When asked whether Social Security would go broke, Congressman Lucas explained that, over the years, the surplus collected has been put in U.S. Treasury bonds. Though the government has borrowed against the surplus, it must be repaid and will be available to make future payments.  After the trust fund is exhausted, Social Security will pay benefits as money is collected, and benefits may be reduced by 20 to 30% unless the Social Security system is changed to extend the trust fund.

Comment: A little research after the meeting showed that the trust fund is expected to be solvent until about 2034 but that a few tweaks, such as reducing benefits, raising the retirement age, or raising the cap on FICA contributions, will make this trust fund solvent to about 2080. Americans overwhelmingly support raising the cap on FICA contributions over the other options.

One gentleman was upset about the cost of his health insurance and of Medicare. He noted that the creation of the Medicare Advantage Plans had added about 14% to the cost of the program. He described a recent surgery in some detail, the point being that Medicare was charged $3000 for one small piece of tubing because Congress had voted that Medicare could not negotiate prices with pharmaceutical companies. His point was that Congressman Lucas had voted for both the Advantage plan and for the ban on negotiating prices.

One constituent complemented Congressman Lucas on the Tulsa World article where he defended raising the debt limit so that the U.S. would not have its credit rating lowered, which would be disastrous for the country. However, he also pointed out that Congressman Lucas had voted for extending the tax cuts for wealthy citizens, costing $800 billion, and also for the $610 billion in spending cuts spending cuts, which may cost 500,000 American jobs. The congressman commented that the mood in Congress was to cut taxes and reduce spending. There were several questions about  agriculture, such as whether there would be a carbon tax, whether the EPA would limit dust, and about the animal ID program. Congressman Lucas, who will be the chairman of the Farm Committee next year, said those are all things that the committee would likely examine.

Comment: Climate scientists have pointed out that there is increasing evidence that climate change is causing increasing incidences of extreme weather, such as droughts and storms, which may put our farms production and food supply at risk.  Congress has recently turned down a motion that the Agriculture Department examine the risk to our food supply and Congressman Lucas voted with the nays.

The discussion was lively and it was good that we could ask questions and express our concerns to Congressman Lucas. The third district covers a large area, the Western two thirds of the state, and we certainly appreciate Congressman Lucas taking time to visit with us. Some of his answers were of concern to the author, as you can discern from his comments, and further information will be provided about Congressman Lucas’s views as the 2012 elections near.

Congressman Frank Lucas (R – OK) held one of his town hall meetings at the Hominy City Hall on April 19, 2011. He reported that the war in Iraq is winding down, but that Afghanistan continues to be a quagmire without a definite ending in sight.  There is concern about our role in Libya, but the President does have power to take limited military action without a formal declaration of war. He reported that the Legislature has become even more divided and partisan over the last year, and it is becoming very difficult to carry out the business of government. This year, Congress is mostly going to be about the budget, and little else is likely to get done.

A scientist in the audience explained that Dr. Patrick Michaels, who testified before Congress that there was no consensus among scientist on climate change, had been exposed for taking large payments from power companies to lobby for them. There is a consensus among scientists.  A recent survey showed that 97% of climate scientists active in research agree that global warming is happening and that greenhouse gas emissions are the cause. Every major scientific organization in the world has adopted a statement in agreement. Research has also shown that global warming is the cause of some of our extreme weather events, and that higher CO2 levels and warmer temperatures may damage crop yields. After that long explanation, the question was whether the Congressman, who will chair the Agriculture Committee next year, would be willing to hold hearings to determine if global warming might put our food supply at risk. The Congressman replied he could not make a commitment as yet.  

Note:  Later, on June 16^th, Rep. Lucas voted to prevent the Department of Agriculture from planning for future extreme weather and crop loss that scientists say will be the result of climate change.  Apparently Congressman Lucas does not believe the scientific evidence and does not want the Department of Agriculture examining the issue, though it poses a danger to our food supply.

When asked about Social Security, Congressman Lucas explained that, over the years, the surplus collected has been put in a trust fund in U.S. Treasury bonds. Though the government has borrowed against the surplus, it must be repaid and will be available to make future payments.  After the trust fund is exhausted, Social Security will pay benefits as money is collected, and benefits may be reduced by about 30% unless the system is tweaked by reducing benefits or raising the retirement age. A little research after the meeting showed that the trust fund is expected to be solvent until about 2034 but that the most popular tweak, raising the cap on FICA contributions, will make this trust fund solvent to about 2080.

One lady explained that we had just spent billions of dollars developing Head Start centers and now the money needed to operate them may be cut from the budget. Head Start allows many low income people with children to work as it reduces some of the expense of child care. What sense does it make to extend the tax cuts for wealthy citizens and then cut programs that benefit disadvantaged citizens and may even cost jobs? The Congressman commented that the mood in Congress was to cut taxes and reduce spending.

Another lady asked about the wild horses on ranches west of town. Congressman Lucas explained it was a program, apparently one he questions, that moved the horses to save them from being euthanized. The horses are a non-native species that damage range-land and the program costs $5 billion dollars. The lady from Head Start asked why we could spend $5 billion on horses, but not $5 billion on the Head Start program benefiting children.  

One constituent complemented Congressman Lucas on the Tulsa World article where he defended raising the debt limit so that the U.S. would not have its credit rating lowered, which would be disastrous for the country. He asked about the monetary policy which benefited the stock market, but hurt many retired people by keeping interest rates low. The Congressman pointed out that the policy was set by the Federal Reserve and it benefits those who borrow and hurts those who save. He suggested the policy might change, and suggested it might be wise to be sure any loans you have were at a fixed rate.

When asked about a flat tax, the Congressman explained he favored a “fair tax”, a national sales tax on all purchases. The states would collect the tax and it would end income tax. Putting the IRS out of business sounds good except that a little research shows that the “fair tax” would have to be about 30% on all goods and services. It would shift more of the tax burden to middle and lower income citizens and would hurt seniors, who have paid income tax all their lives and would now be taxed more on their purchases. 

When asked about the wisdom of subsidizing ethanol from corn, the Congressman replied that the subsidy program benefits corn producing states but hurts everyone else. It costs tax money and it raises the cost of animal feed and food. He commented that the corn producing states have a lot of political clout, and the policy might be hard to change. 

The discussion was lively and it was good that voters could ask questions and express our concerns to Congressman Lucas. The third district covers a large area, the Western two thirds of the state, and it should be appreciated that he conducted town hall meetings at many towns in his district. Elections are coming up and Oklahoma voters need to weigh carefully what he says, and how he votes, in order to decide if we should return Congressman Lucas to Washington.

The U.S. Republican leaders are blocking climate legislation, leaving the EPA in the position of having to regulate carbon emissions. Many Republicans in Congress are unhappy with the EPA and are now claiming the EPA regulation of CO2 is a “power grab”.

Progress has been limited at the climate meetings in Copenhagen and in Cancun because the U.S. has not acted to restrict its carbon emissions. The U.S. is second to China  in emissions but emits six times as much CO2 on a per capita basis. If the U.S. is not willing to reduce its emissions, why should other countries?  The U.S. came very close to passing cap-an-trade but it failed when John McCain (R Az) backed out of the deal because of a challenge from a far right candidate in the last election. Reducing CO2 emissions has been cast as a liberal issue and many conservatives oppose it for that reason. The wins by Republicans in the last election almost insure that action on a responsible policy will be delayed by at least two years. That is a shame as many Republicans in the past have been strong supporters of the environmental issues.

The Republican leadership adopted opposition to environmental regulations as a campaign strategy. They sent out propaganda based on slick reports produced by conservative think tanks, rather than science, and they inflated the cost of environmental legislation by a factor of twenty – while not mentioning any of the benefits. The propaganda has been passed along to voters in town hall meeting and press releases. The EPA has used science as a basis for its decisions and has moved to limit CO2 emissions as an air pollutant under existing regulations in the Clean Air Act. This has infuriated many Republicans anfd they have challenged the EPA’s right to do, calling it a “power grab”.

My Congressman,  Frank Lucas (R-OK), has spoken disparagingly of environmental regulations in his town hall meetings and in opinion pieces he has sent to the states major newspapers. He also writes a column that goes to many small town newspapers called “Frankly Speaking”. In his column, he has  labelled the EPA’s actions to limit carbon emissions as  “the EPA power grab” . That is hardly the case. The Supreme Court, in Massachusetts v. EPA, found the Environmental Protection Agency could make a determination as to whether carbon dioxide is a pollutant. The EPA has found, based on the best scientific evidence, that CO2 is an endangerment to public health and has moved forward to regulate it.

If Congress had acted to develop a sound energy policy and to curb pollution, the  EPA would not be forced to act in the matter. Regulations passed to limit carbon emissions would fall mainly on the coal industry and would favor a shift in the short term to petroleum and natural gas, both abundant in Oklahoma. Many from the petroleum and gas industries originally supported the cap-and -trade bill. However, all the OK Republican Congressmen sat out the process and let the Democrats from coal producing states load up the cap-and-trade bill with perks for coal producing states. Some of  Oklahoma’s industrial leaders see that limiting carbon emissions could be favorable to the Oklahoma economy, but apparently, the elected representatives have not caught on yet.

And, it is not just about the CO2 or climate change. Along with the 30 billion tons of CO2 we put into the air annually are large amounts of mercury, lead, cadmium, arsenic, sulfur oxides, nitrogen oxides, particulates, and radioactive isotopes of radon. Those end up in the air, the water, and the food chain. We are now finding mercury in fish and some places, even in Oklahoma, have limits on consumption. The oceans are now 20% more acidic and economically important fisheries are threatened. Whether we cap pollution, tax it, or strictly regulate it – something must be done and soon. The EPA regulation is a stop gap meaure and the U.S. Congress needs to stop the politics and pass a sound energy policy and meaningful environmental regulations.

(C) 2010 J.C. Moore

An article recently appeared in the Daily KOS containing a video making fun of Boren’s ads and criticizing him for supporting a “Flat Tax” scheme. (1) True to form, in the tree scene in the video, Boren is wearing the unofficial state color – camouflage. He is the  only Democrat among 61 Republicans in Congress supporting the “Flat Tax”(or “Fair Tax”) scheme.

Boren apparently hasn’t thought that Flat Tax scheme through. My Congressman, Frank Lucas (R-OK), also favors a “Fair Tax” scheme that would replace income taxes with a national sales tax ( a consumption tax) (2). Boren says it would be a sales tax of 30%. It  may need to be higher for it to be “revenue neutral” as we have to raise a certain amount of revenue to support our government and that would not change. What the “Fair Tax” would change is that more of the tax burden would shift to the middle and lower income groups, those  already benefiting the least from state and federal tax cuts. (3)

While many like the idea of the Fair Tax’s simplicity, that may turn out not to be the case. The Tax Reform Act of 1986 was supposed to bring us “simplification” of  our income taxes but there is little evidence that it has worked. Adopting a national sales tax will have a ripple effect across our economy with unknown consequences. For instance, we would have to tax internet purchases and raise import duties to keep the wealthy from shopping overseas for major purchases.

Economist Mike Moffatt has worked out who would be the likely winners and losers under the Fair Tax proposal: (4)

Winners:

• People who are inclined to save: People who do not consume as much will benefit from the plan.
• People who can shop in other countries: People who take a lot of overseas vacations or living near the Canadian or Mexican borders.
• People who can avoid sales taxes: Those who can exchange or barter services and goods, or the unscrupulous who can buy for personal use and claim as a business use.
• The wealthiest one percent: They will see an average tax cut of about $75,000 per person.

Losers:

• The Poor: The working poor pay little income tax but they must spend a larger proportion of their income to survive. They’d pay a larger percentage of their income in taxes than wealthier individuals.

• Families: Tax breaks such as dependent deductions, earned income credits and child care credits would disappear. It would hurt families with incomes less than $200,000 but help families with income above $200,000, due to the dramatic reduction in the top tax rate.

• Tax Accountants, IRS Employees and Income Tax Lawyers: Yes, but they’d survive somehow.

• Seniors: They’ve already paid a lifetime of income taxes and this would now tax them again on consumption as well. They would end up paying a disproportionate share of taxes.

Overall, the Fair Tax is fairer to some than to others, and it looks to be most fair to the wealthy. Our present graduated income tax code is based on the ideas that those who profit most from our country’s wealth, resources, and opportunities should pay a greater share of their bounty in taxes. The rich may not think that’s fair, but that’s fairer and more pragmatic than shifting more taxes to those who have little.

Note added on 3/29/2012: Congressman Dan Boren has decided not to run again for Congress in 2012. This post about his 2010 campaign has been left as it explains the disadvantages of flat tax schemes – and also what a Democrat might try to do in Oklahoma to be elected.

(1) http://www.dailykos.com/story/2010/7/3/881389/-Dan-BorenCongress-Worst-Democrat-Has-A-Primary

(2) For an in depth analysis of the consumption tax see:  http://mises.org/daily/1768

(3) For historical top tax rates see:

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213

(4) http://economics.about.com/cs/taxpolicy/a/fairtax_5.htm

If Congress had acted to develop a sound energy policy and to curb pollution, the  EPA would not be forced to act in the matter. Regulation of carbon emissions would fall mainly on the coal industry and would favor a shift to petroleum and natural gas, both abundant in Oklahoma. However, all our  Republican Congressmen sat out the process and let the Democrats from coal producing states load up the cap-and-trade bill with perks for coal producing states. Some of  leaders see that limiting carbon emissions could be favorable to the Oklahoma economy, but apparently, our elected representatives have not caught on yet.

It is not just about the CO2 or climate change. Along with the 30 billion tons of CO2 we put into the air annually are large amounts of mercury, lead, cadmium, arsenic, sulfur oxides, nitrogen oxides, particulates, and radioactive isotopes of radon. Those end up in the air, the water, and the food chain. We are now finding mercury in fish and some places have limits on consumption. The oceans are now 20% more acidic and economically important fisheries are threatened. Whether we cap pollution, tax it, or strictly regulate it, something must be done and soon.

For instance, Congressman Frank Lucas (R-OK) wrote in the Daily Oklahoman (6/21/09) that  cap-and- trade  is a tax and that  it would be especially bad for farmers. That isn’t necessarily so. The true cost of using a resource includes the cost of cleaning up the environment and disposing of the waste. Cap and trade isn’t a tax. It is a way of seeing  that those who  profit from a resource pay the “true cost”. Cap-and-trade  would require those who increase pollution to buy credits to do so while those who find ways to decrease pollution would receive credits. This would encourage entrepreneurship and provide the incentive for using our resources wisely.

No one really knows what the cost of a cap-and-trade bill would be – or what the cost would be of doing nothing. There is one claim that it would cost each U.S. household $3,100 a year. That number was arrived at by doing additional math on a Massachusetts Institute of Technology study. However, John Reilly, the MIT economist who authored  the study, says that  number is wrong and is a misinterpretation of his work. The Congressional Budget Office has estimated the cost to be more like  $180 per household with $19 billion in savings to be generated for the economy over the next ten years.  There is also the claim that the cost of doing nothing will be higher in the long run because of resource scarcity and environmental damage. Its hard to put a cost on that. Either way, paying the true cost of hydrocarbon use is fair and would create incentives for renewable energy and energy efficiency.

Cap-and-trade has worked successfully in the past. It was used to reduce the U.S. sulfur dioxide emissions that produced acid rain in Canada – and, it turned out to be much less expensive than either the industry or the government predicted. And, after a slow start, the European Union may meet its pollution goals by 2012 by using a cap-and-trade system. In Oklahoma, Western Farmers Electric Co-op has voluntarily used cap-and-trade to offset its carbon emissions by encouraging farming practices that reduced emission. Structured properly, cap-and-trade could actually be good for farmers. Farming practices that reduce energy usage would not only save money but could earn farmers  credits that would add to their  profit.