Thursday, March 31, 2011

Dodd-Frank Bad for Consumers

One of the consequences of Congress passing the Dodd-Frank "reform" bill is that consumers are now finding themselves losing out as banks cut debit card rewards programs, increase consumer fees, can no longer serve young adults independently, and now are forced to tell people that their credit and debit cards can be declined by merchants who don't want to accept them for small purchases. Dodd-Frank was positioned as a way to curb so-called "abuse" by banks, but in reality it limits the free market and hurts consumers. 

Congress made mistakes, and they need to act to repeal these parts of Dodd-Frank. Here's why:
  • With the interchange rate caps, banks are moving to eliminate rewards programs and incentives on debit cards, and to a lesser extend credit cards. Consumers in the past could get rewards points or cash back when using their debit cards. Now, many debit cards are eliminating the rewards offerings and some credit cards are reducing their programs as well. The result of this is that consumers lose out. The way that the free-market system worked is that debit and credit card processing firms set rates for debit card acceptance, and merchants who decided they wanted to accept the cards would find the processor that suited their needs and charged a price they were willing to pay. Some merchants decided they didn't want to pay, and thus decided to remain cash-free despite data that shows businesses that accept more forms of payment are actually more profitable.
  • Since Dodd-Frank will curb the amount that banks can charge merchants for credit and debit card transactions, banks are now considering adding more fees to consumers to make up for the lost revenue. Imagine if you had to pay 50 cents every time you used a debit or credit card to your bank? That could add up to hundreds or thousands of dollars in a year. Some consumers would be forced to carry cash, increasing the opportunity for criminals to take advantage of them and losing out on consumer protections.
  • Dodd-Frank limits access to credit for people age 18-21. As a result, these adults, who are of sufficient age to serve the country in combat in a place like Afghanistan, are unable to obtain credit cards or loans on their own. This reduces their ability to build a strong credit profile while in college or when starting out on their own. Additionally, it places an undue burden on young adults. Booking airline tickets, checking into a hotel, or renting a car is much more difficult or inconvenient when you don't have a credit card, for example. 
  • One of the worst parts of Dodd-Frank is that it overrode the "no minimum" policies of Visa, MasterCard, and American Express. In the past, consumers knew their valid credit and debit cards had to be accepted by merchants whether it was a $0.49, $4.90, or $490 purchase. Now, merchants can set a minimum of as high as $10 to use a credit or debit card. This limits consumer choice in payment, and can force people to carry more cash making themselves a target for criminals.
All of the above make it more difficult for consumers to shop, and as a result consumers end up spending less leading to a negative impact on the economy. There are some ways that the American people can fight back against these portions of Dodd-Frank that hurt consumers:
  • Switch to banks that continue to provide rewards programs and do not charge absurd fees. Unfortunately, many banks in order to remain competitive are going to "follow the leader," giving consumers fewer options. 
  • Contact members of Congress and encourage them to repeal parts of Dodd-Frank that hurt consumers. Send letters, e-mails, tweets, and if you see your Congressperson talk to them.
  • Boycot any merchant that imposes a minimum sale. Additionally, if you encounter a minimum sale amount that was not disclosed to you, such as if a bar tells you you have to buy more drinks to close a tab, refuse to do it. Do not sign the receipt, and if you are charged more than what you actually bought then report this is fraud to your credit or debit card issuer. If the place holds onto your credit or debit card, report it as stolen so your bank can close it and issue a new one.
Dodd-Frank is a prime example of how government regulation and interference run amuck hurts the American people. We can only hope that parts of it are repealed. 

Tuesday, March 29, 2011

Birth Certificates

While the burden of proof lies on the accuser, President Obama would be wise to release his full birth certificate. With many Americans questioning his place of birth or concerned the President has not made his full birth certificate public, it might be a smart move for the President to release it. This week, one of President Obama's possible challengers, Donald J. Trump, released his own birth certificate. By putting forth the document himself, Trump will preempt any controversy over his birth. Going into 2012, President could lose votes if people vote for his opponent on the grounds that they think he is an illegitimate President.*

*The author of this post does not believe President Obama is an illegitimate President. Like Speaker John Boehner of the House of Representatives, the author recognizes that the State of Hawaii has said that President Obama was born there and considers that statement good enough, especially given that the "birthers" have no produced any hard evidence to the contrary. However, many Americans have expressed concerns that President Obama is illegitimate, and their concerns could have an impact on the outcome of the 2012 election.

Thursday, March 24, 2011


Some Democrats want to add additional regulation and limitation on oil speculation. They seem to think that oil speculation is driving up the price of oil. While most Americans want gas at a lower price, the Democrats' plan won't solve the problem. Oil speculation will continue in foreign markets, and the root cause of higher oil prices is increasing global demand combined with the United States' failure to increase its own domestic production. Additionally, the members of OPEC are able to continue collusions to keep prices high.

Oil speculation can be a lucrative business. If one invests in oil, they can make money in the short term or the long term. However, there can also be short term and long term loss. As with any commodity or other investment, there is risk. The price of oil comes down to supply and demand. As President Bush identified during his term in office, "America is addicted to oil." If Democrats want oil prices to go down, then they need to put forth solutions that will reduce our demand for oil, increase our supply of oil, or provide a combination of both supply increase and demand reduction.

Tuesday, March 22, 2011

Should Cigarette Taxes Be Lowered?

Recently the New York Times reported about a proposal in New Hampshire to lower cigarette taxes. Opponents of the tax claim that it will hurt revenues and encourage new smokers. They're wrong on the first claim, but might be right on the second claim -- which is actually good for the country.

It has been proven time after time that when taxes are reduced, increased volume will make up for the lower tax rate. If the opponents of a lower cigarette tax in New Hampshire are correct about a lower tax encouraging new smokers, then it means that these new smokers will buy cigarettes and increase the volume of cigarette sales, leading to increased government revenue in the long-run.

Greater sales numbers of cigarettes helps companies that make cigarettes. Companies like the R. J. Reynolds Tobacco Company, Philip Morris, and the Lorillard Tobacco company employ thousands of Americans. More sales could give these companies a need to expand production, and a need to hire more employes creating jobs. With 8.9% unemployment, the country could use these these jobs.

To give American companies an advantage, an idea that states should look to is to keep taxes the same on imported/foreign cigarettes, and reduce the tax on American cigarettes. This would provide an incentive for smokers to switch brands from foreign to American, and incentivize new smokers to go with American-made cigarettes instead of foreign made ones, helping the economy.

Monday, March 21, 2011

Kill Qaddafi (Updated)

Update (8:55 AM, 21 March 2011): A report from FOX News indicates that the coalition did attack Qaddafi's compound with missiles fired from a British submarine. However, the coalition maintains that the attack was not targeted at Qaddafi, but was done due the military significance of the compound. Further, The Pentagon has said that the coalition is not going after Qaddafi. The Report believes this is a mistake, and that hunting Qaddafi down is something that the coalition should do. Unlike the hunt for Saddam Hussein in Iraq, however, the hunt for Qaddafi should be done without ground forces. If a location of Qaddafi is determined, then missile or air strikes should be called in.

Original Post
Leaving dictators in power, while curbing their military capabilities, has almost never been a successful strategy in the long-run. In Iraq, Saddam Hussein was allowed to remain in power for over a decade following the Gulf War. Hussein, despite embargoes and a no-fly zone, continued massacring civilians and oppressing the people of Iraq.

In Libya, coalition forces are enforcing a United Nations authorized no-fly zone and have attacked Qaddafi's military forces. Yet, Qaddafi remains defiant, believing that in the end he will prevail.

What should happen is Qaddafi should be told that he has until Noon on Tuesday to order his forces to stand down and then give up power in Libya or leave the country. If he complies, then freedom and democracy can prevail with greater ease. If he does not comply, then he will be forced out of power. If Qaddafi says he will fight to the death, then that means he gets to die. Coalition warplanes should obliterate Qaddafi's palaces, and obliterate his car, his plane, his bunker, or any location he might be hiding in, too

Libya will be a better place without Qaddafi. The people there deserve freedom and democracy, and with Qaddafi out of power, they will be be able to achieve it. A free, democratic Libya will benefit the United States and the rest of the world, as well. The investment of military action in Libya, in the long run, will pay back the American people with greater security, cheaper oil, and a stronger economy.

Sunday, March 20, 2011

Pornography Creates More Jobs than President Obama

Last week the Obama administration expressed its disappointment that the Internet Corporation for Assigned Names and Numbers (ICANN) granted approval to a new top-level domain of .xxx. The new domain would be aimed at the pornography industry, similar to how .edu is aimed at the educational institutions. The Obama administration sides with religious and "pro-family" groups that claim the new .xxx domain legitimizes the pornography industry.

However, the pornography industry is already a legitimate industry. In 2007, the pornography industry generated over $13.3B in revenues in the United States alone. This is more revenue than the 2007 revenues of Molson Coors ($5.9B), Marriott International ($12.1B),  OfficeMax ($8.9B), or Constellation Brands ($4.6B). Globally, the industry generated over $95B in 2007. The pornography industry creates tens of thousands of jobs in the United States, providing people with paychecks so they can make an honest living without relying on government aid programs paid for by the taxpayers. With hundreds of thousands of jobs created, the pornography industry is better at providing people work than President Obama. Under the Obama administration, unemployment rose from 7.6% in January 2009 to 8.9% in February 2011. Millions of jobs were actually lost under the Obama administration.

If anything, the government and President Obama should be acting to encourage the growth of the pornography industry. More pornography industry revenues and profits will lead to increased tax collections, and more jobs in the pornography business will lead to a lessening of the burden on taxpayers of having to pay for the unemployed to receive government aid and government benefits. While some disagree with the products that the pornography industry offers, in the free market economy individuals have the right to make a decision for themselves about what they purchase. While pornography may be manufactured and sold, people do not have to buy it if they don't want it.

Saturday, March 19, 2011

Ending The Lies

It is known that public officials often fail to tell the truth to their Constituents. Unfortunately, they often get a away with it. The solution is to create a strong punishment for public officials who do not tell the truth to the people: removal and disqualification from office.

It should be an amendment to the United States Constitution that any public official who does not tell the truth is automatically removed from office and shall be ineligible to hold office in the United States, provided that their failure to tell the truth is proven by hard evidence. This means that video or audio of their failure to tell the truth would be required, and there would need to be evidence that their words were untrue.

The idea behind this amendment is not to interfere with free speech, but rather to ensure that those elected to serve the people tell the truth. If a public official says on television that a bill will lower the people's taxes, but there is no provision in the bill to reduce the people's tax burden burden, they would be subject to removal from office and disqualification. If a public official backed a bill that would add taxes, and was asked "will this bill hike taxes" in an interview and responded "yes," they would not be affected because they are telling the truth. If they lied and said "no," then they would be removed from office and disqualified from holding office ever again in the United States. Honest public officials who tell the people the truth would have nothing to fear. The people would benefit greatly because lying would be greatly reduced if public officials knew that lying would lead to removal from office and an end to their public careers.

Tuesday, March 15, 2011

A House In Denial

While House Democrats deny the proven concepts of supply-side economics and that Washington has a spending problem, a panel of House Republicans today denied that the world's temperature has risen over the past 150 years. While one cannot prove that climate change is the result of human action (or inaction), the fact is that if take a graph and plot temperatures and years, as we move towards today the points on the graph move higher and higher. Below is such a graph (click it for a full size / clear view):

The blue dots are the data points, the x-axis year, the y-axis is annual mean temperature (degrees Celsius), the solid red line is a trend line, and the bold black line is the 25-year moving average. When the trend line and the moving average both show upward motion, that is a clear indication that the temperature has been rising.

The far-left, scientists, environmentalists, fellow conservatives, and even fourth-graders who have learned how to make scatter plots / trend lines have made a mockery of the Republicans for their inability to understand simple mathematical concepts. While it can be argued that the government should not be concerned with climate change, you can't really argue against the laws of mathematics. How can Representatives be taken seriously when they push for deficit reduction when they screw up like this?

Sunday, March 13, 2011

In Favor of "Right To Work"

In the workforce, there are good workers and there are bad workers. Good workers perform their job duties well. They get expected results, they get work done on time, and they do competent work. Bad workers, on the other hand, miss expectations, miss deadlines, and provide incompetent work. In teaching, good workers are those who educate the children in their classroom well and bad workers are those who fail to provide a good education to the children in their classroom. As a public company's CEO, increasing shareholder value in the long-run is good work and destroying shareholder value is bad work.

In order to encourage and reward good work, incentives are often used by organizations. Good workers get raises, bonuses, or promotions. Bad workers miss out on raises or bonuses, might be demoted, or might be shown the door. One system that has been successful in many areas is to constantly cut the bottom 10% of the workforce. The bottom 10% is replaced with new hires, and the process is repeated yearly. Eventually, the quality of the workforce increases. In a public school, this would mean students get better teachers.

Unfortunately, large unions oppose such a merit-based system. Rather than reward good employees and get rid of bad ones, they would rather have every employee get the same compensation regardless of their performance. Imagine three employees (A, B, and C) who start a job the same day. Two years later, employee A, in the top top 5% of the organization has received a 25% pay increase and a promotion. Employee B, in the top 25% of the organization has received an 6.5% pay increase but is still in the same job. Employee C, in the bottom 5% of the organization, has been shown the door and replaced with someone more competent. In this system, good performance is rewarded and employees strive for it. However, in a system based on union ideals, after two year employees A, B, and C would all just have a pay hike of 5%. The best and the worst employee would be equally compensated, leaving no incentive for good performance.

The good workers, who would receive compensation based on merit, are getting hurt by the unions. The bad workers get helped, but the organization overall is hurt. In the case of public schools, good teachers are hurt by the unions and the most competent will look to other jobs where their skills can be better used. The bad teachers, on the other hand, will stay put and continue to provide a poor education to students in the classrooms. Many union workers actually oppose the unions that they are members of due to the unions opposing merit-based compensation. In some states, where "right to work" does not exist, people are only union members because they were forced to join unions that actually negatively affect them. For the good of the country, "right to work" should be a right afforded to every American.

Thursday, March 10, 2011

Regime In Libya "Will Prevail" Because The President Is Weak

"The regime will prevail," were the words from United States National Intelligence Director James Clapper today speaking about the situation in Libya. Indeed, Muammar Al-Qaddafi will prevail if President Obama keeps up the policy of simply sitting back and watching while Qaddafi massacres civilians, oppresses the people of Libya, and destabilizes the region. Qaddafi's actions have has already sent oil prices up, leading to pain at the pump as Americans face gas prices significantly higher than one year ago and expected by some to reach $4 or $5. Already, airlines have added new fuel surcharges due to the higher prices.

President Obama must realize that the United States, in order to help the people of Libya, ensure national security, and protect economic growth, must take action in Libya. The establishment of a no-fly zone is a first step, and the United States must move forward. Support from other countries, especially those in the Middle East, would be good to have, but if support cannot be brought together then the United States must use its air superiority to establish a no-fly zone alone. Next, the United States must provide support to the opposition to Qaddafi. The opposition will be the new leadership of Libya, a leadership that will provide freedom, democracy, and prosperity. It must be made clear, that the United States' support is contingent on leadership that provides freedom, democracy, and prosperity to the Libyan people. In return, the United States should receive cheaper oil from Libya. As The Report has written about before, "America is addicted to oil," and while the country can move towards energy independence in the long-run, in the short term, the country would benefit from cheaper oil.

If President Obama fails to act, and simply sits back as if his objective as President is to be remembered as being weaker than Jimmy Carter, it will come back to hurt the United States. Oil prices will continue upward, and gas will hit $5, seriously hurting the economy. From a national security perspective, Libya will continue to be a country led by the man behind the Pan Am 103 terrorist attack and from a humanitarian perspective, the people of Libya will continue to be oppressed instead of living in freedom and being able to pursue prosperity.

Thursday, March 3, 2011

The "Buy American" Credit

Many Americans do not pay attention to where the products they purchase come from. Frequently, Americans are buying imported products that, if they are purchased in lieu of American-made products, can cost jobs here in the United States. In order to encourage the purchase of American-made products, a "Buy American" tax credit should be put in place. The tax credit would be equal to the amount of sales and/or use tax paid for goods produced in America, and services provided by American citizens. By implementing the tax credit, Americans would have incentive to pay attention to where the products and services they purchase come from. At the same time, there would be incentive for companies producing goods outside the United States to begin producing them here, in the process hiring American workers and helping grow the economy.

Tuesday, March 1, 2011

The War On Obesity

First Lady Michelle Obama's efforts to reduce obesity in America have come under fire by many. While a good initiative for the purposes of national security and health, the problem is that the efforts have become connected to left-wing ideas such as taxing foods with high fat or sugar content or restricting access to certain foods. Further, Ms. Obama's proclamation that the American people don't have a right to eat desert didn't help her cause as it presented a position that the government wanted to take control of what you could and could not eat.

The best way to fight "the war on obesity" is not through greater government intervention in the average American's life or new taxes. Rather, the government should incentivize healthy eating through tax breaks. There are two ways to do this:

Method #1: Allow Americans to deduct the cost of all food they purchase within certain dietary guidelines from their taxes each year. No cap on the deduction or income level should phase the deduction out. In practice, this means if a family spends $9,000 a year on food, with $500 spent on "unhealthy" food that don't meet the guidelines, they would be able to deduct $8,500 from their taxes. It would provide an incentive to eat healthy.

Method #2: Similar to a healthcare flexible spending account (FSA), a food savings account should be available for Americans to set aside pre-tax income for food purchases. As with the tax deduction idea, only food items meeting certain dietary guidelines would be eligible for the account, providing an incentive to purchase healthy food.

If the government incentives eating healthy with tax breaks, the result will be that food suppliers will make changes to create healthier food options as customers will demand items that are eligible for the tax deduction or to be purchased out of their food savings account. The government should additionally allow a deduction or a tax credit for the cost of gym membership or exercise equipment made in the United States. This will spur an uptick in purchasing, which will help businesses that make or sell exercise equipment. The result will be that the government, without invasive intervention into the lives of Americans or expensive programs like Obamacare, can encourage healthier eating and reduce obesity while also helping the economy.