Category Archives: Industry Jobs Oil Economics

Legislating Bureaucracy as Infrastructure

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Brilliantly true….wish I had thought of that but credit goes to Robert Mulligan. Infrastructure is really items like roads, bridges, ports and the power grid system….hardly expanding government agencies but read on.

Mr. Mulligan’s summary actually shows us how to think differently and correctly.

President Biden’s staggering $2.3 trillion requests for infrastructure appropriations tend to hide the extent Congress is further bloating them with their own wasteful earmarks. Congress is approving, and even expanding on, the president’s already far-reaching requests, though it’s doing so in installments—the House just sent a $715 billion “INVEST in America Act” to the Senate, where it’s all but certain to be packed with even more pork by legislators from both parties. The typical Orwellian-Kafkaesque title for this legislation—“INVEST”—is supposed to stand for “Investing in a New Vision for the Environment and Surface Transportation,” a title that both helps hide the rancid pork actually contained in the bill, as well as head off any responsible scrutiny or debate.

Hidden deep in the House version are numerous provisions for expanding the federal bureaucracy and government programs that have absolutely nothing to do with infrastructure, including doubling the size of the IRS .

It is especially fascinating that the federal government has such little difficulty spending more money, regardless of how focused or unfocused its aims—being driven mainly by politicians with planning horizons not extending past the next election—but the government has a real problem with raising taxes directly, because politicians fear the potential blowback. Their preferred solution is apparently to expand one of the least-liked sectors of the federal bureaucracy, in hopes of increasing revenues through heightened tax enforcement. Never mind that the IRS has recently exhibited extraordinary misconduct, including leaked confidential tax filings and playing politics with nonprofit tax exemptions. The IRS is one federal bureaucracy among many that needs to be reformed rather than expanded. Without meaningful reform, expanding the IRS’s enforcement budget will be tantamount to unleashing a plague of locusts on already overburdened taxpayers.

Federal income taxes already disproportionately punish the middle class. The purportedly progressive income tax exempts the poor, and the complexity of the tax code with its superabundance of special interest loopholes mainly benefits the rich who can use loopholes to minimize their tax liabilities. Virtually all other taxes paid by households, such as sales taxes, are strongly regressive, further penalizing the poor. Taxes paid by businesses are simply passed on to households in the form of higher prices, creating a further regressive impact which disproportionately falls on the poor. Large corporations both benefit from corporate welfare, which is not provided so generously to small businesses, as well as have access to strategies to book their income overseas in tax havens—something small businesses generally cannot do.

As high as social mobility remains in American society, there is little doubt it could be improved with the simplest and most basic tax reform. Government’s regulatory burden also falls disproportionately on the poorest, who have the least access to education, credit, healthcare, and housing, and can least afford to surmount burdensome occupational licensing and educational barriers that keep them from joining needed professions.

As a nation, we badly need to devote adequate resources to maintaining the infrastructure the federal government owns and operates like the interstate highway system, but the government needs to ensure its expenditures meet reasonable and sustainable cost-benefit standards. A large part of the president’s $2.3 trillion wish list is devoted to harebrained social engineering and poorly defined political goals. These may appeal to various special interest constituencies, but do not reflect actual citizens’ wants or needs.

The U.S. tax structure already penalizes productive citizens far too much, as well as incentivizes businesses to focus on unproductive tax avoidance strategies. We got where we are through an ostensibly “Republican” administration that acted as if the only way to address any problem was to throw money at it. Now we have a Democratic administration doubling down on this failed and discredited strategy, and digging us into an even deeper hole. Earmarks for special interests from both parties make it easier to get bipartisan support in Congress, but with wasteful spending spiraling out of control, it’s hard to see that as an advantage.

Cartel Del Golfo is Operating Stash Houses in Texas

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Primer: January 2020 by the Justice Department/ CDG is a violent Mexican criminal organization engaged in the manufacture, distribution, and importation of ton quantities of cocaine and marijuana into the United States. In the late 1990s, the Gulf Cartel recruited an elite group of former Mexican military personnel to join their ranks as security and enforcers who became known as Los Zetas. The Gulf Cartel and Los Zetas operated under the name of “The Company.” Costilla-Sanchez became the leader of The Company for several years following the arrest of Osiel Cardenas in 2003 and before Costilla-Sanchez’s arrest in September 2012. More details here.

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Mexican Authorities Rescue 47 Kidnap Victims from Cartel ...

So, with that already classified, and with stash houses operating inside the United States, why has it not been declared a domestic terror organization and where are the arrests by Federal agents?

Texas border stash house packed with 108 migrants in searing heat

Nearly 930,000 illegal migrant crossing were reported by CBP through the end of May

A large human smuggling stash house harboring 108 migrants in southeast Texas was uncovered by U.S. Border Patrol agents Monday afternoon.

The migrants were found crammed inside what appeared to be an old car garage, enduring extreme heat and harsh living conditions.

Border Patrol officials told Fox News that smugglers keep migrants in stash houses located near the southern border before dispersing them deeper into the U.S.

The insignia for “Cartel Del Golfo,” which means Gulf Cartel, was spray-painted on one of the interior garage walls – which law enforcement said was the cartel’s method for laying claim to the operation.

 

Border Patrol said the Gulf Cartel is known to be heavily involved in running human smuggling operations across Texas’ southeast border.

Law enforcement initially said 107 migrants were found at the house before upping the count by one.

Officials identified one migrant caretaker during their apprehension near Alton, Texas Monday, but did not confirm whether he was involved in the running of the smuggling operation.

Five unaccompanied children and two-family units with children as young as six years old were uncovered in the stash house, U.S. Customs and Border Protection (CBP) confirmed Tuesday.

The migrants arrived from Mexico, Ecuador, El Salvador, Honduras, and Guatemala.

Stash houses like the garage discovered Monday are not rare sights for Border Patrol agents.

One hour after the stash house in Alton was discovered, CBP reported that a residence near Rio Grande City was found to have been harboring 23 adult migrants.

Fox News could not immediately reach CBP to confirm the number of stash houses found in 2021 but earlier this month local news outlet KGNS reported that over 4,000 migrants had been arrested in more than 200 dismantled stash homes.

CBP has reported nearly 930,000 illegal immigrant encounters at the southern border since January.

More than 180,000 migrants were encountered in May alone.

 

Is the Federal Reserve About to Remake the U.S. Dollar? Going Crypto

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Seems so…

Politico: The Federal Reserve is taking what may be the first significant step toward launching its own virtual currency, a move that could shake up banks, give millions of low-income Americans access to the financial system and fortify the dollar’s status as the world’s reserve currency.

The idea of creating a fully digital version of the U.S. dollar, which was unthinkable just a few years ago, has gained bipartisan interest from lawmakers as diverse as Sens. Elizabeth Warren (D-Mass.) and John Kennedy (R-La.) because of its potential benefits for consumers who don’t have bank accounts. But it’s also sparking strong pushback from those with the most to lose: banks.

“The United States should not implement a [central bank digital currency] simply because we can or because others are doing so,” the American Bankers Association said in a statement to lawmakers this week. The benefits “are theoretical, difficult to measure, and may be elusive,” while the negative consequences “could be severe,” the group wrote.

The explosive rise of private cryptocurrencies in recent years motivated the Fed to start considering a digital dollar to be used alongside the traditional paper currency. The biggest driver of concern was a Facebook-led effort, launched in 2019, to build a global payments network using crypto technology. Though that effort is now much narrower, it demonstrated how the private sector could, in theory, create a massive currency system outside government control.

Now, central banks around the world have begun exploring the idea of issuing their own digital currencies — a fiat version of a cryptocurrency that would operate more like physical cash — that would have some of the same technological benefits as other cryptocurrencies.

That could provide unwelcome competition for banks by giving depositors another safe place to put their money. A person or a business could keep their digital dollars in a virtual “wallet” and then transfer them directly to someone else without needing to use a bank account. Even if the wallet were operated by a bank, the firm wouldn’t be able to lend out the cash. But unlike other crypto assets like Bitcoin or Ether, it would be directly backed and controlled by the central bank, allowing the monetary authorities to use it, like any other form of the dollar, in its policies to guide interest rates.

The Federal Reserve Bank of Boston and the Massachusetts Institute of Technology’s Digital Currency Initiative are aiming next month to publish the first stage of their work to determine whether a Fed virtual currency would work on a practical level — an open-source license for the most basic piece of infrastructure around creating and moving digital dollars.

But it will likely be up to Congress to ultimately decide whether the central bank should formally pursue such a project, as Fed Chair Jerome Powell has acknowledged. Lawmakers on both sides of the aisle are intrigued, particularly as they eye China’s efforts to build its own central bank digital currency, as well as the global rise of cryptocurrencies, both of which could diminish the dollar’s influence.

Sen. Elizabeth Warren speaks.

Sen. Elizabeth Warren speaks.
Sen. Elizabeth Warren, D-Mass., speaks during a Senate Finance Committee hearing on the IRS budget request on Capitol Hill in Washington, Tuesday, June 8, 2021. (Evelyn Hockstein/Pool via AP) | Evelyn Hockstein/AP Photo

Democrats have especially been skeptical about crypto assets because there are fewer consumer protections and the currencies can be used for illicit activity. There are also environmental concerns posed by the sheer amount of electricity used to unlock new units of digital currencies like Bitcoin.

Warren suggested the Fed project could resolve some of those concerns.

“Legitimate digital public money could help drive out bogus digital private money, while improving financial inclusion, efficiency, and the safety of our financial system — if that digital public money is well-designed and efficiently executed,” she said at a hearing on Wednesday, which she convened as chair of the Senate Banking Committee’s economic policy subcommittee.

Other senators highlighted the potential for central bank digital wallets to be used to deliver government aid more directly to people who don’t have bank accounts. A digital dollar could also be designed to have more high-tech benefits of some cryptocurrencies, like facilitating “smart contracts” where a transaction is completed once certain conditions are met.

Neha Narula, who’s leading the effort at MIT to work with the Boston Fed on a central bank digital currency, called the project “a once-in-a-century opportunity to redesign the dollar” in a way that supports innovation much like the internet did.

Still, there are a slew of unanswered policy questions around how a digital dollar would be designed, such as how people would get access to the money, or how much information the government would be able to see about individual transactions. The decision is also tied to a far more controversial policy supported by Democrats like Warren and Senate Banking Chair Sherrod Brown to give regular Americans accounts at the Fed.

“What problem is a central bank digital currency trying to solve? In other words, do we need one? It’s not clear to me yet that we do,” Sen. Pat Toomey (R-Pa.) said. “In my view, turning the Fed into a retail bank is a terrible idea.”

And, “the fact that China is creating a digital currency does not mean it’s inevitable that the yuan would displace the U.S. dollar as the world’s reserve currency,” he said.

Jerome Powell

Jerome Powell
WASHINGTON, DC – MAY 01: Federal Reserve Board Chairman Jerome Powell speaks during a news conference on May 1, 2019 in Washington, DC. Powell said the Fed will not raise interest rates this quarter and no rate hikes are likely anytime soon. (Photo by Mark Wilson/Getty Images) | Mark Wilson/Getty Images

For their part, banks fear a Fed-issued digital currency could make it easier for customers to pull out large amounts of deposits and convert them to digital dollars during a crisis — the virtual equivalent of a bank run — putting financial stress on their institutions and making less money available to provide credit for people, businesses and markets.

It could also potentially deprive them of customers, something the lenders say would interfere with lawmakers’ vision of increased financial inclusion.

“While it is true that deposit accounts are often the first step towards inclusion, the benefits of a long-term banking relationship go well beyond a deposit account,” the ABA said in its statement. “The same is not true of a [central bank digital currency] account with the Federal Reserve, which would not grow into a lending or investing relationship.”

The Bank Policy Institute, which represents large banks, has also argued that many of the benefits of a digital dollar are “mutually exclusive (because they are predicated on different program designs) or effectively non-existent (because the program design that produces them comes with costs that are for other reasons unbearable).”

“The decision on whether to adopt a central bank digital currency in the United States is appropriately a long way off,” BPI President and CEO Greg Baer said. “There are also complex and serious costs that will need to be considered.”

But many lawmakers think it’s worth the effort to look into it.

“The Federal Reserve should continue to explore a digital [currency]; nearly every other country is doing that,” Sen. Bill Hagerty (R-Tenn.) said at the hearing, citing the risk for the U.S. to lose its ability to deploy economic sanctions as effectively with decreased usage of the dollar.

US has Recovered Ransom Payment of the Colonial Pipeline Hack

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Just last month, this site posted a detailed article about the fallout of DarkSide, the hackers of the Colonial Pipeline. In short, U.S. officials seized at least two servers.

Now there is more….like the ransom payment, not all of it, but $2.3 million in real dollars, remember it was paid in cryptocurrency. (Remember, money was paid out to all the dark actors of the DarkSide)

“In addition, a couple of hours after the seizure, funds from the payment server (belonging to us and our clients) were withdrawn to an unknown account,” the DarkSide ransomware operation told its affiliates.

DarkSide: New targeted ransomware demands million dollar ...

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(AP) — The Justice Department has recovered the majority of a multimillion-dollar ransom payment to hackers after a cyberattack that caused the operator of the nation’s largest fuel pipeline to halt its operations last month, officials said Monday.

The operation to recover the cryptocurrency from the Russia-based hacker group is believed to be the first of its kind, and reflects what U.S. officials say is an increasingly aggressive approach to deal with a ransomware threat that in the last month has targeted critical industries around the world.

“By going after an entire ecosystem that fuels ransomware and digital currency, we will continue to use all of our tools and all of our resources to increase the costs and the consequences of ransomware attacks and other cyber-enabled attacks,” Deputy Attorney General Lisa Monaco said at a news conference announcing the operation.

Georgia-based Colonial Pipeline, which supplies roughly half the fuel consumed on the East Coast, temporarily shut down its operations on May 7 after a gang of criminal hackers known as DarkSide broke into its computer system.

Colonial officials have said they took their pipeline system offline before the attack could spread to its operating system, and decided to pay a roughly $4.4 million ransom in an effort to bring itself back online as soon as it could.

The FBI generally discourages the payment of ransom, fearing it could encourage additional hacks.

America First Must Build a New Shipping Canal for the Supply Chain

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Since 2020 up to now, we in America have suffered through supply chain shortages adding in the matter of ransomware of the Colonial pipeline and now the largest meat processor.

A cyberattack on JBS, the largest meat producer in the world, forced the shutdown of American slaughterhouses, and the closures may be spreading. JBS’s five biggest beef plants in the U.S. halted processing following the weekend attack, equal to one-fifth of all of America’s meat production. Slaughter operations across Australia were also down and one of Canada’s largest beef plants was idled. The prospect of more extensive shutdowns is upending agricultural markets and raising concern about food security as hackers increasingly target critical infrastructure. Livestock futures slumped while pork prices rose. JBS told the White House that the cyberattack, like several previous ransomware assaults, probably originated in Russia.

There are shortages of chicken, chlorine, flour, lumber, computer chips, rare earth minerals like cobalt, rental cars, palm oil, truck drivers, diapers and appliances to list a few. Just imagine the impact of pharmaceuticals via China.

Consider the supply chain dangers if sea shipping was slowed or stopped. Consider the Panama Canal. Why worry?

China is the short answer. And China hates the United States.

In part:

Beijing is currently the second or third largest trading partner with the countries of Central America.  Chinese investment in Central America is present in infrastructure projects in Honduras, Nicaragua, Costa Rica, and Panama, and there are plans for further investment in El Salvador and Guatemala.  Excluding a contemplated US $50 billion dollars in a canal project in Nicaragua, Chinese investment in Central American infrastructure has totaled approximately US $2 billion thus far.

In a further demonstration of growing ties between the PRC and the countries of Central America, Costa Rica, Panama, and El Salvador have each broken relations with Taiwan to establish diplomatic ties with China.  Other countries in the region could soon follow suit.

Panamanian “Panda Bonds”

Sino-Central American investment is being actively pursued in Panama.  The country is one of the nations in Latin America that is part of an ambitious program that Beijing has undertaken in the region.

The PRC’s “Silk Road” initiative is a trading and infrastructure plan that aims to connect Asia, Europe, Africa, and Latin America in the same way that the trade route existed during ancient times.  In addition to this initiative, further Chinese investment in Central America will result from the Panamanian government’s issuance of US $500 million of “Panda Bonds” in 2018.  Panda Bonds are Chinese renminbi-denominated bonds from a non-Chinese issuer that are sold into the Chinese market.  Panama issued them in order to take advantage of China’s lower borrowing costs.

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China’s advancement in Central America dates back to 2007, when Costa Rica became the first Central American country to establish diplomatic relations with Beijing. Since then, economic relations between both countries have developed, helping to promote China’s regional brand. Economically, China has presented itself as an attractive partner. In 2008, China purchased Costa Rican bonds in excess of $300m, offered the country aid worth $130m, and funded the $105m construction of the Estadio Nacional. Meanwhile, on March 2 Chinese state media claimed that China will finance the expansion of a highway connecting Costa Rica and the Caribbean.

Chinese activity in Costa Rica is not limited to finance. In terms of culture, students at the University of Costa Rica can study Chinese and enrol in Chinese cultural programmes. The Chinese government has also promoted the development of Chinatown in San José, Costa Rica’s capital.

What is the solution?

America First should consider mobilizing a real infrastructure operation that would build a new shipping canal that would be technologically more advances and handle larger ships. Where to put it? Nicaragua.

Really? Yes, beat China at their own game and do it fast. The Nicaragua Canal was proposed and backed by Chinese investors and was to be completed in 2020 at an estimated cost of $50 billion.

Nicaragua Canal Proposed Routes

Can you see the natural location for such a shipping canal?

This would also stabilized Latin American countries with economic space and stem the immigration chaos. This time, don’t give the canal away either. The cost? Perhaps a mere $15 billion and these days that is much less than the Biden administration budget has proposed to spend…that pesky $6 trillion.

Has China placed some military operatives in Latin America to protect Chinese investments otherwise known as debt trapping? Seems a legit question especially when the left-leaning think tank Foreign Policy Magazine explains the context just as recently in June of 2020.

Furthermore, Iranian warships are headed to Venezuela with 7 high speed missile boats on board. Additionally, China continues to make plays in the energy sector in Cuba. More debt trapping? Yes.

The America First Policy Institute needs to do some immediate forecasts for national security reasons. The AFPI, which holds a stellar staff list has one particular section called ‘Center for New Frontiers’.

America was not founded to restore an imagined past, but to move its people into a bright and brilliant future. In this first half of the twenty-first century, the United States stands on the precipice of an array of extraordinary possibilities. Dreams from our yesterdays — interplanetary travel, autonomous vehicles, subterranean transit systems, artificial intelligence, 3D printing, organ regeneration, extraordinary new power sources, and beyond — are poised to enter our tomorrows. The America First Policy Institute (AFPI) will research and develop policies that nurture America’s experimental spirit.

A new infrastructure plan such as a shipping canal is just the cure for future supply chain protections and stabilizing countries in our own hemisphere when other key industries and manufacturing must relocate to either or both Central America and back to the United States.