Senator Kay Bailey Hutchison has written a great op-ed on why the ethanol mandates passed by Congress were a mistake and why the United States should accelerate all forms of domestic energy production – including the drilling for crude oil.

In her article, the Senator explains how ethanol mandates are leading to higher costs of food at home and the food riots that have been breaking out abroad. Something I didn’t know, she also claims the demand for biofuels is leading to global deforestation as parts of the Amazon basin are being cleared to make room for biofuel production.

The key, Ms. Hutchison says, is increasing energy supply. She is exactly right. What she doesn’t say, but something that is every bit as important, is that a Democratically-controlled Congress will not pass the legislation needed to correct our energy woes unless they hear overwhelmingly from the American people.

If you are an American, this is your problem, too. Write your congressman and insist on a solution, especially if your representative is a Democrat.  

It has become politically popular in this election cycle to criticize the presidency of George W. Bush. Obama is out there saying that electing McCain would be the equivalent of a third Bush term. Clinton never misses an opportunity to make our President appear foolish. And McCain, evidently in reactionary mode, has chosen to distance himself from Bush rather than defend him.

Some of this is understandable given that Bush’s approval rating at an historical low. But his small approval has as much to do with the fact that for the first time in modern politics there is not an incumbent president or vice-president in the race who can defend the administration’s record than it is a reflection of the actual record itself. So, more than anything, it has become politically convenient to bash Bush. Americans should realize the challenging party has a vested interest in making the incumbent administration look as incompetent as possible.

The facts, however, tell a different story, and I believe history will regard George W. Bush as one of our greatest presidents. Among his accomplishments is the undeniable truth that there has not been a terrorist attack on this country since 9/11. Democrats can say what they want about Iraq and how it might be reducing our effectiveness in Afghanistan, but this is the longest period of time the United States has gone without being attacked in thirty years; really since the rise of Islamic Fascism.

Contributing to this statistic is perhaps the most underrated aspect of Bush’s presidency: his support for free trade. President Bush has signed more free trade agreements than any other U.S. president, and he has done it with tiny countries that would otherwise have been susceptible to becoming terrorist havens. Not only have we, under the leadership of President Bush, helped boost the economies of countries like Morocco and Bahrain, but we’ve sent a signal to the world that they are an ally of the United States. 

How effective have these trade agreements been in keeping terrorists out of these countries? We might get to see first hand if Congress continues their refusal to vote on the Columbian Free Trade Agreement.

American voters need to understand what our Democratically-controlled House of Representatives did last week under the leadership of Nancy Pelosi. If you’ve been following the news, you may have heard about Congress’ refusal to bring the free trade agreement negotiated with Columbia up for a vote in the House. Here is what happened, and why it’s important.

The House voted 224-195 to suspend indefinitely Trade Promotion Authority. This is a rule that requires the House to conduct an up or down vote on trade legislation within 90 days of its submission. The purpose for this rule is to give foreign countries the confidence to negotiate trade agreements with the United States in good faith. In other words, countries can make their concessions during negotiations knowing that our Congress will not indefinitely delay approval of (or ignore altogether) the United States’ own concessions. Why is this a big deal? Because it isn’t just about Columbia. Suspending this rule affects our ability to negotiate trade agreements with other nations.

Economic Effects

The Columbian Free Trade Agreement is (or was?) a win-win for both sides. Currently, Columbian goods enter the United States tariff-free and are sold at market price. U.S. goods entering Columbia, however, are subject to a tariff of around 20%. The free trade agreement eliminates this tariff, thus allowing our goods to be sold tariff-free in Columbia, which in turn helps to create American jobs. Columbia benefits because the agreement makes permanent the arrangement allowing its goods to be sold in the U.S. without tariffs.  Under current law, this must be renewed every few years.

National Security Effects

Venezuelan dictator Hugo Chavez is expanding his influence in South America. There exists a threat he might invade Columbia or otherwise place political pressure upon them. A free trade agreement signifies that Columbia is an ally of the United States and effectively places a “Beware of Dog” sign in its front yard. The message sent by the House of Representatives last week, however, is just the opposite, and the importance of maintaining an ally in South America right now, with a dangerous man like Chavez on the prowl, cannot be overstated.

So why did they do it?

Nancy Pelosi reportedly announced that the House will not vote on the Columbian Free Trade Agreement unless President Bush agrees to issue a second round of economic stimulus checks. Given that the trade agreement itself is a positive stimulant for the economy, not to mention that we are in an election year, Pelosi’s words give the appearance of holding a lesser concern for economic improvement than for who gets the credit when the economy does improve.

The economic facts listed below provide the historical perspective in which all Americans should cast their votes this year.

In 1913 (when the federal income tax was established), the top marginal rate was 7%.

By 1918, this same top rate had risen to 77%.

In 1925, the top marginal income tax rate was reduced to 25%.

Over the next four years, economic output almost doubled.

In 1962, the top corporate tax rate was reduced from 52% to 48%.

In 1964 (signed by President Johnson), the top marginal income tax rate was reduced from 91% to 70%.

What was the result on the economy? From 1959-1962, economic investment grew at an annual rate of 3%, but between 1962-1969, investment grew at an annual rate of 6.1%. After these tax cuts were repealed, investment grew at an annual rate of only 2.3% between 1969 and 1972. Furthermore, the gross national product grew at 2.4% from 1952-1960, but it grew at 4.5% per year from 1960-1970. 

What about the result on government revenue? From 1952-1959, government revenue increased 1.2% per year, but between 1962-1969, revenue increased at an annual rate of 6.4%. Furthermore, the deficit during these years fell from $7.1 billion to $1.4 billion. 

In 1981, the top marginal rate was reduced from 70% to 50%.

By 1988, this rate had been reduced to 28%.

What was the result on the economy? From 1978-1982, the real gross domestic product grew at an annual rate of 0.9%, but between 1983-1986, it grew at a rate of 4.8% per year. In 1982, the unemployment rate was 9.7%. In 1986, it was 7.0%, and by 1989 it had fallen to 5.3%.

In 2003, the top marginal tax rate was lowered to 35%.

In 2004, tax revenues increased by 5.5%.

In 2005, tax revenues increased by 14.5%.

I continue to hear people ask, “What is the standard by which we can declare victory in Iraq? What needs to happen before we can bring the troops home?” The intent of the question appears to exert the viewpoint that the United States is in a war of which we cannot escape, and thus the only reasonable thing to do is to set a date of withdrawal by which the Nation of Iraq will be held accountable in terms of becoming self-sufficient. 

E.J. Dionne introduced the subject once again this week, writing:

“But the administration's critics (and even some of its sympathizers) see the current policy as the equivalent of constructing a very expensive road, under hazardous conditions, even though those building it can't explain exactly where the road will lead…The road becomes an end in itself. The point is to keep building it in the hope that it will eventually arrive at some lovely destination.”

Let me tell you where the road leads, for the definition of success in Iraq is simple: Victory has been achieved when Iraq is a self-sufficient democracy capable of protecting its citizens and promoting democratic ideals throughout the Middle East.

Dionne then writes:

“The administration and its supporters talk incessantly about winning but offer no strategy for victory, no definition of what it would look like, no concrete steps to get us there, and no real sense of where "there" is…Tell me again: What does success look like?”

I disagree. General Petraeus this week offerred a clear strategy for winning: continue to recruit and train Iraqi security forces and slowly reduce our troop levels as their capabilities allow them to take over. Furthermore, he indeed offer concrete steps to get us there.

First, temporarily pause troop reductions for a 45-day period so as ensure the gains achieved over the past year are not lost. Despite democratic objections, this is a step to victory. 

Secondly, Petraeus offered numerous examples of gains which have been made, each of which are steps to victory we have already taken. In 2007, Iraq added 100,000 soldiers and police to its security forces. This is a step to victory. Additionally, 91,000 Iraqis, some former insurgents, some Shia and some Sunni, have joined local security forces known as “Sons of Iraq” which have resulted in more weapons and explosive caches discovered in 2008 than were found in all of 2006. This too is a step to victory.

That Dionne can ignore these advances just illustrates how those on the left have positioned themselves politically such that their investment lies in Iraqi failure.

General David Petraeus testified on Tuesday before the Senate Armed Services Committee. I suspect that most Americans who would take the time to read his actual testimony rather than rely on media reports about it would come away with a deeper understanding, if not a changed view entirely, on the war in Iraq.

Some highlights:

“Since September, levels of violence and civilian deaths have been reduced substantially, al-Qaida-Iraq and a number of other extremist elements have been dealt serious blows, the capabilities of Iraqi Security Force elements have grown, and there has been noteworthy involvement of local Iraqis in local security.”

“You are well aware of the U.S. surge. Less recognized is that Iraq has also conducted a surge, adding well over 100,000 additional soldiers and police to the ranks of its security forces in 2007 and slowly increasing its capability to deploy and employ these forces.”

“Since the first Sunni "Awakening" in late 2006, Sunni communities in Iraq increasingly have rejected AQI's indiscriminate violence and extremist ideology. These communities also recognized that they could not share in Iraq's bounty if they didn't participate in the political arena. Over time, Awakenings have prompted tens of thousands of Iraqis — some, former insurgents — to contribute to local security as so-called "Sons of Iraq." With their assistance and with relentless pursuit of al-Qaida-Iraq, the threat posed by AQI — while still lethal and substantial — has been reduced significantly.”

”There are now over 91,000 Sons of Iraq — Shia as well as Sunni — under contract to help Coalition and Iraqi Forces protect their neighborhoods and secure infrastructure and roads. These volunteers have contributed significantly in various areas, and the savings in vehicles not lost because of reduced violence — not to mention the priceless lives saved — have far outweighed the cost of their monthly contracts. Sons of Iraq have also contributed to the discovery of improvised explosive devices and weapons and explosives caches. In fact, we have already found more caches in 2008 than we found in all of 2006.”

“Iraq's ethno-sectarian competition in many areas is now taking place more through debate and less through violence…The number of deaths due to ethno-sectarian violence, in particular, has remained relatively low, illustrating the enemy's inability to date to re-ignite the cycle of ethno-sectarian violence.”

“A failed state in Iraq would pose serious consequences for the greater fight against al-Qaida, for regional stability, for the already existing humanitarian crisis in Iraq and for the effort to counter malign Iranian influence.”

I noticed on Hannity & Colmes last night Barack Obama is running a campaign add in which he promotes the idea of a “Windfall Profit Penalty” for oil companies. There are several items related to this of which one should be aware before casting a vote in this election.

First, and as I pointed out in my last post, the 2007 profit margin of the major oil companies was not excessive. At 8.3 cents of profit for every dollar in sales, it was in line with most businesses.

Second, and probably most importantly, one must decide whether or not the government bears the responsibility in a capitalistic society to determine when the profit produced by a private business is “too much”. Keep in mind that if they can do it for the oil industry, they can do it for your business as well.

And finally, the Windfall Profit Tax has historical precedent. It’s already been attempted.  Judge for yourself its effectiveness. 

Earlier this week, the House Select Committee on Energy Independence and Global Warming called executives from the major oil companies to testify regarding the rise in fuel prices. Representative Edward Markey, a Massachusetts Democrat, said at the hearing, “On April Fool’s Day, the biggest joke of all is being played on American families by Big Oil.” I disagree, and the information below should help put the issue of rising fuel prices in perspective.

In 2007, the oil companies only made 8.3 cents profit on every dollar of gasoline sold in the United States. The federal government takes 18.4 cents for every gallon sold.  Most states take several cents per gallon on top of that.

High gas prices are the result of restrictions placed on oil companies by the federal government which force reliance on an already crowded global market.

Investor’s Business Daily (3/25/08): Developing nations China and India, where the populations — already a third of the world population — and economies are growing, account for more than two-thirds of the increased (oil) consumption. Their use is expected to double in the next 20 years...We watch helplessly while prices at the pump reach $4 point in the priciest U.S. markets and as much as 131 billion barrels of oil remain off-limits beneath our soil and our waters.

To put this in perspective, the United States currently consumes around 20 million barrels of oil a day. 

On the research and development end, the government controls where each company can and cannot explore for new sources of oil as well as where they can and cannot drill in existing sources.

Investor’s Business Daily (3/31/08): The irony is that countries with fast-growing economies such as those in China, Brazil and India are accelerating energy resource development, while resource-rich North America is becoming captive to environmental extremism and continues to restrict access to oil supplies.

Investor’s Business Daily (3/4/08): Passing 236-182 last week, [HR 5351] scrapped the tax deduction routinely given to the major integrated oil companies — Exxon, Chevron, BP, Shell and ConocoPhillips — that helps them explore, extract, refine and market the energy that drives our economy. This will make it $18 billion more costly for those companies to produce oil…Under this bill, [Hugo Chavez's] oil subsidiary keeps its 6% deduction for U.S. domestic manufacturing — the one the American oil companies lose — because Citgo, technically, buys from Chavez.

Can you believe that?!?!  It's true.

On the production side, the governmental laws and regulations are so tight that it is not profitable to build new refineries.

Investor’s Business Daily (3/14/08): In 1982, the U.S. economy was served by 301 refineries. By 2007, the number had dwindled to 149. Productivity has kept output steady over the years at 17 million barrels a day. But the U.S. economy has grown by 125%. "Valero believes there will never be another refinery built in the U.S.," spokesman Bill Day told IBD. He cited costs, environmental regulations, neighborhood activism and lawsuits. "For a new refinery, it would take five years for a permit and five years for construction, and it's very expensive. A company would have to know it would pay off." Congress has been of no help whatsoever. Mandates requiring certain ethanol percentages in gasoline composition are chopping down refiners' market share at the pump. Refiners are undercut by the subsidies ethanol producers get that refiners don't. Ethanol producers are also protected by high tariffs on overseas ethanol, while imported gasoline comes in duty-free. This brings in a lot of competition for refiners.

Don’t forget that the 8.3 percent profit an oil company turns is subject to a 45% corporate income tax. Not only do the federal and state governments make more money from the sale of gasoline than do the oil companies, but it is the policies set forth by the government that are the fundamental reason Americans are paying so much at the pump these days.

I’m a conservative -- a proud conservative -- a conservative who believes that the tax-the-rich-to-help-the-poor policies so often put forth by our liberal friends put more strain on the poor than they do the rich and are historically proven to fail. I’m a conservative who believes that the most proven way to stimulate the economy is to inact massive across the board tax cuts as was done in the 1920s, the 1960s, and the 1980s. I’m a conservative who believes the federal bureaucracy is bloated, inefficient and sucking billions of dollars each year away from the pockets of taxpayers who would otherwise invest their earnings in the private sector. So it would be very hard for me to vote for a candidate who does not share these views.

But I have to ask.

How important is the truthfulness of a politician who is a candidate for your vote?

We were told in the ‘90s that character does not matter. We are hearing that again today with the Elliot Spitzer saga, the Jeremiah Wright controversy, the Detroit mayor indictment, and now the Hillary Clinton Bosnia tale. When Republicans are found to be untruthful, the media focus is often not on the lies but the hypocrisy.  Why?

Politicians are in office to serve – not to rule. They answer to the People – not the other way around. We are, with our votes, entrusting the future of our nation to their care. 

Truth is part of the glue that holds our republic together. As such, there is a reason perjury is a felony. Why should lying under oath in a courtroom result in a prison term and lying to the American People in an effort to obtain their vote be seen as nonchalantly “misspeaking”?

Therefore, I submit to you that when given the choice, it would be more prudent to cast your vote for an honest liberal than a crooked conservative. Of course, we avoid this dilemma entirely when we refuse to nominate a chronic liar as a candidate for public office.