Archive for category Government Regulation

Environmental CO2 Drag on the Economy

Posted by Tom in Environment, EPA, Government Regulation, Uncategorized on August 3, 2011

We know we pay a lawyer tax, a union tax, and a rent-seeker tax, but the environmental tax is probably one of the largest drags on the state, national and world economies. There are various segments of that tax but one of the largest of those is the CO2. You know, breathing, eating and later producing CO2 from one end or the other!

Don Parsons alerts us to the recent NASA data that debunks the environmental alarmists “global warming” models. On point is James Taylor’s article in Forbes, New NASA Data Blow Gaping Hole in Global Warming Alarmism.

“In short, the central premise of alarmist global warming theory is that carbon dioxide emissions should be directly and indirectly trapping a certain amount of heat in the earth’s atmosphere and preventing it from escaping into space. Real-world measurements, however, show far less heat is being trapped in the earth’s atmosphere than the alarmist computer models predict, and far more heat is escaping into space than the alarmist computer models predict.

“When objective NASA satellite data, reported in a peer-reviewed scientific journal, show a “huge discrepancy” between alarmist climate models and real-world facts, climate scientists, the media and our elected officials would be wise to take notice. Whether or not they do so will tell us a great deal about how honest the purveyors of global warming alarmism truly are.”

Now, think of how California is shooting itself in the foot with its own emission standards more stringent than the current national standards. And don’t forget the EPA’s current efforts to regulate CO2!

 

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Ethanol Whores

Posted by Tom in Corporate Welfare, Deficit, Economics, Energy Facts & Policies, Government Regulation, Politics, Republicans, Subsidies, Tariffs on June 16, 2011

There is no better current intersection of economics and the environment than ethanol. The rent-seeking corporate farmers in the U.S. and their political employee representatives in Congress and the White House have been able to (i) subsidize, (ii) mandate, and (iii) restrict imports of the environmentally harmful gasoline additive. Even Al Gore, now that he’s made his money, calls ethanol a fraud.

So why in this time of sky high deficits and unsustainable debt burdens we are laying on our grandchildren, do so-called Republican candidates support the ethanol fraud? Votes in corn producing states! It’s that simple.

Newt Gingrich, if he’s still a viable candidate, is an ethanol whore. He supports it. Mitt Romney, that smooth talking flip-flopper who developed the fore runner of Obamacare, is an ethanol whore. He supports it.

In fact, Mitt supported it publicly in Iowa as a follow-up to Tim Pawlenty’s gutsy Iowa statement that we can’t afford ethanol subsidies. So not only is Mitt a ethanol whore, but he’s a cheap one at that.

I expect Obama to win in 2012, if Mitt Romney, father of ObamneyCare, is leading the Republican field. When you think of it, Mitt should be running as a Democratt!

It’s heartening to see that the Senate today voted to end ethanol subsidies. That means it’s probably time for another Mitt Romney flip-flop. Get ready!

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Minimum Wage, Another Bad Idea of the Left

Posted by Tom in California, Economics, Government Regulation on May 19, 2011

The following and op-ed by Brad Schiller originally published in the Sacramento Bee:

Viewpoints: Minimum Wage Law Relies on False Belief

The debate over the minimum wage has raged since the federal government first set wage standards in 1938. It continues today in California, where freshman Assemblyman Luis Alejo, D-Watsonville, is touting a popular bill – Assembly Bill 10 – to raise and index the state’s minimum wage. The two major points of contention in the policy debate on the minimum wage are whether job loss accompanies a minimum wage increase, and whether a large number of families depend on the income from minimum-wage jobs.

The first argument has been largely resolved: The best empirical evidence confirms standard economic theory that, if the government sets a wage floor above prevailing wages, some jobs will be lost.

But what of the second argument? Legislators from both sides of the aisle have been persuaded to vote for past increases in the minimum wage due to a strong conviction that many families are struggling to make it on the minimum wage alone. My new research debunks this conventional wisdom: A majority of adult minimum-wage earners in families are living well above poverty and are supported by a spouse who earns a considerably higher wage.

If family dependence on the minimum wage is the most widely used justification for wage hikes, we should know how prevalent such dependence is. For instance, a parent working at the minimum wage may hold another, higher-paying job. In two-parent families, the spouse of the minimum-wage employee may be the primary breadwinner. These and other possibilities imply that households with adult minimum-wage workers may not be as income dependent on those jobs as some advocates would like you to think.

The most compelling evidence on this topic is found by examining the finances of affected families in which one adult, age 33 to 50, worked a job earning at or below the minimum wage. I used data from the National Longitudinal Survey of Youth between the years 1998 and 2006, when the federal minimum wage was constant.

In 90 percent of the married-with-children households I studied, there was also a working spouse; 63 percent of these spouses earned more than $30,000 a year, with about half earning more than $40,000 a year.

None of these households are in poverty, nor is their economic well-being dependent on earnings from their minimum-wage job. In only one out of seven of these households are the earnings of both the minimum-wage worker and the spouse less than $10,000 apiece.

We can further describe the financial situation of these married-with-children minimum-wage workers by looking at the percentage of total family income coming from that job. With so many high-earning spouses, the percentage is low; in more than 75 percent of these families, the minimum-wage job accounts for less than 20 percent of family income.

In short, the evidence is overwhelming that family dependence on the minimum wage is the exception rather than the rule. And since almost all of those employees held higher-paying jobs at some point during the period studied, we can once and for all dispel the notion that a sizable number of adults are “stuck” at the minimum and waiting for a raise.

But what about the small number of less-skilled or experienced adults who do work at the minimum for an extended period of time and lack other sources of income? For them, raising the minimum would very likely hurt more than it would help – raising the cost to employ them increases their risk of losing employment altogether. Better-targeted assistance like the Earned Income Tax Credit would be less costly and more effective.

If the principal motivation for increasing the minimum wage is to aid struggling families in California, it is clear that such a strategy is highly inefficient. A majority of families with an adult earning the minimum wage are not struggling, and – given the small percentage of household income contributed by the minimum wage – their economic well-being is little changed as a result of a hike.

 

 

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Trying Hard To Be Jimmy Carter!

Posted by Tom in Corporate Welfare, Energy Facts & Policies, Environment, Government Regulation on March 27, 2011

Remember Jimmy Carter? High interest rates. High inflation. Malaise. Stagflation. And, LONG GAS LINES! Well, President Obama is doing his best to become the reincarnation of Jimmy Carter. (Oh, pardon me, Carter’s not dead yet….it only seems that way. Or did, until we started feeling the full effect of this Administration.)

Tony Senik’s Daily Caller post, The Obama Gas Tax, makes the case pretty well: Fact, gas prices are up 67% since he took office. Fact, he said that we can’t drill our way out of our energy problems. Fact, he has blocked domestic energy exploration at every turn. Fact, he exported Gulf drilling rigs and JOBS out of this country to Brazil!

What’s interesting is that he wants to subsidize so-called green technologies with your tax money. So really you’ll be paying twice: once for the gas tax then again for the green technology. Strange but these uneconomic mirrors in the desert are being blocked by the environmentalists that he supports. The same is true of the idle windmills that his favorite corporate welfare dependent GE has overstocked. But then GE who pays no income tax on its billions in profit, has agreed to buy half the production of the unmarketable little green Chevy Volts! Hell of a deal!

So, Tony Senik has really understated the problem. Gas tax plus wasted green tax subsidy plus stagflation at best or depression at worst. That’s Obama’s energy policy!  As Senik said, saying you can’t drill you way out of your energy problems is like saying “you can’t medicate your way out of an illness!”

Doesn’t President Obama see the contradiction in his positions? And, why on earth would he want to be another Jimmy Carter?

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Obama’s Government By Fiat

Posted by Tom in Banks, Centrally Managed Economy, Fed, Financial Policy, Government Regulation, Statism on March 16, 2011

In one of his most effective attempts to show he is strong, Obama appointed Elizabeth Warren, the leftist Harvard law professor to…..well… ‘er he couldn’t actually appoint her to head the Consumer Finance Protection Bureau (CFPB), the Dodd-Frank finance reform, which he wanted to do. Bi-partisan opposition assured her of rejection as head of any legal, statutory regulatory agency. So what did Obama, lawyer himself, do? He appointed her to a “special position” at both the White House and Treasury with the job of staffing the bureau, setting its direction and implementing the CFPB law, which:

  • has without Congressional oversight jurisdiction over credit institutions,
  • is not subject to annual Congressional appropriations,
  • sets its own budget by taking up to 10-12% of the Fed’s earnings,
  • can call on an added $200 Million more per year from Congress,
  • and, which can issue rules contrary to the Fed, IRS, Comptroller of the Currency and Treasury Secretary.

This is frightening stuff. Government by fiat! A bureau staffed by leftists like the former AFL-CIO counsel David Silbermann, answerable to no one! Today’s WSJ editorial, President Warren’s Empire, calls it a “bureaucratic rogue,”  and concludes:

“This is no way to run a government, especially not one that Madison envisioned. The consumer bureau is essentially a bureaucratic rogue. We’d like to see Congress kill the agency entirely. But at the very least Congress should remove it from the Fed, make it part of the Treasury and subject it to annual appropriations. No one elected—or even nominated—Elizabeth Warren.”

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DOE…Carter’s Creation Provides Obama’s Cover

Posted by Tom in Deficit, Energy Facts & Policies, Environment, Government Regulation, National Debt, Stimulus/Bailout, Subsidies on March 7, 2011

Shika Daimia’s Reason.com post today, Global Warming By Another Name, points out that Obama’s bow to the environmental religion is coded in his promotion of “clean energy.” That global warming has suffered since Climategate, the East Anglica University disclosures, is obvious even to Obama. Ever the politician, he still must curry favor with the well ensconced global warming conspirators. After all, he gets them money, grant money, and they get him votes. To cement that support and yet stay away from that “global warming” fraud, Obama promotes “clean energy.”

Daimia argues that “clean” equals” cool” by virtue of the EPA’s mission to limit greenhouse gasses. Those, in addition to the air you exhale are mainly caused by hydrocarbon energy, coal, oil, gas. So what does our president propose in this year of a $1.6 Trillion deficit and $14 Trillion in debt? He proposes to increase the budget for the Department of Energy by 12%, $8 Billion in addition to the $30 Billion in the 2010 “stimulated” budget!

So our president doesn’t think seriously about the morality of stealing from our future generations. He neglects to treat the budget seriously. He won’t look at the unsustainable entitlements which he has just added to with Obamacare. No, he wants more votes, greater deficits, and more debt for our grandchildren to pay! SICK!

What’s he want to do with that largess? Something smart like nuclear power? No, sorry. He wants things your tax dollars and the tax dollars of your great grandchildren must go to subsidize. Things like, solar with a budget increase of 88% and wind with a budget increase of 61%. Something my grandchildren recognize in their youth is that the sun doesn’t always shine and the wind doesn’t always blow. Apparently Obama hasn’t gotten that message. He hasn’t driven through the Coachella Valley to Palm Desert to see the thousands of acres of still, silent wind mills bilking the US taxpayers. He hasn’t been to Victorville on an overcast day to see all those wonderful mirrors tilted toward the grey sky, reflecting only a testimony to taxpayer ignorance.

Here’s an idea. Let’s abolish the Department of Energy. What does it do that isn’t already being done by or could be done by the myriad of other real departments? It employs 1600 bureaucrats who could contribute the economy significantly better in the private sector, if for no other reason than that taxpayers would not be paying for them. It is not exactly what one thinks of as one of the essential functions of government. And, look who created it, Jimmy Carter, Obama’s alter ego! What better argument to undue it, than that Carter did it?

If we abolish the DOE, Obama will no longer have a code with which to appease the global warming alarmists! Then he must choose, make a decision! What a frightening thought!

 

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Dumb, Dumb and Dumber….This Administration

Posted by Tom in Banks, Economics, Fed, Government Regulation, Housing, Real Estate on March 3, 2011

Obama and crew can’t repeal the law of gravity, but that doesn’t mean they won’t try. They certainly believe they can repeal basic economics, basic psychology! The subject of this concern is the housing market. Last week’s WSJ article pointed out that homeowners are more than $740 Billion “underwater,” owing that much more on their mortgages than the property is worth.  The chart is illustrative:

Now, this is an economic fact of life. That it was caused in the main by government policies complements of Fannie, Freddie and the Fed, is of no import to the economic remedy. That remedy as in past downturns is economic improvement which can be accelerated by abolishing economic uncertainty caused by over regulation and by reforming the big tax and spend government, cutting spending, and reducing the deficit and its corresponding debt load.

With an improving economy homeowners who can will pay their mortgages; those who can’t will default and as in normal times suffer foreclosure. Banks will resell the foreclosed homes to new buyers who can afford the homes and who believe they have bargain prices.

The economic principle here is that before a market can rebound, it must hit bottom. The psychology here is that new buyers do not want inflated prices; they want bargains.

So, what is our brilliant Obama administration trying to do? At best, it is trying to delay the market from hitting bottom. At worst, it is trying to prevent that bottoming out from happening at all! Obama and crew have tried a number of things to insure this dis-economy:

A while back in 2009 there was the Home Affordable Modification Program, HAMP for short, a forced principal write-down program that was supposed to keep borrowers in the homes that the couldn’t afford in the first place! According to yesterday’s WSJ editorial:  “Instead, the program swamped mortgage servicers as debtors rushed for the goodies, gummed up the foreclosure process and left some borrowers worse off. Special Inspector General for the Troubled Asset Relief Program, Neil Barofsky, said in January that Hamp falls “dramatically short of any meaningful standard of success.” Perhaps the effort should have been more appropriately termed “HEMP,” the kind that is smoked, because the designers certainly must have been “high” to have come up with it!

That didn’t prevent home valuation declines so these geniuses in the Obama administration hit upon several minor glitches in the foreclosure process and along with attorney generals from several states and the ever-present parasitical tort bar sued to bring foreclosures to a standstill. Now, they want to force the defendant banks into a $20 Billion principal write-down as part of a global settlement! Mark my words…a large part of that will go the the parasites!

This has further delayed foreclosures and the rebound likely to follow. It will also in the process further damage bank balance sheets with no relationship to the economic collateral value realizable in foreclosures. And to top it off, $20 Billion would not be a drip in the bucket of the $740 Billion in underwater loans. What are these numskulls thinking?

It’s hard to pick the leading genius in this folly but the Journal hears rumors that Elizabeth Warren, the ex Harvard prof who is now the illegal head of the new Consumer Financial Protection Bureau is the culprit. Recall, she’s the one Obama could not get confirmed so he appointed her as a shadow or titular head to run the bureau. Who said anything about “rule of law?” These leftists continue to ignore economics, misallocate capital, and delay a market rebound. Hopefully, they will wake up soon……but I doubt it!

For a related article see: Foreclosure Silliness Equals More Economic Drag, published back in October.

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Strange and Dangerous Bedfellows Squander Your Money

Posted by Tom in Corporate Welfare, Economics, Environment, Foreign Trade, Government Regulation, Taxation on February 11, 2011

Yesterday’s WSJ highlighted the shortage of corn supplies, close to a 15 year low. Of course the price has risen dramatically with corn future contracts up 97% since June. “We’re just not seeing prices ration demand,” said Luke Chandler, head of agricultural commodity markets research at Rabobank. “The markets have changed in a structural way due to ethanol. … Any relief will take considerable time.”

Aha, the ethanol monster raises its ugly head! This blog has discussed the horrible economic and environmental impact of ethanol several times. See for instance: Flushing Your Money Down the Drain and Gore Took His Profits…Can Congress Take Its Losses?. Congress of course did not take its losses but continued on the path of subsidy, mandates and restraint of trade that is the foundation of ethanol.

The impenetrable roadblock to economic rationality here is the union between the big farm lobby and the environmental lobby. Corporate farmers dominate. They are rent-seekers pure and simple. They take your hard earned dollars all the was to the bank as compensation for producing a useless product that absent government mandates no one would buy. The environmentalists are emotional tree huggers grasping at pseudo science to satisfy the need to feel good. These two are often on different sides of an issue, but here they are in bed together.

What is sad to me is to see intelligent politicians like Newt Gingrich support and are paid by the farm lobby. I guess everyone has his price. And no political party is immune to the trade!

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The Folly of Government “Investments”

Posted by Tom in Centrally Managed Economy, Corporate Welfare, Economics, Energy Facts & Policies, Environment, Government Regulation on February 10, 2011

Friedrich Hayek exposed socialism’s hubris of central planning, the notion that the ruling class has more knowledge that the ruled, or one head is better than two or two hundred million. The so-called progressives, a euphemism for leftist liberals, nonetheless continue to believe that they know what’s best. Thus we see the President spouting nonsense about bullet trains and the CEO of Government Motors wanting to triple the production of Chevy Volts costing $40+ thousand; of course there is no independent market demand for either.

Today’s WSJ editorial, The Range Fuels Fiasco, gives a beautiful example of government “investments.” George Bush kicked off the opening act of the comedy in 2006 praising the benefits of “cellulosic ethanol from wood chips” as a way to break our addiction to oil. Range Fuels got a $76 million grant to build a plant to initially produce 20 million gallons and eventually 100 million gallons of this miracle fuel. The media applauded and the environmentalists gushed. Congress got in on the act in 2007 by mandating 100 million gallons by 2010 and 250 million by 2011. Range Fuels with all this hype raised $130 million from the private venture markets, funded in part by CALPERS. In 2008 without a drop of production the Department of Agriculture provided Range with an $80 million loan.

“In early 2010, the EPA said Range would finally produce some fuel in 2010—but only four million gallons, not 100 million, and of methanol, not cellulosic ethanol. So taxpayers have committed $162 million (along with at least that much in private financing) to produce four million gallons of a biofuel that others have been making in quantity for decades.” Range still is promising cellulosic ethanol but has had to lay off all but four employees while it raises more money.

And here’s the corker: “As for current Range CEO Mr. Aldous, he’s blaming this failure on—brace yourself—Washington’s failure to impose a tax on carbon via cap and trade. “The critical issue is really that there’s no mechanism to price carbon today,” he told a Colorado newspaper. He also blamed “public apathy toward green fuels.”

Notice the common elements of this fraud: A Pool Table, as in the kind the Music Man used to sell the boys band. That is a perceived threat, here foreign oil dependency, to create demand. A fawning press of decidedly liberal bent. Environmentalists pushing the government agenda. A large pile of free government money to be taken by corporate welfare rent-seeking types. And a paternalistic government that knows what’s best for all of the rest of us!

I recently drove through California’s major wind farms on the way to Palm Desert. Of the hundreds of acres of wind mills, hundreds of thousands of expensive towers and generators, not one was turning at any speed. I’ve taken this drive many times before and viewed the same tragedy. These monuments to leftist folly are a tragic waste of taxpayer money, a misallocation of capital on a scale seldom seen. Yes, that’s right, your hard earned dollars go to fund the tax credits and mandates without which these gigantic eyesores would not exist.

There is simply no economic justification for wind or solar power. Without tax credits they would not exist. Nor is there any economic justification for bullet trains. Obama is pushing both. He knows what’s best for you…….much better than you do! “Ya got trouble, my friends, right here in River City……TROUBLE with a capital T and that rhymes with P and that stands for Pool!”

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If Obamacare Is So Good, Why Are So Many Asking For Waivers

Posted by Tom in Centrally Managed Economy, Democrats, Economics, Federalism, Government Regulation, Nationalized Health Care, Supreme Court on February 8, 2011

The Democrat rulers who have singularly more knowledge than all of us who in our daily decisions compose the free market have foisted another unsustainable entitlement program upon us, Obamacare. It was touted as providing medical care to all, providing better access and free provider choice and at the same time reducing the aggregate costs of medical care.

Of course, it has done none of that. But it has added another Trillion dollar entitlement program that our grandchildren are going to be paying for with the meager compensation they receive from their Chinese employers.

It has also supplied the rulers with another discretionary plumb with which to grant waivers from its 2000 pages of rules and regulations. Until now, these waivers have been granted or denied on the basis of political pull. So the unions regularly get waivers as do those political organizations like AARP who supported Omabacare. But those gutsy or principled enough to oppose the Obamacare leviathan are denied these plumbs.

Part of the financial farce of the legislation was to expand Medicaid enrollment by 25% and push the costs of that expanded welfare onto the states, so the costs would not count against the financial costs charged against the unsustainable program. Apparently if you add a new unsustainable entitlement to an existing almost bankrupt entitlement, you get Obama’s dependent but bankrupt society.

Well the states are starting to squawk. Governor Mitch Daniels’ WSJ op-ed, An Obamacare Appeal From the States, sets it out pretty well. He correctly points out that the law is a massive mistake amplifying the big drivers of over consumption and excessive pricing. “Why not, it’s free? Reimbursement…and, The more I do, the more I get. Provider payments.

Daniels hopes for legislative repeal or judicial strike down of the monstrosity but as the governor of a state cannot rely on that. He and 20 other governors have written to HHS Secretary Kathleen Sebelius requesting relief from some of the law’s worst strictures. He correctly points out that the law not only increases Medicaid costs by 25% but also commandeers the states’ employees to enforce the new law with insurance exchanges and police powers. If a state refuses, the federal government will operate the exchange within the state. Thus opening Pandora’s box!

Daniels has written Sebelius conditioning Indiana’s participation of several conditions:
• Flexibility in deciding which insurers offer insurance in the state.
• Freedom of choice in coverage, thus not forcing only single costly policies.
• Elimination of discrimination against consumer driven plans, like HSAs.
• Freedom to move Medicaid beneficiaries into the exchanges.
• Reimbursement of the full costs of Indiana’s administration of the law.
• An independent projection of expected enrollment, given the law’s incentives to employers to off load employee insurance programs.

Daniels recognizes the chances are slim to none that Sebelius will grant this effective rewrite of the legislation. But he argues that she should recognize that the paternalistic, command-control nature of the legislation should be recognized as a failure. This because one small part of it, the high-risk preexisting condition pools, have been a failure. A majority of the states refused to participate in these pools, leaving the task to the Feds. Sebelius failed miserably at it with costs far above projections used to get the law passed. Daniels called it a “fiasco.”

Let’s pray that the Supreme Court accepts certiorari on an expedited basis from the various lower court Obamacare cases. Mitch Daniel’s op-ed only scratches the surface of all the wasted economic activity—public and private—attendant to this fiasco that is Obamacare.

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