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Archive for the ‘Big business’ Category

Let’s start 2014 with a depressing story about the reprehensible way in which big companies get in bed with big government.

If asked to list the example of cronyism that I find most nauseating, the Export-Import Bank would be at the top of my list.

The Obamacare handouts for Big Insurance and Big Pharma obviously belong on the list as well.

But don’t forget the corrupt TARP giveaways to Wall Street, the handouts for GM (though at least we got some good parody from that farce), the corrupt H&R Block collusion with the IRS, and the sleazy ethanol handouts to agribusinesses.

We could list more examples, but let’s look at something from today’s newspapers. We normally think of the light-bulb ban as silly environmentalism, but the invaluable Tim Carney writes in the Washington Examiner that the real impetus was from corrupt companies.

Say goodbye to the regular light bulb this New Year. …Starting Jan. 1, the famous bulb is illegal to manufacture in the U.S., and it has become a fitting symbol for the collusion of big business and big government.

Tim explains how companies worked the political system.

People often assume green regulations like this represent the triumph of environmental activists trying to save the plant. That’s rarely the case, and it wasn’t here. Light bulb manufacturers whole-heartedly supported the efficiency standards. General Electric, Sylvania and Philips — the three companies that dominated the bulb industry — all backed the 2007 rule… The lighting industry was the main reason the legislation was moving. …“Philips formed a coalition with environmental groups including the Natural Resources Defense Council to push for higher standards.”

Equally important, Tim explains why the companies thought cronyism was an effective way to line their pockets with undeserved wealth.

Competitive markets with low costs of entry have a characteristic that consumers love and businesses lament: very low profit margins. GE, Philips and Sylvania dominated the U.S. market in incandescents, but they couldn’t convert that dominance into price hikes. Because of light bulb’s low material and manufacturing costs, any big climb in prices would have invited new competitors to undercut the giants — and that new competitor would probably have won a distribution deal with Wal-Mart. So, simply the threat of competition kept profit margins low on the traditional light bulb. …the bulb-makers turned to government. Philips teamed up with NRDC. GE leaned on its huge lobbying army — the largest in the nation — and soon they were able to ban the low-profit-margin bulbs.

The better alternative, needless to say, is freedom.

There is a middle ground between everyone using traditional bulbs and traditional bulbs being illegal. It’s called free choice: Let people choose if they want more efficient and expensive bulbs. Maybe they’ll chose LEDs for some purposes and cheap bulbs for others. But consumer choice is no good either for nanny-staters or companies seeking high profit margins.

Reading Tim’s piece, it makes me wonder what sleaze was involved in the rules forcing us to use inferior washing machines.

P.S. Here are my 10 most-viewed posts of 2013.

*Last January, I shared some gun control humor and readers must like mocking the gun grabbers because that post easily got the most views.

*And in October, Libertarian Jesus racked up the second-highest number of views.

*Interestingly, the third most-viewed post was one from 2012. I guess you won’t be surprised to learn it was another example of gun control humor.

*We also go into the archives – back to 2011 – for the post with the fourth-highest number of views. It’s the classic set of cartoons about the rise and fall of the welfare state.

*Another oldie came in fifth place with this 2012 post featuring – you guessed it – gun control humor.

*In sixth place, we get some 2012 lessons on how a story about beer can be used to explain the failures of class warfare tax policy.

*We finally see another 2013 post with our revelation about the most free-market “state” in North America.

*But then we return to 2011 because lots of people waited until 2013 before reading the classroom experiment with socialism.

*In ninth place, you can read a libertarian fantasy from last April.

*Rounding out the top 10 is a celebration of Obama’s biggest fiscal defeat.

My favorite post of the year, for what it’s worth, reveals my fiscal wonkiness.

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Remember Sandra Fluke, the 30-year old student who got her 15 minutes of fame last year by becoming the poster child for subsidized birth control?

Fluke Birth ControlShe’s fortunately faded away, but the issue is still with us because the courts are being asked to decide whether government has the right to coerce people into decisions that violate their religious values.

But you won’t be surprised that this feature of Obamacare also has important economic and policy lessons.

Statists have tried to scare young people that there’s a fight over whether people have the right to access birth control. They’ll privately admit that this is just empty rhetoric (after all, there were no barriers to birth control in the pre-Obamacare era), but they nonetheless still argue that the mandate is needed for affordability reasons.

But this is utter bunk, as Megan McArdle explains in her Bloomberg column.

Regular, predictable expenses such as birth-control pills cannot be defrayed by insurance; they can only be prepaid, with a markup for the insurer’s administrative costs. The extra cost is passed on by the insurers to your employer, and from your employer to you and your fellow workers, either by raising your contribution or lowering the wage they are willing to offer.

I would take this one step farther. Costs will rise not only because of administrative costs, but also because we’ll have more third-party payer and that will make it much easier for the providers of birth control pills to raise prices.

And that is a perfect segue into the meat of today’s post, which is about the sleazy and corrupt interaction of big business and big government. And the Obamacare birth control mandate is a perfect example.

Tim Carney exposes this issue in his Washington Examiner column. He starts with a hypothesis that corporate cronyism is the real story.

Look at the contraception mandate from almost any angle, and you see the corporatism. Sometimes it’s on the surface, and sometimes it’s implicit in the arguments. The contraception mandate is nakedly a huge subsidy to the industry that most firmly supported Obamacare: the drugmakers. The drug industry has spent more on lobbying under Obama than any other industry.

Tim provides some of the sordid details.

Top Obama bundler Sally Susman oversees the lobbying shop at drug giant Pfizer, which sells $7.6 million a year in name-brand birth control pills, while also selling contraceptive injections and generic drugs. Pfizer’s CEO during the Obamacare debate was Obama donor Jeffrey Kindler. In a corporate filing, the company justified his salary increase by pointing to his Obamacare lobbying. …Merck, which also makes birth control pills, deployed top lobbyist, former Democratic congressional staffer and major Democratic donor Mark Raabe to Capitol Hill and the White House to lobby on “efforts to gain coverage of preventive services,” according to company lobbying filings. The administration uses the “preventive services” provision of Obamacare to justify the contraception mandate. Merck sells implants and other contraceptives — if “sells” is the right word for products that many customers now get for “free,” sticking colleagues and taxpayers with the bill. Conceptus, a company that sells a sterilization procedure, lobbied Congress and the Department of Health and Human Services on “implementation of the preventive services provisions of the Affordable Care Act,” according to lobbying filings. The mandate covers this patented procedure.

Needless to say, drug companies have spent all this money on lobbying and campaign contributions in the expectation that they can artificially increase their revenue as a result of government favoritism.

Obama’s contraception mandate requires all employer-sponsored health care plans to cover 100 percent of the cost of all FDA-approved contraception. That gives customers incentives to choose…name-brand pills, because the entire cost is passed onto employers and thus onto customers and colleagues.

It’s a different topic, but Tim also has some wise words about the Obama Administration’s arguments against the First Amendment.

…liberals argue that the owners of the privately held store Hobby Lobby are not protected by the First Amendment from intrusions of the “free exercise” of religion — and so it must cover the morning-after pill, which can cause a very early-term miscarriage. …It’s not a novel claim, but it’s still a scary one: A person gives up his First Amendment rights when he is acting as a businessman.

And his summary paragraph hits the nail on the head.

Sometimes people think politics is about the collective versus the individual. Most of the time, though, it’s about the state versus civil society. It’s coercion versus voluntary association.

By the way, the drug companies are just the tip of the iceberg. Companies like General Motors and General Electric also are experts at using government to tilt the playing field.

And don’t forget that companies like Boeing and Exxon Mobil use the Export-Import Bank to line their pockets at our expense.

Or what about H&R Block, which lobbies to protect its ability to profit from a corruption-riddled tax system.

The entire ethanol industry, meanwhile, is dependent on favors from Washington, and Fannie Mae and Freddie Mac were created by the government!

And Pizza Hut, joined by other fast food joints, lobbies for food stamps.

The TARP bailout was the epitome of Washington sleaze, which may help explain the revolving door between Wall Street in Washington.

We should also be upset that big corporations sometimes support higher tax rates on their competitors from the small business sector.

Gee, it’s almost enough to make one think Washington is a rat’s nest of corruption. Speaking of which, here’s my video on the link between big government and big corruption. I think you’ll agree that I understated the case.

P.S. Since we started this post by mentioning Sandra Fluke, we may as well close with some jokes at her expense. You can enjoy some laughs with this great Reason video, this funny cartoon, and four more jokes here.

P.P.S. But Sandra Fluke may have the last laugh since the clowns at the United Nations have declared that birth control (almost surely financed by taxpayers) is a human right.

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I’m a big fan of lower corporate tax rates.

I also want to eliminate worldwide taxation so American companies can be on a level playing field when competing for market share around the world.

And I want to get rid of the double taxation of dividends and capital gains in part because these reforms will boost business investment.

Given this track record, I don’t think anybody could accuse me of being an anti-big-business activist.

But I do get very irritated when politically connected corporations use cronyism to guard their interests at the expense of other taxpayers and the overall economy.

That’s why, in this interview with Larry Kudlow on CNBC, I spend most of the time advocating for pro-growth policies, but near the end I slam corporate CEOs from the Business Roundtable for endorsing higher tax rates for small businesses.

For those who don’t follow the intricacies of business taxation, most small companies – such as sole proprietorships, partnerships, and S-corps – are taxed through the personal income tax.

So it’s a bit outrageous when corporate CEOs endorse higher personal income tax rates, knowing that their smaller competitors will get reamed.

I don’t think they’re doing it just for that purpose. As I say in the interview, it’s more a case of feeding somebody else to the sharks out of a narrow, short-term sense of self preservation.

But this also explains why I am such a strong believer in the no-tax-hike pledge. Once “revenue enhancement” is part of the discussion, taxpayers lose their sense of unity and begin to throw each other overboard.

And this isn’t just something that happens among Washington insiders. I’ve previously explained that ordinary Americans get very tempted to support class-warfare tax hikes once they realize someone is going to be raped and pillaged by Washington.

This is why, to discourage talk of tax hikes (especially by crony capitalists), I am willing to make a special exception and support an excise tax on CEO salaries. Anybody who endorses higher taxes should be first in line for the guillotine.

P.S. I apologize for the poor quality of the video. The guy at Cato who does these things is out for the holidays, and you see the suboptimal results when I dabble in technical things. And since I’m acknowledging my shortcomings, I should have said “obediently” instead of “appropriately” at the 3:44 mark.

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While I often complain about government waste and stupidity, I’m not even sure what to say about this grim bit of news from Reuters.

General Motors Co sold a record number of Chevrolet Volt sedans in August — but that probably isn’t a good thing for the automaker’s bottom line. Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds, according to estimates provided to Reuters by industry analysts and manufacturing experts. Cheap Volt lease offers meant to drive more customers to Chevy showrooms this summer may have pushed that loss even higher. There are some Americans paying just $5,050 to drive around for two years in a vehicle that cost as much as $89,000 to produce. …The weak sales are forcing GM to idle the Detroit-Hamtramck assembly plant that makes the Chevrolet Volt for four weeks from September 17, according to plant suppliers and union sources. It is the second time GM has had to call a Volt production halt this year. GM acknowledges the Volt continues to lose money, and suggests it might not reach break even until the next-generation model is launched in about three years.

Gee, it’s almost as if everything that critics have said all along is right.

But not to worry, taxpayers are underwriting the costs. So if bigger subsidies are the price of buying support from the UAW and allowing fat-cat incompetent managers to stay on the job, that just means a bigger tab to pay for the rest of us.

How comforting.

P.S. If you’re a taxpayer and need to be cheered up, these cartoons may help.

P.P.S. This spoof video on the Volt may be even funnier.

P.P.P.S. Last but not least, Government Motors plans to build on the success of the Volt with the Obummer. It was due in 2011, but standard government incompetence has pushed back the release date.

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I’m guilty of usually seeing the world through a rigid prism of right vs wrong. But I think that’s understandable since I’m often writing about clear-cut issues such as the corrupting nature of big government or the foolishness of class-warfare tax policy.

But I periodically come across topics where I’m not sure about the right answer. So I throw these topics out there to see what other people think.

Previous editions of “you be the judge” include: Putting politicians on trial, vigilante justice, brutal tax collection tactics, child molestation, sharia law, healthcare, incest, speed traps, jury nullification, and vigilante justice (again).

Now I’ve come across another example. Over in France, the socialist government says it wants to impose pay caps on corporate executives. That seems like a very bad idea, but there’s a catch. The proposal applies to government-owned companies.

Here’s a description from the Financial Times.

France’s new socialist government has launched a crackdown on excessive corporate pay by promising to slash the wages of chief executives at companies in which it owns a controlling stake, including EDF, the nuclear power group. …According to Jean-Marc Ayrault, prime minister, the measure would be imposed on chief executives at groups such as EDF’s Henri Proglio and Luc Oursel at Areva, the nuclear engineering group. Their pay would fall about 70 per cent and 50 per cent respectively… The government also wants to pressure other companies in which it owns a stake to follow its lead, even though it has no legal power to force such a change. France is unusual in that it still owns large stakes in many of its biggest global companies, ranging from GDF Suez, the gas utility; to Renault, the carmaker; and EADS, parent group of passenger jet maker Airbus. Mr Ayrault said he “believed in the patriotism” of company leaders and their willingness to share the country’s economic pain.

The analogy that pops into my mind is Fannie Mae and Freddie Mac. Those government-created entities (before the crash) were used as piggy banks by members of the political elite, who would take a break from climbing the ladder in Washington and spend a couple of years raking in millions of dollars by overseeing subsidized mortgages.

Or what about Government Motors? Or companies like Solyndra that are part of the green energy scam?

So even though I’m completely opposed to salary controls on the private sector, I don’t view government-owned and government-subsidized companies as being part of the free market.

But I also worry a lot about slippery slopes, so here’s my thought process.

  1. I fully support pay caps for government-owned entities, such as the Postal Service. Indeed, I assume those already exist.
  2. And I like the idea of pay caps for government-subsidized entities, such as Fannie Mae and Freddie Mac. I don’t know if there is a limit now, but if one exists, it’s way too generous if this story is any indication.
  3. But I get nervous about subsidies being an excuse for government regulation of executive pay, even when I’m disgusted when big business gets in bed with big government. This is why I was so conflicted in this interview about pay caps for banks getting TARP bailouts.
  4. Moreover, I’m instinctively opposed to pay caps on companies that have contracts with government, though obviously my views are affected by whether a contract deals with a legitimate function of government (buying a tank) or whether it’s a festering waste of money (paying a politically connected PR firm to boost the image of the IRS).
  5. Last but not least, I get very scared that politicians inevitably will take a good idea and turn it into a bad idea. In other words, if we give them the power to do something reasonable, like regulate pay at Fannie Mae and Freddie Mac, they’ll probably get intoxicated by power and decide they should be able to control compensation levels at genuinely private companies.

So what’s the right answer? If we’re allowed to fantasize, the obvious decision is to shrink government to its legitimate size so there aren’t any government-owned or government-subsidized companies.

But if we’re forced to deal with the world as it is today, then the choice is much more difficult. If we oppose pay caps, then political insiders can use cronyism to get undeserved payouts. But if we endorse pay caps, then we’re giving politicians power that almost surely will be abused.

If you put a gun to my head, I guess I would oppose pay caps. But I hate saying that since few things are as outrageous as rich people using the coercive power of government to take money from those with less.

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One of my first posts on this blog featured this video showing how big government breeds corruption.

I’ve periodically provided examples of how this process works, citing Alaska, Chicago, Wall Street, and Washington.

Here’s another example, explicitly showing how big business and big government get in bed together to rape and pillage taxpayers. The sleazy details have been reported by Bloomberg.

Exxon Mobil Corp. and its partners in a $15 billion Papua New Guinea gas project last year paid the travel expenses for employees of the U.S. Export-Import Bank as it considered whether to help fund the venture. The four workers ran up $97,367 in bills traveling to London, Tokyo and the South Pacific, according to data compiled by the bank. They flew business class, viewed the project’s route by chartered aircraft and were entertained by costumed villagers. Eleven months later, the bank approved $3 billion in financing for the liquefied natural gas facility, the biggest transaction in the agency’s 75 years.

I posted last month about why it’s important to shut down the corrupt subsidies at the Export-Import bank. This story is a good example of why handouts for big companies are a carousel of sleaze.

Pay close attention to this issue. When the votes happen, you’ll be able to tell which Republicans understand the difference between free markets and cronyism – much as a pair of votes last year showed which Republicans believed in free markets instead of government subsidies for well-heeled housing interests.

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I’ve already commented on some of the sleazy behavior that infects Chicago politics.

Now we have a jaw-dropping example of what’s wrong with the state of Illinois, as explained by Bill McGurn of the Wall Street Journal.

Soon the Illinois state legislature will meet in special session to consider the Chicago machine’s latest favor: legislation designed to deliver tax relief to three of the state’s largest companies. These tax breaks for the lucky few come just 10 months after the Illinois legislature approved what has been described as the largest tax increase in the state’s history. …In so doing, Chicago is giving America a window into the logic of crony capitalism: Raise taxes on everyone—and then cut side deals with those big enough to lobby for special relief. The legislature is considering this limited tax relief because three corporate mainstays of greater Chicago have threatened to leave without it. One is the CME Group, operator of the Chicago Mercantile Exchange, the world’s largest futures exchange by volume. Another is the Chicago Board Options Exchange (CBOE), the world’s largest options exchange. The last is Sears, one of America’s oldest and most famous retailing giants.

My initial instinct is to have some sympathy for the companies. After all, America’s corporate tax system is brutally anti-competitive. Heck, government gets a greater share of corporate profit than shareholders!

But the column goes on to explain that at least one of the firms gave lots of money to the very same political predators that created the unfriendly tax system.

CME and the other beneficiaries of this special tax bill would have a far better case, however, if instead of pushing for special treatment for themselves, they used their clout to argue for a more market-friendly environment overall. After all, if the state’s tax treatment is making it hard for Sears and CME, the family restaurant or mom-and-pop shop down the corner is probably feeling the pinch too. Alas, equal treatment is not the Chicago way. Maybe that’s why we heard little from corporate Chicago when Mr. Quinn was campaigning for his tax hikes. To the contrary, back in June the Chicago News Cooperative reported that CME donated $50,000 to Mr. Quinn in the general election and $40,000 in the primary, $200,000 to Rahm Emanuel (a former CME board member) during his run for mayor of Chicago, and $150,000 to the man who really runs Illinois, House Speaker Mike Madigan.

I’ve made fun of the OccupyWallStreet protesters on many occasions (see here, here, here, here, here, and here), but this column shows that big business oftentimes does engage in corrupt deals with the political class. This is something that should deeply offend all decent people.

I also think it should offend the judiciary. I’m not a lawyer, so I don’t pretend to know the answer, but I’m guessing that state constitutions (like the U.S. Constitution) have clauses providing for equal protection under the law. So why, then, do they allow these corrupt forms of favoritism?

But I’m probably being naive in thinking that Illinois courts would actually care about justice. As such, don’t be surprised to see more stories like this in coming years.

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Welcome Instapundit readers. In response to some emails and comments, allow me to add two points. First, creating more beneficiaries (even if the budget doesn’t immediately increase) will increase the number of entities that have an incentive to lobby to preserve the program and/or make it bigger. Second, this development is part of the effort to de-stigmatize food stamps, thus making the destructive dependency lifestyle more attractive. Here’s the original post.

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Should food stamp recipients be able to buy taxpayer-financed meals at fast food restaurants?

That’s actually a trick question. Setting aside the controversy about Obama turning America into a “food stamp nation,” the federal government shouldn’t be involved in income redistribution, so the right answer is that the program shouldn’t exist.

But let’s relax our principles and ponder this story from USA Today. A group of fast-food restaurants wants to be eligible to accept food stamps as payment.

The number of businesses approved to accept food stamps grew by a third from 2005 to 2010, U.S. Department of Agriculture records show, as vendors from convenience and dollar discount stores to gas stations and pharmacies increasingly joined the growing entitlement program. Now, restaurants, which typically have not participated in the program, are lobbying for a piece of the action. Louisville-based Yum! Brands, whose restaurants include Taco Bell, KFC, Long John Silver’s and Pizza Hut, is trying to get restaurants more involved, federal lobbying records show.

Is this a good idea? The answer, of course, is no.

Indeed, this is downright reprehensible, perhaps even worse than the story about college students mooching off the program. Shame on Yum! Brands. This is another distasteful example of how big business is willing to rape taxpayers and/or consumers by using he coercive power of government.

For what it’s worth, I will now try to avoid eating at any the restaurants owned by Yum! Brands (which will be fairly easy since KFC is the only one I like).

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I’ve always rejected coercive redistribution, particularly when imposed by the federal government.

But some types of redistribution are worse than others, and when big business and big government get in bed together, ordinary people are the ones who get screwed.

This is why Obama’s supposed “move to the center” is a bunch of nonsense.

Tim Carney is the go-to guy on this issue, and his column this morning in the Washington Examiner exposes the real meaning of Obama’s recent appointments of a “banker” and a “CEO.”

Let’s start with Bill Daley, the supposed banker who will be Obama’s new Chief of Staff. Does this signal a move to the right, as some left-wingers fear? That might be the case if Obama had appointed a real banker like John Allison of BB&T, who wants government to get out of the way and believes banks should sink or swim without bailouts or subsidies. But, as Tim explains, that is not the attitude of Bill Daley, who is more akin to Jim Taggart, the rent-seeking businessman in Atlas Shrugged.

Check out Daley’s resume. In the 1990s, he ran Amalgamated Bank, owned by a union and described by the Chicago Sun-Times as “one of the city’s most politically connected financial institutions.” Bill’s brother, Mayor Richard Daley, kept the city’s money on deposit at Amalgamated. Later, Bill held a seat on Fannie Mae’s board, pocketing six-figure compensation from the government-sponsored enterprise that used a housing bubble and an implicit government guarantee to fill a slush fund for well-connected Democrats — until taxpayers bailed it out in 2008. This is Obama’s kind of businessman: a banker who leverages his political connections for profit.

Or what about Obama’s appointment of Jeff Immelt of General Electric? Does this mean Obama wants to unleash the power of free enterprise? That would be welcome news, but GE has morphed into a corrupt company that specializes in fleecing taxpayers (a very sad development since GE once sponsored Ronald Reagan). Once again, Tim hits the nail on the head with a devastating indictment.

GE, which marches in sync with government, pocketing subsidies, profiting from regulation, and lobbying for more of both. …Obama bragged GE would be selling to a power plant in Samalkot, India. That sale is no triumph of free trade — Obama’s Export-Import Bank is providing at least $400 million in subsidized financing to grease the skids. Subsidies are GE’s lifeblood, and Immelt’s own words make that clear. In his op-ed announcing his appointment, Immelt called for a “coordinated commitment among business, labor and government…” He also advocated “partnership between business and government…” This is Immelt’s style. …wherever Obama has led, GE has followed. Obama has championed cap and trade in greenhouse gasses, and GE has started a business dedicated to creating and trading greenhouse gas credits. As Obama expanded subsidies on embryonic stem cells, GE opened an embryonic stem-cell business. Obama pushed rail subsidies, and GE hired Linda Daschle — wife of Obama confidant Tom Daschle — as a rail lobbyist. GE, with its windmills, its high-tech batteries, its health care equipment, and its smart meters, was the biggest beneficiary of Obama’s stimulus. To get these gears in sync isn’t cheap: The company has spent $65.7 million on lobbying during the Obama administration — more than any other company by far. So much for Obama’s war on lobbyists.

In other words, appointing Daley and Immelt does not mean a change in policy. These are people who want a bigger government because these are people who have learned to line their pockets when government has more power. They may have different motives than traditional leftists, but the result is the same. As I’ve noted before, my former Cato colleague Will Wilkinson said it best when he wrote that, “…the more power the government has to pick winners and losers, the more power rich people will have relative to poor people.”

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Tim Carney of the Washington Examiner has a great piece looking at the utterly indefensible panoply of ethanol subsidies and handouts that screw consumers and taxpayers in order to line the pockets of the politically powerful. Unfortunately, several senior GOP lawmakers have unseemly ties to the lobbyists for the industry. So this is a test, but don’t expect a passing grade.

Ethanol fuel (especially ethanol distilled from corn) is subsidized in dozens of ways by governments at all levels. Two of the longest-running subsidies — a 54-cent-per-gallon tariff on imported ethanol, and 45-cent tax credit for every gallon blended with gasoline — expire on Dec. 31, making them a top priority for industry lobbyists during the lame-duck session. …In recent years, Americans have learned about the downsides of ethanol subsidies. The 2005 and 2007 energy bills mandated the use of ethanol, igniting a corn boom, which crowded out other crops, contributing to spikes in food prices. Ethanol was even blamed for tortilla riots in Mexico. Growing and distilling ethanol uses immense amounts water (contributing to river and aquifer depletion) and energy (some scientists argue that more energy goes into making a gallon of ethanol than is contained in that gallon). The added corn demand means more fertilizer production and use, adding to harmful runoff, which is blamed for “dead zones” in the Gulf of Mexico that choke out aquatic life. There are plenty of policy reasons to kill ethanol subsidies, but historically, a powerful lobby has kept them alive. And while the GOP talks about free markets, Republican lawmakers are cozier with the ethanol lobby than Democrats are. Republicans raised more than Democrats from Poet, the nation’s largest ethanol maker. Former Republican Rep. Jim Nussle of Iowa is now the president of Growth Energy, a leading pro-ethanol lobby. Presumptive incoming House Ways & Means Chairman Dave Camp has long supported ethanol subsidies, as has Finance Committee ranking member Chuck Grassley. Republican coziness with corn growers and ethanol distillers could outweigh sound policy considerations.

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The “appearance of impropriety” is often considered the Washington standard for corruption and misbehavior. With that in mind, alarm bells began ringing in my head when I read this Washington Times report about Jacob Lew, Obama’s nominee to head the Office of Management and Budget. Why did Citigroup decide to hire a career DC political operator for $1.1 million? As a former political aide, lobbyist, lawyer, and political appointee, what particular talents did he have to justify that salary to manage an investment division? Did the presence of Lew (as well as other Washington insiders such as Robert Rubin) help Citigroup get a big bucket of money from taxpayers as part of the TARP bailout? Did Lew’s big $900K in 2009 have anything to do with the money the bank got from taxpayers? Is it a bit suspicious that he received his big windfall bonus four days after filing a financial disclosure? Read this blurb from the Washington Times and see if you can draw any conclusion other than this was a typical example of the sleazy relationship of big government and big business.

President Obama’s choice to be the government’s chief budget officer received a bonus of more than $900,000 from Citigroup Inc. last year — after the Wall Street firm for which he worked received a massive taxpayer bailout. The money was paid to Jacob Lew in January 2009, about two weeks before he joined the State Department as deputy secretary of state, according to a newly filed ethics form. The payout came on top of the already hefty $1.1 million Citigroup compensation package for 2008 that he reported last year. Administration officials and members of Congress last year expressed outrage that executives at other bailed-out firms, such as American International Group Inc., awarded bonuses to top executives. State Department officials at the time steadfastly refused to say if Mr. Lew received a post-bailout bonus from Citigroup in response to inquiries from The Washington Times. But Mr. Lew’s latest financial disclosure report, provided by the State Department on Wednesday, makes clear that he did receive a significant windfall. …The records show that Mr. Lew received the $944,578 payment four days after he filed his 2008 ethics disclosure.

Lest anyone think I’m being partisan, let’s now look at another story featuring Senator Richard Shelby. The Alabama Republican and his former aides have a nice incestuous relationship that means more campaign cash for him, lucrative fees for them, and lots of our tax dollars being diverted to moochers such as the state’s university system. Here are some of the sordid details.

Since 2008, Alabama Sen. Richard Shelby has steered more than $250 million in earmarks to beneficiaries whose lobbyists used to work in his Senate office — including millions for Alabama universities represented by a former top staffer. In a mix of revolving-door and campaign finance politics, the same organizations that have enjoyed Shelby’s earmarks have seen their lobbyists and employees contribute nearly $1 million to Shelby’s campaign and political action committee since 1999, according to federal records. …Shelby’s earmarking doesn’t appear to run afoul of Senate rules or federal ethics laws. But critics said his tactics are part of a Washington culture in which lawmakers direct money back home to narrow interests, which, in turn, hire well-connected lobbyists — often former congressional aides — who enjoy special access on Capitol Hill.

Some people think the answer to these stories is more ethics laws, corruption laws, and campaign-finance laws, but that’s like putting a band-aid on a compound fracture. Besides, it is quite likely that no laws were broken, either by Lew, Citigroup, Shelby, or his former aides. This is just the way Washington works, and the beneficiaries are the insiders who know how to milk the system. The only way to actually reduce both legal and illegal corruption in Washington is to shrink the size of government. The sleaze will not go away until politicians have less ability to steer our money to special interests – whether they are Wall Street Banks or Alabama universities. This video elaborates.

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There’s an article today in the Wall Street Journal showing how already-established companies and their union allies will use the coercive power of government to thwart competition. The article specifically discusses efforts by less competitive supermarkets to block new Wal-Mart stores. Not that Wal-Mart can complain too vociferously. After all, this is the company that endorsed a key provision of Obamacare in hopes its hurting lower-cost competitors. The moral of the story is that whenever big business and big government get in bed together, you can be sure the outcome almost always is bad for taxpayers and consumers.

A grocery chain with nine stores in the area had hired Saint Consulting Group to secretly run the antidevelopment campaign. Saint is a specialist at fighting proposed Wal-Marts, and it uses tactics it describes as “black arts.” As Wal-Mart Stores Inc. has grown into the largest grocery seller in the U.S., similar battles have played out in hundreds of towns like Mundelein. Local activists and union groups have been the public face of much of the resistance. But in scores of cases, large supermarket chains including Supervalu Inc., Safeway Inc. and Ahold NV have retained Saint Consulting to block Wal-Mart, according to hundreds of pages of Saint documents reviewed by The Wall Street Journal and interviews with former employees. …Supermarkets that have funded campaigns to stop Wal-Mart are concerned about having to match the retailing giant’s low prices lest they lose market share. …In many cases, the pitched battles have more than doubled the amount of time it takes Wal-Mart to open a store, says a person close to the company. … For the typical anti-Wal-Mart assignment, a Saint manager will drop into town using an assumed name to create or take control of local opposition, according to former Saint employees. They flood local politicians with calls, using multiple phones to make it appear that the calls are coming from different people, the former employees say. …Former Saint workers say the union sometimes pays a portion of Saint’s fees. “The work we’ve funded Saint to do to preserve our market share and our jobs is within our First Amendment rights,” says Jill Cashen, spokeswoman for the United Food and Commercial Workers Union. Safeway declined to comment. …Mr. Saint says there is nothing illegal about a company trying to derail a competitor’s project. Companies have legal protection under the First Amendment for using a government or legal process to thwart competition, even if they do so secretly, he says.

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Another local government in California is contemplating bankruptcy. That’s hardly big news, though, since many California jurisdictions have been bled dry by greedy public sector unions and the city of Vallejo already has thrown in the towel. What is amazing, though, is that the government unions are trying to get the state to pass a bill barring bankruptcy. This is eerily akin to the part of Atlas Shrugged where government officials torture John Galt in hopes of trying to force him to produce. The political thugs in Atlas Shrugged were desperate because people no longer were producing anything they could steal. The pathetic politicians and government workers – both in Ayn Rand’s book and in California – obviously don’t understand that parasites should not be so greedy that they kill the host animal. Here’s a Reuters excerpt:

Antioch’s leaders earlier this month said bankruptcy could be an option for the cash-strapped city of roughly 100,000 on the eastern fringe of the San Francisco Bay area. …But cost-cutting measures may not be enough to keep Antioch’s books balanced, so its city council is openly discussing bankruptcy. …Orange County Treasurer Chriss Street would not be surprised if more local governments across the Golden State sound a similar alarm. …Despite its stigma, bankruptcy has paid an important dividend for Vallejo: It has forced public employee unions to the negotiating table, providing city leaders an opportunity to rein in compensation, which city officials said accounts for more than three-quarters of Vallejo’s general fund spending. City Councilwoman Stephanie Gomes said the effort has led to concessions from three of four city unions. Like Vallejo, Los Angeles is suffering from weak revenue at the same time the cost of its pensions and other retirement benefits are rising. Former Mayor Richard Riordan said those factors put the government of the second largest U.S. city on track to declare bankruptcy between now and 2014. …Talk of municipal bankruptcy has not escaped California’s politically powerful public employee unions. A number of them are pressing the legislature to pass a bill that would require local governments to get the approval of a state board before filing for bankruptcy. Since the board could be stacked with union-friendly appointees, bankruptcy pleas could be rejected or delayed. “It’s a horrible bill,” Levinson said. “If you don’t have the bankruptcy outlet, what do you do? If you can’t pay your bills what do you do?”

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It is now fully apparent that General Motors did not pay back any money to taxpayers, and certainly did not pay back the full amount, as stated in the reprehensibly dishonest ads produced by the company. The Obama Administration took part in the lie, which exposes an additional reason why it was a terrible idea to give the company a bailout. For all intents and purposes, taxpayers paid for the GM ad, and the purpose of the ad – at least in part – was to help the Obama Administration. Welcome to corporatism (the nice way of saying it) and national socialism (the not-so-nice way of saying it). Here’s a great video from Reason.tv explaining GM’s gross prevarication:

The good news is that others are now aware of the Obama/GM scam. Here’s an excerpt from the New York Times:

G.M. trumpeted its escape from the program as evidence that it had turned the corner in its operations. “G.M. is able to repay the taxpayers in full, with interest, ahead of schedule, because more customers are buying vehicles like the Chevrolet Malibu and Buick LaCrosse,” boasted Edward E. Whitacre Jr., its chief executive. …Taxpayers are naturally eager for news about bailout repayments. But what neither G.M. nor the Treasury disclosed was that the company simply used other funds held by the Treasury to pay off its original loan. …It’s certainly understandable that G.M. would want to spin its repayment as proof of improving operations. But Mr. Grassley said he was troubled that the Treasury went along with the public relations campaign and didn’t spell out how the loan was retired. “The public would know nothing about the TARP escrow money being the source of the supposed repayment from simply watching G.M.’s TV commercials or reading Treasury’s press release,” Mr. Grassley said in a speech on the Senate floor last Wednesday, saying that “many billions” of federal dollars remained invested in G.M.

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Sleazy political behavior does not necessarily require a bag of money being handed to a politician in a deserted parking garage. Sometimes it is blatantly visible. A good example is the European version of “cap-and-trade” climate legislation. While the legislation produced lots of criminal activity, it also enabled big European companies to game the system, pocketing lots of unearned money thanks to their lobbying power. The House-passed version of the “cap-and-trade” bill in America makes many of the same mistakes, with favors to various campaign contributors and special interests. The Wall Street Journal editorial excerpted below is a good indication of the type of nonsense that will happen in the United States if the bill is approved by the Senate:

Democrats are promising to apply themselves to the task of imposing legislative curbs on carbon. So it’s a good time to see how a prototype cap-and-trade scheme, the European Union’s Emission Trading System, is faring. …Last week, spot trading on the ETS ground to a complete halt for three days after a scandal erupted over players gaming the system. In this case, the government of Hungary admitted to reselling “certified emission reduction” credits that companies had already relinquished, or “spent.” …This is just the latest in a string of embarrassments that have plagued the system almost from the beginning. European authorities admitted last year that in certain countries, 90% of the trading volume was taken up by value-added tax fraud. Sandbag, a British advocacy group, reported in February that metals firms ArcelorMittal, Salzgitter, U.S. Steel, and Corus were just a few of the companies that had been granted more emission permits than they needed. In ArcelorMittal’s case, according to Sandbag, those spare permits amounted to €202 million in asset value in 2008. Last year, Corus announced it was closing a steel plant in Britain and laying off 1,700 workers, for which the company reaped a windfall in carbon allowances. …the ETS is a cautionary tale in how quickly environmental policy engineering degrades into rent-seeking for the fortunate few.

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This column by Tim Carney in the Washington Examiner should make every honest person nauseous. It explains how the big pharmaceutical companies are Obama’s biggest allies. This is well know inside the beltway, but average Americans don’t understand that Obamacare is largely a giveaway to powerful interest groups. Two observations are worth making. First, the pharmaceutical companies are going to get screwed over once the bill passes. The budget numbers will look terrible and the White House, under pressure to do something (besides just higher taxes), will stab the companies in the back by imposing price controls. Second, even though this will be bad for healthcare since it will undermine research on new drugs, I will take a certain perverse satisfaction in that result. Heck, I think opponents of government-run healthcare should have offered amendments to tax and regulate the industry during debate on the healthcare bills. Companies that climb into bed with government deserve all the bad things that happen to them:

As they whip for the health care bill, Democratic leaders pack a mean one-two punch of populist rhetoric and the hefty financial backing of the drug industry. …drug industry lobbyists, according to Politico, spent the weekend “huddled with Democratic staffers” who needed the drug lobby to “sign off” on proposals before moving ahead. Meanwhile, we learn that the drug lobby is buying millions of dollars of ads in 43 districts where a Democratic candidate stands to suffer for supporting the bill. The doctors’ lobby and the hospitals’ lobby are also on board with the Senate bill. …Of all the single-industry lobbies in Washington, the largest is the Pharmaceutical Researchers and Manufacturers of America. PhRMA spent $26.2 million on lobbying last year — that’s nearly three times as much as the insurance lobby, America’s Health Insurance Plans, which spent $8.9 million. If you include individual companies’ lobbying, pharmaceuticals blow away the competition, beating all other industries by 50 percent, according to data at the Center for Responsive Politics. Given this Big Pharma clout, it’s unsurprising that the bill Obama’s whipping for — Senate bill — has nearly everything the drug companies wanted: prohibiting reimportation of drugs, preserving Medicare’s overpayment for drugs, lengthy exclusivity for biotech drugs, a mandate that states subsidize drugs under Medicaid, hundreds of billions in subsidies for drugs, and more.

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The new budget from the White House contains all sorts of land mines for taxpayers, which is not surprising considering the President wants to extract at least another $1.3 trillion over the next ten years. While that’s a discouragingly big number, the details are even more frightening. Higher tax rates on investors and entrepreneurs will dampen incentives for productive behavior. Reinstating the death tax is both economically foolish and immoral. And higher taxes on companies almost surely is a recipe for fewer jobs and reduced competitiveness.

The White House is specifically going after companies that compete in foreign markets. Under current law, the “foreign-source” income of multinationals is subject to tax by the IRS even though it already is subject to all applicable tax where it is earned (just as the IRS taxes foreign companies on income they earn in America). But at least companies have the ability to sometimes delay when this double taxation occurs, thanks to a policy known as deferral. The White House thinks that this income should be taxed right away, though, claiming that “…deferring U.S. tax on the income from the investment may cause U.S. businesses to shift their investments and jobs overseas, harming our domestic economy.”

In reality, deferral protects American companies from being put at a competitive disadvantage when competing with companies from other nations, and therefore protects American jobs. This video has the details.

The American Enterprise Institute just held a conference last month on deferral and related international tax issues. Featuring experts from all viewpoints, there was very little consensus. But almost every participant agreed that higher taxes on multinationals will lead to an exodus of companies, investment, and jobs from America. Obama’s proposal is good news for China, but bad news for America.

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The late George Stigler, winner of the Nobel Prize in economics, is famous in part because of his work on “regulatory capture,” which occurs when interest groups use the coercive power of government to thwart competition and undeservedly line their own pockets. A perfect (and distasteful) example of this can be found in today’s Washington Post, which reports that the IRS plans to impose new regulations dictating who can prepare tax returns. Not surprisingly, the new rules have the support of big tax preparation shops such as H&R Block and Jackson Hewitt, which see this as an opportunity to squeeze smaller competitors out of the market. The IRS and the big firms claim more regulations are needed to protect consumers from shoddy work, but this is the usual rationale for licensing laws and other government-imposed barriers to entry and the Institute for Justice repeatedly has shown such rules are designed to benefit insiders rather than consumers. Tax preparers do make many mistakes, to be sure, but that is a reflection of a nightmarish tax code, and the annual tax test conducted by Money magazine showed that even the most-skilled professionals – such as CPAs, tax lawyers, and enrolled agents – were unable to figure out how to correctly fill out a hypothetical family’s tax return. But since the IRS routinely makes major mistakes as well, perhaps the moral of the story is that we need fundamental tax reform, not IRS rules to create a cartel for the benefit of H&R Block and other big firms. Would any of this be an issue if we had a flat tax or national sales tax?

The Internal Revenue Service plans to test, register and screen people who get paid to prepare tax returns, stepping into a virtually unregulated business on which millions of Americans depend for crucial financial services. …the moves could increase the cost of having tax returns prepared. …Starting with the 2011 tax season, the IRS plans to require paid preparers to register with the agency.  …The new testing and education standards will exempt certified public accountants, lawyers, and tax practitioners known as “enrolled agents,” who are cleared to represent taxpayers in dealing with the IRS… Tax prep giants H&R Block and Jackson Hewitt expressed support for the requirements announced Monday. Under the new rules, H&R Block “won’t be competing against people who aren’t regulated and don’t have the same standards as we do,” said Kathryn Fulton, senior vice president for government relations. …Citing a gap in the agency’s plan, Fulton said the IRS should impose the same rules on unpaid preparers of tax returns. …In field tests, the IRS noted Monday, tax-return preparers often gave bad advice. In a 2006 study in which employees of the Government Accountability Office posed as taxpayers and visited outlets of tax prep chains, all 19 preparers made mistakes, the IRS reported. …It is unclear how much of the blame rests with the tax code’s confusing nature, a perennial target of politicians’ criticism. Do regulated professionals such as CPAs perform better than their unregulated counterparts? The IRS commissioner said the agency does not have the data to answer that question.

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One of the dirty little secrets of Washington is that Republicans and Democrats have more in common with each other than either party has with ordinary Americans. Tim Carney has an excellent (but depressing) column in the Washington Examiner exposing how both Democrat and Republican lobbyists are raking in big buck from General Motors, even though the car company only exists because of massive government subsidies. As Tim writes, this scam redistributes wealth from you and me to well-connected millionaires:

If you’ve flown into Ronald Reagan Washington National Airport and your plane took the northern approach coming down the Potomac, you may have looked out the window at the five-, six- or seven-bedroom homes on both the Maryland and Virginia sides of the river, with three-car garages and swimming pools. Thanks to the Obama administration and General Motors, your tax dollars are now subsidizing the millionaire lobbyists who live in these neighborhoods. GM, the failed carmaker whose $400 million in monthly losses is borne mostly by U.S. taxpayers, has in recent months hired high-priced K Street lobbyists to petition Washington for subsidies, special tax breaks and other government favors on top of the $52 billion in aid the Treasury has already provided. …GM has since rehired two of its old K Street firms, the Duberstein Group and Greenberg Traurig, and picked up new representation in the firm GrayLoeffler. Rounding out GM’s K Street quartet is the well-connected Washington Tax Group, which began representing the company in 2007 and kept its affiliation with GM over the summer, according to a search of the House and Senate lobbying databases. …Among the four firms, 18 lobbyists are registered to represent GM, including many wealthy and well-connected revolving-door players from both parties. Former Reps. William Gray III, D-Pa., and Jim Bacchus, R-Fla., are both on GM retainer, as are fabled Republican and Democratic operatives Ken Duberstein (White House chief of staff under Ronald Reagan) and Michael Berman (counsel to Vice President Walter Mondale and campaign aide to every Democratic presidential nominee since LBJ). …GM, of course, is still owned mostly by the federal government and is still losing money — $1.2 billion in the third quarter. That means the company’s expenses are the taxpayer’s expenses. That means you are paying these lobbying fees. Put another way, the Obama administration, through GM, is transferring wealth from average Americans to millionaire former public officials. …I contacted the White House and the Treasury Department to ask whether the administration found this arrangement appropriate, but neither returned my calls and e-mails. None of the lobbying firms returned calls or e-mails, either. …The auto bailouts of Presidents Bush and Obama teach us once again that when government gets bigger, it’s the well-off who fare the best.

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Since Senators engaged in open extortion and bribery to enact Reid’s government-run healthcare plan, it is hardly newsworthy that Washington is riddled with Corruption. But the magnitude of sleaze is probably far greater than most people realize. There is a new study from a couple of academics at the University of Michigan, who found significant relationships between lobbying and bailout money, as well as a greater chance of getting bailouts depending on a bank’s ties with either the Federal Reserve or key members of Congress. Hopefully, people across America will draw the obvious conclusion and realize that big government is inherently corrupting, as discussed in this video. Reuters has the details on this latest example of big government and malfeasance:

U.S. banks that spent more money on lobbying were more likely to get government bailout money, according to a study released on Monday. Banks whose executives served on Federal Reserve boards were more likely to receive government bailout funds from the Troubled Asset Relief Program, according to the study from Ran Duchin and Denis Sosyura, professors at the University of Michigan’s Ross School of Business. Banks with headquarters in the district of a U.S. House of Representatives member who serves on a committee or subcommittee relating to TARP also received more funds. Political influence was most helpful for poorly performing banks, the study found. “Political connections play an important role in a firm’s access to capital,” Sosyura, a University of Michigan assistant professor of finance, said in a statement. Banks with an executive who sat on the board of a Federal Reserve Bank were 31 percent more likely to get bailouts through TARP’s Capital Purchase Program, the study showed. Banks with ties to a finance committee member were 26 percent more likely to get capital purchase program funds.

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Even though the politicians in Washington have already flushed $887 billion down a rathole, Obama and the Democrats talking about another “stimulus.” I didn’t bother to post this CNBC clip six months ago, but it is completely appropriate given the current debate.

Some of the points may sound familiar to those who watched my recent video. The common theme, of course, is that government is too big, and the Bush-Obama policies are turning America into a welfare state.

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There are many reasons to dislike the statist economic policies emanating from Washington, and high on the list is the way big government lures companies into mooching off taxpayers rather than earning money honestly. If CEOs at least had the dignity to be embarrassed about their plunder, that would provide a bit of solace, but that is rarely the case. The head of General Electric is parroting inaccurate left-wing talking points and trumpeting corporatist policies. It’s not clear whether he believes this nonsense or is merely trying to please his political masters. The FT reports:

Jeffrey Immelt, General Electric’s chief executive, said on Wednesday his generation of business leaders had succumbed to “meanness and greed” that had harmed the US economy and increased the gap between the rich and the poor. …“We are at the end of a difficult generation of business leadership … tough-mindedness, a good trait, was replaced by meanness and greed, both terrible traits,” said Mr Immelt… “Rewards became perverted. The richest people made the most mistakes with the least accountability.” …“The bottom 25 per cent of the American population is poorer than they were 25 years ago. That is just wrong,” he said. “Ethically, leaders do share a common responsibility to narrow the gap between the weak and the strong.” GE wants to win a large slice of the infrastructure projects funded by governments around the world in an effort to kick-start their economies. Mr Immelt said business should welcome government as “a catalyst for leadership and change”.

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Kudos to David Farr, CEO of Emerson Electric. Speaking recently at a conference, Farr actually told the truth about how big government is crippling American manufacturing. In response, an Obama bureaucrat at the Commerce Department actually had the chutzpah to claim that the White House is trying to help companies by (this is not a joke) creating a multi-trillion dollar healthcare entitlement! With this type of nonsense from Washington, no wonder Mr. Farr is angry. His best line (and one that other business leaders should copy) was “…My job is not to shrink and roll over for the U.S. government.” Here are excerpts from the Bloomberg report:

Emerson Electric Co. Chief Executive Officer David Farr said the U.S. government is hurting manufacturers with regulation and taxes and his company will continue to focus on growth overseas. “Washington is doing everything in their manpower, capability, to destroy U.S. manufacturing,” Farr said today in Chicago at a Baird Industrial Outlook conference. “Cap and trade, medical reform, labor rules.” …Companies will create jobs in India and China, “places where people want the products and where the governments welcome you to actually do something,” Farr said.  …“What do you think I am going to do?” Farr asked. “I’m not going to hire anybody in the United States. I’m moving. They are doing everything possible to destroy jobs.” …“This attack isn’t supported by the facts,” Kevin Griffis, a spokesman for U.S. Commerce Secretary Gary Locke, said today in an e-mail from Singapore, where they are attending the Asia-Pacific Economic Cooperation meetings.  “This administration has made a significant commitment to U.S. manufacturing, including reforming the country’s health insurance system to bring down costs and make American companies more competitive globally,” Griffis said.

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That’s the question posed by the Wall Street Journal’s editorial page, which discusses how companies often get seduced into supporting big government – or, in some cases, are active proponents of bigger government since they’ve learned how to milk the system. In the long run, of course, statism saps an economy’s vitality, which is bad for workers, investors, and consumers:

One lesson that Democrats learned from the failure of HillaryCare in 1994 is that they had to buy the silence, if not the outright support, of the business class. They’ve done this brilliantly by peddling the illusion that ObamaCare will “lower costs” for employers. But slowly as the legislative details become clear, it is dawning on executives of businesses large and small that reform is boiling down to a huge tax increase to finance a gigantic new entitlement. …With only a few exceptions, drug makers and health-care providers have shown that their priority is rent-seeking from government, which means that any last-minute push back will have to come from the other six-sevenths of the economy. The Chamber of Commerce and National Federation of Independent Business have finally figured out they were being taken for a ride. And now even the Business Roundtable, the association of CEOs from the largest companies, is engaged in a furious internal debate about the way forward. The Roundtable has been vaguely supportive but restive. But last week Roundtable president John Castellani was informed in a contentious conference call that many of his members will quit if the organization isn’t more assertive against ObamaCare. …The larger issue for business is the productivity and competitiveness of the U.S. economy. Democrats are about to pass the largest entitlement expansion in more than four decades when federal spending is already at unprecedented levels. The “pay or play” tax on employers and the hike in payroll taxes on top earners in the House and Senate bills are merely teaser rates. The long-term pressures created on the federal fisc would require enormous tax hikes that would depress capital investment and economic growth, to say nothing of the Roundtable’s priority of reducing U.S. corporate tax rates that are among the world’s highest. The tendency among business groups is usually to conciliate and speak the language of consensus—especially with Democrats running all of Washington and able to do great harm to anyone who doesn’t cooperate. And no doubt the Roundtable is hearing from the CEOs of companies like Pfizer, Wal-Mart and General Electric that are deeply invested in more government control of the economy.

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