But if Republicans continue to be led around by, and live in fear of, a base that denies global warming after Hurricane Sandy and refuses to ban assault weapons after Sandy Hook — a base that would rather see every American’s taxes rise rather than increase taxes on millionaires — the party has no future. It can’t win with a base that is at war with math, physics, human biology, economics and common-sense gun laws all at the same time.
Because they control the House, this radical Republican base is now holding us all back. President Obama was moving to the center in these budget negotiations. He reduced his demand for higher tax revenues to $1.2 trillion from $1.6 trillion; he upped the level at which Americans who would be hit with higher taxes to those earning $400,000 a year from $250,000; and he made his own base holler by offering to cut long-term spending by lowering the inflation adjustment index for Social Security. It seemed that with a little more Republican compromise, Obama would have met them in the middle, and we could have had a grand bargain that would put the country on a sounder fiscal trajectory and signal to the markets, the world and ourselves that we can still do big hard things together. That will have to wait. Now the best hope is some mini-, crisis-averting, Band-Aid.
But...
Was 2012 the year when the democratic world lost its grip on reality? Must we
assume now that no party that speaks the truth about the economic future has a
chance of winning power in a national election? With the results of presidential
contests in the United States and France as evidence, this would seem to be the
only possible conclusion. Any political leader prepared to deceive the
electorate into believing that government spending, and the vast system of
services that it provides, can go on as before – or that they will be able to
resume as soon as this momentary emergency is over – was propelled into office
virtually by acclamation.
So universal has this rule turned out to be that parties and leaders who know
better – whose economic literacy is beyond question – are now afraid even to
hint at the fact which must eventually be faced. The promises that governments
are making to their electorates are not just misleading: they are unforgivably
dishonest. It will not be possible to go on as we are, or to return to the
expectations that we once had. The immediate emergency created by the crash of
2008 was not some temporary blip in the infinitely expanding growth of the
beneficent state. It was, in fact, almost irrelevant to the larger truth which
it happened, by coincidence, to bring into view. Government on the scale
established in most modern western countries is simply unaffordable. In Britain,
the disagreement between Labour and the Conservatives over how to reduce the
deficit (cut spending or increase borrowing?) is ridiculously insignificant and
out of touch with the actual proportions of the problem. In the UK, the US, and
(above all) the countries of the EU, democratic politics is being conducted on
false premises.
Of course, once in power all governments must deal with reality – even if
they have been elected on a systematic lie. As one ex-minister famously put it
when he was released from the burden of office: “There’s no money left.” So that
challenge must be met. How do you propose to go on providing the entitlements
that you have sworn never to end, without any money? The victorious political
parties of the Left have a ready answer to that one. They will raise taxes on
the “rich”. In France and the United States, this is the formula that is being
presented not only as an economic solution but also as a just social settlement,
since the “rich” are inherently wicked and must have acquired their wealth by
confiscating it from the poor.
Of course, the moral logic of this principle is absurd. The amount of wealth
in an economy is not fixed so that one person having more means that somebody
else must have less. But, for the purposes of our problem, it is the fault in
the economic logic that is more important. The amount of money that is required
to fund government entitlement programmes is now so enormous that it could not
be procured by even very large increases in taxation on the “rich”. Assuming
that you could get all of the rich members of your population to stand still and
be fleeced (rather than leaving the country, as Gérard Depardieu and a vast army
of his French brethren are doing), there are simply not enough of them to
provide the revenue that a universal, comprehensive benefits system requires.
And if all the French rich did stay put, and submit to President Hollande’s
quixotic 75 per cent income tax, they would soon be too impoverished to invest
in the supply side of the economy, which would undermine any possibility of
growth.
Barack Obama knows that a tax rise of those proportions in the US would be
politically suicidal, so he proposes a much more modest increase – an income tax
rate of around 40 per cent on the highest earners sounds very modest indeed to
British ears. But that is precisely the problem. If a tax rise is modest enough
to be politically acceptable to much of the electorate, it will not produce
anything like enough to finance the universal American entitlement programmes,
social security and Medicare, into a future with an ageing population. There is
no way that “taxing the rich” – that irresistibly glib Left-wing solution to
everything – can make present and projected levels of government spending
affordable. That is why Britain and almost all the countries of the EU have
redefined the word “rich” to mean those who are earning scarcely twice the
average wage, and pulled more and more middle-income people into high tax bands.
Not only are there vastly more of them but they are far more likely to stand
still and be fleeced, because they do not have the mobility of the truly rich.
6 comments:
this is not "Ganem" it is portions of recent articles.
The first, by Friedman...talks about the limits of the Republican's...the second, accurately notes that as the Democrats pontificate, they continue to ignore the reality that we have promised too much and refuse to address the root cause which will not be helped...at all...by taxing a limited segment of the population.
No...I don't believe in global warming...I believe in polution and its not good but I believe that free markets and societies best interest which is the best way to a cleaner enviornment.
As previously noted, you don't need to restrict rights on the basis of a tradegy. I don't care about the gun, but rights are not things to let go of too easily...hence the left already excerting control of your body, right, and much more because the "pay" for your health care.
How does the free market provide for a cleaner environment absent regulation?
How does a free market account for the damage caused by burning carbon and fueling climate change?
Hoe does the free market account for all of the costs of importing oil, keeping the sea lanes clear, fighting wars, and stationing hundreds of thousands of troops near the oil fields?
Because Clem, free markets imply free people and free people by nature want to live in a clean world...why wouldn't they? No not always, but usually.
Look at the most controlled societies vs the most free and those who are free generally are more advanced and more "clean".
Free markets and free people left to their own will produce the cleanest enviroment and arrive at less carbon (if that in fact is the desired solution).
Usually wars etc. are the consequence from of distortions of free markets.
Free markets also understand (better said arrive at) that which is possible. It remains impossible to power the world without carbon. 4 years of intense manipulation have produced little measurable benefit.
Your reply, Rufus, was non-responsive.
If it is cheaper to pollute - say, dump untreated waste in the river and release unscrubbed emissions into the air, that is what industry will do unless/until regulation prevents it.
Oil is relatively cheap today, as the cost of delivery is massively subsidized - distorted - by the taxpayer.
Even the most ardent capitalists acknowledge the need for regulation. Its not enough to simply rattle off platitudes about free markets.
Since 1992, the federal government has expended almost $24 billion to encourage investment in wind power through direct spending, tax breaks, R&D, loan guarantees and other federal support of electric power. The Joint Committee on Taxation estimates that a one-year extension of existing federal subsidies for wind power would cost taxpayers almost $12 billion.
The costs of wind subsidies are extraordinarily high—$52.48 per one million watt hours generated, according to the U.S. Energy Information Administration. By contrast, the subsidies for generating the same amount of electricity from nuclear power are $3.10, from hydropower 84 cents, from coal 64 cents, and from natural gas 63 cents.
In addition, wind power benefits from federal mandates requiring the use of renewable energy by federal agencies along with preferential treatment by the Bureau of Land Management and the U.S. Forest Service. Many states provide additional tax breaks, subsidies and mandates for wind power. The total value of these additional subsidies has never been calculated.
But the cost to taxpayers is only part of the problem. Subsidized, wind-generated electricity is displacing other, much cheaper sources of power. The subsidies are so high that wind-power producers can pay utilities to take the electricity they produce and still make a profit. Such "negative pricing" has occurred for some time in the Midwest, the Pacific Northwest and in Texas—and, according to the Energy Information Administration, it will likely grow.
In West Texas, where wind power is a larger percentage of total electricity production than in any other part of the country, negative energy-price distortions have occurred 8% or more of the time for the last five years. Donna Nelson, the chairman of the Texas Public Utility Commission, warned in September that the market distortion caused by negative prices "makes it difficult for other generation types to recover their cost and discourages investment in new generation."
In the 1990s, the federal government began subsidizing wind power based on the hope that, with a helping hand, the technology would improve rapidly, costs would decline, and the industry would become economically viable. Congressman Phil Sharp (D., Ind.), the original proponent of the subsidies, argued in 1991 for "a sunset provision to ensure that the temporary incentive does not become a permanent subsidy."
But the sun has never set. Again and again—on seven subsequent occasions in all—federal subsidies for wind were extended.
Yet wind power is less economically viable today than it was when the current subsidies started in 1992. After the expected gains in moving from one-off production to assembly-line production, no major technological breakthrough has occurred that would substantially lower the cost of wind-power electricity generation. The Department of Energy's "2009 Wind Technology Market Report" finds average wind-power costs were higher in 2009 than they were in 1994, two years after the subsidies began. As Energy Secretary Steven Chu has observed on more than one occasion, wind energy is a "mature technology."
It is increasingly difficult to make a case that taxpayers should continue to subsidize wind-generated electricity. The end of the subsidy will not induce owners of existing windmills to shut them down, since so much of the cost is fixed in the original construction project and so little of their costs are entailed in operating the windmill once it is constructed. Under current law, billions of dollars in subsidies will continue to be paid out over the next decade on existing projects even if the subsidies for projects built in the future expire.
Mr. Gramm, a former Republican U.S. senator from Texas, is a senior partner of US Policy Metrics and a visiting scholar at the American Enterprise Institute.
All of your observations about wind power subsidies are true - and we should scrap all of them and replace them with a significant carbon tax. Jeff Flake and Art Laffer agree with me. The free market - capitalism - will find new ways of generating power and conserving energy once the cost proposition is reliably changed.
How that is done will be up to the market. Winners and loser will not be chosen by the government. The state has a compelling interest in reducing our collective carbon footprint. Dirty energy - notably oil - receives massive subsidies that are not currently reflected in the price. Lets even the playing field and clean up the environment at the same time.
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