Thomas Molitor

Mora County Commissioner John Olivas wants a ban on oil and gas drilling in his county because he is concerned about the environmental impact of a drilling process used to extract tight shale gas named hydraulic fracturing – or “fracking” as it is colloquially called.

Mora County is not alone in its concern about fracking. Santa Fe, Rio Arriba and San Miguel counties have halted or discouraged drilling and fracking with ordinances and moratoriums.

In a hydraulic fracturing job, “fracturing fluids” or “pumping fluids” consisting primarily of water and sand are injected under high pressure into the producing formation, creating fissures that allow resources to move freely from rock pores where it is trapped.

Typically, steel pipe known as surface casing is cemented into place at the uppermost portion of a well for the explicit purpose of protecting the groundwater.

In 2004, the EPA concluded, “the injection of hydraulic fracturing fluids into coal-bed methane wells pose little or no threat to underground drinking water.” However, last month the EPA announced for the first time that fracking may be to blame for groundwater pollution.

The EPA found that compounds likely associated with fracking chemicals had been detected in the groundwater beneath Pavillion, a small community in central Wyoming. The EPA emphasized that the findings are specific to the Pavillion area. The agency said that fracking that occurred in Pavillion differed from fracking methods used elsewhere in regions with different geological characteristics.

A deceitful movie

So why are county commissioners in New Mexico jumping on the “ban wagon?” Maybe they have been watching too many Michael Moore-like documentaries on Netflix. An Oscar-nominated documentary, “Gasland,” says fracking contaminates our water supply with chemicals. In the movie, some homeowners set their tap water on fire.

The movie got a lot of attention (maybe Commissioner Olivas’?), but the movie’s arguments against fracking turn out to be deceitful.

Apparently, the dramatic tap water blaze had little to do with fracking. In many parts of America, there is enough methane in the ground to leak into people’s well water. The best fire scene in the movie was shot in Colorado, where the filmmaker is in the kitchen of a man who lights his faucet.

But Colorado investigators went to the man’s house, checked out his well and found that fracking had nothing to do with his water catching fire. His well-digger had drilled into a naturally occurring methane pocket. The Colorado Oil and Gas Conservation Commission (COGCC), which is overseen by the Department of Natural Resources in Colorado, made this report investigating the claims made by the Gasland filmmakers.

Gasland features three Weld County landowners, Mike Markham, Renee McClure, and Aimee Ellsworth, whose water wells were allegedly contaminated by oil and gas development. The COGCC investigated complaints from all three landowners in 2008 and 2009. The COGCC concluded that Aimee Elllsworth’s well contained a mixture of biogenic and thermogenic methane that was in part attributable to oil and gas development, and Ms. Ellsworth and an operator reached a settlement in that case. However, using the same investigative techniques, the COGCC concluded that Mike Markham’s and Renee McClure’s wells contained bi0genic gas that was not related to oil and gas activity. Unfortunately, Gasland does not mention the McClure finding and dismisses the Markham finding out of hand.

So the Tower of Babel stretches high on this issue of whether fracking is the devil incarnate or just needs professional oversight to continue exploring a possible game-changer for America to break its dependance on unfriendly foreign fossil fuel sources.

Fracking in New Mexico

Fracking was used as far back as the 1860s to access oil and gas reserves. “In New Mexico, the majority of the 52,000 oil and gas wells in production have undergone fracturing,” according to the New Mexico Oil and Gas Association.

In early August of 2011, the New Mexico Oil and Gas Association took a pre-emptive step and asked the state to require companies to disclose fluids 45 days after a well is complete. The information must be posted on a new public website called FracFocus or submitted in writing to the Oil Conservation Division.

“Fracking is the key to increased domestic production,” says Steve Henke, executive director of the New Mexico Oil and Gas Association. “Without this tool, many of these unconventional shale formations become uneconomical to drill.”

The Big Picture

The world’s centers of gravity for hydrocarbons are spreading out from the Middle East. And the reason is new exploitation of “unconventional sources” such as shale. Within the oil and gas industry, this new output is called the “shale gale.”

It’s not overstating the case to say that unconventional hydrocarbons have shifted the world’s energy balance of power. The “shale gale” has spread the wealth around. Vast volumes of hydrocarbons are not just Middle Eastern plays anymore.

This shift has been enabled by new technology – revolutionary, really. Across the world, we’ve seen vast, stunning improvements in applied mathematics and computational abilities. Just on that basis along, today’s energy industry works with much-better exploration tools than in the past – better seismic and geochemistry.

Then there are new dramatically improved capabilities in directional drilling, with better drill bits and better fluids. After the holes are drilled, there’s fracking. The modern energy industry has more powerful pumps, more control of down-hole pressures and even better nanomaterials for holding the cracks open in the fractured shale and other tight rocks. What’s more, there are better post-completion treatments.

Here in the United States, the shale gale has eliminated the need for liquefied natural gas (LNG) imports, likely for several decades and perhaps longer. In addition, the shale gale has the potential to significantly reduce Russia’s influence over the European natural gas market. At the same time, the shale gale will dramatically diminish the “petro power” of other major OPEC players, such as Iran and Venezuela.

Fracking is important to New Mexico

Fracking plays a very important role in energy production nationally and in New Mexico.

A recent report from the American Petroleum Institute concluded that if Congress were to place additional federal regulations that govern the oil and gas industry practice of fracking, the number of new U.S. wells drilled would plummet 20.5 percent over a five-year period.

The study also concluded that elimination of the use of fracking would be catastrophic to the development of American natural gas and oil, with a 79 percent drop in well completions, resulting in a 45 percent reduction in natural gas production and a 17 percent reduction in oil production by 2014.

The oil and gas industry provides significant revenues to the State of New Mexico and local municipalities. For fiscal 2010, oil and gas revenue payments in the form of taxes, royalties and other revenues totaled nearly $2.2 billion. That represents a 27 percent contribution to the state’s general fund.

Now it’s up to the energy industry here in New Mexico to keep pressing its efforts to move ahead with new technology and improved internal controls.

While at the same time, it’s up to the policymakers of New Mexico to keep up on those latest technological and safety improvements in the industry in order to be better-informed about an industry that is of such vital importance to the revenue and energy development of New Mexico.

Natural gas is not risk-free, but no energy source is. Perfect, Commissioner Olivas, is not one of the choices.

Thomas Molitor is a regulatory analyst with the American Action Forum in Washington D.C. You can reach him at tgmolitor@comcast.net.

Thomas Molitor

I want to discuss a theoretical idea regarding the economics of pollution, called “externalities.” Despite what some readers might think, I do care about the environment. I just don’t see current government regulations as a way to solve our problems. In fact, those regulations often make the lives of average people worse.

Let’s start with positive externalities. They’re a little harder to come up with but I’ll try to make a good example. Suppose that I buy a rundown house on a nice block. I put a lot of money into fixing it up and doing some amazing landscaping work. Suddenly, this former dump on the block becomes one of the best-looking houses. My property value increases, but so do the property values of my neighbors. They didn’t put a single nickel into my project, yet their property values may rise by thousands without the eyesore next door. This unpaid gain is a positive externality.

In a way, externalities are inefficiencies. We want people to produce positive externalities, but we often have no way of compensating them for doing so. One is not going to make friends by giving a neighbor $200 and telling him, “It would be great for the whole neighborhood if you would fix your yard.”

The bigger concern is negative externalities

Suppose a coal-powered plant is located near someone’s house. The person buys electricity from the plant at market prices. However, along with the price of electricity, the customer pays an additional price from the increased pollution. The fish nearby have more mercury in their bodies, and the air is horrible. Not every customer pays this price. For those living much farther away from the plant, the externalities are lower. The coal plant does not pay the price of this damage; instead the plant’s neighbors pay the price in a reduced quality of life. Yet pollution is a cost of production.

Just like the positive externalities problem, it’s difficult for an individual to be compensated by the coal plant – especially if the damages are hard to quantify. Furthermore, what’s the price of clean air? I don’t know. For some people who enjoy living in the countryside, it could run in the thousands of dollars per year.

To produce good economic incentives, these externalities must be accounted for. After all, society benefits from production only if value is created. For example, let’s consider a company that manufactures cleaning chemicals for $4 and sells them for $5. Society gains by at least $1. Resources worth $4 have been transformed into products worth $5 to someone. The economic incentive is to keep repeating this process until the profit disappears. However, imagine this case: The chemicals cost $4 and can be sold for $5, but the process also causes $2 of environmental damage. The producer doesn’t pay the cost of the environmental damage, but he still has a personal incentive to produce the chemicals. However, society is worse off overall, because the process costs $6 for only an output of $5.

This is where the government economists step in with suggestions for taxes. If we place a $2 tax on the chemical company, then the incentive will be aligned. Yes, that’s partially true. However, this doesn’t necessarily solve the problem of pollution. Think again about the example of living next to a coal plant. Suppose the government places an extra tax on the plant, and it continues to operate. Who will pay for that tax? Unfortunately, the customers will likely bear some of the cost through higher prices. In fact, the resident will be worse off after the tax. He still bears the damages from pollution, and he must pay higher prices. That tax money doesn’t go toward compensating the victim of the pollution – it goes to paying additional bureaucrats at the EPA.

Laws that punish companies but don’t protect people

Environmentalists almost always support laws that punish companies but don’t actually protect people. In fact, they actually make things worse for the regular Joe. If a company meets the regulations and pays its taxes, it can basically do whatever it wants from there. And that’s a big reason why I’m not a fan of current regulations. The environmental laws are more often than not just barriers or taxes. They don’t do a good job of protecting the little guy.

So what would be my solution? Make companies respect the private property and lives of other people. Don’t hold them responsible to the government; rather, hold them directly responsible to individuals in the community. If a company is hurting people and their property, the firm better be writing them checks instead of sending money to the EPA. It’s really not a radical idea. We do this in court all the time. If a business hurts someone, it’s accountable. For some reason, the same thing doesn’t apply to pollution. Rather than devising environmental regulations and taxes, just hold the companies accountable for damages. That should create all sorts of positive incentives regarding pollution and the location of industrial sites.

It’s time for Congress to look at new ways to protect people and communities, rather than protect the EPA.

Molitor is a regular columnist for this site. You can reach him at tgmolitor@comcast.net.

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Thomas Molitor

Except for their own.

The government has no resources of its own. Everything it does must come from the hides of private producers and the citizenry.

We’re on our own here folks. Don’t look to politicians to look out for our well-being – they are in no position to do so, nor do they even care for you. They care for their careers, and that is all. Maybe I’m wrong. But it seems so.

As the late comedian George Carlin said in his last HBO special before he died: “The real owners of this country don’t care about you. Forget the politicians. They are put there to give you the illusion that you have freedom of choice. You don’t. The real owners control everything.”

Okay, back to jobs. President Obama promised America “hope and change.” He has been in office for over 2.5 years and we are worse off, statistically, then when he took oath.

It’s not his fault. Well, maybe it is. But he has no cohesive, strategic plan for job creation or vision for a way out of this downward spiral, nor does his Council of Economic Advisors – whose chairs quit faster than workers at McDonalds – or his Federal Reserve chairman, Ben Bernanke, who in the recent Wyoming summit pretty much said his monetary toolkit was plain out of tools. He did what any honorable member of government would do in his situation: blame someone else. He said: “Congress should quit arguing and pass legislation that gets our economy back on its feet.”

This is harsh criticism of Obama and Congress, but I think it is justified. Clearly, Obama is on his way to a failed presidency if he doesn’t change course with the rollout of his new jobs program. Don’t hold your breath for policy miracles. Like the subject head reads: Politicians don’t create jobs.

Okay, let’s see, who else can we blame?

The Chinese are to blame for America’s unemployment problem

Not.

Chinese goods account for 2.7 percent of U.S. personal consumer expenditures. Chinese imported goods consist mainly of furniture and household equipment, other durables, and clothing and shoes.

You probably guessed that this figure was much higher. Because we see “Made in China” stickers on our clothes, we imagine that Chinese exports are a major factor in replacing jobs in the USA.

Not so. Then why is urban Asia growing richer, you may ask. Mostly because Asian governments have moved away from the older state economic controls. They have freed up their economies.

China has 1.3 billion people. Yet there are no internal regional tariffs. It is the largest free zone on earth. China must feed itself, house itself, transport itself. Then it exports. To imagine that the export sector is the main sector is a mistake. It is the most innovative sector. It is where growth is transferred from an elite to the masses. China is the largest creditor nation in the world.

Steve Jobs creates jobs

The free market and the price system rewards people who implement ideas that customers are willing to pay for. Two words: Steve Jobs. By the way, what an appropriate last name for a guy who has created nearly 40,000 jobs at Apple plus thousands of other jobs in the Apple supply chain. What politician in the history of Congress can match the inventiveness of Steve Jobs and his track record of creating new products and their attendant job creation?

Our politicians here in New Mexico talk about little else than creating jobs – even traveling around the state on a glossy PR-created event called a “Job Tour.” The cynic in me says that the true objective of the “Job Tour” is to set up the politician’s next job in higher office. Nah, shame on me. I’m sure he is genuinely concerned about the number of New Mexicans out of work. But what can one politician do to remedy the problem? Well, there is something he can do if elected. More on that later.

The government may not have the power or knowledge to create jobs, but it does have the power to reduce business regulations, reduce taxation, and let entrepreneurs create jobs. That is it. In other words, get out of the way of tomorrow’s Steve Jobs.

Unemployment in New Mexico comes mainly from the construction sector. This is not a sector that any one politician or committee in New Mexico ruined. This sector was ruined by Federal Reserve policy, which created a housing bubble for the entire nation and then popped it.

Small businesses are traditionally one of the primary engines of job growth in New Mexico. But right now, small businesses all over New Mexico are having a really hard time getting banks to loan them money. A big reason for this is that the Federal Reserve is actually paying banks not to make loans. Member banks borrow from the Federal Reserve at a rate of 0.25 percent and then turn around and deposit the money back with the Federal Reserve at a 2 percent return – essentially, a risk-free profit. The money that is supposed to make its way through the economy never does.

Small businesses aren’t getting money

I would like to see the Federal Reserve eliminate interest payments on money that banks keep on deposit at the Federal Reserve, thereby encouraging the member banks to make loans to people and businesses instead.

This is but one example of monetary reform our country is in dire need of to restore this economy.

I believe a commitment from our current and future representatives in Washington to bold monetary reform at the federal level is of paramount importance in order to empower small businesses, entrepreneurs, and product innovators in New Mexico – in order for them to increase the productive capacity of our great state and get New Mexicans back on the job.

Sorry, I’m afraid another “Job Tour” is not going to do it.

Molitor is a regular columnist for this site. You can reach him at tgmolitor@comcast.net.

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Thomas Molitor

This is one of a handful of pieces written by NMPolitics.net columnists reflecting on the 10th anniversary of the Sept. 11, 2001 terrorist attacks.

I was working for a software company in Austin, Texas, but was in their Toronto headquarters on the morning of Sept. 11, 2001, and was staying at the downtown Hilton Hotel. There was a half-hour commuter train ride to the corporate offices.

Normally, the trip between the Hilton Hotel downtown and our offices north took about a half-hour. For some strange reason, on this morning the train kept stopping and delaying at every station and it took an hour and a half to get to the office that day.

The office was on the seventh floor of a glass-reflecting building north of Toronto, and upon exiting from the elevator into our lobby, I was ready to complain about the slowness of the train that day to anyone who would listen. Instead, I found 30 or 40 employees glued to the televisions positioned in all four corners of our lobby.

There, the horrific story unfolded. The company I worked for was Canadian, and so I joined my fellow employees, yet Canadian in nationality, to watch the images of the twin towers toppling like collapsed wedding cakes.

I was stunned – as, of course, everyone was.

When I found out that commercial airliners had been hijacked and flown into the twin towers, my first thought, and may God forgive me for this, was, “what an ingenious plan.”

I am a movie fan. More specifically, a “heist genre” fan. I love movies where the first two-thirds of the movie is the planning of a major crime and then Act Three is the execution of that plan.

I could not believe that 19 Saudi Arabian citizens boarded four commercial airliners in America and, armed with box cutters, brought down the Twin Towers. After all, I was raised in the Cold War era and was taught that the end-of-the-world scenario was going to happen by atomic bombs dropped from Russia directly on top of my school desk, under which my teachers told me to seek safety.

But this. This was the end of the world from within – not from without. Amateurish? Crude? Totally unexpected, yes. But effective.

Honestly, I didn’t even think of the people that died

The nearly 3, 000 Americans and others inside the buildings that died in the attack. The hundreds of first responders that died in the attack and are still dealing with respiratory problems. The thousands of family members affected by the tragedy. Can you imagine your husband or wife going off to work that day and then that? That’s the definition of true tragedy.

But no, I kept thinking of the “ingenious crime.” The imagination – the planning that went into pulling off this event by those responsible for this horrendous event.

Maybe it’s because I have spent my entire career in corporate business and, more specifically, business strategy. I always looked at things from a strategic point of view. It’s kind of like the feeling I get when someone commits a crime but, if the crime has a lot of inventiveness to it, there is a place inside me that applauds the ingenuity. Sick, I know, but that’s the initial flood of thoughts that came to my mind that day. Even when someone comes up with a way to rip off Medicare, the first thought that comes to my mind is, “Wow, I wouldn’t have thought of that.”

Which, by the way, explains, why I am not rich. I just don’t think of these kinds of ideas.

What I would like 9/11/2021 to look like

I’m not going to get into 9/11/2001 conspiracy theories. That’s a crowded field to which I could add absolutely no scholarship because I don’t know (they, either) what really happened that day.

For all I know, Lady Gaga planned the 9/11 attacks.

What I do know is what we spend on our military industrial complex and whether I feel we should continue be the world’s cop.

My truth be told, there is nothing for us to win in Iraq or Afghanistan or Yemen or Libya or Iran. Our mission has morphed from apprehending those who attacked us, to apprehending those who threaten or dislike us for invading their county, to remaking an entire political system and even a culture. I remain highly skeptical that, as foreign occupiers, we can ever impose western-style democracy on another country.

This is an expensive, bloody, endless exercise in futility. Generationally, I grew up during the Vietnam era. Newer generations aren’t willing to admit this yet, but every second they spend in denial has real costs in lives and livelihoods.

Many of us can agree one thing, however. Our military spending in general has grown way out of control. This is largely because fiscal accountability in military budgeting is seen, by many, as “weak on defense.”

This is absolutely wrong and a dangerous way to think. It is certainly possible for the military to waste money, or to spend counter-productively, and indeed it has. But out of political correctness, the military has been getting blank checks from the administrations and Congress for far too long.

I agree with Thomas Jefferson: Defend our soil!

It is important to defend our soil, but let us defend our own soil instead of defending Europe’s soil. Or any other country’s soil.

Our willingness to defend Europe and every other country on the globe enables their lavish social spending at our expense, while they criticize our model of capitalism. It is time they allocated the money for their own defense. The same goes for Korea, Japan, Yemen, Egypt and Israel.

Of course, the obvious way to save money and be safer is to stop meddling in the affairs of foreign countries and just bring our troops home. This will happen eventually if our empire, like every other fallen empire, insists on spending itself into collapse. If we want to avoid this, we must look into ways to bring our costs under control. Military budgets must be on the chopping block along with everything else.

In closing, I would like to give my heart out to those who lost family members in the 9/11 attack in 2001. In terms of personal ideology, I would like to see our government stop engaging in global activities that result in blowback events like 9/11/2001.

I truly believe that America is coming to a global awakening, that we can work out our own fiscal difficulties and prosper once again. But we must understand that all that America represents as a culture does not necessarily mean that we can export that culture as a model of excellence.

My thoughts today are with the families who suffered loss on 9/11/2001. My hopes are that, on 9/11/2021, we have right-sized our military expenditures and no longer have troops stationed in 130 counties around the world and spend trillions of American dollars and wasting thousands of American lives fighting other country’s battles.

Molitor is a regular columnist for this site. You can reach him at tgmolitor@comcast.net.

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The U.S. Constitution (Photo by sherrymain/flickr.com)

Why not? We’re not using it.

Congress is not using it. The U.S. Supreme Court is not using it. Obama is not using it – and he taught constitutional law at the University of Chicago Law School for 12 years. In practice, we have been ignoring and circumventing our Constitution since the moment the ink dried from the pens of our founding fathers.

Let’s face it. America is broke and needs to raise cash fast. Auctioning off the U.S. Constitution just might bring in a quick buyer.

Fundamentally, there are four things the federal government can do to raise money: raise taxes, borrow, print money, or sell assets.

The first is political suicide for both parties. We’ve already done the second and third big time and both have had zero affect on balancing our budget, lowering our debt, or raising revenues through increased employment. In fact, actions by this administration and the Federal Reserve Bank have only accelerated our dire debt situation.

No, the time has come for the fourth: Start selling off federal assets. An aggressive program of national asset dumping may prove to be the “revenue enhancements” our federal government is searching for.

I think the Constitution is the first to go on the auction block. Even if you are a constitutional originalist – and believe every word written on the sacred parchment is absolutely unalterable – chances are politicians in both parties haven’t even visited the original copy held at the National Archives and Records Administration in Washington D.C., let alone read it in full.

Or perhaps you feel the Constitution is a “living document?” No, that’s not up for interpretation any longer. The Constitution is not a living document; it’s a dead document in America. Has been for years. So I say let’s put it up on eBay and sell it to another country that might find some value in its carefully crafted words by some pretty famous authors.

After all, we need the money. Our federal budget deficit has been recently raised to $1.7 trillion. Our federal debt is now $15 trillion. And our unfunded liabilities for entitlement programs such as Medicare, Medicaid and Social Security – well, the future trend line is headed to the moon, with a projected minimum of $65 trillion. Ouch. Baby boomers are left high and dry and may want to consider moving back in with their parents. Obviously, with the way the markets are going these days, 401ks and IRAs are not going to be the safety cushion they were sold to us to be.

Possible buyers for our Constitution

Thomas Molitor

There are a lot of countries in the world that just might pay big bucks for the original copy of the Constitution if we put it up on eBay for sale.

Take the newest country in the world, for example, the Republic of South Sudan. The country just ratified a “Transitional Constitution” shortly before independence on July 7. They may be in the market for a “Permanent Constitution” soon, and we have one. We have to act fast, though. Timing in politics is everything.

Granted, South Sudan is one of the poorest countries, with possibly the worst health situation in the world, so it may be too early for them to bid big bucks on a 222-year-old, moldering, unused document. Feeding its poor may be a better use of its initial revenues than the South Sudanese parsing their way through all those articles and sections that another country has found worthless anyway.

Hey, New Zealand might be a good prospect. It is considered by the OECD as one of the world’s most free-market countries. It sells a lot of milk worldwide and is flush with cash. Smartly, they’ve been turning their backs on the United States and Britain and have signed cozy trade agreements with China and other Southeast Asian countries.

New Zealand has a very high standard of living, but more importantly to the United States, they have no unified constitution to speak of. The Constitution of New Zealand consists of a collection of statutes (acts of Parliament), treaties, orders-in-council, letters patent, decisions of the courts and unwritten constitutional conventions.

New Zealand, like its original benefactor, the United Kingdom, has no one supreme document; the New Zealand Constitution is not codified or, with the exception of certain electoral law, formally entrenched. Never know – maybe Britain and New Zealand will go in halfsies on buying our Constitution?

As to the selling channel, I did some research on eBay and found out that the most expensive item ever sold on eBay was a 405-foot, steel mega-yacht (marketed as a gigayacht) auctioned by the Fort Lauderdale-based company 4Yacht and designed by naval architect Frank Mulder of Mulder Design. The yacht was offered up for auction on eBay on Nov. 3, 2006 with a “Buy Now” price of $85 million.

The price paid your 50 percent deposit of the full purchase price of $168 million total. I think the Constitution could go for a lot more than a boat. Even if it was a fancy one. The Constitution has a lot of wise words in it, and another country, unlike the United States, might find some value in organizing its country around those very wise words.

Elsewhere, there are heaps of countries in the world without a constitution and plenty of money to buy one. For example, who knows what totalitarian regime might decide at the spur of the moment to convert to a republic form of government – say North Korea or Saudi Arabia or even China. Especially China. It is the largest creditor nation in the world (read: capitalism on steroids) and yet calls itself a communist government. Believe me, I bet you could search every government building in China and you would more likely find more copies of Benjamin Graham’s Value Investing than Karl Marx’s Communist Manifesto.

Come to think about it, let’s be real about the situation: How much longer are the Chinese going to keep buying our Treasury debt at a 2 percent coupon rate, especially since our debt just got downgraded from a AAA rating to a AA+ rating? Perhaps China might repudiate some of our debt in exchange for our Constitution? A barter deal. Just a thought.

Who squashed the Constitution, anyway?

Presidents of both parties. Members of Congress. The Supreme Court. Special interests. And every American who let them do it.

There are numerous examples throughout history of flagrant acts of constitutional desecration to point to, but none more defiling than the USA Patriot Act.

The USA Patriot Act was passed in Congress just 40 days after the terrorist attacks on Sept. 11, 2001, and rushed through with virtually no congressional debate. Clearly, the USA Patriot Act is an attack on the Constitution. The act permits government to search citizens’ as well as non-citizens’ medical records, tax records, library records, and gives the go-ahead for government agencies to listen in on private telephone conversations – plus the power to conduct secret searches on private, individual homes.

The act is in direct conflict with the Fourth Amendment of the Constitution, which clearly states, “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated…”

Continuing with the assault on civil liberties, the USA Patriot Act is also in violation of the Sixth Amendment and First Amendment, respectively: the right to a speedy trial, freedom of speech, religion and assembly. The USA Patriot Act permits the government to imprison Americans indefinitely without a trial if suspected of terrorist activity.

America was founded on the principle of individual liberties, the right to private property (which starts with your own body and the right to put in it whatever you want) and the rule of law. If it is acceptable to suspend the rule of law for the sake of security, then I agree with Benjamin Franklin, who said, “He who sacrifices freedom for security deserves neither.”

The USA Patriot Act is not the first governmental action that has infringed on our civil liberties. Dating back to 1798 (yes, just 11 years after the Constitution was adopted), the Alien and Sedition Acts by John Adams were clearly atrocious attacks on our constitutional rights. Abraham Lincoln suspended habeas corpus during the Civil War, and Franklin Roosevelt sent Japanese Americans to internment camps during World War II.

But the USA Patriot Act may just be the most egregious of them all, and we are living with it today.

Actually, let’s auction off the USA Patriot Act, too

Why not auction off the USA Patriot Act on eBay, too? The likelihood that totalitarian regimes such as North Korea and Saudi Arabia (let’s throw in Myanmar, China, and Zimbabwe, too) would be interested in buying our Constitution is slim and none, and slim just left town.

But I do think these countries might go for the latest version of the USA Patriot Act, to which Obama just gave his approval for a four-year extension.

The Constitution. The Declaration of Independence. The Bill of Rights. The Statue of Liberty. The Lincoln Memorial. We don’t really pay attention or respect any one them any longer, so why not auction them off on eBay and pay down our deficit with the proceeds from these real, tangible assets?

Heck, beats bludgeoning our dollar into oblivion via Bernanke, I say.

Molitor is a regular columnist for this site. You can reach him at tgmolitor@comcast.net.

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Millard Fillmore, the 13th president of the United States, was the last member of the Whig Party to be president.

Whatever happened to the Whig Party, anyway? It placed four presidents in the White House during its time: William Henry Harrison (1841), John Tyler (1841-1845), Zachary Taylor (1949-1850) and lastly, Millard Fillmore (1850-1853).

The Republican Party pretty much rang the death knell for the end of the Whigs.

Remember Congressman John Anderson’s bid for the presidency in 1980? In the end, he received 7 percent of the vote in the election with a total of 5.7 million votes. He did not carry a single precinct in the country. Anderson’s finish was still the best showing for a third party candidate since George Wallace’s 14 percent in 1968, and the sixth best for any such candidate in the 20th century (trailing Theodore Roosevelt’s 27 percent in 1912, Robert LaFollette’s 17 percent in 1924, Wallace, and Ross Perot’s 19 percent and 8 percent in 1992 and 1996, respectively).

I would be remiss, of course, if I didn’t give mention Ralph Nader. Nader was a four-time candidate for president of the United States, having run as a Green Party candidate in 1996 and 2000, and as an independent candidate in 2004 and 2008.

Two pillars of reform for a new party proposal

I just finished a book, The Conservative Revolution: Why We Must Form a Third Political Party to Win It, written by Nelson Hultberg.

Mr. Hultberg believes that there is no difference between the Republican Party and the Democrat Party.

He believes that Americans have come to realize that their revered “two-party system” is not what it claims to be. Democrats and Republicans have become merely two divisions of the same party – the Demopublican Party, as he calls it.

Hultberg points out that, “the levers of power that have allowed the enormous expansion of the federal government into a ‘Gargantuan beast’ were given to it in 1913 with the enactment of the Federal Reserve and the progressive income tax.” These two institutions ushered in the two major evils of modern day politics: fiat money and confiscatory taxation. “In doing so,” he says, “they destroyed the idea of ‘limited government’ that the Founders had given us in 1787.’”

Thomas Molitor

He suggests we introduce a new third-party based on at least two pillars of reform: Honest money and the equal-rate income tax.

Pillar No. 1: An honest money system

Mr. Hultberg says the Federal Reserve Bank’s monetary policy under Republican and Democrat administrations alike has always been to pump more credit (i.e., debt) into the economy because, according to John Maynard Keynes and his academic progeny, this is the only way to maintain a prosperous economy. This assumes that the creation of money out of thin air will increase people’s wealth without harmful ramifications.

Naturally, the economy has witnessed the boom and bust cycle of fiat money creation time and time again with much harmful ramifications.

Mr. Hultberg’s remedy for unsound money policy (Federal Reserve notes not backed by gold or anything else of intrinsic value) is to put strict limitations on the rate of monetary growth by the Fed. The way to do this, according to Mr. Hultberg, is through Milton Friedman’s 4 percent monetary expansion proposal cap. His plan would computerize the increase of the money supply at 4 percent annually – in other words, remove monetary growth from the arbitrary whims of Federal Reserve bureaucrats and make it automatic.

Pillar No. 2: An equal rate income tax

Mr. Hultberg states, “abolishing the income tax from America is our ultimate goal, but few in the freedom movement understand that the only way to do this is to first end progressive rates.”

According to Mr. Hultberg, most Americans do not understand that the major cause of explosive government spending is our use of progressive income tax rates to redistribute wealth. This is because the progressive income tax permits large constituencies of voters to pay zero taxes and equally large constituencies to pay next to zero taxes.

Statistics support Mr. Hultberg’s hypothesis. According to the IRS, the upper 50 percent of income earners in the U.S. pay 96.03 percent of all taxes, while the lower 50 percent of income earners pay 3.97 percent of the tax load. The bottom 25 percent of income earners pay zero taxes. Thus, a progressive income tax spawns a “something for nothing” voter mindset that dominates all elections.

As Mr. Hultberg states, “when large groups of voters are allowed the privilege of paying nothing or next to nothing in taxes, an irresponsible electorate will inevitably evolve to demand a steady expansion of government services. Consequently, in every election there’s an automatic 50 percent base of voters who have an insatiable demand for more government services and favor politicians who promise them those services because the funding of those services does not come out of their pockets.”

Mr. Hultberg suggests we start tax reform with a straight, across-the-board 10 percent federal income tax. All citizens must contribute to the system rather than leeching from the system. Under a 10 percent flat tax, if a taxpayer earns $100,000 annually, he or she would pay $10,000 to fund the government. If he or she earns $8,000 annually, he or she would pay $800. This way everyone (no matter how small their contribution) has a stake in being a responsible citizen and voting for the common good instead of trying to get something for nothing by taking money from his or her neighbor.

The Conservative American Party

Mr. Hultberg calls for a third party, and has a website called Americans for a Free Republic, in which he is searching for a  candidate to adopt these pillars of reform and has suggested the party be called the Conservative American Party.

Myself, I am leery of putting a label on a new party which, name alone, might alienate voters who agree with the principles of the party but have misplaced associations with the name of the party. I think we can all agree that we are fed up with both parties (hence, the ascendancy of the Tea Party) and would like our elected officials to be more prudent with our tax appropriations.

Green Party. Independent Party. The Peace and Freedom Party. The Conservative American Party. Let’s not get hung-up on names, let’s maybe agree that this country needs to find a way to break the duopoly of a two-party system and give voice to candidates who may not be bought by the corporate class and may not be motivated by voter appeasement alone.

Molitor is a regular columnist for this site. You can reach him at tgmolitor@comcast.net.

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Gary Johnson

Former N.M. Gov. Gary Johnson is a decent human being. He is philosophically sound, pleasant and sincere. A genuinely likable guy. Which is why he hasn’t a snowball’s chance in hell to win the Republican presidential nomination in 2012.

The chances of Johnson even being a contender for the nomination of the Republican Party is zero. And if he got it, the chances of his being elected are less than zero – c’mon, this is the same electorate that put in Obama.

CUT TO: an opium den dream sequence. Johnson is actually elected through some Olympian intervention, but the sober fact is, real change would be impossible. The NSA, the CIA, the FBI, the DOD, and the rest of them are now an empire within an empire. If Johnson ever tried to make serious changes I suspect he’d get a very serious talking-to, much more scary than a small-town mayor might get from the mob. The situation is beyond redemption in my view.

But wait, what about the Tea Party?

There’s the Tea Party. The Libertarian Party. Independents. An anti-government sentiment on broil, even a few genuinely free-market Republicans out there – all constituencies that might vote for Gary Johnson. There are a lot of disillusioned people out there, a good number of whom might vote for an honest man, even if they don’t agree with him about everything.

Okay, maybe he has a chance? Naw.

To start with, about half the population is on the dole – 45 million are on food stamps alone. Worse yet are all the corporate welfare recipients and high-finance fat cats in bed with the government. There are just too many people whose rice bowls would be broken for Johnson to get elected. Organized labor would never stand for him, and much of corporate America would actually be on their side.

Thomas Molitor

Furthermore, there’s no constituency that would really be for him. The Libertarian Party is a completely ineffectual non-entity, and unworthy of support, as it proved by nominating the Congressman Bob Barr for its last candidate. The Tea Party has no central philosophy. Enough said.

Can Johnson shift the debate at least?

Sure, he might change the nature of the debate a bit, and that would be a good thing. It would offer him an ideological pulpit for educating the populace beyond the two-party duopoly, which might be a noble reason for Gary to give it a go.

But none of that debate will change the way the vast majority of either the electorate or the politicians think or vote. The fact is that politicians all know they won’t get re-elected if they force America to bite the rusty bullet it must if America is to begin a real recovery.

In other words, what needs to be done is a large-scale firing of government employees, the abolition of most agencies, reinstitution of a sound currency, a default on many or most government obligations, radical cuts in spending, and the disbanding of the military-industrial complex. Yeah, right. Anybody who did those things would be branded a traitor, or worse.

So the government will continue kicking the can down the road. A controlled demolition of today’s totally corrupt system is the best thing that could happen. Instead we’ll get an uncontrolled collapse later.

The unavoidable train wreck

There is no way to avert the train wreck now. The infinite demand for government services from the 50 percent of the population who pay about 4 percent of the total tax revenues of the United States guarantees it – that’s the point of no return. Not to mention the abject failure of the government education system. Things won’t get better until the present system implodes.

In that regard, I’m glad Johnson is running because his campaign will almost certainly underscore Ron Paul’s principles, which he has been out on the road singing for over 20 years. Both Johnson and Paul speak on principle, and on things that matter. The fact that neither can win is actually a good thing. I pity the poor fool who’s in office as we come out of the eye of the hurricane we’re in now. Whoever is in office will be blamed, even though the collapse will be the consequence of decades of mismanagement.

But getting the ideas out into TV-land is a good thing. Come the crunch, the more people who’ve heard of Johnson’s and Paul’s free-market ideas, the better the odds of things looking up after the crash.

I said there’s no way Johnson will win or prevent the impending economic collapse America is slipping into – but I didn’t say his campaign wouldn’t do any good.

I wish him the greatest success.

Molitor is a regular columnist for this site. You can reach him at tgmolitor@comcast.net.

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The Roundhouse in Santa Fe (Photo by Peter St. Cyr)

Intentions are always good when legislators introduce bills that attempt to create jobs in their state.

Senate Bill 19 was a such a bill. Introduced by Sen. Tim Keller, D-Albuquerque and Rep. Larry Larranaga, R-Albuquerque, SB19 would have required a business to be established in New Mexico and paying state taxes for a few years before it could qualify for a preference law that gives local contractors a 5 percent advantage when bidding on public projects.

Evidently, SB19 has broad support – from the business community, legislators, and Gov. Susana Martinez. Yet Martinez vetoed the measure last week, because of a five-word phrase in the bill that became a concern.

The phrase that garnered her veto was the definition of a public body, which included the words “any entity on state-owned land.” She felt that the phrase leaves concerns that private businesses might be included under the definition.

SB19 is a protectionist tariff

Gov. Martinez has indicated she intends to look at the legislation again during the special session to be held later this year. My unsolicited advice to the governor between now and then is to read (or reread) Adam Smith’s “Wealth of Nations.”

Thomas Molitor

In general, Smith rested his case for free markets on one fundamental proposition: “In every country it always is in the interest of the great body of the people to buy whatever they want from those who sell it cheapest.”

I ask, is giving “preferential treatment” to local construction businesses in the best interest of the great body of New Mexico? According to Rio Grande Foundation President Paul Gessing and Fox Business News reporter John Stossel, the answer is no.

Giving “preferential treatment” to local construction businesses is anti-free trade and does not necessarily serve the return-on-investment for the New Mexican taxpayer. According to Mr. Gessing’s position, in construction, there is a web of preferences (or, as Adam Smith would say, “barriers to free trade”) that has been erected in order to improve the prospects of supposedly New Mexico-based construction companies in receiving public construction projects in the state.

“In-state favoritism is bad policy,” Mr. Gessing says. I agree, and I think Adam Smith would have agreed as well.

After all, ultimately, it is taxpayers who lose out because of protectionist policies. If an out-of-state company can do the job better and/or cheaper (thus winning the firm the project), we’d be foolish not to hire it to do the job.

Senator Keller responded to Gov. Martinez’s veto of his bill with the following statement: “With an estimated 3,000 annual jobs at stake this bill is of urgent importance to the business community and job creation in our state.”

Of course job creation is of the utmost importance to our state, but are in-state protectionist policies good for the state overall?

The ‘seen’ and the ‘unseen’

It has been said that the art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

The “3,000 jobs” Sen. Keller cites are the “seen.” (Although heavens knows promised jobs legislation has disappointed many times in the past.) The unseen is the placing into law what amounts to a protectionist tariff on the free trade of out-0f-state bids that may be in the best interest of the New Mexican taxpayer in the long run.

I think Gov. Martinez ought not ruminate too strenuously over those five words – “any entity on state-owned land” – over this summer and instead look at the bigger, unseen picture. SB19 is a tariff on out-of-state construction companies. Does this tariff benefit the great body of interest in New Mexico in the long run?

Molitor is a regular columnist for this site. You can reach him at tgmolitor@comcast.net.

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Gary Johnson

The “war on drugs” is a losing battle.

Our former governor touched a third-rail when he took a stance in favor of the legalization of marijuana back in the 90s. Now it appears he is to run in the presidential Republican primary in 2012 (by the way, why not for Bigaman’s vacated senatorial seat, Gary?).

After $1 trillion spent on the “War on Drugs,” even the United States drug czar Gil Kerlikowske concedes that, “in the grand scheme, it has not been successful.”

Meanwhile, with 5 percent of the world’s population, the United States now has 25 percent of the world’s prison population.

In a recent report, the Associated Press assembled some pretty grim statistics. Here are just a few. The federal government has evidently spent $33 billion in various antidrug messages and prevention programs. But high-school students continue to use illegal drugs at the same rate as in 1970, and drug overdoses have risen steadily since then.

Some 37 million nonviolent drug offenders – about 10 million of them using marijuana  – have been arrested, at a cost of $121 billion; jail time, research shows, tends to increase drug abuse. Another $450 billion has been spent on locking these people up in federal prisons alone.

At some point, it becomes impossible to pretend any longer that government and its law enforcement arm can solve a problem of this nature. This is a job for families and local institutions, not a paramilitary police state spearheaded by the DEA.

How are other countries handling the problem?

Thomas Molitor

Since 1976, Holland has pursued a marijuana decriminalization policy in which law enforcement will not harass people in possession of small quantities of the weed. Harder drugs are treated in a similar fashion: As long as the quantities remain within certain limits and the individuals involved commit no other criminal behavior, the laws will not be enforced.

Two decades later, teenage marijuana use in Holland is half the level in the United States. Hard drug use decreased among the same group from 15 percent to 2.5 percent, and the average age of the users of such drugs increased by more than seven years.

Portugal recently introduced an even more sweeping policy, abolishing criminal penalties for possession of previously illegal drugs. Again, the results that critics predicted have not come to pass. Portugal was not overrun by so-called drug tourists, and its drug problem has not been exacerbated. To the contrary, five years after the implementation policy, drug use was down considerably among young people, deaths related to heroin and drugs of similar caliber had been cut in half, and the number of people seeking drug treatment had more than doubled.

Had drug use and deaths increased, critics would have pointed to them as evidence of the failure of the policy.

The number of U.S. drug prisoners has increased twelvefold

Meanwhile, in the United States it has been full steam ahead with the imprisonment strategy. The number of drug prisoners has increased twelvefold since 1980, at a time when the number of people behind bars has only quadrupled.

If we add up the number of people incarcerated for all crimes in England, France, Germany and Japan, we would not reach the number incarcerated in the United States for drug crimes alone.

Within a generation of the beginning of the War on Drugs under Nixon, some 19,000 state and local police officers were pursuing the drug war full time, with another 11,000 engaged in it part time.

Two California congressmen confided to a U.S. judge that every federal agency they could think of was getting extra funding in the name of the war on drugs – not just the Drug Enforcement Administration, the military, and the State Department, but also agencies one would never think of, like the Department of Agriculture or the Department of Land Management.

These agencies, the judge was told, are “addicted to the funding provided by the War on Drugs, and they do not want to give up the money.”

The war on drugs has been counterproductive

The 2008 National Survey on Drug Use and Health found that 43.7 percent of American adults – over 98 million people – admitted to marijuana usage at some point in their lives, with 10 percent having used it in the past year. That’s 22.5 million people. At that time the entire incarcerated population of the United States amounted to about 2.3 million. Since it is impossible, and obviously not desirable, to incarcerate tens of millions more, what on earth are we doing?

As for our neighbor south of the border, the Mexican government has released a database it says covers all murders presumed to have a link to the country’s drug wars in which at least seven different cartels are fighting each other and federal forces deployed in a massive offensive against them that was launched in December 2006.

The number of deaths has risen rapidly since then to total 34,612 through the end of 2010, which was by far the most violent year so far with 15,273 people killed. Reportedly, half of the drug trade from Mexico involves marijuana.

Like the failed prohibition laws on alcohol between 1920 and 1933, the prohibition on marijuana has tragically squandered lives and resources, and has been, in practice, a job-creation policy for criminals and corrupt governments and police forces.

Cut government spending on the war on drugs

House Republicans just unveiled a far-reaching budget proposal for next year and beyond that cuts $5.8 trillion from anticipated spending levels over 10 years, and is likely to provide the framework for both the fiscal and political fights of the next two years.

I haven’t read the budget and don’t know how much of the proposed spending cuts would involve cuts in agencies currently funded to fight “the war on drugs.”

But now would be the prefect time for Congress to put those futile drug war expenditures on the table for budgetary discussion, alongside a strong advocacy for the total legalization of marijuana.

Molitor is a regular columnist for this site. You can reach him at tgmolitor@comcast.net.

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The Roundhouse in Santa Fe (Photo by Peter St. Cyr)

Governor, Legislature, withdraw your swords! You’re fighting the wrong battle. The battle isn’t against each other, it’s against other states.

Today, there are multiple combat lines being incised between a number of fiscal, economic and ideological forces. Of all the various combatants, the U.S. states are emerging on the frontlines of the fight. And some of their tactics are encouragingly following free-market principles. Let’s pick up the story with some recently published data.

The corporate income tax rate drives revenue overall

It’s no secret that U.S. states in general are facing large budget deficits, and a dozen or so in particular are in dire straits. State tax revenue has fallen dramatically since the real estate bust and subsequent recession. Although the National Bureau of Economic Research, the official arbiter of recession dating, declared the nation’s downturn had ended in June 2009, the rest of the country knows better.

Let’s look at the three tax revenue sources: corporate income tax (CIT), personal income tax (PIT), and the sales tax (GRT).

Of the three revenue sources, CIT is the one to watch and will determine the path of PIT and GRT growth. A sustained fall in corporate taxes remitted to the state signals company profits are falling or remain negative. Declining or non-existing company profits do not encourage hiring – and absent rising employment, both PIT and GRT revenue stagnate.

Yes, PIT and GRT revenue have shown signs of life for 2010 through September. However, whether this rise was due to income tax rebates and other one-time stimulus schemes or organic growth in employment and wages is hard to determine. Time will tell. The fact remains, the unemployment rate is proving harder to lower than the decibel level on Fox News.

State vs. state: Let the battle begin

Thomas Molitor

Recent events suggest that a battle for tax revenue has commenced – pitting high-tax states against low-tax states.

In January, Illinois, faced with a gaping $13 billion hole in its budget, $8 billion in unpaid bills, and addicted to its corrupt spending ways, raised its personal income tax rate 66 percent and the corporate tax rate 46 percent.

The reaction from neighboring Wisconsin Governor Scott Walker was immediate. “Escape to Wisconsin,” said Walker, borrowing from an old state tourism board campaign slogan, and urged Illinois businesses to move to his state.

Wisconsin’s Walker was not alone. Indiana Governor Mitch Daniels, Michigan’s Rick Snyder, and even Chris Christie in faraway New Jersey have been promoting their states as a haven for businesses that want to flee the tax-and-spend culture.

This rivalrous trend is not limited to the big three tax revenue targets – PIT, CIT, and GRT – with some states getting very creative. The latest twist on beggar-thy-tax-neighbor targets cigarettes in the hope of drawing smokers from other states to buy in their state and increase revenue.

This is the age-old border town strategy. States with geographically small footprints and/or those with large towns on or near their borders will entice neighboring state residents to make the short drive and save on sales, use or excise taxes.

My prediction: At some point, states will begin reducing their tax on gasoline to draw motorists from across the border.

Inter-state tax competition

Tax competition is here and it is real, not merely conjecture based on anecdotal evidence.

If you want to increase your tax take, lower your tax rate. As counter-intuitive as that sounds, it’s true. Free-market competition has entered the tax sector.

Unfortunately, New Mexico has a higher corporate tax rate than any of its neighboring states – Texas, Arizona, Colorado, Utah – according to The Tax Foundation figures.

The recently concluded legislative session did absolutely zero to address this inter-state competitive tax competition.

The border town strategy is turning today’s state lines into tomorrow’s revenue battle lines. The New Mexico taxpayer will be the ultimate winner if the Legislature and the governor stop competing against each other and start competing against other states for revenue and jobs.

Molitor is a regular columnist for this site. You can reach him at tgmolitor@comcast.net.

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