Surprise medical bills occur when patients have emergency or unscheduled services with out-of-network providers and the patients’ insurance companies decide not to pay the bills. The correct solution is for insurers to pay these bills if they are consistent with what other doctors are charging and being paid for out-of-network services. Insurers – led by Blue Cross Blue Shield – are pressuring Congress to outlaw all physician bills and allow them to pay a price of their choosing, the “in-network-rate” that they set. Such price controls would not only devastate doctors and hospitals, but also have profound and adverse consequences on the entire health care system.

 Part of the U.S. health care system already operates under price controls. The government imposes sharply reduced rates for the elderly and those less fortunate through Medicare and Medicaid. Doctors and hospitals can survive financially despite these price controls because of America’s robust private health insurance market. For-profit insurance companies pay at a higher rate. This is how providers survive. But why do for-profit insurance monopolies pay these higher rates? It’s to avoid surprise medical bills. Insurers offer doctors and hospitals higher rates than Medicare so that providers don’t reject their contracted rates and charge their usual and customary rates. And this is particularly true in emergency and unscheduled circumstances. This is how the health care market functions.

 If doctor and hospital usual charges are outlawed, and the insurer is allowed to pay whatever rates it chooses, these rates will quickly drop significantly towards Medicare rates. The federal and state governments would then have to step in to make up the difference in funding that would be lost from the private sector. This will require large tax increases. It would have all the downsides of a fully socialized system, without any of the benefits. The uninsured would remain uninsured. It would simply lead to big savings for private insurers, at the expense of everyone else.

Price controls can be effective in a modern democracy to ensure basic care for those in need. If every member of society is granted these same sharply discounted rates, however, it will lead to a system failure. Every college student can’t attend school on a big scholarship without massive government assistance. As such, every American can’t pay for medical services at sharply discounted rates – without a full and expensive takeover of the entire health care system by the government.

Minimizing Risk: Why Capping The West Lake Landfill Makes Sense

An Institute for Liberty Analytical Brief

Introduction:  The West Lake Landfill is a 200-acre landfill located in Bridgeton in St. Louis County, MO.  It is just northwest of St. Louis-Lambert International Airport, roughly 25 miles from the St. Louis “Gateway” Arch.  In the early 1970s, waste material from the Manhattan Project was illegally disposed of at the site, and in 1977, the Nuclear Regulatory Commission reported on that illegal dumping.  The site was proposed to be listed as a “Superfund” site under the Comprehensive Environmental Response, Compensation, Liability and Recovery Act in 1989 and was placed on CERCLA’s “National Priorities List” in 1990. 

Over the last quarter-century, jurisdiction for the project has remained under the Environmental Protection Agency (USEPA) who, acting under CERCLA, sought “potentially responsible parties” who would be liable for site-remediation costs and developed a plan to reduce risks associated with the site by “capping” the hazardous waste materials found there.

Though remediation efforts are, at long last, slated to commence.  A group of citizens is concerned about associated risks from leaving this waste on-site and wants to abandon this course of action, shifting responsibility for clean-up from USEPA to the US Army Corps of Engineers (USACE) under USACE’s “Formerly Utilized Sites Remedial Action Program” (FUSRAP).  USACE has several sites being remediated under FUSRAP in the St. Louis area, and given the length of time it took USACE to commence site remediation activities on these sites, shifting responsibility from USEPA to USACE will delay remediation for the West Lake Landfill for some time to come.

Risk Versus Risk

Whenever one deals with policymaking having to do with public health, safety, or the environment, one has to make choices regarding the risks associated with a variety of policy options.  When engaging in such an analysis, comparing these risk assessments is essential.  Here, we are talking about the comparative risks associated with leaving these waste materials in place (sealed in such a way as to fundamentally reduce the risk of exposure), or to have the materials excavated and transported to another facility.  This is a choice that decisionmakers have faced when dealing with other public health issues—in asbestos mitigation there is a serious debate over whether it is safer to leave asbestiform materials in situ when discovered, or whether exposure risk is exacerbated when airborne particles are created by asbestos removal.  Likewise, state officials have faced this issue when policymakers were debating whether to leave polychlorinated biphenyls (PCBs) buried under the silt of America’s rivers, or risk exposure by dredging them.

We believe that excavating the materials poses a far-greater risk to public health, for the following reasons:

• Excavating radioactive dirt creates potential harms to those doing the excavating;
• Excavating radioactive dirt raises the possibility of radioactive dust becoming airborne;
• If common dust-mitigation practices are used (ie,, keeping the dirt wet), the risk of leakage from waterborne radioactive dirt particles is massively increased;
• There is risk to general public health in the immediate area from loading these materials into transport vehicles;
• Transporting excavated material creates needless risks to the general public outside of the immediate landfill area, including but not limited to risk of exposure due to a vehicular accident during transport.

In contrast, keeping the waste capped and in leak-proof storage at the site eliminates all of these risks while keeping the risk to exposure to those near the West Lake Landfill to a minimum—lower, in fact, than those risks have been for some time and certainly lower than the risks that are faced should this matter be transferred out of the jurisdiction of the US EPA and placed under the auspices of the US Army Corps of Engineers—where the “clock” would start again as the Corps began formulating and evaluating options once again.

For these reasons, given our conversations with environmental science professionals, the Institute for Liberty continues to recommend that remediation of the West Lake Landfill should remain under the jurisdiction of the EPA, that sealing and capping this site is the right option, and that work on this remediation should commence immediately.  Delaying this work and transferring it out of the jurisdiction of the EPA would create needless risks.

A few months ago, Institute for Liberty joined a coalition of conservative groups expressing concerns with a proposal to restructure the nation’s air traffic control (ATC) system – a so-called “privatization” that actually creates a government sponsored enterprise resembling Amtrak or Fannie Mae. Early this year, we were joined by Americans for Tax Reform. All of us raised, among other concerns, the real danger that the proposal would weaken restrictions on the ATC union, including prohibitions on strikes and a mandatory retirement age nine years earlier than that of pilots.

We’ve been told repeatedly that this isn’t a union friendly proposal, or that the labor problems in the proposal will be “fixed”. But lo and behold, today Paul Rinaldi, president of the National Air Traffic Controllers Association (NATCA) – the union proponents claim won’t gain from the proposal – is the guest speaker at a webinar in support of the ATC proposal.

Did proponents of the ATC proposal forget to tell the union that they had nothing to gain? Or is the union just supporting the proposal out of pure altruism with no regard for its own self-interest? Or could it just possibly be that the ATC proposal is laden with goodies for organized labor, and that’s why NATCA is supporting it publicly?

Perhaps today’s webinar will shed more light on why organized labor is supporting a major restructuring of ATC that supposedly includes no benefit to organized labor.

Philly Soda Tax Breaks the Rules and Hurts the Poor

Mayor Jim Kenney (D-Philadelphia) has proposed a massive tax hike on the residents of his city. The soda tax, set at 3 cents an ounce, will be an added cost on top of the city’s existing 8 percent sales tax.  Today, a 67-ounce bottle of Coke is $1.99. Kenney's soda tax would add $2.01 to the price, more than doubling the cost.

Kenney says the tax will raise $400 million over five years to pay for a universal pre-K program. But, this is a cruel deception.   

The mayor’s proposal breaks all the rules on “Tax it or not” Situations:

1.       When you tax something more you get less of it.

2.       If X and Y are two locations, and if taxes are higher in X and lower in Y, consumers will have a greater incentive to shop in Y.

3.       Businesses don’t pay taxes. They pass the cost of all taxation onto their customers in the prices of the goods and services they sell

Imagine a scenario: Compare two states or two cities — one with a giant tax on beverages and one without. Then do your own calculation and analysis. The results should be apparent. States and cities with lower tax burdens always have higher and faster growing economies and personal incomes than in states or cities with rising tax burdens. For evidence, look at 1990s New York City. Under Rudy Giuliani New Yorkers' tax burden was reduced by nearly 20% – its lowest level in generations. Giuliani cut taxes 23 times, and the whole city benefited, from Wall Street to Main Street and from lower Manhattan to the Bronx.

Kenney’s tax on beverages is fundamentally unfair. First, the Kenney tax is regressive, betraying—for Democrats particularly—the sacrosanct principle of tax fairness. Mayor Kenney’s tax will disproportionately harm low-income individuals, as they spend a larger portion of their income on consumer goods like soda.

A soda tax will hurt Philly’s poorest families, and it won’t fund universal pre-K. Those who can will buy their beverages outside of the city’s limits. And, such arbitrary taxation will have businesses and jobs fleeing Philadelphia.

Kenney’s tax proposal is not a tax on Big Soda. It’s a tax on Philadelphia’s poorest residents.  

By Jerry Rogers, Vice President at the Institute for Liberty and Founder of Capitol Allies 

Rep. Scott Garrett (R-NJ) calls on his colleagues to reform the CFPB

Dodd-Frank effectively gave the Consumer Financial Protection Bureau (CFPB) unlimited regulatory power with little congressional oversight. The bureau’s budget is not subject to congressional appropriations—no power of the purse—because the Federal Reserve, not Congress, funds the agency. Given its independence from congressional scrutiny, the CFPB’s power to regulate is essentially a government license to destroy.

Dodd-Frank, however, specifically exempts auto lenders from the grasp of the unaccountable CFPB, but bureaucrats are going around the law and using lenders as agents of government to regulate auto dealers.

It’s time for Congress to reign in this rogue agency.

Global Economic Warfare at Center of Ag Committee Trade Hearing

The House Agriculture Committee held a hearing on October 20^th , the centerpoint of which was a discussion of the predatory cronyist practices of America’s global competitors.

In light of recent votes on Trade Promotion Authority, and the upcoming discussion of the Trans Pacific Partnership, Committee Chairman K. Michael Conway put together a program of representatives of a range of agricultural interests—with a very clear message:  nations around the world are actively subsidizing their farming sectors with the intention of subverting US firms, and while the TPP would help to open markets heretofore restricted to US goods, a central issue is this anti-competitive crony capitalism, which needs to be addressed by the World Trade Organization.

In his opening statement, Chairman Conway said, “in many cases what foreign countries are doing is patently illegal under their World Trade Organization commitments, while in other instances, foreign countries are extending support to their agricultural sectors in ways that fly below the radar of WTO discipline.  And still in other cases, we learned of countries getting a free pass to ignore WTO rules by declaring themselves “developing” despite these countries having very mature, strong, and in some cases globally dominant agricultural sectors.”

Unfortunately, free trade agreements are not the way to deal with these subsidies.  Jack Roney, Director of Economics and Policy Analysis with the American Sugar Alliance called this perhaps, ““the biggest flaw in the bilateral and regional approach.”

And concern was bi-partisan.  Ranking Democrat Collin Peterson said, “I don't think it's fair that developing countries, no matter how advanced, can designate themselves for special treatment…     I also think it's time for the United States to start challenging those countries that fail to meet their WTO commitments.”

All agreed, our competitors cannot flout the rules, and that cheating must be addressed.

Global Economic Warfare at Center of Ag Committee Trade Hearing

The House Agriculture Committee held a hearing on October 20^th , the centerpoint of which was a discussion of the predatory cronyist practices of America’s global competitors.

In light of recent votes on Trade Promotion Authority, and the upcoming discussion of the Trans Pacific Partnership, Committee Chairman K. Michael Conway put together a program of representatives of a range of agricultural interests—with a very clear message:  nations around the world are actively subsidizing their farming sectors with the intention of subverting US firms, and while the TPP would help to open markets heretofore restricted to US goods, a central issue is this anti-competitive crony capitalism, which needs to be addressed by the World Trade Organization.

In his opening statement, Chairman Conway said, “in many cases what foreign countries are doing is patently illegal under their World Trade Organization commitments, while in other instances, foreign countries are extending support to their agricultural sectors in ways that fly below the radar of WTO discipline.  And still in other cases, we learned of countries getting a free pass to ignore WTO rules by declaring themselves “developing” despite these countries having very mature, strong, and in some cases globally dominant agricultural sectors.”

Unfortunately, free trade agreements are not the way to deal with these subsidies.  Jack Roney, Director of Economics and Policy Analysis with the American Sugar Alliance called this perhaps, ““the biggest flaw in the bilateral and regional approach.”

And concern was bi-partisan.  Ranking Democrat Collin Peterson said, “I don't think it's fair that developing countries, no matter how advanced, can designate themselves for special treatment…     I also think it's time for the United States to start challenging those countries that fail to meet their WTO commitments.”

All agreed, our competitors cannot flout the rules, and that cheating must be addressed.

Why American Exceptionalism Matters When It Comes To the Internet

I’m not sure if it’s ever been said, but the Internet could not have come into existence without America.  I’m not just talking about DARPANet, and the investment of the American people (and the American government) over the course of many years in the development of the ‘net itself—but the very concept, a system where the open exchange of ideas and information can move at the speed of light (literally) is one that could only be born in an environment where such an open exchange of ideas is an essential element of the society.

Only America has that combination of open dialogue, entrepreneurship and perseverance that could make an invention like the internet happen—other nations may have elements, but not all of them or to the same degree.  The ‘net could not have come out of any nation in Europe—and certainly not out of China or Japan.

Which is why the move to turn over one of the internet’s core functions, domain name functions, to some sort of international body, is so distressing.  Don’t get me wrong—there are times and places for international cooperation (even control) of a variety of trans-border policy issues, but the move by the National Telecommunications and Information Administration to try and relinquish oversight of a “national IT asset” like the “root zone file” (funded by the American taxpayer and created by the US Department of Defense) is a fundamentally bad idea.

There’s a letter from Senators Grassley and Cruz, and US Representatives Goodlatte and Issa HERE, but the thing to keep in mind is why this is important over the long term.

No other nation, not a single one, has the respect for the transfer of information that we do.  Even the most classically liberal nations, the ones from which we derive our concepts of American civil liberties, do not have the respect for both the protection of speech, while at the same time the respect for the entrepreneurial spirit that drives online innovation. 

And these are the nations that stand on the side of freedom—once the US relinquishes control, nations that have little or no respect for these principles now also have a say in management of the internet.  This can only create massive problems down the road.

Control of the Internet’s core functions should (and must) remain in and with the United States.  Our exceptional nature has made our control both judicious and innovative, and there is no reason to change that anytime soon.

Hartford, Connecticut — April 1, 2015 – Today, the Institute for Liberty (IFL) has initiated a campaign in the State of Connecticut to bring attention to the actions of the State of Connecticut against the sovereignty of Native American tribes throughout the country. This multi-faceted campaign is meant to educate the people of Connecticut through billboards, mail and grassroots activities about the actions of their government officials and the effect those actions have on our nation’s native people.

Over the last six months, the State of Connecticut’s Department of Banking, under the leadership of former Commissioner Howard Pitkin and General Counsel Bruce Adams, has tested the bounds of its legal authority by attacking the tribal sovereignty of a Northern Oklahoma tribe, by preventing them from offering online financial services to Connecticut residents. The Institute for Liberty is dedicated to preserving liberty for all, and that includes living up to our nation’s century’s-old commitments to Native American tribes.  

“This attack doesn’t just threaten this one tribe.  It threatens all of them.  What Connecticut is trying to do is to ignore hundreds of years of legal precedent and threatening the basic human rights of tribal people—rights guaranteed by our Constitution,” said Andrew Langer, President of the Institute for Liberty. “This is racial discrimination plain and simple against a people who have been attacked repeatedly as they have tried to provide for the needs of their own people through a range of innovative financial products and services. It is emblematic of the historic treatment of Native American tribes by the federal government.  Telling them they cannot work to provide for themselves, to make their lives better, is an illegal act against these tribes and state regulators must stop this attack on Indian country.”

The campaign will charge that Governor Malloy’s administration is blindly advancing President Obama’s controversial attack on short-term lenders across the country.  A prominent Indian tribal leader has already filed a personal civil rights lawsuit against the State of Connecticut and tribal entities have filed an appeal against the Banking Department’s determination.

IFL is an aggressive defender of the rights of individuals to pursue the American dream.  They inject the perspective of small businesses, and the working families that depend on them, into the public policy debate.  IFL’s President, Andrew Langer, has been a vocal critic of the federal government’s dishonest and unethical dealings with Native American tribes for many years.

For more, please visit: NativeKidsFirst.com

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Institute for Liberty condemns members of the press who aided a progressive, anti short-term lending organization

WASHINGTON, D.C. — SEPTEMBER 23, 2014 – Today the Institute for Liberty’s President Andrew Langer released the following statement in response to reports that four journalists cooperated with the progressive Consumer for Responsible Lending in crafting messaging.

“I am outraged and disgusted that these so-called 'objective' journalists from some of the most-respected news organizations around the world would participate in an event that explicitly pushed a political agenda. This conference on September 12, sponsored by the left-wing advocacy group Center for Responsible Lending, focused on ‘messaging’ that organization's narrow vision of bank reform, and their ultimate goal of destroying the for-profit short-term lending industry. Reporters who participated in the off-the-record, behind-closed-doors session were: Danielle Douglas of The Washington Post, Alan Zibel of The Wall Street Journal, Kate Davidson of Politico, and Rachel Witkowski of The American Banker.

The Society of Professional Journalists in their Code of Ethics warns against the creation of conflicts of interest that reporters can face, and, in our view, crossing the line from objective reporting to outright advocacy breaches that code.

We call on the Ombudsmen from Politico, The Washington Post, The Wall Street Journal, and The American Banker to investigate the respective reporters’ participation and review their outlet’s ethics rules about speaking at such an overtly political and advocacy-focused conference. We suspect that these reporters were invited to speak as they have all written on this issue before, mostly with a slanted view of the left’s narrative to shut down perfectly legitimate industries, like the short-term loan industry, through Operation Choke Point. Do they know that CRL and its leader, Martin Eakes, receive millions of taxpayer dollars in government funding to offer an alternative to payday and short-term lending?

The hallmark – the lifeblood – of any free society is an independent and objective press. The idea that journalists are allowing themselves to be co-opted by government-funded organizations to push that pro-government agenda smacks of propagandizing – the very kind of propagandizing that kills liberty and destroys free societies."

IFL is an aggressive defender of the rights of individuals to pursue the American dream. They inject the perspective of small businesses, and the working families that depend on them, into the public policy debate.

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CFPB Field Hearing Ignores Consumer Complaints
Institute for Liberty condemns consumer bureau’s ignoring of its own complaints

 EL PASO, TEXAS — JULY 17, 2014 – Today the Institute for Liberty’s President Andrew Langer at the CFPB Field Hearing for consumer complaints in El Paso, TX, released the following statement in response to the agency’s rogue policies, which are devastating consumers and obstructing America’s economic future:

 “The CFPB held a field hearing on an enhanced program for collecting consumer complaints against free-market industries, but continues to ignores and sometimes silence, complaints against its own activities. The CFPB has proven repeatedly that they are a rogue agency, interested only in political maneuvers and aggregating bureaucratic power, while they turn a blind eye to the consumer-stifling effects of their behavior. Instead of using consumers as pawns to promote their own political agenda, the CFPB should be listening to the multitudes of consumer voices that have been for months crying out against the agency’s abuses of power.

The CFPB’s own house is not in order. The agency has proved its own internal chaos by perpetuating a racist work environment, proposing extravagant budgets for a new agency building, and unconstitutionally collecting mass quantities of consumer financial data. The CFPB has even secretly payed audience members to attend filed hearings in order to fabricate an illusion of public support for the agency. 

The most egregious complaint against the Bureau is the existence of rampant racial discrimination at the Bureau. After being reported by a staff whistle blower, Director Cordray is alleged to have tried silence her testimony and Democrats on the Hill have tried to prevent Congressional hearings on the matter. The CFPB’s reckless catalogue of behavior must end immediately if America is to regain individual liberty and hope for economic prosperity for future generations. The CFPB must listen to the voices of consumers and end its attack on our freedom.”

Recently, Americans have witnessed the utter disregard for the Rule of Law Attorney General Eric Holder has displayed with regards to the IRS scandal. Instead of appointing an independent special prosecutor, the Attorney General continues his hyper-partisan cover-ups of the Obama Administration. And it is not the first time he's done so.

Two years ago Eric Holder was held civilly and criminally in contempt by the United States Congress for stonewalling and withholding release of important documents related to the failed "Fast and Furious" program that resulted in the loss of innocent lives. It was the first time in American history that a member of the President's cabinet was held in contempt in a bipartisan vote at the House of Representatives. Furthermore, the Attorney General is behind the targeting of law-abiding free-market industries under the "Operation Choke Point" probe we've highlighted before. A probe that circumvents Congress, is undoubtedly extralegal, and punishes private industries the Administration does not like.

It is evident that Eric Holder is the most partisan Attorney General in American history. His extreme disregard to upholding the laws and his advancement of a far-Left agenda has greatly damaged the American system. For these reasons, we are advocating for Eric Holder's impeachment.

You can join our efforts by following us on Twitter and using the hashtag: #ImpeachHolder

It's time we push back and defend America's right to be free!

None of us like taxes, but for one of the largest U.S. companies to use schemes and tactics to protect its income from the IRS is unpatriotic, and in the case of Apple, it led to a significant shortfall in government revenues.  Even the most conservative estimates of what Apple sheltered would have brought billions to federal coffers – money that could’ve saved many health and safety programs from Sequester’s chopping block.  Programs like early childhood education through Head Start, public housing support, and health research at NIH all are victims of The Apple Sequester.

Apple is saying that they didn’t skirt the law – and that what they did was within the letter of the law.  Even if that’s true, their actions are profoundly un-American and especially insulting since millions of Americans support their company.

Interesting article from Tom Foremski over at ZDNET late last week...  

Hundreds of thousands of small businesses use Google affiliate marketing as a way of increasing their revenue (and finding ways to generate traffic to their own websites).  After all, in this day and age, it's tough enough to be a small business owner, given the impacts of a massive government (at all levels) sitting on your chest.

So these businesses enter into an agreement with Google - help us get traffic, and we'll help your customers do business.  In an honest and transparent world, this is a win-win.

But according to Foremski, something isn't entirely kosher here.  Foremski proffers the theory that Google is cutting its affiliates out of the loop, making itself the primary affiliate to drive traffic to its largest partners.  Thus, they don't have to pay any shared revenue to the small businesses who have entered into these agreements.  These websites don't get the traffic, and they don't get their expected share of the pie.

It's bad enough when the big boys team up with big government (and big labor, I might add) to set things up so that they're tilted to protect the territory of those "who got".  But to do this and renege on a promise made, and to do it in what appears to be an underhanded way?  It's just god awful.

It's rough out there for small businesses already, Google.  They don't need your chicanery to add to it!

Last May, I wrote about the need to combat rogue websites—websites that offer counterfeit and pirated products – and commended Senators Leahy, Grassley, and Hatch as well as the entire Senate Judiciary Committee for their unanimous support of the PROTECT IP Act.This bipartisan legislation now enjoys the support of 43 state Attorneys General, the Conference of Mayors, a coalition of over 360 companies, trade associations, and labor groups. These groups all recognize that enhanced enforcement tools would help protect American consumers and workers from these blatant thieves hiding behind rogue websites.

However, the legislation has also faced numerous blatantly unfounded allegations. The fact is that according to our Constitution, we all are entitled to our property, including our intellectual property. And the government has a fundamental responsibility to protect its citizens from theft and harm beyond our borders. That is why rogue sites legislation like PROTECT IP Act is needed. Every marketplace needs rules to protect people from fraud and theft, but no one wants those rules to be overbearing. And PROTECT IP Act strikes the right balance.

Here’s how you can help get this bill to the finish line:

• WRITE: Tell your public officials that we cannot let rogue sites undermine U.S. innovation, consumers, and the online ecosystem.
• JOIN: Join the conversation online to learn more about latest happenings on rogue sites legislation. [link to facebook]
• SHARE: Know of someone who suffers from online counterfeiting and piracy? Share the call for rogue sites legislation with them and recruit them to join the coalition against counterfeiting and piracy!
• LEARN: Check out www.fightonlinetheft.com to learn the latest on the fight against rogue sites.

The online thieves are stealing our products, our ideas, our property. Why should we tolerate their criminal activity? Support rogue sites legislation today!

Yesterday, Sen. Mike Lee (R-UT) spent a considerable amount of time delving deeply into Google’s operations.  Google Executive Chairman Eric Schmidt said that the company has “learned the Microsoft lesson,” but one wonders which lesson Schmidt was referring to?

You see, this isn’t the first time that Google and Microsoft have butted heads—in fact, what Sen. Lee is unraveling is that Google is learning from its years of experience trying to topple Microsoft from its hard-earned place as “king of the mountain”.

It would be one thing if Schmidt were one of Google’s founders—one of the entrepreneurs who had turned a simple dream into a marketplace juggernaut (like so many other tech companies, Microsoft and Apple included).  While Schmidt has a long history in the world of corporate high-tech, he also has a history of using government power to the advantage of his employers, and to the detriment of his competitors—he was one of the men feeding information to the Clinton-era Justice Department that eventually led to the Federal Government filing suit against Microsoft! 

You read that correctly—while Schmidt was working for Sun Microsystems and Novell, two of Microsoft’s most-earnest competitors, he was trying to convince the Feds that they ought to investigate Microsoft, actions which would cost that company billions and could serve to immeasurably benefit Sun and Novell.

So while Schmidt claims that Google has learned the “antitrust lessons” of Microsoft’s well-earned rise to prominence, it begs the question:  is he talking about side-stepping the landmines of what some might consider to be monopolistic behavior?  Or is he talking about learning from his own tactical errors during his decade of leadership at Google?

Make no mistake about it—Schmidt’s envy of Microsoft is well-placed.  He wants to build a venture that ultimately supplants it.  He has wanted to do so since before his days at Google.  But by steering Google today, he has built a tool powerful enough to do so.   Google can undercut Microsoft by offering freebies that go after their business model: from office software to information access.

Sure, Schmidt learned the lessons from Microsoft’s antitrust battle.  Because he was one of the forces behind it.

One of the best things about the new climate in Washington is that people really understand the importance of transparency.  When it comes to Google's work at trying to topple Microsoft, such sunshine is sorely needed, and we ought to be applauding folks like Sen. Lee for taking on this unenviable task!

On September 29, 2001, I wrote the following essay.  It was entitled, "Why We Fight" and was, essentially, a declaration as to why we were going to war in Afghanistan following the September 11th Attacks.  It was a response to a growing anti-war sentiment from the extreme American left, and written to be spoken at a counter-protest in DC.  I was reminded of it when someone tweeted, "I guess war WAS the answer..."

Why We Fight

By Andrew Langer 

America is starting to heal.  There can be no doubt about that fact—Americans are healing.  But America is not healed, and cannot be completely healed until those who have perpetrated the heinous acts of violence are brought to justice, and the threat of additional acts of terror has been alleviated. 

But there are those who are seizing upon this time of healing and are attempting to hijack the potential for justice, and the alleviation of that threat.  While some of these are well-intentioned, the calls ignore the basic reality that we are in a state of war.  Whether we like it or not, we have enemies who have sworn to destroy the very fabric of American life. 

These people believe that violence is “not the answer”, but these individuals ignore that for some people, rationality simply does not work—which is why those people commit violent acts.  Just as sometimes one needs to physically restrain a crazed person, so must we physically restrain those who would commit these acts, so that they cannot do them in the future.

Why We Fight

We cannot let these individuals destroy the greatest nation on Earth.  America is not a perfect place.  It has not acted perfectly either here or abroad.  But it has done far better than any nation on Earth in promoting prosperity, individual rights, and freedom.  Among the freedoms that are championed in the United States is the right of an individual to be secure in his person and possessions.

On September 11th that right was violated.  The heightened sense of terror and lack of general safety is a constant reminder that right continues to be violated by those who committed this act.

For this reason we fight.

Why We Fight

There are those who believe that there are legal remedies at hand, that if we simply bring Osama Bin Laden to trial, all will be over.

But after the 1993 bombing of the World Trade Center, when we were able to catch and prosecute the perpetrators of THAT heinous act, Bin Laden continued to commit acts of terrorism worldwide.  In other words, the diplomatic and legal solution did not work.  These individuals laughed at our response, and became ever-more audacious in their planning.

We must strike the fear of Allah into individuals that commit these acts, and let them know that their deeds will not go unpunished, either on Earth or in the hereafter.  We must make the consequences of these actions so dire that the very thought of their commission will be repugnant to those who might be considering them.

For this reason we fight.

Why We Fight

America has been a friend to many nations, and among these nations are Tanzania and Kenya.  In 1998, Osama Bin Laden committed an act of war, not only against the United States, but against these nations as well, when he bombed the United States Embassies in Dar Es Salaam and Nairobi.  Certainly, such a violation of diplomatic relations is an egregious act of war against America, but the death of Tanzanians and Kenyans also represents an act of war against those nations as well.

The rights of Americans, Tanzanians, and Kenyans were violated.  International laws were broken, and no contrition was made for those violations.

For those reasons we fight.

Why We Fight

Nobody disputes that when military targets are attacked, an act of war is committed.  Last year, a ship of the United States Navy, the U.S.S. Cole, was attacked in the port of Aden, Yemen.  American sailors were killed in this attack, and scores were wounded.

We did not succeed in putting a stop to the war with that response.

For this reason, we fight.

Why We Fight

The United States has long been recognized as the protector of the innocent, the weak, and others who simply cannot defend themselves.  No where is this true than with the innocents in Afghanistan, who find themselves under the crushing thumb of the Taliban regime.  Freedom is denied, non-islamic religions are not tolerated, and the basic wants and needs of the populace are in no way met.

That the Taliban supports someone like Osama Bin Laden is no surprise.  Nor is it a surprise that Bin Laden considers the Taliban’s regime to be a place that he can call home.

When one offers aid to criminals, then they, too, are criminals.  The Taliban are more than complicit in Bin Laden’s campaign of terror.

We must make it clear that abetting such evil, providing a sanctuary and homeland for it, will not be tolerated by the civilized world.  We must make it clear that the denial of individual rights by those who so abet such criminal acts will not be tolerated by the civilized world.  We must make it clear that people will not be oppressed, worldwide.

For this reason, we fight.

Why We Fight

There are those who believe that a diplomatic solution can be had to this problem. But consider just how little regard these people held for international law:

They didn't work through international channels to seek change.  They aren't lobbying the United Nations.  They aren't lobbying the United States Congress. They aren't trying to meet with representative of the United States Department of State (either here or abroad).  They aren't working through international agencies.  They aren't working with non-governmental organizations.

No.  They put together cells of individuals.  Cells of individuals who visited American pilot training schools to learn, not take-offs or landings, but how to maneuver a plane once in flight.  They continued to plan (for years, apparently), and one day they walked onto airplanes, armed and ready.  Calculatedly they waited for the planes to take off.  They then took over the planes, presumably by disposing of the crew.

And then they flew those planes into pre-determined targets - including a calculated maneuver in which they would guarantee that the media (and thus the world) would be watching as they crashed into WTC Tower #2.

They took advantage of America's open arms, America's hospitality, America's freedoms.

For this reason we fight.

Why We Fight

We live in a society which, at its core, believes in the mutual respect of other human beings.  All of our laws stem from that precept.  But when someone invades our nation, violates those precepts, and stands mocking us afterwards, action must be taken.

We have no choice.  We didn’t seek out this war, it came to us.  It came to us in the most cruel and horrifying manner.

And to put a stop to it, we must neutralize the threat.

For this reason, and all of the reasons above it, we fight.

Palm Oil "Nuts" in a cart in a plantation near Quepos, Costa Rica

We went to Costa Rica for a variety of reasons.  Visiting an Oil Palm plantation wasn't one of them.  But on a trip through the village of Quepos, we were brought to such a plantation--and my eyes were opened.

Palm oil, both the product and its production, have gotten a bad rap in some circles.  Health advocates question its use in food-products, and environmentalists show disdain (as they do for most things) with any sort of large-scale agricultural environment, which, in the case of oil palms, they term as "monoculture".

Our guide, Antony, was proud of this plantation--which had taken over what had formerly been a banana farm until Costa Rica's domestic banana industry collapsed late in the last century.  That collapse, obviously, had decimated local economies all over Costa Rica, and locals not involved in the tourist trade were deeply interested in having something come in and take its place.  Enter the oil palm, a crop perfect for this region.  Oil palms grow quickly, and offer their fruit after only 3 years, and continue to produce over the course of 3 decades!  Their fruits are used not only for human and animal foodstuffs and cosmetic products, but also in renewable energies like biodiesel.

These plantations also provide habitat for local species.  Far from keeping them out of the "monoculture", we saw birds and other animals thriving in this plantation.  For people interested in ensuring that there is a healthy, cooperative relationship between global trade, local prosperity, "green energy" demands, and species conservation, oil palm farming seems to fit perfectly.

Oh, and they're spectacularly beautiful as well!

    A shot of an oil palm from our vehicle.  

      On a bluff overlooking the cooperative plantation.

  A sea of green products, habitat, and energy!               

 To the extent that it is run by anyone, the Tea Party movement is--like all great social movements--largely run by women.
     Many of the movement’s most important political figures, like former Alaska Gov. Sarah Palin and Minnesota GOP Rep. Michele Bachmann, are women. Many of its important writers, bloggers, and commentators--like S.E. Cupp, Dana Loesch, Kathleen McKinley, and Michelle Moore--are women. And you are more likely than not going to see a woman like Jenny Beth Martin of the Tea Party Patriots, Amy Kremer of the Tea Party Express, or FreedomWorks’ Tabitha Hale out front leading rallies, organizing activists, and driving the point home that the American people are fed up with the government in Washington. [See who contributes to Bachmann.]
     In point of fact, the number of women holding visible, important, leading roles in the Tea Party movement are too numerous to list here or anywhere. But they are all part of an important social movement, one that filmmakers David Bossie and Stephen K. Bannon examine closely in their sure-to-be-controversial documentary Fire From the Heartland: The Awakening of the Conservative Woman.
     Drawing a line from the pioneer women who settled the frontier straight to the modern era, Bossie and Bannon respectfully--one hesitates to use any of the warm words like “lovingly” here--show how they and their contemporaries are changing America, by working to restore that which has been lost and preserve what is still best about America, particularly its grounding in the idea of liberty.
Continue reading...The Tea Party Movement is a Women's Movement

 A recent Andrew Breitbart’s Big Government article has provided even more sordid details of a story we’ve been covering about a liberal agenda revealed.  It seems that many far left factions with a little help from the New York Times are going to great lengths to misrepresent taxes paid by American oil companies.  These extreme groups have formed a circle of collusion that is evidently more concerned with pushing liberal policies than stating the facts.  Their attacks claim that energy companies are dodging taxes through subsidies and loop holes.  This deceiving conclusion comes in the form of a Times article that as Big Government points out:

 “appears to have been heavily edited by a cadre of left leaning groups, including ACORN President Maude Hurd, Citizens for Tax Justice, Center for American Progress and the Clean Energy Works campaign.”

 The Times article falsely asserted that oil companies are heavily subsidized and given massive tax breaks.  To prove the story was riddled was inaccuracies IFL even posted counterpoints to each argument in a post “IFL Responds to Clean Energy Works AND The New York Times.”  The liberal agenda behind this all first came to light in a leaked Clean Energy Works memo by David Di Martino.  At a time when our country is trying to create jobs and recover from an economic recession it seems particularly disheartening that liberal groups are trying to tear down American businesses.  Hopefully the public and those in Washington will continue to watch as this story unravels.

The classic superhero, a mysterious person of the night, who anonymously swoops in to save the day without expectation of credit or monetary gain, has time and again captured the American imagination. The BP spill disaster has proved an opportunity for one such citizen to properly assess the situation and help solve the problem without anyone discovering his true identity. Unfortunately, more often than not, when persons are involved in a situation they do not fully understand, they do not act as a problem solver but a problem maker.

 Over six weeks ago, Cal-Berkeley Professor Robert Bea received an anonymous call from a mystery plumber late one night who had designed a containment cap he felt could control the gushing well. Bea saw the potential of the cap, which utilized on a larger scale the same techniques plumbers use when repairing leaky pipes, and forwarded it to the US Coast Guard. More than a month later, a similar containment cap was put in place, and has successfully capped the main gusher. In this unique circumstance, someone without any oil expertise was able to assist in problem solving however this is a rare circumstance considering the complexity of offshore drilling.

 President Obama has appointed a commission to look into the causes of the oil spill and provide recommendations for the future of drilling off the coasts of the United States. While this momentous task may not have the tabloid appeal of the late night plumber, the conclusions of this commission will shape future offshore drilling endeavors, acting to enhance or hinder safety and risk management. Boring holes into underground reservoirs buried miles underwater requires technical specificity the likes of which NASA has used to travel to the moon. Engineers and experts need difficult degrees and years of experience before being trusted to carefully plan and complete well operations. Unfortunately, the Administration’s commission does not demonstrate a respect for the difficulty of deep sea drilling, relying instead on politicians and environmentalists with no prior drilling experience.

 Though it is a savvy DC political move to appoint a commissions whose conclusion is predetermined by its membership, in this case it could backfire. Due to the complexity of deep sea drilling and exploration, and the rapid advancement in technology and procedure, often work on an oil rig involves quick reactions, as opposed to rigorous predetermined regulations that would act to bind the hands of the crew. If the oil commission lays out a static set of procedures and technologies for drilling, advancements in safety and risk control would come to a halt. Furthermore, on an oil rig where flexibility is necessary when facing a difficult set of circumstances, regulations could act as an impediment and increase the risk of disaster. 

 Experienced offshore engineers are aware of the necessity of flexibility mixed with rigorous safety requirements on a rig, but how could an environmental lawyer, a former governor, or a physics engineer know about day to day operations on an offshore rig. Not one person on the president’s oil commission has any experience in the offshore industry.

 The majority of offshore drillers follow a rigorous set of industry standards. From the initial reports, it appears that BP habitually ignored best practices in order to cut costs. Punishing an entire industry that has had a near spotless drilling record in the last 40 years for the reckless behavior of one company is overkill. More likely, this disaster that has caused so much pain for our Southern shore is being used for political purposes by those who naively want to eliminate drilling. Unfortunately, the anti-fossil fuel crowd is sorely out of touch with reality. Clean and renewable technologies are nowhere near a point where they could replace oil, natural gas, and coal. Even environmentalists would acknowledge that the transition would take at least 40 years, and even then these vital natural resources would be an important part of the energy mix. If we were to eliminate drilling off our shores, we would see increased reliance on foreign oil, lost jobs, a shrinking economy, and a drop in the standard of living here at home.  

 As the president’s unqualified commission proceeds with the investigation, let’s hope that it can take on a problem solving role as opposed to one of problem making. We need oil and gas for years to come, and we need to extract it safely. Adding onerous regulations that threaten this safety would be disastrous, yet are a real threat as a result of the inexperienced commission chosen by the White House. While the press certainly appreciates an unlikely hero during a crisis, the future safety and success of the U.S. energy industry demands the expertise of those with real technical expertise and veteran experience.

In a memo recently cited by E&E news, communications firm CEW (which appears at the bottom of this post, and can also be found HERE) outlines the possible method of using the New York Times as a centerpiece of a “tactical campaign” to reframe proposed tax increases on American consumers as “The Big Oil Welfare Tax”.  This is a left wing campaign strategy to use the New York Times as a tool to push a liberal agenda that would increase taxes on energy companies and consumers.  An actual article in the New York Times seems to be one example of this strategy in action.  The article is riddled with inaccuracies and misrepresentations that are easily spotted by anyone with a basic understanding or background in tax policy.  To understand the full level of the recent articles deception we have included counterpoints (below) to all the flawed and false statements.  The plain text is the actual NY Times article while the italicized, bolded, and color-coded sections are the counterpoints containing the facts.   This type of dishonesty seems to be an ongoing pattern with the far left and provides yet another black eye to the credibility of the Times.    

As Oil Industry Fights a Tax, It Reaps Billions From Subsidies

By David Kocieniewski

July 4, 2010

The New York Times

Copyright 2010 The New York Times Company. All Rights Reserved.

When the Deepwater Horizon drilling platform set off the worst oil spill at sea in American history, it was flying the flag of the Marshall Islands. Registering there allowed the rig’s owner to significantly reduce its American taxes.

The owner, Transocean, moved its corporate headquarters from Houston to the Cayman Islands in 1999 and then to Switzerland in 2008, maneuvers that also helped it avoid taxes.

The United States taxes the worldwide income earned by its residents. Most other countries only subject income earned within their borders to their income taxes.  For companies like Transocean, with worldwide operations and major competitors based in countries that do not tax outside their borders, this was likely a matter of survival if Transocean were to be able to compete for non-US projects.  For projects undertaken in the United States, companies based outside the US and companies in the US are generally taxed the same, so it was unlikely a strategy motivated by reducing US taxes on work done in the US, including the Gulf of Mexico. 

The issue this raises is the uncompetitive state of the US tax law when applied to income earned completely outside the country.  Rather than trying to level the playing field and keep US companies in the US, surprisingly the current proposals of the Obama Administration would actually make this even worse--likely prompting the US to lose even more companies, have them bought out by foreign investors (e.g. the loss of Anheuser Busch) or have their foreign operations acquired by foreigners, all of which result in the loss of US jobs.  

At the same time, BP was reaping sizable tax benefits from leasing the rig. According to a letter sent in June to the Senate Finance Committee, the company used a tax break for the oil industry to write off 70 percent of the rent for Deepwater Horizon — a deduction of more than $225,000 a day since the lease began.

Business income earned in the US is subject to a 35% net income tax.  The tax is due on all income in excess of the costs incurred in earning that income. These are the rules that apply to all businesses.

In drilling the well in the Gulf, BP hired the drilling rig and paid a daily rental expense.  That expense, just like when a computer company rents office space, a restaurant rents its building, or a construction company rents equipment, is "deductible" in determining BP's net income in the US. (Note that the rent paid by BP was US income to the drilling rig operator and immediately included in its US tax return)  The term "write off" as used in this article is the way the New York Times has chosen to describe the normal deduction of costs under our net income tax.  Note that BP was only allowed to deduct 70% of these costs as spent, and the remaining 30% are deductible over a period of years.  So, as compared with many businesses that can deduct 100% of similar costs as incurred, the oil industry must defer the deductibility of some of these costs. Not exactly a subsidy compared to how other industries are treated. 

With federal officials now considering a new tax on petroleum production to pay for the cleanup, the industry is fighting the measure, warning that it will lead to job losses and higher gasoline prices, as well as an increased dependence on foreign oil.

BP has committed to pay for the cleanup, and has agreed to put into escrow $20 billion. If more is needed, they have committed to pay that.  Further, an oil spill tax already is in place, and proposals to raise this tax to over 600% of the current tax, have not been opposed by industry.  The total taxes to be collected over the next decade would be well over $20 billion.  In addition to this, the Administration has proposed numerous other increases in the taxation of oil and gas in the United States, and it is understandable that increasing such taxes is not something that the industry would favor.  

But an examination of the American tax code indicates that oil production is among the most heavily subsidized businesses, with tax breaks available at virtually every stage of the exploration and extraction process.

This is an absolute fallacy, but it doesn't deter people from making the assertion.  In fact, the Center for American Progress, quoted later in this article, notes that the total amount of "tax subsidies" in the tax code amount to almost $1.1 trillion per year.  Of this amount, the "tax subsidies" related to oil and gas are around one third of one percent--or just under $4 billion.  And when we use the term "subsidies", we certainly use it "loosely".  The main items that make up the so-called oil and gas subsidies fall into three categories: 

(1) Deductibility of drilling costs, mostly labor and rentals like the drilling rig mentioned above.  No one disputes that these costs are deductible, and the only issue is the timing of the deductibility--hardly what most people would regard as a "subsidy". 

(2) The deduction for "domestic production activities", enacted in the 2004 Jobs Bill and designed to give all domestic producers and manufacturers, of all kinds, a deduction to promote jobs in the domestic producing an manufacturing sectors.  This applies to coal, iron, all other mineral production, farming, manufacturing, construction, architectural services, computer software, and even the grinding of coffee beans at the local coffee shop and the cutting of keys at the department store.  In fact, oil and gas production activities only get two thirds of the level of the deduction that all others get.  Somehow this is described as a "subsidy" to oil and gas, when in reality it is a penalty over all others.  You will note that later in the article Senator Menendez refers only to the "manufacturing" part of this, but the law itself clearly describes this as the deduction for "domestic production activities", and includes manufacturing in that definition.

(3) Percentage depletion deduction for oil and gas properties.  This is a method of calculating the deductible costs in determining net income from oil and gas activities.  It applies to all other mining and mineral activities as well.  But, for oil and gas, and again only for oil and gas, it is severely limited. First it is limited to independent companies and to royalty owners.  Integrated oil and gas companies, such as those generally referred to as Big Oil ( ExxonMobil, ConocoPhillips, Chevron, Marathon, etc.), do not even qualify for it at all.  For those that do qualify, it is further limited to the equivalent of 1000 barrels per day of production.  No other mineral production is limited in such a way.  So again, to describe this as a "subsidy" to oil and gas, when it is more limited than for any other mineral producing industry, is outright wrong.

According to the Joint Committee on Taxation in its Tax Expenditures Report for 2009-2013, oil and gas "tax expenditures" amount to under $4 billion per year, but subsidies and expenditures for renewables amounted to over three times that amount per year.  And amounts committed to renewables and energy efficiency provisions in the six month period at the end of 2008 and early 2009 under stimulus provisions amount to over 25 years worth of the 2008 oil and gas amounts.

According to the most recent study by the Congressional Budget Office, released in 2005, capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry.

This is a very arbitrary calculation that seeks to look at the costs of making an incremental capital investment, and is hardly a description of the tax rate paid by the industry on its profits.  Under this same study, homeowners are said to face negative tax rates.  Try telling a hardworking homeowner who pays taxes that he really is facing a negative tax rate. 

And for many small and midsize oil companies, the tax on capital investments is so low that it is more than eliminated by various credits. These companies’ returns on those investments are often higher after taxes than before.

Again, the same highly artificial calculation. 

“The flow of revenues to oil companies is like the gusher at the bottom of the Gulf of Mexico: heavy and constant,” said Senator Robert Menendez, Democrat of New Jersey, who has worked alongside the Obama administration on a bill that would cut $20 billion in oil industry tax breaks over the next decade. “There is no reason for these corporations to shortchange the American taxpayer.”

These companies are hardly "shortchanging" the American taxpayer, and the Senator knows better.  The amount of taxes paid by oil and gas companies is staggering, and as noted above, the so-called "subsidies" are far from special subsidies at all.  This is simply a way of using language to disguise what is a simple tax increase on the domestic oil and gas industry, one of the few industries that, even through the recession, has contributed large amounts of revenue to the federal, state, and local governments. 

Oil industry officials say that the tax breaks, which average about $4 billion a year according to various government reports, are a bargain for taxpayers. By helping producers weather market fluctuations and invest in technology, tax incentives are supporting an industry that the officials say provides 9.2 million jobs.

"Tax breaks" is hardly how oil industry officials would describe these rules.  But it is clear that increasing the costs of doing business in the United States by raising the tax rates on the industry will not help maintain or increase job growth--quite the opposite.  

The American Petroleum Institute, an industry advocacy group, argues that even with subsidies, oil producers paid or incurred $280 billion in American income taxes from 2006 to 2008, and pay a higher percentage of their earnings in taxes than most other American corporations.

As oil continues to spread across the Gulf of Mexico, however, the industry is being forced to defend tax breaks that some say are being abused or are outdated.

The Senate Finance Committee on Wednesday announced that it was investigating whether Transocean had exploited tax laws by moving overseas to avoid paying taxes in the United States. Efforts to curtail the tax breaks are likely to face fierce opposition in Congress; the oil and natural gas industry has spent $340 million on lobbyists since 2008, according to the nonpartisan Center for Responsive Politics, which monitors political spending.

Jack N. Gerard, president of the American Petroleum Institute, warns that any cut in subsidies will cost jobs.

“These companies evaluate costs, risks and opportunities across the globe,” he said. “So if the U.S. makes changes in the tax code that discourage drilling in gulf waters, they will go elsewhere and take their jobs with them.”

But some government watchdog groups say that only the industry’s political muscle is preserving the tax breaks. An economist for the Treasury Department said in 2009 that a study had found that oil prices and potential profits were so high that eliminating the subsidies would decrease American output by less than half of one percent.

“We’re giving tax breaks to highly profitable companies to do what they would be doing anyway,” said Sima J. Gandhi, a policy analyst at the Center for American Progress, a liberal research organization. “That’s not an incentive; that’s a giveaway.”

Other industries, in fact, based on profit margin per sales dollar, are far more profitable than the oil and gas industry, but the even more advantageous treatment they receive under the tax code is conveniently ignored. Under this analysis, allowing a tax deduction to any profitable company for its costs a "giveaway", but in fact, under an income tax the costs of earning income have to be "deductible".  Calling deductions "tax breaks" is just wrong.  Calling the oil and gas provisions "tax breaks", or giveaways, when if anything they are more restrictive than for any other industry, is also wrong.   

Some of the tax breaks date back nearly a century, when they were intended to encourage exploration in an era of rudimentary technology, when costly investments frequently produced only dry holes. Because of one lingering provision from the Tariff Act of 1913, many small and midsize oil companies based in the United States can claim deductions for the lost value of tapped oil fields far beyond the amount the companies actually paid for the oil rights.

This is the percentage depletion deduction described above--which is more limited for the oil and gas industry than any other mineral producing activity.   

Other tax breaks were born of international politics. In an attempt to deter Soviet influence in the Middle East in the 1950s, the State Department backed a Saudi Arabian accounting maneuver that reclassified the royalties charged by foreign governments to American oil drillers. Saudi Arabia and others began to treat some of the royalties as taxes, which entitled the companies to subtract those payments from their American tax bills. Despite repeated attempts to forbid this accounting practice, companies continue to deduct the payments. The Treasury Department estimates that it will cost $8.2 billion over the next decade.

This may be the most disingenuous claim of all.  Under rules in place for over 25 years, again the most severe and substantial restrictions and limitations apply to the oil and gas industry in determining the US taxation of income earned outside the country.  As noted above, the US has a worldwide tax system and taxes the income earned outside its borders.  But under that system, it recognizes that it should not impose full taxation on such foreign income because that would amount to full double taxation.  Thus, the US permits an offset for the US taxes otherwise due--only on foreign income--for income taxes already paid on that income to foreign countries.  The tax rules only allow an offset for income taxes paid and, contrary to the assertion above, the tax rules forbid the claiming of an offset credit for a royalty.  Further, and most restrictive of all, the tax rules place the entire burden of proof on the taxpayer to show that no portion of what it claims as an income tax offset is in fact a royalty.  The taxpayer must overcome this burden by ultimately proving that up in an American court.  The Obama Administration would deny US taxpayers in this situation the right to go to an American court to get a fair and neutral determination.  In other words, even where a taxpayer can meet the already highly restrictive rules and overcome the burden of proof, to the satisfaction of an American judge, the Obama Administration would deny that opportunity.  Rather than saying that the current rules will "cost $8.2 billion over the next decade", it is more appropriate to say that the Obama Administration wants to simply raise $8.2 billion more from the oil and gas industry, on income earned outside its borders, on which in most cases an income tax burden approaching 50% has already been paid.  This is a pure and simple money grab, and it denies access to the judicial system to an American taxpayer who believes the IRS has made a mistake.  That is a denial of a fundamental right, done under the "guise" of eliminating a "tax break" to one taxpayer.  The real question is why the Obama Administration and Senator Menendez are afraid of allowing a US court to review the actual facts, particularly given their call for transparency, and how denying the right to an independent review is consistent with sound tax policy.  If the Administration can deny this right of access to the justice system for one taxpayer, what will prevent it from doing so for others whenever they may be out of current favor?  

Finally, and perhaps most ironically, changing these rules as proposed will actually reward the major foreign competitors of US based companies in the key, strategic world energy markets, including companies based in China, Russia, and even in Great Britain or other European countries.  

Over the last 10 years, oil companies have also been aggressive in using foreign tax havens. Many rigs, like Deepwater Horizon, are registered in Panama or in the Marshall Islands, where they are subject to lower taxes and less stringent safety and staff regulations. American producers have also aggressively exploited the tax code by opening small offices in low-tax countries. A recent study by Martin A. Sullivan, an economist for the trade publication Tax Analysts, found that the five oil drilling companies that had undergone these “corporate inversions” had saved themselves a total of $4 billion in taxes since 1999. 

They have not likely saved this tax on their activities conducted in the United States, but they have avoided being taxed by the US on their non-US income, in order to compete with companies headquartered in other countries.  The punitive US tax laws applicable to taxation of non-US income have forced these companies to leave in order to survive.  The idea of making such punitive rules even more punitive, in the face of what they force companies to do to survive, hardly seems the right strategy if we are trying to promote investment and jobs in the United States. 

Transocean — which has approximately 18,000 employees worldwide, including 1,300 in Houston and about a dozen in Zug, Switzerland — has saved $1.8 billion in taxes since moving overseas in 1999, the study found. 

Just considering the proportion of employees of Transocean outside the US, and the fact noted in the following paragraph that almost 90% of its work is outside the United States, simply underscores that in order to compete for that work against companies headquartered in other countries, Transocean determined, for its own survival, that it had to leave.  A tax system that creates that imperative is hardly in America's best interests, and additional tax proposals that make current rules even more harmful will be counterproductive in the long run.

Transocean said it had paid more than $300 million in taxes so far for 2009, and that its move reflected its global scope, with only 15 of its 139 rigs located in the United States. “Transocean is truly a global company,” it said in a statement.

Despite the public anger at the gulf spill, it is far from certain that Congress will eliminate the tax breaks. As recently as 2005, when windfall profits for energy companies prompted even President George W. Bush — a former Texas oilman himself — to publicly call for an end to incentives, the energy bill he and Congress enacted still included $2.6 billion in oil subsidies. In 2007, after Democrats took control of Congress, a move to end the tax breaks failed.

This is again one of the pure fallacies.  According to a Congressional Research Service report (CRS Report for Congress, December 20, 2006), the Energy Act of 2005 actually increased taxes on the oil and gas industry, including the refining industry, by over $1.3 billion; the comment above takes one piece of the bill that was a benefit, without looking at the other parts of the bill that were tax increases.  And one of the few beneficial aspects of the 2005 bill was repealed in 2007 and 2008.

Mr. Menendez said he believed the Gulf spill was devastating enough to spur Congress into action. But one notable omission in his bill shows the vast economic reach of the industry. While the legislation would cut many incentives over the next decade, it would not touch the tax breaks for oil refineries, many of which have operations and employees in his home state, New Jersey.

This sounds suspiciously like the health care bill with the special "cornhusker kickback".   

Mr. Menendez’s aides said the senator thought it was legitimate to allow refineries to continue claiming a manufacturing tax credit that he wants to eliminate for drillers because refining is a manufacturing business and because refineries do not benefit from high oil prices. Mr. Menendez did not consult with New Jersey refineries when writing the bill, his aides said.

Clean Energy Works Memo

In the wake of bad approval ratings and tough news about a slow economic recovery, President Obama’s team has started to fight back against accusations that the President is anti-business.  President Obama focused on the stimulus to highlight his pro-growth agenda during a recent speech in Nevada.  Back in Washington, the President’s advisors responded to press inquiries by citing Obama’s frequent visits with corporate leaders as evidence of the President’s positive relationship with the business community.

Read more here....

One of the most gratifying things I've been involved in over the last year has been the reinvigorated interest in the constitutional underpinnings of the American Republic.  Whether it's the Tea Party Movement or our work with ReConstituting America, Let Freedom Ring, and Liberty Central, there is something truly satisfying as this resurgent interest in the principles upon which this nation was founded.

Conversely, it is more-than-irritating when folks grossly misstate these principles--and, in fact, write in such a way as to perpetuate misconceptions.  It is, in fact, entirely destructive of those principles.  So it was, today, with the Associated Press' Mark Sherman, whose initial piece on the Supreme Court's Decision in McDonald v. Chicago claimed that the High Court had "expanded" gun rights in America.  So I decided to drop Mr. Sherman a note:

Mr. Sherman:

I read with great interest your reporting on the Supreme Court's decision today in McDonald v. Chicago.  But the headline, and your introductory paragraph, make an erroneous statement:  the Supreme Court today did NOT expand or extend gun rights.  Today, the High Court struck down unconstitutional limitations on those rights - restoring what had been erroneously taken away.

There is a tremendous difference between the two perspectives.  The latter recognizes that we, as a people, are endowed with a collection of rights, a state of being that was affirmed and sought to be protected by the founders and the documents that set about the rules under which our system operates. 

The former, on the other hand, leaves a reader with the impression that rights can be expanded or narrowed at will, and that in this case, the Justices of the Supreme Court were going beyond the scope of what is constitutionally warranted.  That perspective is unfortunately both persistent and ubiquitous among Americans, a misunderstanding of the nature of rights which puts them constantly under the threat of assault.  If we believe that rights are held at the whim of government officials, and can be narrowed or expanded at will, then it becomes that much harder to defend them when they are so narrowed.

I'll put it to you this way:  assume for a moment that the High Court had spent years chipping away at the ability of journalists to practice their craft--and, in fact, had affirmed state-based rules which sharply limited the proliferation or even existence of news outlets.  If, today, McDonald v. Chicago had struck down these rules, would you have announced that the Supreme Court had "extended" or "expanded" 1st Amendment rights?

I doubt that highly.

Facts are important things, Mr. Sherman.  This is especially important when talking about the fundamental principles which underlie our Republic.  I'd ask that you take greater care when reporting on them in the future.

Sincerely,

Andrew Langer
President, The Institute for Liberty

Gen. David Petraeus is now the darling of the Democrats. Having been picked by President Barack Obama to lead U.S. efforts on the ground in Afghanistan, Petraeus, the architect of the surge in Iraq, is being praised by the Democrats from pillar to post.
It wasn’t always so.
 
Continue reading… 

U.S. Army Gen. Stanley McChrystal is now out of a job, thanks to some unguarded and unflattering comments made about President Barack Obama within earshot of a reporter working on a freelance piece for Rolling Stone. This is as it should be.

Read more here

The President’s Oil Spill Commission: The Lazarus Effect

 Earlier this week, the Obama Administration announced the appointment of Richard Lazarus, to serve as executive director of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling.   Lazarus, a notorious environmental lawyer, is a curious choice considering the technical nature of the task at hand.

Energy experts have raised eyebrows at the pick, suggesting that perhaps someone with a technical background, a career in the energy industry, or better yet, any experience at all with offshore drilling, would have been a more suitable pick. 

I wasn’t so surprised at this dubious choice.  The Administration is clearly pushing industry experts, best practices, and knowledge aside in the pursuit of a predetermined political outcome - namely, closing access to America's offshore energy resources. 

Using this crisis as a pretext for shutting down drilling is grossly irresponsible and detrimental to solving the problem at hand.  Now more than ever it's important that our government tap the most informed available experts – the brightest engineers we have to offer – to identify the most promising technologies for coping with this ongoing crisis and to begin developing the guiding principles that will reduce the likelihood of this type of incident from occurring in the future.

While we usually need a trial, a jury, and a guilty verdict before a death sentence is pronounced, here we're through the looking glass:  we have no need of trials, juries, or executioners.  The verdict is predetermined, regardless of the overwhelming expert opinion that demonstrates that something much different ought to be done.    Almost from the start of this crisis, the President's unfocused, bureaucratic and obstructionist response has caused this disaster to get infinitely worse.  Whether it's payoffs to his political cronies or slavish devotion to this anti-energy ideology, the outcome is still the same:  the American people, especially those on the Gulf Coast, lose and lose big."

To be frank, the journalists who cover U.S. elections are, by and large, not really up to the job. There are a select few, like former U.S. News columnist Michael Barone, the much-missed Tim Russert, and others who, as former practitioners of some aspect of the “dark arts” themselves, understand the subtexts and subtleties of campaigns and their strategies and can explain them in ways that are neither mind-numbing nor unbalanced.
They are too few in number. Many of the rest--but by no means all--of the stamped out, blow dried network types who report on poll numbers like they were sports’ scores and who are obsessed, to borrow a word from Sarah Palin, with playing “Gotcha” so obviously radiate contempt for the candidates they are assigned to cover or are so clearly in love with them that they fail to even approach objectivity.
For them, especially, it would useful, even instructive, to read Karl Rove’s memoir of his life in politics. Most books of this type are little more than an “I was there as history unfolded” collections of great moments and significant accomplishments. Rove’s Courage and Consequence is decidedly not that kind of book. Instead it is something more on the order of, well, a training manual for anyone who is interested in running campaigns or, of equal importance, covering them....

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