The Democrats Still Haven't Learned From Their 1990 Tax-The-Rich Fiasco

In 1990, the Democrats in Congress convinced President, read-my-lips, no-new-taxes, George H.W. Bush to sign into law a luxury tax on expensive boats, furs, aircraft, and automobiles.  You know, all those things that the envious Democrats find to be disgusting toys and symbols of the rich and famous.  Blinded by their ideological zeal to punish the wealthy,  they truly thought this tax would help line the coffers of the federal government and reduce the deficit.  But, the tax backfired.  The revenues from it failed to materialize because the "rich" just stopped buying all those new toys; especially from U.S. manufacturers and suppliers.  Many went overseas or north to Canada and south to Mexico to buy them.  Then, too, they also bought used.  After all, a 10-year old Ferrari is still a Ferrari and still quite the status symbol; maybe even worth more than a new one.

In the boat building industry, alone, more than 16,000 highly paid  craftsman and workers lost their jobs.  Others, too, not directly involved in the actual boat building, like mechanics and sales personnel, lost their jobs.  Decades old, custom boat builders shuttered their doors, and some communities, who were primarily dependent on that industry, saw people move away to greener pastures; leaving it with barely any tax base to survive on.  States lost sales tax and income tax revenues.  And, the federal government lost income tax revenues from all those previously healthy boat builders and from the incomes of their workers.

Just, three years later, the Democrats and Bill Clinton quietly repealed the luxury tax.

So, here we are, again, with the Democrats and Obama wanting to sock it to the rich by extending the Bush tax cuts on everyone but the rich.  Obama says that it will bring in a much-needed $85 billion a year in increased tax revenues to reduce the deficit.  But, the rich are likely to respond, as they did in 1990, by avoiding those taxes.  Further,  that $85 billion is money that the rich won't have to spend; and, just like 1990, you can expect that some of the non-rich will pay, big-time, by losing their jobs.  That will result in higher government spending to pay for the increased unemployment claims.  In addition, the states will lose income tax revenues since state income taxes aren't calculated until after Uncle Sam takes his share; so those revenues are sure to proportionately decline.  That, in turn, will force some states to raise their own taxes to make up for the shortfalls.  And, as always: "He who ignores history is doomed to repeat it!"

Where's The Electric Passenger Jets?

The newer, more fuel efficient, Boeing 767 will use about 1700 gallons of jet fuel per hour of flight. In comparison, an Airbus A330 will run at approximately 2100 gallons fuel per hour.

Efficiency aside, our fleet of aircraft, flying over our heads, are burning fuel at a rate that is the equivalent of between 80 and 120 automobile gas tanks worth of fuel per hour. In a 4 hour flight, the fairly efficient A330 will empty about 400 automobile gas tanks' worth of fuel. Every hour during the peak daytime hours, there are approximately 5000 aircraft in the air at any one time. All those aircraft, combined, are emptying the equivalent of 1/2 million automobile gas tanks every hour. To put that into better perspective, a tank of gasoline will typically power a car for 4 to 6 hours of highway travel. As a consequence, you could conclude that an hour of peak air activity is using the same amount of fuel that 2 to 3 million cars would use in that same hour.

The purpose of all these statistics is to show how mammoth the use of oil-based fuels is. While the automobile seems to be the target of our Washington law makers, the real and substantial fuel usage is flying over our heads and wind and solar won't solve that problem. To my knowledge, there are no practical electric passenger jets on the drawing boards.

Then, to that airplane fuel usage, you can add a substantial oil-based fuel usage for things like boats, trains, trucks and buses that operate every hour of the day in America. For sure, these, too, will have no "electric" or hybrid alternatives and, from that, you can see how insanely futile it is to save a few miles per gallon on passenger cars; like in the Cash For Clunkers program.

Despite all the push for wind and solar power, crude oil based fuels for non-auto transportation vehicles will be with us a very long time. Even for cars, the average automobile will last 9 or more years; with many operating well past 9 years in order to achieve that average age.

Our oil reserves are declining and the real prospects of lowering fuel usage are not going to happen fast enough for us to avoid increasing our importation of crude oil. The stupidity of our politicians is that they don't seem to understand that we need to find new domestic oil reserves if we really want to wean ourselves off of our dependence on imported crude. Our avoidance in drilling off shore in California and Florida and in not drilling in the Alaskan National Wildlife Refuge and in the Bakken reserves of the Midwest is just putting us at an increased dependence on foreign oil. Our national security is at risk because many of our oil supplying countries are either our enemies or they are in unstable parts of the world. People don't seem to understand that we now import almost 63% of our needed crude oil (Click to See a Report: "USA Oil Imports by Country 2007"). My guess is, that will be 70% or higher in the next 10 years and we will have more oil-hungry vehicles than we have today; by virtue of population growth.

As our dollar continues to weaken, the price of crude oil just keeps rising. This morning, crude oil was near $75 per barrel; and, this is despite the reduced demand during this recession. This is a serious warning because, once this recession is over, oil prices will go through the roof as demand starts to increase. Those days of $4 a gallon gas are clearly going to be here again. Additionally, we could wind up paying more than $6 per gallon if the dollar continues to fall and if domestic supplies continue to fall. No amount of lowering the average automobile fuel usage or hybrid cars is going to really easy that pain. All the money being poured into wind and solar isn't going to help us power airplanes, boats, trucks, and trains. We're in serious trouble and we just keep ignoring the problem.

You better have a bicycle in your garage because things are going to get pretty hairy for us in the not-too-distant future!