AFF Sentinel Vol.6#15

Consider things unthinkable just three years ago, before Pelosi, Obama and Reid (POR) gained control:

• A union, the UAW, is poised to be handed majority ownership of GM
• The UAW is slated in the government's bankruptcy plan to be handed Chrysler's majority ownership
• The Administration has told California that if it wants its promised $6 billion stimulus, it must rescind pay cuts voted in through the state's budget process to cut deficits. The cuts affect unionized home health care workers (Service Employees International Union) and President Obama wants to block that.
• Carol Browner, who as energy czar answers only to the president, has a previous EPA record of favoring punishment for industry
• The U.S. Supreme Court and EPA are tangled in greenhouse gas regulation rulings and proposals that could result in crippling taxes on livestock.
• Certain banks, auto and insurance companies are already government controlled.

It is obvious that the present administration intends maximum control over the economy. I have a conspiracy theorist friend who's been warning for years that secret cabals were poised to take over the world. Observing government and business has taught me that executing a secret, complicated plan is unlikely. Executing the simple and the obvious is difficult for many companies.

Yet here we are, barely 100 days into the POR era, and the takeover of the economy and government expansion is happening, not in secret, but right before our eyes, while a large slice of the electorate and our mass media fawns, "Oh, Barack!" No secrecy -- just a misdirection here, a reversal of position there, a step beyond the initial step here and mostly bold moves, figuring no one can stop them because they have the votes and the power.

While the slack jawed struggle to comprehend the power grab and the rest wrestle with visions of economic chaos when T-bills are unmarketable, our industry should consider what this juggernaut could do to us.

In his book, "Liberty and Tyranny,"* Mark Levin has a chapter "On the Free Market." Levin examines our oil industry crippled by the federal government. That got me to thinking: what could happen to beef, now that POR and their activist allies are in control.

Consider :

• Government has shrunk the oil supply by restricting drilling in Alaska, off our coasts, etc. Result: higher fuel prices. Government has begun but could eliminate grazing on all public lands, reducing the beef supply. Result: higher beef prices.
• Government has so tightened environmental restrictions, that no new oil refineries were built after 1983. Levin notes 301 refineries supplied America in 1982; now, 149. Result: higher fuel prices. Government has already blocked one packer merger. It could respond to populist agriculture groups' calls by breaking up the big packers, retailers and Wal-Mart. Result: higher beef prices.
• Government fleet CAFE standards forced auto makers to build smaller cars many people found lacking: space limitations, safety and construction compromises from lighter vehicle weights or lack of power to handle loads. POR plans forcing car companies it controls to build compacts and electric cars. Result: higher costs, higher car prices, fewer consumer-preferred vehicles. Government activists would love to reduce or eliminate animal protein consumption, since they believe a vegetarian diet is healthier, that animal production damages the environment and uses too much fossil fuel and water. Low Fat Beef (LFB) standards could be imposed, eliminating grain feeding, producing a product unpalatable to consumers. Result: beef few customers want, higher prices for what's left.
• Levin: the Tax Foundation calculated from 1977- 2004, U.S. oil companies paid $518 billion in federal and state corporate taxes - an average rate of 45 percent - while making profits of $630 billion. An additional $1.34 trillion in excise fuel taxes was paid by consumers in pump prices and paid to state and federal governments. POR plans to raise capital gains taxes, the death tax and is contemplating a livestock methane tax. Governments have imposed ingredient bans on food, higher taxes on tobacco and considered taxes on fat and sugar in foods. An increase in business taxes and imposing "fat," "sugar," and "animal product" taxes could make production and consumption of animal products unprofitable, unaffordable and nearly illegal.
• State governments/voters have already restricted farm animal production methods. More is coming. Full-blown production restrictions could make beef production extremely expensive.

Overall result: beef prices so high - for an inferior product - that market share - and the beef industry -- would evaporate. Could it happen? Ask GM and Chrysler.

*Clic k here for purchase information on "Liberty and Tyranny." See "Featured Books" at bottom of page.http://www.marklevinshow.com/home.asp

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