- The Washington Times - Sunday, November 6, 2005

A solution to natural-gas supply problems

Congratulations to The Washington Times for airing one of the most serious problems facing American industry today, the skyrocketing costs and supply shortages of natural gas (“A vulnerable natural-gas supply,” Op-Ed, Tuesday). Author Jack Gerard of theAmericanChemistry Council focused on the impacts on the chemical industry. The impact is equally dire in many other industries that depend on natural gas not just as a fuel, but as a vital raw material.

Plastics are an important example. Over the past five years, the plastics industry has lost more than 300,000 jobs and countless small companies have been driven out of business largely as a result of out-of-control natural-gas prices. In my meetings with members of Congress on this issue, it has become evident that until very recently, most members had little inkling of the importance of natural gas as a feedstock for American industry. Clearly, no member of Congress would deliberately vote to close down American plants and send thousands of jobs overseas, but this has been the result of policies that have led to critical natural-gas shortages and spiraling costs.

Fortunately, a solution may be at hand in the form of important legislation recently passed by the House Committee on Resources that would increase supply by allowing development of the vast natural-gas resources in the outer continental shelf, the eastern Gulf of Mexico and elsewhere. With today’s advanced technologies, this can be done with no measurable harm to the environment or to tourism in our coastal states.

To prevent the loss of thousands more jobs and the further erosion of American manufacturing, Congress should pass this legislation (the Ocean State Options Act). Its enactment would have an immediate beneficial impact on the price of natural gas for consumers, ensure adequate future supplies, protect American jobs — and open up new economic opportunities for our coastal states.

WILLIAM R. CARTEAUX

President and CEO

The Society of the Plastics Industry, Inc.

Washington

The trouble in Paris

The French government, after conspicuously pampering Muslims worldwide and allowing 10 percent of the population to isolate themselves based on their Muslim religion, is now reaping the whirlwind of its policies (“Suburban Paris is burning,” Editorial, Saturday).

To be fair, economic issues are a real part of the rioters’ grievances, but a major contributor to unemployment in the Muslim neighborhoods is the community’s separatist tendencies, intentionally seeing themselves as almost anything but French.

By making decisions aimed at snubbing the United States and at selling more weapons and technology to Iraq and other Middle Eastern countries, France abandoned any pretense of protecting its domestic tranquility, with last week’s terrible consequences following necessarily.

Even now, the second loudest noise after the gunfire is French politicians squabbling for political advantage. Nero would seem to be Prime Minister Dominique de Villepin’s political role model.

I cannot say I feel great sympathy for the French government or for the isolationist Muslims who are burning their own neighborhoods. They deserve each other. But Paris is one of the world’s great cities — maybe its greatest. It deserves better than this.

ROSS G KAMINSKY

Boulder, Colo.

A Great Society for future generations

I thank Walter Williams for keeping the fires burning on an issue many feel is dead (“Do we care about our children?” Commentary, Saturday). Only in a “Great Society” can we go from a program that cost taxpayers nothing in 1936 (because it didn’t exist) to one that consumes almost one-sixth of our income. If our government doesn’t do something soon, like raise taxes (again), increase the retirement age (again), make receipt of benefits “means tested” or transition to a personal account-based program, it will need between $61 trillion and $75 trillion today to meet future Social Security and Medicare obligations.

One need not look very hard to see that we’re throwing good money after bad. The Social Security tax rate has gone from 2 percent in 1937 to 12.4 percent today. In that same time period the taxable income cap has gone from $3,000 to $90,000. Adjusting for inflation, the combined effect is a 1,300 percent increase in tax burden. The average benefit check was $22.71 in 1940 and $922.10 in 2004. Adjusting again for inflation that’s a 200 percent increase. Thus every gain reaped by retirees has come from heaping 6.5 times the burden on workers. Medicare, which began in 1965, has an even gloomier picture.

Unfortunately Mr. Williams is right about politicians. Few in office today care what 2030 looks like because they won’t be in office then. Baby boomers should be concerned, though. Social Security and Medicare were voted into existence and they can be voted out of existence. When today’s twentysomethings are paying 40 percent of their income in 25 years to fund retirement and medical benefits, you can bet there’ll be a cry for change in the halls of Congress.

PATRICK MCGINN

California, Md.

Walter Williams’ piece draws attention to the fact that entitlement recipients certainly do not care, at least not enough to do the math. This last summer I had a discussion with my 82-year-old uncle about the Social Security problem. He thought it was much ado about nothing because you certainly cannot predict what will happen 20, 30, 40 years into the future. In other words, why worry, and besides, he is getting his check. I pointed out what a sorry state pensioners would be in if all pension-fund managers had that attitude. However, my uncle was right about one thing, and that is that making predictions about the far term can be very difficult.

Mr. Williams falls into the far-term prediction trap in his piece. To illustrate, I told my 14-year-old daughter to use her math skills to ascertain the validity of a statement made by a long-term-care-insurance salesman who attempted to sell us a policy. He maintained that health-care costs were increasing at a 10 percent clip and we should plan for it in 20 or 30 years. With a little nudging my daughter was able to determine that health care would consume the entire gross domestic product in 21 years. So, either the salesman is a moron or is dishonest, and I let my daughter draw her own conclusions.

What about the validity of the $75 trillion present-value liability? Note that when interest rates jump from 4 percent to 5 percent the discounted present value of one dollar 75 years into the future drops by one half. This does not mean the $75 trillion drops by half, but you can see the sensitivity to interest rates.

Note that Mr. Williams goes on to extrapolate entitlement expenses equal to all federal income taxes. Well, just like the long-term-care insurance example above, it just will not happen. This does not mean that everything is going to work out such that our children get the same deal that my uncle is getting. What Mr. Williams should be pointing out, though, is that the older generation is dumping a great deal of financial uncertainty onto the backs of its children.

You might view this as the intergenerational risk transfer, and it certainly is not fair, by any means. The irony is that Social Security was supposed to reduce risk, but the reality is that there is no free lunch; our children are handed the uncertainty that we were not willing to deal with ourselves.

SAMUEL BURKEEN

Reston

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