This column will be published on the eve of the annual Update Banquet, a weekend of education and camaraderie. A chance to reconnect with old and new friends and to discuss the issues that are near and dear to our hearts. Once again family obligations keep me from coming to my second favorite city to join in the festivities. But that doesn’t mean I can’t join in the conversation.
As many of you gather to discuss the big issues there is an ongoing debate within the Republican Party as to whether it is the party of business or the party of free enterprise. To a Democrat they are the same thing. To those who think at all about the issues they are very different.
The debate today centers around the reauthorization of the Export Import Bank. It has become a litmus test of whether you are for or against crony capitalism and now many members of congress (even some Democrats) are wrapping themselves in that vote to show how pure they are. How they are for the little guy. Well unless you work for Boeing it’s not that difficult to be against the Ex Im Bank.
But after taking that easy position the hard questions start. It’s important to look in the mirror and ask if we really are the party of free enterprise or the party of big business. It’s easy to be against the things that don’t effect you, but where do you stand when you or someone close to you gets a direct or indirect benefit from a government program. And let’s be honest, with a government that spends and regulates as much as ours does we are all touched by it one way or another. So are you willing to gore your own ox? This is a list that I crafted in a few short minutes but with a little effort I could go much broader and deeper. I will only comment on a few of the items. We each need to be asking ourselves, what are we willing to give up?
Education Funding – 12 % of all direct education spending is funneled through the Department of Education. They don’t create the wealth, they just take if from us, take a cut and send it back and yet we feel good about this.
Farm Bill – The farm bill is $956 Billion over 10 years. $756 Billion goes to food stamps, $90 Billion to Crop Insurance, $56 Billion to Conservation, $44 Billion to Commodity Programs (price supports) and $8 Billion to everything else.
College Aid and Loans
Green Energy Investments
Transportation Bill – It’s not that I am opposed to roads but does the money need to flow through Washington and back to the states. Should someone in Arizona really have helped pay for the “Big Dig” here in Boston?
BRAND USA – $100 mm annual direct spending to support tourism in the United States.
Home Mortgage Interest – One of the most controversial items on this list. We have all been brought up that owning a house is important to society and that home interest should be deductible. How much of the real estate crash was because of this mindset. Canada has an equal percentage of home ownership without the subsidy.
Tax Free Muni Bonds
Special treatment of Carried Interest – When an investment firm (PE or Hedge typically) receives a payment of carried interest it is taxed at the lower capital gains rate. This isn’t typical capital gains because there is no money at risk. It is more of a bonus payment based on performance.
Special Treatment of Oil and Gas Depletion Allowance – Oil and Gas companies get to take a depletion allowance (think depreciation) based on how much oil or gas they initially believe is in the well. Then can then continue to take this allowance well past 100% as more oil or gas is discovered in the well.
Regulations or Administrative Actions
Anti Online Casinos Legislation – Shelly Adelson, a big donor to Republican candidates and causes is also the biggest proponent of keeping online gambling illegal. Not because he is against gambling but he doesn’t want competition for all of his casinos.
Ethanol Blending requirements
Zero Interest Rates from the Fed – The fed allowing banks and other financial services firms to borrow at close to zero interest rates is essentially providing a subsidy to them while discouraging saving in society.
Insurance Mandates – Insurance mandates provide demand for things like contraception, chiropractic and other services because someone else is paying for them. If you lobby enough you can get on the list.
Licensing Requirements – Licensing for hair stylists and taxi cabs and nail salons only limits competition and benefits the owners of the businesses.
USDA and FDA Regulations –
So have I pissed everyone at the banquet off a little or am I being burned in effigy? If so, I have done my job.
Many of these we could all agree on, but can we all agree that a simpler tax and regulatory environment is better for the country even if it means that our personal ox is gored? What are you willing to give up?