VAT is neither fair nor responsible

It is interesting how the left will take a politically popular idea and pervert it into something that will only further destroy a country that is already well down the road to serfdom. The latest example is the Obama administration's repeated statements that it is looking into the possibility of a Value Added Tax (VAT). This comes after almost two decades of millions of Americans advocating a "Fair Tax" instead of the current income tax system. Obama's apologists will state that they both are, after all, taxes on consumption. The similarities after that, however, largely evaporate.

The Fair Tax is a system that has been promoted for years by individuals who support limited government and greater voter participation in the political process. Today, less than half of all Americans pay federal income taxes. This reality has been like a continuous cold shower on a population that should be on fire because government is out of control. A "Fair Tax" would be a national sales tax on every good and service. Everyone would know that cost of government at every transaction. Millions of Americans who have been sleeping politically, would come to an abrupt awakening. Centerpiece in this strategy would be that this tax would replace the very destructive and archaic income tax system, which wages a direct war on wealth and job creation.

In addition to waking up a sleeping public to the depth of our fiscal crisis, this law would also allow us to tax illegal aliens in our country and those who are committing illegal activities. Drug dealers, prostitutes, and others involved in illegal actions would now contribute to the government and help pay for the law enforcement designed to keep them in check. Who else should pay for these crimes? Remember, they are all involved in illegal activities; they have their income completely tax free. This reform would allow us to take a financial "bite out of crime."

Then there is the Value Added Tax. Like the Fair Tax, it would tax consumption. In fact, it would tax every single step of the production of every single good. Unlike the Fair Tax, VAT would be in addition to our current income tax system. Furthermore, it is a hidden tax that is included automatically in the price of goods. Where the tax begins and the real price ends, the typical consumer will be unsure.

The National Center for Policy Analysis notes that "The VAT has been in use in European countries since the late 1960s, and has had a strong, negative economic influence, says (Pete) du Pont (former governor of Delaware and current national policy chairman of the organization): Before the European VATs were put into effect, the average tax burden in the European Union (EU) was 28 percent of gross domestic product (GDP), compared with the 25 percent in the United States. By 2006, with the VATs, the EU average tax burden was 40 percent compared with 28 percent in America."

In addition to that,”Average European government spending was about 30 percent of GDP when the VATs were instituted in the late 1960s." Today we see that European "government spending has grown more than 50 percent and now hits 47 percent of GDP." Debt in European government in 2005 "was 50 percent of GDP, compared with under 40 percent in America." The biggest tax of all on Europeans has been on job creation, according to du Pont, "Between 1982 and 2007, Europe created fewer than 10 million new jobs versus 45 million in the United States. Our economic growth was more than one-third faster, says du Pont." That is, by the way, the entire continent of Europe.

Access to revenue does nothing in terms of providing fiscal restraint, as we have seen in the case of VAT or the many tax increases we regularly see in this country. In fact, new taxes and increases in old ones have encouraged governments to tax more. The answer to America's fiscal problems are found in less taxes and, more importantly, less government.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Timing of Health Care Report leads to Charges of Deception

The Department of Health and Human Services has finally released its controversial report on the costs that will surround the recently passed Obamacare legislation and questions are being asked as to why it was not released earlier, when it might have made a difference during the health care debate. The simple answer is that the report would only further damage a bill that passed by the thinnest of margins and with the most questionable of means.

The American Spectator is reporting in its blog that "The economic report released last week by Health and Human Services, which indicated that President Barack Obama's health care 'reform law would actually increase the cost of health care and impose higher costs on consumers, had been submitted to the office of HHS Secretary Kathleen Sebelius more than a week before the Congressional votes on the bill, according to career HHS sources, who added that Sebelius's staff refused to review the document before the vote was taken." The reason why they would not review it? Because they did not want the results of the report to influence the health care debate. That is very odd, considering that is the reason such reports are produced in the first place.

This should create serious problems for an administration and Congress that has pounding the "cost savings" drum since the 2008 elections. We knew that the way any savings would be obtained were unsettling. They would come through death panels and rationed care, price and regulatory controls on physicians (driving them into other professions), and reducing the rewards for the risks that comes from innovation (which means that health care progress would slow or decline). Now we see that, in spite of the fact this bill promises to turn a visit to the doctor into something that resembles a trip to the Department of Motor Vehicles, we will fail to see actual savings. No wonder why the ideologues in the administration that are more interested in agendas than the public good held this information hostage until it could do little or no good. According to the American Spectator, the information about the timing of the report is from an official of HHS who is remaining nameless at this time. The report is based on the analysis performed by the Medicare's Office of the Actuary, which is described as being a "nonpolitical" office. It was certainly nonpartisan in its content, but not in its timing.

The administration and its Congressional apologists have been arguing, all along, that Obamacare would have immediate savings and, more importantly, long term cost containment. Not so, according to the analysis in the report. The Kansas City Star notes that "The report was controversial because it was a direct rebuttal of President Obama's claims that the bill would 'lower costs for families and for businesses and for the federal government.'" The Star also notes that "The report found that the law would raise costs, as many critics of ObamaCare had argued. The actuary said some parts of the bill would help lower costs, but they would be 'more than offset through 2019 by the higher health expenditures resulting from the coverage expansions.'"

This is just one more scandal that would significantly damage earlier administrations, but is simply business as usual for Obama.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Ugly Rumors Surround Goldman Sachs Investigation

I am no fan of Goldman Sachs. They have eaten at the government trough and entangled itself with the political establishment in such a way that anyone should be embarrassed about doing business with them. The company took billions in bailouts on the one hand and gave even more in bonuses to its employees. The corruption demonstrated by the firm in the way it conducts itself is breath taking. On the other hand, it is also reflective of a new business and political culture that makes such activities very "legal" (at least until they are challenged in the courts).

This is not a unique sentiment. The vast majority of Americans that have an opinion on the financial firm probably share a similar view. So when it was announced that the Securities and Exchange Commission was going to press charges on the financial firm, most Americans were pleased and thought "they deserved it." Now there are questions about what the charges are based on, since their behavior does not appear any different than the many other financial companies that took advantage of the bailouts of 2008 and 2009.

Charles Gasparino of Fox Business is keeping a close eye on the story and is raising some important questions that we should all be asking. He wrote in his column that the charges against the firm "are widely regarded as the most aggressive enforcement action against a major Wall Street firm in years. They also come as Wall Street has begun one of the most aggressive lobbying efforts in recent memory to kill aspects of Sen. Chris Dodd's financial reform legislation, which has many on Wall Street believing the charges were motivated at least in part to give momentum to the bill, FOX Business has learned."

"Momentum" may be an understatement. It is true, the lawsuit against Goldman Sachs will have dollars spent by the firm on defending itself, rather than lobbying members of Congress. Especially since the actions of the US has had a domino effect and countries around the world are lining up to go after the financial giant. Furthermore, since the company is being treated like a criminal, it is likely that its criticism of the financial legislation being promoted by the administration would fall upon deaf ears.

Gasparino observes that "In Washington, the aggressiveness of the lobbying efforts has been a controversial issue. One senior executive at a major Wall Street firm said people inside the administration are annoyed by the push and that it only strengthened the White House's resolve to keep the Volcker Rule in place. But people at JP Morgan and Goldman say they believe in the end the administration will back off so it can get a financial-reform bill passed. Republicans oppose the bill on the grounds that it allows the government to continue to bail out large banks that bet wrong in the markets." If this lawsuit turns into little more than harassment it could prove to be a major embarrassment for the Obama administration. Unfortunately, these type of embarrassments have become quite common for this president.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Obamacare will Create Doctor Shortages

Surveys among medical doctors during the health care debate showed that one out of three physicians intended to leave the profession of Obamacare became law. With the law on the books, many in the medical profession are not going to wait for states to sue or courts to over turn, but are going to simply find something else to do.

This is, of course, one of the many ironies of Obamacare. The Plan was suppose to make health care more accessible to the "15 to 30 million" uninsured that we have heard so much about. Instead, health care will be less accessible to everyone, including the uninsured, thanks to Obamacare.

Many doctors are getting ready to move on to other professions. According to the Heritage Foundation, the frustration among medical doctors is at an all time high, noting that "Arizona dermatologist Joseph M. Scherzer M.D. reports in the Daily Caller that he plans to do just that. He cites the impossibility of complying with Medicare's bureaucratic guidelines and paperwork. The fine for failure to comply used to be $10,000. Under Obamacare, it's now $50,000." How will this reduce the high cost of health care?

Another problem is that the government thinks costs first, the patient second, in terms of priorities. This stands in contrast to the mandate that physicians operate under. According to Jerome Groopman, M.D., in The New York Review of Books: "Medicare specified that it was a ‘best practice' to tightly control blood sugar levels in critically ill patients in intensive care. That measure of quality was not only shown to be wrong but resulted in a higher likelihood of death when compared to measures allowing a more flexible treatment and higher blood sugar.
Similarly, government officials directed that normal blood sugar levels should be maintained in ambulatory diabetics with cardiovascular disease. Studies in Canada and the United States showed that this ‘best practice' was misconceived. There were more deaths when doctors obeyed this rule than when patients received what the government had designated as subpar treatment (in which sugar levels were allowed to vary)." So the "best practices" would cost lives. The doctor choosing what was best for a particular patient, would be penalized at the tune of $50,000. Who would have thought we would live in a world with such choices?

This strange approach to health care was previously limited to Medicare and Medicaid. That is no longer the case with the passing of Obamacare. Every American, regardless of where their coverage comes from, will be subject to these laws. So much for "doctor-patient confidentiality." Heritage Foundation notes that "The new law creates an Institute for Comparative Effectiveness Research, which will define best practices using population-based research. This will be used to create government-approved standards for the practice of medicine-deviant physicians will pay a penalty for failure to comply." With such, doctors will cease to be in medical practice, but simply well educated government bureaucrats who are often opposed to the rules they must practice.

It is projected that some 40,000 physicians will leave medicine in the next decade. That is a very conservative estimate.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

US beats many European Countries in the Spending Arena

We all realize that different types of governments cost various amounts to run. Those in which the government does less, typically have stronger financial portfolios. Those in which the government does more have much weaker financial pictures.

Fox News recently asked "How much money does it take for the governments of sovereign nations to do their job?" Those that are socialist or social democratic suffer from huge budgets and looming deficits as they strive to provide "cradle-to-grave" spending programs. Most Americans assume that countries like Sweden and France have massive governments compared to the US. They also think France, Finland, and the UK are much larger in their spending per person. This is not the case anymore, according to economist and author, John Lott. Those who oppose European style socialism do not have to wait for that system to arrive in the US. Lott warns that type of government has already arrived.

Most Americans are probably not surprised that US spending is higher than other countries, but when you factor in cost of living and total population, our budgets "are much lower" than other countries, it is often perceived. In reality, government spending accounts for more real resources per capita than "95 percent of the countries in the world," according to Lott. In fact, only "166 out of 175" countries have smaller real budgets than the US, according to Lott.

The numbers, when it comes to government spending, are frightening. The US government spends 276 percent more than is spent by the average government of another country around the world. This type of spending amounts to about $17,400 per person living in the United States or $70,000 for a family of four.

The one country that is most famous for its "welfare state" is Sweden, yet it only spends about 8.6 percent more per capita than the US. This figure is far less than most Americans would likely assume. How about France? Americans seem to enjoy making fun of France's fame for government dependency. The bad news for Americans is that France spends virtually the same amount as the United States. The difference between the US and France is a mere 1.6 percent when it comes to spending.

It gets worse from here. Finland actually spends 6 percent less than the US and countries such as Germany, Italy, and the United Kingdom do not even compare. Meanwhile, Canada spends 14 percent less than the US per capita and Japan's spending is a fraction of the United State, standing at 32 percent less. What is interesting is that this current fiscal state is before the costs of President's Obama's trillion dollar health care bill was signed into law. After the impact of that law is fully felt, the US could easily find itself close to number one in the "cradle-to-grave" socialism department, compared to its European friends.

The US government has more control of its nation's resources, per capita, than virtually all the other countries in the world This government determines an entire nation's financial future and controls from whom money comes from, who gets that money, and, ultimately, how that money is spent. Lott also points out that "Of course, the money also pays for the enforcement of all the regulations and laws that tell us what to do." The old saying that "the government is out of control" may no longer hold true. Government is in total control of virtually every aspect of our lives and economic freedom is held in very low regard.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

What is a "Reagan Conservative?"

Ronald Reagan became President at a time when the US had become accustomed to being a second rate power and had found itself well on its path towards socialism. The media hated the man and dismissed him as an intellectual lightweight, a “Neanderthal” in his foreign policy, and “Draconian” in his policies toward the poor. In spite of this, he was one of the most popular Presidents in US history. He loved freedom and conveyed optimism at a time most Americans were suffering from government created malaise.



The Wall Street Journal and other surveys rank Reagan as high as number 6 on the list of great Presidents; the only people that beat him in the surveys are individuals who died many years before those polled were even born. This would be people like George Washington and Teddy Roosevelt. It is hard to beat “legends.” Even professional historians in academia rank Reagan as high as ten in surveys, according to MSNBC.



Reagan's greatness is measured by the "copy cat factor" seen in politicians today. The old saying that "imitation is the sincerest form of flattery" could not be truer then what we see in regards to Reagan. Politicians of all stripes -- conservatives, liberals, and many who are in between -- have described their policies as being "Reganesque." I think that Reagan would find many of the comparisons quite shocking, if he were with us today.



So what does it mean to have an approach to governing like Reagan? I actually believe the Reagan model is easy to understand, but quite difficult to practice. Reagan was really simple in his view of the world. There was "good" and "bad," "right" and "wrong," he left the grey areas to the pragmatists or those who lacked the backbone or principle to take a definitive stand. His strong positions made him an attractive leader to a people who had been washed "back and forth" by the liberal policies that came before. He is hard to copy because his approach to governing required integrity in word and deed.



A sample of that simplicity and one of the hallmarks of Reagan's policies was his "three legged stool." Reagan's policies were built on three ideas; free enterprise, limited government, and pro-family social policies. He chose these three because they, of course, reflected his own values, but he also realized that each of these ideas have enormous appeal on their own. I was attracted to the conservative philosophy as a young Christian and noticed that Reagan's philosophy was very strong when it came to traditional family values. Over the last few decades, economics have become my passion and expertise, but it started with a concern in culture (and this remains important to me).



The approach is simple, yet profound. Reagan believed that there are huge sectors of the population that would be attracted to a strong message of free market economics, regardless of where one stood on other issues. The other issues (defense or culture) were not nearly as important to this block, but these voters would not be deterred by the other areas as long as a candidate was very strong on economic policies. Reagan rightly believed that this would be the case when it comes to other legs of the stool, as long as he was very strong and clear on his positions. While "big tent" Republicans argued that Reagan should have "lightened up" when it came to the strong positions he took, voters came to him in larger numbers as he took stronger stands on the issues of the day.



"Reagan conservatives" are the complete package. They recognize that consistency and strength are hallmarks in leadership. They understand that a stool stands on three legs and falls with fewer than that. The less shy conservatives are when it comes to policy issues, the more success they will likely enjoy.



Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Citizens Against Government Waste Point at Pork

Each year, Citizens Against Government Waste (CAGW) releases its annual report of government pork barrel spending and this year is no exception. This week, the organization released its 2010 "Congressional Pig Book," which comes during the group's 20th anniversary. As in past issues, the focus is on spending that is out of control. The Pig Book exposes 9,129 earmarks that combined are worth $16.5 billion.

What, exactly, is an "earmark?" The simplest and most concise definition I have seen on the subject comes from FactCheck.org, which describes earmarks as "government funds that are allocated by a legislator for a particular pet project, often without proper review." Spending bills are often full of politically unpopular items and in order to get them passed, they include nasty little pet projects that are designed to make the larger bill more palpable to individual members of Congress in both Houses and parties. According to CAGW, slightly more than 15 percent of earmarks went to Republican members, the remainder went to the Democrats. Considering that the GOP pretends to be the only party with a moral high ground on this issue, this number is still too high.

Rhetorically, things are changing in government today. According to CAGW President Tom Schatz, "Recent actions in the House to stop funding for-profit earmarks and the House Republican Caucus' decision to not request earmarks, indicates that politicians from both parties recognize that taxpayers are enraged about the broken spending process in Washington. They have noticed that it is popular to posture as an anti-earmarker. Unfortunately, the 2010 Congressional Pig Book illustrates that most members of Congress still aren't willing to eliminate the practice and why meaningful reform is necessary."

I'm sure members of both parties are going to cite progress. According to CAGW's press release, "The number of projects declined by 10.2 percent, from 10,160 in fiscal year 2009 to 9,129 in fiscal year 2010, while the total tax dollars spent to fund them decreased by 15.5 percent, from $19.6 billion to $16.5 billion." This is partially attributed to the fact that reforms have been passed that make it mandatory for members of Congress to identify earmarks they requested and those who will benefit from them. In spite of these reforms, Congress still finds itself breaking its own rules in regards to being transparent. CAGW "uncovered 91 earmarks worth $6.5 billion that were funded" outside of the required rules. This was particularly noticeable in the 2010 Defense Appropriations Act, which included 35 anonymous earmarks worth $6 billion, which made up a breath taking 59 percent of the earmarked tax dollars.

The Pig Book Summary review some of the most outrageous examples, breaks down pork per capita by state, and presents the annual "Oinker Awards." All 9,129 projects are listed in a searchable database on CAGW's website www.cagw.org. Examples of pork in the 2010 Pig Book include:

• $465,000,000 for the alternate engine for the Joint Strike Fighter;
• $5,000,000 for the Presidio Heritage Center in California;
• $1,000,000 for Portsmouth Music Hall in New Hampshire;
• $400,000 for the USA Swimming Foundation in New Jersey;
• $300,000 for Carnegie Hall in New York City;
• $250,000 for the Monroe County Farmer's Market in Kentucky;
• $200,000 for the Washington National Opera in the District of Columbia; and
• $206,000 for wool research in Montana, Texas, and Wyoming.

CNN notes that the CAGW also provided several awards for members, based on their spending behavior.

The "Dunder-head Mifflin Award" (from the popular TV show, "The Office") -- Sen. Arlen Specter, D-Pennsylvania, and Rep. Paul Kanjorski, D-Pennsylvania, for "$200,000 for design and construction of a small business incubator and multipurpose center in Scranton, Pennsylvania."

There is also the "Thad the Impaler Award" -- Sen. Thad Cochran, R-Mississippi, "for $490 million in pork, including $200,000 for the Washington National Opera for set design, installation and performing arts at libraries and schools, and $500,000 for the University of Southern Mississippi for cannabis eradication."

Then there is the "Hal Bent on Earmarking Award" -- Rep. Harold "Hal" Rogers, R-Kentucky, "for $10 million for the National Institute for Hometown Security."

Other awards included the "Little Engine That Couldn't Award," the "Narcissist Award," the "Steak Through the Heart of Taxpayers Award," and the "Sapping the Taxpayers Award." My personal favorite is the "Jekyll and Hyde Award" -- Rep. Leonard Lance, R-New Jersey, received it for being a moving target on earmarks. "He first signed a no-earmark pledge, then received $21 million in earmarks, then supported the Republican earmark moratorium." I believe there are probably many other members that walk one thing and talk something entirely different. Review the list of other awards and find out if your member of Congress is a "winner" and how bad of a loser you are in the type of representation you have in Washington, DC.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

The Future of the Tea Party

There is a debate when it comes to the future of the Tea Party movement. There are arguments raging over whether the Tea Party matters, will matter in the future, or be a mere footnote in US history. It is our tendency to get caught up in the moments of time. Right now, it seems like the Tea Party movement could be a major player in the policy debate for years to come. For that to happen, several issues will need to be addressed.

What, exactly, is the Tea Party? It started as a simple protest movement when an angry reporter said that the American people should be disgusted over the corporate bailouts and they should fight back with a Tea Party movement. In no time, that became a reality. Its membership, however, is very interesting and raises many questions about unity. Forty percent of those who call themselves Tea Party "members" are also self described Democrats and independents. A loud, if not significant, minority are of the libertarian variety. There are also those who describe themselves as "Truthers" (believe the US was behind September 11th), which seems to be largely ignored by the vast majority in the movement. The single largest group ranges from traditional conservatives to those who call themselves "Constitutionalists." It is difficult to call this a "united movement." However, there could be enough "critical mass" to make a difference.

Are the members of the Tea Party too worried about "being used" to be useful in the cause of liberty? There is no doubt that the members of the Tea Parties have every right to be offended over the abuses in government that exist today. However, most of these abuses accumulated while the "giant," now called the Tea Party, slept. Yes, shame on government for going on autopilot, but shame on the American people for not keeping them in line. Virtually everyone in the Democratic Party has open disdain for the Constitution and most of Republicans are filled with hypocrisy. That leaves few options for a group of Americans that have felt disenfranchised. A mere "throw the bums out" strategy is filled with problems and America cannot afford to wait for a viable third party. It will be a truly wasted opportunity if this movement fails to accomplish anything of lasting value.

I think it is imperative for those who are interested in having an immediate impact on the political process, but do not want to be taken advantage of by the political parties, to take a strategic approach when it comes to their activities. Conservatives should aggressively support the best (AKA constitutionally sound) candidates in primaries. They should go door to door, make phone calls, and give money to these type of candidates. If they do not exist in your district, work in a nearby district that has a candidate that shares your values. You can also help these candidates outside of your district, if the candidate you supported does not get the party's nod. Don't waste time, energy, and resources on candidates who do not share your values...that is, America's value. If such principles are applied consistently, you will naturally have better candidates over time. I would argue, in a very short time.

So what happens when you get to November and your choices are various degrees of "bad?" My view is one that is both pragmatic, but lends to the wisdom of the Founding Fathers. The United States is one of the only governments in the world that can have a head of government that is different from the legislative branch of government. For example, the Prime Minister of England is a mere member of Parliament, whose party enjoys a majority. Our Founders did not believe that a government that could create policy with ease was necessarily a good government. In our current state and with a President pushing this nation towards a socialist wasteland, I can comfortably vote for obstruction. To vote for a Republican for Congress in the general election is a vote against Nancy Pelosi or Harry Reid as leaders (depending on the House). At this point, it is unconscionable to vote for a third party or to not vote at all in the current political environment. With the fast track towards socialism we are moving on today, I can comfortably support obstruction all day long.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Good Government Requires a Civic Minded Population

Recently I was a speaker at the Young Conservatives of Texas annual convention in Austin, Texas and, as I waited for my opportunity to present, I had the opportunity to hear Dr. Rich Brake of the Intercollegiate Studies Institute (ISI) discusse the status of America's civic education. Brake eloquently reminded the audience that our country has a republican form of government. That means that we must have a population that understands individual responsibility and is capable of making sure the government stays within the limits so clearly stated in the Constitution. We are not a nation that is ruled by the mob, but by the law. The people must hold those who govern accountable to that law. So how are the American people doing?

ISI, through its American Civil Literacy Program, produced a report entitled "Failing our Students, Failing America." It's purpose is to hold "colleges accountable for teaching America's history and institutions." The survey was of "some 14,000 freshmen and seniors at 50 colleges and universities. Students were asked 60 multiple-choice questions to measure their knowledge in four subject areas: America's history, government, international relations, and market economy." The finding of the report are very disturbing, including:

• College seniors failed a basic test on America's history and institutions. According to the report, these students made an "F" on all four basic areas, with a score of 54.2 percent. Harvard seniors did best, but their score was only 69.6, which was a mere "D+."
• Colleges actually slow down, and even stall, student learning about America. The report found that from K-12, the "average student gains 2.3 points per year in civic knowledge, almost twice the annual gain of the average college student." Worse still, some students actually lose civic knowledge as they go through school.
• Ironically (considering the costs and other factors), America's most prestigious schools were the worse performers. In fact, colleges that perform well in popular rankings (such at US News & World Report) are actually quite poor at advancing civic knowledge. Seniors from four of the top 12 schools in US News had weaker scores on the test as they left school, compared to when they entered.
• Not surprisingly, the study indicated that inadequate college curriculum contributes to failure. Obviously the number of civic oriented courses (and their quality) a student takes will have a bearing on how well they would perform on such a test. The average senior only takes four such courses while in college.
• Finally the more people learn about government, the more active they will likely be as citizens. Simply put, those who know more are going to be more likely to vote and be involved in other civic activities.
  

The average score of these students was 53.2% and the simplicity of the questions these test takers failed on, is disturbing. For example the takers of this multiple choice test could not provide a simple chronology of the most important events in US history (what came first, the Constitution or the Cuban Missile Crisis?), the purpose of Martin Luther King, Jr's "I Have a Dream" speech, and they could not define the free enterprise system.

Parents are spending thousands of dollars helping their children to make a living and to make a life. They clearly deserve a refund from their colleges when it comes to the type of education these students are receiving to prepare for the responsibilities of protecting that quality of life.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Taxes on Wealthy lead to Pain for All

"Soak the rich" is a favorite battle cry for politicians seeking reelection and advocates of social justice, but in the end, it creates injustice for all. This will clearly be seen as a consequence of the recent health care bill, as well as with the President's ambitious efforts to dramatically increase the tax on capital gains.

Numerous major corporations have announced projected loses in the hundreds of millions of dollars due to Obamacare. These tax hikes will have an adverse effect on the capital stock and will undermine job creation among small businesses. You would think the Obama administration, which is presiding over the worse unemployment this nation has seen in over a generation, would do everything in its power to keep unemployment down. To look at the obvious consequences of Obamacare, however, one would think that increased job losses is a policy objective. But the damage does not end with the President's ambitious health care agenda, but is also seen in his desire to change the taxes on capital gains.

Pamela Villarreal, a senior policy analyst with the National Center for Policy Analysis, notes that:
The 2001 Bush tax cuts reduced the lowest marginal income tax rate from 15 percent to 10 percent and the highest from 39.6 percent to 35 percent. This tax situation led to a job creation environment that was one of the best in recent history and brought the US unemployment down to around 5 percent. Simply put, the cost of using an asset got smaller and the profit got higher. This led to business activity taking place that resulted in more jobs and more tax revenue (because revenue comes from business activities that take place, like the selling of assets).
President Obama proposes to raise the two top marginal rates to 36 and 39.6 percent beginning in 2011 for the highest-income earners while leaving the other tax brackets unchanged. This will be temporary, however and will be followed with additional changes in the brackets and the amount taxed.

Starting in 2013, Obamacare will impose an additional 0.9 percent Medicare tax on wage income for individuals earning more than $200,000 a year and couples earning more than $250,000.
To make matters worse, the new law imposes a 3.8 percent Medicare tax on unearned income, such as "rent, royalties, dividends and capital gains for the same high-income earners."
The Obama administration also wants to increase long-term capital gains tax rates from 15 percent this year to 20 percent in 2011 for the two highest tax brackets, and taxing dividends at ordinary income tax rates for those earning $200,000 a year or more.

So what kind of impact will this have on the most affluent? Villarreal suggests we should "suppose an individual owns $50,000 worth of stock that has accumulated an 8 percent capital gain and 3 percent dividend after one year:"

• By 2013, the tax on the $4,000 gain (just after one year) would be as much as $1,309, compared to $825 if we simply left taxes at the current rate.
• With the current tax rate on capital gains (15 percent), the tax on the sale of $50,000 in stock would be $825, and the after-tax rate of return would be 9.35 percent.
• If President Obama's proposed capital gains and dividends increases of 20 percent go into effect, along with the excessive new taxes that will come with Medicare, the tax bill rises to $1,352 and the after-tax rate of return falls to 8.38 percent (a drop of almost 1 percent).
• For ordinary dividends, a higher marginal tax rate and the new Medicare taxes could nearly double the individual's effective tax rate from 15 percent to more than 29 percent, essentially doubling the tax burden.

The US already has the unwelcome distinction of having one of the highest tax rates of any industrialized country in the world. After Obama's pro-tax, anti-prosperity, agenda, we will likely be the world's number one tax collector among modern countries. For those who are more affluent, this will result in an after tax rate of return on this type of investment that would have the return on the profit be reduced by approximately 10 percent. The ironic result of such is that increasing the capital gains tax could actually lower government tax revenues (as witnessed in the past), because people will hold on to assets in order to avoid the tax. Remember, unlike the vast majority of people who sell things because they need to move, or they need a different vehicle, or there is some other cost driving necessity, the rich simply sit on the asset and wait until the tax environment changes. They can afford to do that and it is in their self interest. For much of the country, however, it leads to the depletion of jobs and even the hope of jobs.

Instead of increasing taxes on wealth creation (e.g., capital gains, taxes on businesses, etc.), this administration should consider dramatically reducing such barriers between people and jobs.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Conservatives talk Policy Priorities for 2010 Congressional Races

Recently I asked Facebook friends and Price of Business Show Fans what their policy priorities would be if they were running for Congress in 2010. There is no question about it, people are ready for meaningful change and many of their opinions are quite perceptive, in my opinion.

Steve Yeager of Arkansas said, "Quit spending money on anything except for national defense and economic recovery, period. No more pork barrel spending, I am sorry if your district does not get your small municipal airports re-paved, but the buck has got to stop here and now!" In my view, do not spend another penny on economic recovery, but instead create a tax and regulatory environment in which businesses can thrive. I certainly think that Steve has us heading in the right direction.

One popular "love to hate" theme among conservative activists is health care. Brandon Dupont of Louisiana said that we should "repeal health care, go after fraud In Medicare and Medicaid...drug test for welfare and food stamp recipients." I believe the "drug test" theme might become a populist theme among Americans who are disgusted by the lack of accountability when it comes to government spending. Of course, welfare should be left entirely to the states and the citizens thereof. That, too, will be a popular mantra in 2010.

Another big concern is the amount of money the government is taking from its citizens and the type of things being taxed. There is an old saying, "the more you tax something, the less you get of it." With that, why would one want to tax wealth and job creation? The US is about to have the highest tax rate of any industrialized country in the world and our job growth numbers continues to show weakness. In fact, the continuously stagnant economy of England has lower unemployment than the US. With that, Dee Dobson of Oklahoma calls for a "FAIR TAX! They take our freedoms through taxes!" Taxes also take our wealth and productivity. A Fair Tax would stop taxing wealth creation and instead tax consumption. This type of policy would go far in restoring our economic greatness.

One issue I often beat the drum on is corporate welfare. This form of fascism is destroying America's economic fabric and is waging a war on entrepreneurship. Dave Smith of Texas noted that "Corporate welfare: end it. No subsidies, no special treatment, no tax credits for specific behaviors -- just a simple, fair, efficient flat tax that is easily understandable and doesn't favor or restrict businesses." Those who do not favor a Fair tax, tend to support a flat tax of around 10 percent. Either one would have every person contributing to government spending and holding that government accountable in a manner we have not seen in generations.

One of the most important issues facing America is the restoration of constitutional government. Larry Sherman of Minnesota says we should "return to a republic." Today, democracy and republican government are largely treated as synonyms, but the Founding Fathers clearly understood that true freedom is preserved in rule by law that protected the minority and even the individual, rather than through any form of dictatorship, be it popular or by a few.

Finally, Herschel Evans of Georgia may have put it best when he said, "Freedom! Freedom to succeed, freedom to fail. It should be all about Freedom!"

2010 should be about restoring limited constitutional government and restoring the rights of individual. It is time to replace the fast track to mob role (which invariably leads to oligarchy) with one of rule by law.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

What Pro-life Democrats got for their Vote

The vote seemed suspicious enough. At the 11th hour of the notorious health care vote, 11 "pro-life" Democrats who were adamant in their opposition of the President's legislation decided to vote with him. The stated reason for the shift was assurances from the Administration that the law would not be used to federally fund abortions, even though the legislation clearly allows for such. In order to bolster his claim, President Obama even signed an Executive Order prohibiting such funding. However, Congressman Bart Stupak (D-MI), the leader of the pro-life Democrat coalition, knows that the same pen that prohibits abortion funding can just as easily sweep it away, and it is likely Barack Obama will do just that. After all, the most famous vote of state Sen. Barack Obama in Illinois was to be the lone member of that body to vote against a bill to rescue victims of a botched abortion. His position was to simply let such victims to die. To think the funding of abortion is not a part of the Obama agenda is ridiculous and those who oppose abortion, but supported this bill, leads many critics to believe they must have received something in return for their votes.

Judas Iscariot only received 30 pieces of silver for being a traitor. He could have learned a great deal from the Stupak 11. It appears these members made several deals through the earmark process, which is a favorite of politicians. In the past, crafty members would sneak appropriations for the home district in massive spending bills with little notice since they would receive final approval after the vote (in this case in June or July by the Appropriations committee). However, Bill Allison of the Sunlight Foundation and other spending critics are watching expenditures as they relate to the health care bill. There will be no simple "pass" this time.

FoxNews.com reveals what the eleven members requested:

Rep. Jerry Costello of Illinois.: $1,418.7 million ($256.4 million in 2010)
Rep. Solomon Ortiz of Texas: $618 million ($726.1 million in 2010)
Rep. Stupak of Michigan: $578.9 million
Rep. Marcy Kaptur of Ohio: $294 million ($305.7 million in 2010)
Rep. Kathy Dahlkemper of Pennsylvania: $236.8 million ($54 million in 2010)
Rep. James Oberstar of Minnesota.: $207 million ($226 million in 2010)
Rep. Brad Ellsworth of Indiana.: $115.4 million ($82.3 million in 2010)
Rep. Charles Wilson of Ohio: $84 million ($62.3 million in 2010)
Rep. Paul Kanjorski of Pennsylvania.: $67.1 million
Rep. Steve Driehaus of Ohio: $33.2 million
Rep. Joseph Donnelly of Indiana: $19.8 million ($11.65 million in 2010)

Regardless of whether these members get the prize for their vote, their "sacrifice" may not be over when it comes to the health care bill. For example, Bart Stupak's race has gone from an "easy" election in 2010 to someone who is now facing a serious challenge. The GOP challenger, Dan Benishek, was limping along and was hoping to put together a campaign in the six digits by November. Politico reports that, after Stupak voted for the health care bill, the Republican challenger saw $125,000 in donations on one day alone. It is now a completely different ball game. It is likely that many of these "pro-life" members will be fighting to avoid extinction. For many voters it is no longer revenge. It is a reckoning.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Companies of all Sizes fear National Health Care

Obama's massive health care proposal has far reaching implications, many of which we are now only beginning to learn about. One of the biggest areas of concern is the cost to businesses of every size. Higher government costs on business leads to several negative effects, including these businesses becoming less competitive (or leaving the US to avoid the costs), laying off employees to avoid certain regulatory thresholds or simply to remain competitive, and higher prices for consumers (since businesses will be forced to pass on the higher costs of doing business).

The Associated Press is reporting that "In the first two days after the law was signed, three major companies — Deere & Co., Caterpillar Inc. and Valero Energy — said they expect to take a total hit of $265 million to account for smaller tax deductions in the future. With more than 3,500 companies now getting the tax break as an incentive to keep providing coverage, others are almost certain to announce similar cost increases in the weeks ahead as they sort out the impact of the change. Figuring out what it will mean for retirees will take longer, but analysts said as many as 2 million could lose the prescription drug coverage provided by their former employers, leaving them to enroll in Medicare's program."

One of the first and most important rules I learned in economics was this little concept called the "secondary effects." Public policy is virtually always full of good intentions, but they are often damaged by the unintended consequences. The government thought they were going to be able to get businesses to pick up the load of its socialized health care programs. Unfortunately, many of these businesses will not be able to (nor have to), because they will be exempt due to their losses. These results are similar to the Massachusetts experience with government health care, where there was suppose to be huge health insurance relief by business, that instead resulted in a large increase in government coverage and the costs that come with such.

The problem does not end with big businesses though. According to the Pittsburgh Business Journal, "Employers with 50+ workers that do not offer health insurance will pay $2,000 per full-time worker (not including the first 30 workers) if any of their employees purchases government-subsidized coverage through an exchange. Employers with 50+ workers that offer unaffordable coverage or coverage that does not cover at least 60 percent of allowable costs will pay $3,000 for any employee who receives a tax credit in the exchange" Again, myopic policy makers who do not understand basic human nature, do not see the obvious consequence of these type of policies. These still small, but aspiring to be larger, businesses will simply layoff enough employees to make sure they fall beneath the 50+ threshold. They will likely make up the loss through outsourcing and vendors, including the utilization of companies overseas. This latter result is something people of most political stripes hate to see happen, but will be the natural result of Obamacare.

Currently the US is in the middle of what is being called the "Great Recession," with the highest unemployment numbers in over a quarter of a century. The Obama administration's irresponsible health care policy could move the country closer to seeing the original Great Depression as the second worse economy in US history. Actually, the ones who should fear Obama's health care policies the most is not the employers, but the people who will ask these companies for a job.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

The Simplest Guide to what the US Government can do that You will Ever Find

More Americans are aware of the huge problems facing are republic than at any time in recent decades. Our unemployment is approaching Great Depression levels, our deficits are growing annually at a rate similar to what our entire national debt was just a few decades ago, and the government is pumping dollars into our money supply in the trillions of dollars, putting us on pace for hyperinflation. Everyone seems to be aware of what is wrong, but are unaware as to why and, more importantly, how to fix it. That is why I developed this simple guide.

There is nothing original in this article. In fact, that is what makes it unique. It goes back to the original source, which is the US Constitution, to guide us back to where we belong. There is an old saying, "if you lose something, go back to the place where you last remembered having it." We have lost our liberty and the place we can find it is in the US Constitution. Every member of Congress swears to defend the US Constitution and to fulfill the powers listed in it. What are those powers? How many are there? The answer to those questions will surprise most Americans today.

Seventeen powers. That is all. None of them are particularly sexy and combined would cost a fraction of what we pay today. If they only did these functions, taxes (which obstruct job creation) would be much lower, the dollar would be much stronger (since we would not need "funny money" to fund excess government), and we would simply be more free. Here are those simple items:

"The Congress shall have power To lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;"

"To borrow money on the credit of the United States;"

"To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;"

"To establish a uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States;"

"To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;"

"To provide for the punishment of counterfeiting the securities and current coin of the United States;"

"To establish post offices and post roads;"

"To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;"

"To constitute tribunals inferior to the Supreme Court;"

"To define and punish piracies and felonies committed on the high seas, and offenses against the law of nations;"

"To declare war, grant letters of marque and reprisal, and make rules concerning captures on land and water;"

"To raise and support armies, but no appropriation of money to that use shall be for a longer term than two years;"

"To provide and maintain a navy;"

"To make rules for the government and regulation of the land and naval forces;"

"To provide for calling forth the militia to execute the laws of the union, suppress insurrections and repel invasions;"

"To provide for organizing, arming, and disciplining, the militia, and for governing such part of them as may be employed in the service of the United States, reserving to the states respectively, the appointment of the officers, and the authority of training the militia according to the discipline prescribed by Congress;"

"To exercise exclusive legislation in all cases whatsoever, over such District (not exceeding ten miles "square) as may, by cession of particular states, and the acceptance of Congress, become the seat of the government of the United States, and to exercise like authority over all places purchased by the consent of the legislature of the state in which the same shall be, for the erection of forts, magazines, arsenals, dockyards, and other needful buildings;-And"

"To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof."

Over the years that last clause ("necessary and proper") has become a license to do virtually everything. This is wrong, because the clause makes it clear that it applies only to the "foregoing powers" (the seventeen items listed above. Some of the Founding Fathers feared that this could lead to an abuse of power, which led to the first ten amendments being added to guarantee our rights, including the 10th Amendment, which states "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

Stop arguing with friends, family, loved ones, neighbors, and even idiots. Tell them their elected officials are breaking the law and have them read this simple document which will give them the tools they need to determine whether or not a policy is proper and whether or not their member of Congress should change careers.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Congressional Budget Office has new Numbers

About two weeks ago the Obama Administration was blushing as it boasted about the "favorable" numbers its administration received from the Congressional Budget Office (CBO). The fact that the CBO is appointed by members of the President's own party (the majority in Congress are Democrats) made some skeptical. However, the experts outside of the CBO and the White House looked at the numbers and said, "wait a minute!" The numbers are scary and the budget is pointing at a direction that will make the US appear to be little more than a typical debtor nation. This is not something "down the road," but just a few years away.

Now, the Congressional Budget Office itself is releasing new numbers that make it appear it has had its own rude awakening. The Hill is reporting "The federal government would record total deficits of 9.8 trillion between 2011 and 2020 under President Obama's fiscal 2011 budget, according to an analysis released Wednesday by the Congressional Budget Office. The deficit would be $1.5 trillion in 2010 and and would decline to 8.9 percent of gross domestic product or $1.3 trillion in 2011, $346 billion more than the deficit that CBO projects in its March 5 baseline, based on current policies and laws not changing." Ironically, the Administration made the case for health care reform on the March 5th numbers. The "mistake" could not have been at a better time for Obama, Speaker Pelosi and Sen. Reid, and I'm sure the corrections will be used to make the case for more tax increases. "Isn't that convenient."

The article also goes on to point out that "under the president's budget debt held by the public would grow from $7.5 trillion or 53 percent of GDP at the end of 2009 to $20.3 trillion, or 90 percent of GDP, at the end of 2020, about $5 trillion more than under the assumptions underlying the baseline." These numbers have horror picture written all over them and show huge weaknesses in the fundamentals of our economy in the very near future.

The timing of the initial release of numbers on March 5th helped Obama get his socialized medicine program passed. I doubt he would have promoted these new numbers a few weeks ago. Questions of politics will certainly come up and should. Did Pelosi and Reid put undue influence on the CBO? Was the mistake a mere accident or perfectly times to help the Obama agenda? I am waiting for Republican members of Congress to raise those questions.

I have always worked to articulate what is going on in politics and the economy in the context of "results" rather than "intentions." Those who focus on the latter are dismissed as conspiracy theorists and nut jobs. Furthermore, they typically have no credibility in the eyes of the media or even the general public. However, with stating that, I have never seen an administration raise suspicions about politics, agendas, and deceit than that of Barack Obama.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN 650). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.