Bring Warren G. Harding Back from the Dead

Beginning in 1920, after the end of World War I, the U.S. Gross Domestic Product plunged 24 percent, consumer prices dropped 18 percent, and unemployment soared from 2 percent to 12 percent. It was ugly.

Did President Harding try to spend his way out of the downturn? Not on your life. Instead, he cut federal expenditures, reduced the top tax rates, and broadened the tax base, making the rates flatter and less progressive. He also induced the Federal Reserve Bank to cut the money supply.

Bingo, the depression came to a screeching halt. Unemployment plunged, and the extraordinary prosperity of the 1920s was launched.

Bigger government and higher tax rates don’t cure economic downturns. They lengthen and intensify them.

 

 

 

Who’s Greedy for Oil Profits?

Oil companies are the greedy ones. They make too much profit, right?

Well, let’s see. Assume the retail price is gas is $3.50:

$2.66 (or 76%) goes to the oil producers. This price is set in the global market for crude oil, moving up or down like any commodity according to world-wide supply and demand.

The next major cost is the refining of crude to extract gasoline, lubricants, and many other products. The gasoline portion costs 21 cents (6%).

Then comes another 21 cents (6%), for transportation, advertising, and retailer markup.

Out of the $3.50 retail price, we’ve got 42 cents left, or 12%. The recipient?

Government. The federal sales tax on every gallon of gasoline is 18.4 cents. The State taxes vary from 8 cents (Alaska) to 49 cents (New York and California), with an average of 23.6 cents per gallon.

For every gallon of gas sold in 2011, Exxon made 7 cents. Government made 42 cents. That’s six times greater. The biggest oil profiteer of all is government.