Ron Paul's texas straight talk

[Shawn.L]

I signed up a while ago for these, thought maybe I would start a thread and post the new ones in it as they come out weekly.

http://www.house.gov/paul/tst/tst2008/tst033008.htm

On Money, Inflation and Government

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.

[Shawn.L]

http://www.house.gov/paul/tst/tst2008/tst042008.htm

The Double Trouble of Taxation

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.

[Shawn.L]

http://www.house.gov/paul/tst/tst2008/tst042708.htm

Politicizing Pain

K.K. Forss does not claim medical marijuana solves all his problems. His pain from a ruptured disc in his neck is debilitating. He is unable to go to work or to the First Baptist Church he used to attend because of the pain and muscle spasms. Taxpayers through Medicare spend over $18,000 a year on his various medications. Half of those drugs are strong narcotics. The other half address the various side-effects brought on by the first half, such as nausea, heartburn, heart palpitations, difficulty sleeping, and muscle spasms.

No, marijuana would not completely address all his pain, but it made a tremendous difference in the quality of his life when he tried it for over a year. It helped him regain 38 pounds he had lost. It calmed his muscle spasms and helped him sleep. In short, it alleviated many side effects and greatly reduced his need for other expensive medications. Mr. Forss estimates that being allowed to use medical marijuana would save taxpayers at least $12,000 a year in medications he would no longer need. He would also be able to work occasionally and attend some church services.

Scientists at the University of California at Davis recently completed a study that backs up Mr. Forss’s experience, finding that cannabis demonstrates significant relief of neuropathic pain. Many in government call for more studies while people like K.K. Forss suffer. More studies will not change what many patients already know, and that is for some, medical marijuana helps their pain. But over-reaching government gets in the way.

K.K. Forss lived in constant fear of federal and state officials so he eventually stopped taking medical marijuana and switched to his more rigorous and expensive pill regimen. Presently, twelve states have passed legislation allowing marijuana, under certain conditions, to be prescribed legally by doctors for patients who could benefit from it. K.K. Forss lives in Minnesota, where it is not yet legal. However, even if it is legalized by the state, Mr. Forss will still have plenty to fear from the Federal government, as cannabis dispensaries and clinics that operate under these state laws are still under fire from the Drug Enforcement Administration.

In other words, the federal government sees fit to use our tax dollars to raid state sanctioned healthcare clinics, to imprison and fine patients and operators, in order to compel people like Mr. Forss to be bedridden and overmedicated at great taxpayer expense every single day.

The Federal government should recognize that states have the authority to decide these issues. This affords all states the opportunity to see which policies are most beneficial. As a Congressman and a physician, I strongly advocate that healthcare decisions should be made by doctors and patients, not politicians or federal agents, which is why I am an original co-sponsor of the recently introduced “Medical Marijuana Patient Protection Act” which would bar the Federal government from intervening in such doctor/patient relationships that violate no state law.

The bottom line is that K.K. Forss should be treated as a free American. Mr. Forss is one of many who would like to use marijuana medicinally because it helps him. Politicians and bureaucrats have no right to interfere.

[Shawn.L]

http://www.house.gov/paul/tst/tst2008/tst050408.htm

Big Government Responsible for High Gas Prices

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.

[Shawn.L]

http://www.house.gov/paul/tst/tst2008/tst051108.htm

Big Government Responsible for Housing Bubble

The House passed two bills attempting to rehabilitate the housing and mortgage market this week. There doesn't seem to be any shortage of criticism and blame for the bad decisions, and rightly so. Lenders and banks do share much of the blame for the overheated market. Lending standards were relaxed, or even abandoned altogether, creating an exaggerated pool of homebuyers that led to ballooning home prices that many, especially real estate investors, expected to continue forever. Now that the bubble has burst, the losses are staggering.

However, many in Washington fail to realize it was government intervention that brought on the current economic malaise in the first place. The Federal Reserve’s artificially low interest rates created the loose, easy credit that ignited a voracious appetite in the banks for borrowers. People made these lending and buying decisions based on market conditions that were wildly manipulated by government. But part of sound financial management should be recognizing untenable or falsified economic conditions and adjusting risk accordingly. Many banks failed to do that and are now looking to taxpayers to pick up the pieces. This is wrong-headed and unfair, but Congress is attempting to do it anyway.

These housing bills address the crisis in exactly the wrong way, by seeking to hide the problem with more disastrous government bail-outs and interventions. One measure, HR 5830 the Federal Housing Administration (FHA) Housing Stabilization and Homeowner Retention Act would allow the FHA to guarantee as much as $300 billion worth of refinanced home loans for those facing threat of foreclosure. HR 5818 the Neighborhood Stabilization Act, would provide $15 billion in loans and grants to localities to purchase and renovate foreclosed homes with the object of then selling or renting out those homes. Thankfully, President Bush has vowed to veto both of these bills. It is neither morally right nor fiscally wise to socialize private losses in this way.

The solution is for government to stop micromanaging the economy and let the market adjust, as painful as that will be for some. We should not force taxpayers, including renters and more frugal homeowners, to switch places with the speculators and take on those same risks that bankrupted them. It is a terrible idea to spread the financial crisis any wider or deeper than it already is, and to prolong the agony years into the future. Socializing the losses now will only create more unintended consequences that will give new excuses for further government interventions in the future. This is how government grows - by claiming to correct the mistakes it earlier created, all the while constantly shaking down the taxpayer. The market needs a chance to correct itself, and Congress needs to avoid making the situation worse by pretending to ride to the rescue.

[Shawn.L]

The Economy: Another Casualty of War

This week, as the American economy continued to suffer the effects of big government, the House attempted to pass two multibillion dollar "emergency" spending bills, one for continued spending on the war in Iraq , and one increasing spending on domestic and international welfare programs. The plan was to pass these two bills and then send them to the president as one package. Even though the House failed to pass the war spending bill, opponents of the war should not be fooled into believing this vote signals a long term change in policy. At the end of the day, those favoring continued military occupation of Iraq will receive every penny they are requesting and more as long as they agree to dramatically increase domestic and international welfare spending as well.



The continued War in Iraq and the constant state of emergency has allowed Congress to use these so-called "emergency" bills as a vehicle to dramatically increase spending across the board--including spending that does not meet even the most generous definition of emergency. For example, the spending proposals currently being considered by Congress provide $210 million to the Census Bureau and $4 million for the Bureau of Alcohol, Tobacco, and Firearms. $4.6 billion is requested for the closing of military bases, but not any of the more than 700 bases overseas – but bases here at home! Another $387 million would go to various international organizations and $850 million more just in international food aid - all this when food prices are skyrocketing here and American families are having a hard time making ends meet. Because this spending will be part of "emergency" measures, it will not count against debt ceilings, or any spending limits set by Congressional budget resolutions, and does not have to be offset in any way.



Explosive growth of government is just another tragedy of this war. The "bipartisan" compromises made in Washington are at the expense of the taxpayer, not in the interest of fiscal responsibility, or peace. The taxpayer loses and government grows.



The bottom line is that our dollar is falling, the economy is in rough shape, and government spending is wildly out of control. Congress argues over relatively minor details, instead of dramatically changing our flawed foreign policy. We need to bring our troops home, not only from Iraq and Afghanistan , but from South Korea , Germany , and the other 138 countries where we have troops stationed. Our foreign policy of interventionism is not only offensive to others, inviting further terrorist attacks, but it is ruining our economy as we tax, borrow and print the money to pay the bills of our empire. The economy and ultimately the American people suffer because Washington is refusing to adopt more sensible and constitutional policies.

..........

[Shawn.L]

http://www.house.gov/paul/tst/tst2008/tst060108.htm

Sowing More Big Government with the Farm Bill

Recently Congress sent the latest Farm Bill to the president. The bill features brand new federal programs, expansion of existing subsidies, more food stamps and more foreign food aid. This bill hits the taxpayer hard, while at the same time ensuring food prices will remain elevated. The president vetoed the bill, citing concerns over its costs and subsidies for the wealthy in a time of high food prices and record farm income. Nevertheless, this over-reaching, government-expanding Farm Bill will soon be law.

The truth is most farmers simply want honest pay for honest work. However, if the government is providing competing farms with advantages, and one wants to remain a farmer, one must seek a proportional advantage from government. It is a difficult position for the farmer. Some are better at qualifying for taxpayers’ largesse than others as evidenced by the fact that more than 60% of the subsidies go to just 10% of recipients, edging out the small family farm. This entire system is unfair and demoralizing. It disproportionately benefits big agribusiness at the expense of struggling family farms.

Third world countries also lose with these continued government manipulations. Agricultural subsidies lead to overproduction, which leads to foreign food aid as a form of dumping. By “dumping” government-created agricultural surpluses, agrarian economies are artificially kept in a constant state of economic depression. The would-be third world farmer cannot compete with “free” grain, thus he and his countrymen remain perpetual beggars rather than competitive producers. Also, by keeping food prices high, we keep more of our own citizens dependent on government food stamps, instead of paying fair market prices for food.

Free trade helps farmers and consumers much more than this convoluted system of subsidies, surpluses and central planning. Newly opened markets would create increased demand for what we produce. There is absolutely no reason we trade with China , yet not with Cuba . With energy and transportation prices as high as they are, opening up trade with a country as close as Cuba just makes sense. The recent power shift from Fidel Castro to his brother Raul, and the somewhat positive steps he has taken, provides an opportunity to lift the embargo.

Removing unreasonable, confiscatory tax policies would also make good farm policy. We need to permanently repeal the estate tax, which would again take a devastating 55% cut of family farms upon death of an owner. This tax will force the sale of many family farms, and further huge corporate agriculture.

Those who believe federal farm programs benefit independent farmers, should take note that after 70 years of this type of government intervention, small farms continue to struggle while large corporate farms control an ever-increasing share of the agricultural market. Subsidies for agribusiness should be stopped and the free market should be allowed to work. With commodity and food prices on the rise, Congress had an opportunity to scale down government controls and taxpayer funding of agriculture. Instead, despite the warning sent by an 18% approval rating, Congress stubbornly opted for more of the same.

[Shawn.L]

http://www.house.gov/paul/tst/tst2008/tst060908.htm

Rising Energy Prices and the Falling Dollar

Oil prices are on the minds of many Americans as gas hits $4 a gallon, and continues to surge. How high can prices go? How can we solve these problems? What, or who, is to blame?



Part of the answer lies in understanding bubbles and monetary inflation, but especially the Federal Reserve System. The Federal Reserve is charged with controlling inflation through interest rate manipulation, however, many fail to realize that creating money, and therefore inflation, is really its only tool. When the Federal Reserve inflates the dollar as drastically as it has in the past few decades, the first users of the newly created money go in search of investments for their dollars. They must invest this money quickly and aggressively before it loses value. This causes certain sectors to expand beyond what would naturally occur in the free market. Eventually the sector overheats and the bubble bursts. Overinvestment in dotcoms eventually led to a collapse of the NASDAQ. Next we had the housing bubble, and now we are seeing the price of oil being bid up in the creation of another new bubble. Investors are now looking to commodities like oil, for stability and growth as they pull capital out of real estate. This increased demand for investment vehicles related to oil contributes to driving up the price of the actual product.



If the Fed continues with its bubble blowing policies of the past, the new commodities bubble will continue to grow, gas prices will continue to go up, as the value of your dollars go down. We will see an overinvestment in these commodities as solutions are desperately sought for a supply shortage, which is only part of the problem. Make no mistake, though, this is not the free market at work. Government manipulations have added levels of complication and unintended consequences to the marketplace.



This is not the time for members of Congress to take political potshots at each other, or to imagine that the free market is somehow to blame. This is the time to understand and fix problems. That begins with making sure the decision makers have a firm grasp on the causes of the problems and possible effects of their decisions. This is absolutely crucial if we want to get it right this time. That is why I am in the process of calling for hearings on Capitol Hill on how the falling value of the dollar affects energy prices.



Governments need to get out of the way and let the people get back to work so that we can get our economy back on stable footing. Our destructive regulatory environment, confiscatory tax policies, and managed, rather than free trade have chased many businesses overseas. The bottom line is average Americans are being seriously hurt by these flawed policies, and they are not getting good information about the true dynamics at work. The important thing now is to get the diagnosis absolutely correct so we can administer the appropriate treatment and move on to a healthier economic future. To do this it is absolutely necessary to address the subjects of central banking and fiat money.

[Shawn.L]

http://www.house.gov/paul/tst/tst2008/tst061608.htm

Iraq or the Economy?

What is the importance of the war in Iraq relative to other current issues? This is a question I am often asked, especially as Americans continue to become increasingly aware that something is very wrong with the economy. The difficulty with the way the question is often asked relates to the perception that we are somehow able to divide such issues, or to isolate the cost of war into arbitrarily defined areas such as national security or international relations. War is an all-encompassing governmental activity. The impact of war on our ability to defend ourselves from future attack, and upon America ’s standing in the world, is only a mere fraction of the total overall effect that war has on our nation and the policies of its government.

The cost of this particular war is enormous, and therefore its of great importance. There is no single issue that is more important at this particular time. The war has, of course, made us less safe as a nation and damaged our credibility with allies and hostile nations alike. Moreover, years of growing deficits have been spurred on by the high price tag of war, and the decision to pay that price primarily by supplemental spending rather than traditional “on-budget” accounting.

War takes what would otherwise be productive economic capacity and transfers both that capacity, and the wealth it would generate in normal, peaceful, times into far less economically viable activities. It also impacts budget priorities in ways that are detrimental to our nation. I have often pointed to the fact that we are building bridges in Iraq while they are collapsing in the United States .

All war, but most particularly war funded by monetary inflation, bleeds a country in multiple ways. Obviously, many of the young people who are in the military literally give their blood, and sometimes their lives, fighting in wars of this type. Meanwhile, those who do not fight the war, but fund it, are forced to pay both the immediate costs, as well as seeing their long term purchasing power erode, as the twin pillars of debt and inflation are foisted upon the backs of current taxpayers and future generations. Neither conspiracy nor coincidence explains steep increases in the price of gas as the war drags on. No, this is simply a reality of the inflationary policies that, among other things, make this war possible.

As people are continually asked to choose whether our nation’s teetering economy or the failed foreign policy of the past several decades is most important as we look forward, it is well for those of us who understand that these two issues are closely linked, to continue to explain this fact to our fellow citizens. To fix the problem requires a proper diagnosis.

[Shawn.L]

http://www.house.gov/paul/tst/tst2008/tst062308.htm

A Major Victory for Texas

I am pleased to report that last week we received notice that the Texas Department of Transportation will recommend the I-69 Project be developed using existing highway facilities instead of the proposed massive new Trans Texas Corridor/NAFTA Superhighway. According to the Texas Transportation Commissioner, consideration is no longer being given to new corridors and other proposals for a new highway footprint for this project. A major looming threat to property rights and national sovereignty is removed with this encouraging announcement.

Public outcry was cited as the main reason for this decision. I was very impressed to learn that the TxDOT received nearly 28,000 public comments on this matter, and that some 12,000 Texans attended the 47 public hearings held earlier this year. They could not ignore this tsunami of strong public opinion against the proposed plans. I was especially proud of how informed my constituents became on the subject, and how eloquently and respectfully they spoke and conducted themselves, considering how upsetting the plans were for our communities in Texas .

This is a major victory for the people of Texas , and a reminder of what we can accomplish with civic involvement. The informed and active citizen truly is a force to be reckoned with, as we have seen with the defeat of this proposal. We must keep fighting the good fight, and remain ever diligent against the encroachments of big government. We must do this if we wish to maintain our traditional standard of living in this country. As tempting as it may be to simply live our lives with no regard to government, apathy will inevitably be punished by ever more government intrusion. That is what this fight was all about. We can win if we stick together.

However, now is not the time to rest on our laurels. The bittersweet aspect of this victory is that we had to fight at all. We took time away from family and friends, doing other things, to attend these meetings, inform others, write letters, post signs and submit our complaints, and we should not have had to. Government should let us be, if we are peaceful citizens, harming no one. In a perfect world, government could be trusted to act in the best interests of the people without overwhelming pressure of this kind. This is not a perfect world. Constant pressure is needed to keep government in check, and we succeeded this time. But this will not be the last time citizen efforts and involvement will be required. We still face many unreasonable encroachments of big government today, from confiscatory, economy-strangling taxation to creeping disregard of the right of habeas corpus and other Constitutional rights, to thousands of nuisance bureaucratic regulations interfering with our every day lives. We have drifted far from what the founding fathers envisioned for this nation. Last week was just one victory towards getting back on the right path. We must continue to hold politicians’ feet to the Constitutional fire. If I had to guess, they will probably try to implement the NAFTA Superhighway again sometime in the future.

It is a never-ending battle, but it must be fought, and can be won. I am proud to stand with my constituents in this fight, and in the other fights we have ahead of us.