KCBD Issues and Answers– by Richard Peterson. Libertarian Candidate for Congress, District 19


Medicare Discount Drug Plan--are the cards part of the solution to the U.S. health care crisis?


          Prescription drugs are an important component of medical care as their proper use can reduce the need for other, more expensive, medical services. Thus, prescription drugs should be covered under medical health care plans if they allow medical conditions to be managed more effectively and cheaply. That said, the present discount drug plan has both pros and cons. One con is its cost. According to Ton Saving, one of the public trustees for Medicare and Social Security, going into the future, the prescription drug benefit program will cost more than $16.6 trillion dollars, making the future shortfall in Medicare promises, vs. revenues, total $61.9 trillion, or approximately 6 times our Gross Domestic Product.

          A second con is the complexity of the program. Different drug providers each have a different plan, and people must spend time and effort reviewing all plans and deciding which plan is most appropriate for their circumstances— yet there is no guarantee that the plans will not change in the future. In addition, the initial subsidized discount drug cards will only be available to people whose income is sufficiently low, and they must take some effort to determine if they qualify for the $600 per year low income subsidy cards. Thus, many people are confused about the program and whether it will do them any good. To further peoples’ confusion, the percentage coverage of drug benefits varies widely depending upon how much people spend on drugs each year. After some initial coverage, there is a level of drug spending that is not covered before coverage resumes for those people with very high drug expense levels.

          The most important positive aspect of the proposed prescrition drug program is that it allows people to use drugs to alleviate their medical conditions and possibly reduce the need for more expensive treatments later. A second positive aspect is that it introduces competition among drug providers and, thus, may help hold down drug costs.  A third positive aspect is that it the proportional payment requirement and the coverage gap will make people pay some or all (depending upon their drug usage level) of their drug costs and therefore will encourage them to economize on their drug use. For instance, when faced with the high cost of taking Celebrex, some people, (including most of those pictured in the Celebrex ads) might find that they could save money by taking aspirin or Ibuprofen instead. In fact, NSAID drugs, such as Aspirin and Ibuprofen, are more effective in relieving pain and inflamation than Cox II inhibitors like Celebrex. The main reason for taking Celebrex, like my wife does, is if one has had severe arthritis for many years and has damaged one’s gastrointestinal tract by taking too many NSAID drugs over the years. However, I can guarantee that people with severe arthritis can’t dance or run like the people in the Celebrex ads. When people have to pay a portion of their own drug costs they may decide to take cheap drugs like aspirin or Ibuprofen (and eat cheese or milk to protect their stomach) instead of Celebrex, or to take generic drugs instead of more expensive drugs that still have patent protection. They also may decide to buy drugs from places like Canada (which I favor), if the same drugs are sold more cheaply there.

          The introduction of price competition and price sensitivity is an important element in the proposed drug plan and points the way toward an important requirement for any solution to our health care crisis.

          If we don’t use a price mechanism to ration health care the potential demand for health care is limitless. If it cost $1 million in medical expenses to raise a person’s life expectancy by one day, very few people would be willing to demand that level of medical care if they had to pay for it. However, most people would want that level of care if the government paid for it on their behalf. Thus, people must pay some portion of their medical costs. If not, we would have to use a rationing or  queuing system to ration care as they do in socialized medicine systems, where some people (often the old) are denied care , through rationing of care to socially “eligible” recipients, and other people are forced to wait in line (a queue) for appointments to obtain care in the future. In socialized systems, people often are not allowed to pay for their own private care (i.e. jump the queue) even if they were willing to pay to do so because they had a dread disease that required prompt care.

          I will now make some proposals based upon years of discussion with my children. Two are MD’s. One did a residency in Psychiatry and worked in emergency rooms in the San Francisco Bay area, where there are many drug problems. The other did a residency in Internal Medicine and then specialized in Gastroenterology before joining an academic faculty, working at a VA hospital and completing all her courses for a Masters Degree in public health at Harvard. So those two have a variety of experience in the medical field. In addition, my third child half completed her doctoral dissertation in Medical Economics at Princeton before she started having children. She also has lived in the U.S., England, and Canada, so she has experience with a variety of health care systems. Thus, our family has lively debates on the problems with medical care in different countries.

           The main problem I see with the U.S. system is that it has a variety of pricing schemes for the same services, and those prices are not readily available, so people can’t make cost effective decisions regarding their own medical care. Furthermore, many people receive care without having to pay any price (even though Medicare provides only partial or limited reimbursements).

          A related problem is that great inequities exist in the system when the uninsured are charged many times the amount that insured people pay for the same services, or when people who don’t intend to pay anything get Cadillac levels of medical service while people with restrictive insurance plans cannot receive the same services.  In addition, different insurance plans pay different prices and use different reimbursement schedules and procedures. Consequently, every medical practice must employ more people to do bookwork than in providing medical services. In addition, medical insurers and HMOsmust also employ numerous people. As a result, U.S. medical care is expensive, in part, because so many resources are wasted doing paperwork.

          I am a Libertarian and I strongly believe that the free market system’s strengths should be used wherever possible to solve problems. A vital part of the free market is the use of prices to ration the use of scarce resources. At present that is not the case in the medical field, as different people pay different prices for the same service, many people pay nothing, and most don’t know what price applies to each medical service. Furthermore, under Medicare, many medical service providers do not charge their patients as they should if people are supposed to pay 20% of the cost of the services they use. Thus, those services are not rationed at all and are often overused or misused, and Medicare picks up the entire bill.

          Thus, as a critical first step toward increasing the efficiency with which medical services are provided and reducing medicare costs, I propose that all medical service providers be required to post the prices for each service they perform in a readily accessible way. I further propose that medical service providers charge everyone the same price for the same service--at present, uninsured patients may be charged many times the price charged to insured patients.. In addition, I propose that every user of medical services pay at least part of the posted price, and that Medicare audit service providers to ensure that that is done. Poor people on Medicare or Medicaid might pay a very low percentage of the posted price with Medicare or Medicaid picking up the balance, but everyone should pay something so they have an incentive to seek out the cheapest source of medical services. Richer people could buy insurance to cover part of the posted prices, while they paid all (up to some deductible) or some (above their deductible) of the posted charges themselves. Medicare could set (and publicize) limits on how much they would reimburse for certain procedures, but people could still pay more for the service than the limit established by Medicare if they were individually willing, or had insurance companies that were willing, to pay any extra amount. No one would be allowed to consume medical services with no payment, lest providers of such services bill Medicare excessive amounts while not passing on the required proportion of the costs to the ultimate consumer.

          The purpose in listing all prices and requiring that each medical care user pay at least a portion of the price is to make sure that people price shop for discretionary medical services, and thereby use medical services more efficiently than would otherwise be the case. In addition, uniform prices posted on computers and publicized price lists would simplify bookkeeping and might reduce some back office work in the medical field.

          A second innovation that could reduce medical waste would be to allow medical insurance companies or Medicare to vary insurance premiums or reduce coverage percentages for people with bad habits--such as smoking, excessive obesity, or a failure to take their diabetes medicine. Presently, auto and life insurance companies can vary premiums or coverage for smokers, careless drivers, overweight people, or other bad risks. Medical insurers should be allowed to adopt similar differential pricing to encourage people to live healthier lifestyles by controlling factors that they can control to improve their health.

          A third feature that I would propose is to provide basic medical coverage that would improve our nation’s general welfare via funding support for county public health clinics. Such clinics could provide basic general medical care such as immunizations and treatment of infections and broken limbs at relatively low cost, using queuing rather than dollars to ration care. They also could serve as a first line of defense against biological terror attacks.  However, they would not provide expensive specialized services such as bypass operations, etc., for which a person would have to use cash or insurance to pay at another provider. Because county provision of medical services would be subsidized and available below cost, they would probably have to be rationed to some extent by queuing, unless a county decided to fund overcapacity.

          Finally, our medical system needs to be protected from frivolous lawsuits that raise medical costs and drive doctors from the field. Limitations on awards for patient “pain and suffering” are necessary in order to prevent suit happy trial lawyers from threatening to obtain multimillion dollar judgements for medical problems where actual damages are not nearly as large. Claims for actual damages would be allowed in full, but the “piling on” allowed by ”pain and suffering” awards would be limited. By doing so, more doctors could afford to specialize in lawsuit prone areas as their insurance rates would be lower, and all doctors could afford to lower charges as their insurance rates fell. In addition, patient charges would also likely to be reduced by a reduction in the running of generally unnecessary and expensive tests, that doctors have to order now in order to practice defensive medicine.

          I favor drug coverage as a vital part of medical care, but there are many other things that must be done to help resolve our health care and medicare funding crisis.

          I would be happy to meet with any interested group to talk about Medicare or other issues in the campaign. My phone and fax number is 806-799-6032, and my website is www.chippeterson.com.. I’d be happy to hear from you.




          The easiest solution would be to have more rain, but we don’t have divine powers so we have to learn to make do with what we have. Our problem in West Texas is that we have a semi-arid climate. However, our land is rich and can be extremely productive if it just has sufficient water for crops and forage. In addition, people need a dependable source of clean water in order to live in this area. Thus, our problem is to make sure that the water we have and receive through annual rainfall is sufficient for people to live, for agriculture, and for the future growth of West Texas. Consequently, we have to use our water resources economically and not waste what we have. We also need to make sure that our water is not taken from our area for use by others with more political influence. I will elaborate on these issues, in turn.


          First, we need to ensure that our water is used economically. Texas Tech has existing research programs designed to develop crops that use less water and agricultural methods that economize on water use. I would encourage and support more funding for such research efforts and for the dissemination of that research knowledge through extension services, education, and other methods so it could be put to use.


          Second, we need to make sure that the water we have is used efficiently. Where water use is priced, as in cities and factories, if economic water use is required, higher prices could induce people to ration their water use, particularly for marginal uses such as watering lawns daily or washing cars frequently. Also, charges could be imposed on businesses that discharged hard to reprocess wastewater.


          Third, where the price mechanism is inadequate to change behavior , fines or charges could be imposed so water would be economized upon and could be reprocessed inexpensively--as in Lubbock which now imposes fines on people who water their lawns during midday when evaporation rates are high and the water is used inefficiently. In the event of drought conditions, similar fines could be imposed on agricultural producers who waste water by using spray irrigation during midday when evaporation rates are high. Also, conservation charges could be levied upon water-wasting spray irrigation equipment sales so that equipment would be more expensive than water-conserving drip irrigation equipment.


          Fourth, recycling of water could be increased with appropriate reprocessing. Presently, the city of Lubbock sprays partially treated sewage water on fields to irrigate crops, then collects the water that has  percolated down through the ground and become further purified. Lubbock then uses the water to fill the chain of lakes that runs through Lubbock. With additional processing, the water could be reused as tapwater. Federal programs might assist in funding water purification processes.


          Fifth, we need to make sure that the water we have stays pure enough for residential use. In particular, we need to make sure that Lake Alan Henry does not become polluted, as it can be a valuable city water source for a large region in West Texas.

          Finally, we need to conserve the water  in the Ogallala aquifer so that its level doesn’t fall too much, thereby causing agricultural wells to go dry and pumping costs to rise. A major potential problem here is that T. Boone Pickens wants to tap the Ogallala aquifer under his property in the Panhandle to sell it downstate. Under the “law of capture,” people can capture the resources on their land. While that is appropriate for something like gold, which doesn’t move from one person’s property to another, water flows, even when it is underground. Thus, all farmers and people who live above the Ogallala aquifer would be affected if the level of the aquifer fell. While movement of water solely within the state’s borders is not a federal concern, since the Ogalla aquifer lies below several states, its potential depletion could be a legitimate federal concern.


          Overall, then, to solve our water problem, we need to use the water we have and receive more efficiently and to husband the water resources we have. The Federal government can possibly help with legal issues involving drainage of the Ogallala reservoir under our land, by helping communities develop water recovery and efficient water use programs, and by funding research and extension services to help agricultural producers utilize water resources more efficiently in growing crops and forage.


          Finally, if anyone wants me to discuss campaign issues with them, I would be happy to meet with interested groups to do so. My phone and fax number is 806-799-6032, and my website is www.chippeterson.com.. I’d be happy to hear from you.



War in Iraq


          Last year, when the war in Iraq was just starting in late March, I gave an interview to Channel 9 in the Midland -Odessa area about the war. The reporter liked my response but said it was unfortunate he could only use 10 seconds of it rather than the whole two minutes. In the interests of consistency, I will begin this segment by repeating and updating what I said..

          At that time I said that I thought the war was justified because it appeared that Saddam Hussein had weapons of mass destruction that he might provide to Al Qaida for use against us. I found it suspicious that we had suffered from anthrax attacks and that the leader of the 9-11 attacks, Mohammad Atta, had suffered from something like anthrax on his leg and had previously met with Iraqi operatives in the Czech Republic. While those meetings weren’t confirmed by our government, they were confirmed several times, both before and after our government’s denials, by the Czech secret service and government. Since Iraq was known to have worked on weapons grade anthrax, like the Anthrax included in the letters, I suspected that Iraq might have supplied Al Qaida with the bacteria used in the letters. In addition, I had read that Al Qaida cells were operating in Northen Iraq. Furthermore, based on Secretary Powell’s presentation to the U.N., it appeared that Iraq was working on biological and chemical weapons of mass destruction, and was trying to develop nuclear weapons as well. Thus, I thought that the war was justified to further our national defense. I further thought that we would win it handily because of the superior effectiveness of our military forces.

          However, I expressed reservations about what we would do after we won and ousted Saddam Hussein from power. I noted that when my daughter had lived in Oxford, England, my wife and I had visited and spent considerable time in the British Museum of Natural History. I was impressed at that time as to how well developed Iraq (ancient Mesopotamia) was with cuneiform writing, a legal system (the code of Hammurabi), and other trappings of civilization many thousands of years ago. However, I also wondered why that area had never been able to develop continuously. I thought that I had found the answer in the museum. The British had brought back many palace walls, friezes, and tablets from the area. Depicted in the artwork were scenes of soldiers returning from war carrying the heads of the vanquished. In the writings, they told tales of slaughtering their enemies, destroying their houses and spreading the rocks in their fields, which they also sowed with salt. In short, they destroyed both the physical capital and the human capital of the vanquished. Thus, vengeance and the destruction of capital had been incorporated in the culture of the people of Iraq for thousands of years, and that is why they had not been able to continuously develop in spite of their obvious intellectual accomplishments. Saddam Hussein had only been able to control the country by exercising the terrible mechanics of repression by a despotic ruler to which they were accustomed. I feared that once we defeated the Iraqi army, we would have a hard time bringing the country under civilized control, and I expressed the view that I didn’t think enough thought and planning had been given to the question of what to do once a military victory had been achieved.

          In hindsight, I was seemingly wrong, as was the U.S. administration and the intelligence services of the entire world, about Hussein’s possession of weapons of mass destruction (albeit, I would not be surprised if some later surfaced in Syria). Had Iraq not seemed to be an imminent threat to us, it would have been better to keep Hussein bottled up under strict controls for another year or more. However, we were wrong, and based on the information we had, I believe we did the right thing by going to war. Nonetheless, I think that the administration has botched the postwar occupation. For one thing, we assumed that the Iraqis would welcome us and enthusiastically seek democracy. Thus, we didn’t worry sufficiently about post battle insurrections and the difficulty in establishing a democratic replacement government.

          Since the main battles ended, we have tried to impose arbitrary rules on Iraq concerning representation in their governing councils (with quotas for women and various minorities). We also have tried to ensure that they would have a true democracy. However, Iraq is a country that has never known true democracy. At best, they can develop a federal system with representative democracy with a strong central executive. If the central executive is a benevolent despot, that may the best we can hope for.

          We should try to minimize our losses as they develop a new civil order. Thus, we should encourage them to develop an effective police force and national guard, and to have elections so they can feel that they have a stake in their own government and can replace it legally if it becomes too despotic, without any benevolence. We should encourage them to adopt a federal system with substantial regional autonomy in order to reduce the risk of civil war.

          We should maintain forces in Iraq to serve as a backup to their elected government and to help stabilize the region and prevent civil war and the development of a breeding ground for terrorists. However, our forces should mainly remain on relatively remote bases and only intervene judiciously--and as the Iraqis develop their own military capabilities, we should start withdrawing much of our military from the region.

          Economically, once they have a newly elected government, we should encourage the Iraqis to default on all past debts incurred by Saddam Hussein’s regime.  Many past debts were incurred by Hussein to buy arms for the war with Iran, and the current government need not repay debts from the former regime. The Iraqis should start over financially, funding their needs out of current oil revenues. That would give the whole country an incentive to find, produce, and protect as much oil as possible. 

          If anyone would like to hear more about my opinions on Iraq or other matters, I would be happy to talk to any group or class of 30 or more people. My phone and fax number is 806-799-6032, and my website is www.chippeterson.com.. I’d be happy to hear from you.




          Agriculture is extremely important to the U.S. in general and to this area in particular. Our farmers are the most productive in the world. Unfortunately, high agricultural production frequently exceeds demand and depresses agricultural prices and profitability. Furthermore, trade practices of other nations frequently subsidize their agricultural exports or restrict our agricultural producers’ ability to export to them. Consequently, there often is international trade friction associated with agricultural products and with the direct and indirect subsidies directed at agricultural production. Those frictions pose political risks that are  in addition to the ordinary risks of whether, disease, and market price fluctuations  that agricultural producers ordinarily face.

          Several years ago, the U.S. passed a farm bill that was badly needed by farmers in this area as cotton prices had plunged to roughly 30 cents per pound. The farm bill raised support prices for cotton and, in order to ensure its passage, for numerous other crops besides. In the short run, the farm bill helped local producers, but now it is beginning to cause problems. Brazil has won a case before the World Trade Organization that claims our cotton price support subsidies are excessive and hurt poor country cotton producers around the world. Furthermore, in order to proceed with the Doha round of international trade agreement talks, the U.S. has recently agreed to cut agricultural subsidies by 20%. In addition, because the recent farm bill set price supports so high for many commodities that no producers could take a loss, it has encouraged overproduction in many areas, thereby depressing market prices for those commodities and guaranteeing that U.S. price support payments will, in the long run, be higher than estimated initially, thereby adding to the U.S. budget deficit. Consequently, potential budget cutters may target the farm bill for cutbacks, and there now are fewer farm-state representatives in congress to protest such cutbacks.. Thus, despite what others may say, the recent farm bill is in trouble politically.

          Our problem, then, becomes one of figuring out how to prevent the farm bill rug from being pulled out from under local producers. It may not be good enough to say it must be defended at all costs because the U.S. trade negotiator is likely to sacrifice some agricultural price supports in order to ensure that the Doha trade round will go forward. Thus, one must come up with additional rationales for protecting certain agricultural producers. There are three rationales I can think of.

          First, while Libertarians support free market price mechanisms, in this case, because of past price supports, agricultural markets have been distorted and capital has been misallocated. Consequently, one can argue that we should move toward flexible support prices gradually so producers have time to adjust if they are not the low-cost producers and need to reallocate their capital over time. Thus, I suggest that one can argue that agricultural price support levels be set at average market price levels over the past ten years. Initially, the price supports would stay as they are, but each year, the average support level would be adjusted by taking  9/10 of the previous years price support level and adding 1/10 of the most recent year’s average price for that commodity. In that way, price support levels would gradually adjust down for commodities that were being overproduced and the least efficient producers would be able to leave the industry gradually before their losses became financially crushing. This would incorporate the benefits of the free market system without crushing producers financially with rapid price changes. 

          A second rationale for continued agricultural price supports is that certain commodities might be deemed to be essential goods for the country to produce, in order to maintain self-sufficiency for national security reasons. If it were to be deemed desirable to maintain enough domestic capacity to produce 10 million bales of cotton each year, the government might run a Dutch auction each spring in which producers could offer to sell the government a certain amount of production (deliverable, with predetermined grade discounts, as called for by the cotton futures exchange) at a fixed price for December delivery. The government could accept bids for the predetermined amount at the price determined by the Dutch auction mechanism--in essence, issuing futures contracts to buy the predetermined amount at the Dutch auction determined price. All winning bidders in the auction, who had bid an amount equal to or below the final price, would, in essence, have sold a futures contract to the government guaranteeing the amount of cotton to be delivered and the price at which it would be delivered. Since these contracts with the government would be the same as futures contracts, they could be hedged in the futures markets, if necessary, and the government could pass its contracts on to the futures markets by selling futures there. That mechanism would allow prices to be hedged forward for a substantial amount of the year’s crop, provided that the futures contracts had sufficient delivery flexibility with respect to location and grade discounts so that a wide variety of producers, exporters, and consumers would have access to the market. They also would ensure that a certain minimal amount of production could be grown and financed each crop year, depending upon national needs.

          A third rationale for maintaining some price supports is that other countries have ganged up on the U.S. to inflate our dollar value and distort our exchange rate, with resulting effects on market prices of internationally traded goods. It is quite likely that the U.S. dollar is overvalued by 20% or more on a purchasing power parity basis. As a result, our exports sell for 20% or more higher in foreign currency terms than might be desirable. Consequently, domestic prices for our exported commodities may have to fall by 20% or more to make our exports attractive to foreigners. That could make the difference between 40 cent per pound and 50 cent per pound cotton. Temporary price supports could be defended on the grounds that they were needed to adjust for the fact that our currency was not being allowed, due to the intervention in our foreign exchange markets by other countries, to trade at its purchasing power parity. While this is true, I don’t like this rationale because purchasing power parity is a slippery concept and, thus, there would be no single price level of support that could be justified, and the resulting price level would be a political football, encouraging retaliation from other countries in the world. Instead, I favor this argument as a theoretical argument for explaining why price supports for agricultural producers are justified--and thus why a flexible price support system can be maintained in the U.S.

          If a flexible price support system were to be adopted, agricultural producers would have to assess whether they were among the low cost producers for a commodity or whether they should shift their production to other commodities. In this area, many producers are efficient cotton producers, and probably would be among the most efficient if water subsidies to California and Arizona producers were to be fully priced. However, other crops also do well in West Texas. Grapes, peanuts, onions, trees, and livestock, all can be profitably produced, and agricultural economists and researchers at Tech may have other helpful ideas. In addition, hunting rights can be sold and wind farms located on some lands. Overall, there are many areas where farmers can earn diverse sources of income from their land, so they do not have to be fully committed to growing only one crop. In fact, one of the most important principles of finance is that an investor (which is what a landowner is) should diversify because the future is uncertain.

          One disadvantage to diversification, however, is that farmers incur considerable capital costs in gearing up to produce particular commodities. Unfortunately, after investing in and depreciating their specialized equipment, they might be hit with expensive tax burdens for the “recapture” of their depreciation expenses if they sold their equipment. I think this is inequitable and would like to see the tax laws changed so all agricultural equipment expenditures would be eligible for deduction as current expenses with no recapture required.





          As a Libertarian, I favor a strong national defense, as called for in our constitution. I also favor our volunteer army instead of an army of conscripts. I think much of the divisiveness of the Vietnam War has resulted from the fact that many people were drafted to go to war unwillingly, while others managed to evade the draft and the war. Since Vietnam, we have relied upon volunteers to staff our military forces. Our subsequent volunteer military has been tremendously effective with much higher morale than our draftee forces. I believe that our military forces are by far the best in the world. They are excellent in part because their members have volunteered to serve our country and they are high quality people. Their effectiveness has been demonstrated in Gulf Wars I and II as well as in Afghanistan.

          As a Libertarian, I very much oppose the reimposition of a draft. I know that bills have been introduced in both houses of Congress that would provide for mandatory national service by young people. I oppose those bills because they assume that people in this country belong to the “government” and can be used as the government wishes. Such an approach is a “statist” approach that is anathema to a Libertarian, since Libertarians believe, as our nation’s founders did, that our government should exist to serve the people and that people do not exist to serve the government. While national defense is an important function of government, a military draft should only be instituted in times of national emergency, and national service should not be required of people unless the nation’s survival is at stake.

          Unfortunately, I am afraid that the power hungry in Washington would like to reimpose a military draft. The reserves and national guard have been abused in recent years with callups that exceed their expectations and, possibly, their contractual obligations. If our military has too few people for its current obligations, as a Libertarian I believe in free markets and I see a straightforward solution if we need to expand our military. It is simple and twofold.

          First, pay the military volunteers better. If we have too few volunteers, we obviously aren’t offering them enough in pay and benefits. I am bothered when I hear stories of our brave military living on wages below the poverty level. Clearly, we need to do more for them.

          Second, we should use our volunteer forces more sparingly and sensibly. While I favor a strong national defense, like other Libertarians, I do not favor having our brave military personnel risking their lives in police actions and politically motivated actions around the world that have nothing to do with the defense of our country. I do not think we should have wasted our soldiers lives in Bosnia, Kosovo, and Somalia (remember “Black Hawk Down”--while our soldiers were brave, does anyone know why they were there and why their deaths contributed to our national defense in any way). I also wonder why our soldiers have to go to places like Haiti and Liberia to conduct police actions in parts of the world which are not a threat to us. Our soldiers are trained to be an effective military force, not to be civil policemen. Furthermore, I question whether we need to keep 70,000 troops in Germany and 30,000 troops in Korea --including troops on the front lines facing a crazy dictator— when both Germany and Korea are rich countries that are perfectly capable of defending themselves. While, I admit that we need some forward bases from which we can project power around the world if our national defense requires it, clearly we don’t need to place a large number of our soldiers lives in jeopardy defending countries that can defend themselves, and we don’t want to have too many troops in places like Germany that may want to limit our ability to deploy them as we see fit.

          By limiting the use of our troops to areas and engagements that truly contribute to our national defense, we could reduce the numbers of troops that we have deployed around the world, improve their morale (since they would know that their lives would not be put on the line unless it were vital to do so for the good of our country), and probably make it easier to staff, maintain, and decently compensate members of  our excellent volunteer army.

          Finally, since our technological lead has made our army more effective than any other army in the world, I would also support continued research, development and upgrading of our military support systems and weapons. A strong national defense is in all our interests and is called for by the U.S. Constitution.

           If anyone would like to hear more about my opinions on national defense or other matters, I would be happy to talk to any group or class of 30 or more people. My phone and fax number is 806-799-6032, and my website is www.chippeterson.com.. I’d be happy to hear from you.

                    Social Security


          Our nation’s social security crisis is very severe.  According to a public trustee for the social security system, the social security funding gap for the next 75 years is $5.2 trillion, and over a longer horizon is $8.1 trillion. To put this in perspective, our present national debt ceiling is BELOW $8 trillion and the amount of Federal debt held by the public at the present time is around $4 trillion. Thus, no matter how you look at it, the indebtedness of our social security system exceeds the amount of publicly held federal debt outstanding. Yet politicians continue to ignore it. Presidential candidate Kerry, in fact, says that he will protect social security. But that is impossible. In the long run, the insolvency can only be rectified by (i) cutting promised benefits, (ii) raising taxes, or (iii) raising retirement ages. If we wait and raise employment taxes, which is what Kerry seems to have in mind, we run the risk of replicating the continental European situation where their employment taxes are so high that no one wants to hire much labor. As a result, they have 9% and 10% unemployment rates in France and Germany and in the European Union as a whole. By its inaction, Congress seems to implicitly countenance the same solution.

          Cutting benefits is problematic as people on social security have incorporated those payments  into their life. Thus, cutting their benefits could work some real hardship on them. Nonetheless, some people have suggested that we , de facto, cut benefits by indexing social security payments to a different price index (which would have the effect of causing payments to go up more slowly than inflation). In fact, I initially decided to get into politics because Alan Greenspan had made such a proposal to Congress and I felt that it was patently unfair and could eventually cause real hardship for some people.

          Several years ago I wrote a book on social security because I felt that people should know how it really works. I made the book simple and had it illustrated with cartoons so every literate person could understand the problem, as well as various proposed solutions. The book illustrates that the much-touted social security trust fund cannot be trusted. Because the “trust fund” is essentially worthless, the real problems with social security funding will commence within a decade, not in 2050.

          The book shows that the key to providing for future social security recipients lies in improving our future economic productivity. That means that we need to support investment in education, research, and  assets that will enable us to produce more with fewer people in the future. That implies that lower tax rates are needed now to stimulate productive private investment, rather than higher tax rates (which would only discourage work and incentives to invest). The book also supports liberal immigration policies for those who want to work in the U.S., as more workers can help support more retirees in the future. In addition, the book shows that private investment by people who are saving for their own future will not only help people better provide for their future, but also will support the new investment needed to make the economy more productive in the future (provided that the savings are invested productively, rather than frivolously, and provided that the government doesn’t take the resources saved and waste them on present pork barrel expenditures).

          From a policy standpoint, I propose the following approaches to solving our nation’s social security problem. First, normal retirement ages should be raised to account for the increasing longevity of our population. Early retirement would still be possible, but people would likely want to save more in order to afford it. Second, younger people should be allowed to divert some of their social security contributions to private savings plans that could supplement their retirement benefits in the future or allow them to retire at earlier ages. Unlike social security, they would have an ownership interest in their private savings plans (called “personal security, or PSA, accounts”) and could pass them on to their heirs. Both these policies would increase present savings rates and reduce the need or ability of people to draw upon social security at relatively young ages in the future. The catch is that both of these policies should be implemented NOW so people would have more time to save for early retirement or to supplement their retirement income in the future. It will be too late to implement them after the baby boomers start taking early retirement in 2008, and if changes are to be made in retirement ages, then people should be given advance notice as quickly as possible so they can better plan for the future. In addition, I favor allowing people who want to work to enter our country and become citizens, as long as they are not terrorists or incapacitated and only want to enter the U.S. to work and not to cause harm or draw welfare payments. I also favor education, research and investment stimulating tax policies  that will help make our young people and producers more productive in the future. By increasing our current savings and future productivity, our social security burden will become more affordable in the future.


          I would be happy to talk about social security, or other issues in the campaign to any interested groups that can assemble an audience of 30 people or more. I also will be happy to give out copies of my social security book to any interested parties with whom I meet. My phone and fax number is 806-799-6032, and my website is www.chippeterson.com.. I’d be happy to hear from you.





          As a Libertarian, I don’t like taxes because they take some of the fruits of individuals’ labors , without direct compensation. Some Libertarians compare taxation to theft. In the case of a robbery on a street, someone with a gun comes and asks for your money. In the case of taxes, the government asks for your money and, then, if you don’t pay, someone with a gun will come to arrest you and ultimately take your money. The order is reversed between the appearance of the gun and the request to hand over money in robbery and taxation, but, in both cases, another person has the gun and your money disappears. However, Libertarians, including me, also recognize that some taxes are necessary to support national defense and the governmental needs of a  civil society. Consequently, we need to collect Federal taxes, but we should make their burden as light as possible, by using them to finance only the most important federal spending-- not wasteful pork barrel projects.

          One problem with our current tax system is that it is too complicated, thus, it  imposes a time burden on people as well as a monetary burden. It has been estimated that the average person spends over 30 hours per year just doing their Federal income tax, and over 60% of the people pay a professional preparer to do their taxes for them. Consequently, I favor tax simplification. In particular, I favor a flat personal income tax with, at most, a 20% marginal rate and a large  deduction (possibly $20,000 or $30,000 per family or more, depending upon family size).

          As an alternative to a flat tax, I would favor a value-added tax, but only instead of, and not on top of, an income tax. However, it might be harder to implement a large personal-  or family-size- weighted standard deduction under a value-added tax. A value-added tax might be particularly useful as a substitute for the corporate income tax. It could be assessed at a lower rate than the present corporate income tax as it would be harder to evade or dodge. A value added tax taxes the difference between a corporation’s gross revenues and its expenditures. Because purchases by one corporation generate revenues for another, there are two records of each transaction and the purchaser has a vested interest in reporting the transaction; thus, tax evasion is potentially difficult. In addition, value added taxes can be rebated on exports and added to imports  as the Europeans do. That would help us solve some of our balance of payments problem, by discouraging imports and subsidizing exports like the Europeans do. Thus, a corporate value-added tax could help resolve the problems we have encountered with the World Trade Organization, which has declared our present system of corporate taxation for exporters to be illegal and has authorized retaliatory tariffs against our exports.    

          I do not favor a national sales tax. Canada has one, and their residents hate it. Their national sales tax (the GST) is levied in addition to an income tax. I’m afraid the U.S. would do the same, thereby increasing total taxes over time. In addition, there would likely be many calls for exemptions under a national sales tax--for food, medicine, rent, etc.--with the result being that the overall rate would have to be quite high (Canada’s GST rate is 15%). Furthermore, unless there are many exemptions for necessities, a sales tax is more regressive (i.e., hits poorer people proportionately harder) than an income tax. One benefit, however, could be that it would not tax savings, so people would be encouraged to save and invest--which would help the productivity of our economy in the long run


          I have studied taxes extensively because I have been a finance professor and have an economics PhD. If anyone would like to hear more about my opinions on taxes or other matters, I would be happy to talk to any group or class of 30 or more people. My phone and fax number is 806-799-6032, and my website is www.chippeterson.com.  I’d be happy to hear from you.




          I’d like to talk about both education and research. Under our constitution, the Federal government is charged generally with improving the general welfare and specifically with promoting the progress of science and useful arts with provisions for patents and copyrights. Clearly, our founding fathers thought that our government should actively encourage research, and it has done so by supporting research of all types at universities, chartering land grant universities, etc. I am strongly in favor of government support of research in agriculture, science, and other areas, as it clearly increases our general welfare.

           However, our federal government is not explicitly charged by our constitution  with providing education. Consequently, only about 6% to 8% of total precollege educational costs are bourne by the federal government. That fact, however, has not prevented the federal government and the courts from imposing all kinds of demands upon local and state school systems that have dramatically increased their costs in recent years. Many of these requirements have taken the form of unfunded mandates in that they require that considerable administrative time and effort be involved in complying with federal laws, court decisions, and mandates. Many of the federal requirements  have also adulterated the educational process, thereby causing people to flee the public school system for private schools or home schooling.

          One of the biggest problems imposed upon public schools is that they are unable to enforce discipline upon unruly students, lest they be sued for depriving the student of a right to an education. This might be so even if a student would otherwise be suspended for destroying school property, assaulting others, including teachers, etc. When my mother taught school, unruly students could be sent to the principles office for a paddling. My high school had a former military man as the Vice Principle, and no one fooled with him. When I was in high school, one student hit a study hall teacher and was told he could no longer attend any public school in the state. No one worried that he might not get an education if he didn’t show he deserved it. Now, schools are so afraid of lawsuits that they have to hire a staff of lawyers and, at worst, that student might get “in-school suspension” for a limited time.  My 270 pound nephew, who teaches science in Milwaukee, was recently hit by a 200 pound student who taunted him, knowing that he could do nothing substantive to punish the student, and he wasn’t allowed to hit back.

          I have talked for teachers at private schools who said they were paid 1/3 less than teachers in public schools, but it was worth it because they didn’t have the discipline problems and paperwork requirements of public school teachers. Troublesome students could be expelled, and the remaining students were there because they expected to learn. Many of the paperwork problems in public schools are caused by a need to comply with federal regulations that accompany federal money and many of the discipline problems are the result of the propensity to sue that is countenanced by the courts. We need to let public schools enforce discipline and suspend students, lest they become the repositories for undisciplined, unmotivated students.

          Another set of problems relates to students with “disabilities.” The number of students with “disabilities” has increased greatly in recent years. One reason is that the government pays a bonus to schools that educate more disabled students. Consequently, students that might formerly be “antsy” or hyperenergetic are often classed as having an attention deficit disorder, and the school may get more bonus money.

          However, schools that enroll students that are truly disabled might require substantially more money, since federal law requires that all students with disabilities be “mainstreamed” in regular classes. My sister has had “students” in public school classes in Milwaukee that couldn’t communicate, control their bodily functions, or speak. Yet the school system had to provide caretakers to move those students wheelchairs from one room to another and provide for their bodily needs. This is unnecessary and a waste of resources. It doesn’t make sense, and it is one reason public school costs have risen while their performance has not. It is one reason that more and more people have removed their children from public schools.

          Now, as a Libertarian, what do I propose. First, I favor getting the federal government out of the public school business; the constitution does not mandate such a function. Furthermore, the federal government should not tell public schools how to operate or how to fund their operations.

It should not provide either carrots or sticks to interfere in local education and its funding--with the exception, that it should not let schools discriminate on the basis of race (under the 14th  amendment to our constitution and civil rights laws).  Second, I suggest that state and local governments be allowed to experiment with voucher plans, private schools, charter schools, and home schooling as they see fit without federal interference, as various experiments may provide more effective education and more discipline than is present at times in public schools. . However, I do propose that the federal government, under its mandate to improve the general welfare, be allowed to prepare standardized tests that could be distributed free to interested parties across the country to see how well students were performing relative to national standards and expectations for their age groups. Such tests could be useful for allowing parents to judge their students progress in home schools, public schools, charter schools, or private schools from year to year, and, thus, would help them make decisions about school choice and performance.

          The federal government is already developing student achievement tests under the “no child left behind initiative.” However, I think the tests should be provided by the government free, for information purposes only,  and not used to determine which schools should be closed or over- or under- funded by the federal government.  Schooling decisions should be made by parents under applicable state and local laws, and the federal government should not interfere as long as no racial group has its civil rights violated.



How  could I better represent District 19, what differentiates me from my opponents?


          I am a Libertarian. Thus, I strongly believe in having low, simple taxes; smaller, less meddlesome government; and protections for peoples’ constitutional rights and personal freedoms, as those were the principles upon which our nation was founded and which made it great.

           People should vote for me if they want someone in office who will try to reduce  government interference in their lives and pocketbooks. They should vote for me if they want someone in office who will fight against government waste and against higher taxes. They should vote for me if they want someone to fight against the reimposition of the draft, and to fight for their civil and constitutional rights and their personal freedoms. They also should vote for me if they want to send a message to the other candidates that they want them to pursue similar goals and objectives.

          If elected, I could do the job effectively because I have a history of accomplishment in previous jobs, I have the academic and personal background necessary to analyze complex economic and financial issues, and I have a large number of high level contacts in Washington whom I could use to help my constituents.

          I recognize that one of the primary functions of a congressman’s job is to help constituents. Fortunately, congressmen are provided with large staffs who could help in that process. I would try to employ very helpful and competent people for that staff and to make sure that some of them were dedicated to solving problems that constituents have with government regulatory agencies. If the problems persisted, I would try to introduce legislation to eliminate the regulations or offending agencies. I also would bring unfavorable publicity to bear upon the agencies that repetitively hassled my constituents. In addition, I would employ one or more people on my staff who could aid people or cities in the area who wanted to initiate new businesses and needed help learning about sources of aid and complying with government regulations.

          I would be in a more favorable position for obtaining publicity and assembling a first rate staff than my competitors, because I would probably be the only Libertarian in Congress. There are many highly competent Libertarians in Washington, employed by think tanks such as the Heritage Foundation and the Cato Institute. I could obtain helpful advice and staff members and references from those institutions. I also could draw upon my contacts at Texas Tech, and existing congressional staff members who would be familiar with and helpful to West Texans. In addition, I have many friends and past associates  in Washington who have or have held important jobs (with the National Federation of Independent Business, the National Home Builders Association, the Federal Reserve Board, The Federal Trade Commission, Standard and Poor’s Corporation, the National Association of Business Economists, Ashland Oil, the Federal Reserve Banks, the Social Security Administration and Medicare). Those people could give me useful advice and leads regarding first rate people to hire.

          If elected, I   could obtain publicity easily because I would be unique as a Libertarian congressman. Thus, I would be a novelty and could obtain press attention when needed to address important problems, and I am an accomplished communicator so I could make the most of such opportunities. In addition, I could speak my mind freely on issues important to West Texas and the nation because I would not have to defer to my party’s congressional leaders if that leadership was so at odds with my constituents interests and needs that they didn’t want me to speak out.

          In terms of how I am differentiated from the other candidates. I have already cited the fact that I would pursue Libertarian policies of lower, simpler taxes; smaller less-meddlesome government; and defense of individual’s constitutional rights and personal freedom. I have also mentioned that I would be in a favorable position for assembling a first rate staff and for using the bully pulpit of national publicity to pressure regulatory agencies and legislators to respond to important problems that affect our district or the nation as a whole.  In addition, I would be beholden to no one who could induce me to deviate from those goals once elected, because I have accepted no money to finance my campaign (while the other candidates have collected and spent many millions of dollars-- some from donors who will want the elected congressman to further their private interests, even if those interests may not necessarily be in the best interest of the country as a whole— as is often the case with pork barrel spending ). The National Taxpayers Union rated congressman on over 200 votes related to spending and taxes last year, giving points for votes to restrain spending or reduce taxes. Congressman Ron Paul of Houston, who is now a Republican but previously was a Libertarian candidate for President, rated an A. In contrast, Congressman Neugebauer received a “C” and Congressman Stenholm received a “D.”  Thus, I urge people who want lower, simpler taxes; smaller, less-meddlesome government; and their constitutional rights and personal freedoms to vote for me, if only to send a message to the other candidates that that is what you want.


          If you want to find out more about me, my background or my policies, you may consult my website at www.chippeterson.com. If you want to find out more about Libertarians and their policies, you may want to check out the following websites: www.theadvocates.org  www.lptexas.org, or www.LP.org.


Presidential Choice


          I am going to vote for Michael Badnarik for President. Michael is a Texan, a Libertarian, and an all around good person. I also agree with him on most of his most important positions. Since most people do not hear much about him in the national media, I need to tell you some more about him.

          Michael is in the computer field and he lives in the Austin area. He teaches a course on the U.S. Constitution and I am sure that is why he is an active Libertarian, and also why he was able to win the Libertarian nomination for President.

          Like all Libertarians, Michael supports our Constitution and looks at it as it was intended by our founding fathers. Our Constitution was the reason we have grown to be a great nation, and Michael, like all Libertarians, is disturbed that we have gotten so far away from the intent of our founding fathers in recent years.

          Our founding fathers realized that centralized government power tended to be abused and that powerful kings or sovereigns tended to treat their subjects much like slaves. Under the divine right of kings theory, and under other despotic forms of government (such as communist dictatorships, for a more recent example), citizens were treated like slaves that belonged to the state and lived or died at the pleasure of the sovereign (state)--which retained the right to tell  subjects what to do.

          Our forefathers realized that it was essential to limit government power so that the citizens would not be abused by their government leaders. Thus, they developed a new form of government in which all sovereign power was to be held by the citizens— who then could delegate some of that power to the government in order to achieve certain common objectives (such as national defense). In our new form of government, the people were to be sovereign and the government was to be the servant of the people--not the other way around. To further ensure that government powers would be strictly limited, our forefathers developed a system of government that created a balance of powers by separating the legislative, judicial, and executive branches. In addition, before our initial 13 states agreed to ratify our constitution, many requested that a Bill of Rights be attached that would strictly limit governmental powers and preserve the rights of citizens and states against abuse by an overreaching federal government. The Bill of Rights consists of the First Ten Amendments to our Constitution, and it was passed shortly after the U.S. Constitution was first ratified.

          Many of Michael’s positions, as well as my positions, and the positions of most Libertarians, involve the defense of the U.S. Constitution and the Bill of Rights, since our power seeking government has tried to take many of our constitutional rights away from us in recent years.

          For instance, all Libertarians, including Michael, oppose the reimposition of a military draft. Bills have been introduced in both houses of Congress that would require 2 years of national service for 20 year-olds. That is a form of involuntary servitude that all Libertarians oppose (The one exception would be if we needed a draft to ensure our national survival).

          While we oppose a draft, Michael and I both support a strong national defense, as called for by our constitution, but we both oppose military interventions in other countries that are unrelated to our national defense. If we were to remove most of our troops from countries that are perfectly capable of providing their own defense (like Germany and South Korea), and we were to stop risking the lives of our fine volunteer soldiers in police actions unrelated to our national defense (such as Somalia, Bosnia, and Kosovo,etc.) we would probably be able to support our national defense without reintroducing a draft or abusing our national guard and reserves.

          Michael and I also support citizens second amendment rights to keep and bear arms (we know that an unarmed citizenry can more easily be ordered around, even be sent to concentration camps, by some future despotic government). We also oppose overreaching government laws and regulations designed to deprive citizens to the right of a fair trial by jury before the government can take their life, liberty, or property, Forfeiture laws used in the drug war allow peoples’ property to be seized without trial, and violate our constitutional Bill of Rights. While  Michael and I dislike drugs and don’t advocate their use, we like the “War on Drugs” even less as it has led to extensive violations of the constitutional rights of citizens (forfeiture laws, and the arrest of innocent minorities in Tulia, Texas)), It also has led to the violation of 10th amendment rights of states to establish their own laws unless the constitution expressly gives that power to the federal government and not the states (people who have complied with state medical marijuana laws in California have been prosecuted in Federal courts and not allowed to introduce the fact that their actions totally complied with state laws). The war on drugs, like alcohol prohibition, has also fostered the growth of gangs, corruption, and harmful adulterated drugs. It also has filled our jails and penitentiaries, at great expense, with people who have done something stupid and potentially harmed themselves by taking drugs, but have not harmed others.  Libertarians believe it is a crime to harm, endanger, or defraud others, but it is not a crime to harm oneself. Unless there is a victim, there is no crime. We had to have a constitutional amendment to prohibit alcohol use. If the nation is serious about trying to ban drugs, it should also pass a constitutional amendment to do so.

          The “war on drugs” has caused us, and our state governments to lose many of our guaranteed constitutional rights. Similarly, the “war on terror” has provided an excuse for the central government to try to deprive us of even more constitutional rights-- as evidenced in the misnamed “Patriot Act” (I call it misnamed because the true Patriots who gave their lives to create this country would turn over in the grave if they saw some of its provisions). The Patriot Act takes away many of the rights guaranteed to us by our constitution. It allows for warrants to be issued outside of normal procedures that impose independent judicial checks on administrative leeway.  It allows  “sneak and peek” provisions where people’s homes can be entered and their records and computers searched with no need for them to even be notified for up to 90 days. It allows people to be tried before special courts where only government approved attorneys can practice and there is no jury of peers to determine guilt or innocence. These provisions violate many of the protections guaranteed by our the 4th, 5th, and 6th amendments to our constitution. Because of these obnoxious and unconstitutional provisions, more than 350 state and local governments in the U.S. have passed resolutions opposing the “Patriot Act.”

          The “Patriot Act” comes up for renewal next year. I want someone in the White House who will veto its renewal if its unconstitutional provisions are not eliminated. I also want someone in the White House who will defend our citizens individual constitutional rights against the encroachments of an increasingly power hungry congress and administration. That is why I am going to vote for Michael Badnarik for President.







Email Chip with any questions.

Richard Peterson Campaign, Richard Peterson treasurer