Dash of Calabash

Senator Tom Coburn on the effort to rein in federal spending. Ending “Earmarks” is key. Another WSJ Opinion Journal article. A short essay worth reading.

John Fund has a WSJ Opinion Journal article that illuminates the real truth behind government spending. It is about cronyism and payback for political favors. One only has to wonder how this process is taking place in Hawaii. Fund gives just a single example outside of Alaska, the main thrust of his article, that illustrates how the practice happens in other states as well.

Earmarks represent a looming political disaster for the GOP. Last year Congress authorized a record 13,999 earmarks. The scandals surrounding just a few of them involving disgraced lobbyist Jack Abramoff and ex-Rep. Duke Cunningham have sent reporters scurrying to find what other nuggets of news might be buried in the remainder. If just 1% of the earmarks turn out to be embarrassing, that’s 140 stories. If a mere 0.1% turn out to be legally questionable, that’s 14 front-page exposes between now and the November election. Because they are in charge of Congress, Republicans will take the brunt of any political fallout, even though Democrats routinely secure an estimated 45% of earmark spending.

And the stories keep coming. A major newsmagazine is working on a piece exploring the bosom-buddy relationships some lobbyists for earmarks have with key appropriators. The San Diego Union-Tribune reports that House appropriations chairman Jerry Lewis has steered hundreds of millions of dollars in federal funds to clients of lobbyist Bill Lowery, a former congressman who is so close to Mr. Lewis that they have exchanged two key staff members, “making their offices so intermingled that they seem to be extensions of each other.”

The question we have to ask in Hawaii is who is really going to benefit from all that federal money dedicated for “rail transit?”

There will be a rebroadcast of John Stossel’s Myths, Lies and Nasty Behavior tonight on ABC. The article on ABC lists some of the Myths and this one in particularly needs to be repeated. Most people think gas prices are higher than ever. John explains:

But the reality is that the “record high gas prices” are a myth. The U.S. Department of Energy records show that when you adjust for inflation the price of gas is now lower than it’s been for most of the twentieth century. Prices are lower now than they were 25 years ago. Yes, they price is up from the 1998 all time low of $1.19, but they are a dollar lower than they were in the early 1980s.

When I told this to people at the gas station they didn’t believe me. And why should they? The media keep telling us about the record high prices - they’re just not adjusting for inflation.

Gas is actually a bargain, not that you’ll hear that from most of the media.

This is just one of 10 Myths that Stossel covers. The article is interesting the TV show even more so.

Hat Tip: Out of Control

This Heritage Foundation report details the increase in federal spending from 1990 until 2005. The “federal spending by category” table has an astonishing fact. Federal spending on energy programs increased an unbelievable 29022 percent from 2001 to 2006 (projected.) It went from $9 million to $2.621 billion in just 5 years. The No Child Left Behind program was responsible for a 137 percent increase in spending for education for the same period. The long term trends in Entitlement Spending are just as astounding, and frightening.

The whole report is here (pdf.)

Economist John Rutledge, who is on the GRIH board of scholars, wrote on his blog the importance of updating our telecom laws to encourage investment before we get left behind. He makes the point again, as he has before, that the U.S. is not competing for jobs, it is competing for capital to invest in industries that create those jobs. Many of our laws are hampering that investment.

Inadequate investment in high-speed telecom networks undermines our competitiveness. For the past decade, policies in Washington have discouraged investment by undermining the return on capital invested in US telecom assets. During that time the US has gone from first place to 14th place among global economies in access to high-speed telecom networks. America’s eroding telecom position is quietly reducing our workers’ standard of living.

This is the reason why U.S. jobs are going overseas.

There is an intense global competition for capital underway. Workers in the U.S. aren’t competing with other states for jobs. Our workers and businesses are competing with China, India and Korea for the capital to build businesses. Jobs go where the businesses go. With fiber-optic connections, service jobs-from customer service in a call center to radiologists reading x-rays–can be done over fiber optic cable from anywhere in the world at the speed of light. China, India and Korea are taking steps every day to make themselves a destination resort for capital. They have made high-speed telecom a national priority. Ironically, it’s easier today to outsource work to companies in Beijing or Bangalore than to many small towns in America.

It’s time for policy makers in Washington and in state capitols around the country to wake up to the need for telecom reform. I was one of the authors of a study conducted by US Chamber of Commerce which showed a how simple but powerful reforms could add 330,000 jobs and nearly $600 billion in output.

Congress has the opportunity this year to abandon the misguided ideas that they have the ability to predict new technologies and that regulation encourages competition. By reforming telecom regulation, they will to encourage new investment, innovation, and jobs and would free businesses to do the capital spending they need to grow. This will do more to solve the problem of outsourcing than any form of protectionism.

Last July, Senator John Ensign (R-NV) introduced a highly deregulatory telecom bill that would encourage massive capital spending in the U.S. communications network. Within 48 hours, U.S. investors responded by pushing the market value of U.S. telecom equipment makers up by $22 billion. Opponents of reform say that we don’t need a new telecom law, arguing that FCC rulings are good enough. But investors will not commit capital based on the rulings of five political appointees. The duration of capital equipment is much longer than the duration of an FCC commissioner. We need a new telecom law to give investors enough visibility to risk their capital by building new networks.

Talking about change doesn’t make it happen. You have to change the rules. Congress should commit to making every law and regulation pass a simple litmus test: Will it bring capital into the U.S., or drive it out? This issue is not about Republicans or Democrats. It is about growth. It’s time for the U.S. to take a stand on growth, beginning with telecom reform.

Whole blog article here.

A story in the Honolulu Advertiser this morning revealed one of the major problems with ethanol.

E85 is a blend that’s 85 percent ethanol - alcohol usually made from Midwest corn - and 15 percent gasoline. . .

E85’s drawback is reduced fuel economy. For example, GM’s 2006 Chevrolet Impala sedan is rated 21 mpg in town, 31 on the highway using gasoline, but only 16 and 23 mpg on E85. Ethanol backers acknowledge that E85 must be sufficiently cheaper than gasoline to make up for the poorer mileage.

That is a 7.5 percent reduction in efficiency. So where is the savings? The price per gallon at the current rate would have to be at least 20 cents per gallon less in Hawaii to make up the difference. Does anyone really think “big oil” is going to reduce their prices by that amount simply because of the cheaper cost of ethanol? (And that cheaper cost is very much in question.)

Once again, what savings? Advertiser link here.

The plethora of tax increases passed last year wasn’t unique to Hawaii.

State taxpayer burdens increased by an average of 41 percent from 1994 to 2004, according to newly released data from the Census Bureau.

But this is the sentence that really caught my eye:

Hawaiians last year paid the most to state government - $3,050 per person on average.

Don’t you just love how Hawaii is always first in these things?

Whole article here.

Hat Tip: Out of Control

This is a classic case of unintended consequences. The downside of hybrid vehicles.