Stimulating Bad Ideas


Stimulating Bad Ideas

Jan 26, 2008 4 min read

Former Distinguished Fellow

Ernest served as a Distinguished Fellow at the Heritage Foundation.

We can't afford Congress. It's driving America's cost-of-living through the roof.

Any tax cut or "economic stimulus" we might get this spring is peanuts compared to how Washington keeps jacking up the price of everything that's important.

By itself, last month's energy bill will make food, cars, gasoline and even light bulbs more expensive. Washington is also the culprit behind high medical bills and health insurance, washing machines that have doubled in price, and our wonderful, more-expensive "lo-flo" toilets that don't flush right.

All this is on top of what red tape already costs us. A 2004 government report admitted that federal regulations cost our economy at least $1.1 trillion each year. That's $3,666 per person, so multiply that by the number of people in your household. And remember that's before the 2007 energy bill. And in addition to taxes.

The new energy laws are a leftist's dream and a supply-sider's nightmare. As 2008 starts, we're paying $3 (often more) for a gallon of gasoline. That's up about a fourth (64 cents) from a year ago. The Heritage Foundation calculates the new energy bill will boost gas prices over $5 a gallon by 2016. Yet rather than let us produce more oil domestically, Congress keeps areas off-limits from drilling that could raise supply and lower prices.

Someday you might save gas, since Congress has dictated that new cars must soon get 10 percent more miles per gallon. But that depends on your being able to afford a new car. Sticker shock on new cars will get worse because engineering them to meet the mandate will raise car prices by $5,000 to $7,000 per car, according to General Motors.

Compounding the engineering challenge is the congressional requirement that more ethanol be mixed into the gasoline. That lowers mpg because ethanol contains less energy. In return for this mileage reduction, your tax dollars are used to pay ethanol producers a 51-cent-per-gallon subsidy. Since the new law compels the sale of 35 billion gallons of ethanol - up from the currently mandated 8 billion gallons a year - the subsidy costs to taxpayers will rise from $4 billion to $17.5 billion annually.

This is why food prices keep going up. As more corn goes into ethanol, food processors must bid against the government subsidy to buy corn. So must livestock producers who need the corn to feed the cattle, chickens and other animals. Even before the four-fold increase in the ethanol mandate, one-fifth of corn production already goes to ethanol. This will worsen the $9 billion a year extra that consumers already pay in food prices because ethanol subsidies have taken so much corn out of the food and feed supply. Thanks to Congress, the era of cheap and plentiful food in America may be over. (Sadly, they'll just propose more food stamps as a "solution.")

Could we just plant more corn (and maybe end $23 billion in farm subsidies)? The ethanol mandate is so massive there's not room to plant more corn to avoid higher food prices. The National Environmental Trust estimates the new mandate will require us to plant an additional 82.5 millon acres of corn (129,000 square miles). That would take every square inch of Tennessee, Kentucky and Ohio - presuming you could evacuate the people and plant every acre.

Then there's Congress' bright idea about light bulbs - banning Thomas Edison's invention of the incandescent bulb. As a smart shopper, I can buy them on sale for only 25 cents each. But I can't find the new curlicue fluorescent bulbs for less than $2 apiece. I've bought some anyway, since they're said to last eight times longer and save 80 percent more energy. But I resent Congress' telling me I've got no choice. I'm tempted to be ornery and stock up on the old-school bulbs before they're banished to consumer prison. (I had the same dismay when the feds banned 99-cent cans of Freon, making us spend a hundred dollars to fix the coolant in our car air-conditioning.)

There's a cultural factor, too. We lose a little refinement when the piggy-tail lights replace decorative bulbs in candelabras, mirror lights, etc., or we can't find small incandescent lights for Christmas decorations.

These mandates come from the same folks who brought us the $900 washing machine (up from $400 or so before federal mandates kicked in) and the pricier 1.6-gallon-per-flush toilet, which wastes water because you have to flush multiple times.

Federal red tape is also the biggest reason why health care is so expensive. For each hour spent with patients, our doctors, nurses and their staff must spend almost another hour doing the paperwork dictated by federal regulations.

No wonder we're losing jobs to the rest of the world. They don't drown themselves in silly red tape that makes the price of their products uncompetitive. But we do.

Presidential candidates take note: If you want to woo middle-class voters, don't offer them one-shot rebates or other "economic stimulus" gimmicks. Bring back common sense, and make life in America affordable again.

Ernest Istook is a distinguished fellow in Government Relations.

First appeared in World Net Daily

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