In the movie “The Last Boy Scout”, Bruce Willis would ask people that he was about to punch, “Head or Gut?”. If you were an unlucky person who didn’t understand the question, you got both. This is similar to how the government treats industries that they want to get involved in. Apparently, the utilities are asking for the gut, thinking it will be less painful.

The executives’ desire for prompt action is colliding with Washington’s focus on other issues and growing reluctance to tamper with power-industry costs during a weak economy.

An American Electric Power coal plant, with a new carbon-capture unit, in New Haven, W.Va. Most power companies don’t think any effective, affordable technology exists to capture and store their carbon-dioxide emissions.

Some executives said last week they think intervention by the Environmental Protection Agency would be doomed because, for the most part, all the agency can do is order firms to install “best available control technology.” Most power companies don’t think any effective, affordable technology exists to capture and store carbon-dioxide emissions from power plants.

Most power companies prefer so-called cap-and-trade legislation to EPA regulation because the former is expected to give them greater flexibility on how to comply and thus cost them less than EPA regulation, they say.

Still, plenty in the utility sector continue to oppose legislation to cap carbon emissions.

Under cap-and-trade legislation — which the House has passed but the Senate hasn’t vote on yet — the government would require companies to hold permits to emit greenhouse gases. Over time, the government would issue fewer permits, bringing emissions down gradually while allowing companies to trade the permits among themselves. Companies that find it too expensive to reduce their own emissions could pay other firms to reduce theirs. They could also invest in activities that offset carbon-dioxide emissions, such as planting trees.

The EPA would be “forced to pursue a technology road map that doesn’t exist,” warned Jim Rogers, chief executive of Duke Energy Corp., Charlotte, N.C., who also has lobbied the Hill repeatedly to pass a bill.

John Rowe, head of Exelon Corp., Chicago, said that EPA regulation would be “more arbitrary, more expensive, and more uncertain for investors and the industry than a reasonable, market-based legislative solution like cap and trade.”

The executives said they want legislation — and soon — because utilities need to make billions of dollars of investments in coming years and risk bad choices in a legislative void.

via Some Utilities Push Congress to Act on Carbon Emissions – WSJ.com.

Guess who the people are who don’t understand the question? That would be the you and me. We are about to get both in the form of a huge increases in the cost of living. This will come in our utility and health care costs. Not only that, each one of these touches every other part of our lives. Every business is going to be affected by these increased costs, which means they will have to raise prices of their products.

Instead of picking either head or gut, utilities should throw the first punch. They should be telling the public/customers what this means to them. Then again, the government could tell them they can’t do that. Look at Humana during the health care debate. But hey, luckily we still have freedom of speech right?

As I have said many times, the free market allocates resources based on their highest and best use. It is fine tuned by millions of decisions and transactions of individuals. This is why the market is so efficient, and meets the needs of society. On the other hand, government allocates resources based on politics. It has nothing to do with real needs, other than the need of a politician to get re-elected. The Wall Street Journal has  an article on how the Democrats are trying to please all their members with pay offs in order to get their votes. So how is paying off all members with pork for their state supposed to lower cost?

LAFAYETTE, La. — Democratic Sen. Mary Landrieu says she generally backs President Barack Obama’s health-care overhaul efforts. But she’d like to see a few items in the bill before voting for it, including bigger federal Medicaid payments for her home state of Louisiana, extended health coverage for her pet cause of foster children, and help for teaching hospitals in her state.

While pushing more spending in those areas, Ms. Landrieu also wants the plan to cut the overall amount the nation spends on health care.

via Democrats Pose Health Bill Hurdle – WSJ.com.

In an op-ed in today’s Wall Street Journal, Dr. Pardes, president and CEO of NewYork-Presbyterian Hospital, talks about the coming doctor shortage.

It is important to note that the shortage the country will soon face isn’t just of primary-care physicians. It is true that there aren’t enough primary-care doctors and nurse practitioners. But it is also true that we need more cardiologists, neurologists, general surgeons, pediatric subspecialists, urologists and other highly trained specialists.

Nonetheless, the few ideas to address the coming doctor shortages that were briefly considered in Washington treated the problem merely as a shortfall of primary-care doctors. One idea is to shift unused federal training funds to hospitals that need more positions, but only if those funds are used for primary care. Another is to move primary-care physician training out of hospitals and into federally qualified health centers. A third idea is to take training dollars away from doctors and instead use it to train nurses and other professionals.

None of these ideas would actually increase the number of doctors. At most the first two ideas would increase the number of primary-care doctors at the expense of the number of specialists.

But that’s not likely to happen either. The fundamental reason why medical students are not entering primary care on their own is that they can’t afford it. Medical-school tuition can cost a student as much as $50,000 a year. Some doctors start out owing hundreds of thousands of dollars before they are even able to open a practice. Going to medical school is a little like taking out a mortgage, only without getting a house in return.

Once doctors do start treating patients, they are squeezed between what they earn from government programs and insurance companies on one side and escalating malpractice insurance rates on the other. Meanwhile, specialists can often charge more and pay less in other costs than primary-care doctors. The reality is that many physicians cannot afford to go into primary care.

To address the shortage of doctors and the incentives that compel young doctors to eschew primary care, Congress needs to think about how to increase doctor pay, institute malpractice reform, and provide subsidies to reduce the amount of debt doctors have to take on. Residency caps should also be raised so teaching hospitals can train more doctors. Without these actions new doctors would be foolish to enter primary care, and thankfully our medical schools do not recruit foolish people.

via Herbert Pardes: The Coming Shortage of Doctors – WSJ.com.

Unfortunately, the doctor seems to suffer from what most commentators and policy wonks suffer from. They believe that you can cure an illness by increasing the causes of the illness. It would be like telling an alcoholic to drink a different alcohol to cure his liver disease. The government creates the shortage by manipulating the free market. When the government implements price controls via program reimbursement rates, you end up effecting supply negatively.  The doctor also doesn’t seem to realize that part of the reason education is so expensive is there is a massive amount of government money chasing after education services. The more dollars chasing a good or service, the higher the price rises.

The doctors has many bad assumptions here that undermine his stated goal. He says that the cost of education is extremely high. He compares it to taking out a mortgage without getting a house. This is in my opinion economically silly. Tuition is in investment like any other investment. Actually, if you pick the right major, it can be a very high yielding investment. With the high cost of medical school, one would expect a high return on that investment. In the free market that would be the case. As I’ve already said, tuition has climbed year after year because of all the government money in education. Remove government, and you will lower cost. On top of that, the doctor says government programs squeeze doctors with government reimbursement rates. This alters the return on investment analysis as well. If your investment continues to grow larger because of government, and your return is “squeezed” by government, of course you are going to begin to see shortages. This is what government always does.

Unfortunately, he then argues the government should do more. He says Congress should be looking at ways to raise doctor pay. Are you serious? Government is the reason your pay is decreasing. Get the government out of health care, and you will begin to see salaries increase.  In the free market, if there is a shortage in supply, prices increase. Seeing the increase in price (or pay in this case), competitors enter the market (in this case doctors).

Also, as price is driven up, entrepreneurs will look for alternate solutions to doctors. An real world example of this are the clinics at many local pharmacies.

Government on the other hand will just hold prices against the will of the market. As Austrian economists will tell you, “You can control price or supply, but you can’t control both.” Because government is controlling price, they will drive down supply. This will ultimately lead in the opposite outcome that the doctor claims to want. Even if the government funnels money in to subsidize doctors, they are taking that money from another area of the economy. While they may be able to falsely increase the supply of doctors, they’d end up producing a shortage in another area. This is why we defeated the Soviet Union. Central planning never works. Government always gets it wrong. The free market does this on its own by the decisions of millions of people. While I appreciate the doctors concern, I wish he’d drop his assumption that government can fix this. They have never been able to fix a problem in the economy without creating multiple new and worse problems.

The Senate, including Republicans, continue to alter incentives by passing tax cuts and tax increases. In other words, favors and punishments. And people whine about lobbyists. Well, of course, big companies are going to send lobbyists to Washington. Don’t you want to get the favors? If you don’t your going to get the punishments.

So let’s see how some of this effects the market. I’m guessing senators passed this without a care in the world about it’s effects.

Senate Alters Taxes for Big Companies

By JOHN D. MCKINNON and LAURA SAUNDERS

WASHINGTON — The Senate on Wednesday passed legislation that would give tax breaks to big companies hit by the recession and expand a credit for homebuyers, while raising other corporate levies, particularly for multinationals.

….

The Senate has passed a bill extending unemployment benefits and the popular tax credit for homebuyers. It also includes proposed tax increases to offset the costs that may be hard for some businesses to swallow. WSJ’s John McKinnon explains.

The senate passes the tax credit for homebuyers again. We are in the midst of a collapse in housing because of easy money by the Fed, which they are doing again, and because the government’s push for “everyone should own a home” social engineering. So what does the Senate do? Just more of the same. Incentivize people to buy houses. If it is in the homebuyer’s best interest to buy a home, they will do so without the government. Incentivizing them changes the behavior of purchasers and will make people who otherwise wouldn’t have purchased a home purchase one. This is what happened during the housing boom that led to this mess.

“We clearly are going to have tax increases going forward,” said Bruce Josten, executive vice president of the U.S. Chamber of Commerce.

The latest changes to business taxes are contained in a measure that would extend unemployment benefits by as much as 20 weeks from the current 79 weeks. In a bid to aid the property market, the bill would also extend for five months a tax credit for homebuyers, and expand it beyond first-time purchasers. That move is estimated to cost about $10.8 billion over the next decade.

So, we are going to extend unemployment by another 20 weeks. What does this incentivize? You can go without work for almost two years. Does the Senate believe that this doesn’t effect peoples behavior? Surely, many people won’t even attempt to look for a job for over a year and a half if they have two years before they are without money. Also, unemployment insurance is insurance. You pay for unemployment insurance in the event of losing your job. Those people who now are going to have checks rolling in for two years did not pay enough in for the two year pay off. So, who pays for this? That’s right. The productive workers of society have to pay to cover the difference. That’s real motivating for those who are producing and keeping this country afloat.

The Senate on Wednesday approved the measure 98-0. The House was expected to pass the measure quickly and send it to President Barack Obama.

I’m sure glad this was unanimous. Goes to show we don’t have one intelligent politician in the bunch.

House Democrats, led by Ways and Means Committee Chairman Charles Rangel, shown in February, still seek a full corporate-tax overhaul.

Hey, let’s have someone write the tax laws who doesn’t even follow the laws himself. Genius!

via Senate Alters Taxes for Big Companies – WSJ.com.

In an op-ed in the Washington Times, Senator Susan Collins calls into question the constitutionality of the czars. While I completely agree, I’d ask the senator where she has been all this time?

When it comes to accountability and transparency, who is actually in charge and making the policy decisions? Is it the secretary, whom the Senate confirmed, or is it the czar, whom the president unilaterally appointed? These czars operate outside the established structure of checks and balances.

As ranking member of the Senate Homeland Security and Governmental Affairs Committee, I also am concerned about the management dysfunction that so many czars create. They duplicate or dilute the statutory authority and responsibilities Congress has conferred on Cabinet officers and other senior officials.

Unfortunately, because czars can circumvent the constitutionally mandated process of “advice and consent” and because the president’s advisers have informed me that no White House czars will be allowed to testify before Congress, we cannot ask them for the answers.

Czars bypass the constitutional oversight authority of Congress, tipping the balance of power in favor of the executive branch.

via Reining in the czars – Washington Times.

The czars without a doubt undermine the constitution. If I was President and wanted to become a tyrant, one of the things I would do is put my select people in places and positions where they could seize control at the right time. While I am not saying this is Obama’s intent, although everyday I wonder, once the precedent is set,  it allows future Presidents to do the same thing. If one of those Presidents has the intention of becoming a tyrant, he’ll have precedent on his side.

While I agree with Collins on this issue, I would hope she’d be consistent in her concern for the constitution. The congress violates the constitution with almost every bill they write. Will we see an op-ed about the constitutionality of health care reform, cash for clunkers, bailouts, etc?

Here is more proof of the idiocy of the Federal government. Because the congress has to show how much they care, they are going to drive these small toy makers out of business.

By LESLIE WAYNE | New York Times

October 30, 2009

For 35 years, William John Woods has made wooden toys for children. Each one of the 2,000 or so he makes each year passes through his hands at his shop in Ogunquit, Maine, and no child, he said, has ever been hurt by one of his small boats, cars, helicopters or rattles.

But now he and others like him — makers of small toys and owners of toy resale shops and boutique stores — say their livelihood is being threatened by federal legislation enacted in the last year to protect children from toxic toys through more extensive testing. Big toymakers, including those whose tainted imports from China led to the recall of 45 million toys and spurred Congress to take action, have more resources and are able to comply with the new law’s requirements.

“This is absurd,” said Mr. Woods, whose toys are made of maple, walnut and cherry and finished with walnut oil and beeswax from a local apiary. He estimates it would cost him $30,000 — a figure he calculated from having to pay $400 in required tests for each of the 80 or so different items he produces — to show that they are not toxic.

“I use beeswax,” Mr. Woods said. “The law was targeted at large toymakers using lead. There was no exclusion for benign products.”

via Federal Government Putting Small Toymakers Out of Business | Ron Paul 2012 | Campaign for Liberty at the Daily Paul.

This is just more proof that so called government protection is not only not necessary, but they are harmful to the little guy and all Americans. Without government intervention, 45 million toys were recalled for having traces of lead. Private businesses, in order to protect their reputation and customers, acted without coercion to remove these toys from the market. This is proof that you do not need all these government regulators and protection agencies in order to protect the public.

If there was no government agency to interfere in the free market, you would still have private watch dogs such as Consumer Reports. When they discovered lead in a toy, the media would be alerted, and the problem would be blasted out to the public, as it was when these toys were discovered to have led. Once the news breaks, in order to protect their future business, businesses will react to rectify the problem. All of this takes place without the need for government coercion. This all works efficiently with the least amount of cost to all parties involved.

But of course, the government decides they need to show they are looking out for “the people” (read my post about what the Federalist Papers say about this). In doing so, they drive up the cost on each toy produced. They drive the little guy out of business, despite the fact he uses nothing that could even contain lead. They drive up the price of toys for everyday Americans. In general they make it harder for the “little guy”.

Rather than letting the free market deliver credit to consumers, Chris Dodd needs to grandstand for his constituents. He wants the government to limit interest rates on credit cards.

Senate Banking Chairman Chris Dodd has been hearing from constituents upset because banks have been raising the interest rates on their credit cards. This week Mr. Dodd decided to do something about it. He proposed a bill imposing an immediate freeze on those rates.

“At a time when families are struggling to make ends meet, jacked up rates can quickly create crushing debt,” Mr. Dodd said in a statement. “People need to be responsible with their money, but they shouldn’t be taken to the cleaners by outrageous rates.”

If customers are being taken to the cleaners, it is because lawmakers like Mr. Dodd sent them there. In May, Congress passed the Credit Card Accountability, Responsibility and Disclosure Act, which bars rate increases without a 45-day notification. To reduce their risk under this law, banks are rushing to raise rates before it takes effect in February. Thus the Senator’s latest political grandstand.

via Dodd Tries to Freeze Credit Card Rates – WSJ.com.

This is no different than price caps. What do price caps do? In order for price to be driven down, you need demand to decline while supply remains steady, supply to increase while demand remains steady, or demand to decrease while supply increases. If you artificially limit price, while not lowering demand, you automatically lower supply. It will happen no other way, so while Dodd does some showing off, he is decreasing credit in the market, which we are told is one of our biggest problems right now. I have an idea. How about Dodd tells his constituents to quit borrowing money. The credit card companies can’t charge you if you don’t ask for their services.

We may have the dumbest people in America running the country. Even most of the politicians pushing for the expanded Fed powers admit that the Fed caused the housing bubble. So, what is their fix? I think most rational people would say let’s take power away from the Fed. Oh no, not the geniuses sitting in the Capital. They want to give the Fed more power to screw up the economy. Apparently, this disaster isn’t bad enough yet. They want to see if the Fed can collapse the entire system.

By SUDEEP REDDY

WASHINGTON — Get ready for a fiery debate about the role of the Federal Reserve.

The latest financial-regulation legislation moving through Congress would give the Fed new oversight powers, including the authority to force large firms to shrink if their size threatens the broader economy.

The draft bill, released this week by House Financial Services Committee Chairman Barney Frank (D., Mass.) gives the central bank more direct authority than outlined in a proposal earlier this year.

The expansion of the Fed’s role is sure to become a flash point in the debate over the overhaul of financial regulations.

On one side are Mr. Frank and Treasury Secretary Timothy Geithner, who favor giving the Fed broad authority. On the other side are lawmakers who want power spread out among agencies. Many also charge that the Fed’s regulatory missteps helped to cause the financial crisis.

via Congress Weighs Scope of Fed’s Authority – WSJ.com.

As I’ve explained in previous posts, the free market in order to make the most profit utilizes resources to their highest and best benefit. Efficiency reigns. Government always has the opposite effect. Government intervenes in order to divert resources for political means. What this does is lower our economic output and value, in other words, it lowers our standard of living below what it would other wise be. Here is a perfect example of the government not caring what’s best, but instead they care what is politically best for the politician. So much for self-interest being the purview of the free market.

By NEIL KING JR.

Montana Rep. Denny Rehberg was no fan of the $58 billion federal rescue of General Motors Co., saying he worried taxpayer money would be wasted and the restructuring process would be vulnerable to “political pressure.” Now the lawmaker says it’s his “patriotic duty” to wade into GM’s affairs.

Along with Montana’s two Democratic senators, the Republican congressman is battling to get GM to reinstate a contract with a Montana palladium mine nullified in bankruptcy court. “The simple fact is, when GM took federal dollars, they lost some of their autonomy,” Mr. Rehberg says.

Federal support for companies such as GM, Chrysler Group LLC and Bank of America Corp. has come with baggage: Companies in hock to Washington now have the equivalent of 535 new board members — 100 U.S. senators and 435 House members.

Since the financial crisis broke, Congress has been acting like the board of USA Inc., invoking the infusion of taxpayer money to get banks to modify loans to constituents and to give more help to those in danger of foreclosure. Members have berated CEOs for their business practices and pushed for caps on executive pay. They have also pushed GM and Chrysler to reverse core decisions designed to cut costs, such as closing facilities and shuttering dealerships.

via Politicians Butt In at Bailed-Out GM – WSJ.com.

Wow, can’t wait till these jackasses taking over health care and are making political decisions with our lives.

For some reason, Americans have been sold on what I’ll now term “the free ride theory”, in which we think we can live our collective lives like we’ve lived our lives over the past decade by racking up our collective debt for today’s keep up with the Jones. Under the Bush administration we racked up debt for a prescription drug program, pork projects and wars. Not to be shown up, Obama has increased our yearly deficits four fold. Is there any end in sight?

No, of course not.

Why stop spending when you can buy votes with so called free goodies. We need to nationalize health care, because we don’t want to pay Wal-Mart for our $4 prescriptions. We need to bail out banks, because supposedly we’ll all lose our jobs if we don’t. We have to take over GM, so that a company, which none of us wants their products, can stay in business. We have to bribe granny with a $250 check, because we don’t want to lose her vote. We have to spend billions to create so called “Green Jobs” because there is no market for them. We’re talking about bailing out newspapers; although most of us get news on the internet. We pay farmers to destroy crops, because we think prices need to be high enough for them to keep producing. With all this frivilous spending, how do you think it is going to be paid for? It is going to be paid by the enslavement of your children, my children and our grandchildren.

This is not just colorful language. It is grounded in the reality we will soon bare witness to.

What is debt? Debt is you promising tomorrows labor for today’s expenditures. When you buy that new car with a loan, you are saying I am going to work X number of hours in the future to get you the money for this plus interest, so that you can give me the car now. If you don’t work those hours, you don’t make the money. If you don’t make the money and pay them, they take the car back. Personal debt is bad enough, but at least you are only enslaving yourself.

What is the most dispicable aspect of what we (yes that includes me) are doing is we are not just enslaving ourselves. We are not saying, I will pay for this. We are building up so much debt that my two year old daughter, my nine year old son, your children, our children’s children and who knows how many generations to come will be enslaved. We are not pledging our future labor for today’s useless expenditures. We are pledging ours and future generations. We aren’t even giving them the chance to say NO. We are saying, “Sorry future Americans, but we want ‘free health car’. We don’t want any job losses (they haven’t stopped have they). We want bridges to nowhere. We want research how to manage the smell of manure! And we want you to pay for it.”

Now, economists would argue that deficits cancel themselves out. They explain this by saying that while we borrow the money, the future generation will hold the Treasury Bonds (an asset) and receive the interest plus principle of those bonds. This basically negates the theory that debt robs one generation by the previous. While this may be true, I emailed the economist that had this in his book. I asked “that may be true if all the debt was held by Americans, but what if China is holding a large portion of that debt. Would that not mean, that A) China is holding the Treasury bond as an asset, and B) won’t they be receiving the interest.?” He responded Yes, that is correct. The book would only apply if future generations means all people regardless of borders. So, not only are we enslaving our future generations, we are enslaving them to China, Japan and other nations. We are saying we want all this stuff, and we are willing to make the next generation work for it in order to transfer the value of their production out of the country. Does this sound like a recipe for a brighter future for our children? While our children are working, the rewards of their work is not bettering their lives. It’s being transferred out to better the lives of foreign nations.

Does this sound like it’s just theory? As of right this  second (it goes up constantly), each citizen owes $343,785. If you have a family of four as I do, multiply that by four, and you get your household debt. Just this week, Moody’s rating agency said the US is a few years away from losing our AAA credit rating. This has never happened. It would be catastrophic to our country and economy. It would mean higher interest on the debt, which would mean even more future labor pledged to today’s expenses.

What does it say that our Secretary of State is begging China to buy more of our debt? We are begging our children’s masters to enslave them. How moral are we?

The financial crisis, we are still in the midst of, undoubtedly woke a lot of people up to the evils of excessive debt. Unfortunately, it has not awoken our politicians. While many families have cut back spending to bring their lives under control, they have at the same time asked the government to continue and even ramp up the very actions that caused them harm in the first place.

While this post is a little depressing, hopefully it will serve as a call to action. A call to stop asking for free handouts from the government that your children will be enslaved for. Stop electing politicians who promise the world and buy votes with pork. Vote for politicians who are going to address the debt problem and speak the truth. With every government policy you hear about ask “How is that going to lower the debt?” Lastly, realize that nothing from the government is free. Everything you ask for from the government comes at the lost liberty of you and your children.