Discussion of the campaign's most important issues

Economy

The current financial trauma and financial bailout signal a serious flaw in the Republican deregulation of financial institutions. Congressman Duncan voted against the bailout bill both times but he should have exercised leadership in helping pass the original bill - which needed 12 representatives to switch their votes. Since the original bill failed to pass, the revised bill contained ONE HUNDRED BILLION dollars in inducements to essentially bribe the representatives to pass it. The next congress will have to reexamine the financial regulations.

A major problem with the U.S. economy is the loss of manufacturing jobs. A lot of jobs are going overseas to manufacturers who do not have to meet U.S. standards for wages, safety, environmental cleanup, unemployment insurance, workman’s compensation, medicare and social security.

I propose to impose a tariff on imported manufactured goods if the manufacturer has not met U.S. standards for minimum wage, safety, environmental cleanup, unemployment insurance, workman’s compensation, medicare and social security. Our industries should not have to face unfair competition in the U.S. markets.

I think it is important to encourage manufacturing in the U.S., so I propose that corporate taxes on manufacturing operations be discontinued. Profits from manufacturing should be subject to income tax when they are distributed to owners or stockholders. I remember, when I worked in the chemical industry, making economic evaluations of manufacturing projects and noting how the taxes caused many projects to be rejected. Removing taxes would be- in effect- a subsidy for our industries that would help them compete in world markets.

Corporate executives are routinely being over compensated and the performance of the companies is being affected adversely. I propose that publicly held companies must get stockholder’s specific approval for the salaries of the top ten officers each year.

Labor unions have been losing ground for several years. One reason is the loss or dislocation of manufacturing jobs but a poor climate for union recruitment is probably an important factor. Most people don’t understand or appreciate the contribution labor unions have made to our standard of living and to our freedoms but they have been crucial and many of the gains were bought in blood.

I was always a part of management when I worked in industry but I saw how effective it was whenever the workers were given a strong voice. I once made a comment about his difficulties in dealing with the strong union in his plant to the personnel man in a large company and he said “we consider our strong union to be a valuable asset.” I thought to myself he was trying to put a good face on a bad situation and then I read of a study that showed companies with a strong union were more successful than companies that didn’t have a strong union. Remarkably, some enlightened managers understand that and take advantage of it. Many managers, however, prefer to not share the decision making process with the workers and prefer to fight. The years of administrations hostile to unions and hostile or indifferent congressional actions toward unions need to be reversed.

Pensions for many workers have been reduced by unscrupulous employers and an overhaul of federal regulations is needed to ensure that employees are treated fairly- even when their company is bought by another company.

The gold standard

John Duncan Jr., our current U.S. Representative, in his 2006 newsletter proposed that our country return to the gold standard and eliminate the Federal Reserve system. There isn’t enough gold in the world to back our money with the balance of payments our country has now. The Chinese would own every scrap of gold we could put in Fort Knox. Many Republicans think of money as something tangible when money is only what people agree to value to make trade easier. Gold is valuable only because people agree to consider it valuable. The Indians of Alaska knew gold was in the creeks but they considered it useless- except that it could be used to make bullets. Money today is numbers in financial institution computers- if you don’t agree, then think about what you have in liquid assets and what form they are in. Our society has almost advanced to the point that most of the worlds financial problems could be solved just by changing the numbers in bank computers around the world.

The Federal Reserve System

The Federal Reserve Bank is manipulated to try to control the economy and it’s primary tool is the interest rate it charges banks to borrow money. Since it creates it’s own money, it never runs out. In the runup to the the last high and low in economic activity the Federal Reserve board kept increasing the interest rate on money and then the economy took a nosedive and the Federal Reserve board cut interest rates to ridiculously low rates. Control of processes is one of my professional interests (my master's thesis was concerned with process control) and I can see the problem the Federal Reserve board has. The economy is not a stable system- if it moves in a direction it tends to accelerate in the same direction. (You can understand this if you think of driving your car. If you drive forward it is easy to control but if you back up it is difficult to control. When you are backing up if it starts one way it will turn that way more unless you turn the steering wheel and you have to be moving the steering wheel constantly- the economy acts like a car backing up.) The Federal Reserve board tries to control the economy by making small incremental changes but such a process needs to be controlled by frequent larger changes. Other tools for controlling the economy are needed and I have wondered if the president might be induced to give a weekly report on the economy and ask people to spend more in a certain area or ask them to restrain in some area. If the response was significant it might add to the limited tools we have for controlling the economy.

The Federal Reserve system is doing a fair job and it is certainly better than anything else devised- it shouldn’t need to be defended from our U.S. Representative, John Duncan Jr.


Environment and energy

There is uncertainty regarding how quickly and in what exact way the climate is changing and will change.
The one undeniable fact is this:
The percentage of carbon dioxide in the air is increasing steadily year after year due to human activity and the increased carbon dioxide WILL have an effect on the climate.

I propose funding development of a computer model for the earth’s weather and climate that will allow well informed decisions regarding the effects of burning fossil fuels and other processes that may affect the climate and allow evaluation of remedial measures that will be effective and in conjunction, I propose funding a massive weather collecting system worldwide to gather sufficient data so we can really understand and accurately predict the weather and climate.

I propose a research and development project along with subsidized manufacturing for solar cells for home roofs. The goal would be to develop a reasonably efficient, inexpensive solar cell that could be installed by ordinary roofers. The solar cells would need to be connected to a transducer that would allow them to put energy into the power grid. Once a market is developed private enterprise will drive the costs down.

The practice of coal mining by the cheapest method is destructive of the long term beauty of our environment and coal (and other natural resources) extraction needs to be done to preserve natural beauty and water quality. In evaluating economics of coal mining, logging or other extraction or development that may change the environment it must be recognized that scenic beauty and clear water are very valuable to our region as tourist attractions. The rights of private property owners do not extend to doing damage to their property that is against legitimate public interest - and I would try to prohibit the “mountain top removal” method of mining !

Gasoline prices
The current high gasoline prices have resulted in shrill voices calling for immediate remedies. There is a lot of finger pointing. The congress is holding hearings to find the cause of high gasoline prices. My viewpoint is unique. I formerly worked for Shell Chemical Company- a subsidiary of Shell Oil Company. While I never worked for Shell Oil, I occasionally ate lunch with people from Shell Oil when I worked in Rockefeller Center and I learned that they had no clue regarding gasoline marketing. During the time that tetraethyl lead was being phased out one of them told me solemly that there could never be pumps for three grades at gasoline stations and it is very apparent that he didn’t know what he was talking about. Regarding pricing, we were told that if we were ever someplace and someone started talking about commodity prices that we were to leave the room. Shell upper management had no intention of being jailed for price fixing and I am sure that continues today. On the other hand Shell would sell products for whatever they could get for them. I heard of a time when someone accidentally switched invoices to two companies. One company immediately complained when they discovered that Shell had negotiated a better rate with the other company. The price of oil, gas and refined products is determined by what people will pay and what the competitors will sell for- one company cannot raise a price and hold to it if the competition maintains a lower price. When considering crude oil prices it is important to realize that a cartel is involved. As an example of what a cartel can do, I worked on a synthetic version of natural rubber that Shell could sell profitably for about 40 cents a pound at a time that natural rubber was selling for about 60 cents a pound. The Shell marketing people thought the natural rubber cartel would let them get about forty percent of the market before they would lower their price. They were wrong- the natural rubber cartel met the forty cent price and since natural rubber was a little better than our synthetic rubber the natural rubber cartel drove the synthetic rubber out of business and I am sure they then raised their price back to sixty cents a pound.

In the oil business fluctuations in the price of crude oil have had dramatic effects on the oil drilling and production industries. In 1981 crude oil was selling for about $60 per barrel. At that price many oil wells would be ecconomical and the activity in domestic oil well drilling was intense. Then over a period of 4 years the price dropped to below $20 per barrel and the newly dug wells in the United States were not ecconomical and the United States domestic oil drilling and production industry crashed. With a price of crude oil well over $100 per barrel there are many sources for oil that could be tapped ecconomically but what happens to the oil drillers and producers if the price collapses again- even if just for a few years? Realize- the oil industry is dominated by a cartel and some of the cartel members have very low production costs. Remember when the well fields in Kuwait were burning after the first gulf war? Those were all gushers. Think about the oil wells in Texas and Louisiana - they have to use pumps. It is impossible to compete with someone who has a very low operating cost if they want to cut the price.

Crude oil and refined products can be moved around the world at a low price (2 or 3 cents per gallon?) and the shortages and surpluses in various areas can be easily balanced. There is a shortage of gasoline refining capacity in the United States but it is unlikely that refinery capacity will be increased when there is a surplus of refining capacity in Europe and the gasoline usage in the United States will probably decrease as automobiles become more fuel efficient.

Drilling for oil in wilderness areas and wildlife refuges and strategic reserves is not a long term solution to the U.S. gasoline supply manipulations and price fluctuations. There is oil in the ground in developed fields in the lower 48 states but it is more expensive to extract than oil that comes from big gushers in the middle east. If we want increased domestic oil production the federal government needs to protect the oil production and the oil drilling industry from predatory price competition by setting a minimum price for oil imported into the United States.

When looking for the reason for high crude oil prices it may be useful to think about the last time high energy prices victimized a large number of people. The Enron Company managed to withhold electrical power in California and they sold electricity at exhorbitant prices. They got away with robbing the Californians for months until George Bush reluctantly imposed price controls and the problem disappeared immediately. It is worth considering that the United States imposed price controls on crude oil when it rose to about $60 per barrel and the price of crude oil came down in a relatively short time.

A move to more fuel efficient cars and trucks will reduce the need for oil imports to a level where the U.S. could see a buyers market rather than the current sellers market. We (Bob and Julia Scott) purchased a Honda Civic Hybrid in 2003 and it gets better than 40 miles per gallon of gasoline. We purchased a Mercury Mariner hybrid in 2007. As a U.S. Representative I would propose legislation to compel automobile manufacturers to have fleet averages of 40 miles per gallon in a short but attainable length of time.

Arctic National Wildlife Refuge

Drilling for oil in wilderness areas and wildlife refuges and strategic reserves may enrich the people who produce and sell the oil if the oil can be sold at a high price but it is unlikely that it will influence world prices. It is likely that much of the Alaskan oil will be shipped to the Orient because of reduced demand on the Pacific coast. Alaskan oil may incrementally improve our balance of payments but it will not solve anything (it will delight the residents of Alaska since they will continue to pay no state income or sales tax). If the price of crude oil drops to $20 per barrel again- even for a year or two- the oil wells in Alaska will be shut down and abandoned unless the government steps in and subsidizes them. If oil drilling is subsidized then there are plenty of places in the lower states for oil drilling.

Regarding the assertion by Representative Duncan that the Arctic National Wildlife Refuge is a "moonscape", that is an assertion based on superficial analysis and it is not supported by the reports. I remember seeing the bare shores on the banks of the Bay of Fundy in Canada and thinking they must be devoid of life. I was amazed to discover they are very productive and important biological areas. The environmental costs of drilling for oil in the Arctic National Wildlife Refuge would be very significant - like strip mining in the Smoky Mountain National Park. Strip mining in the Smoky Mountain National Park could be done in an emergency but we East Tennesseans would be able to understand the cost.

In my opinion our country in not in dire straits enough to drain the last drop of oil from the earth in every environmemtally sensitive area we have- especially when it will not solve our problems.

Offshore oil drilling

Offshore oil drilling is expensive and dangerous but if it is ecconomical and wanted by a coastal state, I have no objection. However,I remember visiting Santa Barbara, California and walking on the beach. The beach was spotted with black tar lumps -about half an inch in dimension- which had come from an oil spill. Santa Barbara is a tourist town and it was agonizing to see what the oil spill had done to the attractiveness of the beach. The people of the coastal states should continue to have the ability to protect their shores and evaluate whether tourism or oil production is more important.

Nuclear energy

The future energy requirements may result in nuclear power becoming economical and I propose research and development into the use of thorium for atomic power, development of a nuclear power reactor that will be stable and safe and further development of spent nuclear fuel reprocessing. I have spent many years in chemical plants- often handling very dangerous materials- and I have seen both very good and very bad manufacturing practices. I was appalled by the control systems installed in the first nuclear plant I visited- the controls were primitive compared to what we used in the chemical industry. I know that even the best designed plants can be dangerous if operated by management that does not put safety as the first priority and safety as the second priority. I would insist that the nuclear industry operate safely. Many changes in the operating procedures for nuclear power plants were made after the Three Mile Island nuclear plant accident and nuclear power plants are operated very safely at the present time.

I have also been appalled by the imposition of changes in nuclear plant design during construction. When you are building a plant you build it as designed and modify it after it is built (it should be designed so it can be modified easily, if necessary). Modifications during construction run up the cost of construction astronomically and most of the excessive costs of the nuclear plants built in the past were due to (well intentioned) changes during construction.

Education

As a professor in a college I saw many students who wanted and needed an education. During the Reagan presidency the money for student assistance was cut and from that time until today most of the engineering technology students worked to support themselves, and often a family, while trying to graduate. I would propose more resources to support college students.

Taxation

The graduated income tax primarily does two things. It results in the collection of a large portion of the money spent by the federal government and it tends to redistribute wealth. The mark of a civilized country is its ability to collect taxes from its wealthier citizens. The State of Tennessee is an example of a government that increases taxes on the poor (increased sales tax and the well advertised lottery). Increasing taxes on the wealthy requires political courage since the wealthy will spend money to elect officials who will reduce their taxes. President George H.W. Bush increased taxes in a politically courageous move that contributed to his defeat by Bill Clinton. Conversely, President George W. Bush has pandered to the wealthy by cutting their taxes and was rewarded with large contributions to his reelection campaign.

The current huge federal deficits are totally unnecessary and are due to the Bush administrations irrational desire to cut taxes just to cut taxes. The current tax rate in the highest tax bracket is 35 percent and the economy is dragging. The comparable rate during the Clinton administration was 39.6 percent and the economy was booming so it seems the tax rate has little to do with how the economy does.

I favor adding a 50 percent tax rate bracket for over $750,000 (this is something that has to be carefully thought out). This (or some similar tax increase) will make the income tax a more progressive tax and go a long way toward eliminating the budget deficit.

I favor modifying the alternative minimum tax. It should be calculated at 28 percent of income with a deduction of $200,000 to simplify it and minimize the number of people affected by it. All of the taxes that have a fixed dollar amount associated with them should be revised yearly so inflation does not change their original intent.

Even with a tax increase in the higher income level, the United States citizens will be taxed at a lower rate than most Europeans. In general, countries with high standards of living have high tax rates and it is not an accident.

Federal sales tax

John Duncan Jr., our current U.S. Representative, in his 2008 newsletter favors eliminating the federal income tax and replacing it with a 21% federal sales tax. The proposed sales tax would be revenue neutral. The Republicans have a real talent for creative misnomers and they call this their “fair tax”. Many high income people pay more than 21 % of their income in federal income tax. Anyone who is paying more than 21% of their income in federal income taxes will have a tax reduction if a federal sales tax is instituted. If the federal sales tax plan is revenue neutral the taxpayers who have been paying less than 21% of their income in income tax will have to pay more in taxes to make up for the loss in tax revenue from the wealthy.

One of the touted benefits for the “fair tax” is the elimination of the Federal Internal Revenue Service. (The IRS does need better oversight from Congress). However, even the Republicans would hesitate to impose a 21% sales tax on people in poverty so the “fair tax” would provide to everyone a monthly refund equal to the amount of sales tax paid by someone in poverty. Sending a monthly check to all US households (however they are defined) would require a lot of IRS employees. Ingenious people would work up ingenious ways to avoid the sales tax and it would require IRS agents to monitor the payment of sales taxes. It would be only a matter of a short time before campaign contributions to selected Republican legislators would result in the sales tax laws being riddled with exceptions and soon the tax laws and their enforcement would become complicated again. It is easy for legislators to make a slight increase in the sales tax percent when they run short of money- for example look at the Tennessee sales tax history (not including local sales tax):

There are radio talk show hosts who favor the 23% (Congressman Duncan says 21%) federal sales tax (euphemistically called the “fair tax”) and the Republicans may be deciding that we should have government of, by and for our radio talk show hosts- “honk your horn for the “fair tax” when you drive past the capital building!!”

John Duncan Jr., our current U.S. Representative, should be able to understand this “fair tax” and he should never have considered a 21% federal sales tax to have any merit and certainly our next U.S. Representative should try to stop it from even being considered in the House of Representatives.

As an afterthought, the Republican duplicity is obvious here- Congressman Duncan's so called 21 percent "fair tax" is actually a 26.6 percent sales tax when it is calculated as sales taxes are calculated everywhere else. This would be added to our approximately 10 percent Tennessee local and state sales tax for a total sales tax of about 37percent. The incentives for tax avoidance and tax fraud are obvious.

If ayone is unconvinced by my discussion, I have copied an article on the "Fair Tax" at the end of this section.

Health Care
It is a disgrace for the United States to have people within our country who cannot get the medical treatment they need because it is too expensive for them. I am currently covered by Medicare and it is a very good program except that it seems to underpay the physicians for some treatments. I favor a program similar to Medicare for everyone. I have heard that the United States spends more for health care per person than any other major country and I believe if the money were allocated rationally that everyone could be covered.

I believe the Medicare prescription drug program should be completely revamped.

I favor a national federal medical records program. Physicians would not have to maintain large filing systems and medical records would have continuity and completeness that they do not have now. Currently if you go to several physicians and if you have gone to physicians in the past your medical records are hopelessly confused or lost if you want a comprehensive overview. When a physician retires the patient records are kept for a few years (5 years?) and then destroyed- with modern communications and computers we can preserve medical records and keep them usefully organized.

Nuclear disarmament

We had an email exchange among members of my church a few years ago and I wrote the following:

There are two parts to the question for me and my opinions are given below:

1. The bombing of Hiroshima and Nagasaki
The United States had only two A-bombs built and I don't know how long it would have taken to build more. The story that I have heard for many years is that President Truman dropped them quickly so the Japanese would think there were more. When the two bombs were dropped, the Japanese emperor did something unprecedented- he addressed the people and told them Japan was surrendering. It was the first time most Japanese had ever heard his voice. The Japanese military almost stopped the emperor from making his announcement.

I have heard in recent years that the Japanese were trying to stop the war- particularly since the Russians had entered it. Many things were going on but the emperor would never have intervened because of the Russians and the Japanese military would never have agreed to surrender (without the intervention of the emperor) if it meant U.S. occupation of Japan. The United States would not have agreed to anything but unconditional surrender. It would have been ghastly.

The bombings were terrible but they ended the war and saved many lives. On the other hand the achieving of a goal by an immoral means (bombing of a civilian population is a war crime) always has consequences. In my opinion the successful conclusion of World War II resulted in the United States believing good could come from the use of military force and the possession of atom bombs. That belief has distorted our country's policies for many years.

2. Regarding our nuclear arsenal
The genie has been released from the bottle and it will not go back in. The possession of a huge number of nuclear weapons cannot be justified and the feeling of nuclear superiority the huge number of bombs engenders means there is always a temptation to use one or more. It is not possible now for all countries to dispose of all their A-bombs because it would be too easy for some small group or country to build A-bombs surreptitiously and become the most powerful country or group on earth until the other countries could rebuild some A-bombs.

It would take a change of many attitudes but the best situation for the world- in my opinion- would be to scrap all the hydrogen bombs and plutonium bombs and keep only a number of U235 bombs that would not destroy the world if they were all used. (U235 bombs do not deteriorate with time- although the explosive charges would have to be replaced periodically.) The A-bombs should be allocated among the UN Security Council permanent members, their use should be prohibited by international law and their security should be regulated tightly. This would require that the United States give up the desire to have overwhelming force compared to the rest of the world and there would be a lot of domestic opposition. It would also require that the other countries that have recently developed A-bombs give up the bombs and the capability to make them and agree to inspections. The other Security Council countries might agree to a consensus allocation that gave the United States a somewhat greater number than the other countries so the United States and the rest of the world could feel secure.

More on the "Fair Tax":

from The Newsletter of the Tennesseeans for Fair taxation February 2008

Fair Tax/Flawed Tax: Why The National Sales Tax Is Bad For America

From : Beyond the Headlines

Over the past few years, the socalled
“FairTax” has gained attention
in limited circles through talk
radio, blogs, YouTube and MySpace.
Despite its lack of support
from any credible economist, that
attention has been bleeding into
mainstream media.

So what is the so-called “Fair-
Tax”? It’s a proposed national
sales tax that would, in theory,
replace all other federal taxes.
Advocates of the plan argue that
it would “simplify” the tax code
by getting rid of the estate tax,
personal income tax, payroll tax,
corporate income taxes and the
IRS itself.
The FairTax, however, would
only replace one government
agency with another, while shifting
the tax burden onto middle-
and low-income families.

The 50% Sales Tax

The plan is rife with distortions.
For example, supporters claim the
FairTax is a 23% sales tax. That
claim, however, uses misleading
math. For example, if you bought
a $100 item, and a $30 tax were
added to the price of that item,
you would incur a 30% tax, right?
That’s certainly the way every
other sales tax in the nation is
calculated. In FairTax math, it
would be a 23% tax, since 23% of
the final price ($30/$130 = 23%) is
the tax.
That’s only the beginning. In
calculating how much of a sales
tax it would take to replace all
other federal taxes, the crafters
of the FairTax included purchases
made by the government
itself. So, if the government buys
a bomber, it would pay itself a
tax. If the government builds a
school, it would pay itself a little
more. The problem here is that the
government paying itself does not
actually raise revenue. When this
type of circular math and other
distortions are taken out of the tax
equation, it would take a sales tax
of over a 50% to replace current
federal taxes. Imagine paying a
50% sales tax on the next house
you buy (Yes, it would apply to
new homes)!
Even the Bush Administration’s
tax reform panel recognized
these gross miscalculations and
chose not to endorse the national
sales tax idea. The panel noted
that the tax rate would have to be
between 34 and 49 percent just to
replace the federal income tax, let
alone every other federal tax.
Another Tax Break for the Rich
On top of the distortions, the Fair-
Tax would shift taxes onto middle
and lower-income families. Like
Tennessee’s sales tax, it would not
apply to purchases, such as stocks
and bonds, savings and private
school tuition, typically made by
higher income families. At the
same time, applying it to such
things as medical expenses and
hospitalization, would essentially
kick people when they’re down.
Since these medical expenses
could easily surpass families’ income
during a crisis, the FairTax
would force them to pay much
higher taxes as a portion of their
income in bad years.
In the end, what progressive
features our federal tax system has
left, after years of tax breaks for
the rich, would be replaced with
a tax system where the more you
make, the less you would pay.
Proponents of the plan attempt
to blunt this fairness argument by
offering rebates for the amount of
sales tax paid on family purchases
up to the poverty level. Even with
the rebates, low-income families
would still lose, as would most
families. A state-by-state analysis
from the Institute on Taxation and
Economic Policy (ITEP) found
that under the FairTax plan, taxes
would rise an average of $3,260 a
year for the bottom 80 percent of
Tennessee taxpayers. Only the top
5% would actually save, while the
richest 1% of Tennesseans would
get an annual tax cut of $162,000
each.
In short, the FairTax would
just be more of the same, failed,
trickle-down policies that have
enriched a small handful of Americans,
stagnated incomes for most
and weakened the nation’s economy
as a whole.

The New IRS

Even the argument that the Fair-
Tax would allow us to get rid of
the IRS, and thus government
bureaucracy, falls flat upon further
examination. In part, this is
because when a tax rate reaches
as high as 50%, the incentives to
find creative ways to avoid the tax
grow even stronger.
Since the intent of the FairTax
is to tax only end-user consumption,
business-to-business transactions
would not be taxed. This
opens up an entire host of tax evasion
opportunities. Employers
would find ways to provide
their top executives with tax-free
corporate cars, homes, meals and
even clothing.
The tax-evasion opportunities
would go beyond business-to-
business transactions. Shady
retailers would be tempted to sell
items at steep discounts to people
who pay cash, because retailers
can more easily hide cash sales.
Some would even find ways to
“barter” for goods as a way of
avoiding the tax.
On top of all the policing,
someone in the federal government
would have to administer the
rebate program. In short, someone
would have to track current
addresses, process applications,
verify the number of children
people claim and issue checks.
In the end, the IRS would
simply be replaced with another
government agency to administer
the rebates, ensure people don’t
claim more children than they
actually have, conduct extensive
audits of businesses, track purchases,
monitor retailers and make
its best effort to curb the extensive
tax evasion that would occur
under such a plan.
Summary
As long as we have schools, police,
highways and other public infrastructures,
we will need ways to
raise the money and pay for them.
Proposals such as the so-called
“FairTax” do little but shift taxes
back onto the backs of middle-
and lower-income families under
the guise of “tax simplification.”