I was in the lockerroom of my local gym this week when I heard two men talking about how America will be moving in the next few years from a country relying on energy from fossil fuels to relying on renewable energy sources.
After chuckling to myself, I nearly walked over and slapped those fools.
Those who believe that renewable energy sources will power America might as well believe in Santa Claus or the Easter Bunny. At this point in the development of these energy sources and the technologies that support them, their widespread use is nothing more than fantasy, just like those fictional characters loved by so many children.
Let's say that America decided that that it wanted to rid itself of all fossil fuels, relying instead on solar and wind to power our country. There are a number of reasons why this will not happen in my lifetime and perhaps even during my children's lifetimes.
First of all, the sun doesn't shine 24 hours a day, and battery technology doesn't exist to store the amount of electricity needed to power a small city, let alone a metropolis. As a result, one could possibly power a city using solar energy during the day, but at night that city would be in the dark. The renewable energy advocates would counter by saying that they would simply build enough wind turbines to power the country at night when the solar panels aren't able to generate electricity.
There's are a number of problems with that solution, including the fact that wind turbines on average are able to produce electricity only about 40 percent of the time. The rest of the time, though, wind isn't sufficient to generate electricity.
The same renewable energy advocates would counter by saying that surely a mix of solar panels and wind turbines spread across the country could power this great land. Once again, logic prevails.
In order to achieve this, America would need to build six or seven times its needed generating capacity in order to provide a somewhat reliable source of electricity. With renewable sources already costing two, three or more times the current cost of electricity generated predominantly by fossil fuels, one would see his or electricity bill increase from $100 per month to $1,000, $1,500 or even more per month, just to pay for redundancies to offset the loss of solar power at night, or the loss of wind generation when the wind isn't blowing sufficiently to turn a large number of the wind turbines.
Those same renewable energy advocates might then say that America should simply turn to wind and solar to power maybe 20% or 25% of the country's energy needs. Once again, America would have to build sufficient redundancies in coal, nuclear and natural gas generation to power the country when these renewables aren't available. And once again, the cost of electricity would skyrocket because of having to pay twice for the same generation.
Those same renewable energy advocates don't even consider the consequences of an America with electricity costs that increase two, three, four times or even more. The result would be that American families would be even harder pressed to make ends meet, and significantly more manufacturing jobs would be driven overseas to countries relying on cheap, reliable sources such as coal to generate their electricity. In other words, Americans wouldn't be able to pay their electricity bills because of the rapidly rising rates and the fact that millions more would be out of work.
To prove my point even further, consider a community that needs 1,000 megawatts of electricity to meet the energy demands of its residents. The community builds 1,000 megawatts of solar capacity, but then has to build another 1,000 megawatts of wind capacity in order to rely on those renewables. But to ensure that there will be sufficient energy when needed, the community will also need to build 1,000 megawatts of capacity powered through traditinal fossil fuels, so that energy is available at night and when the wind isn't blowing hard enough to turn the turbines. In short, in order to ensure a reliable supply of 1,000 megawatts of electricity, this community would have to build three times that capacity, which would cause electric rates to increase significantly for residents and result in the loss of jobs to communities with much lower electric rates.
The fact is that every energy source has its positives and negatives, and America should develop an "all of the above" strategy to meet its energy needs. But the marketplace, not the government, should determine which energy sources power our country so that America can remain competitive in a global marketplace.
Just as the use of coal results in air pollution, even with the most sophisticated pollution-control equipment installed on power stations, natural gas also has its downside. Prices of natural gas have fluctuated wildly in the past, and the pipeline explosion this past week in West Virginia reminded us of another downside -- natural gas can explode. Everyone knows about the dangers of nuclear power, thanks to Three Mile Island, Chernobyl and the failure in Japan.
Even the renewables have downsides. Solar panels are manufactured using extremely toxic chemicals, and once installed they disturb thousands of acres of land and result in the loss of habitat for animals. As for wind turbines, hundreds of thousands of migratory birds are already killed each year by the relatively small number of wind turbines in use across America now, and noise disturbs people living within a couple of miles of these large structures. People also complain about these large structures ruining the view in their picturesque communities.
Maybe one day renewables will power this country. But for now, believing that they will power America is much like believing in Santa Claus. It may be nice to believe for children, but reality takes over for the adults once the bills come due.
Sunday, December 16, 2012
The Voice of Reason: Do We Have a Revenue Problem or a Spending Problem?
The latest negotiations between the White House and Congress to avoid the fiscal cliff centers around the "balanced approach" supported by President Barack Obama during the recent campaign.
Now, the President seems to be focused almost entirely on raising taxes for the most successful Americans, while the Republicans seem to be touting the approach once favored but now seemingly abandoned by the President -- increasing revenue and making spending cuts. Without significant spending cuts, though, the Republican-controlled House simply will not agree to raise taxes on the highest-earning Americans. In contrast, the President has outlined a specific plan for raising taxes on Americans earning over $200,000 as individuals or for married couples earning over $250,000, but has avoided any details whatsoever on how he would cut the federal budget.
But does America have a revenue problem, or does it have a spending problem? If you're like me, once people begin talking about trillions upon trillions of dollars, it's nearly impossible to fathom. But once you put the debt into context in numbers that people can understand, you begin to see a much clearer picture.
If America were a household, and we took away five zeros to make the numbers manageable, we would be earning about $25,000 per year (total annual government revenue). This year, however, we will spend about $38,000 (national budget), which means that we had to put about $13,000 on our credit card (annual deficit), bringing our total credit card debt to about $164,000 (total national debt). This year, the interest alone on that debt will cost us about $4,500, nearly one-fifth of what we took in.
By taxing the most successful Americans more, the President will add about $16,000 to our household income over the next 10 years, which equates to a paltry $1,600 per year. However, his most recent budget projections show a deficit of at least $10,000 per year which will be added to our credit card debt. This means that by the end of his second term our total household debt will be well over $200,000. In just eight years, this President will have added about half -- $100,000 -- of our nation's total credit card debt. The interest alone on our debt will cost our household around $6,000 per year by 2016, if interest rates remain low.
Adding to this national financial mess is the fact that our entitlement programs are growing much faster than any increases in our revenue. Within two decades, the entitlement programs of Social Security, Medicaid and Medicare will consume 100% of annual revenue, leaving nothing for education, defense or anything else. If the trend of spending more than we take in continues, couple of decades the interest alone on our national debt will consume 100% of our annual revenue.
America is facing a fiscal cliff of increased taxes for nearly all Americans on January 1, 2013, if Congress and the President can't agree on a plan to extend the Bush-era tax cuts. Our nation faces a much bigger precipice -- a Grand Canyon-like cliff -- if we don't address the debt problem and growing entitlement programs that will bankrupt this country and send the entire world into a deep depression.
As one can see, America does not have a revenue problem. We simply have been spending, and continue to spend, money we just don't have.
This President has done more to bankrupt this country than any other President before him.
One way or another, though, this spending will stop -- either through managed budget cuts and a well-defined plan to cut our debt -- or through a bankruptcy and deep depression that will be much more painful for all Americans.
Now, the President seems to be focused almost entirely on raising taxes for the most successful Americans, while the Republicans seem to be touting the approach once favored but now seemingly abandoned by the President -- increasing revenue and making spending cuts. Without significant spending cuts, though, the Republican-controlled House simply will not agree to raise taxes on the highest-earning Americans. In contrast, the President has outlined a specific plan for raising taxes on Americans earning over $200,000 as individuals or for married couples earning over $250,000, but has avoided any details whatsoever on how he would cut the federal budget.
But does America have a revenue problem, or does it have a spending problem? If you're like me, once people begin talking about trillions upon trillions of dollars, it's nearly impossible to fathom. But once you put the debt into context in numbers that people can understand, you begin to see a much clearer picture.
If America were a household, and we took away five zeros to make the numbers manageable, we would be earning about $25,000 per year (total annual government revenue). This year, however, we will spend about $38,000 (national budget), which means that we had to put about $13,000 on our credit card (annual deficit), bringing our total credit card debt to about $164,000 (total national debt). This year, the interest alone on that debt will cost us about $4,500, nearly one-fifth of what we took in.
By taxing the most successful Americans more, the President will add about $16,000 to our household income over the next 10 years, which equates to a paltry $1,600 per year. However, his most recent budget projections show a deficit of at least $10,000 per year which will be added to our credit card debt. This means that by the end of his second term our total household debt will be well over $200,000. In just eight years, this President will have added about half -- $100,000 -- of our nation's total credit card debt. The interest alone on our debt will cost our household around $6,000 per year by 2016, if interest rates remain low.
Adding to this national financial mess is the fact that our entitlement programs are growing much faster than any increases in our revenue. Within two decades, the entitlement programs of Social Security, Medicaid and Medicare will consume 100% of annual revenue, leaving nothing for education, defense or anything else. If the trend of spending more than we take in continues, couple of decades the interest alone on our national debt will consume 100% of our annual revenue.
America is facing a fiscal cliff of increased taxes for nearly all Americans on January 1, 2013, if Congress and the President can't agree on a plan to extend the Bush-era tax cuts. Our nation faces a much bigger precipice -- a Grand Canyon-like cliff -- if we don't address the debt problem and growing entitlement programs that will bankrupt this country and send the entire world into a deep depression.
As one can see, America does not have a revenue problem. We simply have been spending, and continue to spend, money we just don't have.
This President has done more to bankrupt this country than any other President before him.
One way or another, though, this spending will stop -- either through managed budget cuts and a well-defined plan to cut our debt -- or through a bankruptcy and deep depression that will be much more painful for all Americans.
Saturday, December 8, 2012
The Voice of Reason: Why Many of Today's 20-Something Liberals Will Be Conservatives Tomorrow
So you're in college or have recently graduated from college. You have this Utopian view of what the world should be, that there should be no poor people, corporations are evil, profit is a four-letter word, rich people pay too little in taxes and conservatives are evil people who simply don't care about others. You've bought into messaging of President Barack Obama and the Democratic Party, like so many of your classmates.
I can see why you see the world this way. I had similar beliefs when I was 19, 20 and 21 years old, but then a funny thing happened to change my view of the world. I grew up, and so will you.
Once you start working and paying taxes, your beliefs will begin to change. And then once you marry and start raising a family your views will change even more dramatically. Let me explain why.
Once you graduate and start working, you will see the percentage of what you take home diminish as your income increases. As you work your way up the corporate ladder or build your own business, you will be asked to contribute more and more of what you earn to the federal government. Each year, as your income increases, you will pay more taxes to the point that you wonder whether government receives more of your paycheck than you do, once you add all of your federal, state and local taxes and fees together.
A few of your college classmates and friends will somehow never be able to find a good job, so they will rely on government checks to survive. A few will receive food stamps. A few will sign up and receive disability. Even more will receive welfare. You will realize that the difference between your success and their failure isn't that government didn't provide them with an equal opportunity. You will learn that the reason that they aren't successful is that they didn't work as hard or as long as you have.
After years of watching your hard-earned tax dollars support government programs that help the poor, you will see that the percentage of people living in poverty hasn't diminished. In fact, you see that as government programs expand, more people take advantage of them instead of working as you have.
You will also learn, whether you work for a company or build your own company, that people are employed because companies earn a profit. Without profit there will be no jobs. You may lose your job at an unprofitable company, or, if you own your own company, you may have to lay off a few of your workers because a new government regulation or an increase in your tax rate took away part of your profit.
You will learn that your savings and investments also rely on companies being profitable and growing. If companies are profitable and prosper, your investments will grow accordingly, but if they aren't successful, you see your nestegg grow smaller or disappear completely. You begin to realize that your retirement and the retirements of others rely on the ability of American businesses to grow and prosper. You will also see first-hand that government often puts unreasonable roadblocks in the way of companies being successful. You will learn, as I have over the years, that government is often the enemy of business.
And then when you marry and have children of your own, your views change even more. You become very protective of your offspring to the point that you don't want your children doing the same things that you may have done as a young person. You also realize that every dollar you send to government is a dollar that you can't save for their college, put food on the table or buy their clothes. You resent working so hard for so little of what you earn, while so many aren't working and receive the benefit of your tax dollars.
As you enter your 30s, you may begin admiring successful older people who give back to their communties in time and money. You will notice that the majority of these people are conservative. These people worked hard, built a successful business that employed people, providing them with a good wage, and now they want to give back even more to their community. They care deeply about others, and they share with you what they've learned -- that the only way to change people is to change their behavior and that handouts rarely if ever have a long-term impact. You listen and learn as these role models support programs in their community that help to move people out of poverty through efforts that help them to learn job skills and money management.
You may become involved in programs like Habitat for Humanity, which is exponentially more successful than government housing because people who receive houses through this non-profit have pride in their homes because they pay for them and help to build them. You begin to see that government, through what you once viewed as "kindness," often holds people back by giving them that handout, instead of providing them what they really need, which is a hand up out of poverty.
You now see the world in a much different way. You look back to your early 20s and your college years and begin to see how wrong you really were.
You realize that you're now a conservative.
I can see why you see the world this way. I had similar beliefs when I was 19, 20 and 21 years old, but then a funny thing happened to change my view of the world. I grew up, and so will you.
Once you start working and paying taxes, your beliefs will begin to change. And then once you marry and start raising a family your views will change even more dramatically. Let me explain why.
Once you graduate and start working, you will see the percentage of what you take home diminish as your income increases. As you work your way up the corporate ladder or build your own business, you will be asked to contribute more and more of what you earn to the federal government. Each year, as your income increases, you will pay more taxes to the point that you wonder whether government receives more of your paycheck than you do, once you add all of your federal, state and local taxes and fees together.
A few of your college classmates and friends will somehow never be able to find a good job, so they will rely on government checks to survive. A few will receive food stamps. A few will sign up and receive disability. Even more will receive welfare. You will realize that the difference between your success and their failure isn't that government didn't provide them with an equal opportunity. You will learn that the reason that they aren't successful is that they didn't work as hard or as long as you have.
After years of watching your hard-earned tax dollars support government programs that help the poor, you will see that the percentage of people living in poverty hasn't diminished. In fact, you see that as government programs expand, more people take advantage of them instead of working as you have.
You will also learn, whether you work for a company or build your own company, that people are employed because companies earn a profit. Without profit there will be no jobs. You may lose your job at an unprofitable company, or, if you own your own company, you may have to lay off a few of your workers because a new government regulation or an increase in your tax rate took away part of your profit.
You will learn that your savings and investments also rely on companies being profitable and growing. If companies are profitable and prosper, your investments will grow accordingly, but if they aren't successful, you see your nestegg grow smaller or disappear completely. You begin to realize that your retirement and the retirements of others rely on the ability of American businesses to grow and prosper. You will also see first-hand that government often puts unreasonable roadblocks in the way of companies being successful. You will learn, as I have over the years, that government is often the enemy of business.
And then when you marry and have children of your own, your views change even more. You become very protective of your offspring to the point that you don't want your children doing the same things that you may have done as a young person. You also realize that every dollar you send to government is a dollar that you can't save for their college, put food on the table or buy their clothes. You resent working so hard for so little of what you earn, while so many aren't working and receive the benefit of your tax dollars.
As you enter your 30s, you may begin admiring successful older people who give back to their communties in time and money. You will notice that the majority of these people are conservative. These people worked hard, built a successful business that employed people, providing them with a good wage, and now they want to give back even more to their community. They care deeply about others, and they share with you what they've learned -- that the only way to change people is to change their behavior and that handouts rarely if ever have a long-term impact. You listen and learn as these role models support programs in their community that help to move people out of poverty through efforts that help them to learn job skills and money management.
You may become involved in programs like Habitat for Humanity, which is exponentially more successful than government housing because people who receive houses through this non-profit have pride in their homes because they pay for them and help to build them. You begin to see that government, through what you once viewed as "kindness," often holds people back by giving them that handout, instead of providing them what they really need, which is a hand up out of poverty.
You now see the world in a much different way. You look back to your early 20s and your college years and begin to see how wrong you really were.
You realize that you're now a conservative.
Saturday, December 1, 2012
The Voice of Reason: Geithner Unveils President's Plan with a Straight Face
Treasury Secretary Tim Geithner unveiled President Obama's budget plan to Congress this week. The plan includes $1.6 trillion in tax increases over 10 years, a request for $50 billion in stimulus dollars and a promise to address out-of-control entitlement programs next year with $400 billion in cuts.
And he did it with a straight face.
The proposal made by the President's top money man was as laughable as it was unrealistic. In return for Republicans agreeing to raise income taxes on Americans earning more than $250,000 per year and increasing the rate on capital gains and dividends, the President has offered them a promise of $400 billion in entitlement cuts beginning at some point next year, but won't specify what they might be. In other words, cave in, Republicans, on taxes and then trust the President to do what he says he will do about cutting federal spending.
Does the President propose that the extra revenue be used to cut our deficit and our growing debt? Nope. That's where the President apparently plans to find funds for "investments" in education and other pet programs (i.e., Solyndra). The problem with the President's approach is that unless government spending is controlled, the extra revenue from higher taxes brought in one door will just go out another another door, instead of cutting our annual deficit and growing national debt. The problem is that the additional revenue from punishing higher taxes is much like a single grain of sand in a sandbox full of sand representing our fast-expanding debt.
It's clear that this President refuses to take on the tough budgetary issues, such as entitlement reform. Although the President hasn't put any specific proposal to cut entitlements on the negotiating table, he promises to do this in exchange for significant tax increases almost immediately. Clearly, if America is going to begin cutting its debt and reining in entitlement programs that will soon bankrupt the country, the Republicans will have to be the adults in the room. This line from a story in the New York Times describes the Democratic strategy: http://www.nytimes.com/2012/11/30/us/politics/fiscal-talks-in-congress-seem-to-reach-impasse.html?_r=0
Senate Democratic leaders left their meeting with Mr. Geithner ecstatic. If the Republicans want additional spending cuts in that down payment, the onus is on them to put them on the table, said Senator Harry Reid of Nevada, the Democratic leader.
While the Democrats and the mainstream news media plan to blame the Republicans for any impasse that would cause painful, automatic cuts under sequestration, the truth is that the Democrats and the President haven't even begun negotiating in good faith. We're now exactly one month away from the fiscal cliff that will plunge America back into a deep recession, if not a depression.
At least now you know the truth.
And he did it with a straight face.
The proposal made by the President's top money man was as laughable as it was unrealistic. In return for Republicans agreeing to raise income taxes on Americans earning more than $250,000 per year and increasing the rate on capital gains and dividends, the President has offered them a promise of $400 billion in entitlement cuts beginning at some point next year, but won't specify what they might be. In other words, cave in, Republicans, on taxes and then trust the President to do what he says he will do about cutting federal spending.
Does the President propose that the extra revenue be used to cut our deficit and our growing debt? Nope. That's where the President apparently plans to find funds for "investments" in education and other pet programs (i.e., Solyndra). The problem with the President's approach is that unless government spending is controlled, the extra revenue from higher taxes brought in one door will just go out another another door, instead of cutting our annual deficit and growing national debt. The problem is that the additional revenue from punishing higher taxes is much like a single grain of sand in a sandbox full of sand representing our fast-expanding debt.
It's clear that this President refuses to take on the tough budgetary issues, such as entitlement reform. Although the President hasn't put any specific proposal to cut entitlements on the negotiating table, he promises to do this in exchange for significant tax increases almost immediately. Clearly, if America is going to begin cutting its debt and reining in entitlement programs that will soon bankrupt the country, the Republicans will have to be the adults in the room. This line from a story in the New York Times describes the Democratic strategy: http://www.nytimes.com/2012/11/30/us/politics/fiscal-talks-in-congress-seem-to-reach-impasse.html?_r=0
Senate Democratic leaders left their meeting with Mr. Geithner ecstatic. If the Republicans want additional spending cuts in that down payment, the onus is on them to put them on the table, said Senator Harry Reid of Nevada, the Democratic leader.
While the Democrats and the mainstream news media plan to blame the Republicans for any impasse that would cause painful, automatic cuts under sequestration, the truth is that the Democrats and the President haven't even begun negotiating in good faith. We're now exactly one month away from the fiscal cliff that will plunge America back into a deep recession, if not a depression.
At least now you know the truth.
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