Mises Daily: Wednesday, December 02, 2009 by Floy Lilley Floy Lilley is an adjunct scholar at the Mises Institute. She was formerly with the University of Texas at Austin's Chair of Free Enterprise, and an attorney-at-law in Texas and Florida. There are three things everybody knows when we talk trash: 1.We know we're running out of landfill space; 2.we know we're saving resources and protecting the environment by recycling; and 3.we know no one would recycle if they weren't forced to. Let's look at these three things we think we know. Are they real or are they rubbish? 1. Are We Running Out of Landfill Space? Two events created the perfect garbage storm in the late 1980s. One barge and one bureaucrat created this overhyped myth. The garbage barge was the Mobro 4000. The bureaucrat was J. Winston Porter. The Mobro 4000 gained celebrity status by spending two months and 6,000 miles seeming to scour the Atlantic coastline and the Gulf of Mexico looking for a home for its load, as if no landfills existed. The physical availability of landfill space was not the issue, but you would not have guessed that from the hysteria the media whipped up. J. Winston Porter became a star that season at the Environmental Protection Agency (EPA) by writing a report entitled The Solid Waste Dilemma: Agenda for Action, in which Porter proclaimed that recycling is absolutely vital because America is running out of landfill space. What Porter thought he knew was simply not so. The EPA had noticed that the number of landfills was dropping. They failed to notice that the size of landfills was getting much bigger much faster. Total landfill capacity was actually rising. The EPA also underestimated the prospects for creating additional capacity. Obviously, and as usual, the real landfill problem is not a landfill problem at all but a political problem. "Fears about the effects of landfills on the local environment have led to the rise of the not-in-my-back-yard (NIMBY) syndrome, which has made permitting facilities difficult. Actual landfill capacity is not running out." Today, 1,654 landfills in 48 states take care of 54 percent of all the solid waste in the country. One-third of them are privately owned. The largest landfill, in Las Vegas, received 3.8 million tons during 2007 at fees within the national range of $24 to $70 per ton. Landfills are no longer a threat to the environment or public health. State-of-the-art landfills, with redundant clay, plastic liners, and leachate collection systems, have now replaced all of our previously unsafe dumps. "We are not running out of landfill space."More and more landfills are producing pipeline-quality natural gas. Waste Management plans to turn 60 of their waste sites into energy facilities by 2012. The new plants will capture methane gas from decomposing landfill waste, generating more than 700 megawatts of electricity, enough to power 700,000 homes. Holding all of America's garbage for the next one hundred years would require a space only 255 feet high or deep and 10 miles on a side. Landfills welcome the business. Forty percent of what we recycle ends up there anyway. We are not running out of landfill space. 2. Are We Saving Resources and Protecting the Environment by Recycling? What are the costs in energy and material resources to recycling as opposed to landfill disposal, which we've just looked at? Which method of handling solid waste uses the least amount of resources as valued by the market? As government budgets tighten and the cost of being "green" rubs against the reality of rising taxes, recycling coordinators like Auburn University's Leigh Jacobson will increasingly be under pressure to justify their programs as cost-effective alternatives to waste-disposal methods like landfills. I don't think she will be able to do it. But it should be easier for Leigh at the university than it will be for her counterpart in the City of Auburn, or in any city that funds curbside recycling. Curbside recycling is substantially more costly - that is, it uses far more resources - than a program in which disposal is combined with a voluntary drop-off/buy-back option. Overall, curbside recycling's costs run between 35 percent and 55 percent more than other recycling methods, because it uses huge amounts of capital and labor per pound of material recycled. Recycling itself uses three times more resources than does depositing waste in landfills. The largest US organization dedicated to recycling just found out how difficult this chosen path can be. The final death knell for the National Recycling Coalition (NRC) appeared to ring earlier this year when the organization announced it would be filing for Chapter 7 bankruptcy. The NRC ceased operations and terminated all staff members at the close of business on September 4, shortly after an attempt to merge with Keep America Beautiful failed. NRC is now trying to avoid bankruptcy by reorganization. Even though they are a half-million dollars in debt, NRC may legally continue to exist if they can raise funds, negotiate with their creditors and develop a business plan. What seems to be their business plan? They are counting on the Kerry-Boxer Bill on clean energy to include recycling language. In other words, they are counting on being bailed out and subsidized. The market knows this is a losing proposition, so these players are trying to get taxpayers to fund their enterprises. "Wherever private-property rights to forests are well-defined and enforced, forests are either stable or growing."The Solid Waste Association of North America found that, of the six communities involved in a particular study, all but one of the curbside recycling programs, and all the composting operations and waste-to-energy incinerators, increased the cost of waste disposal. Indeed, the price for recycling tends to soar far higher than the combined costs of manufacturing raw materials from virgin sources and dumping rubbish into landfills. Recycled newspapers must be deinked, often with chemicals, creating sludge. Even if the sludge is harmless, it too must be disposed of. Second, recycling more newspapers will not necessarily preserve trees, because many trees are grown specifically to be made into paper. The amount of new growth that occurs each year in forests exceeds by a factor of 20 the amount of wood and paper that is consumed by the world each year. Wherever private-property rights to forests are well-defined and enforced, forests are either stable or growing. Glass is made from silica dioxide - that's common beach sand - the most abundant mineral in the crust of the earth. Plastic is derived from petroleum byproducts after fuel is harvested from the raw material. Recycling paper, glass, or plastic is usually not justified compared to the virgin prices of these materials. The best way to measure the scarcity of natural resources, such as trees, sand, or oil, is to use the market prices of those resources. If the price of a resource is going up over time (and it's not just inflation pushing those prices higher) the resource is getting scarcer. If the price is going down, it is becoming more plentiful. Indeed, since 1845, the average price of raw materials has fallen roughly 80 percent after adjusting for inflation. This paradox of our having more by using more is explained by the use of the most important resource - man's mind. Human ingenuity makes natural resources increasingly available through prices, innovation, and substitution. Bureaucrats, however, appear to occupy a place at the opposite end from human ingenuity. Their interferences in markets do damage. Just two examples will illustrate what I mean by that. One is about a light that has a dark side. The other example requires that you either clean your plate or become a composter. In 2007, Congress banned incandescent bulbs - not exactly a market action. The phasing out of incandescent light is to begin with the 100-watt bulb in 2012 and end with the 40-watt bulb in 2014. By 2020, bulbs must be 70 percent more efficient than they are today. While a standard, 100-watt bulb costs $1.24, the spiral compact fluorescent light (CFL) 100-watt sells for $4.97. Advocates argue, however, that the CFL lasts longer and uses less energy. The packaging claims that after six years I will have saved $74 in energy. Thereby, in the year 2007 alone, under this edict, some 397 million compact fluorescent light bulbs were placed on the market. Their debut is counted as a success. "Recycling would seem to be the philosophy that everything is worth saving except your own time and money."However, the recycling of spent household CFLs has been an abject failure. Despite CFL-disposal bans in states like Maine, despite continuing statewide education efforts, and despite a free CFL-recycling program there, households throw the used bulbs into the trash that ends up in the landfills. What's the problem with that? Landfills, as we've learned, have the space and the appetite for our waste. Well, the problem is the potential public and environmental health effects of the collective release of the small amount of mercury in each discarded CFL. For example, using the mean amount of 5 milligrams per CFL, the total amount of mercury contained in the 2007 shipments of CFLs alone is a large amount. There is no mention on GE's packaging of the bulb's mercury component or any special precautions you must take when this bulb breaks. Notice that "mercury free" is already a selling point for the producers of new LED technology Accent bulbs. "Accent" means you can't actually get enough light from them to read by. But, you can tell the packager has obviously experienced how ugly the CFL-produced light is, because the buyer is assured a warm, white light, which is something you do not get with a CFL. In June of this year, Maine adopted the nation's first law that requires CFL bulb manufacturers to share the costs and responsibility for recycling mercury-containing CFLs through a producer-financed collection and recycling program, which must include an education component. This mandate will drive the CFLs' cost even higher. Additional specialized equipment will have to be created for handling light bulbs that will be seen to be hazardous waste. How can any savings ever result from such a boondoggle? Then, bringing new depth and meaning to the word "boondoggle," San Francisco's newest mandatory-recycling ordinance took effect last month. All residences, all restaurants and all commercial buildings must participate in the city's recycling and composting programs. A recent study had unearthed the fact that 36 percent of the city's landfilled waste is compostable. That happens to be the ingredient that makes the landfill valuable as an energy source. Collecting your food scraps, plant trimmings, soiled paper, and other compostables is considered necessary by San Franciscans to fight global warming. Residents get both a green cart and a green report titled "Stop Trashing the Planet." Residents face $100 fines if they fail to separate their food scraps from their papers or cans. Businesses face fines of $500. Really bad actors could be fined $1,000. The stated goal is to get to zero waste, meaning no garbage at all going into landfills, by the year 2020. Obviously, San Francisco believes we have run out of landfill space. Obviously, they do not have the vision to see the energy plants that landfills can become when waste is actually put in them. In light of these facts, how can San Franciscans and others think recycling conserves resources? First, many states and local communities subsidize recycling programs, either out of tax receipts or out of fees collected for trash disposal. That's the case with Auburn University's recycling grant. Thus the bookkeeping costs reported for such programs are far less than their true resource costs to society. Also, observers sometimes erroneously compare relatively high-cost, twice a week garbage pickup with relatively low-cost, once or twice a month recycling pickups, which makes recycling appear more attractive. "Mandated recycling exists mainly because there is plenty of money to be made by labeling products as "green" or "recycled" to get municipal and federal grants."Why do these same people think that recycling is protecting the environment by not polluting? Recycling is a manufacturing process, and therefore it too has environmental impact. The US Office of Technology Assessment says that it is "usually not clear whether secondary manufacturing such as recycling produces less pollution per ton of material processed than primary manufacturing processes." Increased pollution by recycling is particularly apparent in the case of curbside recycling. Los Angeles has estimated that its fleet of trucks is twice as large as it otherwise would be - 800 versus 400 trucks. This means more iron ore and coal mining, more steel and rubber manufacturing, more petroleum extracted and refined for fuel - and of course all that extra air pollution in the Los Angeles basin as the 400 added trucks cruise the curbs. Manufacturing paper, glass, and plastic from recycled materials uses appreciably more energy and water, and produces as much or more air pollution, as manufacturing from raw materials does. Resources are not saved and the environment is not protected. 3. Do People Recycle Only When They Are Forced To? If all we knew about recycling was what we heard from environmentalist groups, recycling would seem to be the philosophy that everything is worth saving except your own time and money. Costs of recycling are mostly hidden. If we add in the weekly costs of sorting out items, it makes more sense to place everything in landfills. But private recycling is the world's second oldest, if not the oldest, profession. Recyclers were just called scavengers. Everything of value has always been recycled. You will automatically know that something is of value when someone offers to buy it from you, or you see people picking through your waste or diving into dumpsters. Aluminum packaging has never been more than a small fraction of solid waste, because metals have value. Ragpickers separating out cloth from waste may not be in season now, but cardboard, wood, and metals have always been in some demand. Scrapyards recycle iron and steel because making steel from virgin iron and coal is more expensive. Members of the Institute of Scrap Recycling Industries recycle 60 million tons of ferrous metals, 7 million tons of nonferrous metals, and 30 million tons of waste paper, glass, and plastic each year - an amount that dwarfs that of all government (city, county, and state) recycling programs. Recycling is a long-practiced, productive, indeed essential, element of the market system. Informed, voluntary recycling conserves resources and raises our wealth, enabling us to achieve valued ends that would otherwise be impossible. So yes, people do recycle even when they are not forced to do so. Henry Hazlitt and Ludwig von Mises speak to our recycling topic. However, forcing people to recycle makes society worse off. Mandated recycling exists mainly because there is plenty of money to be made by labeling products as "green" or "recycled" to get municipal and federal grants. In Economics in One Lesson, Hazlitt teaches us that mandatory recycling considers only-short term benefits to a few groups - politicians, public-relations consultants, environmental organizations, and waste-handling corporations - instead of looking at the longer-term effects of the policy for all groups. The negative consequence will be the squandering of human resources. In conclusion, Mises also teaches us what to expect. Mises, in his great work Human Action, does not say that recycling is a bad belief. He shows by example that mandatory recycling is an inappropriate means of caring about the environment. Waste is inescapable. Austrian economics leaves it to every person to decide whether his or her belief in recycling is more important than the avoidance of the inevitable consequences of forced recycling policies: wasted natural resources and wasted human resources.

This and 5 Other Complaints About the Recently Passed House Health Bill
By John Nichols, The Nation
Posted on November 9, 2009, Printed on November 10, 2009
http://www.alternet.org/story/143842/

The Affordable Health Care for America Act was approved by the U.S. House Saturday night with overwhelming support from progressive Democrats who serve in the chamber and from a president who was nominated and elected with the enthusiastic support of progressive voters.

But that does not mean that informed and engaged progressives are entirely enthusiastic about the measure.

In fact, some are openly and explicitly opposed to it -- among them former Congressional Progressive Caucus chair Dennis Kucinich, D-Ohio, and CPC member Eric Massa, D-New York, both of whom broke with the majority of their fellow Democrats to vote "no" when the House approved the measure by a narrow 220-215 vote Saturday.

How can this be?

Isn't this a fight between Democrats and Republicans? Between reforming liberals and tea-party conservatives?

How can there possible be any subtlety or nuance to this debate?

Well, of course, the debate over this 1,900-page behemoth of a bill is more complicated than the easy spin of political insiders -- and media cheering sections -- would have Americans believe.

Key interest groups, such as the National Organization for Women, and key congressmen who have been long-term supporters of reform, such as single-payer backers Massa and Kucinich, argue that the bill is not the cure for what ails the U.S. health care system.

Indeed, they suggest, the bill as it is currently constructed could make a bad situation worse.

Many sincere progressives in the House, and outside of it, chose to back the bill as the best that could be gotten. Others supported it on the theory that flaws could be fixed in the Senate and in the reconciliation of the House and Senate bills.

But those repairs will only be made if activists are conscious of what ails this bill.

For that reason, even supporters of the House legislation would be wise to consider the criticisms of it by groups that advocate for the rights of women, patient advocates, unions and some of the most progressive members of the House.

Here are six smart progressive complaints about the House bill:

1. FROM CONGRESSMAN ERIC MASSA: "This Bill Will Enshrine in Law the Monopolistic Powers of the Private Health Insurance Industry"

At the highest level, this bill will enshrine in law the monopolistic powers of the private health insurance industry, period. There's really no other way to look at it. I believe the private health insurance industry is part of the problem.

This bill also, I believe, fails to address the fundamental question before the American people, and that is how do we control the costs of health care. It does not address interstate portability, as Medicare does. It does not address real medical malpractice insurance reform. It does not address the incredible waste and fraud that are currently in the system.

2. FROM THE CALIFORNIA NURSES ASSOCIATION: This Bill Fails to Control Costs

While the current bills will provide limited assistance for some, the inconvenient truth is they fall far short in effective controls on skyrocketing insurance, pharmaceutical and hospital costs, do little to stop insurance companies from denying needed medical care recommended by doctors, and provide little relief for Americans with employer-sponsored insurance worried about health security for themselves and their families.

3. FROM THE NATIONAL ORGANIZATION FOR WOMEN: "This Bill Obliterates Women's Fundamental Right to Choose"

The House of Representatives has dealt the worst blow to women's fundamental right to self-determination in order to buy a few votes for reform of the profit-driven health insurance industry. We must protect the rights we fought for in Roe v. Wade. We cannot and will not support a health care bill that strips millions of women of their existing access to abortion.

Birth control and abortion are integral aspects of women's health care needs. Health care reform should not be a vehicle to obliterate a woman's fundamental right to choose.

The Stupak Amendment (to the House bill, which was approved and attached on Saturday) goes far beyond the abusive Hyde Amendment, which has denied federal funding of abortion since 1976. The Stupak Amendment, if incorporated into the final version of health insurance reform legislation, will:

• Prevent women receiving tax subsidies from using their own money to purchase private insurance that covers abortion;

• Prevent women participating in the public health insurance exchange, administered by private insurance companies, from using 100 percent of their own money to purchase private insurance that covers abortion;

• Prevent low-income women from accessing abortion entirely, in many cases.

NOW calls on the Senate to pass a health care bill that respects women's constitutionally protected right to abortion and calls on President Obama to refuse to sign any health care bill that restricts women's access to affordable, quality reproductive health care.

4. FROM PLANNED PARENTHOOD'S CECILE RICHARDS: This Bill Embraces Religious-Right Extremes

It is extremely unfortunate that the United States Conference of Catholic Bishops and anti-choice opponents were able to hijack the health care reform bill in their dedicated attempt to ban all legal abortion In the United States.

Most telling is the fact that the vast majority of members of the House who supported the Stupak/Pitts amendment in today's vote do not support HR 3962, revealing their true motive, which is to kill the health care reform bill.

These single-issue advocates simply used health care reform to advance their extreme, ideological agenda at the expense of tens of millions of women.

5. FROM CONGRESSMAN DENNIS KUCINICH,: This Bill Worries About the Health of Wall Street, Not America

We have been led to believe that we must make our health care choices only within the current structure of a predatory, for-profit insurance system which makes money not providing health care. We cannot fault the insurance companies for being what they are. But we can fault legislation in which the government incentivizes the perpetuation, indeed the strengthening, of the for-profit health insurance industry, the very source of the problem. When health insurance companies deny care or raise premiums, co-pays and deductibles they are simply trying to make a profit. That is our system.

Clearly, the insurance companies are the problem, not the solution. They are driving up the cost of health care. Because their massive bureaucracy avoids paying bills so effectively, they force hospitals and doctors to hire their own bureaucracy to fight the insurance companies to avoid getting stuck with an unfair share of the bills. The result is that since 1970, the number of physicians has increased by less than 200% while the number of administrators has increased by 3000 percent. It is no wonder that 31 cents of every health care dollar goes to administrative costs, not toward providing care. Even those with insurance are at risk. The single biggest cause of bankruptcies in the U.S. is health insurance policies that do not cover you when you get sick.

But instead of working toward the elimination of for-profit insurance, H.R. 3962 would put the government in the role of accelerating the privatization of health care. In H.R. 3962, the government is requiring at least 21 million Americans to buy private health insurance from the very industry that causes costs to be so high, which will result in at least $70 billion in new annual revenue, much of which is coming from taxpayers. This inevitably will lead to even more costs, more subsidies, and higher profits for insurance companies - a bailout under a blue cross.

By incurring only a new requirement to cover pre-existing conditions, a weakened public option, and a few other important but limited concessions, the health insurance companies are getting quite a deal. The Center for American Progress' blog, Think Progress, states, 'since the President signaled that he is backing away from the public option, health insurance stocks have been on the rise.' Similarly, healthcare stocks rallied when Senator Max Baucus introduced a bill without a public option. Bloomberg reports that Curtis Lane, a prominent health industry investor, predicted a few weeks ago that 'money will start flowing in again' to health insurance stocks after passage of the legislation. Investors.com last month reported that pharmacy benefit managers share prices are hitting all-time highs, with the only industry worry that the Administration would reverse its decision not to negotiate Medicare Part D drug prices, leaving in place a Bush Administration policy.

During the debate, when the interests of insurance companies would have been effectively challenged, that challenge was turned back. The 'robust public option' which would have offered a modicum of competition to a monopolistic industry was whittled down from an initial potential enrollment of 129 million Americans to 6 million. An amendment which would have protected the rights of states to pursue single-payer health care was stripped from the bill at the request of the Administration. Looking ahead, we cringe at the prospect of even greater favors for insurance companies.

Recent rises in unemployment indicate a widening separation between the finance economy and the real economy. The finance economy considers the health of Wall Street, rising corporate profits, and banks' hoarding of cash, much of it from taxpayers, as sign of an economic recovery. However in the real economy - in which most Americans live - the recession is not over. Rising unemployment, business failures, bankruptcies and foreclosures are still hammering Main Street.

This health care bill continues the redistribution of wealth to Wall Street at the expense of America's manufacturing and service economies which suffer from costs other countries do not have to bear, especially the cost of health care. America continues to stand out among all industrialized nations for its privatized health care system. As a result, we are less competitive in steel, automotive, aerospace and shipping while other countries subsidize their exports in these areas through socializing the cost of health care.

Notwithstanding the fate of H.R. 3962, America will someday come to recognize the broad social and economic benefits of a not-for-profit, single-payer health care system, which is good for the American people and good for America's businesses, with of course the notable exceptions being insurance and pharmaceuticals.

6. FROM "SICKO'S" DONNA SMITH: The Bill Does Not Cure What Ails Us

Passing a healthcare reform bill that does not provide me with better access to care or protection from bankruptcy and financial ruin is not what I asked you all to do. Stripping away all reference to a progressively financed, single standard of high quality healthcare for all - also known as single-payer -- is done only to more deeply ensconce the deep pocketed interests in healthcare: the private, for-profit insurance giants, the big pharmaceuticals, the medical equipment companies, the hospital corporations and all the other making huge profits as thousands die needless deaths.

Healthcare is a basic human right. Granting that right is not something to be calculated differently in swing Congressional districts, off-year election strategy or second-Presidential term planning. It is your (members of Congress') duty to me, to my fellow citizens and to your nation.

And (members of Congress) are marching away from reality when you think all the hard-working people who counted on you to make this a better healthcare system will not notice when you deliver insurance purchase mandates and a corporate bail-out that will dwarf the Wall Street trillions you've already justified.

Watch Smith's video: "American Sickos: Will the Current Bills Help? No"

Follow Smith's organizing for real reform at the website of Progressive Democrats of America. She is the national co-chair of PDA's Healthcare NOT Warfare campaign.

John Nichols is The Nation's Washington correspondent.

© 2009 The Nation All rights reserved.
View this story online at: http://www.alternet.org/story/143842/

Statement of John William Kurowski

Founder of The
American Constitutional Research Service
Before the
Committee on Ways And Means
United States House of Representatives

June 1995

Mr. Chairman and Member of this Committee:

The subject of tax reform was extensively debated by the Founders of our country. I do not know if other participants in these Hearings have taken the time to research the accounts of these historical debates when formulating the suggestions they will present to this Committee, but, having research the Founders' original tax reform package. I am inclined to believe its fundamental principals are as valid today as when they were put into practice over two hundred years ago.

Our nation's first revenue Act was "...in a certain sense a second Declaration of Independence; and by a coincidence which could not have been more striking or more significant, it was approved by President Washington on the fourth day of July, 1789." [See, Twenty Years of Congress, James G. Blaine, 1884, Vol. 1, page 185]

James Madison, in discussing this Act before Congress identified a fundamental principal concerning the power delegated to Congress to lay and collect taxes:

"...a national revenue must be obtained; but the system must be such a one, that, while it secures the object of revenue it shall not be oppressive to our constituents."

The Act went on to imposed taxes, not on Congress' constituents, but on specific "goods, wares, and merchandise, imported into the United States", and not one dime was raised under the Act by internal taxation! Internal taxes were frowned upon by the Founders, especially when a national revenue could be had by requiring foreigners to pay for the privilege of doing business on American soil!

Jefferson, in his Second Annual Message (December 15, 1802) states:

"In the department of finance it is with pleasure inform you that the receipts of external duties for the last twelve months have exceeded those of any former year, and that the ratio of increase has been also greater than usual. This has enabled us to answer all the regular exigencies of government, to pay from the treasury in one year upward of eight millions of dollars, principal and interest, of the public debt, exclusive of upward of one million paid by the sale of bank stock, and making in the whole a reduction of nearly five millions and a half of principal; and to have now in the treasury four millions and a half of dollars, which are in a course of application to a further discharge of debt and current demands." [emphasis added] Imagine....all this in consequence of "external duties"!

In Jefferson's Second Inaugural Address (March 4, 1805), he points out:

"At home, fellow citizens, you best know whether we have done well or ill. The suppression of unnecessary offices, of useless establishments and expenses, ENABLED US TO DISCONTINUE OUR INTERNAL TAXES. These covering our land with officers, and opening our doors to their intrusions, had already begun that process of domiciliary vexations which, once entered, is scarcely to be retrained from reaching successively every article of produce and property...

"The remaining revenue ON THE CONSUMPTION OF FOREIGN ARTICLES, IS PAID CHEERFULLY BY THOSE WHO CAN AFFORD TO ADD FOREIGN LUXURIES TO DOMESTIC COMFORTS, being collected on our seaboards and frontiers only, and incorporated with the transactions of our mercantile citizens, it may be the pleasure and pride of an American to ask, what farmer, what mechanic, what laborer, ever sees a tax-gather of the United States?" [emphasis added]

Although the national sales tax proposals appear to be somewhat fairer than existing taxations, each would do ill to out nation as they are all based on INTERNAL TAXATION, which would ultimately increases the cost of goods manufactured on American soil; burden the American Citizen in its collection; and, are to be paid by the "farmer, mechanic, laborer", etc., who will continue to see the intrusion of the "tax-gatherer of the United States" if such a system is adopted!

In view of the undesirable effects of an internal national sales tax, perhaps it is wise to further study the Founder's plan and learn how imposts and duties (external taxation) were successfully used to fill the national treasury, encourage domestic manufacturing and assist in building a strong industrial base.

In addition to imposing a specific amount of tax on specific articles of consumption imported, the first revenue Act also imposed an across-the-board tax on imports which was higher for imports shipped in foreign owned foreign built vessels, and discounted the tax for imports arriving in American owned American built ships:

"...a discount of ten percent on all duties imposed by the Act shall be allowed on such goods, wards, and merchandise as shall be imported in vessels built in the United States, and wholly the property of a citizen or citizens thereof."

This patriotic and skillful use of EXTERNAL TAXATION not only filled our national treasury, but gave American ship builders a hometown advantage and predictably resulted in America's merchant marine becoming the most powerful on the face of the planet. Unfortunately, today when I visit the docks in New York's Hell's Kitchen area, I am saddened that I can no longer read the names on the docked ships as they all seem to now be foreign owned foreign built vessels....an irrefutable sign of America's decline traceable to the acceptance of thirty pieces of silver.

Yes, there was a day when our national treasury was gladly filled by foreigners paying for the opportunity to do business on American soil. But this was when members of Congress, and those running for Office, put American interests first and would have considered the NAFTA, GATT, and the WTO as acts of sedition, and would have tarred and feathered those participating in the surrender of America's sovereignty.

A national sales tax plan which omits external taxation as a principal source to fill our national treasury, is in fact a surrender of national sovereignty to the advantages of foreign interests!

A SECOND SOURCE TO FILL THE TREASURY

An across the board national sales tax would unquestionably increase the cost of production on American soil, as previously pointed out. To avoid this, and other unwanted effects of an across the board national sales tax, common sense dictates we must exclude from the list of taxable items, tools of production, supplies necessary to conduct business, services needed to sustain business, and the necessities of life (food, shelter, clothing, medical expenses) i.e. all those items which makes labor possible must also be excluded.

In simple language, a consumption tax plan ought to be limited to articles of luxury, and each article must be individually selected by Congress and the appropriate amount of tax must be determined for each specific item chosen, just as was done in the first revenue raising Act of our country!

By limiting the tax to articles of luxury, and requiring each article to be specifically chosen and the appropriate amount of tax determined by Congress, a self regulating check and balance is imposed upon Congress. If Congress does its job properly and the nation as a whole is productive and prosperous, the purchase of articles of luxury will undoubtedly increase, and with it, the flow of revenue into the common treasury! But, if Congress' policies become burdensome and its regulatory requirements upon business, industry and our nation's labor force inhibit a hearty economy, or any particular article is excessively taxed, the first sign would be a decline in the flow of revenue into the national treasury!

Thus, the free market place determines the limit of taxation under the Founder's internal consumption tax plan, and it establishes a self regulating gauge beyond the reach of Congress' manipulation!

As Hamilton said, in regard to taxes on consumption, they:

"....may be compared to a fluid, which will in time find its level with the means of paying them. The amount to be contributed by each citizen will in a degree be by his own option, and can be regulated by an attention to his own resources. The rich may be extravagant, the poor can be frugal; AND PRIVATE OPPRESSION MAY ALWAYS BE AVOIDED BY A JUDICIOUS SELECTION OF OBJECTS PROPER FOR SUCH IMPOSITIONS...It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess. THEY PRESCRIBE THEIR OWN LIMIT, WHICH CAN NOT BE EXCEEDED WITHOUT DEFEATING THE END PROPOSED.... THAT IS, AN EXTENSION OF REVENUE." [No. 21 of the Federalist, emphasis added]

BALANCING THE BUDGET

Still one more question remains to be answered: what is to be done if insufficient revenue is raised from external and internal taxes on consumption?

Once again the Founder's plan shines bright above all contemporary suggestions. Careful research into out Nation's early legislative history reveals the Framers did in fact provide Congress with an emergency power to be used if deficits should arise. And the wisdom of the Framer's method, unlike the proposed balanced budget amendment (S.J. RES.1), contains a brilliant mechanism which would abruptly end Congress' current profligate spending habits!

Under the Framer's plan, whenever the monies arising form Congress' normal taxing powers (imposts, duties and excises) are found insufficient to fund federal expenditures during a fiscal year, and a deficit is produced by Congress borrowing to finance expenditures, Congress must then use its direct taxing power at the beginning of the next fiscal year to raise an amount sufficient to retire this deficit.

Congress is required to follow the rules of apportionment when imposing this tax, and bills each state for a share of the deficit. Each State must contribute a share of the total deficit in proportion to its allotted number of Representatives a set forth in Article 1, Section 2, clause 3, of the United States Constitution. The more votes a State exercises in the House, the larger is its share toward extinguishing a deficit.......REPRESENTATION WITH PROPORTIONAL OBLIGATION!

The chart below is based on a total House membership of 435:

STATE NUMBER OF REPRESENTATIVES SHARE OF DEFICIT
----------------------------------------------------------------------
New York 31 31/435's
Maryland 8 8/435's
California 52 52/435's
Idaho 2 2/435's
Florida 23 23/435's
etc...................................................................
----------------------------------------------------------------------

The states are left free to raise their share of the tax in their own way, within a time period set by Congress. But if any state shall neglect to pay its share, then Congress must send forth its officers to assess and levy that state's apportioned share, together with interest thereon.

LEGISLATIVE HISTORY

This method of extinguishing deficits appears in seven of the ratification documents which gave life to the United States Constitution. The first emergency DIRECT tax was imposed in 1798, to extinguish part of the Revolutionary War debt. It was later used during the War of 1812, and also to extinguish deficits during the Civil War.

The Sixteenth Amendment to the United States Constitution did not repeal or alter Congress' power, or OBLIGATION, to impose the emergency direct tax should a deficit arise. The power of Congress to impose a direct tax still exists, and direct taxes are still required to be apportioned among the states, as pointed out by the United States Supreme Court [see Stanton v. Baltic Mining Co., 240 U.S. 103 (1916); Eisner v. Macomber, 252 U.S. 189 (1920); and, Bromely v. McCaughn, 280 U.S. 124 (1929). Also see Congressional Research Service Report No. 84-168 A 784/275, which was updated September 26, 1984].

BIG ADVANTAGES

There is no smoke and mirrors with the 'FAIR-SHARE' method of balancing the budget. The emergency direct tax is required to be imposed whenever Congress closes a fiscal year with a deficit. The structural mechanism which would immediately bring fiscal sanity to Congress is the requirement of having Congress send a bill to the governor of each state, notifying him to remit his state's APPORTIONED SHARE toward extinguishing the deficit created during the year by Congress; the governors and state legislators being left with the burden of having to raise this money, and to send it off to Washington, D.C.

Picture, for a moment, the expression of the faces of the Governor of New York and the New York State Legislature, if New York should receive a bill for its apportioned share (31/435) of the 1995 federal deficit. This threat would create a compelling incentive for the Governor of each state, and the various state legislatures, to keep a jealous eye on the spending habits of their Congressional Delegation.... it would require the fiscal accountability which the state governments once DEMANDED from their Senate and House Members!

In addition, because each state's share of the tax burden is determined by a fixed rule, similar to that which determines the House membership size of each state, a barrier is erected preventing the kind of mischief which Congress now practices, i.e., discriminatory tax legislation; pork-barrel favoritism; special interest lobbying, etc.

BOTTOM LINE

The Framers of our Constitution provided specific method to extinguish anticipated deficits through an emergency direct tax. Hamilton, in No. 36 of the Federalist Papers, reminds us:

"let us be recollected that the proportion of these taxes IS NOT TO BE LEFT TO THE DISCRETION OF THE NATIONAL LEGISLATURE, BUT IS TO BE DETERMINED BY THE NUMBERS OF EACH STATE, AS DESCRIBED IN THE SECOND SECTION OF THE FIRST ARTICLE (United States Constitution). An actual census or enumeration of the people must furnish the rule, a circumstance which effectually shuts the door to partiality or oppression. The abuse of this power of taxation seems to have been provided against with guarded circumspection." (emphasis added)

The rule of apportionment was written into our constitution to remedy a major defect associated with "democracies", which Madison points out in No. 10 of The Federalist Papers:

"...have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights or property; and have in general been as short in their lives as they have been violent in their deaths."

And so, the Founding Fathers formed a Constitutional Republic to avoid the predictable disastrous consequences of democracy.

The intended use of the emergency direct taxing power to extinguish deficits is not only for superior to any of the proposed balanced budget amendments being offered....it is already part of our Constitution. The method in text form is as follows:

THE FAIR SHARE BALANCED BUDGET METHOD

"SECTION 1. Congress ought not raise money by borrowing, but when the money arising form imposts duties and excise taxes are insufficient to meet the public exigencies, and Congress has raised money by borrowing during the course of a fiscal year, Congress shall then lay a direct tax at the beginning of the next fiscal year for an amount sufficient to extinguish the preceding fiscal year's deficit, and apply the revenue so raised to extinguishing said deficit.

"SECTION 2. When Congress is required to lay a direct tax in accordance with Section 1 of this Article, Congress shall immediately calculate each State's apportioned share of the tax based upon its number of Representatives as allotted by the Constitution, and then notify the Executive of each State of its apportioned share of the total tax being collected and a final date by which said tax shall be paid into the United States Treasury.

"SECTION 3. Each State shall be free to assume and pay its quota of the direct tax into the United States Treasury by the final date set by Congress, but if any State shall refuse or neglect to pay its quota, then Congress shall send forth its officers to assess and levy such State's proportion against the real property within the State with interest thereon at the rate of _____ per cent per annum, and against the individual owners of such property. Provision shall be made for a 15 percent discount for those States paying their share by ____ of the fiscal year in which the tax is laid, and a 10 percent discount for States paying by the final date set by Congress, such discount being a defray the States' cost of collection.

CONCLUSION

There are participants at this Hearing, and many political pundits appearing on talk shows across our country, who are far more articulate than I in identifying the flaring defects and dishonest nature of income taxation, whether flat or progressive. Likewise, there is also an abundant supply of those presenting well rehearsed arguments against an across the board national sales tax, and have displayed their rhetorical skills quite admirable. But who, I ask, has made a substantial argument against the Founding Father's original tax reform package?

Perhaps our only problem in regard to tax reform is that we, as a nation, have lost touch with the original intent and wisdom of those who framed and ratified our Constitution....such negligence culminating in our current dilemma.

What this country needs is a good Caesar.

By David Kahane

His plan would give broad new powers to the Federal Reserve, abolish the Office of Thrift Supervision, establish a new watchdog agency to protect consumers, and more tightly regulate hedge funds and derivatives, according to a senior Treasury Department official. The official requested anonymity because Obama has not announced details of the overhaul.

Aggressive marketing of subprime mortgages and their packaging into securities helped undercut financial systems and trigger a deep recession. The overhaul would:

•Strengthen oversight of the financial system. A "financial services oversight council" headed by Treasury would make the Fed supervisor of all big financial holding companies.

"We have to have somebody who is responsible for seeing the risks of the system as a whole and not just individual institutions," Obama told Bloomberg News Tuesday. "And we think that the Fed is best positioned to do that."

Regulators would ensure major financial institutions have sufficient capital and that high levels of executive compensation don't prompt company officers to take undue risks.

The Office of Thrift Supervision, which has been criticized for lax enforcement of savings and loans, would be replaced by a "national bank supervisor."

The new system would also force hedge funds to register and regulate money market mutual funds. A crisis of confidence in money market funds last year threatened to topple the financial system.

•Regulate complex financial instruments. Over-the-counter derivatives and credit default swaps would be regulated and sold on exchanges. Companies that bundle loans into securities would have to retain 5% of the credit risk.

•Create a financial watchdog agency. The entity would oversee a wide range of consumer products, including mortgages. The agency would ensure financial firms clearly disclose risks to consumers in plain language and don't use unfair practices.

"We've got to make sure that we have somebody who is focused and responsible for protecting consumers, whether it's on subprime loans for their mortgages, for their credit cards, that investors have additional protections," Obama said.

•Reduce risk of failing companies. The Fed would have authority to safely shut down failing financial firms so they don't threaten the entire system. Today, the government can dismantle failing banks but has no such power over non-banks. Last year, the Fed had to use its emergency powers to prop up insurance giant American International Group.

Check this out...it is a must see.

http://blogs.cqpolitics.com/politicalinsider/2008/11/iousa.html

TALLAHASSEE -- Lt. Gov. Jeff Kottkamp, who heads the board of Brevard-based Space Florida, said Wednesday to "stay tuned" for potential changes to be made at the maligned economic development agency tasked with transitioning the state's economy into the post-space shuttle world.

The agency and its president, Steve Kohler, have endured a string of critical stories in the Sentinel over its no-bid lobbying contracts, another "sole source" contract with a now-indicted former NASA official who played a central role in hiring Kohler, complaints from former contractors and space business leaders, and the agency's deal with a Panhandle sports clinic for a "space tourist" training center.

Disclosure over the $300,000 spent on lobbyists last year led lawmakers to threaten to cut state funds for the agency last month, and Rep. Dean Cannon, R-Winter Park, said this week he had been given a vague assurance from Kottkamp's office that there would be "structural improvements" at the three-year-old agency.

Asked for more details Wednesday, Kottkamp said: 'Stay tuned. Obviously part of the board's job is to continually monitor what's going on at Space Florida and make sure we're making sure Florida continues to be seen as a pre-eminent state in the space industry. Stay tuned to that. We'll continue to monitor closely to make sure we get the job done.'

Here's what else he had to say:

Question: What about the group of space industry officials who met privately with you last week to voice their concerns? What was said?

Kottkamp: "It was to make sure we are poised to take advantage of the great workforce that we have by transitioning some of the people that may not stay with NASA into the private sector. That is a strength we have that no place else in the country has, that work force, and to make sure we're taking steps to transition that work force and keep as many jobs as we possibly can here in Florida.'

Question: Lawmakers have expressed concerns that the agency wasn't acting with enough "urgency" to offset the job losses along the Space Coast. Is it?

Kottkamp: 'I think there's been an urgency. Maybe it hasn't been communicated as well as it should have been. But I think there's a very strong understanding that change is coming on the Space Coast and we need to be prepared for it.'

Question: What do you know about President Obama's plan to order a review of the Constellation program?

Kottkamp: 'Hopefully that means they will understand there's an urgency at the federal level that needs to be taken seriously, too. We need to be given some assurances throughout the country…. We need to make sure long-term plans are put in place soon at the federal level that will trickle down and effect what we do here in Florida."

By Paul Craig Roberts from VDARE.COM

In 1773, a handful of men dumped tea into the Boston Harbor. That one act set in motion a chain of events that birthed the greatest nation on earth. But today, many Americans feel helpless as they watch an imperialistic government destroy our Constitution and 237 years of liberty.

The first American Tea Party birthed a nation. The second American Tea Party could help save it!

Just like our Founding Fathers, we're tired of the way our government is behaving. And lawmakers are refusing to listen. It's time to exercise our first amendment right and make a statement.

Douglas Kosarek - Taxpayer Protection Amendment Petition Drive Chairman...working with yourdollaryourdecision.com and LowerTaxesNow.org

Matthew Falconer
Orange County Taxpayer Budget Review Board
www.TaxpayerBudgetReviewBoard.org