Masquerading in Conservative Garb
by Robert H. Kalk for www.SchoolOfStatesmanship.org
The professional politician has created an illusion for every situation. And for those constituents with an exaggerated sense of entitlement, privilege will always be made to seem like an open ended right. They have fully embraced a latter day “golden gimmick” to give themselves a highly subsidized lifestyle. And their political consorts, catering to every indulgence, give each special constituency the plausible deniability needed to help maintain a “healthy” public or self-image.
The original Golden Gimmick refers to a November 1950 deal that accorded the Arabian-American Oil Company (ARAMCO), a consortium comprising Standard Oil of California (Socal), Standard Oil of New Jersey (Exxon), Standard Oil of New York (Mobil) and Texaco, a tax break equivalent to 50% of their profits on oil sales. The other 50% was diverted to King Ibn Saud via the US Treasury.
King Ibn Saud agreed to this fifty/fifty splitting of Aramco’s oil profits instead of nationalizing Aramco’s oil facilities on Saudi soil. He was inspired by Juan Pablo Pérez Alfonzo of Venezuela who had cut a similar deal with Jersey Standard Oil and Royal Dutch Shell. Venezuela eventually led the effort in forming OPEC and Saudi Arabia gained full control of Aramco by 1980.
In the days when beneficiaries of the welfare scheme were mostly poor, some people objected to the use of subsidies, because subsidizing goods or services could lead to over consumption. Recently we’ve seen the highly distorted debates concerning agriculture and oil industry subsidies. The combination of long supply lines, competition for available oil, and limited refinery capacities affects everyone’s price at the pump for gasoline. Building passenger cars on truck frames to accommodate an obesity epidemic simply exacerbates both the effects of limited supply and the health problems.
Now that the most heavily subsidized among us are rich, the price of subsidized commodities is reduced for the “ultimate consumer.” This encourages guilt suppression through binge drinking, gluttonous eating and gas guzzling. Just as the uninsured pass on billions of dollars in costs to people who carry insurance, those with unhealthy lifestyles drive costs up for everyone.
To the extent they are content in having society carry them, the faux conservative enjoys conspicuous consumption together with an excuse to indulge in liberal helpings for one’s self. This occurs even while begrudging others the means to meet their most basic human needs. For the condescending elite, each heavily subsidized self-helping also feeds an unreal sense of self-reliance and an exaggerated sense of self-importance.
The sense around the world is that the United States is in terminal decline. In the case of our pampered executives, people rightly ask if we’re looking at the kind of inspired leadership that built the enterprise from scratch and taking it from one meaningful level of attainment to the next or, are we seeing the feel-good custodial whose talent seems limited to the selective amplification, contextualization, and filtration of facts sought by the hit and run short-term investor. The pretense of those corporations, waxing patriotic for political purposes and registered off-shore for tax evasion purposes, further pollutes the electoral swamp.
While the rich have come to live more and more on the public dole, the poor face servility to endless war. The elitist and corporate forms of welfare that are provided through new social insurance models are not, in substance, anything new. In 1834, on closing the Second Bank of the United States, Andrew Jackson had this to say:
“I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the Bank. … You are a den of vipers and thieves.”
Recent observations about privatizing the gains and socializing the losses of the well-to-do barely scratch the surface of deceitful practices. In May of 2011, oil industry executives testified before the United States Senate on ending tax breaks for the largest multinational oil companies. And throughout the hearing, they addressed only those subsidies that were admitted to by politicians that appear to be wholly owned and operated by the industry. Yet over the years we have witnessed ample evidence pointing to a vast array of unacknowledged subsidies that inure to the benefit of the oil industry.
From the Truman era Golden Gimmick to the protection of Saudi oil fields, from the re-flagging of Kuwaiti tankers to the protection of shipping lanes on behalf of all countries by the United States through its Fifth Fleet. There is no commodity more heavily subsidized than oil. And yet, in the U.S., pandering politicians seek to divert the public’s attention to certain paltry subsidies concerning domestically produced alternative fuels.
While the corporate media runs oil industry public relations material on a continuous loop, there is no denying its complicity in squelching any honest debate on the true merits. There is no refuting the way the United States, since World War II, has undertaken a strategic redeployment of its military assets to keep the long, way too long oil pipeline open. It is largely for this reason, especially with respect to mid-east contingencies, that the U.S. military budget accounts for approximately 40% of global arms spending. Oh, if only the bleeding ended there.
In light of the history, it is clear that whenever a politician mentions the “strategic interest” of the United States in any particular country, it is undeniably a reference to that country’s oil. At the heart of the Carter Doctrine for example, was that president’s belief that the energy challenge is the “moral equivalent of war.” In 1980 he dramatically expanded the perimeter of the U.S. defensive shield by declaring:
“Let our position be absolutely clear: An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.”
Carter was well aware that the Soviet Union’s invasion of Afghanistan in December of 1979 inched Russia closer to its long-held desire to reach the Persian Gulf. In the wake of the 2011 retirement of Robert Gates as Secretary of Defense, several witnesses testifying during confirmation hearings made desperate attempts to help the U.S. electorate overcome its abysmal ignorance concerning the history of U.S. involvement in Afghanistan. To these witnesses we would ask: Do you really expect them to watch a confirmation hearing when you can’t even get them to rent Charlie Wilson’s War?
During the time when the United States was a participatory democracy in the making, Sir Edmond Burke’s Report to King George described our forebears as attentive to the task at hand. Burke wrote:
This study renders men acute, inquisitive, dexterous, prompt in their attack, ready in defense, full of resources. In other countries the people are more simple and are of a less mercurial cast. They judge of an ill principle only in government, only by an actual grievance. Here they anticipate the evil and judge the pressure of the evil by the badness of the principle. They honor misgovernment from a distance and snuff out the approach of tyranny in every tainted breeze.”
Today, it’s as if we never learn. For even after the Arab oil embargo of 1973, an action designed to punish the U.S. for its support of Israel, the strategic interests of the United States are still rooted, not in any structured soil, but in sifting sand. You cannot build enduring legacies on a plane of unreality. And you will certainly reap what you sow when your seed stock is composed almost entirely of worthless derivatives.
Like those elected officials feigning surprise during the 2008 financial meltdown, it would seem military leaders only recently discovered there is no national security without a strong economy. Their betrayal of the doctrine which demands maintaining the industrial base was supported by a chicken-hawk administration intent on outsourcing nearly everything of value. The White House oilmen deliberately mislead their constituencies while industry executives mislead their consumers and their investors with import statistics that combine foreign oil imports with domestic natural gas in their reporting. This is done to lull people into a false sense of security based upon a skewed sense of just how much oil has actually been imported from unfriendly nations.
The price of gas at the pump is also misleading. For by the time you factor in the true cost of securing shipping lanes, re-flagging tankers, fighting well and refinery fires in war zones, protecting fields and pipelines, the disruption to military families, attending to wounded soldiers, and the payment of death benefits; you have expenditures that inure to the benefit of oil companies in ways that are not reflected at the point of sale. The loss of human life is apparently not a factor to be considered by those for whom saving a nickel on a gallon of gas is paramount.
There is one reason the Congressional Budget Office (CBO) has not been tasked with determining the material cost of oil subsidies. And that is the unmitigated selfishness of those the politicians seek to gratify. Don’t expect the Boehner’s owners to be served by such a disclosure. Don’t look to a lemming-like press to expose their own compromising position. For just as the oil companies have come to expect they can foul the waters and move on, the political realm and the journalistic medium are every bit as polluted. The true enemies of this country are those that would pacify the electorate, thus serving their own narrow interests.
Native Americans, at least as far back as 1410 AD, had been harvesting oil for medicinal purposes by digging small pits around active seeps and lining them with wood. Spanish explorers in 1543 discovered the black, sticky tar found washed up on the beaches along the Texas coast could be used to waterproof their boots, European settlers also recognized the oil skimmed from seeps as a valuable source of lamp fuel and machinery lubrication.
No one of sound mind would argue that oil is not valuable. But the gamesmanship surrounding what counts as a subsidy, and what does not, distorts our view of the marketplace. The relative cost, within a wide range of energy alternatives, is simply not known because the government of the United States can not be relied upon for a set of honest numbers. As long as CBO tasking is determined by a self-serving group of politically motivated individuals those “term limits” some call elections become increasingly meaningless.
The tax code of the United States is an obfuscation device designed as part of a political payoff mechanism to perpetrate and perpetuate a fraud upon the electorate. Those who characterize themselves as both fiscal and social conservatives, who claim to believe in market economics, are betraying their very core as well as their constituents, if they are willing to accept the kind of market manipulations embedded in the code. It is clear the politicians, most boisterous about the folly of picking winners and losers, protect oil and other pet subsidies with the same kind of pseudo-religious fervor that those masquerading in conservative garb have recently come to embrace.
It is time to examine the motivations of so-called reformers who have put forth claims that a consumption tax would be un-progressive. A consumption tax would serve to remind consumers of what is and what is not subsidized with every transaction. The current system of taxing productivity effectively confuses and masks the sophistries of any elected give-away artist. With a corporate income tax rate of zero, manufacturing would return to the USA, workers would only pay taxes at the point of sale, the desperately poor could apply for rebates, and a small contingent of former IRS auditors could process the claims.
In the over the counter scenario corporations would continue to be exempt for domestically produced raw materials actually utilized in the manufacture of domestically produced finished goods. Their accounting burden would be reduced to focusing only on the same bill-of-materials scrutinized during the normal course of business. They would pay the exact same sales tax as their workers for items consumed through activities other than manufacturing.
Food, housing, healthcare and even stocks could be made exempt as a matter of public policy. The difference is that such above board transactions would promote the health of the State by ushering the self-serving politician one step closer to extinction.