If It Walks Like A Duck, Talks Like A Duck...

Rand Paul May Run for U.S. Senate in 2010

He told The Associated Press on Thursday that he would consider entering the race, but only if Bunning drops out.

Update: Here is some more information on Rand Paul's possible Senate bid.

Don't Believe The Unemployment Statistics!

How far off is the real number of unemployed to the “official” number? You have to look deep into the Bureau of Labor Statistics monthly report to find this out. Buried in footnote U-6 of Table A-12 of the monthly report is a rate of unemployment that comes pretty close to the actual number of people out of work and who want to work.

As you might have already guessed that real rate is a lot higher. For example, here are the unemployment numbers for January 2009. The official unemployment rate states that 7.6% of the workforce is unemployed. The real rate (people who want a job but can’t find one) is 13.9%. Scroll down to page 23. It is listed in the bottom right-hand corner.

You can read more here.

How To Eat Local

Erin Barnett
Director, LocalHarvest

Many times each month, people ask us exactly how they can begin to eat locally. The questioner invariably understands the 'whys' of the proposition, but is daunted by the 'how.' So this month we offer a short primer on eating local food, with emphasis on the notion of transition. Let's start there. The first thing to remember is that eating locally is a continuum. If you allow yourself to get drawn into an all-or-nothing mindset, the proposition will seem impossible. You will get derailed by the list of the imported foods you think you can't live without. Bananas. Coffee. Chocolate-covered yum-yums. Don't start with those things. Don't even put them on the table the first year. Eating locally is about doing what you can. It is about making the most of your region's agricultural strengths. It is about beginning to pay attention. Where should you start? Focus on whole foods first. Highly processed foods are made with many ingredients that are shipped from afar, processed, and shipped again. It is simpler, not to mention healthier, to put your efforts into simpler foods. Start with one or more of these food groups: produce, meat, dairy products and eggs. In many cases, you can buy these foods directly from farmers, which is often a highly satisfying experience in and of itself.

A few years ago, a friend whose family loves chow-mein hotdish and Cheez-its asked me what three things she could do to better her family's diet without triggering a lot of grumbling. She was clear: she was not ready to take on the whole pantry, and neither was her family. Sound familiar? She knew that if she felt overwhelmed, the changes wouldn't stick. But three things seemed reasonable to her. After talking more about her food buying habits and priorities, we came up with this: Buy high quality chicken. Get organic milk. Shop at the farmers market when you can. Now, we live in Minnesota, where small-scale farmers make good meat and quality milk readily available, but the growing season is short. Other places in the country will have a different list of logical first steps. My LH colleagues, for example, live on the Central Coast of California, where gorgeous fresh veggies are available almost year round, but meat and dairy from small farms is a little harder to come by. For people there, just committing to shop at the farmers market or to join a CSA would bring local foods into their diets much of the year. Another regional difference concerns food preservation: neither my colleagues in California nor my friends in the South spend much time canning and freezing. Here in Minnesota, we do, because that is the way to enjoy local produce in the long winter. Getting to know what grows well in your state - and when - is a valuable part of your education as a locavore.

As you begin to dig more deeply into your region's specialties, you will find that some of these cost more money than their anonymous counterparts at the supermarket. If you are one of the many Americans experiencing real financial distress, this may dissuade you from choosing them. But it is important to remember that there are ways to work around price if you have some flexibility in your food budget. For example, you might choose to buy high quality meat and cheese, but eat it less often, and instead eat more lower-cost whole foods like grains, beans, and in-season produce. Check out the LH blog for a close-up look at the home economics of my family's local foods-based diet. Finally, it pays to remember that for most human beings, change is difficult. Food is so fundamental to our sense of well-being that changes in that arena may be met with a lot of resistance. If that is the case in your house, go slowly and look for small windows of opportunity. For example, enjoy lots of local strawberries when they are in their glory. If you can, go out to the farm and have fun picking some of your own. Really pay attention to how good - and how different - they are. Acclimate your taste buds and over time your family may decide that the local ones are worth waiting for. You may even decide to throw a few bags of berries into the freezer for later. And you're on your way...

In sum: Start with whole foods. Don't make it too hard. Study your region's agricultural strengths, and play up to them. Look for ways to be creative with your budget. Be gentle with your self and your family as you try out new habits. Do these things, and you will set yourself up for a highly satisfying adventure in local eating, and a deeper connection to your food.

What Exactly Did The 16th Amendment Do?

Edward Douglass White, Chief Justice of the U.S. Supreme Court from 1912-1921. He was the grandson of James White who served as representative for the Territory South of the River Ohio before Tennessee statehood

"In dealing with the scope of the taxing power, the question has sometimes been framed in terms of whether something can be taxed as income under the Sixteenth Amendment. This is an inaccurate formulation of the question and has led to much loose thinking on the subject. The source of the taxing power is not the Sixteenth Amendment; it is Article I, section 8 of the Constitution. It is important that these provisions be clearly understood; what is required is an understanding of fundamental principles. The familiar statement that at this time we need education in the obvious more than investigation into the obscure (Holmes, Collective Legal Papers, pp. 292-293), although made in a different context, is peculiarly applicable here."
Penn Mutual Indemnity Co. v. Commissioner of Internal Revenue, 32 T.C. 653 at 5659 (1959)

What does Article 1, Section 8 say? With regard to the taxing power, it says in Clause 1:

The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;

The court explains what duties and imposts and excises are: "Duties and imposts are terms commonly applied to levies made by governments on the importation or exportation of commodities. Excises are 'taxes laid upon the manufacture, sale, or consumption of commodities within the country, upon licenses to pursue certain occupations, and upon corporate privileges.' Cooley, Const. Lim. 7th ed. 680." Flint v. Stone Tracy Co., 220 U.S. 107 (1911)

The other taxing clauses are as follows:

Article 1, Section 2, Clause 3: Representatives and direct taxes shall be apportioned among the several states which may be included within this union, according to their respective numbers, which shall be determined by adding to the whole number of free persons, including those bound to service for a term of years, (and excluding Indians not taxed, three fifths of all other Persons-changed by Sec 2 of 14th amendment).

Article 1, Section 9, Clause 4: No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.

Article 1, Section 9, Clause 5: No Tax or Duty shall be laid on Articles exported from any State.

Did the Supreme Court actually rule on whether the "income" tax was a direct or indirect tax BEFORE it was authorized by the 16th amendment? Yes! But some background information on the 16th Amendment would be fitting.

In Pollock v. Farmers' Loan & Trust Co., 158 U.S. 601 (1895), the court ruled that:

First. We adhere to the opinion already announced, that, taxes on real estate being indisputably direct taxes, taxes on the rents or income of real estate are equally direct taxes.

Second. We are of opinion that taxes on personal property, or on the income of personal property, are likewise direct taxes.

Third. The tax imposed by sections 27 to 37, inclusive, of the act of 1894, so far as it falls on the income of real estate, and of personal property, being a direct tax, within the meaning of the constitution, and therefore unconstitutional and void, because not apportioned according to representation, all those sections, constituting one entire scheme of taxation, are necessarily invalid.

Since these sections of the act levied a direct tax without regard to apportionment, the court threw out the whole act and all the revenue collected under the act had to be refunded. This is what brought about the 16th amendment, which stated that Congress could collect taxes on incomes without apportionment. The Sixteenth Amendment did not define the taxes on income as direct or indirect. So it appeared that the constitution was in conflict with itself. It allowed for a tax on income, but the clause requiring direct taxes to be apportioned was not repealed. The United States Supreme Court in Brushaber v. Union Pacific R.R., 240 U.S. 1 (1916) settled the issue when it said "Moreover, in addition, the conclusion reached in the Pollock Case did not in any degree involve holding that income taxes generically and necessarily came within the class of direct taxes on property, but, on the contrary, recognized the fact that taxation on income was in its nature an excise entitled to be enforced as such..."

The Sixteenth Amendment reads as follows: The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.

It is the without apportionment language and without regard to census or enumeration that restricts taxation on incomes to the class of excises. Did the 16th amendment authorize a new kind of tax called the 'income' tax? No it did not. "This result, instead of simplifying the situation and making clear the limitations on the taxing power, which obviously the Amendment must have been intended to accomplish, would create radical and destructive changes in our constitutional system and multiply confusion." The court went on to say "It is clear on the face of this text that it does not purport to confer power to levy income taxes in a generic sense, an authority already possessed and never questioned,..." [240 U.S. 1, 18] Chief Justice Edward Douglass White delivered the opinion in both cases.

The 3rd Circuit Court of Appeals clarifies: "It did not take a constitutional amendment to entitle the United States to impose an income tax. Pollock v. Farmers' Loan & Trust Co.(citations omitted) only held that a tax on the income derived from real or personal property was so close to a tax on that property that it could not be imposed without apportionment. The Sixteenth Amendment removed that barrier. Indeed, the requirement for apportionment is pretty strictly limited to taxes on real and personal property and capitation taxes." Penn Mutual Indemnity Co. v. C.I.R., 277 F.2d 16 (1960)

The court also said "It is not necessary to uphold the validity of the tax imposed by the United States that the tax itself bear an accurate label." Congress is free to name the tax whatever it desires. The question still remains: Is it a direct tax? Capitation? Or is it a duty, impost, or excise?

The barrier refers to the consideration of the source of income. The United States Supreme Court in the Brushaber case said "Indeed, from another point of view, the Amendment demonstrates that no such purpose was intended, and on the contrary shows that it was drawn with the object of maintaining the limitations of the Constitution and harmonizing their operation." What was the problem? Was an amendment really necessary to make clear the taxing power that Congress always had?

There are three things to look for: The Rule, the Ruling and the Principle. The Rule applied relates to the rule of apportionment to all direct taxes before and after the Sixteenth Amendment.

The Ruling relates to the court's decision in Pollock that taxes on real estate and personal property and the rents and incomes derived from real and personal property are direct taxes.

The principle relates to the duty of the courts to disregard the form (name of tax) and consider the substance (subject of the tax). The 16th Amendment was to prevent the courts from treating the so-called 'income' tax as anything other than an excise tax. The courts can no longer void a statute in regard to income taxation because it was not imposed by the rule of apportionment like it had done in the Pollock case. The courts can't legally enforce the income tax as if it were a direct tax. The income tax can only be enforced as a tax on certain activities, privileges, events, etc... In my copy of "Frequently Asked Questions Concerning the Federal Income Tax" updated May 7, 2001, John R. Luckey, Legislative Attorney for the American Law Division writes on page four that "[T]he Court found that the Sixteenth Amendment sought to restrain the Court from viewing an income tax, because of its close effect on the underlying property as a direct tax."

It is true that various personnel in the Office of the Commissioner of Internal Revenue claim that the Sixteenth Amendment gave Congress some new power of taxation. But the courts have settled the issue as to what the Sixteenth Amendment did and didn't do. The problem is not the Sixteenth Amendment; it is the disinformation regarding it.

Legislative History of the 16th Amendment

A political cartoon from Puck Magazine titled "The Helping Hand" that parodies Emile Renouf's 1881 painting of the same name. Shows Uncle Sam and J.P. Morgan rowing a boat. Morgan's enormous size reflects his stature and the importance of his banking operations to the country.

The 16th Amendment and the Federal Reserve can be traced to the so-called Progressive movement that was taking place around the turn of the 20th century. While this movement has been portrayed as workers and intellectuals rising up against ruthless corporations, the simple fact of the matter is that it was John D. Rockefeller and J.P. Morgan who supported it. Indeed, much of the political history of the United States from the late nineteenth century until World War II may be interpreted by the closeness of each administration to one of these sometimes cooperating, more often conflicting, financial groupings: Cleveland (Morgan), McKinley (Rockefeller), Theodore Roosevelt (Morgan), Taft (Rockefeller), Wilson (Morgan), Harding (Rockefeller), Coolidge (Morgan), Hoover (Morgan), or Franklin Roosevelt (Harriman–Kuhn–Loeb–Rockefeller). So what was going on?

As Murray Rothbard put it in “The Origins Of The Federal Reserve”,
“For this intellectual shell game, the cartelists needed the support of the nation’s intellectuals, the class of professional opinion-molders in society. The Morgans needed a smokescreen of ideology, setting forth the rationale and the apologetics for the New Order. Again, fortunately for them, the intellectuals were ready and eager for the new alliance. The enormous growth of intellectuals, academics, social scientists, technocrats, engineers, social workers, physicians, and occupational “guilds” of all types in the late nineteenth century led most of these groups to organize for a far greater share of the pie than they could possibly achieve on the free market. These intellectuals needed the State to license, restrict, and cartelize their occupations, so as to raise the incomes for the fortunate people already in these fields. In return for their serving as apologists for the new statism, the State was prepared to offer not only cartelized occupations, but also ever-increasing and cushier jobs in the bureaucracy to plan and propagandize for the newly statized society. And the intellectuals were ready for it, having learned in graduate schools in Germany the glories of statism and organicist socialism, of a harmonious “middle way” between dog-eat-dog laissez-faire on the one hand and proletarian Marxism on the other. Instead, big government, staffed by intellectuals and technocrats, steered by big business and aided by unions organizing a subservient labor force, would impose a cooperative commonwealth for the alleged benefit of all."

Nelson Aldrich was known in his day as the "General Manager of the Nation". He was essentially Wall Street’s senator and the go-to guy in Congress for both John Rockefeller and J.P. Morgan. One of the symbols of his immense wealth was his own private railcar.

Senator Norris Brown of Nebraska entered the following resolution-
Senate Joint Resolution 39, June 17, 1909, Congressional Record Volume 44, Part 3, page 3377:

"The Congress shall have power to lay and collect direct taxes on incomes without apportionment among the several States according to population"

Those who were supporting the implementation of the 16th Amendment knew that a direct tax without apportionment would be in conflict with the requirement that direct taxes be levied with regard to apportionment.

So Nelson Aldrich who chaired the Senate Finance Committee at the time entered the following-
Senate Joint Resolution 40, June 28, 1909, Congressional Record Volume 44, Part 4, page 3900: "Article XVI. The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States and without regard to any census or enumeration."

This is the Sixteenth Amendment; but notice that it makes no provision for the repeal of the clauses requiring apportionment. Why? Because it was not the "intent" of Congress to levy a direct tax (or a "capitation" tax for that matter). Aldrich and his cronies knew that if the 16th Amendment had levied a direct tax without regard to apportionment, the United States Supreme Court would have struck it down.

But what did the Supreme Court rule? It ruled that "[B]y the previous ruling, [Brushaber v Union Pacific Railroad] it was settled that the Sixteenth Amendment conferred [NO NEW POWER] of taxation but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning [of our national government under the Constitution] from being taken out of the category of indirect taxation to which it inherently belonged..."
Stanton v. Baltic Mining Co., 240 U.S. 103, 112 (1916)

So what is the real issue at hand here?
"In dealing with the scope of the taxing power, the question has sometimes been framed in terms of whether something can be taxed as income under the Sixteenth Amendment. This is an inaccurate formulation of the question and has led to much loose thinking on the subject. The source of the taxing power is not the Sixteenth Amendment; it is Article I, section 8 of the Constitution. It is important that these provisions be clearly understood; what is required is an understanding of fundamental principles. The familiar statement that at this time we need education in the obvious more than investigation into the obscure (Holmes, Collective Legal Papers, pp. 292-293), although made in a different context, is peculiarly applicable here." Penn Mutual Indemnity Co. v. Commissioner of Internal Revenue, 32 T.C. 653 at 5659 (1959)

For more, see "Does The IRS Exist?"

The Oil Crisis Is One Of Insanity

“The definition of insanity is doing the same thing over and over again and expecting different results”. Albert Einstein

M. King Hubbert created and first used the models behind peak oil in 1956 to accurately predict that United States oil production would peak between 1965 and 1970. His logistic model, now called Hubbert peak theory, and its variants have described with reasonable accuracy the peak and decline of production from oil wells, fields, regions, and countries, and has also proved useful in other limited-resource production-domains. According to the Hubbert model, the production rate of a limited resource will follow a roughly symmetrical bell-shaped curve based on the limits of exploitability and market pressures. Various modified versions of his original logistic model are used, using more complex functions to allow for real world factors. While each version is applied to a specific domain, the central features of the Hubbert curve (that production stops rising, flattens and then declines) remain unchanged, albeit with different profiles.

At first his prediction received much criticism, for the most part because many other predictions of oil capacity had been made over the preceding half century, but these had been based purely on reserve and production, data rather than past discovery trends, and had proven false. Needless to say, it became a classic case of "I told you so".

Between October 17, 1973, and March 1974, the Organization of Petroleum Exporting Countries (OPEC) ceased shipments of petroleum to the United States, causing what has been called the 1973 energy crisis. In 1975, with the United States still suffering from high petroleum prices, the National Academy of Sciences confirmed their acceptance of Hubbert's calculations on oil and natural gas depletion, and acknowledged that their earlier, more optimistic estimates had been incorrect.

According to the Energy Information Administration, U.S. Petroleum Consumption is 20,680,000 barrels/day while U.S. Motor Gasoline Consumption is 9,286,000 barrels/day (390 million gallons/day). We import 10,031,000 barrels/day. So in essence, we import about 50% of the oil we use. 50 years ago, the United States was the world's largest oil exporter.
This diagram gives the overall picture as of 2007. The Total World Production as of 2006 was 82,433,000 barrels/day while Total World Petroleum Consumption was 84,979,000 barrels/day. The law of supply and demand dictates in a situation where the demand is greater than the supply, price go up.

This is not a political issue. It is simply a fact of life. Trying to cheat the laws of economics is just as troubling as passing a law that bans hurricanes or gravity. Sadly, the people who make decisions for the world these days play on our emotions with power and instant gratification being the primarily motives. Whenever you are making decisions about economics, money, science, etc..., logic is the way to go. One of the main reasons housing is so unaffordable is in addition to having a phony monetary system, housing prices have in large part been based on just whatever the seller felt like pricing it at instead of relying on logic.

There are ways to address this issue. The biggest challenge is adjusting our mindsets and our daily way of lives to compensate. Innovative thinking about transportation, our daily habits and what not will go a long way towards addressing this issue. Sadly, we are creatures of habit and we are stubborn to change our ways. In the downtown areas, people will live and work there. What's the point of driving if your place of work is just a mile or two away? Not to mention parking downtown is usually a hassle anyways. Buses and trains ought to be considered.
It will vary from city to city.

I think the suburbs over time will cease to exist to a large extent. As the price of gasoline goes up and stays there, many of the trucking companies will either go under or simply change their routes in order to survive. Food production which should be done locally anyways will be going back to that. Food co-ops and farmer's markets will be way to go. In rural areas, they will find a way to mix the use of conventional technologies with old ways like the horse.

This problem we have is largely a problem of convenience for convenience sake and combined with the lack of foresight, we have what we have. We are suffering because of it and we will for the foreseeable future. But we either change our ways or die. Sadly, I think in combination with the instability in the job market, geo-politics, and many other areas, tensions will boil over to the point of it being of no return at least in the short-term. I think it will be a combination of the Road Warrior and Star Wars as the situation goes from massive unemployment, tax protests, sit-ins to literal violence as the power-brokers are removed. It will take another revolution to remove them. It may take another generation, the ones who are children today to figure things out after they are removed. We are mostly 20th century animals doing things in a 20th century way, but clearly those ways are becoming obseolete. What we haven't figure out or mastered yet is what does work in the 21st century? Only time will tell. In any event, I'm ready for anything.