Minor Thoughts from me to you

Lately, the dollar has been sinking lower and lower. Indeed, Nixon was President the last time the dollar was this low. A lot of people are really upset about that. I'm having trouble understanding why. Take this commenter for instance:

The dollar, as predicted is being crushed. We are now at Par with the Canadian Dollar, the Loonie as it is called. This was all so predictable. You cannot run an 800 billion dollar trade deficit and have your currency in demand. We have a lot farther to fall. Within 5 years from 2008 we should see the Canadian Dollar worth 25 % more than the U.S. dollar. The Euro at 1.40 now, should move to near 2.50, as China buys more and more of the Euro. The pound at 2.04 as I write this will be near 3.00. Be ready for CHINA. When they finally let their currency float it will appreciate 70% over a 36 month period. The US trade deficit will be cut in half and then some by 2020.

He starts out by blaming everything on our trade deficit (which is pretty much an illusion to begin with). He finishes by saying that the disastrous result of a falling dollar will be ... a smaller trade deficit. Isn't that exactly what a lot of people (not me!) have been saying that we need? Where's the problem?

A high dollar is worth more compared to foreign currencies. Consequently, imports are cheap and the country imports a lot of stuff. On the downside, our exports are more expensive and we sell less stuff overseas. A low dollar is worth less compared to foreign currencies. Consequently, imports are expensive, but our exports are cheap. We export a little and import a little.

Right now, it appears that our exports may be picking up. People living on our northern border are used to seeing Americans going to Canada to buy things cheaply. Now, the trend is reversing. Canadians are crossing the border to buy cheaper goods.

On either side of the border, a buck is now a buck, or as Canadians call it on their side, a loonie. Coupled with high prices and high taxes for many things in Canada, the strength of the Canadian dollar is driving Canadians into the United States to shop for shoes, school supplies, gasoline, used cars and second homes.

In Vermont, Buzz Roy, owner of Brown's Drugstore in Derby Line, said of his Canadian customers: "They don't buy anything in particular, but everything in general. We've seen a gradual increase over the summer, and we've seen a bigger increase this week."

Mr. Roy said more customers would make trips if it were easier to cross the border, "but they're still coming in droves."

In North Dakota, Crystal Schlecht, who works for the City of Cavalier, said the arts and crafts show in town last weekend had a surprisingly international feel in spite of the slow-go at the border crossing.

"I'd say 60 percent of the people the whole weekend were from Canada," she said. "And we've never really had that before."

Why does it matter that people choose to buy things in Euros or Loonies instead of dollars? Why does it matter that import may slow down and exports may pick up? How does that foretell that nation's doom?

In a recent entry (Sunday's "Alan Greenspan's life is for sale. We don't know where.") I noted that Mr. Greenspan's autobiography The Age of Turbulence, now on sale, has received rather odd publicity: some newspapers are running whole articles about the book's declaration that the U.S. is mainly in Iraq due to oil-related reasons, but somehow failing to -... er, well, mention the name of the book in said articles (one again, that's The Age of Turbulence, Folks!).

I suggested that this was because Democrat-filled newsrooms are in a bit of a pickle: on the one hand, Alan Greenspan - the (Perceived) Bush-Lover and Elder Statesman of Finance - dissing Mr. Bush is too tempting a tale for them to resist reporting. On the other hand, Alan Greenspan's opinions are not the kind to which they'd prefer drawing a lot of attention.

How little did I know.

Mr. Greenspan has since clarified his book's comments to the world, and in a surprising twist, yes, Mr. Greenspan says, he (rightly) rips Mr. Bush to pieces concerning a lot of the president's fiscal policies - but, his tome's analysis of Desert Storm II as primarily oil-driven wasn't one of the negative bits. Actually, Mr. Greenspan thinks insuring the world's continued access to Iraqi oil is a dandy reason to have invaded.

Got that? Mr. Greenspan is not - repeat, not! - accusing President Bush of invading Iraq in order to secure access to Iraq's oil. He is just saying that nobody in power is willing to admit that securing access to that oil is a great benefit of the invasion, much less that killing Hussein for such reason alone probably would've been perfectly justifiable.

I mean, why not, right? He wasn't the elected leader of a people or anything; he was the man with his boot on an entire people's neck. And the homicidal nutcase was in control of one of the world's largest oil reserves. If anyone's whack-worthy in our national interest, why not him?

Now I disagree with that viewpoint, but it's certainly more interesting than what every news story about his book has entirely (and suspiciously) focused on: the news that one more creditable guy technically disagrees with President Bush.

What a bunch of dishonest people these journalists are. At least I can justify the glaring errors in my news stories; I'm just an amateur blogger.

Delays are caused by flight volumes that the FAA Administrator's ineptly-managed Air Traffic Control system cannot handle. The skies are full, not because there's no more room in the air, but because the flight controllers can't keep up with any more flights.

What's Congress's solution to this problem? Why, funding a Peace Garden instead of updating air-traffic control towers.

Want to know what had to be cut from the bill in order to get the North Dakota Peace Garden? Oh, just a silly little project that would have updated technology in air-traffic control towers. But the Peace Garden wasn't the only beneficiary of freeing up funds from making air travel safer. California will also get a "mule and packer museum". Perhaps Americans can start traveling by donkey instead.

Senator Tom Coburn attempted to stop the pork party, to no avail. He offered an amendment that would have forbidden earmarks on transportation bills until all deficient bridges had been properly updated. That just barely failed -- by a vote of 82 to 14. Eighty-two Senators voted to prioritize pork over infrastructure maintenance.

In fact, the pork comes to one out of every eight dollars spent on transportation now. In the past eleven years, earmarks have increased a whopping 1150%, while the dollar value of the pork has increased over 300% in the same period. Ninety-nine percent of these earmarks bypassed planning agencies, meaning that the monies got no review for prioritization. How many bridges could have been repaired with that money over the last decade?

Still believe that Congress should manage a multi-trillion dollar budget? Still believe that government is more interested in your safety and well-being than a private company would be? Private companies would be embarrassed to run the air-traffic control system that the FAA runs. Private companies would be embarrassed to have roads and bridges as well-maintained as the governments.

Don't put your faith in government spending. It's the worst "investment" you could possibly make.

Alan Greenspan's memoir is due for release tomorrow, and the news stories teasing its contents, they be a-poppin'.

Not that this is actually going to help Mr. Greenspan's book's sales as much as it might, since hilariously, both of the articles I've read on the subject today failed to mention the book's title. How much good does free publicity do when the journalists all forget to type in the name of your book?

But then, maybe "America's elder statesman of finance" should've expected as much; after all, while the leaking of his new book's anti-Bush comments are like manna from Heaven to the anti-Bush crowd, most of the rest of the tome is probably nothing people want to hear. While Mr. Greenspan is no longer a believer in Objectivist principles, as Ayn Rand's disciples have furiously noted, the time he spent as a member of her inner circle in the 1950's did ingrain in him at least some modicum of true respect for capitalism - so much so that Mr. Greenspan still advocates a U.S. return to the gold standard. That sort of talk is anathema to the majority of Democrats and Republicans today.

Mr. Greenspan was such a great chairman for the Federal Reserve, though, precisely because of this prevalent mindset in America that one should have faith in free markets just as most people have faith in Jesus Christ: sure, it's important to believe in them, but completely counting on them is just folly. Unlike his belligerent brothers and sisters in the Libertarian and Objectivist movements, Mr. Greenspan decided he was willing to play ball with this delusion. Once nominated to office he gladly went about saving America's government from its own policies, treating every symptom he could find while being careful not to directly attack the disease. As Leonard Peikoff, Ayn Rand's disappointment of an intellectual heir, has fumed: "When he was on the Social Security commission, he helped them to save the rotten institution, rather than to phase it out."

Ironically, such behavior is exactly the target of his mentor Ms. Rand's best-known book. In her final novel, Atlas Shrugged, Ms. Rand's characters learn that capitalists cannot survive by simply doing their best within a framework established by the collectivist mentality of their fellow brothers and sisters.

Of course, Atlas Shrugged ends with its featured capitalists hiding in the mountains and the whole world around them going to Hell in a hand basket, and therein lies the rub. Many feel that abiding by principles to which you confess belief extremely limits one's ability to accomplish anything in this world. Thus Mr. Greenspan chose, much like President Bush himself has, to simply guide the U.S. economy according to whatever plan he thought (a) would help at all and (b) he could get away with. The man who wrote articles like this in 1966 lowered the dollar in the 1990's. Judge the results for yourself.

The name of his autobiography, by the way, is The Age of Turbulence.

You're welcome, Alan.

The New York Times published a long story last week on the sub-prime mortgage "crisis". Can the Mortgage Crisis Swallow a Town? - New York Times. As I read through it, there were a few points that jumped out at me.

One of those loans belonged to Audrey Sweet, a Maple Heights resident and a first-time home buyer who borrowed $118,000 from Countrywide in late 2004 without putting any money down. Because of Mrs. Sweet's poor credit history and lack of assets, the adjustable loan's rate was 10.25 percent, but she says she was told that if the couple "just proved themselves," they could quickly refinance at a lower rate.

Mrs. Sweet says Countrywide advised her that the monthly property tax bill would be $100, but it turned out to be $230 and the Sweets quickly fell behind. Countrywide stepped in and paid $3,493 in back taxes in March 2007, and the next month raised the Sweets' monthly mortgage bill to $1,713 from $1,055.

That was far beyond the budget of the couple, so ... working with a local lender, Third Federal Savings and Loan, the Sweets managed to refinance the loan at a fixed rate of 7.2 percent, and the original $1,055 monthly payment now covers the property taxes the Sweets couldn't afford before.

Notice the main points of this little sob story. The Sweets did not put any money down on their house. In effect, they were on a rent-to-own plan with their house. Even if they had defaulted on the mortgage, they would not have lost any money -- they never put any down in the first place. They were only making monthly payments, no different from paying monthly rent.

Note also that the couple had a poor credit history and no assets. Countrywide took a big risk in loaning money to them. For this, Countrywide is demonized throughout the article. (What a great way to encourage companies to take risks!)

It is also clear that the Sweets bear some responsibility for their predicament. "I do blame myself a little bit," Mrs. Sweet acknowledges. "I feel dumb." She explains that she was focused on the monthly payment when she borrowed from Countrywide, not the interest rate or taxes due. "Once we got the loan documents at the closing, I just came home and stuck them in a drawer."

Wow. Just ... wow. I just took out a mortgage recently. I know for a fact that you have to sign a stack of documents that state in very plain language exactly what your monthly payment covers and exactly what the terms of the loan are. The Sweets don't just bear "some responsibility" for their predicament. They bear all of it. They signed the paperwork, the saw the terms, they chose to ignore the terms. End of story.

They had a lender give them a chance, even though previous evidence (and this story!) shows that Countrywide was taking a huge risk. They very nearly threw that chance away.

[Mr. Stefanski, CEO of Third Federal Savings and Loan] never offered no-money-down loans, piggyback mortgages, exploding adjustable-rate mortgages or the other financial exotica that ultimately tripped up the Sweets and millions like them.

[Mr. Stefanski] does not hide his feelings about just what went wrong in places like Maple Heights. "The whole system was based on raping the public," he says, matter-of-factly. "Not everyone should own a home -- just those who can afford it."

Mr. Stefanski is just dead wrong. The system was not out to "rape the public". Indeed, I find it hard to see how someone can "rape" another person by giving them free money and risking not getting any of it back. How, exactly, does the lender make out in that situation? If any "raping" is going on, it seems to be that the borrower is raping the lender.

Secondly, Mr. Stefanski's attitude is 100% discriminatory. He only favors giving loans (and taking chances) on borrowers who are supremely well qualified and well-off. In other words, existing middle-class Americans. If everyone had the attitude he did, no one would ever move up from the low-income ranks to the middle-income ranks.

I'm grateful that lenders across the country chose to take risks on low-income, high-risk borrowers. Many people proved unable to handle those loans. Many other people were able to get ahead, thanks to those loans. I'd rather focus on the people that got ahead instead of shutting down lenders because of the people that didn't. Wouldn't you?

More than two years after Hurricane Katrina, much of New Orleans still lays in ruins. There are those that would blame that on the federal government. They are the same people that blame President Bush for their uncut lawns and unweeded gardens.

Instead, there are two things to consider: one, where are the local leaders who should be stepping up and rebuilding; two, should New Orleans be rebuilt?

There are some leaders stepping up in the city, but they're not from the government.

In Waveland, Mississippi, for example, the manager of the local Wal-Mart worked with the company's corporate officials to open a store under a tent in the parking lot, then later opened a convenient, easily accessible "Wal-Mart Express"-the first-ever store of its type-designed especially for post-Katrina Mississippi.

Down the road in Bay St. Louis, I spoke with resident Alicia Cool, who told me she reopened her flower shop because "without business you can't have people wanting to come back and stay here." Despite the devastation all around her, her perseverance paid off. Her sales went through the roof.

One example is Doris Voitier, the superintendent of the St. Bernard Parish Schools. Voitier became something of a local hero when she realized that functional schools were critical to getting residents to move back to the parish. She decided she'd figure out a way to open them, bureaucracy be damned. ... For her heroic efforts to reopen her schools, Voitier would later be investigated for misappropriation of federal property.

Neighborhood associations are a good example. LaToya Cantrell, who by day works for an education non-profit, turned the 75-year old Broadmoor Improvement Association into a leading example of how to organize a neighborhood to rebuild. ... The neighborhood association wants to open a charter school in an abandoned school building. The parish school board, fighting further the decay of its authority, is doing everything it can to prevent them.

Get the government out of New Orleans and residents might be able to accomplish more. But we should also ask whether it's even worth rebuilding New Orleans.

The Democratic debate over the future of New Orleans somehow passed over the instructive example of Valmeyer, Ill. In 1993, the town of 900 was swamped, not for the first time, by a rain-swollen Mississippi River. It hasn't been swamped since, because it's not there anymore. Rather than remain in a vulnerable spot, the residents voted to relocate their village to a bluff 400 feet above the river.

But no one wants to suggest similar discretion in Louisiana.

The cost of the levee system envisioned by Sen. Clinton is tabbed at $40 billion. Restoring other infrastructure would increase the cost. The question is whether that's the best use of our resources. For $40 billion, you could give more than $61,000 to every Louisianan displaced by Katrina -- nearly a quarter of a million dollars for a family of four.

Here's the question that ought to be considered: Would those people prefer that the money be spent shoring up dikes around a natural lake? Or would they rather get the money themselves and decide whether to stay or migrate to less soggy terrain?

Living in soggy terrain is expensive. It's expensive to keep out the water and it's expensive to rebuild after the water forces its way in. Many residents are finally starting to see that cost.

The extensive damage done by the storms of 2005 has sharply raised the cost of homeowners' insurance in the region, for those who can find a policy at all. Those costs have become a major impediment to recovery.

"It makes it very difficult for people, particularly those of marginal means, who want to come back, to rebuild," said Lawrence Ponoroff, the dean of the Tulane University School of Law here. "It is very tough on institutions and on attracting new business to the area."

The higher premiums have made buying a house -- or selling one -- here more difficult, said Lynda Nugent Smith, who has been selling real estate here for 34 years. "All of a sudden your insurance goes from $2,000 a year to $6,000 a year," Ms. Smith said. "It's just that cherry on top that makes the whole pile of ice cream and whipped cream fall over."

New Orleans residents should make the decision to stay or go for themselves. But they should do so with a full understanding of the costs and risks inherent in staying. It is not the responsibility of the other 49 states in the Union to rebuild New Orleans every time it floods. Nor is it a constitutional right to live in a flood plain and have your home rebuilt each time it floods.

I'm glad to see local leaders stepping up and helping to bring life back to New Orleans. They're proving their commitment to the city by working on the city. But I'm also glad to see insurance prices rising. Those that stay in the city should bear the costs of doing so, not push those costs onto you and me. Insurance is just a way of making those costs visible. It would be criminal to attempt to hide those costs or force others to shoulder them.

Rolling Stone on ethanol. They're not complimentary.

The Ethanol Scam: One of America's Biggest Political Boondoggles

The great danger of confronting peak oil and global warming isn't that we will sit on our collective asses and do nothing while civilization collapses, but that we will plunge after "solutions" that will make our problems even worse. Like believing we can replace gasoline with ethanol, the much-hyped biofuel that we make from corn.

Ethanol, of course, is nothing new. American refiners will produce nearly 6 billion gallons of corn ethanol this year, mostly for use as a gasoline additive to make engines burn cleaner. But in June, the Senate all but announced that America's future is going to be powered by biofuels, mandating the production of 36 billion gallons of ethanol by 2022. According to ethanol boosters, this is the beginning of a much larger revolution that could entirely replace our 21-million-barrel-a-day oil addiction. Midwest farmers will get rich, the air will be cleaner, the planet will be cooler, and, best of all, we can tell those greedy sheiks to fuck off. As the king of ethanol hype, Sen. Chuck Grassley of Iowa, put it recently, "Everything about ethanol is good, good, good."

This is not just hype -- it's dangerous, delusional bullshit. Ethanol doesn't burn cleaner than gasoline, nor is it cheaper. Our current ethanol production represents only 3.5 percent of our gasoline consumption -- yet it consumes twenty percent of the entire U.S. corn crop, causing the price of corn to double in the last two years and raising the threat of hunger in the Third World. And the increasing acreage devoted to corn for ethanol means less land for other staple crops, giving farmers in South America an incentive to carve fields out of tropical forests that help to cool the planet and stave off global warming.

Here's the best single quote in the article: "'Corn ethanol is essentially a way of recycling natural gas,' says Robert Rapier, an oil-industry engineer who runs the R-Squared Energy Blog."

Giuliani on Taxes and a Homeowner Bailout - Capital Commerce (usnews.com)

I had a chance to chat with Rudy Giuliani this weekend, on Saturday morning, just after he finished with his "tax summit" campaign event in Manchester, N.H. There, Giuliani offered his case for making the Bush cuts permanent, killing the estate tax (or "death tax," as he puts it), indexing the alternative minimum tax to inflation, and lowering corporate taxes. The easy-reading, truncated version of the interview can be found here. But lucky CapCom readers get to peruse the longer "director's cut." No Iraq, no abortion, no immigration"”just hardcore economic policy. Giuliani speaks at length about taxes, Social Security, and the mortgage crisis.

Guiliani continues to intrigue me from an economic, fiscal-policy perspective. This interview shows some of the reasons.

If you're interested in Guiliani's economic record as Mayor of New York City, the Club for Growth has a breakdown.

Should we raise taxes to pay for road and bridge repair? In the wake of the Minnesota bridge collaspse, many politicians are certainly saying that we should. But what have they done with the road money that they already have?

Of Bridges and Taxes

James Oberstar, the Minnesota Democrat who runs the House Transportation and Infrastructure Committee, recently stood beside the wreckage and recommended an increase in the 18.4-cent-a-gallon federal gas tax, as a way to prevent future bridge collapses. His wing man, Alaska Republican and former Transportation Chairman Don Young, agrees wholeheartedly.

As it happens, these are the same men who played the lead role in the $286 billion 2005 federal highway bill. That's the bill that diverted billions of dollars of gas tax money away from urgent road and bridge projects toward Member earmarks for bike paths, nature trails and inefficient urban transit systems.

As recently as July 25, Mr. Oberstar sent out a press release boasting that he had "secured more than $12 million in funding" for his state in a recent federal transportation and housing bill. But $10 million of that was dedicated to a commuter rail line, $250,000 for the "Isanti Bike/Walk Trail," $200,000 to bus services in Duluth, and $150,000 for the Mesabi Academy of Kidspeace in Buhl. None of it went for bridge repair.

Even transportation dollars aren't scarce. Minnesota spends $1.6 billion a year on transportation--enough to build a new bridge over the Mississippi River every four months. But nearly $1 billion of that has been diverted from road and bridge repair to the state's light rail network that has a negligible impact on traffic congestion. Last year part of a sales tax revenue stream that is supposed to be dedicated for road and bridge construction was re-routed to mass transit. The Minnesota Department of Economic Development reports that only 2.8% of the state's commuters ride buses or rail to get to work, but these projects get up to 25% of the funding.

How is this not illegal? Select Hospitals Reap a Windfall Under Child Bill - New York Times

Despite promises by Congress to end the secrecy of earmarks and other pet projects, the House of Representatives has quietly funneled hundreds of millions of dollars to specific hospitals and health care providers under a bill passed this month to help low-income children.

... One hospital, Bay Area Medical Center, sits on Green Bay, straddling the border between Wisconsin and the Upper Peninsula of Michigan, more than 200 miles north of Chicago. The bill would increase Medicare payments to the hospital by instructing federal officials to assume that it was in Chicago, where Medicare rates are set to cover substantially higher wages for hospital workers.

The bill, for example, would give special treatment to two hospitals in Kingston, N.Y., stipulating that Medicare should pay them as if they were in New York City, 80 miles away. Representative Maurice D. Hinchey, Democrat of New York, who worked to get this provision into the bill, said it would allow the hospitals to pay competitive wages so they could keep top health care professionals.

John E. Finch Jr., a vice president of Benedictine Hospital, one of the two in Kingston, said the bill would "make a significant difference to us financially," increasing the payment for a typical Medicare case by $1,000.

Republicans sometimes did the same thing when they controlled Congress. Under a 1999 law, for example, a small hospital in rural Dixon, Ill., was deemed to be in the Chicago area "” 95 miles away "” at the behest of its congressman, J. Dennis Hastert, who was then speaker.

This is outright fraud. No matter how hard hospital administrators pretend different, these hospitals are not in New York City or Chicago. The hospitals will be taking money that the law says they're not entitled to. That's wrong. Any doctor trying to defraud Medicare out of that much money would be stripped of his license, find, and probably jailed. Why should these Congress men and women be treated any differently?

Even President Bush realizes that spending has to be prioritized. Sadly, Congress has yet to learn the lesson. Bush Rejects Gas Tax as Way to Shore Up Bridges - New York Times

Asked about the gasoline proposal, which could amount to an increase of 5 cents a gallon under schemes floating around Congress, Mr. Bush said, "Before we raise taxes, which could affect economic growth, I would strongly urge the Congress to examine how they set priorities."

In a nod to using earmarks to pay for transportation projects like the one supposed to pay for the "bridge to nowhere" in Alaska, Mr. Bush said:

"From my perspective, the way it seems to have worked is that each member on that committee gets to set his or her own priority first, and then whatever is left over is spent through a funding formula. That's not the right way to prioritize the people's money."

Why is Congress talking about raising the gas tax?

Representative James L. Oberstar, Democrat of Minnesota and chairman of the House Transportation and Infrastructure Committee, suggested this week that a tax increase might be needed to finance a proposed trust fund to repair bridges in the Federal Highway System, A large percentage of the bridges have been identified as having structural problems.

Mr. Oberstar raised the possibility of a temporary 5-cent-a-gallon tax. The idea has some bipartisan support.

Representative Don Young, Republican of Alaska and former chairman of the transportation panel, said he could possibly support such a tax. Mr. Young has previously voiced support for increasing the gasoline tax.

Oh, well, if Don Young supports it, it must be a good idea. This is, after all, the same man under Federal investigation for taking bribes. He's also infamous for treating tax money as his own personal slush fund. Obviously, we should follow Rep. Young's advice on tax policy.

No, wait. I've reconsidered. Let's prioritize our spending instead. Let Congress actually decide to fund what matters instead of what personally enriches them. Then we could repair the nation's bridges without needing to raise a dollar of additional taxes.

That would demonstrate true political courage.

Allied Drive jobs program struggling

A local Madison jobs training program has been in operation since January. It was intended to help residents of the Allied Drive neighborhood find decent jobs.

The START program prepares people to take entrance tests for trade apprenticeships. It began in January and has been touted as one of the best ways to lift people out of poverty.

Participants enroll in a six-week class of instruction and individualized tutoring in math, English and spatial skills. The training also covers safety standards, blueprint reading and interviewing skills.

After seven months and $75,000, how is the program doing?

Only two Allied Drive residents completed the program in the first five months. The contract goal for the year is 32. Only one of them passed an apprenticeship test, and only one got a job. The goal is 20 jobs for Allied Drive residents in 2007. ... A city analysis found 82 percent of the people who gained employment through the program live outside the city, including Prairie du Sac, Fall River, Sun Prairie and Janesville.

Something's not quite right here. Why aren't more Allied Drive residents participating in the program? And why is Madison heavily funding a program that is mainly being used by people who live outside of Madison?

Thankfully, I don't live in Madison so I don't have to worry about how long my property tax dollars will fund such an unsuccessful program.

Every politician has a pet charity. Unfortunately, politicians fund their pet charities through my income. In case you've wondered, this is why I love politicians so much.

State Rep. Gary Bies is just the latest politician to make my "dead to me" list. Dentists urge 2-cent tax on soda.

When state Rep. Garey Bies was growing up poor in a large family, he was thankful for a program in Oshkosh that made it financially possible for him to see a dentist.

That is why the Sister Bay Republican has authored AB 237, a bill that would impose a tax on soft drinks -- which dentists say increase risk of tooth decay -- to subsidize dental access for low-income people and to pay for dental education.

Come on. If Rep Bies really wanted to do something useful, he could travel the state talking about the value of dentistry and asking private donors to contribute. Trying to force Wisconsin's taxpayers to contribute is just tacky.

For once, however, an industry trade group actually offers robust opposition to a stupid idea.

"No one will argue that people need dental care and education. They also need vision care and obesity care. Should we tax certain products to pay for that type of help?" asked Brandon Scholz, president and chief executive of the Grocers Association.

"Say people need reading glasses, should we impose a tax of 10 cents on each newspaper? How would your publisher like that? You would say that's not fair to us or our customers, and we view the soda tax the same way."

Scholz added that if sugar causes tooth decay, why just pick on soda? How about ice cream or a bag of sugar?

"Once they go down that road, they will tax everything else," he warned. "And all that money won't go for the program. It would be diverted elsewhere."

So very true.

If you're in the capitol today, and you see Rep. Bies, grab his wallet and pull $10 out of it. I have a few charities I'd like to help. He should approve.

While I'm on the subject of trade-offs, I'd like to mention a recent article from the Wisconsin State Journal. Bridge repairs could cost Wisconsin over $2 billion

Wisconsin's bridges are considered safer than the national average, but the state still has more than 2,100 bridges that fall short of federal standards for carrying loads and providing wide lanes for cars, according to a Wisconsin State Journal review of state and federal records.

The civil engineers report noted Wisconsin needs some $1.75 billion for state and local bridge projects between 2000 and 2020 as outlined in a state plan. That doesn't include another $2.8 billion in road and bridge projects planned for the Milwaukee area and the southeastern part of the state.

I'm glad the Wisconsin section of the American Society of Civil Engineers is looking into this. With the collapse of the bridge of the Minnesota, every politician in America is focused on bridge maintenance and repair. If that money needs to be spent on bridge repair, then spend it.

But first, take it out of another section of the budget. Delay spending increases on other projects. Cut spending on redundant areas of the budget. Prioritize spending in all areas of the budget.

I know what Wisconsin's politicians would like to do: raise taxes by $2 billion to cover this spending. I'd like to do that to -- I'd like to just increase my own income whenever I have something new I want to spend money. Unfortunately, I can't. And neither can Wisconsin's politicians. Every time they raise taxes, I get a pay cut. It's impossible to tax and spend a state into prosperity and safety.

By all means, maintain the bridges. But focus on the trade-offs inherent in doing that and make tough decisions about the budget.

How much do you need to spend on groceries? It depends. If you're talking about whether or not we give out enough food stamps, then $21 a week is far too little. If you're talking about the value of a good, wholesome Cuban diet, then $17 a week is just about right. So say America's liberals. (And, yes, they were talking about buying food in America for both amounts.)

Don't believe me? Check it out for yourself. Don Surber » Blog Archive » Name that party: Alms for the poor edition.

Tim Challies is a Canadian blogger. Therefore, he's uniquely qualified to discuss the positives and negatives of the Canadian healthcare system. He doesn't much like the utopian image painted by Michael Moore.

Now that Sicko, Michael Moore's latest film has been released, Americans are bound to hear a lot about the wonders of the Canadian health care system. As I understand it, Moore's ultimate proposed solution to the American health care conundrum is to adopt a socialized system similar to what we enjoy in Canada. The truth is, though, that the Canadian system simply isn't all that and a bag of chips. The system works, but it comes with a cost that most Americans would be unwilling to pay: a heavy tax burden.

... Our health care system is good, but it has some serious problems. It is certainly not the ultimate solution, and especially so if you dislike 45% tax brackets.

One of his commenters complained about his characterization of the Canadian healthcare system and included this:

I'm an immigrant to Canada. I've travelled extensively and have family all over the world. I'm convinced that God, in His providence, brought me to live in one of the best countries in the world. As Seniors on government pensions, we have more disposable income than we ever had on a Pastor's salary and no worries about paying for medications and health-care as we age.

...I thank the Lord that I live in Canada.

Ms. Compton: you and your husband are living the high-life on Tim Challie's salary. The Canadian government takes nearly half of his income to fund your healthcare and your pension. This isn't a voluntary contribution made out of the goodness of his heart. If he ever failed to send in his taxes, the government would put him in prison. Millions of other Canadians face the same "choice".

I'm sure you do thank God that you live in Canada. It's quite a good deal for you. How do you walk down the street each day, knowing that most of the people you pass are paying half of their income to support you? More than that, those people are not voluntarily supporting you. And you know it. If it ever came to a vote, you would vote to force those people to keep supporting you. From where I sit, that looks like legalized robbery -- not loving charity.

I thank God that I don't live in Canada. I'd rather keep that extra 25% of my salary (my taxes are roughly 20%) and spend it on my family or donate it to the charities of my choice.

My wife and I take great pleasure in sending nearly 14% of our gross income to others. We enjoy sitting down each money and selecting various charities to give to. We increase our giving whenever our income increases. If we increased our taxes whenever our income increased, we'd lose out on that pleasure. We'd lose out on the joy of voluntary giving if we lived with greater taxation.

Here's what Jesus said about giving.

Give, and it will be given to you. A good measure, pressed down, shaken together and running over, will be poured into your lap. For with the measure you use, it will be measured to you.

I'm thankful that I have money to give away. It's fun. Every month we end up wishing we had even more to give away. That's why I'm thankful that I live in a country that allows me to keep more of my money.

Wisconsin Congressman Ron Kind wants to reform the farm subsidy program.

Mr. Kind, a six-term congressman, has introduced legislation that would drastically reduce farm subsidies while pouring more money into land conservation programs and rural development. He gathered 200 votes for a similar bill in 2002 and says he believes he has additional momentum this time around.

To no one's surprise, Mr. Kind's crusade has raised the hackles of the powerful farm lobby and its supporters in Congress, who describe his proposal as naïve, ill conceived and even dangerous.

He argues that if Congress is going to overhaul the farm program, it has to do it across all commodities, including the dairy industry. Mr. Kind said his farmers realized that change was inevitable and would welcome more money and programs for beginning farmers.

Under Mr. Kind's proposal, subsidies would be reduced and replaced with "revenue management accounts" that would function like an individual retirement account, with the difference being that farmers could tap into it to pay for small losses that are not covered by crop insurance.

Over the next five years, Mr. Kind's proposal would increase spending on conservation by $6 billion, anti-hunger programs by $5 billion, renewable energy by $1 billion and rural development, $700 million.

I'm intrigued by this proposal. I'm somewhat surprised that a Wisconsin democrat would propose changing the farm subsidy program. (This state practically worships at the altar of farm subsidies.) I'd also like to know more about these "revenue management accounts". Are they funded by farmers or by the federal government? What kind of conservation spending is being increased? What do the anti-hunger programs do? Is renewable energy just a codeword for increased ethanol production? If so, how is that different from the existing subsidy programs that give money to corn growers?

These are just a few of the questions that I'd like to have answered. As soon as I find out more, I'll tell you.

The Wisconsin State Journal published a few local reactions to the Wisconsin's ongoing budget debates. One reaction caught my eye.

Christa Decker of Madison said she depends on Medicaid programs for everything from her wheelchair to doctor's visits to long-term care. Decker, 51, who has both physical and cognitive disabilities, said that cuts to those services would have a direct impact on her life.

"You cannot cut out part of my life. This is too important to me," Decker said.

I'd like to pick on Ms. Decker just a little bit, on my way to illustrating a point. Ms. Decker is supported by money that comes from every taxpayer in Wisconsin and taxpayers from around the nation. Ms. Decker's life is sustained by the work of everyone around her. She's making a fairly common blanket statement: "If you cut taxes, you'll cut the money I depend on and throw my life into chaos."

That is a legitimate worry. Many people have come to depend on the money and services they receive from local, state, and federal governments. But there is another worry too, one that's expressed far less often. "What is the real cost of giving all of this money away?" Let me give you an example, straight out of my own budget. First, here's a breakdown of where our income goes.

Mortgage

25.84%

Taxes

21.42%

Tithe

10.37%

Student Loans

8.65%

Groceries

3.17%

Gasoline

3.04%

The remaining 30% goes into a large variety of small expenses and savings. Notice that $1 out of every $5 dollars we earn, goes straight into taxes. $0.20 out of every $1.00. $21 out of every $100. Gone. Straight off the top. That's a significant fraction of our income. We're a young married couple, just 2 years out of college. There are a lot of things we could be spending that money on. Here's a short list.

• Paying down student loans
• Paying down our mortgage
• Replacing the old roof on our house
• Replacing the ancient windows in our house
• Finishing our basement to increase the living space in our house
• Saving for a new laptop, to replace my wife's rapidly aging one
• Saving for a new car, so we won't have to take out a car loan next time around
• Saving for retirement
• Saving for our children's college education
• Saving to visit my parents, in Papua New Guinea

As you can see, paying down loans and increasing savings is a large part of our financial goals. We'd love to be free of our debt. There are times that it seems almost achievable. For instance, if we weren't paying taxes the past three months we could have either paid of 68% of one of our student loans or 20% of our home equity loan. And that's just in a three month period.

That's the cost of those "free" government services that so many people enjoy. Ms. Decker's life is financed by my family's increased debt and decreased savings. Oddly enough, those are the costs that are most likely to make me need a government handout later in life. Ironic, isn't it?

I don't know where the dividing line between necessary and unnecessary taxes is. And I don't have a plan for weaning the public off of the dole. I'm still thinking about that. But just remember that government services aren't free. And that the money I'm spending on taxes is money that I'm not spending on goods and services -- money that could be used to create jobs and wealth.

Recently, Congress has been going nuts over ethanol production. Government money has been thrown at every imaginable ethanol-related project.

If the current tax credits, grants and loan guarantees are extended, the package would cost taxpayers an additional $140 billion over the next 15 years. New proposals under consideration in Congress could raise the tab to $205 billion.

The biggest single item would be an extension of an existing 51-cent-a-gallon ethanol tax credit, scheduled to expire in 2010. It would cost the federal government an extra $131 billion through 2022 under a fuel mandate that recently cleared by the Senate Energy and Natural Resources Committee. (It would cost $18.36 billion in 2022 alone.)

Besides the ethanol tax credit, other current incentives include a $1-a-gallon biodiesel tax credit, a subsidy for service stations that install E85 pumps, spending by the Agriculture Department on energy programs, and various other Energy Department grants and loan guarantees.

Some lawmakers want to provide aid for ethanol infrastructure since ethanol is too corrosive to be transported through existing gasoline pipelines. ... Another bill would establish a Strategic Ethanol Reserve for years when corn harvests were reduced by droughts. ... a House Agriculture subcommittee approved a proposed new energy provision that would provide $2 billion in loan guarantees for new biomass plants and $1.5 billion for research into cellulosic ethanol technologies.

The only problem -- nobody's quite sure how to pay for any of this. Especially as Democrat presidential candidates are proposing billions in new healthcare and education spending. All of those billion have to come from somewhere, but Democrats have been pledging to keep the budget balanced. Obviously, those are code words for "hike taxes on the rich to pay for our new toys", but even tax hikes on the rich only go so far. After all, how many separate billion dollar toys can repealing the tax cuts for people who earn $200,000+ really pay for?

As always, the best quote is saved for the end of the article.

Rep. Tim Holden, D-Pa., who chairs the House Agriculture subcommittee dealing with energy, contended that "we need a Manhattan Project ... we need to be less dependent on energy."

Less dependent on energy? As in, the entire nation should start using less energy? How? Ban air conditioning? Ban driving? Mandate thermostat limits in the winter? Take away our iPods, cellphones, laptops, and digital cameras?

I'm afraid Representative Holden is a bit nuts. As are all of these energy subsidies. Knock it off. When an innovator finally comes up with a better, cheaper way to produce energy, the world will stampede to his doorstep. Until then, quit throwing tax money at the problem. None of you idiots in Congress know how to produce energy any more efficiently, so stop using my money to pretend like you're making good investments.

You're worse than a trust-fund teenager taking Daddy's stock portfolio for a test drive. Knock it off already.

UPDATE: Not only that, but the rush to invest in ethanol could lead to a food shortage down the road:

A recent study conducted by the Center for Agricultural and Rural Development at Iowa State University (which receives funding from grocery manufacturers and livestock producers) reported that U.S. ethanol production could consume more than half of U.S. corn, wheat and coarse grains by 2012, driving up food prices and causing shortages. The study estimates that booming ethanol production has already raised U.S. food prices by $47 per person annually. In Mexico, protests have already erupted over the high price of corn tortillas, a staple food in the local diet.

Planting more corn is one solution, but that means planting less of other crops that are also widely used in foods, such as soybeans and wheat. Tilling fallow land could create more growing space for corn, but might lead to soil erosion and impacts on wildlife habitats.

According to a December 2006 study by the International Food Policy Research Institute, producing enough ethanol to fuel all of the world's vehicles would require five times more corn than is planted today and 15 times as much sugar cane.

So. Ethanol investment isn't just a waste of taxpayer dollars. It could also have some very detrimental effects on agricultural production, land management, and food prices. Quit distorting the market and have the patience to let a level playing field reveal the next energy technology. Please.

Last week the Democrats in Congress decided how they'll spend your money. Surprisingly, they won't be letting you keep much of it.

Majority Democrats passed an important test Thursday with approval of a $2.9 trillion budget plan that promises big spending increases for party priorities such as education and health care.

The budget blueprint sets a course to produce a small surplus in five years by assuming that many of President Bush's tax cuts would expire.

Ah, yes. They'll hit all of their spending priorities by taking more of your money. Makes perfect sense.

The House passed the measure by a 214-209 vote without a single Republican voting for it. The Senate quickly followed on a 52-40 vote; moderate Republicans Olympia Snowe and Susan Collins of Maine joined with Democrats.

But deficits under the Democratic plan would be higher over the next two years than the $150 billion to $200 billion the Congressional Budget Office predicts for the current year. A $41 billion surplus is projected for 2012.

They noted it projects a surplus of $41 billion in 2012 by assuming that more than $200 billion worth of tax cuts over 2011-12 "” on income, stock dividends and capital gains, among others "” expire as scheduled at the end of 2010.

Yep. That makes sense. Increase the deficit in the hopes that continually increasing tax revenues will cover the spending spree. Also, assume that the American people will let you hike their taxes by $200 billion.

The budget plan sets the stage for an $850 billion increase in the national debt "” to $9.8 trillion. Under a House rule endorsed at different times by both Democrats and Republicans, adoption of the budget resolution means a separate debt limit increase bill is automatically passed and sent to the Senate.

You know, Congress has the same sense of fiscal responsibility that the Moellering's do. Joy.