Keystone XL and Natural Gas Provide Energy Trade Opportunities

Posted at The Foundry by Nicolas Loris May 7, 2013 at 4:30 pm

In June 2008, presidential candidate Barack Obama said, “If we continue to let our trade policy be dictated by special interests, then American workers will continue to be undermined, and public support for robust trade will continue to erode.” That’s exactly what’s happening with respect to energy trade. Special interests want to block the construction of the Keystone XL pipeline and block opportunities to export natural gas.

Representative Lee Terry (R–NE) has introduced the Northern Route Approval Act, which would approve the Keystone XL pipeline by deeming the State Department’s first environmental review as satisfying all requirements of the National Environmental Policy Act. House Majority Leader Eric Cantor (R–VA) announced that the House will vote on the bill this month.

The act is important for several other reasons. Even if President Obama grants Keystone XL the presidential permit, environmental activists adamantly opposed to the project will almost certainly bring legal challenges to delay or prevent the pipeline’s construction. Terry’s bipartisan bill, which has 36 co-sponsors, would limit these challenges by creating a 60-day deadline for filing a claim.

In addition, the act would ensure that the environmental review satisfies all requirements of the Endangered Species Act, which has been an important tool for environmental activists unjustifiably stopping economic activity. In addition to dragging its feet on Keystone, the Administration is also needlessly delaying energy export opportunities.

With the glut of natural gas and low gas prices in the United States, energy producers are seeking to liquefy and ship domestic natural gas to foreign markets. Special interest groups such as chemical companies are trying to keep natural gas in the states.

Exporting natural gas would provide a huge boon to the U.S. economy since it would expand market opportunities for American companies, and new market access would spur more domestic development.
Two former Democratic Senators—Byron Dorgan (ND) and Bennett Johnston (LA)—testified today before the House Energy and Commerce Subcommittee on Energy and Power about the broad economic benefits of exporting natural gas, emphasizing that the U.S. should avoid restrictions on energy exports. (These thoughts are elaborated on in a Heritage Foundation paper, “U.S. Natural Gas Exports: Lift Restrictions and Empower the States.”)

But the Department of Energy (DOE) has delayed decisions on export licenses. Not only does an export applicant have to obtain approval from the Federal Energy Regulatory Commission, but the DOE must determine if the project is in the public’s interest if the importing country does not have a free trade agreement with the U.S.

There is no question that the economic benefits from exporting natural gas are overwhelmingly positive. A DOE-commissioned study reinforced that by concluding, “Across the scenarios, U.S. economic welfare consistently increases as the volume of natural gas exports increased. This includes scenarios in which there are unlimited exports.”

So why is the DOE involved in the permit authorization process at all? U.S. producers should be allowed to export natural gas to any country they see fit, subject to the same restrictions that govern other trade. This would direct natural gas to its highest valued use. Congress should lift restrictions on natural gas recipient countries and prohibit any federal agency from determining natural gas exports based on public interest.

President Obama of 2013 should listen to 2008 candidate Obama. We shouldn’t have our trade policy dictated by special interests. Allowing access to energy imports and exports would make Americans far better off.

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Health Care Conscience Rights Act

Victims of the Obama Administration’s assault on religious freedom speak out at Rep. Black’s press conference in support of the Health Care Conscience Rights Act. Speakers included:

• Cathy Cenzon-DeCarlo, RN – New York State nurse who filed suit after her freedom to serve patients according to her conscience was violated.

• Susan Elliott, PhD, Director and Professor at Biola University Nursing Department.
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• Christine Ketterhagen, Co-Owner/Board Member of Hercules Industries, Inc.; Andy Newland, President of Hercules Industries; Bill Newland, Chairman of the Board of Hercules Industries.

• Sister Jane Marie Klein, OSF, Chairperson of the Board of Franciscan Alliance, Inc. (in Mishawaka, IN). Franciscan Alliance is a co-plaintiff with the Diocese of Fort Wayne-South Bend.

 

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Federal Spending Without & With Sequester Cuts

Posted by Veronique de Rugy | Nov 07, 2011

VerodeRugyThis week, Mercatus Center Senior Research Fellow Veronique de Rugy uses data from the Congressional Budget Office (CBO) to examine the estimated growth in spending without and with a potential Budget Control Act (BCA) sequester. As the chart and the accompanying data show, the purported spending “cuts” arising from the sequester are merely reductions in the overall growth of spending, not actual cuts that would address and relieve the United States’ debt problems.

The sequester is an automatic budget enforcement mechanism triggered when the Joint Select Committee on Deficit Reduction fails to enact legislation to reduce the deficit by $1.2 trillion over the sequestration period. Instead of simply passing appropriated funds to the agencies, the U.S. Treasury “sequesters” the difference between the cap set in the BCA and the amount appropriated.

Changes in spending from sequestration result in new budget projections below the CBO’s baseline projection of spending based on current law. The federal government would spend $3.62 trillion in the first year with sequestration versus the $3.69 trillion projected by CBO. By 2021, the government would spend $5.26 trillion versus the $5.41 trillion projected. Overall, without a sequester, federal spending would increase $1.7 trillion (blue line). With a sequester, federal spending would increase by $1.6 trillion (red line).

A further breakdown of the percentage of budget programs reveals that sequestration provides relatively small reductions in spending rates across the board. With sequestration, defense increases 18% (vs. 20%); nondefense discretionary increases 12% (vs. 14%); Medicare roughly increases at the same rate; and net interest increases 136% (vs. 152%).

While the sequester projections are nominal spending increases, most budget plans count them as cuts. Referring to decreases in the rate of growth of spending as “cuts” influences public perceptions about the budget. When the public hears “cut,” it thinks that spending has been significantly reduced below current levels, not that spending has increased. Thus, calling a reduced growth rate of projected spending a “cut” leads to confusion, a growing deficit, and an ever-larger burden for future generations.

Veronique de Rugy talks about the feasibility of sequestration and historical spending reductions atNational Review Online’s The Corner.

At The Washington Post, opinion writer George Will uses this chart to examine spending increases with and without  the budget sequester.

TABLE: Annual and Cumulative Spending Increase.

DATA FOR BLUE LINE.

DATA FOR RED LINE.

verochart500px

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Student Loans: Another Federal Debacle

JANUARY 29, 2013 by JAY BOWEN
Posted on The Freeman

FEEEven if you aren’t considering going back to school, you’re about to pick up the tab for a college education. The same cast of characters that brought you the housing crisis, a post office hemorrhaging billions, and a school system that gets more expensive as it gets worse has now brought us a student loan crisis.
A recent report from the Federal Reserve Bank of New York says the value of student loans outstanding is now close to $1 trillion, making it the largest and fastest-growing share of non-mortgage consumer borrowing. Unlike other forms of consumer debt, which have fallen, total student loans have grown by 75 percent since 2007.
The federal government has pushed relentlessly to expand access to college by cutting out the private sector in loan programs and by altering repayment terms for borrowers via executive order. It bears an eerie resemblance to the obsession with homeownership that got us into our current straits.
Like potential homeowners, students have been encouraged to borrow with impunity. It continues to intensify: The Department of Education lent $133 billion in 2010 and $157 billion in 2011. Late payment trends are also following a similar pattern to the subprime mortgage crisis. With new programs geared toward “income based” repayment plans and forbearance timetables, it is increasingly likely that the federal government and thus the taxpayer will eventually be on the hook for tens of billions of dollars of loans that will never be repaid.
This phenomenon has real social consequences. With two-thirds of college graduates possessing student loan debt of at least $25,000 and 53 percent of recent college graduates either unemployed or acutely underemployed, unproductive economic dislocations—putting off the purchase of a home or delaying marriage, for example—are rampant.
This misguided policy approach has produced more than a student loan bubble that could damage the economy. It has also triggered an inflationary spiral in tuition costs and provided college bureaucracies with incentives to become bloated and inefficient. As one critical report recently stated, “In no other industry would overhead costs be allowed to grow at this rate—executives would lose their jobs.”
The billions of dollars sloshing around the system have triggered the classic definition of inflation: Too much money is chasing too few goods. It has also lent further credence to Milton Friedman’s claim that inflation is always and everywhere a monetary phenomenon. Since 2000, tuition at public, four-year colleges has risen by an inflation-adjusted 72 percent, and over the past 25 years, it has increased at an annual rate 6 percentage points higher than the cost of living. When prices rise, government loans increase to effectively subsidize the difference, allowing colleges to continue increasing tuition, thus completing the cycle.
One beneficiary is online education. While it will never completely replace the college campus, current economic realities make it a legitimate alternative. It provides an avenue of highly individualized instruction at a fraction of the cost of the traditional model.
Overspending on higher education has reached a tipping point. Just as aggressive government intervention in the housing market led to a variety of economic distortions and ultimately cost the taxpayers billions, the student loan problem is destined for similar results unless substantial reforms are implemented.
The government must exit the lending arena and be replaced by an active and innovative private market with legitimate underwriting standards. A variety of arrangements would be possible in this environment, including contractual agreements between businesses and students that revolve around the future employment and cash flows of the borrower.
Before we can get to that point, however, it is essential that we grasp as a nation how unproductive and costly it is when federal authorities try to dictate outcomes by aggressively intervening in the marketplace.
We must return to first principles and continuously ask ourselves what the proper role of government is in a free society.
Jay Bowen is a FEE trustee and president of Bowen, Hanes & Co. Inc., an Atlanta investment counseling firm. A version of this piece was originally published Jan. 11, 2013, in Atlanta Business Chronicle.

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Obama ‘freedom to worship’ assaults First Amendment

Freedom of religion not just for private expression
By Jonathan Imbody
Op-ed in The Washington Times Monday, January 28, 2013

BillofRightsPresident Obama marked Religious Freedom Day earlier this month by framing religious liberty as “the freedom to worship as we choose.” If the president had not been restricting and attacking religious freedom so egregiously, he might merit a pass for using “freedom to worship” as poor shorthand for religious liberty.

The First Amendment of our Constitution actually reads, “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” The constitutionally guaranteed free exercise of religion in America extends well beyond the freedom to worship. It includes the freedom to live out our conscientiously held beliefs.

Worship at its core is essentially a private and personal process, a communion between God and an individual. No government could restrict such worship, any more than it could monitor and censor every citizen’s thoughts and prayers. Even forbidding individuals to worship together in public, which coercive communist governments like China’s have done, cannot actually prevent individuals from worshiping God in private. So a law that merely protected the freedom to worship would hardly be worth heralding in a presidential proclamation.

The free exercise of religion under the American Constitution, by contrast, includes the freedom to openly express, follow and live out our faith — not just in private but also in the public square — without government coercion, censorship or any other form of restriction.

The concept of religious liberty held by the Constitution’s framers included not merely the freedom to worship, but also the free exercise of conscience — carrying out one’s moral beliefs with conviction and action.

As Thomas Jefferson asserted, “[O]ur rules can have authority over such natural rights only as we have submitted to them. The rights of conscience we never submitted, we could not submit. We are answerable for them to our God.”

James Madison expressed this understanding in his original amendment to the Constitution: “The civil rights of none, shall be abridged on account of religious belief or worship, nor shall any national religion be established, nor shall the full and equal rights of conscience be in any manner, or on any pretext infringed.”

To be fair, Mr. Obama’s statement eventually included a more expansive acknowledgement of religious freedom: “Because of the protections guaranteed by our Constitution, each of us has the right to practice our faith openly and as we choose.”

Yet the record will show that the president’s gilded rhetoric belies tarnished policies. The prioritization of the president’s first statement — that religious freedom means simply freedom to worship — in fact parallels his policies. Those policies often violate not only the general principles of the First Amendment, but also the more specific Religious Freedom Restoration Act of 1993, which provides that “Government shall not substantially burden a person’s exercise of religion” and must take “the least restrictive means of furthering that compelling governmental interest.”

The Obama administration has taken several actions to restrict or outright violate religious liberty. They have gutted the only federal conscience regulation protecting the conscience rights of American health care professionals.

Officials issued a coercive contraception and sterilization mandate that imposes the president’s abortion ideology on all employers, exempting virtually only places of worship. The thousands of faith-based charities that actually exercise their faith and conscience beyond the four walls of their churches now face millions of dollars in fines by the Obama administration.

The administration has argued before the Supreme Court in Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC against a religious institution in an attempt to restrict faith-based organizations’ hiring rights. In a unanimous decision, even Mr. Obama’s own appointees to the court rejected the administration’s radical arguments to restrict religious liberty.

The Obama administration failed for months to aggressively advocate on behalf of Pastor Saeed Abedini, an American citizen imprisoned, tortured and now on trial, facing possible execution by the Iranian government, for simply living out and speaking about his Christian faith.

The first American Congress enshrined religious liberty pre-eminently in the Bill of Rights. Many of those leaders and their fellow patriots who ratified the First Amendment had risked everything they owned and their very lives to win those freedoms. They also recognized that threatening one group’s freedoms, by either restricting or establishing a faith, threatens the freedoms of everyone.

Unless we act swiftly to guard against current assaults on religious liberty — by reversing the administration’s coercive policies through the courts, by passing conscience-protecting laws in Congress and by re-educating the culture on religious liberty — our First Amendment freedoms will become an empty proclamation.

Jonathan Imbody is vice president for government relations at the Christian Medical Association.

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Unalienable Rights: The Right to Life

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed…


 

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Whither Kuwait: Illiberal Democracy or Enlightened Autocracy?

Posted at Foundation for Economic Education: JANUARY 15, 2013 by DOUG BANDOW
20130115_Kuwaitdetail
KUWAIT CITY, KUWAIT—The touchstone for American foreign policy today is support for democracy. Yet democracy sometimes has only a tenuous relationship with liberty. In fact, unconstrained democracy can threaten a free society. This tension is evident in Kuwait, a small Persian Gulf nation in which people are demanding greater democracy.
Kuwait was freed from British “protection” a half century ago. Since then Kuwaitis have established the region’s freest country: The elected parliament has real power and the independent media asks embarrassing questions. Moreover, non-Muslims are free to practice their faiths.
However, in December Kuwait held its second National Assembly election this year. The Emir unilaterally changed the voting system, triggering protests and a campaign boycott. A broad coalition ranging from liberal to Islamist is pressuring the government to change course—and eventually create an elected prime minister.
Khaled al-Fadhala, a student organizer, told the Financial Times, “The youth want change. Whoever will bring that change, the youth want. I don’t care if they’re Islamists, Muslim Brotherhood, Shia . . . as long as they win in a democratic election.”
Better to win in a democratic election than not. However, winning an election is no guarantee of support for freedom, as is evident throughout the Middle East.
For instance, Egypt’s Hosni Mubarak was an authoritarian who found favor in Washington because he generally backed U.S. policy. Unfortunately, this association did wonders—all bad—for America’s reputation in the Middle East.
Mohamed Morsi, a member of the Islamic Brotherhood, was elected president after Mubarak’s fall. Morsi has claimed the right to exercise near-dictatorial powers. The proposed constitution enshrines authority rather than liberty. And violent attacks on Coptic Christians have risen. Egypt is more democratic than before, but could end up less free.
Fears are rising that Kuwait might be traveling down the same road. Kuwait is not Egypt: The former is far more democratic, free, and prosperous. Kuwait’s political community is smaller and more united. Most Kuwaitis realize that they have a huge stake in social stability.
Indeed, even opposition activists emphasize their support for Kuwait’s Emir. For instance, Musallam Al-Barrak, a long-time parliamentarian who now is calling for sustained protests, told me when I visited in December that “there is a big difference between the Arab Spring and Kuwaiti movements. The Arab Spring was against the ruling system.” Not so in Kuwait. Protestors want an elected government, but “that never means we are against the government or the ruling system.”
However, an elected rather than appointed government would sharply curtail the Emir’s powers. And, ironically, that might not be good for liberty.
The parliament elected in 2009 fell into disrepute, leading to elections in February, which I also observed. The opposition took two-thirds of the seats. And a majority of MPs were Islamists.
In general these men were moderate in temperament and fully integrated into Kuwaiti society. Nor did they bear Americans any ill will. For instance, I interviewed Dr. Naser al-Sane, a former MP active with the international Islamic Brotherhood. Dr. al-Sane had met with U.S. congressmen and his son attended college in America.
Nevertheless, liberty is not high on their list of national priorities. A religious bloc quickly formed, leading to talk about imposing a dress code on women. The group also called for making Sharia the source of all law, executing blasphemers, and closing down Christian churches. Only the Emir’s “no”—for instance, the government explained that the constitution protected freedom of religion—prevented these measures from becoming law.
This is a society in which liberal Kuwaitis choose Western dress and tell you which brand of alcohol they prefer. They also freely share their doubts about the monarchy. One younger Kuwaiti complained to me that “I am not sure that monarchy is the best system for Kuwait. The royal family now believes the country, property, and people belong to them.”
Indeed, the driving force behind the continuing protests that are challenging Kuwait’s government is the young. Al-Barrak and other long-serving MPs provide the public face of opposition. But al-Barrak called the youth “the heart of the movement.” My friend Shafeeq Ghabra, a political scientist at Kuwait University, estimates that 60 percent of Kuwait’s population is under 26, and 70 percent is under 29. Everyone I spoke with said young people were spontaneously pressing for change out of personal conviction—they were under no one’s control. “The youth are saying that this is their movement,” explained Ghabra.
That’s exciting. But it brings to mind Khaled al-Fadhala’s comment. Is all that matters that officials are democratically elected? Or should one elect people who will use their authority to protect the liberty of those doing the electing?
As yet there is no Kuwaiti Mohamed Morsi in the wings, ready to exercise dictatorial authority in the name of democracy. Nevertheless, seemingly reasonable people already said they were ready to kill blasphemers and destroy churches. One wonders if this is the world that young Kuwaitis hope to construct.
The ultimate objective in Kuwait, as in America, should be to create a free and tolerant society. Democracy is an important means to that end. But it is critical to limit State power before deciding who gets to exercise that authority.
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The Mundane Morality of Les Misérables

Posted on January 9, 2013 by Jordan Ballor at Acton Institute

Les MisérablesThe release of the film Les Misérables is a remarkable achievement, not only for its ambitious cinematic scope but also for its inspired cast and stunning dramatic and musical performances. A key driver of the ongoing popularity of the musical play over the better part of the last three decades is the source material’s deep moral and spiritual seriousness. The narrative focuses in large part on the transformation of Jean Valjean, who after nineteen years of hard labor as a violent criminal is released on parole to see “what this new world” might bring. The dynamics of sin and salvation, despair and hope, rigid legalism and the grace of the gospel, resonate with audiences, who are all able to find in this story something of themselves and their own experiences. This narrative is an exercise of the moral imagination at its finest.

There are a number of critical transitions in the plot that push the action in intriguing directions. One episode in particular is worthy of closer examination, since it illustrates what might be called the mundane morality of Les Misérables. We find that the obligations of the moral order fall equally upon all human beings; we are all, regardless of our wealth, power, or fame, moral agents responsible for our actions before God and toward others.

After his parole, Valjean faces a life dogged by his past, having been branded a violent criminal, unable to find work. As a laborer puts it, “You broke the law. It’s there for people to see. Why should you get the same as honest men like me?” Driven by the need to start over, Valjean eventually breaks his parole, and begins a new life under an assumed name, Monsieur Madeleine. Inspired by the loving example set by the bishop of Digne, whose charity made Valjean’s transformation possible, Valjean rises to prominence in Montreuil-sur-Mer, eventually becoming mayor of the town and the owner of a manufacturing enterprise.

It is at this point that Valjean’s past resurfaces, as Inspector Javert, who passionately pursues the outlaw Valjean, becomes suspicious of Monsieur Madeleine’s resemblance to the convict. His doubts are seemingly groundless, however, as another man has been rearrested as Valjean and is facing trial for his parole violation. When Valjean hears that someone else stands accused in his place, he faces a moral dilemma that functions as one of the critical turning points in the tale.

ValjeanAs Valjean puts it, “That stranger he has found, this man could be my chance!” All Valjean need do is “stay silent” and his past will be buried forever. But if he speaks up to correct the case of mistaken identity, the new life he has built will be destroyed and he will be forced to face the penalty for breaking his parole. There are in fact good reasons beyond mere self-preservation for Valjean to allow “this innocent who bears my face” to go “to judgment in my place.”

After all, thinks Valjean, he is in a position of some authority and responsibility now as mayor and business owner. “I am the master of hundreds of workers. They all look to me,” he thinks, “How can I abandon them? How would they live if I am not free?” Clearly Valjean’s choice will have consequences that affect others, including his workers as well as the suffering Fantine and the soon-to-be-orphaned Cosette.

Valjean is not mistaken to consider such effects, as his obligations towards others are indeed morally relevant. The dynamics of our social responsibilities are reflected in the Christian doctrine of vocation, which sees each one of us as uniquely situated by God in a complex network of relationships with varied moral significance. As Gustaf Wingren summarized the Lutheran teaching, vocation amounts to a place of responsibility before God and toward others. “In the earthly realm man always stands in relatione, always bound to another,” writes Wingren, “From this it is clear that every Christian occupies a multitude of offices at the same time, not just one: the same man is, for instance, father of his children, husband of his wife, master of his servants, and the office-holder in the town hall.”

CrowlandJackmanIt is in the varied complexity of these relationships, however, that the danger of self-justification arises. It is far too easy for us to over-emphasize the uniqueness of our responsibilities and our relationships to the extent that we minimize our objective and universal moral obligations. After all, if I am the only one who is placed as “master of hundreds of workers” and mayoral “office-holder in the town hall,” as in Valjean’s case, perhaps the fundamental moral obligation to not allow another to be unjustly punished for crimes he has not committed does not apply. Or in the case of business executives, perhaps their responsibility toward the well-being of their family, their shareholders, and their employees warrants some illicit or otherwise ethically dubious practices. Or in the case of politicians, perhaps the responsibility to their constituents means that the basic tenets of honesty and fair-dealing no longer apply.

It is precisely at this point that the mundane morality of Les Misérables shines through, as Valjean’s moral breakthrough recognizes his responsibility to come clean and “right this wrong” of mistaken identity. It is tempting to think sometimes that the basic rules of morality do not apply to us, that we are somehow above or beyond the law. But the reality is that there is no special morality for those who exercise greater responsibilities, whether in familial, economic, ecclesiastical, or political contexts. It is true that there is often in such cases greater moral complexity, but there is no dispensation for those in places of authority from mundane moral obligations. Valjean’s recognition of this fact represents one of the powerful insights of Les Misérables, and it is a lesson that ought to be recalled ever anew, especially by those tempted by the exercise of great power and authority to excuse themselves from the mundane obligations of the moral order.

 

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So What’s Next, Mr. President?

Nearly every decision made during Obama’s presidency has been conducted under the canopy of catastrophe.

| January 3, 2013: Posted on Reason.com

reasonwebsiteThe worst part of the fiscal cliff deal isn’t the specifics—though they do stink. It’s being reminded again how utterly detached Washington is from reality.

The question, now that we’ve finally hiked taxes on the rich (and doesn’t everyone feel better knowing that life is that much fairer?), is: How are we going to continue paying for the government we’ve been promised? As it turns out, raising tax rates on the “wealthy,” the most pressing issue of the Obama Age, amounts to a mere $62 billion of new revenue.

To put it in perspective, the deficit spending this year alone was more than $1 trillion. So the fiscal deal will supposedly bring in $620 billion in new revenue over the next decade, which is less than any year’s worth of debt under President Barack Obama. If redirecting resources from private-sector investments to green energy subsidies feels like a victory, congratulations.

But if you’re not a class warrior, a Hollywood studio, a maker of electric motorcycles, a booze producer from Puerto Rico, an algae grower or NASCAR—all of which are subsidized in the bill—you’re out of luck. For the rest of you, there are higher taxes. The expiration of the payroll tax holiday means that Washington will continue to pretend Social Security and Medicare are “paid for,” and according to the Tax Policy Center, 77 percent of you will see your taxes rise an average of $1,635 per year.

The “American Taxpayer Relief Act of 2012,” indeed.

For all of you, there is also more debt, as the Congressional Budget Office found that the fiscal cliff deal increases the deficit by $4 trillion.

Yes, this is what Americans voted for in November. But if we’re supposed to believe that this deal reflects a “balanced, responsible” approach as the president asserts, what does the future hold? The GOP has surrendered on its core issue: It voted for a tax hike. Obama? No spending cuts. No tax reform. No debt reduction. No entitlement reform. There is no balance. And none is coming.

How can we expect any useful policy to emerge from manufactured crisis, anyway? Nearly every decision made during Obama’s presidency has been conducted under the canopy of catastrophe. The result is hastily assembled legislation that is larded up with goodies. It’s no accident.

And a newly elected Congress will be immediately submerged into another round of “negotiations,” this time centered on the debt ceiling (which we’ve already hit). Failure to surrender to the president’s demands allows the media to portray Republicans as the ones pushing the nation into default/over cliffs/etc. Low-information voters will soon be informed by Democrats that the debt ceiling, rather than debt, is the villain.

Even if we concede that Republicans, with no leverage or leadership to speak of, did the best they could in averting even higher taxes, they still lost. And the dynamics of the debate have not changed. This might be politically fortuitous for the president, but it is a disaster for the rest of us. Obama is unserious about debt because anything that cuts the size of Washington threatens his agenda. But a looming $50 trillion unfunded entitlement crisis is real. And the party in charge hasn’t offered any concrete ideas on how to deal with it.

So now that the rich pay more, it’d be nice if we could stop incessantly complaining about how dysfunctional Washington has become—as if ideological unanimity were something to be desired in a free nation—and start talking about how indifferent the president has been on one of the critical issues we face.

 

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Taxes to Rise on Most American Workers

The Heritage Foundation Morning Bell: Amy Payne January 2, 2013 at 8:57 am

Fiscal Cliff IcebergRepresentative Nancy Pelosi (D-CA) called it “a happy start to a new year.” That probably tells you all you need to know about the fiscal cliff deal that passed the House last night.

The bill—which President Obama has promised to sign, though he took off for Hawaii again after the vote—has a 10 to 1 ratio of tax increases to spending cuts. This is the President’s version of a “balanced” approach.

In addition to tax increases on Americans making more than $250,000 a year, the bipartisan deal will actually raise taxes on the vast majority of American workers. How? The payroll tax “holiday” has ended. The Wall Street Journal calculates that the “typical U.S. family earning $50,000 a year” will lose “an annual income boost of $1,000.”

Meanwhile, the higher tax rates will hit small businesses and investors—which is grim news for a country in need of new jobs.

“It is the small businesses that employ the most workers who will pay the higher rates,” explains Heritage’s Curtis Dubay. “These tax hikes on investment will further dampen investment and result in even less job creation. This is more bad news for the 12 million unemployed Americans.”

While the President touted a “balance” of tax hikes and spending cuts, the truth is that the bill increases government spending by about $330 billion.

Though Congress and the President have known for two years that they would have to do something about all the expiring tax rates, they waited until after the deadline had passed. This resulted in lawmaking for which “irresponsible” is not a strong enough word.

The Senate voted without knowing the cost of the bill—the Congressional Budget Office had not even had time to go through it.

The legislation passed both chambers of Congress within a 24-hour period on a holiday, which meant that Members of Congress—much less the American people—did not have time to find out what was in the 157-page bill.

Business Insider notes that all of the new tax rates are “‘permanent,’ meaning that Congress would have to agree to change them. This is a big deal. Almost every fiscal agreement reached by Congress since the Bush tax cuts of 2001 has been scheduled to phase out at a future date.”

After all the damage this deal has done, Congress isn’t through yet. Well, this Congress is—the outgoing lawmakers make their exit on Thursday, and the new Congress will be coming in. It will face the real consequences of the across-the-board budget cuts to defense known as sequestration, which this deal postponed for two months.

It will also face the U.S. debt limit. President Obama said last night that he is in no mood to get into another debt limit fight—even though that is inevitable.

“While I will negotiate over many things, I will not have another debate with this Congress over whether they will pay the bills they’ve already racked up,” Obama said.

But that debate is coming. This time, rather than grandstanding, Obama must deliver on his promise of a “balanced approach,” now that he has locked in his class warfare tax hikes. That means reforms to rein in entitlement spending in particular. The $650 billion fiscal cliff distracted from the $48 trillion looming fiscal crisis—the long-term funding obligations of Social Security and Medicare.

Without spending cuts and real entitlement reforms, that fiscal iceberg remains dead ahead.

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