.
  • More than $4,000 spent on limousine services.
  • Nearly $3,300 spent at Truluck’s Seafood Steak & Crab House in Austin, Texas.
  • More than $2,500 spent at the 21 Club.
  • More than $2,000 spent at 4Rivers Smokehouse.
  • More than $1,300 spent on a charter fishing boat.
  • Roughly another $30,000 per month spent on American Express credit cards for unknown expenditures.
  • Thousands more on airfare, luxury resorts and hotels, expensive meals and limousine services.

The people of Florida deserve accountability and transparency within every aspect of our government.  Given the appearance of impropriety, an inspector general report is needed to determine whether the taxpayer resources that support Enterprise Florida are properly protected and whether corrective action is needed.  A company this large, supported by hard-working Florida families, must be held to the highest ethical standards.

Additional Resources:

Integrity Florida letter to Governor Rick Scott “Eliminate government waste at Enterprise Florida, investigation needed” (read more)

“State-run agency accused of abusing taxpayer dollars” Story by Michael Buczyner / CBS 12 NEWS (read more) (watch video)

Enterprise Florida Internal Audit by McGladrey – March 15, 2012 (read more)

Enterprise Florida, Inc. Vendor Payments – January 1, 2012 to August 28, 2013 (read more)

Enterprise Florida receives more than 97% of its funding from taxpayers (read more on page 24) (watch video starting at 1:00:20 about an hour into the video)

  • $57.4 million total 2012-13 budget for Enterprise Florida
  • $56 million (97.6%) in government/public/taxpayer-funded sources
  • $1.4 million (2.4%) from the private sector

Bipartisan efforts to hold Enterprise Florida accountable with bills filed for the 2014 legislative session:

  • Applies state ethics code to Enterprise Florida staff – CS/SB 846: Governmental Ethics GENERAL BILL by Senate Ethics and Elections Commission; Senator Jack Latvala (read more)
  • Strengthening Enterprise Florida disclosure practices and fiscal accountability SB 1270: Economic Incentive Programs GENERAL BILL by Senator Eleanor Sobel (read more)
  • Strengthening Enterprise Florida disclosure practices and fiscal accountability HB 1103: Economic Incentive Programs GENERAL BILL by Representative Jose Javier Rodriguez (read more)

Dick Cheney: Obama would ‘much rather spend the money on food stamps’ than military

Former Vice President Dick Cheney on Monday accused President Barack Obama of cutting the defense budget because “he would rather spend money on food stamps.”

[youtube]http://youtu.be/QMev7cfceG4[/youtube]

The Pentagon announced on Monday plans to shrink the U.S. Army to pre-World War II levels, in addition to eliminating the Air Force’s A-10 fleet and retiring the Cold War-era U-2 spy plane program.

“Absolutely dangerous,” Cheney told Fox News host Sean Hannity. “I, obviously, have not been a strong supporter of Barack Obama but this really is over the top. It does enormous long-term damage to our military.”

“They’re basically making the decision, the Obama administration, that they no longer want to be dominant on the seas and the skies and in space,” the former vice president added. “This notion that we no longer want to have a force that’s capable of any sustained occupation of a foreign territory, that’s a basic fundamental decision that drives — supposedly justifies this. But lots of times, you don’t get to make that choice. Circumstances will make that choice for you.”

Cheney said that his “old friends” in the Middle East had told him that they no longer trusted the United States to use military power when it was necessary.

“I think the whole thing is not driven by any change in world circumstances, it’s driven by budget considerations,” he insisted. “He would much rather spend the money on food stamps than he would on a strong military or support for our troops.”

“Pretty frightening,” Hannity agreed.

How Social Security Makes Us Poorer by Brenton Smith

When you read that Social Security lifts 50 percent of seniors out of poverty, keep in mind that it was largely the cost of Social Security that put them there. It’s the perfect example of government incompetence creating higher costs and misguided incentives—and delivering exactly the opposite of what it promised.

The contradiction stems from the cost of Social Security, which has exploded. In 1950 Social Security cost 2 percent of the first $3,000 of income (in 2013 dollars, that would be 2 percent of roughly $29,000, according to the BLS calculator).  In 2013, the retirement portion of Social Security cost 10.6 percent of the first $113,700. On top of this cost, the government now takes another 1.8 percent of your wages to cover the cost of disability benefits, which were added in 1958.

What’s more, you get a lot less bang for a lot more bucks. A couple retiring in 1960 expected to collect $8 of benefits for every $1 of contributions. Today the return for average Americans is actually negative.

The process of rising costs and declining returns has continued for 80 years. We are now at a point where the largest investment in retirement planning of the vast majority of Americans loses money. No one should be surprised to find that people who invest their retirement savings poorly wind up in poverty when they reach retirement.

The Urban Institute’s “Social Security and Medicare Taxes and Benefits over a Lifetime” projects what a hypothetical worker will contribute to Social Security versus what they expect to collect. The “lifetime value of taxes” shows what would have happened if the accumulated taxes had been put into an account that earned interest. The research projects that an average worker who retires in 2030 will have lost more than $400,000 in savings in order to collect about $370,000 in expected benefits.

Here is where the system gets really ugly. The $370,000 isn’t guaranteed. In fact, the Trustees project that in a good economy this worker will only get 77 percent of his scheduled benefits because he will retire after the trust fund is exhausted. Mind you, the 77 percent of scheduled benefits is completely dependent upon the willingness of future workers to commit 12.4 percent of their wages to this system as it falls into collapse. Basically this worker only collects provided another worker gets a worse deal.

The government has compounded the impact of the problem by feeding the systemic dysfunction directly through our labor market. Social Security is financed with a tax on labor—so it penalizes work even though the best cure for poverty is a job. This tax also creates a disincentive to hire people and creates an incentive to move work to countries with a lower tax burden. Social Security introduces incentives to work less, such as early retirement.

Nobody wants to be poor in their old age. If workers did not have to spend their entire careers burdened with Social Security taxes, fewer would face that possibility.

ABOUT BRENTON SMITH

Brenton Smith is the founder of Fix Social Security Now.

Pentagon Budget Slashes Military Personnel Benefits Again

The assault on the US military continues unabated.  The long term goal of the Obama administration has always been to reduce America’s military power consistently and systematically, and they are doing it at a time when China, Russia, Iran, and Al Qaeda military strengths are increasing.

In the below listed article you can read how the Obama administration continues its assault on military personnel who have repeatedly put their lives on the line in defense of the Republic, and many have been maimed for life.   The deepest and most draconian cuts in military pay and benefits in 40 years is being proposed by Obama’s civilian appointees at the Pentagon in their new budget.  It includes:

  1. Increasing healthcare costs for retirees & military families (Tricare deductibles and co-pays are being increased)
  2. Massive cuts in commissary benefits so the cost of food to military families will be increased
  3. The first ever cuts in basic housing allowance for families
  4. Draconian pay raises in 2015 will only be 1% which won’t keep up with inflation
  5. Moreover personnel costs will be reduced significantly by reducing the US Army below 1940 levels which is a extremely dangerous policy
  6. Hagel quote “Of course there is going to be risk”

All this is taking place at a time when there is serious concern in the US Armed Forces about many enlisted military families requiring food stamps because of their unusually low incomes.  Cutting their pay and benefits is underway while the Obama administration provides billions of dollars of free medical care, education, and food stamp benefits for Illegal Immigrants.  In addition, annually the IRS refunds billions of dollars in employer paid federal taxes to Illegal Immigrants who file for dependent benefits for their Illegal Immigrant’s children residing in Mexico.

Annually the Obama administration has been increasing the percentage of authorized expenditure on food stamps, which exceeds the increase in the authorized expenditures for the defense of the Republic (48 million people are now on food stamps with no requirement for verification of if they are truly eligible US citizens). “Common sense is not so common in the Obama administration.”

The way to prevent war is to maintain a strong military establishment—it should be “Peace Thru Strength,” not peace thru weakness.

Pentagon budget slashes benefits

By Kristina Wong

Benefits for active­ duty personnel and their families would be slashed under a budget proposal released Monday by the Pentagon.

The budget would dramatically reduce the Army’s size and trigger a new round of controversial base closures while cutting healthcare copays and deductibles and reducing the subsidies military families get for housing and low-cost goods.

Defense Secretary Chuck Hagel acknowledged the cuts would be controversial but argued they were unavoidable in a belt-tightening era following the end of wars in Afghanistan and Iraq.

“Congress has taken some important steps in recent years to control the growth in compensation spending, but we must do more,” he said.

Lawmakers, as well as groups that represent veterans and the military, accused the Pentagon of balancing its pocketbook on the backs of soldiers and their families.

“We know the Defense Department must make difficult budget decisions, but these cuts would hit service members, making it harder for them and their families to make ends meet,” said Paul Rieckhoff, the founder and CEO of Iraq and Afghanistan Veterans of America (IAVA).

Coupled with a 1 percent ceiling on pay hikes and assuming a 5 percent annual increase in housing costs, the Military Officers Association of America estimated an Army sergeant with a family of four would see an annual loss of $1,400. An Army captain would lose $2,100, it said.

The group said those figures doesn’t account for other costs that would affect military families, such as increased prices at military commissaries because of another budget proposal and an increase in health care fees for military family members.

Hagel cast the cuts as unavoidable and necessary to avoid steeper cuts to military personnel.

He said payroll costs have risen 40 percent more than in the private sector.

While he said those hikes were the “right thing to do” during war, “today DOD faces a vastly different fiscal situation … We must now consider fair and responsible adjustments to our overall military compensation package.”

“This is the first time in 13 years we will be presenting a budget to the Congress of the United States that’s not a war-footing budget,” Hagel said.

Read more.

RELATED COLUMNS:

Budget cuts to slash U.S. Army to smallest since before World War Two

Increased domestic spending may be behind proposed military cuts, CBO report suggests

Susan Rice and the retreat of American power – The Washington Post

End of American Military Dominance | Washington Free Beacon

How Do We Cut Federal Growth and Spending?

Most Americans agree that the federal government is totally out of control, that it is too large, spends too much money, and should be reduced in size.  In fact, a recent headline for a Rasmussen Poll reported that “73% Think Federal Government Should Cut Spending to Help Economy.”

There are too many government agencies, too many regulations, too many federal employees, and too much waste. As new regulations are created, new employees are hired to enforce the regulations—then those employees expand their area with more regulations, which requires the hiring of even more federal employees—and the government grows and grows.  If we had perpetual motion it would be a government agency.  As Heritage Foundation budget expert, Romina Boccia stated, “you have so much waste in the federal government, it is really outrageous and we need to be cutting the federal budget, not increasing it.”

The Investor’s Business Daily reported:

 “A new study of government data says that since Oct. 1, federal workers, including bureaucrats and members of Congress, have worked less than three-fourths of the time… Compared to civilian workers, federal employees are underworked.  Rather than criticize them for working so little, maybe we should see this as an opportunity. If they can cut back on work with so little impact on the rest of us, why don’t we simply cut government employment by 25%?  If the country can survive the government working 25% fewer hours, doesn’t it make sense to cut an equivalent amount and make those still on board work full-time like the rest of us?”

How do we cut the federal budget?  First, we need to study all government departments/agencies and assure that none of them receive more funding than they received in the last fiscal year. To accomplish this, we must establish a commission similar to the Base Closure and Realignment Commission (BRAC), which has been effectively used throughout the Department of Defense (DOD).

I mention a BRAC-like commission because it could get much more done to trim government than any group within Congress.  Historically, Congressional legislation only adds federal agencies or increases their size.  We need a commission with a mission to review all agencies for current need, consolidation, efficiency, elimination, etc.  Otherwise, we’ll continue to have growing waste in an ever-expanding federal government.

Since BRAC was used successfully in the DOD, which is one of the most important and necessary of the many government agencies, it could be just as useful in other agencies that are less important to our survival as a nation.  Defense is a constitutional requirement, not some questionable freebie program that rewards citizens, and in many cases non-citizens, for not working.  Coming in second in defense of the nation is unacceptable!  And the survival of the nation and our Constitution is, or should be, the most important function of government.

The U.S. Postal Service (USPS) is a perfect example of the problem.  The USPS defaulted on its debt last year—after seven straight years of deficits. It’s saddled with billions owed in retiree benefits while its customers are sending less and less mail with each passing year. If it is to survive, the USPS realizes that big reforms are needed, and it has recommended some cost-cutting changes.  But in the omnibus spending bill, Congress blocked two money-savers: discontinuing Saturday delivery and closing some rural post offices.  BRAC would not be saddled with such Congressional politics and would have the authority to solve the problem as needed.

Our second step in cutting federal spending should be a Balanced Budget Amendment.  This would allow us to budget only what is needed and exclude unnecessary functions within the current government structure.

The nation wants to see action, not just rhetoric. In baseball, a base hit excites fans when it happens, but if it doesn’t result in a score, it is just another statistic. Likewise, the taxpayers were happy with all the proposals to reduce the federal budget, but the talk did not materialize into a serious reduction in the budget. The job is not done until we see these major reductions.

Congress must get aggressive in controlling government growth and spending by first establishing BRAC for all areas of the three branches of the federal government (except the DOD where it has already been used), and secondly, by passing a Balanced Budget Amendment. As the Rasmussen Poll shows, the taxpayers want government spending cut.

This is critical, and failure of the Congress to act accordingly is a gross neglect of its responsibilities to the taxpayers.