This is something for people of my generation – 55-65 – ” Mark “The Bird” Fidrych was found dead today, age 54, apparently working under his truck. Fidrych was a baseball player, and “a character”, one who who got down on his knees and patted the mound around him as he talked to himself while pitching for the Detroit Tigers in the 1970’s. He was animated, urging on his team mates, congratulating them with high fives after good innings. He earned the nickname “The Bird” because of his posture and curly locks – he reminded people of Sesame Street’s Big Bird.

He made baseball fun, he energized Detroit. He only played 58 games because of injuries – injuries of the type that today can be repaired by surgery. But he never complained. He retired, bought a farm, married his girl friend, had a daughter. I just saw him on MLB Network recently, and he was aging well, was happy and outgoing. A nice guy.

Thanks to Swede for pointing me towards this op-ed in the Billings Gazette, Obama’s Oil Tax Changes Would Cripple Industry, by Tom Hauptman of Billings. Tom is a natural gas producer/explorer who has had much success. He writes about some special tax breaks given people in the oil business. But first,

As a young man growing up in the big city of Billings, my “summer camp” consisted of working for my uncle Stewart at his ranch in the Flint Creek Valley of Western Montana. We worked long hours in the hay fields either picking rocks or driving buck rakes. In those days, loosely stacked hay was the standard. Round bales had never been heard of, and “idiot cubes” were to be avoided at all cost! He made two promises to me, long hours and low pay, and Stewart was always a man of his word.

Conservatives talk like that, I’ve found. They like to think they invented hard work – they imagine that liberals are people who live off their sweat. Honestly, the hardest-working people I’ve ever met are restaurant cooks, followed closely by dish washers, and then the wait staff. Their rewards are paltry compared to Tom’s – heck, they are lucky if their employer provides health insurance. Last I heard, the Montana Restaurant Association was in Helena trying to undercut their pay by making it legal to reduce the minimum wage by any tips they receive. So much for conservatives and hard work. As my rich and surly uncle once told me, “you will never get rich on your own sweat. You make others sweat for you.”

I digress. Let’s get down to business. Tom, like all people who receive special tax breaks, thinks 1) he is entitled to them, and 2) they benefit us more than him. What’s good for him is even better for us.

In the upcoming Fiscal Year 2010 federal budget, the Obama administration is proposing the elimination of the depletion allowance and the further elimination of the expensing of intangible drilling costs for all wells drilled in the U.S. after July of this year. What does this oilfield mumbo jumbo mean? The depletion allowance allows an oil and gas producer to deduct 15 percent of his production income from taxation. The reason for this is simple. As the oil or gas well depletes, the producer must drill more wells or he will soon be out of business. It is exactly the same as depreciation expense for plant and equipment.

We all know depreciation is a real expense. All a rancher has to do is look at that “new” tractor he bought 15 years ago. The green has faded and, some day, he is going to have to knuckle under and buy a new one. Same thing goes for oil and gas wells. They don’t last forever.

That’s not exactly true. Actually, it’s exactly wrong. Suppose, for example, a farmer invests $100 thousand in a combine – he is allowed an expense for depreciation over the useful life of that piece of equipment as it produces revenue for him. When he has “recovered” the entire cost, he can no longer take depreciation expense.

In the oil business, it’s a little different. Tom doesn’t distinguish between “cost depletion”, the equivalent of depreciation of the farmer’s combine, and “percentage depletion”, a tax gift. If farmers were treated like oil men, they would be able to write off their equipment in full when they buy it, and 15% of their revenue forever after. That’s percentage depletion – a permanent and perpetual write off of 15% of all revenue received from oil and wells regardless of cost basis, aka “intangible drilling costs”.

The next item is intangible drilling expense, which is everything that can’t be salvaged from an oil or gas well. That is building the well pad, the cost of drilling the well, the cost of the pipe and the cement used to place the pipe in the ground, the cost of stimulating the well, etc. The majority of these costs are labor. Name one industry that can’t expense the labor costs before determining net income. I can’t think of one!

The ability to write off intangibles for successful wells is another tax gift. Without the IDC writeoff, oil producers would have to recover the cost of a well, it’s “IDC’s”, by cost depletion, a mathematical estimate of the portion of the recoverable reserves produced applied against the cost of drilling. This would be in sync with farmers and their equipment.

And the majority of these costs are not labor – where did that come from? Oil and gas is a capital-intensive business. They drill using rigs costing tens of millions of dollars, and chemicals and muds and technology developed in the last century, the cost of which makes labor a paltry part of the process.

Small producers get special tax treatment (percentage depletion) because they lobbied for it back in the 1980’s. As a matter of public policy, Congress thought it important to encourage domestic oil and gas production by small companies. But don’t confuse this special treatment written into the tax code with normal tax policy that other manufacturers and independent businesses must abide by. It’s a special benefit we gave them.

If this provision passes, the independent oil and gas industry in America is basically over. No one will drill wells with their hard to come by after-tax dollars. The business is just too risky. The mineral rights under Montana’s farms and ranches will become basically worthless. Even if you don’t own any mineral rights, it will hit you in the pocket, too.

Stand back! I think he’ll really do it! This is self-serving, I’m afraid. Tom has done what we all do – he has taken the special treatment given him by Congress, internalized it, and now believes that what is good for him personally should be public policy.

That’s a matter for debate. If we decide that independent producers no longer deserve special tax break, life will go on, wells will be drilled, farmers and ranchers will still farm and ranch, and lucky ones might find they have some Texas Tea underneath. Loss of the IDC writeoff would slow down deductions, but not eliminate them.

It all rests with the U.S. Senate. Call Sens. Max Baucus (800-332-6106) or Jon Tester (406-252-0550) and tell them you support the domestic oil and gas industry and are opposed to these destructive tax law changes. Time is of the essence. Our energy future is in peril.

Lives are at stake.

Let’s be frank here. The United States will always be dependent on oil from other countries. Oil is where you find it, and there isn’t much of it left here. Small producers, taken in total, provide some relief from the need to import, but mostly they are gamblers playing for high stakes, men and women not content to make their money a buck at a time. They want huge rewards, and so entered this very risky business. Most of them minimize their risk by doing infield drilling, expanding on known reserves, and by shying away from wildcatting. The really big risks – the deep-sea drilling and stone-cold wildcatting under arctic tundra, are taken by the Exxons and Shells and BP’s – only they have enough money to justify the risks taken.

I just finished doing a tax return for a corporation, and the sole owner of this corporation will soon realize one of the greatest benefits of the corporate structure: protection of personal assets in bankruptcy proceedings. We on the left often demonize “corporations” as if they were persons. In fact, a corporation is nothing more than a legal fiction, a way of encouraging risk-takers, and of raising large pools of capital. It’s very hard to envision an industrial society without such a structure.

Are corporations evil? (Are “sole proprietorships” virtuous?) Not at all. All of the evil perpetrated by humans on one another is done by humans, and humans alone. The corporate structure merely facilitates some of our worst traits.

When I lived in Billings, I encountered a term bandied about by employees of the Billings Gazette: “making book”. It’s not something ever seen in print. (As Molly Ivins reminded us, if you want real news, you don’t read what reporters write. You drink with them.) “Making book” meant delivering a certain rate of return to the corporate owners, say, 12%. The owners didn’t care how the Gazette publisher went about it – let some people go, raise rates, trim the page size, boost the ad/news ratio. Didn’t matter. Just make book.

So the publisher did what he had to do. People got hurt – the publisher, unless his name rhymes with wheelie, was not a bad person. In fact, with very few exceptions, none of us are bad people. Yet we are constantly doing bad things to one another. We do it out of necessity – we need to eat, we want to accumulate wealth and be secure. We do so without corporations, but the corporate structure magnifies our worst traits.

The reason is simple – top-down authority. In corporations, people below must carry out the orders of people above. If they don’t, they are soon gone. For the people above, they are removed from the effects of their decisions. (The management of Union Carbide didn’t live near Bhopal; the Dow boys never smelled napalm-burned flesh or gazed upon a deformed Agent Orange baby.)

Greed is a tool, like a hammer, than can build or destroy. Corporations are built around greed. Removal of accountability unleashes naked greed, and it is unabashed, unrestrained greed that gives large corporations a bad name. Monsanto right now is pushing legislation (HR 875) introduced by Rep. Rose De Lauro (whose husband works for Monsanto) that would put organic farming out of business. It’s called the “Food Safety and Modernization Act”. It’s not about safety, and its not modern. It’s as old as time itself. Monsanto doesn’t like all the competition it’s getting from non-chemical based farming. They want it stopped.

Hugh Grant is the CEO of Monsanto. He made the decision to introduce that legislation. It is being carried out below, by the wife of one of his employees. It’s a very bad deal for thousands of small farmers and people, like me and my wife, who like organic food. The farmers will either buy and use Monsanto’s (or some similar corporation’s) pesticides and fertilizers, or stop farming. And we’ll have to eat that crap. We’ll all be hurt.

Hugh Grant will never have to answer to us. He’s alone in his office, unaffected by his decisions.

Perhaps we on the left need to clean up our own act, clarify our concepts. We attack evil corporations. What we mean is that we want to bring corporations under control of law and stakeholders, make them accountable. That’s all we mean. If we do that, if CEO’s are held accountable for more than just making book, we will have a better, cleaner, safer, and nicer world.

This is important – I can’t begin to emphasize how important it is. Joe Biden, our VP, is a blowhard – I think we can all see that. He gets on a roll, and Lord only knows what follows. So he made up this oval office conversation with George W. Bush that went as follows, on CNN:

… President Bush once told him in the Oval Office, “‘Well, Joe, I’m a leader,” and Biden responded: “Mr. President, turn around and look behind you. No one is following.”

Yeah, that happened. Bush often parried and engaged in repertoire with people he disagreed with, so he likely opened himself up like that to Biden. Righto.

Here’s Karl Rove in response:

“I hate to say this, but he’s a serial exaggerator. If I was being unkind I would say liar. But it is a habit he ought to drop. … You should not exaggerate and lie like this when you are the Vice President of the United States. There were few presidents who spend hours with somebody in the Oval Office, particularly with a blowhard like Joe Biden was”.

Here’s why this is important: Politicians have to be honest with us. That’s one of the important changes we made last November – no more lying! Now Rove never lied to us when he was Bush’s Brain, and Dick Cheney, as Vice President, certainly set a high bar, and hundreds of thousands of people did not die in part because Karl Rove and Cheney and others orchestrated the official lying that never went on anyway. So he doesn’t have any blood on his hands at all. That’s a given. That’s why he’s a prominent spokesman on FOX. He’s trustable.

And anyway, lying is not important, even if it had happened (it didn’t), when it is only foreigners who would have to pay the price if anyone had lied, which they didn’t.

But this … this is important. Joe Biden might be telling us a lie about a passing conversation involving only personal vanity.

We have our priorities straight. ‘Bout time.

In other minor news notes, Attorney General Eric Holder has decided that while former Senator Ted Stevens, plainly guilty, can walk, former Alabama Governor Don Siegelman, maliciously imprisoned by Karl Rove, can rot.

Alex Epstein of the Ayn Rand Institute was on the Thom Hartmann radio show, April 8, 2009. Hartmann brought up Upton Sinclair’s book, The Jungle, which exposed conditions in the U.S. meat packing industry. Epstein was talking about public attitudes and the government regulations that ensued:

It was a hack pseudo-novel … and anyway, they got this from reading a novel?

From the cartoon strip “Pickles” today, quoting Orwell:

Every generation imagines itself to be more intelligent than the one that went before it, and wiser than the one that comes after it.

That’s something to ponder as we look around and see the devastation wrought by undoing of Depression-era banking regulations by Clinton and Bush.

What do Jane Hamsher, (Firedoglake.com), Glenn Greenwald and Markos Moulitsas (Daily Kos) have in common? They are supporting the Accountability Now Political Action Committee, which has set out to recruit liberal Democratic candidates to run primary contests against seats currently held by so-called “moderate” Democrats – those who often support Republican policies and oddly, when stripped of party designation, seem like Republicans. Accountability Now is also supported by MoveOn.org.

Read more about it here.

Predictably, the Democratic leadership is not happy about this. Says Rep. Chris Van Hollen, chairman of the Democratic Congressional Campaign Committee,

What I’ve been warning people very clearly is, beware of forming a circular firing squad. We people should be focusing their efforts on expanding the Democratic majority, and that should be their singular focus.

Asked what was the point of electing Democrats who support Republican policies, Van Hollen said “That’s the whole point. Both parties dislike liberals. Always have.”

OK, I made that up, but it is my suspicion. Here’s his eminence, Harry Reid:

It’s not helpful to me. It’s not helpful to the Democratic Caucus.

Asked why having more liberals in congress would not be helpful to the Democratic Caucus, Reid said “They interfere with my objectives. I have a job to do – I have to promote an agenda completely at odds with my supporters while at the same time having to appear to be in harmony with them. It’s hard enough without having to deal with real liberals.”

OK. I made that up too.

It’s a good thing they are doing. I’ve long said that liberals don’t get what they want because they are too easy. They cave to the Democrats like a the class nerd to the homecoming queen. If having Democrats in congress is important for its own sake, and not to advance an agenda, then the two-party system is a sham.

By the way, it is, pretty much.

It was a sad day last Thursday for the states of Washington and Montana, as all four Democratic senators representing these two states sided with Republicans to lower the estate tax. Senators Maria Cantwell, Patty Murray, Max Baucus and Jon Tester all jointed with Republicans in voting to extend current estate tax levels into the foreseeable future. Its a wee bit confusing, as there is a “deficit-neutral” provision that would actually increase the estate tax exemption to $10 million. Let’s just say that Congress is looking at the re-emergence of the old estate tax at 2001 levels with trepidation.

The estate tax is a deceitful issue, but one very demonstrative of how politics is done in the United States. It affects only the top 2/10th’s of one percent (.002) of all taxpayers. These would be our wealthiest families and their heirs – the Walton’s, Harriman’s, Kennedy’s and Bush’s. Yet when politicians talk about it publicly, they frame it in terms of dirt farmers and cattle ranchers, who are mostly unaffected. Further, conservatives ran the tax through the public relations industry, and were instructed never to use the expression “estate tax”, but rather the “death tax”, giving it an ominous aura.

The vote on Thursday will be a costly one – a tax cut of $245 billion for our wealthiest, bringing the total cost of estate tax cuts since Bush took office to over $700 billion. This at a time when so many working and middle class people are suffering. Baucus and Tester have screwed up priorities, it seems.

Why an estate tax? It goes back to the Progressive Era. During the late 19th century, for the first time in our history and coinciding with the Industrial Revolution, the U.S. saw its ranks of extremely wealthy families grow – the Rockefellers, Mellons, DuPonts and others left a bad taste on the public palate. Based on our experience in Great Britain, a country still run by its wealthiest families through the House of Lords, our forebears thought it wise to break up large estates. Nothing good comes from large concentrations of wealth save undue power and influence, bought politicians and privileged citizens enjoying special influence over public officials – the opposite of democracy.

In other words, untaxed estates lead to rule by the Walton heirs – oligarchy, or plutocracy, to be precise. We have legislators bending over (backwards) for the sake of the top 1%.

In Montana in 2006, 92 estates paid estate taxes – about 1.1% of all estates that year. But these are the wealthiest people in the state, and Senators Baucus and Tester seem very aware of them. One of the wealthiest families in the state is the Rehberg family. Congressman Rehberg ought to recuse himself from estate tax votes, as he is voting dollars into his own pocket. Rehberg has been one of the most vocal opponents of estate taxation – I suspect this has to do with his father’s estate having to pay the tax, and Denny’s inheritance being decreased. Hell hath no fury like a jilted trust baby. (Read here how Rehberg in 2005, true to form, speaks of the Estate Tax as affecting “families who have their whole lives invested in the farm or their small business”, rather than affecting him personally. It’s blatant – he’s shameless.)

But he’s got Senators Baucus and Tester fighting for him. So it’s a moot point.