In deficit reduction talks, Senate Democrats derail and insist on increasing spending & taxes.


In today’s deficit cutting talks with Vice President Joe Biden; Democrat representatives stated that they felt the way to fix the problem was to increase spending and subsequently increase taxes.

Does anybody else see the conundrum that the Republicans are having to deal with?

We are $14.3 trillion+ in debt that needs to be agreed upon by August 2 (less than a month away) or at we risk defaulting on our debts.

If we do not make some serious cutting, start creating jobs and selling more exports; we are going to have a serious problem balancing the budget.

It is at this point that we need to be CUTTING; not INCREASING spending.

Is Vice President Biden and his debt group really that oblivious to the will of the American people?

Are the Democrats really surprised that the Republicans walked out of deficit cutting talks?

How can you argue a concept of cutting spending when the other side wants to spend more money?

Its a waste of time and unbelievable that the Democrats would adopt this line of thought.

Even though, it is not technically “his job” Obama, as President, should get involved considering the severity of our situation.

According to my sources on Capitol Hill; the only involvement Obama is doing is “looking for a meeting room”.  Literally.

The game plan was to have deficit reduction talks completed by the end of June. That’s only 7 days from now.

Senator John Cornyn of Texas, a Republican leader, also agrees that President Obama needs to get directly involved.

“It’s clear that these were non-serious negotiations and the only time it’s going to get serious is when the president of the United States becomes thoroughly engaged,” Cornyn said. “There’s not going to be a deal without his direct involvement.”

Flashback to the 2011 Compromised Budget talk delays. The only time serious progress was made was when Obama was involved so he could push the Democrats to be reasonable.  It is obvious that Obama is needed in this case.

Deja vu seem to fall upon my ears as I heard Kentucky Republican Mitch McConnell ask of Obama once again, “Where is he?” What does he propose? What is he willing to do to reduce the debt and to avoid this crisis that’s building on his watch? He’s the one in charge. I think most Americans think it’s about time he started acting like it.”

Raising the Debt Ceiling and increasing spending; Contradictory?

It is imperative that we cut trillions of dollars from our $14.3+ trillion debt and NOT increase spending.

You cannot spend your way out of a recession.

The Democrats fail to understand the generic cutting mindset as the “Democrats continue to insist that any deal must include tax increases,” said Eric Cantor, a Virginia Republican, in a statement announcing his decision. “There is not support in the House for a tax increase.”

The tax issue must be resolved before discussions can continue,” Cantor said. “Given this impasse, I will not be participating in today’s meeting and I believe it is time for the president to speak clearly and resolve the tax issue. Once the tax issue is resolved, we have a blueprint to move forward to trillions of spending cuts and binding mechanisms to change the way things are done around here.”

Note to the Democrats: Your constituents want you to cut spending.  You have to come to the deficit reduction talks in the mindset of “what are we cutting, today?” because if you are looking at things from an increased spending point of view; the discussion is going to be pointless and a waste of everyone’s time.

It is imperative that you understand that we cannot spend, and most certainly cannot freeze, our way out of a recession. We have less than one week until Congress is needed to make a decision on whether or not we are going to raise the debt ceiling and to determine if the US will start defaulting on our debtors. Our SP index rating already dropped to negative; let’s not fall even further into the economic hole.

Note to the Republicans:  Eliminating the subsidies and tax breaks for big oil is NOT increasing taxes. If we eliminated a lot of the money we give big oil (they are doing just fine on their own); we could give that money back to the people and small businesses through price relief at the gas pump and help jumpstart our economy.

Also, please not give in to a  payroll tax deduction as that directly drains the Social Security funds and we are already short on Social Security funds as it is.

Copyright (c) June 23, 2011. All rights reserved.

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Libyan Questions that MUST be answered before we continue with Operation Odyssey Dawn.


A multi phased mission, deceivingly named Operation Odyssey Dawn, involves several nations with the lead position being held by the US, the French and the British military forces against Muammar Qaddafi forces in Libya, after the nations became convinced that the Libyan leader was not adhering to a United Nations mandated cease fire.

The United Arab Emirates, Turkey, Qatar, Kuwait and Jordan have also agreed to provide humanitarian or logistical support.

Together- US & Britain launched 128 Tomahawk missiles on areas of deemed “threat” by Pro Qaddafi forces.

With the UN’s help- Libyan opposition forces claimed victory Saturday over Muammar Qaddafi’s forces in a strategically located in the Eastern city but the battle in the West raged as loyalists tanks resumed shelling Misrata, the city next to Tripoli (Libyas capital) and are setting up camp, after a recent victory for the opposition, in Ajdabiya.

With the importance of Ajdabiya and its strategic location that sits on the path to Tripoli, this could be seen as a turning point favoring Anti-Qaddafi protesters with the Western gate falling on Thursday and the Western  Gate falling on Friday

However, at this point it still is yet to be determined WHO the Anti-Qaddafi protesters actually are?

A number of on the ground contacts state that the leadership falls under Al Qaeda with Hezbollah and Hamas thrown in for extra volatility.

At this point, Britain & France have stated that a no fly zone has been established with Italy pushing for all the nations involved to fall under NATO command.

A NATO structure is still being finalized at this point, however it is said that the US would report to Canadian Lt. General  Bouchard who will be assigned as the joint task force commander (which pleases me greatly as I am French-Canadian) and one thing that I can tell you about Canadians is that they have a great appreciation for the US as their Southern neighbor. I feel that we would be in “safe” hands.

Italian Foreign Minister Franco Frattini said in a news conference that “NATO is in the beginning stages of operation.”

However, it is at THIS point that the United States should retreat and get our bearings together. To continue this fight without huddling back in the US would be a GRAVE mistake.

Before we even continue doing ANYTHING with Libya, Obama MUST get congressional approval and explain to the American People , where much disapproval abounds, a long term plan AND budget, how much this war is going to cost, and an exit strategy.

Let’s learn from our war in Afghanistan and not fight a fuzzy battle of “hope and change”. We need clear cut definition and directive not to mention a declaration of war, as required in the US Constitution, if Congress approves this costly action.

We need to gather our bearings as Obama has said one thing about the war but does the exact opposite. This is not news to us who have been following Obama since the 2010 election. This is a pattern of his; however, now its serious because our US military service men & women lives are stake.

There are several questions that need to be answered before we continue with military operations in Libya. For example;

1. The name Operation Odyssey Dawn.  Is Obama not aware of Homer’s Ilaid and Odyssey where Odysessus travels almost 10 years to get back home to Ithaca? But if you ask Obama, he sees our involvement will be quick. There’s a disconnect. What is the timeline for our involvement in Libya? Obama said it will be “short” but there are serious long term implications if we wage war with Libya as we are all interconnected.

2.  Obama did not consult with Congress before going into this war. He did not set forth a long term plan, budget or exit strategy. It is unclear as to how much this war will cost us. What we do know is that it costs approximately $575, 000 for each cruise missile fired.

At this point, there were 112 confirmed missiles fired and then 16 missiles were said to be fired in a second round (AFTER Obama said he would not send any more missiles because of the exorbitant cause and massive amount of innocent Libyan lives).

That comes to 128 Tomahawk Cruise missiles being fired which results in a WHOPPING $73.6 MILLION.  That price does not include the overhead and maintenance costs of our Airforce & Navy.

3. Obama states that his goal is to get rid of Qaddafi’s power but not Qaddafi. Oh; so we are just going to make Qaddafi angry enough to ban oil exports to the US?  Is Obama planning on having a divided Libya where Qaddafi controls the West side and the unknown rebels control the East? How is this supposed to work in our benefit again?

4. Where is the Arab League? Qater has flown fighter jets overhead but that is the only member who has stepped up to the plate. They asked for our help, as most of you know, I have stated since the beginning that we SHOULD NOT TAKE A ROLE LEAD IN LIBYA. Yet, that is EXACTLY what we are doing. This is not OUR fight. We need to step back and let Libya decide the history of Libya.

5. Where does  Saudi Arabia, Germany, Turkey and Italy stand in this fight?  Can we count on their support? Would they be willing to be a lead player in this human rights correction?

6. If we are going to war with Libya because of a human rights violation- do we set the same standard for the other middle east countries doing the same thing? At present count, I have noted 11 areas of disrest. 1. Afghanistan 2. Iraq 3. Tunisia 4. Egypt 5. Libya 6. Bahrain 7. Jordan 8. Yemen 9. Algeria  10. Iran and now 11. Syria.

7. What is the operational budget and how much it is going to cost us taxpayers? I know its  a hard concept for Obama to grasp but money does not grow on trees.

8. What is the exit strategy? How can we avoid another Afghanistan or Vietnam?

9. Who are these Anti-Qaddafi forces really? What do we know about them? From I understand they are a mixture of Al Qaeda, Hezbollah and Hamas.

If that is the case, why are we going to support them? Their way of life is VERY different from ours- do you really think they will cater to the US like Libya has?? Really? Im sure their definition of freedom is VERY different than our definition.

We need to do a serious background check on these people before we commit time, money, arms and military.

10. If we get into this war, is there a possibility of WW3?  As it looks to me, I see two very distinct sides of this equation.

On one side, stands the US, Israel, Jordan, Yemen, France, Britain, Europe, Canada, South Korea (hopefully Saudi Arabia), Italy, Japan and the Arab League

Against Group B-of  Libya, Old Egypt, Venezuela, Cuba, Bolivia, Nicaragua, Iran, North Korea, Russia (and more than likely, China).

Read more about the WW3 implications by visiting: https://theheartofamerica.wordpress.com/2011/03/20/is-wwwiii-in-the-near-future-qaddafis-latin-american-allies-blast-military-attacks/

Does anybody else see this potential line up?  If this happens, what are the repercussions and cost of that?! How can WW3 be avoided if we do decide (which I advise AGAINST) to get involved in Libya.

11. Are we prepared to lose Libya’s oil supply? What steps can we do to lessen our foreign dependence on oil?  I can hear the drill baby drill crowd chanting and I am supportive of drilling in preapproved areas as long as we dont add any NEW drilling in the Gulf.  So what other means are available? Plenty and the majority of them can be implemented simulatenously.

So many, in fact, I created a radio show especially to showcase how we can lower our gas cost. Listen here by visiting: http://www.blogtalkradio.com/heart-of-america-radio/2011/03/10/hoas-gus-guzzler-special-edition-03102011

There are many questions that need to be answered and Obama needs to be honest about his stance and his vision of the US involvement in Libya.

So what can WE do about it? For starters, you can contact:

Obama’s staff directly at 1-202-456-1111. Try it, you get to talk to a live person. I  have memorized this number, I call it so much.

Tell them that we need to regroup and figure out the long term plan and exit strategy as well as the cost and the increase in taxes (its either an increase in taxing or cutting more programs to balance!) and how us going into Libya in an attempt to get cheaper oil is a risky investment and not one that you are willing to take, not with a $14.3 trillion dollar debt haunting our children and grandchildren and no clear definition, direction, exit strategy or budget.

Also, make it a point to contact your Senators and Representatives to put more pressure on them and encourage them to stand up against President Obama (we elected them to be our voice!)

Representative Search: https://writerep.house.gov/writerep/welcome.shtml
Senate Search: http://www.senate.gov/general/contact_information/senators_cfm.cfm.

Finally, dont be afraid to contact your local news media and speak up! The Truth needs to be heard and it is up to US to deliver it. You can do it, I believe in you. If you need help getting started, email me at Theheartofamerica@wordpress.com and Ill help point you in the right direction.

Obama may have preached about hope and change and while change is certainly occurring. I have found many people to have lost their hope and that is a dangerous slippery slope that must be avoided at all costs.

Stay hopeful, stay faithful- Together we will solve this problem and work towards bettering our children’s future. That I promise you.

Copyright (c) March 26, 2011. All rights reserved.

Stop attacking the defense budget.


People wildly overestimate how much we spend on defense and greatly underestimate how much we spend on entitlements.

Unless we reform Welfare and Medicaid, the Congressional Budget Office forecasts, spending on just those 2 entitlements plus interest alone  will consume all federal revenues within the next 35 years. Nothing would be left for defense — or any other discretionary spending, for that matter.

Annual federal spending for these entitlement spending accounts for 32.6 percent of all federal outlays (excluding interest). Defense outlays come in much smaller than that, of just 21.1% of federal spending.

We spend just 4 percent of the gross domestic product, or GDP, on core defense (excluding overseas operations), well below our historical average.

Clearly, defense spending is not “out of control,” nor is it the cause of our rapidly ballooning debt. And yet lawmakers insist our security take a hit.

Defense cuts will have real negative consequences on the military. They will only ratchet up defense spending over the long term.

To accommodate cuts, the Pentagon will need to stretch out buying times for weapons and other equipment. That causes unit prices to soar, raising the ultimate tab for those procurements. Thus, the supposed “cutting” actions actually add upward pressure on long-term spending and debt.

Defense cuts could adversely affect our military capability as well.

The Air Force would need to ground some of its F-15 fleet, weakening the Air National Guards ability to patrol and provide U.S. air defense.

Remember how important those planes were after Sept. 11.

A second Virginia-class submarine and additional destroyer cannot be started, which will delay bringing those capabilities online and drive up costs.

The Army likely would have to postpone working on a new ground-combat vehicle to improve protection for its soldiers. Production of new drones for use in Afghanistan will be pushed back.

Training for soldiers and sailors will be scaled down, and shipyard repairs and maintenance will be canceled.

What I found interesting is that House Minority Leader Nancy Pelosi (Calif.) and Rep. Jan Schakowsky (Ill.) as well as a handful of Freshman Republicans were gun ho on cutting defense but lacked the understanding of the importance of such programs.

Sure, savings can be found through greater efficiencies at the Department of Defense. But they should be put back into long-term funding for military modernization and force structure. The military services already have said their modernization accounts are underfunded by about $50 billion a year.

It would be one thing if providing for the “common defense” were some extraconstitutional luxury and thus rightly a target for budget cutting as a matter of principle. But that most definitely is not the case here. Defending the country is a core, enumerated, federal power mandated by the Constitution.

Entitlement spending, not defense, is the source of our nation’s debt problem. Those who ignore this fact aren’t serious about reducing the nation’s spiraling debt. Worse, they undermine the federal government’s ability to meet its constitutional obligation to defend the country.

To see the full text of H.R. 1: Full-Year Continuing Appropriations Act, 2011 – please visit, http://www.govtrack.us/congress/billtext.xpd?bill=h112-1

Copyright (c) February 25, 2011. All rights reserved.

Mitch McConnell: “A Budget on Cruise Control Won’t Cut Spending”


In response to Obama stating he would put a 5 yr freeze spending in his 2011 State of the Union address.

“In their Monthly Budget Review, the Congressional Budget Office said that if the current spending levels are frozen at the same level as they are now, and Congress were to enact no other legislation affecting spending or revenues, the federal government would end this fiscal year with a deficit of $1.5 trillion—or about $200 billion more than the deficit Democrats ran last year.”

GOP offers $32 billion budget cut


UPDATE 2/14/11- Please note that House Republicans are now offering a budget cut of $100 billion. Post outlining new cuts, coming soon.

———–

House Republican leaders late last week said they would seek $32 billion in spending cuts from the resolution currently fundceing the government.

Republicans framed their proposal as cutting $74 billion from President Obama’s 2011 budget request.

However, because Obama’s budget was never approved by the last Congress, the cuts would actually be made against a continuing resolution now funding the government.

That resolution is to expire on March 4, and if lawmakers do not agree on another short-term measure or one funding the government for the rest of the year, they risk a government shutdown.

The GOP decision sets up a two-front battle with congressional Democrats and President Obama, who have warned that immediate spending cuts would damage the economy, and with conservative Tea Party-backed Republicans who want to make deeper cuts to spending.

The Congressional Budget Office has projected a $1.5 trillion deficit for the year.

The conservative House Republican Study Committee (RSC) is demanding a full $100 billion cut in non-security discretionary spending, and Republicans are trying to fend off internal criticism by offering conservative lawmakers the chance to offer amendments to the spending bill that would make more significant cuts.

A spokesman for the RSC offered support for the proposal, but added that many Republicans want deeper cuts.

“Chairman Ryan’s proposal shows that Republicans are working to help the economy by cutting reckless spending,” RSC spokesman Brian Straessle said.

“Many House members want to see at least $100 billion in non-security savings this fiscal year and will offer amendments to get there if necessary. Unlike former Speaker Pelosi, Republican leadership understands the value of an open legislative process.”

In a letter signed by 89 RSC members to Speaker John Boehner (R-Ohio), conservative Republicans last month pushed for deep cuts.

Rep. Chris Van Hollen,  the ranking Democrat on Ryan’s panel, said the cuts would hurt the economy and put more people out of work. ”

The President’s bipartisan Fiscal Commission cautioned against such immediate spending cuts, and economists like Mark Zandi have made the point that deep and immediate spending cuts proposed by Republicans could raise the unemployment rate back into double digits,” Van Hollen said.

Details of the cuts were not announced on Thursday. The House Appropriations Committee next week will release its bill based on the spending ceiling.

However, a leadership aide indicated the Environmental Protection Agency (EPA) will be targeted. The aide said EPA has tripled its budget in the last three years and said agencies that have seen such growth will be affected.

Another area that can be targeted is abusive Welfare and Medicaid spending. For example, look at New York City who was sued by the State of New York  for civil penalties and damages of at least tens of millions of dollars. That would be a good place to start.

You can read more about the lawsuit by visiting: https://theheartofamerica.wordpress.com/2011/01/11/new-york-sues-new-york-city-for-medicaid-fraud

Another place to look into for cuts would be the debit cards given to welfare recipients. The choices of locations are not the strictest and it known that you can cash in the debit cards in Vegas at select strip clubs and casinos.

Taxpayers money should not be available for people who are wanting to gamble or blow it on shows. That money is for necessities only and should be treated as such.

There are many ways to slice the pie but the Democrats and Freshman Republicans on putting the most important things (such as Social Security, Defense and Medicare) on the chopping block.

Look around, be creative and I predict that more savings can be found.

Copyright (c) February 7, 2011. All rights reserved.

Marine Corps’ EFV will be eliminated to make room in the 2012 budget.


Defense Secretary Robert Gates last month announced plans to cancel several hardware programs in the 2012 budget plan as part of a broader effort that unearthed $150 billion in savings.

Gates plans to take some of those monies and shift them to other needs — but some lawmakers and analysts say the secretary might loose a good chunk as Congress grapples with paring down the federal deficit.

“I don’t expect any major surprises” next week when the next budget plan is made public, said Jim Thomas of the Center for Strategic and Budgetary Assessments.

“I don’t think there will be more immediate program cuts,” Thomas added Sunday during “This Week in Defense News.”

Chris Preble of the CATO Institute said deficit-reduction efforts will not be the lone hurdle for Gates’ so-called “efficiencies” effort. Keeping the $150 billion in savings could be further complicated if the planned troop draw downs in Iraq and Afghanistan do not go as planned.

“A lot of the efficiencies [program] is based on troop levels coming down. That’s where you get real savings,” Preble said. “That’s a big if.”

And, he added, there is opposition in Congress — especially among House Republicans — to trim one dime from the Pentagon budget.

“There are already people in Congress saying we shouldn’t be considering budget cuts until the wars are over,” Preble said.

One major program Gates announced he will propose terminating in the 2012 plan is the Marine Corps’ Expeditionary Fighting Vehicle (EFV). Its overall expected price tag had grown to $14 billion, and the secretary and Marine leaders said last month that was simply too expensive.

EFV prime contractor General Dynamics and some Republican lawmakers are fighting back, saying the service should buy about 200 and upgrade over 300 of its current amphibious troop-hauling truck.

The analysts said the expeditionary vehicle battle in Congress this year will be a telling sign of calls for deeper defense spending cuts.

Preble said after years of developmental issues, the troubled EFV program has for some time been on just about every “cut list.”

“So if you can’t cut this one,” he said, “then it’s going to be really tough to cut anything else.”

Copyright (c) February 7, 2011. All rights reserved.

The Full Faith and Credit Act and its attempt to protect the govt from debt default.


Republican Senator Pat Toomey introduced legislation, entitled the Full Faith and Credit Act (S. 163 and H.R. 421).

This legislation will ensure that the U.S. government does not default on its debt by requiring the Treasury to prioritize payments on the debt in case the debt ceiling is not raised.

“We need to take the default scare tactics off the table so both sides can sit down at the table and have a serious and honest conversation about cutting spending and instituting structural reforms to put our country’s finances on a sustainable path,” Sen. Toomey said.

“The Full Faith and Credit Act will allow us to have that conversation by eliminating the possibility for default in case the debt ceiling is not raised.

Failing to raise the debt ceiling is not a desirable situation and would be disruptive, but the worst thing we can do is simply continue the irresponsible deficit spending that jeopardizes our economic future.”

Already, the Full Faith and Credit Act has garnered enthusiastic support from members of Congress.

In the Senate, the legislation has 15 cosponsors: Senators John Barrasso (Wyo.); Roy Blunt (Mo.); Saxby Chambliss (Ga.); Tom Coburn (Okla.); Jim DeMint (S.C); John Ensign (Nev.); Mike Enzi (Wyo.); James Inhofe (Okla.); Johnny Isakson (Ga.); Mike Johanns (Neb.); Ron Johnson (Wis.); Mark Kirk (Ill.); Mike Lee (Utah); Rand Paul (Ky.); and David Vitter (La.).

In the U.S. House of Representatives, a companion piece of legislation will be introduced by Representative Tom McClintock (Calif.-04).

To read the full House bill and list of cosponsors, please visit: http://www.opencongress.org/bill/112-h421/show

To read the full Senate bill and list of cosponsors, please visit: http://www.opencongress.org/bill/112-s163/show

To watch Toomey’s explanation of the Full Faith and Credit Act, please click on the below link.

Published in: on February 6, 2011 at 5:11 pm  Leave a Comment  
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Case in point: Eliminate big oil’s subsidies and royalties and reap the rewards.


With unleaded gas prices rising into the $4/gallon range; it is no wonder that Exxon and other oil companies are unleashing record 1st Quarter profits.

A Natural Resources staff review of recent earnings announcements by the five largest oil companies operating in the United States shows that this industry has generated outsized profits that undermine the necessity for continued tax subsidies and royalty-free drilling access.

Hugely profitable multi-national oil and gas companies are set to enjoy $53 billion in royalty-free drilling over the next 25 years and $36.5 billion in taxpayer subsidies over the next decade.

In his State of the Union speech, President Obama called for an end to these tax subsidies:

“I’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. I don’t know if you’ve noticed, but they’re doing just fine on their own. So instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s.”

Tax Breaks and Royalty Relief Ridiculousness

The President’s remarks have focused renewed attention on the impact that outdated legacies of the tax code and failed royalty-relief policies have on our current energy system.

Most oil and gas subsidies have been on the books in the United States for many decades. They represent an era when oil and gas exploration was in its infancy, and when resources were plentiful but remained largely unexplored.

Intangible costs of exploration generally include wages, costs of using machinery for drilling, and the costs of materials like drilling muds, chemicals, and fuel that get used up during the process of building wells.

Since 1968, this program has cost the U.S. Treasury $78 billion. Ending this tax subsidy would raise nearly $8 billion over the next decade.

Tax breaks that allow oil and gas companies to use the “percentage depletion allowance” were first put in place in 1926. Rather than writing off the actual costs of the property over its useful life, like most businesses must do, some oil companies get to simply deduct a flat percentage of gross revenues.

Under this method of accounting, total deductions regularly exceed the actual capital invested to acquire and develop the reserve.

When this program was started, stimulating massive exploration around the geologically unknown United States was so important that oil and gas companies were allowed—through this preferable tax treatment—to recover amounts in excess of their investment.

Since 1968, this program has cost the U.S. Treasury $111 billion. Ending this tax subsidy would raise more than $10 billion over the next decade.

Subsidies to Oil Companies Do Not Benefit the Public

The oil and gas industry argues that the tax breaks they enjoy encourage them to develop more oil and gas deposits, which lead to increased oil and gas supplies and lower energy prices.

The Natural Resources Committee Staff’s analysis suggests otherwise for two primary reasons:

1. Depending on the reservoir and the physical characteristics of the hydrocarbon, the cost of producing oil can range from as little as $2 per barrel in the Middle East to more than $15 per barrel in some fields in the United States, according to the Energy Information Administration.

The profit incentive to explore and produce new supplies for this lucrative market dwarfs any marginal benefit that existing federal tax breaks for oil exploration or production could provide.

As President George W. Bush said in 2005, “With oil at more than $50 a barrel, by the way, energy companies do not need taxpayers’-funded incentives to explore for oil and gas.”  Now that oil prices have risen to $100 barrel, the same logic still applies.

2. In recent years, higher oil company profits have increasingly been redirected into dividends and stock purchases, not exploration. Among the Big 5 oil companies, less than 10 percent of profits are reinvested into exploration of new oil deposits.

Net profits directed towards dividends and stock repurchases for the Big 5 oil companies were 58 percent in 2005, 73 percent in 2006, and 72 percent in 2007, 71 percent in 2008, and 89 percent in 2009.

Dumping profits into stock buybacks drives up share prices for remaining shareholders by concentrating ownership, and, in the process, acts to increase the values of stock options for executives.

It also reduces the amount of capital available for new exploration and improvements in drilling safety. The current tax treatment does not incentivize oil and gas companies to diversify into clean energy alternatives.

While some oil companies tout their commitment to research into alternative energy resources, a review of actual corporate investments in research and development (R&D) reveal a business model which appears wildly averse to innovation.

While companies in high-tech sectors like pharmaceuticals and semiconductors regularly invest 15-18 percent of their revenues in R&D, U.S. energy companies invest less than one quarter of one percent of revenues in R&D.

Repealing the oil industry’s tax subsidies will not impact gas prices for American consumers. Oil, the main input and primary cost driver of gasoline, is traded in a global market and oil companies get paid the going market price for the oil they produce.

On the oil market, there is no difference between an unsubsidized barrel of oil that costs $10 to produce and a subsidized barrel that costs $9.50 to produce. Each barrel will sell for the same price, almost $100 on the oil market. Oil companies that receive tax subsidies pass on that benefit to their shareholders, not to consumers.

Reduce the Foreign Dependency

American consumers are price takers when it comes to buying oil. When oil markets react negatively to unfavorable political events or when OPEC decides to cut production, American consumers must simply pay more at the pump.

The world has little spare production capacity that can be tapped during supply crunches, and what does exist lies almost entirely in Saudi Arabia and other OPEC countries.

Expanded domestic drilling will not significantly change that dynamic, as the United States lacks sufficient oil reserves and production capacity to offset OPEC production decisions.

Put the Oil Profits Back into the Pockets of the Taxpayer

ExxonMobil, BP, Chevron, Shell, Conoco Phillips and many other companies are now drilling for free on public land offshore and will continue to do so for the life of these leases no matter how high oil prices climb.

The Government Accountability Office (GAO) has estimated that the federal government and American taxpayers stand to lose up to $53 billion in foregone royalties over the next 25 years.

Ranking Member Ed Markey has authored legislation that would recover these royalties rightfully owed to the American people.

The House has repeatedly passed Rep. Markey’s legislation, including as part of H.R. 3534 that passed the House on July 30, 2010, but the Senate has never taken action.

Oil Profits lay with the Shareholders, not Big Oil operations.

The oil companies and their representatives frequently suggest that their high publicly reported profit numbers are misunderstood because only 7 cents of every dollar in sales is profit, which is similar to other American industries.

However, intensely competitive industries like retail and food service are lucky to earn 1 or 2 cents of profit per sales dollar. The real measure of the oil industry’s financial health is how much profit they generate with the money shareholders have invested. Over the last two years, the Big 5’s average annual return on equity was 21 percent. The U.S. Treasury bond, in contrast, yielded about 3 percent during this same period.

The oil and gas industry’s very high profitability has provided a financial a bonanza for shareholders over the last decade. A $10,000 investment in the Big 5 in 1990 is worth $100,000 today. In contrast, the same investment in an S&P 500 index fund is now worth $60,000. Big difference.

The oil and gas industry is a mature and highly profitable sector that is no longer in need of generous tax breaks or royalty-free drilling access. The $36.5 billion in subsidies that the industry is set to receive over the next decade will not help consumers with rising energy prices.

These subsidies will not strengthen America’s energy independence or help to develop alternatives to oil. Allowing hundreds of billions of dollars to go to an industry who is clearly not in need of the subsidies is a fiscal misstep that must be corrected.

Redirecting a portion of the money saved from the subsidies and royalties into alternative energy while using the rest to pay down our monstrous national debt, would be the best way to start addressing the the US’s financial and environmental concerns.

Copyright (c) February 5, 2011. All rights reserved.

New budget slasher legislation on the table- CAP bill to the rescue.


As the Congressional Budget Office reports a record $1.5 trillion U.S. deficit for fiscal year 2011, U.S. Senators Bob Corker  and Claire McCaskill are introducing legislation to force Congress to dramatically cut spending over 10 years.

“Washington continues to borrow and spend, and despite the pleas of the American people, there is no end in sight,” said Corker, who spent the fall delivering a sobering presentation about America’s fiscal situation to more than 43 audiences in Tennessee.

“As we approach our debt limit of $14.29 trillion and more and more Americans – Republicans, Democrats and Independents – call on Washington to get spending under control and reduce our deficit, I see no better time to change course.

What Senator McCaskill and I are offering is a legislative straitjacket, a way of forcing Congress to dramatically cut spending over 10 years. The beauty of the CAP Act is that it imposes fiscal discipline and smaller government, while incentivizing lawmakers to pass policies that promote economic growth.”

“At a time when many families have been forced to tighten their pocketbooks, Congress must also learn to do the same. This bill isn’t just about cutting back this year or next year; it’s about instilling permanent discipline to keep spending at a responsible level,” McCaskill said.

The Commitment to American Prosperity Act, the “CAP Act,” would:

(1) Put in place a 10-year glide path to cap all spending – discretionary and mandatory – to a declining percentage of the country’s gross domestic product, eventually bringing spending down from the current level, 24.7 percent of GDP, to the 40-year historical level of 20.6 percent, and

(2) If Congress fails to meet the annual cap, authorize the Office of Management and Budget to make evenly distributed, simultaneous cuts throughout the federal budget to bring spending down to the pre-determined level. Only a two-thirds vote in both houses of Congress could override the binding cap, and

(3) For the first time, eliminate the deceptive “off-budget” distinction for Social Security – providing a complete and accurate assessment of all federal spending.

“Cutting trillions of dollars from the federal budget in the coming years won’t be easy or painless; it will require backbone and discipline on the part of policy makers and shared sacrifice for the country. I believe Americans will be willing to make short-term sacrifices for the long-term good of our country and demand commensurate actions from their elected officials,” continued Corker.

The Corker-McCaskill CAP Act is cosponsored by a slew of Republican Senators Lamar Alexander, Richard Burr, Saxby Chambliss, Jim Inhofe, Johnny Isakson, Mark Kirk, and John McCain. No Demcrats other than McCaskill have signed onto this attempt at reducing the national debt.

In 2009 the federal government spent $1.4 trillion more than it took in, borrowing nearly 40 cents of every dollar. The gap between spending and revenue is almost four times the historic average.

Even when the U.S. reaches historic revenue levels, we are still projected to be spending nearly six percent more of our gross domestic product than we take in, and the gap will continue to widen.

By 2035, on our current trajectory, U.S. debt will reach 185 percent of GDP. If this occurs, interest payments on our national debt will reach nearly nine percent of GDP – as much as we currently spend on national defense, education, roads, and all government agencies combined.

Action must be taken and cutting must happen on a significant level in order to ensure financial stability and the value of the US dollar.

To read Commitment to America’s Prosperity Act (CAP)’s 10 page bill, please click: http://corker.senate.gov/public/?a=Files.Serve&File_id=1b37d6e3-7c8e-4106-90b9-176d2c0d49e7

Balancing the Budget


Senate Republicans are divided over whether to demand a balanced-budget amendment from the White House as a precondition for increasing the national debt ceiling whether the Democrats flounder with no response on cutting 2011 fiscal spending.

Members of Republican Party have said they will filibuster the debt-limit increase unless 2/3 of the upper chamber votes for a balanced-budget amendment.

Note: 2/3 of the House and 3/4 of the states must also ratify the amendment for it to become law.

To pass a balanced budget, one in which the projected income to the government through taxes,fees, fines and other revenues equals the amount proposed to be spent. Several things need to be done with the emphasis on cutting spending. An action, the Left, is reluctant to do.

“I’m in the camp of I want to see a process that leads to some realistic, achievable solutions,” said Republican Senator Lindsey Graham. “I don’t think we’re going to get 2/3 of the Senate and the House.”

“I’m willing to vote for a balanced-budget amendment, I think that’s the ultimate solution, but I’m not going to make that a requirement for raising the debt ceiling”, Graham said.

To which I ask, “What is the reasoning behind that line of logic?

Graham co-sponsored a balanced-budget amendment with Senator Jim DeMint, the conservative chairman of the Senate Republican Steering Committee, in the 111th Congress and 2012 Presidential hopeful.

Senator DeMint will oppose an increase to the debt ceiling unless the Senate first passes a balanced-budget measure.

Senator Mike Lee said Thursday that he will filibuster legislation to increase the national debt limit unless Democratic leaders promise to support passage of a balanced-budget amendment.

“The only scenario in which I can imagine not using the filibuster is if the leadership of both parties agree that as a condition of that they would first pass out a balanced-budget amendment,” Lee stated.

There’s also a move among House Republicans to attach a balanced-budget amendment to the legislation increasing the debt limit.

Republican Representatives Bob Goodlatte and Lee Terry  have each introduced balanced-budget amendments and have attracted growing interest from colleagues.

House Speaker John Boehner and Majority Leader Eric Cantor  have previously co-sponsored Goodlatte’s measure. It is similar to the balanced-budget amendment that was included in former House Speaker Newt Gingrich’s “Contract With America.”

In the Senate, there are two leading proposals for a balanced-budget amendment.

Lee and Senate Republican Whip Jon Kyl have sponsored the more stringent amendment.

It would limit federal spending to 18 percent of gross domestic product and would require a two-thirds vote in the Senate and the House to approve expenditures in excess of revenues.

Senators John Cornyn and Orrin Hatch have sponsored a competing proposal.

It would set the federal spending cap at 20 percent of gross domestic product and also require a two-thirds vote in both chambers for Congress to spend more than the government collects in revenue. The balanced-budget requirement may be waived, however, if there is a formal declaration of war or the U.S. is engaged in a military conflict considered a threat to national security.

Both proposals would require a 2/3 vote in the Senate and House to approve tax increases.

The Senate Republican Conference voted in November to adopt a resolution expressing support for a balanced-budget amendment.

“There is certainly, I would believe, across-the-board support for a balanced-budget amendment in the conference,” said Dan Hauser, a spokesman for Lee.

Meanwhile, Democrats are focusing more on the point of failing to raise the nation’s debt limit and it resulting in an economic catastrophe in an attempt to take the focus off of increased speeding via “innovation”.

Austan Goolsbee, a senior economic adviser to President Obama, declared: “If we hit the debt ceiling, that’s essentially defaulting on our obligations, which is totally unprecedented in American history. “The impact on the economy would be catastrophic. I mean, that would be a worse financial economic crisis than anything we saw in 2008”.

Goolsbee and fellow Democrats are preaching to the choir, as not one Republican voted to raise the debt ceiling in the 111th Congress.

Who are they trying to convince other than the American People that the Republicans want to raise the debt ceiling? That is the farthest thing from the truth.

In reality, the Republican Party is looking at the US’s financial situation and saying “We have a lot of debt and we may default on our obligations if we do not cut spending right now.”

It appears that the Left would rather not focus on the later part of the statement, so they simply ignore it.

Ignoring the problem will not make it go away, lawmakers need to learn this now or they will pay the price in the 2012 elections.

Copyright (c) January 31, 2011. All rights reserved.