Victorville Daily Press
The U.S. Commerce Department predicted that the Gross National Product for the first quarter of the year would grow by .6 percent, but it didn’t; it grew by .9 percent.
Why is that noteworthy? Because the department underestimated the strength of the American economic system, and because it also belies the assumption by a whole raft of economists that we’re either on the verge of a recession, or more commonly, that we’re already in one. Recessions are defined as beginning when, for two straight quarters, the economy shows negative growth.
Predictions now, in the wake of the first quarter’s figures, are that the economy will grow by .4 percent in the current quarter, which ends in June, and then will grow by 2.2 percent in the third quarter, which ends in September.
George Bush entered office just as a recession was getting underway, but his tax cuts pulled the economy back into the black. Now, Congress and the two Democrats seeking their party’s nomination, Barack Obama and Hillary Clinton, say they’ll push Congress to “phase out” those tax cuts — which actually would mean tax hikes, and which would pretty much automatically guarantee a recession.
Are they, economically speaking, crazy? Of course. The wonder is that so many Americans don’t view them as being so.
But raising taxes isn’t the only thing threatening the economy, in fact, it’s not even the most serious. That spot is filled by a Senate bill titled America’s Climate Security Act. It sets strict limits on emissions of greenhouse gases, mainly carbon dioxide, from combustion of coal, oil and natural gas. A Heritage Foundation report says that the fossil fuels targeted constitute “the most expensive environmental undertaking in history.” They produce 85 percent of the energy powering the economy, and restricting that energy would raise prices for electricity, natural gas and home heating oil, and would drive the typical consumer’s total annual energy bill higher and higher —$938.63 more in 2030 than 2012.
Meanwhile, gas prices in the Victor Valley — and across America — went up again this week, and of course Congress is fulminating about Big Oil and its evil ways. But consider this little kernel of truth emerging from the Senate Judiciary Committee’s grilling of oil executives in mid-May: 15 percent of the cost of gasoline at the pump goes for taxes, while only 4 percent represents oil company profits. In California, of course, the 15 percent is higher, since California taxes gasoline consumers at higher rates than any other state.
Naturally, Congress is mulling a “windfall profits tax” on oil companies because of those “obscene” profits. But are they obscene? Not exactly. The average profit of American oil companies last year was 8.3 percent. But American cigarette and beverage companies’ average profit margins were 19.1 percent, pharmaceutical companies’ 18.4 percent, and American manufacturers’ 8.9 percent.
No, the real culprit here is Congress and various other state and local governmental bodies. Congress, as we’ve often noted, keeps American oil companies from further exploration and development of potential oil sources, taxes those same companies at exorbitant rates (which cuts into their research and development budgets, which cuts into their ability to develop new sources and more efficiently exploit old sources) and in addition bars development of other, cleaner, sources by over-regulating their licensing, construction and use.
We suppose the day will come — eventually — when the American people finally begin to realize the harm that’s been done them by a Congress too wrapped up in the blame game to come to grips with reality. By then, of course, our options will be even more limited than they are today.