Thursday, September 30, 2010

1099 reasons to hate Obamacare

From the 04 October 2010 Greater Niagara Newspapers

By Bob Confer

When Congress and the Obama Administration unleashed health care reform earlier this year they knew they were looking at substantial budget shortfalls over the long haul, so they developed a series of revenue-generation projects.

Among them is a new law that, once it goes into effect in 2012, will demand that businesses file 1099 forms for every company from which they purchase more than $600 in goods and services in a given year. The Administration believes that tax cheats are everywhere and this new law will help the IRS to collect over $17 billion in new revenues during its first 10 years.

$17 billion is a stretch to say the least. The actual number is no doubt just a fraction of that wild guesstimate and the cost of compliance to the economy will far outweigh the taxes that could supposedly be collected.

That’s because businesses – both small and large – will have to devote an incredible amount of time and money to the new standard. It doesn’t take much to spend $600 in one shot with another company. But, then, when one adds up the multitude of smaller transactions that occur over the course of 12 months they’ll find that most vendors they work with fall under the 1099 umbrella. So, for each and every one of their vendors, business will have to compile and track data, fill out forms, send them to vendors at the close of the fiscal year, collect those forms and then send the 1099s to the IRS.

Those tasks can add up in a hurry. In total it will take at least 25 minutes of a worker’s time on a per-vendor basis. Most small businesses have a supplier base that numbers in the tens if not hundreds while larger corporations will have thousands of partners to account for. Using Confer Plastics as an example, we had 360 vendors in 2009 that met the $600 minimum. Based on the 25-minute factor, it will take 9,000 minutes – or 150 hours – to satisfy the new recordkeeping standards. Therefore, someone in our office will have to waste nearly 4 weeks of her time on Obamacare’s new chore each and every year which prevents her from doing something that’s actually productive and would be a wise investment of her time and the company’s money.

Looking at the economy as a whole, there are 26 million businesses - some larger, some smaller than mine - that have to invest in similar efforts. The US Chamber of Commerce and the National Federation of Independent Businesses have both come out in full force against the 1099 rule and they say the cost to businesses will be the tune of billions of dollars per year.

Their numbers don’t tell the whole story, though. There will be another cost to businesses and individuals alike in the form of taxes needed by Washington to fund the bureaucracy created at the IRS by the new standard. Many new IRS clerks will be needed to collect, collate, analyze and act on the millions of 1099 forms set to come their way. How many new agents will it take? 5,000? 10,000? The new wages, benefits, equipment and facilities won’t come cheaply.

A few weeks ago Congress attempted to take care of the situation by holding a vote on one amendment that would have repealed the requirement and another that would have exempted businesses with less than 25 employees. Neither garnered the 60 votes necessary to advance, so the 1099 rule still stands and will continue to haunt businesses until it is resolved – if it ever is.

Even if you’re not a businessperson you should be concerned. Foolish regulations like these only serve to drive up the cost of doing business. Such costs can only be recouped with higher selling prices which in turn mean you’re paying more at the department store or repair shop.

Aren’t you paying enough as it is for government-run health care?

Saturday, September 25, 2010

Poverty created by and for Big Government

From the 20 September 2010 The New American at:

By Bob Confer

The Census Bureau recently shook up the nation with its report that the poverty rate for 2009 had increased dramatically over that of the previous year. The federal government considers one to be impoverished if one’s income is $10,830 or less, or $22,050 for a family of four.

The number of Americans within those categories grew in 2009 by nearly a full percentage point to 14.2 percent, or 43.6 million people — a 3.8 million increase over 2008. The poverty rate now stands at its highest level since 1994, while the actual number of those living in poverty is the greatest in 51 years.

To put that in perspective, the poverty crisis suffered by America 51 years ago is exactly what inspired Lyndon B. Johnson to initiate the War on Poverty in his first State of the Union address in 1964. Among the federal programs created to combat this socio-economic problem were the Job Corps and the Social Security Act of 1965, the latter of which introduced the father of all entitlement programs: Medicare/Medicaid.

Since then, these agencies have become an indelible part of American life, used by the poor and, especially in the case of Medicare, the not-so-poor. But despite their abundant patronage, these massive, unconstitutional programs have neither eliminated poverty nor become even remotely efficient or affordable.

Every year, the Job Corps provides 60,000 young Americans, ages 16-24, with vocational, on-the-job and life training to prepare them for the workplace. The cost to taxpayers is approximately $1.5 billion per year, or $25,000 per participant. Such a price tag is excessive, rivaling the cost of either a community college vocational-training education or the wages for a participant’s first year in the economic sector. Not surprisingly, as with most federal programs, the Job Corps is redundant, as the specific learning experiences it offers are already available in public schools (also funded by taxes), the private sector (which typically assumes responsibility for on-the-job training), and the home (where it is the parents’ role to nourish the child’s physical/emotional/spiritual/intellectual development). That said, the Job Corps also strips the economy of $1.5 billion of productive money on an annual basis.

Of course, the impact of the Job Corps pales in comparison to that of Medicare and Medicaid, the inherent fiscal weaknesses of both of which have been well documented.

Medicare, which provides health “insurance” to 45 million Americans 65 and over, is funded through a payroll tax of 2.9 percent split between the employee and the employer. Despite stripping the economy of more than 3 percent of its value annually, the program is still unable to adequately fund itself: Since 2008 the Medicare trust fund has been paying out more than it brings in. Like any Ponzi scheme, this unsustainable economic model is destined to come crashing down. Medicare has unfunded obligations of $37.8 trillion — roughly 2.5 times the size of the U.S. economy — a great deal of which is coming due soon. As the massive Baby Boomer population ages, they will put incredible pressure upon the system, ultimately bankrupting Medicare. Most economists, as well as the Medicare trustees, believe the fund will be in the red by 2017. Upon its collapse, what will the federal government do? It has done nothing yet to prepare for Doomsday, though it may be only seven years away. So a financial crisis — and tax tsunami — are looming for American taxpayers and Medicare beneficiaries, as well as those who must be paid to provide for their care.

Medicaid, another onerous drain on the economy, provides medical and health-related services and funding to the poor. Even though it’s a federal edict, it uses a combination of federal/state/local funding and state management of Medicaid recipients. In 2007, there were an average 49.1 million Americans receiving Medicaid. The federal outlay that year was $190.6 billion, while the states pumped in another $142.6 billion for a total of $333.2 billion. That number is expected to reach $673.7 billion by 2017, the very same year Medicare comes to a crossroad. It should be noted that the program is notoriously abused, with some states such as New York providing recipients with products and services that those on private health insurance would never receive without considerable out-of-pocket expense. In the Empire State the cost to local/state/federal taxpayers is a staggering $16,000 per Medicaid recipient. Outlandish, to say the least.

These incredible burdens placed on productive sectors of the economy make it painfully obvious to the reasonable mind that the Job Corps, Medicare, and Medicaid have created poverty rather than alleviated it. In its effort to combat the very poverty it had created through taxation and regulation of a productive private sector, the federal government — through Medicare and Medicaid — managed to create even more poverty by adding to the cost of doing business (which inhibits job growth, stunts wages, and sends jobs overseas) and living (which prevents people from spendng as much as they could in the free market, which would then encourage economic development and squash poverty). Whenever monies — hundreds of billions annually for Johnson’s long-running War on Poverty — are forcibly removed from the private sector, then the private sector is unable to use that money to make products, provide services, employ people, and increase the standard of living. Thus, the average worker, because of diminished employment opportunities, is impoverished by the invisible hand of the government. That individual then relies on government subsidies, further stressing the system of dependence unleashed by our rulers, which will then again take away even more jobs and opportunity further down the road. Truly a vicious cycle.

Yet most Americans, not understanding this mechanism, submit to big government’s supposedly well-intentioned programs. The government is then empowered to strengthen its paternalistic ways, introducing more policies and therefore, more control.

In light of the horrific news that poverty in the United States is spiraling out of control, it wouldn’t be surprising if the Obama administration introduced a new War on Poverty with more entitlements in the coming years (or months), further providing for the needs of lower-income Americans with an expansion of the health, food, cellphone, housing and home-heating benefits already being provided, taking the very same from everyone else.

These are dangerous waters the government is leading us into. And if that government is left unchecked, we will drown in a sea of debt and lost liberty, as it washes away everything that America once was and could be again.

Thursday, September 23, 2010

The Bank of Eminent Domain

From the 27 September 2010 Greater Niagara Newspapers

By Bob Confer

Eminent domain is a power of the government that is tacitly recognized in the Fifth Amendment of the US Constitution which reads, “…nor shall private property be taken for public use without just compensation.” Over the course of our nation’s history that ability to force the sale of land for common good has been abused. It’s not uncommon to hear horror stories of municipalities basically stealing homes for corporate, not public, benefit, and the federal government taking away precious ranchland and transforming it into an idled preserve.

Sometimes, the only thing that prevents the government from further abusing this power is money. If it doesn’t have it the supposed fair trade for land cannot take place. Congress, though, is trying to change that by creating a perpetually well-funded Land and Water Conservation Fund (LWCF).

The LWCF was created in 1964 and is the primary source of funding for federal land acquisition for the purpose of conservation and/or recreation. It also provides grants to state and local governments for the same. Using a variety of funding methods (taxes on fuels, for example) its annual authorization has been set at $900 million since 1977. But, that cap has been met only twice during the program’s history because it’s not a true trust fund in the sense that the $900 million in taxes collected do not have to be given to LWCF. The funds are typically diverted by Congress for other purposes. Over the past decade LWCF has received an average of $313 million per year.

Congress is looking is looking to overcome that budgetary obstacle with, of course, new means of taxation. In July the House of Representatives passed HR.3534, the CLEAR Act (an acronym for the Consolidated Land, Energy and Aquatic Resources Act), which was in response to the British Petroleum oil leak and places all sorts of new taxes on onshore and offshore drilling alike, forces federal takeover of states’ waters, and creates new regulatory functions. Among the new revenue streams is a $2 per barrel surcharge on oil drilling that will be used to, as the Act demands, fully-fund LWCF every single year. That means the government will have nearly-limitless reserves to buy up land that it sees as being necessary to the betterment of the environment or the advancement of outdoor pursuits.

It should be noted, though, that government is already the primary stakeholder of land in our country. The federal government owns in excess of 700 million acres while state and local governments own another 197 million acres, equating in total to about 40 percent of the nation’s landmass.

Despite such earthly possessions, the government wants more. That’s because the control of the masses is most-easily attained through public ownership of property. Think about your frustrations as a homeowner whose property rights have been tempered with onerous building codes and property taxes. Now, imagine that heartache and stress magnified a thousandfold by being a one-time property owner who was forced out of possession of land through eminent domain. Just ask anyone who has lost land in such a manner to the government; the monetary “rewards” of the mandatory sale (which are often below market value) never make you whole.

With the green movement as mainstream as it is and a good percentage of the population willing to abandon human progress for the perceived benefit of Mother Nature, environmental concerns, rather than the ages-old reasons for eminent domain (like roads, municipal complexes, urban renewal), will dominate the reasoning for federal and state land grabs. That said, rural landowners will now be in the crosshairs as it is they who have the lands and habitats (forests, grasslands, waterways) that are so prized by the environmentalists. This will have a major impact on economic activities like logging, farming, and ranching, just as it will on folks who want to enjoy personal liberty on their own lands.

There is still some time, though, to stop LWCF from growing out of control. The Senate has yet to take up their version of the CLEAR Act which is S.3663, the Clean Energy and Oil Company Accountability Act of 2010. Make an effort to write your Senator and ask that he or she vote against the Act entirely or at least push for the dismissal of the LWCF component. If not, you’re putting your land rights and those of the productive sectors of our economy at risk.

Thursday, September 16, 2010

Reagan was not a Conservative

From the 20 September 2010 Greater Niagara Newspapers

By Bob Confer

Ronald Reagan is widely regarded as one of the best of the American Presidents. To many, he was a great communicator who made Americans appreciate the American Way, motivating them to aspire for a better self and a better country. His fans say that his economic policies eliminated obstacles to business and investing that helped to spur private sector growth. Republican talking heads (like Sean Hannity and Rush Limbaugh) put him on a pedestal and not a day goes by that they don’t paint him as the pinnacle of Conservatism, someone whose policies and philosophies hearken to our nation’s founding principles and are much needed in today’s world.

Despite all of his perceived positives, Reagan was far from the perfect President. As a matter of fact, he was a proponent of very large government. His policies were dangerous and you might even say that some of them are actually being used today.

Barack Obama has been highly criticized by Republicans for the growth of federal spending under his watch. In times much more trying than those faced in 1980s, the Obama Administration’s spending as a portion of Gross Domestic Product (GDP) has been much like Reagan’s. According to the Congressional Budget Office (CBO), government spending averaged 22.4 percent of GDP during Reagan’s 2 terms. Based on estimations of federal spending during the final years of his first, maybe only, term, the CBO figures that Obama’s fiscal legacy will average 24.6 percent of GDP, not too far off from what Reagan accomplished. It should be noted that Reagan’s 22.4 percent stands as the all-time record amongst US Presidents. If the CBO’s calculations hold true, Obama will break that record but the fact that the Conservative torchbearer holds the record now (and he didn’t have wars like other presidents to blame it on) really puts everything into perspective.

In a related topic, Obama’s ability to “create jobs” (an outcome of government expansion/contraction) is never considered as being at par with Reagan’s. Yet, it is eerily similar. During the first year and a half of his presidency, Reagan saw the unemployment rate increase from 7.5 to 9.8 percent. When Obama came into office, unemployment stood at 7.2 percent and 18 months later it was at 9.5 percent. Reagan’s growth for that period was 2.3 percentage points. Obama’s? 2.3 points, too.

The Reagan myth also has the man pegged as the greatest tax cutting president ever. Yes, in 1981 he forced through Congress some major tax cuts but, in other years of his presidency (specifically ’83 through ‘87) he introduced a multitude of tax increases and new taxes that pulled in revenues from other bases. Historians look at 1982 and 1984 as featuring the highest tax increases in peacetime America. While in power, he also increased funding for America’s two behemoth entitlement programs: Social Security grew by 50 percent from 1981 to 1987 while Medicare grew by a startling 84 percent over that same period.

If you step back and look past the rhetoric and hero worship that surrounds the Republican Insiders’ Reagan myth, you’ll realize that he was anything but a Conservative (based upon the most factual definition of the political belief) and - like most people who count themselves as Conservatives nowadays - he is more appropriately identified as a Neoconservative, someone who, like George W. Bush, is socially conservative yet quite liberal in the application of government powers and military might. His approach to governance was, quite frankly, no different than Obama’s. So, if you count yourself as a true Conservative and a believer in small government and free markets, it’s high time you found yourself a new hero.

Friday, September 10, 2010

New York's pension crisis

From the 13 September 2010 Greater Niagara Newspapers

By Bob Confer

If you work or have worked in the private sector you know retirement income, even retiring itself, is not a sure thing. As a result of the recession many retirees have seen their pensions slashed considerably (or, in some cases, eliminated altogether) or their 401(k) accounts downsized by 25 to 35 percent. Baby Boomers who are still working have felt those same pains and many have suspended their plans to retire by 5 to 10 years, maybe more, sadly realizing they’ll have to work well into their 70s due to the economic uncertainty of what was to be their Golden Years.

In stark contrast to that harsh reality is an alternate universe known as New York. Here, in the Empire State, decades of injudicious political rule have granted government workers special privilege, a retirement that is guaranteed, no matter the economic conditions. Unlike retirees from the private sector, they receive a set post-labor income. They can actually retire and comfortably – some of them extravagantly - enjoy the twilight of their lives.

In order to ensure that happens, others have to assume their risk, namely the taxpayers. In trying financial times like these when the return on the stock market just isn’t there, thus yielding lower returns for the state’s pension fund, our assumption of risk becomes even greater.

State Comptroller Thomas DiNapoli delivered such a sobering message recently when he told New Yorkers that the pension cost for state and local governments will escalate by 37 percent in 2012. That’s because municipalities will be forced to contribute to the state pension fund a value equal to 16.3 percent of total salary. Mind you, that 37 percent increase is based on a 2011 versus 2012 comparison. Earlier this year the input rate was “only” 7.4 percent of payroll (it’s set to be 11.9 percent in early 2011), meaning that come 2012 taxpayers at the local level will dedicate more than twice what they had been for pensions just 7 months ago.

Considering that labor is the number one expense for municipalities, DiNapoli’s new requirement will pose a significant budgetary hurdle for towns and cities across the state. Early calculations from DiNapoli’s office say that, in total, municipalities will be on the hook for $3.5 billion in pension funds for 2011 alone. That works out to be $200 from every man, woman and child living in New York.

Budget-conscious mayors and supervisors and tax-stung taxpayers thought 2010 was bad, but it will be a walk in the park compared to the coming years. Rochester officials believe pension mandates will bankrupt the city by 2015. Many other governing bodies speak the same (although behind closed doors) for they see that the economy is not set to grow quickly anytime soon and the federal government has overextended itself to the point that it will be unable to provide emergency funding to the states (it was the only thing that kept many afloat). That means there are some truly creative and gut-wrenching choices to be made. Services will have to be cut and public workers will have to be let go, or so goes the logic. But, we aren’t talking about logical, reasonable people here. This is New York State, where logic is cast aside and things like gigantic guaranteed pensions are considered good government.

That said, it’s certain that cuts will be minimal and property owners will see disgustingly larger tax bills in 2011 and 2012 and possibly well beyond the decade’s half-way point if the economy continues to move along at a snail’s pace or falls into a double-dip recession. Considering that New York’s property taxes are already among the highest in the nation and in part responsible for our state’s long-running economic malaise and the mass exodus of residents from our borders, it’s frightening to think of what might be.

Friday, September 3, 2010

Learning about our Constitution

From the 06 September 2010 Greater Niagara Newspapers

By Bob Confer

In a recent column for the Greater Niagara Newspapers in which he addressed Constitutional amendments that he’d like to do away with, Scott Leffler began a paragraph with this thought: “For those of you without a pocket Constitution (in other words, everyone but Bob Confer)…”

Being that Scott can sometimes be a kidder, most readers probably thought he was joking at my expense.

Actually, he wasn’t.

I really do have a pocket Constitution on me at all times. It’s been a habit of mine for years. That may seem somewhat over the top in regard to patriotism and perhaps a little nerdy, but the Constitution is my Bible. That simple yet powerful document is the guiding light to what is the greatest experiment in self-government - and, from that, the greatest society - that Mankind has ever known and will ever know, the United States of America. I strongly believe it’s our founding principles that made our nation great by allowing and inspiring Americans to be the very best that we can be. America is unique in that our natural rights were officially recognized and deemed inalienable by the Constitution, allowing liberty, self-rule and free markets to flourish.

Over the course of our history, though, the Constitution has seen some rough spots. Presidencies such as Lincoln’s, FDR’s, the younger Bush’s, and Obama’s have trampled over our nation’s legal and philosophical foundation with zeal. Sometimes we need a reminder that the morality and virtuous free environment recognized and provided for by the Constitution is what’s best for whatever ails us. Can it put an end to what seem like never-ending wars? Yes. Can it heal our sickened economy? Yes. Can it kill the numerous and creative ways being used to invade our privacy? Yes. The Constitution can be - or will lead us to - the answers for all of today’s problems.

Most people have forgotten that. To them the Constitution has become an afterthought, maybe even an antiquity or novelty. Some even forget that it exists.

Enter “Constitution and Citizenship Day”.

Introduced as an amendment to an appropriations bill in 2004, Public Law 108-447 requires that any public school that receives federal funding educate its students on the Constitution on September 17 of every year in observance of its signing in 1787. It’s interesting to note that the law was penned by none other than the since-deceased Democratic Senator Robert Byrd who was never really known to be a Constitution enthusiast and it should also be noted that the Constitution in proper practice should prohibit the federal government from funding and dictating to public schools. But, nonetheless, it is the law and even without its edict it’s good citizenship to revisit and be reeducated about the document on its birthday. It’s a day just as important to America as July 4.

On the evening of September 17 make it a point to ask your children or grandchildren if they received an education about the Constitution over the course of the school day. It’s not necessarily guaranteed that they will. An obscure law like this can be easily overlooked and, as history shows, even if it were followed our schools aren’t necessarily the best for civics (some teachers are more versed in and focused on other subjects while others are overburdened teaching to meaningless standardized tests).

Plus, although many modern parents may not agree, it’s your responsibility to educate your kids as much it is the school’s; education shouldn’t end when the school bell rings. Take the time to discuss the Constitution with them. It doesn’t have to be a dry subject. The Boy Scouts and Girl Scouts have shown that teaching about government can be exciting and character-building. Start young and they’ll better understand their duties as citizens and, as they age, what their government can and cannot do to and for them.

If your understanding of the Constitution is a little limited itself take the time to make it a shared learning experience with your family. There is plenty of great material on the web and among the very best is the John Birch Society’s “Overview of America” video which can be watched in its entirety on YouTube. You’ll come away enlightened.

Regardless of your knowledge, it’s imperative that you take the time to reacquaint yourself and your children with the Constitution. If more people did, it’s guaranteed that America would be in a better place than it is now during these trying times. Sometimes, the old fashioned ways are the best ways…our Founding Fathers were really onto something.