By RonPaul.com on April 20, 2008
by Ron Paul
Taxes were on the forefront of many Americans’ minds this week as they scrambled to meet the April 15th deadline to file their returns. Tax policy in this country hurts taxpayers twice – once when they pay taxes, and then when the government spends the money. Americans are sick and tired of the financial burden and the endless forms to fill out. To add insult to injury, after collecting this money the government does some very detrimental things to the economy.
The burden of complying with the income tax is tremendous. Since its inception in 1913, the tax code has gone from 400 pages to over 67,000. The Tax Foundation estimates that around $265 billion dollars and 6 billion hours are spent just on compliance. That expense amounts to about 22 cents of every dollar the IRS collects. Imagine the boon to the economy if we spent that time and money expanding our businesses and creating jobs!
Aside from the direct loss of money and productivity, the funds from the income tax enable the government to do some very destructive things, such as vastly over-regulating economic activity, making it difficult to earn money in the first place. The federal government funds over 50 agencies, departments and commissions that formulate rules and regulations. These bureaucracies operate with little to no oversight from the people or Congress and generate around 4,000 new rules every year and operate at a cost of about 40 billion dollars. There are some 75,000 pages of regulations in the Federal Register that Americans are expected to know and abide by. Complying with these governmental regulations costs American businesses more than one trillion dollars per year, according to a study by Mark Crain for the Small Business Administration. This complicated system drives production to other countries and shrinks our job market here at home.
Big government is destructive when it takes your money and when it spends it. There is no economic benefit to supporting a government sector as massive as ours. In fact, this country thrived for well over 100 years without an income tax. Today, if you took away the income tax, the government would still have revenue from other sources equal to total government spending in 1990, when government was still too big. $1.2 trillion should be more than enough to fund a government operating within its constitutional confines, and that is exactly what we need to get back to.
I have introduced legislation many times to abolish the IRS and the income tax. It is fundamentally un-American to require taxpayers to testify against themselves and be considered guilty until proven innocent. Abolishing the IRS altogether would trigger an avalanche of real growth in the economy.
With these financial hard times only just beginning, this would be the most efficient and logical way to get our economy growing again, and Americans would need not dread the 15th of April every year.
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Posted in Ron Paul's Writings, Tax Freedom, Texas Straight Talk | Tagged April 15, IRS |
By RonPaul.com on April 13, 2008
by Ron Paul
There has been a lot of talk in the news recently about the Federal Reserve and the actions it has taken over the past few months. Many media pundits have been bending over backwards to praise the Fed for supposedly restoring stability to the market. This interpretation of the Fed’s actions couldn’t be further from the truth. The current market crisis began because of Federal Reserve monetary policy during the early 2000s in which the Fed lowered the interest rate to a below-market rate.
The artificially low rates led to overinvestment in housing and other malinvestments. When the first indications of market trouble began back in August of 2007, instead of holding back and allowing bad decision-makers to suffer the consequences of their actions, the Federal Reserve took aggressive, inflationary action to ensure that large Wall Street firms would not lose money. It began by lowering the discount rates, the rates of interest charged to banks who borrow directly from the Fed, and lengthening the terms of such loans.
This eliminated much of the stigma from discount window borrowing and enabled troubled banks to come to the Fed directly for funding, pay only a slightly higher interest rate but also secure these loans for a period longer than just overnight. After the massive increase in discount window lending proved to be ineffective, the Fed became more and more creative with its funding arrangements. It has since created the Term Auction Facility (TAF), the Primary Dealer Credit Facility (PDCF), and the Term Securities Lending Facility (TSLF). The upshot of all of these new programs is that through auctions of securities or through deposits of collateral, the Fed is pushing hundreds of billions of dollars of funding into the financial system in a misguided attempt to shore up the stability of the system. The PDCF in particular is a departure from the established pattern of Fed intervention because it targets the primary dealers, the largest investment banks who purchase government securities directly from the New York Fed.
These banks have never before been allowed to borrow from the Fed, but thanks to the Fed Board of Governors, these investment banks can now receive loans from the Fed in exchange for securities which will in all likelihood soon lose much of their value. The net effect of all this new funding has been to pump hundreds of billions of dollars into the financial system and bail out banks whose poor decision making should have caused them to go out of business. Instead of being forced to learn their lesson, these poor-performing banks are being rewarded for their financial mismanagement, and the ultimate cost of this bailout will fall on the American taxpayers. Already this new money flowing into the system is spurring talk of the next speculative bubble, possibly this time in commodities. Worst of all, the Treasury Department has recently proposed that the Federal Reserve, which was responsible for the housing bubble and subprime crisis in the first place, be rewarded for all its intervention by being turned into a super-regulator. The Treasury foresees the Fed as the guarantor of market stability, with oversight over any financial institution that could pose a threat to the financial system. Rewarding poor performing financial institutions is bad enough, but rewarding the institution that enabled the current economic crisis is unconscionable.
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Posted in Ron Paul's Writings, Texas Straight Talk | Tagged Bailout |
By RonPaul.com on April 7, 2008
by Ron Paul
Last month, the House amended the 1978 Foreign Intelligence Surveillance Act (FISA) to expand the government’s ability to monitor our private communications. This measure, if it becomes law, will result in more warrantless government surveillance of innocent American citizens. Though some opponents claimed that the only controversial part of this legislation was its grant of immunity to telecommunications companies, there is much more to be wary of in the bill.
In the House version, Title II, Section 801, extends immunity from prosecution of civil legal action to people and companies including any provider of an electronic communication service, any provider of a remote computing service, “any other communication service provider who has access to wire or electronic communications,” any “parent, subsidiary, affiliate, successor, or assignee” of such company, any “officer, employee, or agent” of any such company, and any “landlord, custodian, or other person who may be authorized or required to furnish assistance.” The Senate version goes even further by granting retroactive immunity to such entities that may have broken the law in the past. The new FISA bill allows the federal government to compel many more types of companies and individuals to grant the government access to our communications without a warrant. The provisions in the legislation designed to protect Americans from warrantless surveillance are full of loopholes and ambiguities.
There is no blanket prohibition against listening in on all American citizens without a warrant. We have been told that this power to listen in on communications is legal and only targets terrorists. But if what these companies are being compelled to do is legal, why is it necessary to grant them immunity? If what they did in the past was legal and proper, why is it necessary to grant them retroactive immunity? In communist East Germany , one in every 100 citizens was an informer for the dreaded secret police, the Stasi. They either volunteered or were compelled by their government to spy on their customers, their neighbors, their families, and their friends. When we think of the evil of totalitarianism, such networks of state spies are usually what comes to mind. Yet, with modern technology, what once took tens of thousands of informants can now be achieved by a few companies being coerced by the government to allow it to listen in to our communications. This surveillance is un-American.
We should remember that former New York governor Eliot Spitzer was brought down by a provision of the PATRIOT Act that required enhanced bank monitoring of certain types of financial transactions. Yet we were told that the PATRIOT Act was needed to catch terrorists, not philanderers. The extraordinary power the government has granted itself to look into our private lives can be used for many purposes unrelated to fighting terrorism. We can even see how expanded federal government surveillance power might be used to do away with political rivals. The Fourth Amendment to our Constitution requires the government to have a warrant when it wishes to look into the private affairs of individuals. If we are to remain a free society we must defend our rights against any governmental attempt to undermine or bypass the Constitution.
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Posted in Civil Liberties, Ron Paul's Writings, Texas Straight Talk | Tagged FISA, Surveillance |
By RonPaul.com on April 4, 2008
by Ron Paul
In the past few months, American workers, consumers, and businesses have experienced a sudden and dramatic rise in gasoline prices. In some parts of the country, gasoline costs as much as $4 per gallon. Some politicians claim that the way to reduce gas prices is by expanding the government’s power to regulate prices and control the supply of gasoline. For example, the House of Representatives has even passed legislation subjecting gas stations owners to criminal penalties if they charge more than a federal bureaucrat deems appropriate. Proponents of these measures must have forgotten the 1970s, when government controls on the oil industry resulted in gas lines and shortages.
It was only after President Reagan lifted federal price controls that the gas lines disappeared. Instead of imposing further restraints on the market, Congress should consider reforming the federal policies that raise gas prices. For example, federal and state taxes can account for as much as a third of what consumers’ pay at the pump. The Federal Government’s boom-and-bust monetary policy also makes consumers vulnerable to inflation and to constant fluctuations in the prices of essential goods such as oil. It is no coincidence that oil prices first became an issue shortly after President Nixon unilaterally severed the dollar’s last link to gold. Basic economics says that when government restricts the supply of a good, the price will increase.
Yet Congress continues to reject simple measures that could increase the supply of oil. For example, Congress refuses to allow reasonable, environmentally sensitive, offshore drilling. Congress also refuses to remove the numerous regulatory hurdles that add to the prohibitively expensive task of constructing new refineries. Building a new refinery requires billions of dollars in capital investment. It can take several years just to obtain the necessary federal permits. Even after the permits are obtained, construction of a refinery may still be delayed or even halted by frivolous lawsuits. It is no wonder that there has not been a new refinery constructed in the United States since 1976. Last year, in order to provide the American people with relief from high oil prices, I introduced the Affordable Gas Price Act (HR 2415). This legislation protects the American people from gas price spikes by suspending the federal gas tax whenever the national average gas price exceeds $3.00 per gallon.
The Affordable Gas Price Act also expands the supply of gasoline by repealing the federal moratorium on offshore drilling, including in the ANWR reserve in Alaska . HR 2415 also provides tax incentives and protection from nuisance lawsuits for those seeking to build new refineries. Finally, HR 2415 authorizes a federal study on the link between our nation’s monetary policy and the price of oil. The free market can meet the American people’s demand for a reliable supply of gasoline as long as government does not distort the market through excessive taxation and regulation. Therefore, Congress should lower prices gas prices by pursuing an agenda of low taxes, regulatory relief, and sound money by passing legislation such as my Affordable Gas Act.
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Posted in Ron Paul's Writings, Texas Straight Talk | Tagged Gas Price |
By RonPaul.com on March 30, 2008
by Ron Paul
These past few weeks have provided an unfortunate opportunity to discuss inflation. The dollar index has reached new all-time lows. The total money supply, M3, as calculated by private sources, is growing at a disturbing 17% rate. The Fed is pumping dollars into the economy at an alarming rate. Just recently the Fed announced new loan auctions totaling $100 billion. That is new money created from thin air. If these money auctions, combined with the bailout of Bear Stearns, continue to be the trend, we are in for some economic stormy weather. The explanation lies in understanding the basics of money, and why it is dangerous to give government and big banks control over it. First, money is not wealth, in and of itself.
You cannot create more wealth simply by creating more money. Wall Street bankers cry out for more liquidity, but what is really needed is more value behind the dollar. But the value, unfortunately, isn’t there. You see, the Fed creates new money and uses it to purchase securities from banks. Flush with funds, these banks seek to put this money to use. During the Fed’s expansionary period, much of this money went to home loans. Through a combination of federal government inducements to lend to risky borrowers, and the Fed’s supply of easy money, the housing bubble took shape. Fannie Mae and Freddie Mac were encouraged to purchase and securitize mortgages, while investors, buoyed by implicit government backing, rushed to provide funding. Money that could have been invested in more productive, less risky sectors of the economy was thereby malinvested in subprime mortgage loans. The implicit guarantee from the Fed is quickly becoming explicit, as those institutions deemed “too big to fail” are bailed out at taxpayer expense. Wall Street made a killing during the housing bubble, reaping record profits.
Now that the bubble has burst, these same firms are trying to dump their losses on the taxpayers. This approach requires more money creation, and therefore debasement of all dollars in circulation. The Federal Reserve, a quasi-government entity, should not be creating money or determining interest rates, as this causes malinvestment and excessive debt to accumulate. Centrally planned, government manipulated economies always fail eventually. The collapse of communism and the failure of socialism should have made this apparent. Even the most educated, well-intentioned central planners cannot plan the market better than the market itself. Those that understand economics best, understand this reality. In free markets, both success and failure are options. If government interventions prevent businesses, like Bear Stearns, from failing, then it is not truly a free market. As painful as it might be for Wall Street, banks, even big ones, must be allowed to fail. The end game for this policy of monetary inflation is that the money in your bank account loses purchasing power. So, by keeping failing banks afloat, the Fed punishes those who have lived frugally and saved. The power to create money is a power that should never be granted to government. As we can plainly see today, the Fed has abused this power, and taxpayers are paying the price.
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Posted in Monetary Policy, Ron Paul's Writings, Texas Straight Talk | Tagged Inflation |
By RonPaul.com on March 23, 2008
by Ron Paul
Five years ago last week, the US military’s “shock and awe” campaign lit up the Baghdad sky. Five years later, with hundreds of thousands of Iraqis and nearly four thousand Americans dead, we should pause and reflect on just what has been gained and what has been lost. From the beginning, the march to war was paved with false assumptions and lies. Senior administration officials claimed repeatedly that Iraq was somehow responsible for the attacks of September 11, 2001. They claimed that Iraq had weapons of mass destruction. They manipulated the fear of the American people after 9/11 to further a war agenda that they had been planning years before that attack. The mainstream media was complicit in this war propaganda.
Nearly ten years ago, long before 9/11, I requested the time in opposition to the fateful Iraq Liberation Act of 1998, where I then stated on the Floor of the House of Representatives, “I see this piece of legislation as essentially being a declaration of virtual war. It is giving the President tremendous powers to pursue war efforts against a sovereign Nation.” Less than five years later we were invading Iraq . Five years into the invasion and occupation of Iraq , untold hundreds of thousands of Iraqis are dead; some two million Iraqis have fled the country as refugees; and the Iraqi Christian community – one of the oldest in the world – has been decimated more completely than even under the Ottoman occupation or the rule of Saddam Hussein.
On the US side, nearly four thousand Americans have lost their lives fighting in Iraq and many thousands more are horribly wounded. Our own senior military officers warn that our military is nearly broken by the strain of the Iraq occupation. The Veterans Administration is overwhelmed by the volume of disability claims from Iraq war veterans. A study by Nobel Prize economist Joseph Stiglitz concludes that the cost of the war in Iraq could be at least $3 trillion. The economic consequences of our enormous expenditure in Iraq are beginning to make themselves known as we fall into recession and possibly worse. Iraq war supporters claim that the “surge” of additional US troops into Iraq has been a resounding success. I am not so confident. Under the “surge” policy the United States military has trained and equipped with deadly weapons those Iraqi militia members against whom they were fighting just months ago. I fear by arming and equipping opposing militias we are just setting the stage for a more tragic and dangerous explosion of violence, possibly aimed at US troops in Iraq . There is no indication that the Iraqi government has made any political progress whatsoever.
The sooner we withdraw the better. The invasion and continued US occupation has strengthened both Iran and Al-Qaeda in the region. Continuing down the road of a failed policy will only cost more money we do not have and more lives that should not be sacrificed. Interventionism has produced one disaster after another. It is time we return to a non-interventionist foreign policy that emphasizes peaceful trade and travel and no entangling alliances. We can begin by withdrawing from Iraq immediately.
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Posted in Foreign Policy, Ron Paul's Writings, Texas Straight Talk | Tagged Iraq |
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