Mr. Obama is asking each of us how a $2,000 increase in taxes would impact us. Such an increase would occur for an average middle class family if the current tax structure reverts to pre-2004 law on January 1, 2013 without new changes agreed to by Congress and Mr. Obama.

Here is my offering.

Dear Mr. Obama,

To date you have ignored our unsustainable entitlement liabilities, now estimated in excess of 85 trillion dollars. You have ignored our current $16 trillion Federal debt. You have proposed budgets with ongoing annual Federal deficits of $1 trillion.

The most responsible thing to do now is to retain the current tax structure while restructuring medicare and social security to be sustainable within the current tax structure, and so that each generation pays their own way (each generation gets what they can afford based on their productivity, and the value of their work).

Understanding that political reality has nothing to do with what is most responsible, I offer an alternative. Every American should contribute to the cost of real solutions.

Everyone of us bears responsibility for our debt, deficits, and unsustainable entitlement liabilities. Therefore, let every one of us help fix the problem through additional taxation by allowing the current tax structure to revert to pre-2004 rules, provided that this decision MUST BE coupled with the restructuring of our entitlement liabilities proposed above, where medicare and social security become financially sustainable and where each generation pays their own way. I will happily pay my share of the cost of a real and lasting solution.

The extra tax revenue will help those currently receiving and anticipating medicare and social security benefits while financing the restructuring to sustain these social programs for our children and grandchildren.

Unambiguous reforms making medicare and social security sustainable will motivate investment and greatly increase world wide confidence in the future of the United States. These consequences will create opportunity for all, bringing down unemployment and thereby reducing unemployment payments, food stamps, and other subsidies related to unemployment.

Certainly, a man as compassionate as you will see the long term wisdom of actually solving our fundamental problems. Certainly, you will want to be remembered for contributing leadership to a real solution. Certainly, a leader would rather fix the real problems than pander to subsets of Americans for political gain.

Regards, Pete Weldon
americanstance.org

UPDATE March 11, 2013 – Read Bjorn Lomborg’s take on these issues.

I am all for the private sector investing in new car technology. The realities of taxpayer funding of electric cars, however, demonstrate ignorant and  incompetent leadership.

It is one thing to have a realistic vision of the future and another to simply waste billions of our money on pipe dreams. The circumstances surrounding subsidies for the Chevy Volt clearly fall in the later category. The subsidies are a waste, not an investment, by any stretch of language or imagination.

I am all for effective alternatives to burning fossil fuel. We all know that stuff will eventually be in limited supply because we are consuming it all, worldwide, over time. Add in the environmental concerns about the by-products of burning fossil fuels and you can gin up quite the emotional story line.

If only we could replace that fossil fuel consumption with something more, shall we say, “attractive.”

Problem is, studies on the full life cycle environmental impact of electric cars from raw materials, to fabrication, to assembly, to usage, to reclamation show marginal, if any, benefit versus purely gasoline powered cars. Just do a search for “environmental impact of electric cars versus gas powered cars” and read a few articles to understand for yourself.

So, it would be nice to have a marginal benefit presuming there was one to talk about. But at what cost?

Here is a specification comparison of the 2012 Chevy Volt with the 2013 Chevy Cruze. Note that the Volt is built on the same basic platform as the Cruze. They have the same wheelbase and four doors. However the Volt sells for $39,995 USD before tax credits and the Cruze comparably equipped with leather seating, etc., etc. lists for $24,345 USD. (The Volt is estimated to cost as much as $89,000 per car to produce.) The Volt seats 4 people while the Cruze seats 5. The Volt weighs 3,781 lbs while the Cruze weighs 3,155 lbs. The Volt has almost 5% less passenger space and 40+% less truck volume than the Cruze.

So what is better about the Volt? Volt mileage is rated at 40 MPG highway and 35 city. Cruze mileage is rated at 38 MPG highway and 26 city. The 2013 Volt is supposed to get a total of 380 miles on a full charge and full tank, 38 electric miles and 342 miles burning fossil fuel to generate electricity. That’s 36.8 MPG on a 9.3 gallon gas tank going 342 miles plus an imputed 45.8 MPG for the rated 38 all electric miles (based on 37.5 MPG at half highway half city use per full charge/full tank).

A Chevy Cruze driving cycle of half highway and half city driving rates out at 32 MPG versus 37.5 for the Volt. That savings converts to 55 gallons of gas saved per year for the Volt based on driving 12,000 miles per year. At $3.50 per gallon the Volt driver is saving a little less than $200 per year. Based on the list price differential of $15,650 it would take over 78 years to pay back the increased cost of the Volt. Assuming you can take the full $7,500 tax credit offered by the government (and it will not fully apply in all circumstances) it would still take over 40 years to pay back the increased price of the Volt AND you get less car and assume more resale risk with the Volt. In the best possible scenario if you drove only 38 miles per day and used the Volt only on electricity the EPA says you would get the equivalent of 98 MPG versus a blended highway/city 32 MPH for the Cruze. At $3.50 per gallon the annual savings from the Volt if used in this way would be about $1,000 per year, resulting in a 7 to 15 year payback depending on how much of the tax credit you can realize. Now you need to ask how the person realizing any saving from using the Volt will be spending that money. Will they buy a JetSki or take an airplane trip on a nice fossil fuel burning vacation? Where, exactly, is the benefit and why are we paying to subsidize the reality that there is none?

Spending (actually borrowing) billions of dollars subsidizing the production and sale of electric vehicles such as the Chevy Volt makes no sense in any context other than political favoritism.

This Department of Energy piece is a good starting point for understanding the government myopia and hubris underlying the subsidies. It seems the Department of Energy believed GM would produce (and necessarily sell) 120,000 Volts in 2012. Actual 2012 Volt sales through August were 13,500 and those were driven by discounted leases.

This article is a good starting point for understanding the extent of government subsidies supporting the production and sale of the Chevy Volt. That’s right, $3,000,000,000 of our money to subsidize a product that is too expensive and insufficiently compelling to sell, even with a potential $7,500 tax credit that we pay for.

Here is a good article on the possible marginal environmental benefits of electric vehicles. Seems we would be in great shape only if all our electricity were generated by nuclear and hydro power. Electric vehicles actually increase environmental damage in areas where coal is the primary source of electricity. Makes me wonder how to infuse reality into government planning.

For the truly obsessed, here is a Wiki piece on electric vehicle subsidies by country.

And to top this all off, according to the Wall Street Journal, US taxpayers owned 26.9% of General Motors as of September 2012. GM stock would need to reach $53 a share for the U.S. to break even on the government ownership interest. GM stock is currently trading near $25 a share. That’s about a $12,000,000,000 loss we are paying for in addition to the $3,000,000,000 in Volt related subsidies.

What more do we need to stop the nonsense? When will those responsible admit to this failure and accept responsibility for it? How many more borrowed dollars need to be wasted for the taxpayers to wake up?

Regards, Pete Weldon
americanstance.org

Viewing Clint Eastwood’s RNC speech with a couple of weeks to reflect confirms his common sense observations as a citizen. The chair is empty.

The August employment report from the US Department of Labor showed more of the same lack of response we have seen for the past several years with the number of “unemployed persons” at 12.5 million, the number of persons “employed part time for economic reasons” (sometimes referred to as involuntary part-time workers) at 8.0 million, and 2.6 million persons “marginally attached to the labor force.” That totals 23.1 million Americans unemployed, underemployed, or who have given up looking for work.

Alan Abelson in the September 10 Barron’s quotes David Rosenberg, Chief Economist & Strategist at Canadian wealth management firm Gluskin Sheff, as follows; “bear in mind that in the month of August, more people went on the food-stamp program (173,000) than those who managed to find a new job (96,000).”

Here is a chart of average monthly food-stamp participation based on data from the USDA (2012 is a nine month average through June), showing participation increasing from 26.3 million people in 2007 to over 46.3 million people in 2012, a 12 % compound annual increase:

The unemployment rate has gone from a low of 4.4% in March 2007, to 7.3% when Mr. Obama took office in January 2009, to 10.0% in October 2009, and now stands at 8.1% as of August 2012.

The number of people employed has gone from a high of 138 million people in January 2008 to 133 million people when Mr. Obama took office in January 2009, and now stands at the same 133 million in August 2012.

Mr. Obama told us in March 2009 that his trillion dollar stimulus would “save and create over 3.5 million jobs over the next two years.” If this is true we borrowed a trillion dollars our kids will pay back to subsidize jobs paying less than $100,000 a year that cost over $285,000 each to “create,” and we are now in a deeper unemployment hole than in 2009.

“Possibly, now it may be time for somebody else to come along and solve the problem.” Indeed.

Regards, Pete Weldon
americanstance.org