The Democratic majority has routinely rejected every proposed tax reduction on Americans and they have steadfastly stuck to their insistence on repealing every tax reduction passed during this century. That will raise taxes on every single American who currently pays taxes and add some new ones to the tax rolls.

But there is one group that apparently is deserving of a tax cut, according to the majority. Contingent fee trial lawyers. Yep, you heard me correctly. Buried in a recent tax increase bill (which I opposed and the president will likely veto) was a special tax break for trail lawyers paid under a contingent fee. It would allow them to deduct their expenses on a contingent fee case whenever they incur them rather than wait, as current law requires, until the case is concluded. This bill contained mainly tax increases on lots of other businesses. This was one of the few tax cuts in the bill.

Maybe this is to aid the struggling trial lawyer industry? After all, they are the engine of our economy aren't they? They employ so many people? Yeah right.

Is there any question what special interests rule the roost now?

Today the Washington Post reported on a massive new program in the recently passed farm bill that managed to slip by most House members and staff, during consideration of the 637 page farm package last week.

The new program will install a program to increase taxpayer-financed subsidies by billions of dollars if high commodity prices decline down to the historic typical levels.  Therefore if commodity prices drop from their current exorbitantly high levels, the government would institute subsidies to match current inflated commodity prices.

The program in question, dubbed the Average Crop Revenue Election (ACRE), if enacted will be a bloated and wasteful program since the subsidy amounts are tied to recent record commodity prices.

For instance, the Agriculture Department has projected that subsidy payments for corn alone could reach $10 billion per year if prices were to drop from its current extravagant price of $5-$6 per bushel to $3.25 a bushel; a level that was seen last year.  Currently, subsidies are disbursed when bushel prices drop below $2.63. 

If this senseless level of subsidation wasn’t enough, the farm bill also includes billions of dollars in additional subsidies and handouts to wealthy farmers.  That’s not to mention the other horrific parts of this legislation, but that is for another blog.

This is hardly an example of sound fiscal policy to say the least.

The Defense Authorization Bill for 2009 is set to hit the floor today and already a battle is brewing over earmarks.  House Armed Services Chairman Ike Skelton (D-MO) included a provision in the enormous Defense authorization that rejects President Bush’s Executive Order: Protecting American Taxpayers From Government Spending on Wasteful Earmarks which directs Executive Branch agencies not to commit, obligate, or expend funds on the basis of earmarks included in the actual text of legislation. Not only do they undo President Bush’s executive order, they also have indicated their intent to “sneak” earmarks into bills at the last minute using a process known as “airdropping”, will be actively used. 

The provision inserted into the bill is only 5 lines long but effectively declares that the president’s executive order “shall not apply”.  The bill currently lists 541 individual projects totaling $9.9 billion in the accompanying report.      

It appears that the earmarkers are now more determined than ever to bring home the bacon.

Oink.

Today the House will consider the Budget Resolution Conference Report for 2009.  The report calls for record tax increases, increases discretionary spending by $241 billion above the President’s level over 5 years, and does nothing to reform entitlements or earmarks. Below are some of the highlights of what this budget WILL do:

• Raises taxes by at least $683 billion over the next 5 years. These include increases in marginal tax rates; elimination of the 10-percent bracket for lower-income taxpayers; restore the marriage penalty, the death tax, as well as install higher tax rates on investments.
• Authorizes More Than $1 Trillion over and above entitlements. The conference report increases so called “discretionary spending” by $21 above the President’s request, pushing it above $1 trillion for 2009. This translates to a spending increase of $241 billion when extended over 5 years.
• Entitlements Continue on Automatic Pilot. This budget does nothing to address the growing entitlement problem. Medicare and Social Security alone currently face $40 billion in unfunded liabilities, and that figure is growing unchecked every year.
• Record Debt Increase. Although Democrats claim to balance the budget by 2012, the conference report results in the largest debt increase in history – from $8.951 trillion in 2007 to $9.575 trillion in 2008 – and increase of $624 billion this year.
• No Earmark Reform. Having repeatedly decried the scandal of earmarks, the Majority does nothing in the budget to address them. Last year’s appropriations bills included some 11,000 earmarks totaling $14.8 billion – and under this budget, the trend will continue.

Not only will this budget stifle economic growth, it will increase our debt level, and authorize an enormous amount of money for discretionary spending.  That isn’t even accounting for what the budget fails to do! ….Scary thought isn’t it?

I read a lot of political discourse that is pretty tedious and boring. I never want this blog to sink to that level. I understand that there is always a risk of that when I bring up such scintillating topics as international tax policy and mortgage origination regulations. Stop yawning!

Anyway, so here is the very first Campbell Quiz. These are a few questions about current events in Congress and politics. And no, I will not make you wait until next week to find the answers. They are all at the end of each question. Good luck, have fun.......oh yeah and maybe you'll learn something you didn't know too!

1) Two weeks ago, Congress passed a "technical corrections bill" that contained hundreds of new transportation earmarks including $90 million to study a "maglev" (magnetic levitation) train. This train would run a route that is currently served by dozens of daily airline flights and at a fare of about $118. If it takes $90 million to study it, imagine what it would take to subsidize it. This train would run between:

a) New York and Washington
b) Anaheim and Las Vegas
c) Cincinnati and Cleveland
d) San Francisco and Honolulu

Answer: (b). This earmark was originally put forth by Harry Reid (D-NV) to subsidize bringing more people to Vegas. If any of you picked (d) (San Francisco and Honolulu), please stop reading this until you sober up.
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The House is currently considering the supplemental appropriations bill for the troops on the floor.  Aside from the setting of an arbitrary withdrawal deadline, and various other provisions I do not agree with, the supplemental has several domestically directed additions as well as a tax increase to top it all off.

First, this piece of legislation includes language that will expand veteran’s education benefits to the tune of $51.6 billion over ten years.  I don’t think anyone can argue that the modernization of education benefits for veterans is long overdue, but it must be done responsibly.  This expansion of benefits will, according to the Pentagon, and former P.O.W. and Navy Captain, John McCain discourage retention rates among active duty personnel. 

Second, it provides thirteen weeks of unemployment compensation to workers, and for states with unemployment rates that exceed 6%, the benefits would be extended for another thirteen weeks. History shows, that extending unemployment benefits longer actually keeps people unemployed for longer periods of time. Besides, unemployment benefits have nothing to do with this supplemental appropriations bill.

Lastly, Democrats have proposed a job-killing tax increase on individuals making more than $500,000 and couples making more than $1 million. According to the Tax Foundation, nearly 83 percent of filers who will be hit by the Democrat tax increase report some form of income from a small business, sole proprietorship, or partnership. According to ADP, last month, small businesses created 56,000 jobs, while the economy lost 20,000 jobs overall. The last thing we should be doing is raising taxes on the innovators and entrepreneurs who are critical to getting our economy back on track.

Three major domestic aspects of a supplemental appropriations bill that has nothing to do with domestic policy…what’s next?

Yesterday, the House passed the Farm Bill, and as my blog indicated yesterday, I voted against this bill for a variety of reasons, but there is one piece I am sure that Democrats will be sure to exclude from their talking points.  An earmark inserted by Senator Max Baucus (D-MT) for a “Qualified Forestry Bonds Program”, which would provide federally funded-tax credit bonds for purchases that meet the following standards:

• The forest must be adjacent to U.S. Forest Service Land;
• Half of the parcel must be turned over to the U.S. Forest Service;
• It must include at least 40,000 total acres; and
• It must be subject to a “native fish habitat conservation plan approved by the United States Fish and Wildlife Service.”

You might have guessed it, but there is only one piece of land that meets these qualifications, a 1.6 million acre piece of land, owned by the Plum Creek Timber Company.

The Plum Creek Timber Company is attempting to sell the qualifying land to the Nature Conservancy, which has been touted by the Washington Post as the “world’s richest environmental group, with $3 billion in assets.”

This earmark will allow the Nature Conservancy to claim a $250 million ‘Tax Refund’ which would basically provide additional motivation for the group to purchase the land.  Keep in mind, that this tax refund would go to a conservancy group that has 501(c)3 organization, so it doesn’t pay taxes in the first place, according to the earmark the tax refund would be provided anyway.

If that wasn’t enough, according to the FEC, employees of plum Creek Timber have donated nearly $17,000 to Senator Baucus’ campaign fund.

The endowment of $250 million of taxpayer funds to encourage a rich environmental group to purchase land from a Senator’s wealthy campaign donors…I wish I could say the audacity of some Members of Congress surprises me, but I can’t. 

Today the House passed HR 2419, the Food, Conservation, and Energy Act of 2008, better known as the Farm Bill.  I was one of 106 who voted against the bill, I want to take a moment to let you know exactly what this bill does….all 673 pages of it.

Since 1933, Congress has passed some version of a Farm Bill every couple of years.  Unfortunately, all too often U.S. Farm Bills fail to consider the real needs of a responsible Agriculture policy.  The real problem impacting farmers is not persistent poverty, but rather normal yearly income fluctuations.  Below you will find several reasons why this is the wrong direction for Farm policy in America.

• This bill continues to subsidize wealthy farmers.  All farmer income tests are rejected by this farm bill and affluent will still remain eligible for permanent subsidies.  Most of these subsidies will go into large agribusiness interests.
• This Farm Bill waives the Democrat PAYGO rule, which requires any bill affecting mandatory spending or revenue to be deficit neutral. This conference agreement increases spending by $10 billion over the next decade, and $10 billion in gimmicks are also included.  Not to mention, this Farm Bill uses the spending from 2007, which allows for more spending than that of the 2008.
• The measure ignores the plight of consumers facing skyrocketing food prices by making a bad sugar program worse. Due to the current policy, sugar prices in the U.S. are twice the worldwide average and cost consumers nearly $1.8 billion last year, according to the GAO]. This Farm Bill will worsen this situation by increasing the sugar loan rate, and by creating a new sugar-to-ethanol mandate that will purchase sugar at inflated prices and sell it to ethanol producers at a substantial discount. This sweet deal for sugar producers will leave a sour taste in the mouths of American taxpayers.
• This Farm Bill creates a new, $3.8-billion Permanent Disaster Relief Program that disproportionately assists those with political clout, not real needs. This duplicates at least three existing crop insurance programs, along with other subsidy programs. This new program also creates incentives for the use of marginal lands that would otherwise not be farmed. To make matters worse, the cost of the program is likely to be double this amount due to a funding cliff that makes a “permanent” program disappear after only 5 years.
• The Farm Bill contains numerous wasteful earmarks. These include a $250-million earmark for land in Montana, an earmark that requires the USDA Forest Service to sell land to a ski resort, and a $170-million earmark for the salmon industry in San Francisco.
• The true cost of the Farm Bill is much higher than the advertised by the conferees. PAYGO gimmickry and special interest tax breaks and earmarks not contemplated within the advertized $10-billion framework push the overall cost to $23 billion over what the current Farm Bill pays for. 

This morning, The Hill reported that Rep. John Murtha’s infamous earmark for the National Drug Intelligence Center (NDIC) was stripped from the 2009 intelligence authorization bill, the very same project which Democrats fought so hard to defend last year. 

The earmark worth $23 million was handily defeated in the House Intelligence Committee by a vote of 17-4.

Perhaps, the beltway establishment is starting to wake up to the public's distaste for these wasteful and corrupting earmarks.

It is no secret that I am not a fan of the Democrat PAYGO rule that requires any bill affecting mandatory spending or revenue to be deficit neutral.  In theory PAYGO sounds great, but at the heart of it, the Democrat rule is nothing more than a gimmick.

House Democrats, especially members of the “Blue Dog Coalition”, claim that they will not waive PAYGO for any reason, their recent actions have indicated otherwise.

In preparing the supplemental appropriations bill, Democrat leaders are reportedly planning on including billions of dollars in mandatory spending that would normally be subject to PAYGO, but recent reports indicate that they plan to circumvent PAYGO in order to enact proposals that could cost anywhere between $30 and $70 billion.

However, they are not willing to waive PAYGO to extend numerous expired and expiring tax provisions, including:

• The Research and Development Tax Credit
• Subpart F for active financing income
• Depreciation of restaurant equipment
• Credit for residential and commercial solar property
• Credit for electricity from renewable sources
• Credit for energy efficient homes and commercial buildings
• Credit for energy efficient appliances
• State and local sales tax deductibility
• Deduction for teachers’ classroom expenses

Collectively, these tax provisions which expired at the end of 2007 or will expire in 2008 will result in a tax increase of $102.6 billion through fiscal year 2008.

Democrats are using this gimmick for cheap political theater, and will jump at their first chance to circumvent it in order to raise your taxes.

Despite a much needed revamp of the entire farm bill, conferees continue to struggle through negotiations, but there is at least one group of planters who will come out ahead.  However, despite this congressional gridlock, there is at least one group of planters who continue to make money off the old farm bill. Sugar cane and sugar beet growers have actually managed to increase the size of their proverbial pot in the new package. Why? Because of government sponsored mandates for a “sugar-to-ethanol” program in the United States.

The U.S. Sugar industry has long enjoyed the comfort of a federal security blanket.  With interlocking price supports and import quotas, sugar tycoons have been able to sell their product in the marketplace with little or no foreign competition.  However, with the implementation of free trade agreements such as the 2005 Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) and new provisions in NAFTA, the sweet deal U.S. growers had was about to be disrupted.  Not to be outdone, a strong lobbying effort was launched on behalf of sugar growers in order to help regain their cozy and secure spot in the U.S. market.

If these provisions in the Farm Bill are implemented, the price for U.S. Sugar (which is already above the global price) will increase, with additional mandates to encourage part of the sugar market towards ethanol production.  In addition, the U.S. based ethanol industry also benefits from high tariffs limiting ethanol imports, mostly on sugar derived ethanol from Brazil.

This is a sour deal and contrary to proven free market principles. Ethanol tariffs combined with the sugar subsidies keep Americans from accessing ethanol from its most efficient source, which is sugar. 

In the next week or two, the Senate will consider S. 27 the San Joaquin River Restoration Settlement Act.  This bill has been pushed by environmentalist extremists and would “settle” a 20 year old lawsuit that they’ve pursued against the federal government, in order to restore the salmon population of the San Joaquin River.  The best part of this bill is that the targeted area of water that this bill would help has been dry for the better part of 70 years.

This bill all by itself is outrageous, but thanks to Congressman Devin Nunes (R-CA), it has come to light that Democrats are planning to sneak in a massive earmark and “airdrop” it into this bill. The earmark will spend $1.1 billion in an attempt to put salmon into a river that has run dry.  The threshold for success is very small.  According to the settlement, if only 500 fish return, the project will be deemed successful. 

If you do the math, that makes each fish worth $2.2 million dollars.

Even for someone from Orange County $2.2 million is a lot for a fish.

Last week, the House passed H.R. 1195 which amends the Highway Bill from 2005, (The Safe, Accountable, Flexible, and Efficient Transportation Equity Act SAFETEA-LU).  To say H.R. 1195 passed is an understatement, it passed overwhelmingly…there were only 50 of us who voted against it, including yours truly.

This bill was supposed to only be making technical corrections to SAFETEA-LU, but if you read what the bill actually does, it conveniently increases funding for roughly 500 earmarks.

Included is a “technical correction” which expands an earmark for magnetic levitation technology (MAGLEV), a mass transit program. This earmark was problematic from the start. This project actively competes with a private company that is raising billions of dollars (without taxpayer support) to complete a similar high-speed rail route from Las Vegas to Southern California. Furthermore, the demand for a MAGLEV route from Southern California to Las Vegas is relatively low. Taxpayers from Florida, Ohio, or any other state should not be forced to foot the bill for earmarks that serve a select few.  Besides, you can get a plane ticket from LAX to Las Vegas for as little as $118.