ironist15

I.O.U.S.A.: Documentary Worth a Peek

I agree heartily with Gramps2, with one exception - both he and Jim misunderstand the Laffer curve. Laffer said that income tax receipts will be zero at two tax rates - 0% and 100%. [I hope I don't have to explain why a 100% tax rate will yield no revenue!] In between those rates, there is a convex curve, and there exists a point on this curve where tax receipts will be maximized. The only interesting question is what tax rate will yield the maximum tax receipts. Saying that Reagan "believed" in the Laffer curve is equivalent to saying that he believed in gravity. What Reagan believed was that the top tax rates, which were between 70% and 90% at the time, were counter-productive in the sense that they depressed economic activity and yielded less tax money to the government.

Finally, Milton Friedman pointed out that tax rates were not the correct measure of the burden of government - the total amount of government spending represents the burden, and it doesn't matter whether the spending is financed by taxes or debt. To keep the ship from sinking, the US has to reduce government spending as a percentage of GDP, period. That means that Social Security and Medicare/Medicaid cannot be taken as givens - we simply cannot afford these blank-check programs anymore.

Gas Lines Coming This Fall

To comment only on one part of your article, I think that gas lines can only occur as a result of government intervention in the form of price controls; otherwise, market pricing will be orderly. To put it another way, if there is a gas shortage, prices may need to go to $10 per gallon to reduce demand to the point where lines do not occur. Those with the greatest need, and ability to pay, will get the gas they need, and everyone will get the message to conserve.

How Much Will Drilling in ANWR Affect Oil Prices?

I always enjoy your thoughtful analysis. In this case, I notice that you fall into the "too small to make a difference" camp, and I have a few comments. First, the North Slope produced a lot more oil than it was predicted to so we can't be too confident that ANWR will not do the same. Second, if ANWR alone isn't impressive enough, what about adding production off all coasts? Third, even if oil prices aren't reduced at all, it doesn't mean that producing our own oil is in vain. Drilling here means that the dollars stay at home, creating jobs here, and not further enriching dictatorships abroad; it also means a strengthening dollar and lower inflation since our trade balance will be improved. Finally, what is the risk of drilling? Oil leaks are much less likely than they were 40 years ago (the Santa Barbara spill). The caribou haven't died off on the North Slope, for example, and even the hurricane that sank New Orleans couldn't produce an oil leak in the Gulf. Let's ignore the hysterics and drill.