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by Will Rogers | Jul 27, 2011
In his recent visit to our state, President Obama toured Alcoa, one of the world’s largest manufacturers of aluminum, located in Davenport, IA. As a part of his visit, President Obama praised the manufacturing sector of the economy and touted the strong growth of private sector jobs over the last 15-months of his administration. President Obama also mentioned in his speech that not only had Alcoa rehired laid-off workers, but that it was anticipating the need to add new employees to its workforce.
I am delighted that the President recognizes the positive impact private sector manufacturers are having on the economy, but what he failed to mention as a part of his visit was that he is advocating for repeal of the Last-In, First-Out accounting method, which would devastate businesses in our country, cost workers their jobs, and hurt our recovering economy.
The Last-In, First-Out accounting method, better know as LIFO, is a textbook accounting method that has been used by businesses for over 70 years. LIFO allows businesses to manage inventories in a way that helps protect assets from the costs associated with inflation. As a part of this method, businesses may incur a tax liability that has been held over from one year to the next, which is called a LIFO reserve.
President Obama proposes that the LIFO reserve should be eliminated and that businesses should pay a retroactive tax on this liability. Estimates put the amount the federal government would stand to collect from repealing LIFO at between $50-100 billion dollars.
President Obama says that he is only trying to end a tax break for oil companies and billionaires, so he can reduce deficit spending. And, while I applaud his, and other, noble efforts to reduce deficit spending and lower our national debt, repealing LIFO is precisely the wrong way to go about it.
The President and so many others who are advocating for the repeal of LIFO don’t seem to understand that this one time shot of revenue would have a chilling effect on the recovering U.S. economy and devastate businesses that use LIFO, many of which are manufacturers and wholesalers.
President Obama is correct that many of the largest U.S. oil and energy companies use LIFO. But so do many of our largest manufacturers and wholesalers, such as Archer Daniels Midland, Caterpillar, U.S. Steel, Nucor, Wal-Mart, and Dupont. Alcoa, the same company that President Obama praised during his visit to Iowa, has the 10th largest LIFO reserve in the country.
And many Iowa businesses would be hurt by LIFO repeal. John Deere, Meredith Publishing, Sukup Manufacturing, and Winnebago Industries, all use LIFO. So do farm equipment dealers, automobile dealers, grocery stores, and many other main street businesses.
A repeal of LIFO would have a huge impact on jobs as well. Employers would have to scramble to pay retroactive taxes and would be forced to lay off workers, cut health care benefits, stop contributions to 401(k) plans, and cancel planned hiring.
President Obama should take LIFO repeal off the table as part of his deficit reduction talks with Congress. And, if he won’t, Congress should refuse to pursue LIFO repeal as a part of the negotiations process for the sake of our country.
Reprinted from The Retailer, an Iowa Nebraska Equipment Dealers Association Publication, by permission.
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by Steven Waechter | Jul 26, 2011
Talking points are truly amazing things. They capture the essence of the obsessions of political operatives. The political news has recently been dominated by the talking points surrounding the debt ceiling debate, with the main terms of choice being the assorted variants of “apocalypse.â€
First of all, failing to raise the debt ceiling would not automatically lead to a default on the national debt. The federal government would continue to collect revenue, and could use that revenue to pay debt obligations as they fall due, or in other words, pay the coupon interest on time. This would involve deep cuts to everything else, and if you are a professional politician that is synonymous with impossible, so there is an assumption that default would be the result.
And that default would be “apocalyptic,†“a catastrophe,†“a disaster,†or would “cost us our credit rating,†– which is doomed anyway because it is a mirage; the federal government is borrowing 40% of the money it spends this year and is projected to do so for the next ten. This is not a debtor worthy of a AAA rating, and the only reason we haven’t seen a failed bond auction is because the Federal Reserve has been buying everything in sight.
Professional politicians who never saw a dollar belonging to somebody else that they wouldn’t spend, now lecture us on the importance of borrowing money to pay the obligations on the money they borrowed to spend on political goodies. We are told of the need to increase our debts to stay current on our debt payments.
When individuals pay debts with new debts (called “Surfing†by finance experts) it is usually the last desperate trick before they call a bankruptcy lawyer. When our political overlords do it, they demand to be: 1. Re-elected; 2. Paid more; 3. Given a medal or an honorary Ivy League doctorate.
The apocalypse for the Democrats is that this issue is coming to a head too soon. Over the next ten years, a majority of the baby-boom generation will be enrolled in Social Security and Medicare. And, as the American economy continues to die over the next ten years, it is thought that these voters will be more frightened of losing benefits than of the country collapsing under the weight of the debt. Government dependency is the Democratic Party’s stock-in-trade, and they will be there to defend all government spending with borrowed (or more likely, printed) money.
In their calculation, if they can only delay the eventual tipping point where the economy just can’t take more debt, then as things continue to get worse more voters will fear losing Big Government than losing everything to Big Government.
While we’re talking about Medicare, some time soon you should do a web search for “unemployed college graduates,†and see how many news articles you can find. Think about this: A generation wants to get government-financed benefits, while a younger generation is chronically underemployed and not paying much money in FICA (Federal Insurance Contributions Act), the tax that funds Medicare. No job means no wages; no wages means no FICA; no FICA means no Medicare – unless they print the money and finance it with pure, un-tempered inflation.
The professional politicians cannot get us out of this problem; it is in their best interest to make the problem bigger. The cynicism is downright psychopathic – make sure that so many people depend on your appropriations that you cannot lose power even if the country is completely bankrupted. This, I fear, is what most Congressional Democrats, and probably most Congressional Republicans, intend to do.
It must stop. It is time to stop rewarding politicians who successfully loot the public treasury by affixing their names to schools, institutes, nature trails and wildlife refuges as recognition of their long and illustrious careers of running the nation into serfdom.
I’ve been told that veteran bankruptcy lawyers have a common speech they give to their clients who feel guilty or ashamed about the debts they’ve run up. They say “Stop that. Do you think corporate CEO’s feel guilty when they restructure debt? No! You are Mr. and Mrs. X, Incorporated, and you are getting out of debt.â€
We need to put down the pride, the guilt, and the illusions of prosperity fashioned by self-interested politicians, and declare that we are the United States of America, Incorporated, and we are getting out of debt. If we don’t, we will default eventually anyway either directly or through currency devaluation, but by then our nation will not have a future. At all.
[Note: The first article “On National Debt, Default is Inevitable,†the numbers in the article were from the Monthly Statement of the Public Debt, June 2011, but the link inside the article was to the Monthly Statement of the Public Debt from June 2010. Apologies for the error.]
Photo Becky Stares – Fotolia.com
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by | Jul 22, 2011
The following is the second installment of a two part piece. The first is entitled “The Stench of Impropriety: Tom Harkin, Al Franken, Herbalife International, and The F.R.E.E.D Actâ€, and can be viewed below.
In part one of this piece, I introduced you to the relationship between Tom Harkin and his largest campaign contributor, Herbalife International. A partnership that demonstrates the perils of an incestuous system of politics and money, and ultimately played a part in Harkin’s introduction of the F.R.E.E.D. Act in the U.S. Senate. As bad as that looks, what the bill actually proposes to do is just as bad.
The act itself is only impressive in that it manages to hit the Liberal trifecta—it is completely devoid of any traditionally rational Constitutional basis, it increases and empowers an unelected bureaucracy to spend our money, and is a blatant attempt to further grow the entitlement base (which we can’t afford as it is now).
As the name suggests the stated mission of the bill is “to enhance and further research into the prevention and treatment of eating disorders, and for other purposesâ€. The bill opens with an assortment of claims and statistics meant to spur the reader into supporting its “heroic†intentions. Included here is that, “estimates, based on current research, indicate that at least 5,000,000 people in the U.S suffer from eating disorders including anorexia nervosa, bulimia nervosa, binge eating disorder, and eating disorders not otherwise specified†and “anecdotal evidence suggests that as many as 11,000,000 people in the U.S, including 1,000,000 males, may also suffer from these disordersâ€.
Naturally, the way this legislation would solve this problem is to create more agencies, throw an undisclosed amount of money around, and as mentioned above, amend and expand the Social Security Act of 1935 to ensure that we as taxpayers pay as much as possible in curing our fellow citizens’ ills.
The additional bureaucracy it proposes creating would exist inside The Department of Health and Human Services and be named—I kid you not—“The Interagency Eating Disorder Councilâ€, and be funded from 2012 through 2016. To run this Council and to award grants (i.e. our tax dollars) would be the Director of The National Institute of Health, Francis S. Collins. His job would be to hand out money, as he saw fit, to various non-profits, colleges, State or local health departments, and community based organizations.
The bill states that the grant money is to be awarded for, among other things, the following reasons: to conduct a study regarding the economic costs of eating disorders that would “examine years of productive life lost, missed days of work, reduced work productivity, costs of mental health treatment, costs to family, and costs to society as a result of eating disordersâ€. In addition, money would also be required to go to “promoting positive body image development, positive self-esteem development, life skills that take into account cultural and developmental issues and the role of family, school, communities and the connection between emotional and physical health, and the prevention of bullying based on body size, shape, and weight.â€
In short it is an embodiment of the kind of financially irresponsible, Constitution-shredding, emotionally-driven, nanny-state legislation that modern day American liberals have become synonymous with.
When it comes to co-sponsor Sen. Franken, though Herbalife did throw him $250, my sense is that he is in it for the pure ideological benefit of expanding the entitlement base…otherwise known as Section 938 of the F.R.E.E.D Act.
Section 938 is entitled “Grants to Support Patient Advocacyâ€, and would essentially require an unspecified amount of our tax dollars to be spent “diagnosing†people with eating disorders and enrolling them in Federal programs. In the bills words, the funds would be spent to “provide education and outreach in community settings regarding eating disorders and associated health problems, especially among low-income, minority, and medically underserved populationsâ€, (Sect. 938(c)(1)); “providing education and outreach regarding enrollment in health insurance, including enrollment in Medicare, Medicaid, and the Children’s Health Insurance Program (SCHIP)â€, (Sect. 938(c)(6)); and for, “Identifying, referring, and enrolling underserved populations in the appropriate Health Care agencies and community based programs and organizations in order to increase access to high quality health care servicesâ€, (Sect. 938(c)(6)).
It has long been believed by liberals that the surest way to get to a single payer health care system is to get enough people dependent on the government for this service that the private insurance sector can no longer exist. My view is that Sen. Franken (and probably Sen. Klobuchar and Sen. Harkin) wrote this part of the bill to hasten this process by further adding to the 16 million people that Obamacare is already slated to dump into Medicaid in the coming years.
Indeed this bill has a little something for everyone. The citizens among us deemed to have an eating disorder would get free medical attention, Herbalife International would be eligible to bill the Federal government for weight loss and eating disorder “treatmentsâ€, Al Franken could successfully move us one step closer to socialized medicine, and Harkin, well he has already gained $137,916 in campaign contributions (no matter the ultimate fate of the bill).
Those left among us who still respect the Constitution and its clear vision of the role of Federal government know that somewhere along the way we have failed it. Every single element of this bill, from the spirit in which it was offered, the language it contains, and the system it arose from is the epitome of this failure. I would argue that not only does this bill need to be stopped, but the institutionalized system of political donations from private companies needs to be abolished. Until such reform comes there will be no reprieve to the endless wave of disastrous special interest legislation that this bill represents.
It is we the American people that need to be F.R.E.E.D.
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by | Jul 19, 2011
Harkin and Herbalife
Every reasonable American with a pulse knows that much of what goes on in the undercurrents of Washington D.C is disturbing. It is not often, however, that one proposed piece of legislation encapsulates nearly everything that is wrong in our Federal Government, unfortunately that is exactly the case with Senate file 481.
The name of this bill is the Federal Response to Eliminate Eating Disorders, or the F.R.E.E.D Act. It is sponsored by Sen. Tom Harkin (D-IA), co-sponsored by Sen. Al Franken (D-MN) and Sen. Amy Klobuchar (D-MN), and was introduced in the Senate on March 3, 2011. If you have ever wondered what Tom Harkin and Al Franken have been up to lately you are about to find out not just the what, but more appallingly the why.
Before examining the wide ranging particulars of the bill, let us first take a look at a very suspicious factor in its origin— a company called Herbalife International.
Without getting too far into the maze of legislative language (though you are welcome to do just that by following the links), what this bill does is continue the re-write of The Social Security Act of 1935 that The Patient Protection And Affordable Health Care Act (Obamacare) began in 2010.
Specifically the F.R.E.E.D Act does the following:
• Redefines what our tax dollars can pay for by amending Sect.1905 of the Social Security Act (SSA) to add coverage for—screening, counseling, and non-prescription drugs used in the treatment of eating disorders.
• Amends Sect. 1927(d)(2)(A) of the SSA by removing the restriction that specifically excludes payment for—“agents when used for anorexia, weight loss, or weight gainâ€.
• Though it was passed only last year, amends Obamacare to include coverage for eating disorders treatment.
The effective implication of this, among other things, is that it would authorize Medicare and Medicaid pay-outs for over-the-counter drugs used in the “treatment†of eating disorders. For a private company which sells such products this change in the law would represent nothing less than the Holy Grail—government purchased sales.
In what would be a remarkable coincidence, Tom Harkin’s biggest political contributor over the last 22 years is a company called Herbalife International. Not an agro products company, an insurance provider, or a labor union as you may suspect, Herbalife International is in fact a global nutrition and supplement company that specializes in “healthy†weight loss.
Herbalife International earns the distinction of becoming Harkin’s biggest single donor by having given him a total of $137,916.00 since 1989. Between the years 2005-2010 they gave Harkin $55,606.00, a display of generosity which came after already having donated over $40,000.00 to him in the 2004 campaign cycle alone.
Some investigating shows that not only does Herbalife International have a wide range of products directly or indirectly tied to weight gain, weight loss, and eating disorders, but that the issue is one of a deeply personal nature for the company. Herbalife was founded in 1980 by a man named Mark Hughes, now deceased, whose inspiration for starting the company was his belief that his mother died of an eating disorder and an “unhealthy approach to weight lossâ€.
While there is no way of knowing what they have in the future pipeline, the products they currently offer that directly relate to eating disorders include Zinc and Thiamine B1 supplements. The medical link lies in the fact that a person suffering from an eating disorder, by nature, has deficiencies of these compounds in their system, which supplements can effectively correct.
Illustrating the connection between nutritional supplements and eating disorder treatment is a report released by the Royal College of Psychiatrists in London entitled “Guidelines for the nutritional management of anorexia nervosaâ€. One of many similar studies, it recommends that in planning the diet for a patient with anorexia, particular attention should be given to “the need for long-term, well balanced vitamin and mineral supplementationâ€. It goes on to say that “A significant proportion of patients with anorexia nervosa are deficient in thiamine, and the increase in carbohydrate metabolism that occurs during re-feeding may exhaust inadequate thiamine reserves. The use of prophylactic thiamine supplements in oral form is recommended for in-patients and those undergoing rapid weight gainâ€.
In addition to the already defined role that supplements have in treating eating disorders with Zinc and Thiamine, there are ongoing studies looking at whether the lack of these in the body may actually cause the onset of eating disorders, opening the possibility that in the future such supplements may also be used in preventative care.
By all appearances what we have here is a major global company giving a U.S Senator over $90,000.00 in a seven year period and then being the beneficiary of a sweeping piece of legislation, sponsored by said Senator, which authorizes our government to pay for the company’s products.
It would be a mistake to conclude this is a simple case of a company giving a legislator money to be their puppet; in fact Tom Harkin has been one of Capital Hill’s loudest advocates for alternative medicine and prevention for 20 years now. In 1992 he was primarily responsible for the Office of Alternative Medicine coming into existence, and in early 2009 said the following:
On several occasions, I have laid down a public marker, saying that if we pass a bill that greatly extends health insurance coverage but does nothing to create a dramatically stronger prevention and public health infrastructure and agenda, then we will have failed the American people.
Clearly he feels Obamacare has “failed the American people†and is proposing this bill to make it even more inclusive and expansive, which is certainly his prerogative.
Whether or not he has a genuine conviction on this issue, and frankly I believe he does, is beside the point. What is at issue here is that his largest political donor stands to make gigantic amounts of money should legislation that he proposed be signed into law.
Though we have allowed and accepted the institutional development of these types of relationships and practices, we as the American public have a right to know about them when they occur.
Note: Tom Harkin’s Washington D.C office was contacted for comment and clarification regarding this story. So far they have provided neither, as soon as they do this story will be updated.
This is only one of many disturbing elements of this legislation. Here is part two entitled: “The Stench of Impropriety: Your Tax Dollars, Your Body Image, and The Government (Part 2 of 2)”, where many other provisions of this bill are examined, including Al Franken’s involvement.
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by John Bloom | Jul 13, 2011
The Des Moines Register’s Opinion Section on Sunday, July 3, 2011 featured a “Progressives Trifecta†of half-truths and sophistry:
Richard Doak – What if the founders were around today?
Donald Kaul – My favorite 4th of July speech
Dean Baker – Keep Social Security safe from politicians who want to save it
This week I will focus my comments on Donald Kaul’s article sub-titled “Real patriotism requires coming to terms with the grimmer side of American historyâ€.
Donald Kaul – He shares viewpoints about the things he likes and dislikes about the 4th of July. He likes back yard gatherings but he dislikes patriotic claptrap. He likes patriotism, defined as acts of citizenship and service, but dislikes speechifying. He likes the flag itself but dislikes flag-waving, defined as substitute emotionalism for rational behavior. My primary issue with his meandering opening is that he never refers to the holiday by its real name, which is Independence Day, not the “Fourth of Julyâ€.
- Flag Waving Emotionalism-His example of substituting flag-waving emotionalism for rational behavior is “War, for example. How many times have nations been led into truly stupid wars behind a flowing flag? Does the word Iraq suggest anything to you?â€
The rest of the story: Which Iraq war was Mr. Kaul referring to? Why did he select war(s) started under Republican Presidents, but not include Vietnam, started under Democrat Presidents?  There was meaningful United Nations support for both military actions in Iraq. There was minimal UN involvement in the military actions in Vietnam. His point about irrational behavior would have seemed less partisan had he said “Does the word Vietnam suggest anything to you?â€.
- Favorite Fourth of July Speech-He proceeds to inform his readers about the great black orator and civil rights leader, Frederick Douglass. He rightfully acknowledges the key role that Douglass played in pointing out the hypocrisy of the “Independence Day†celebration of 1854, a time when slavery was a legal practice in southern states and segregation a common practice almost everywhere in the United States.
The rest of the story:  Mr. Kaul does not fully inform us about the political party that was responsible for the safeguarding of slavery between 1789 and 1854.  That was the Democrat Party.  Frederick Douglass supported abolitionist John C Fremont in the 1864 Republican primary.  Lincoln, who won the nomination and the election, was a moderate, not a radical abolitionist. Douglass eventually reconciled himself with Lincoln’s shortcomings and legacy. Douglass supported Republican Ulysses S. Grant in 1868. Mr. Kaul, why not acknowledge that Frederick Douglass’ speech was about injustices imposed by Democrats, including Thomas Jefferson and Andrew Jackson?
(On a side note, I wish influential liberal writers like Mr. Kaul would acknowledge that Republicans drafted and passed the 13th, 14th and 15th amendments ending slavery, providing citizenship and voting rights to all minorities. It is a tragedy that the Supreme Court later gutted the clear intention of these amendments with the Cruikshank decision of 1876. After that, southern Democrat Senators prevented enforcement rights for 88 years until a coalition of Republican and Democrat Senators prevailed with the Civil Rights Act of 1964 and the Voting Rights Act of 1965.)
- Tulsa Race Riot- He concludes with a review of the history of the Tulsa race riot of May 31, 1921. The Wikipedia article on this event varies substantially with Mr. Kaul’s article, but my interests are not to quibble over details.  It was a deplorable event driven by unreasonable fear and hatred stirred up by sensationalistic newspaper reporting.   The town’s black community was burned to the ground and they suffered a large number of deaths and injuries. I support Mr. Kaul’s desire to educate the public about this event.  Our nation’s history has too many examples of horrible behavior denying life and liberty to minorities and the underprivileged.
The rest of the story:  Now, it is also a fact that the state of Oklahoma originated in 1907 and had Democrat Governors until 1963. The Governor in 1921 was Democrat, James Brooks Ayers Robertson.  An article from the Encyclopedia of Oklahoma History and Culture, referring to the early years of the state legislature, “The legislature banned interracial schools at all levels. Many public facilities along with common carriers were segregated. Some 540 railroad depots in the state had to be altered to fit the new separate waiting rooms requirement, while new coaches also had to be added to the lines. Over time, legislators segregated everything from hospitals to housing to cemeteries to restaurants. In 1915 Oklahoma made national history by becoming the first state in the Union to segregate public pay telephone booths.â€.[1] Mr. Kaul, why don’t you acknowledge that the Tulsa race riot was a product of the racist history of the Democrat Party?
[1] http://digital.library.okstate.edu/encyclopedia/entries/S/SE006.html
