Saturday, April 30, 2011

A Replacement for Gasoline Taxes...

There has been some debate, not just in Utah, but in other state about gas taxes.  If you drive a hybrid or an electric car, then you don't pay as much fuel taxes as other drivers.  And when gas prices spike, vehicle usage goes down.  Fuel tax revenue goes down.  But highways, roads and bridges need to be built and maintained and the work can not be outsourced to India.

In my opinion, the time has come to do away with fuel taxes and replace them with another stream of revenue.  This is the first time this debate has hit the Beehive State, but in other states, it has been an issue for many years.

In 2009, as cited by a New York Times article, Secretary of Transportation, Ray LaHood suggested charging vehicles by the mile.  However, this would require a device that would track the miles a vehicle is driven.  That is a little to "Big Brother" for this blogger.  Although such a device could be voluntary to those who do not find this invasion of privacy too creepy.  Any other way suggested by the article is complicated and messy.

Therefore, I suggest a simple alternative.  Today, the average vehicle gets about 20 miles to the gallon is is driven around 12000 miles per year.  This means that the average vehicle will burn 600 gallons of fuel per year.  The Federal Gas Tax is 18.4 cents per gallon.  This means that the Federal Government gets around 110 dollars per vehicle in gas taxes.  In Utah, the gas tax is a little higher than the Federal rate at 24.5 cents per gallon, or about 147 dollars of gas tax per vehicle.

If the Federal Government were to do away with fuel taxes and charge every vehicle with a $110 additional tax, it would generate about 27.5 billion in revenue per year.  Of course, that is about 10 billion short of current revenues, but the 27.5 billion is only from passenger vehicles.  The Federal Government does not report the percentage of fuel taxes by source, private or commercial, just total revenue.  There are about 90 million commercial vehicles on the road, and charging them 150 dollars per until per unit would generate another 13.5 billion in revenue per year.  That is over 40 billion in revenue, which is more the 37 billion generated today.

Now, the problem comes in collecting the tax.  My suggestion is that at the individual level, an extra 10 dollars per month be withheld from a person's paycheck and reconciled on the tax return.  Problem solved.

In Utah, it would not be a problem to eliminate the tax on fuel completely and add an extra 147 dollars to vehicle registration fees.   But that may be a little steep for some people, therefore payroll withholding seems to be the answer here as well, but it would be slightly higher.  An extra 15 dollars per month.  And it would also be reconciled on the state tax return.  Problem solved.

Most families, with two wage earners and two vehicles, would see a slightly larger refund at tax time.  About another 10 dollars.  Those without a vehicle would see all of this money come back to them.  Those with more vehicles than wage earners would be the ones hurt by this change.

The reason to push for this?  How to we pay for Police and Fire protection?  In income taxes, that's how.  Why not pay for our highways in the same manner.

Now I have also noticed that the majority of commercial vehicles are using our highways are from out of state.  Therefore, the fuel taxes on diesel fuel will need to remain.  But, those of you who own diesels should keep your receipts because you could file for a refund on the excess tax as well.

And one last question: what about tourists?  Well, if tourists who visit our fair state pay less on fuel because of lower fuel taxes, would they not have more money to spend on other activities?  Would that not benefit the state?  And wouldn't the lack of fuel taxes provide an extra inducement for people to visit our state?  Just some questions to ponder.  This is another way in which our state can be a leader.  And just imagine how hilarious it would be to see people from Evanston driving to Coalville to save buy gas?

Don't Blame Oil Companies...

My friends are organizing a boycott of Exxon/Mobile this coming Sunday.  I support the right to protest anyone, including Exxon.  But I also know that there are things that are beyond the control of Exxon and others.  For example, there were laws enacted in the past to prevent Big Oil from squeezing ma and pa gas stations out of existence.   That is why nearly every corner gas station in your town has the same price for gas.  It is against the law for someone to sell the gas much cheaper than someone else.  It's a strange law because, for example, most Chevron gas stations are in fact not owned by Chevron but are ma and pa stores.  They only have the Chevron logo on their pumps.

But let's examine the supply and demand equation in big oil.  You have limited and regulated supply, plus you have strong, almost inelastic demand.  This is the formula for a cash cow.  Like it or not, this is not the fault of the oil companies, it is the fault of...government.  Government policies created this and only in repealing them can we bring a solution.

Not just the US government, but government everywhere.  Some governments are using their vast supply of oil to buy the favor of the people with cradle to grave benefits from healthcare to education.  That is why it has been much easier to depose the president of Egypt while the Saud Royal Family is still very much in power in Saudi Arabia.  But they are only able to do this because the oil under the ground is state property and they are part of the insane profit equation.

We have not helped the situation here in the United States.  We would rather protect pristine wilderness than resolve the problem by doing what makes sense, and that is taking logical steps to dramatically increase supply and stabilize prices.  We could also help the equation by the development of alternatives.

There has only been a minor push toward the use of bio fuel.  But one must remember that in the US, it takes a lot of fuel to produce crops.  It takes fuel to plant the crops, it takes fuel to irrigate the land, it takes fuel to fertilize the crops and defend them from predatory vermin.  It also takes fuel to harvest the crops and refine them.  We have ethanol that we can burn in our engines, but it is not profitable and heavily subsidized at this time.  It also takes food out of the food supply, thus increasing the price level for food as well.  Until yield per acre can be increased significantly, bio fuels will not be a replacement for fossil fuels.  Besides, there are much better crops than corn that can be used for bio fuels.  For example, the Aston-Martin that was used in the Royal Wedding is in fact powered by ethanol distilled from surplus wine.  If we can create booze from just about anything, why not ethanol?  Anything we can make booze out of, we can make fuel out of.  We do not have to insist on corn.

We could push for electric cars, but would need to replace gasoline with electricity, and right now there is not a big push in the country to increase the supply of electricity.  Sure, there are clean technologies, such as wind and solar, but at this time can not even come close to replace our current mixture of coal, gas, hydro- and nuclear generated electricity.  If we can figure out how to handle the waste, then nuclear becomes a great option.  Right now, however, especially after the disaster in Japan, it still seems too risky.  But almost every form of electricity generation has an environmental cost.  Wind power poses a danger to birds in flight and solar power will block sunlight from reaching the ground and that will result in unnatural cooling.

The worst thing to do at this time is what we are doing right now, while spending just a little money to research clean alternatives; while doing very little increase supplies of known, reliable forms of energy.  We would rather argue than find solutions.  (Remember, we don't elect our representative to compromise with their colleagues.)  This lack of action is bad and will continue to be a drain to the economy.  Energy is an input to all economic activity (and most economic activity in Nevada ;-)).  Allowing energy costs to continue to remain high will be a mistake.  The money that is spent on energy could be spent on other things, like healthcare and beds for the homeless and midnight basketball leagues and condoms in schools and a bunch of other things that social liberals love to spend other people's money on.  I would be for a compromise; even a new tax.  1 cent of every dollar of new US oil going to alternative energy research.  Almost anything to make our current situation better.

Wednesday, April 27, 2011

Who Deserves Credit for the Birther Controversy?

If Trump wants credit for outing Obama's birth certificate, he can have it.  Look at how much it helped the economy, helped people get back to work and helped resolve the mortgage and foreclosure crisis.  The terrorists are going to sleep tonight, and I can too because we know for certain that Obama was born in Hawaii.  Even thought Obama's mother was a US citizen and it likely didn't matter anyway.  I am even much more likely to turn in and watch Celebrity Apprentice this weekend, thanks to Trump!  We are all better off knowing that Joe Biden is not going to the President anytime soon!

Saturday, April 23, 2011

What to do about high fuel costs.

Sick of high fuel prices.  Here is some advice on sticking it to the oil companies.  Generally, it means finding ways to drive less and drive more efficiently.

1.  Dump stock in oil companies and resist the temptation to buy.
2.  Use alternatives to gasoline where available.
3.  Use public transportation when practical.
4.  Write letters to congress.  Encourage the use of American sources of fossil fuels.
5.  Plan the use of your vehicle wisely.
6.  Grow a garden to limit trips to the grocery store.
7.  Car pool.
8.  Purcahse store brand products.
9.  Purchase locally grown produce, dairy and meats.
10. Do not use the restraunt drive through...park the car and go inside
11. Rent movies on-line and use streaming.
12. Work from home.
13. Maintain a healthy/active lifestyle.
14. Walk wherever possible.
15. Turn down the lights.
16. Remove excess vehicle weight.
17. Observe the speed limit.
18. Avoid excess idling.
19. Cruise control.
20. Keep the car tuned up.
21. Use the proper motor oil weight.

Nominating the right candidate...it's important.

In the election of 2004, George W. Bush was vulnerable.  He was waging an increasingly unpopular war.  The economy was limping.  Bush won, but probably not by a comfortable enough margin and he won without carying a single state north nor east of Pennsylvania.  Could it be that the democrats nominated the wrong candidate in 2004?

Out of the declared candidates in 2004, there were 5 democrats with the historical precedent to defeat a sitting President.  (In our history, only former senators and state governors have ever defeated a sitting president, and only state governors have pulled off the feat since 1888).  Of those 5, there were 4 senators and one state governor, former Governor Howard Dean of Vermont.  In 2004, there were other democratic governors in office, who had completed at least four years in office, but not many were interested in running for the White House.  They inluded Gary Locke of Washington and Ben Nelson of Nebraska, but none of them had the National coverage of Howard Dean, who was the front runner heading into the primaries.  But the Dean campaign stumbled out of the gate.  The Democrats were left with the campaign of Kerry, who in the end could not stand up to Bush.

In 2004, the right candidate could have defeated Bush, but was no where to be found.  Here is my analysis of those who failed to defeat a sitting President and if there was a better candidate for the opposite pary available.

2004--Senator John Kerry of Nebraska lost to President George W. Bush.  Who could have defeated Bush?  The only former or current state governor who ran for the Democratic nomination was Howard Dean.  There were some personality issues that likely cost Dean the nomination and in the end, cost the Democrats the White House.

1996--Senator Bob Dole lost to President Bill Clinton.  Who could have defeated Clinton? Long-time Tennesse Governor Lamar Alexander, who had served as the Secratary of Education under George HW Bush had the historical precedence to defeat Bill Clinton.  But his campaign never got traction in the early primaries.  Possibly because the federal Department of Education is considered as non-essential by many fiscal conservatives.  Clinton did not win 50% of the popular vote either time he was elected.

1984--Former Vice President Walter Mondale lost to President Ronald Reagan.  Who could have defeated Reagan?  No one.  In 1984, Reagan's popularity with the public was soaring and there was likely no chance any Democrat could have defeated him.  There were no former or current state governors running for the Democratic nod in 1984.  Mario Cuomo of New York had a lot of traction before the campaign but decided not to run.

1972--Senator George McGovern lost to President Richard Nixon.  Who could have defeated Nixon?  If George Wallace, former Alabama Governor, had not run as an independent in 1968, he could have easily captured the Democratic nod and possibly defeated Nixon.

1964--Senator Barry Goldwater lost to President Lyndon Johnson.  Who could have defeated Johnson?Governor Nelson Rockerfeller of New York was a front runner early on, but could not fight off rumors that an extra-marital affair led to his divorce from his first wife and the loss of the custody of his children 2 years ealier.  This sort of thing seems to common now-a-days that most of us would not consider this a disqualification.  But things were different in 1964.

1956--Governor Adlai Stevenson lost to President Dwight Eisenhower.  Who could have defeated Eisenhower?  Probably no one.  Stevenson did not have the historical precendence because he had been defeated by Eisenhower 4 years earlier when he only had 2 years as Governor under his belt.  No other governor was interested in the nomination and the Democrats nominated Stevenson a second time.

1948--Governor Thomas E Dewey lost to President Harry Truman.  Who could have defeated Truman?  Governor Earl Warren of California was also running for the Republican nod in 1948.  Warren became the Vice Presidential running mate to Dewey.  Warren won the popular vote in the primaries, but lost in convention.  The majority of convention delegates in 1948 were unpledged in those days as the majority of states did not hold primaries.  In my analysis, this election, like 1988, is where the losing ticket was upside down.  Had the VP nominee become the presidential nominee (In 1988 Bentsen/Dukakis would have been more successful than Dukakis/Bentsen) the election would have changed.  In 1948, Dewey was running for the White House at the top of the ticket for the second time.  The first time, he had only two years in office as Governor of New York.  Dewey had two historical strikes against him.  2nd-time nominees rarely win and he did not have enough experience as governor the first time.  Warren would eventually become the Chief Justice of the Supreme Court.  His court was monumental in the some civil rights decisions and criminal rights.  Perhaps in the end in 1948, Dewey's popularity led to a malaise in the electorate that kept a lot of people home on election day, especially in Ohio, California and Illinois where the election turned.  Again, California was Warren's home state.

1944--Governor Dewey lost to President Franklin Roosevelt.  Who could have defeated Roosevelt?  Probably no one.  Americans would not have considered Changing the Commander in Chief of the Armed Forces at this point in World War II.  However, the eventual VP nominee, Governor John W. Bricker of Ohio was probably a better choice in spite of Dewey's popularity.

1940--Lawyer/Businessman Wendell Wilkie lost to President Franklin Roosevelt.  Who could have defeated Roosevelt?  probably no one.  There were no state governors running for the GOP nomination in 1940.  The other major candidates were opposed to US involvement in World War II and the GOP convention was held just days after France fell to the Nazis.  There were not enough electorial votes in close states to turn the election.

Saturday, April 16, 2011

Donald Trump, Candidate...

Donald Trump is getting some serious poll number as a potential Republican nominee.  I have to say in response, really?

If you have followed this blog, you know that I have pointed out the historical futility of the very wealthy running for President.  Certainly, politics is not a poor-man's game.  It takes some degree of personal wealth to run for political office.  Usually, a candidate leaves his or her regular job for a period of time to focus on a campaign.  Those that lack the personal wealth need to have some degree of financial backing from supporters to be successful.  George W. Bush, for example, was wealthy enough to be a part owner of a major league baseball team.  It seems that our most recent presidents had some degree of wealth or like Bill Clinton and Barrack Obama were well backed, life-long public servants.

But the wealthy that have eventually become our Cheif Executive, also worked their way through other minor offices before becoming the President.  Those who have tried to short-cut their way to the White House have traditionally failed.  Three names comes to mind when speaking of those who tried short cuts.  They are H Ross Perot, Wendell Wilkie and William Randolf Hearst.

Perot is the IT Billionaire who was famous for his charts showing the need for governmental restraint in the 1992 election.  He wooed fiscal conservatives away from George W. Bush and gave the 1992 election to Bill Clinton.  But he lost momentum in the campaign after ending it and then beginning it again.  Then he chose languishing Admiral Stockdale as a running mate.  He could not get enough momentum to overcome Clinton.

With World War II raging in Europe in 1940, and the United States yet to be involved, the Republican Party was split between isolationists and interventionists.  They were ripe for a dark horse candidate to rise up and take the nomination.  Wilkie, who never before held office nor a high military rank, beat out Senator Robert Taft from Ohio (Son of former President and Supreme Court Justice William Howard Taft) for the nomination.  Wilkie campaigned to do everything to help the embattled British and Russian allies short of formal declaration of War, where Taft was concerned that War could lead America further down the road to Socialism.  Taft and the other major candidates were isolationists.  Just days before the GOP convention, France fell to the Nazi's, and the tide turned toward Wilkie. But his campaign lacked a consistent message and Roosevelt easily won.  Wilkie was never able to unite the party.  After the election, Wilkie turned to back Roosevelt programs and became a key member of his team.

I have been able to find no other evidence of a very rich individual making an impact on the presidential race as a candidate.  Others may have tried, but realized that their money would speak louder than their candidacy.  The same could be the case for Trump.  Some of the wealthy will have tried other offices before running for president.

Hearst tried for, but never won the nomination of his party and when news of an extra-marital affair came to light, he retired from politics.

It is time for Republicans who are smart to fight the Trump candidacy and unite behind someone else.  There are reasons why a Trump candidacy is bad.

1.  Party unity.  With all of his money and business sense he needs to be taken serious, but let down gradually.  If Trump decides to run as a third party candidate, we may as well swear in Obama for another 4 years.  Both GOP leaders and Trump know this well, and this plays to Trump's advantage.  Donald Trump is an ego, perhaps the biggest ego in the world and has the money to support it.  He knows his wealth holds power over the party.  Someone that rich has no reason to be loyal to the party or the platform.  And therefore, he will not be able to unite the GOP behind his candidacy.  The people that he needs to support his campaign may say all the right things publicly, but will likely not unite behind him.

2.  Political experience.  There is a big difference between running a business enterprise and running the country.  How can Trump unite Congress and get them to be in step with him when he does not have the power to fire them?  The President of the United States does not call all of the shots, especially in powers that the Constitution gives specifically to the Congress, like the power of the budget.  In business, the executive branch is over the legislative branch.  In Government, these branches are (in theory) equal.  This will be an adjustment that Trump may not be able to make.

3.  Message.  In business, it is much easier to change your message and then get the masses to follow along.  It is not so easy to do in politics.  One will be labeled as a turncoat or a flip-flop, even when evidence supports making a change in policy.  The message needs to be consistent, even on social issues.  How does Trump feel about Global Warming, Abortion, Gay Rights, etc?  Will he change his mind after winning the nomination, like Wilkie did?  Will he change his mind, change the sails in one direction one day, and then return to the old course the next?

4.  How the masses react?  In business, it is your loyal customer that dictate how the business is run.  It is they, the loyal customers that you, as a businessman can't afford to lose.  Word of mouth is a powerful advertising message in business.  The good words of your loyal customers are worth more than any advertising campaign.  In politics, it is those who do not support you that you need to woo.  It is those who do not normally vote for your party or your message that have the power to elect you.  Trump would have to find a way to bring loyal conservative Republicans, Independents, some Democrats and those who normally do not vote at all out to vote for him.  Generally, word of mouth advertising does not work in politics as people do not like to discuss politics among friends.

5.  Experience.  In our history, only Wendell Wilkie received the nomination of his party after never serving as a Vice President, Governor, Senator, Member of the House of Representatives, Cabinet  Secretary, Supreme Court Justice, Criminal Judge or Military Officer.  H Ross Perot was the only serious 3rd-party candidate to gain a significant percentage of the vote who also never held a major office.  With all of the anti-career politician talk, certainly Americans prefer someone with a little experience as a president.  Could Trump run as governor or mayor of New York before running for President?  How about a term in the Senate?  He certainly would not take being VP very well.

6.  Perception.  Of course, Trump will become a media darling.  His candidacy makes it look as if the Republicans are desperate and willing to nominate just about anyone to knock Obama out of the White House.  Republicans should realize that the Trump candidacy is more than another media stunt.  He is serious.  And primary voters should understand how the Trump candidacy will play out when he is up against Obama in November of 2012.

Trump may be able to learn a lot by looking over the failed campaigns of Wilkie and Perot and learning from them.  If he does, his campaign may be successful.  My gut feeling is that this will not happen.  Trump's money would be better served if he supported a candidate who has a better profile for President, and aligned closely with the Trump philosophy...whatever that is.

However, like Wilkie, the Trump candidacy could be bad for the GOP in the long run.  The Wilkie candidacy left the Republican party without course and direction and it would be another 12 years before the nation would elect another Republican to the White House.

If Trump were to ask my advice, I would advise him that if he really wants to be the President to run for Governor of New York state or Mayor of New York City first and to serve at least one complete term.  This will show the American people that he is serious about politics and can lead a government.  This will also help him flesh out his political philosophy and develop a consistent message.  This, after all, is the way that others have done it.

Recent presidents that had some degree of wealth or fame outside of public service before entering politics...
George W. Bush--Part owner of the Texas Rangers Baseball Club.  Political family.  Former Texas Governor.
Ronald Reagan--Actor.  Former California Governor.
Jimmy Carter--Successful (considered wealthy) businessman and farmer.  Former Georgia Governor.
John F. Kennedy--Family wealth.  Former Congressman and Senator from Massachusetts.
Harry Truman--Successful businessman in Kansas City before he ran for the US Senate.


Life-long public servants of recent presidents.
Barrack Obama
Bill Clinton
Gerald Ford
Richard Nixon
Lyndon Johnson
Dwight Eisenhower

Friday, April 8, 2011

A government shutdown...yes, you voted for this...

Not everyone voted for this, actually, and not even the majority of people who voted for Republicans last fall voted for this, but two groups of people did.  The first group of people that votes for this were the Tea Party folks.  It is only the Tea Party that would celebrate the government shut down and claim that this is a victory.  There are many that would consider a compromise a mistake that would cost Tea Party candidates in the next election.  If you voted for a Tea Party candidate in your GOP primary, congratulations, you won.  You should hail the shutdown as a victory.

If you don't believe me, let me ask if this sounds familiar?

"I'm not going along just to get along!"


I think that says it all.

Now those of you who did not vote also share some of the blame and credit for this shutdown.  Especially here in Utah.  You who think that you do not matter.  That can not be further from the truth.  There is a big difference in winning by 20% of the vote and winning by 2% of the vote.  And let's say you support a 3rd party candidate.  Then understand that there is a big difference in winning with 60% of the vote and winning with 48% of the vote.  Your vote for the loser sends a bigger message than your non-vote.

Because 67% of the voting-eligible public does not vote and 16% of the people support the Tea Party I figure that the government shutdown passed with 83% of the vote.  That, my friends, is a landslide.

Monday, April 4, 2011

Comments about Overstock.com and Sales Tax

Overstock.com, a place on the Internet where I have found some excellent electronics deals, has decided to cut it's advertising ties with states that charge sales tax with Internet sales.  It calls the practice of charging sales tax on internet ads in those states unconstitutional.  If you live in those states, you can still use Overstock.com to purchase goods, but there will not longer be advertising in those areas.

I know that sales companies make such decisions all of the time.  It is one thing for a company to support and endorse political candidates.  It is another when a company, like Overstock, makes a political statement like this.  It rarely happens.

Generally, the reason why a company does not become so overtly political is because they do not want to risk offending customers.  For example.  When working on a Master's degree, I focused on the grocery store industry.  Harmon's, an independent Utah chain with about a dozen stores in the state does not get involved in politics at all.  Croger, the parent company of Smith's, is highly involved in the Democratic party.  But in Utah, where the Democratic party is weak, their involvement is minimal.

It is risky for a company to get involved in politics at this level.  It costs the firm potential customers, even those that agree with the company in principal.  Which is what Overstock is doing.  It is intentionally reducing it's customer base, costing itself revenue and employee jobs, to make a point.  Many of the customers affected by the decision agree with the company and think that paying this type of sales tax is somehow wrong.  The employees that will lose their jobs as a result probably also agree with Overstock.

This is not the correct way to make a point.  Customers will find other online discount retailers.  So will suppliers.  So will investors.  So will employees.  The only ones that will be hurt by the decision is Overstock.com itself, their investors, their suppliers and their employees.  As a customer who believes with Overstock in principle, I believe that Overstock.com should rethink the methods they use to make a point.