De-Railing Reality

The amount of money the federal government takes out of the U.S. economy in taxes will increase by more than 30 percent between 2012 and 2014, according to the Budget and Economic Outlook published yesterday by the Congressional Budget Office.

At the same time, according to CBO, the economy will remain sluggish, partly because of higher taxes.

“In particular, between 2012 and 2014, revenues in CBO’s baseline shoot up by more than 30 percent,” said CBO, “mostly because of the recent or scheduled expirations of tax provisions, such as those that lower income tax rates and limit the reach of the alternative minimum tax (AMT), and the imposition of new taxes, fees, and penalties that are scheduled to go into effect.”

The U.S. economy, CBO projects, will perform “below its potential” for another six years and unemployment will remain above 7 percent for another three.

Now that”Hope and Change” you can believe in!

California has a huge state debt and Washington has a huge national debt. But that does not discourage either Governor Jerry Brown or President Barack Obama from wanting to launch a very costly high-speed rail system.

Most of us might be a little skittish about spending money if we were teetering on the brink of bankruptcy. But the beauty of politics is that it is all other people’s money, including among those other people generations yet unborn.

The high-speed rail system proposed for California has been envisioned as a model for similar systems elsewhere in the United States. A recent story in the San Francisco Chronicle used the high-speed rail system in Spain as an analogy for California.

Spain is about the same size as California, and has a similar population density — and population density is the key to the economic viability of mass transportation, from subways to high-speed rail.

It so happens that I have ridden on Spain’s high-speed rail system. It was very nice, especially since I did not have to pay the full costs, which were subsidized by the Spanish taxpayers.

While the Spanish government has been subsidizing the passengers on its high-speed rail system, the European Union has been subsidizing the Spanish government. Someone once said that government is the illusion that we can all live off somebody else. Spain’s high-speed rail system is not even covering its operating costs, never mind the enormous costs of setting up the system in the first place. One reason is that half the seats are empty in the high-speed trains in Spain.

That is what happens when you don’t have the population density required for passengers to cover the operating costs. You would need the hordes of Genghis Khan riding the high-speed rail system to cover the additional costs of the rails and the trains.

An economics professor at the University of Barcelona says that Spain “has not recovered one single euro from the infrastructure investment.”

The most famous high-speed rail system is that in Japan, one of the most densely populated countries in the world. The “bullet train” between Tokyo and Osaka has 130 million riders a year. Tokyo alone has more than three times the population of San Francisco and Los Angeles put together.

In California, an element of farce has been added to the impending economic tragedy, if the envisioned high-speed rail system actually materializes.

The first leg of the system is planned to run between Fresno and Bakersfield. If those names don’t ring a bell with you, there is a reason. They are modest-sized communities out in the agricultural San Joaquin Valley, well removed from San Francisco or Los Angeles.

You can bet the rent money that high-speed rail traffic between Fresno and Bakersfield will never come within shouting distance of covering the operating costs. Some people have analogized putting such a rail line between these two towns to the infamous “bridge to nowhere” in Alaska.

Why are they doing it? Because they can.

If they began this project where they want it to go — between San Francisco and Los Angeles — they would run into so much opposition from the environmentalists, and from local politicians influenced by the environmentalists, that the delays could take the high-speed rail advocates beyond the time limit for using the federal subsidy money. But the green fanatics have not yet taken over politically out in the San Joaquin Valley.

The only reason for even thinking about building a high-speed rail line between Fresno and Bakersfield is just to get the project underway with federal money, making it politically more difficult to stop the larger project for a similar rail line between San Francisco and Los Angeles.

In other words, they are going to start wasting money out in the valley, so that they will be able to waste more money later on, along the coast. This may not make any sense economically, but it can make sense politically for Jerry Brown and Barack Obama.

An old song ended, “You’ve been running around in circles, getting nowhere — getting nowhere very fast.” On high-speed rail.

But since it’s all about the Politics of Me, it works for them.

And the Money and the debt, who cares.

FAST & FURIOUS

Democrats on the House Oversight Committee are officially trying to cover for Attorney General Eric Holder just before he testifies on Thursday about Operation Fast and Furious, with anti-Second Amendment Ranking Member Elijah Cummings leading the way. Last night, Cummings released a 95 page waste of paper and taxpayer money report, alleging that top Justice Department officials did not authorize the program, despite evidence showing otherwise.  The report tries to pin the blame back on a few “rogue” managers in the ATF Phoenix Field Division. This is the same argument we’ve heard since the beginning of the scandal: it was a local operation, nobody important knew anything.

A few important points:

First, Deputy Attorney General of the Criminal Division Lanny Breuer (the number two man in DOJ), approved wiretaps for Operation Fast and Furious. Wiretap applications require excruciating detail about a case to be presented before approval. Wiretaps are considered the most intrusive tool law enforcement can use. Breuer, who read through the wiretap applications, knew details of the strategy used in Fast and Furious, letting guns walk into Mexico without alerting Mexican authorities, yet he approved it anyway. New emails released last Friday in a late night document dump, show Attorney General Eric Holder was briefed about Brian Terry’s death just hours after he was murdered in the early morning hours on December 15, 2010. Later in the day, Holder’s deputy chief of staff at the time Monty Wilkinson, was told directly by former Arizona U.S. Attorney Dennis Burke that the guns found at the murder scene were part of Operation Fast and Furious. According to the report, Wilkinson doesn’t “recall” that email, despite replying to it with, “Call you tomorrow.” Burke, who resigned from his position as U.S. Attorney in August, was in “complete agreement” with former ATF Special Agent in Charge of the Phoenix Division Bill Newell about Fast and Furious tactics according to a January 8, 2010 briefing memo.

If Wilkinson’s “I don’t recall,” argument sounds familiar, there’s a reason why. On May 3, 2011, Attorney General Eric Holder testifed before the House Judicary Committee that he had only known about Fast and Furious, “for a couple of weeks.” Five months later, memos addressed directly to Holder surfaced, with details and discussion about the program. In defense, Holder said he didn’t read the memos and that his staff didn’t inform him of their content.

Second, the report claims Fast and Furious was not used as a way for the Obama administration to push through back door gun control measures.

“The report debunks many unsubstantiated conspiracy theories. Contrary to repeated claims by some, the Committee has obtained no evidence that Operation Fast and Furious was a politically-motivated operation conceived and directed by high-level Obama Administration political appointees at the Department of Justice,” Cummings wrote in the report.

But whenever catch a Liberal with his hands in cookie jar, just remember ” Nothing to see here…move on…” 🙂

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