Free Markets, Free People

Daily Archives: May 12, 2009

Predicted vs. Actual

Here’s an interesting little chart I found at Innocent Bystanders.  The light blue line is the Obama administration’s prediction of how terrible unemployment would be if we didn’t pass the stimulus plan.  The dark blue line is the prediction of how much better things would be we did pass it.  The dark red triangles show the actual unemployment statistics.

The Amazing Effectiveness of Stimulus

The Amazing Effectiveness of Stimulus

So, how’s that recovery plan working out for us?  Not so good, apparently.

I merely provide the chart for informational purposes.  I know it’s useless to make any criticisms of the actual performance of the plan, just as it was useless to predict that this is pretty much what would happen.

Besides, saying, “I told you so”, is so churlish and mean.

Podcast for 10 May 09

In this podcast, Michael, and Dale discuss the county’s failing energy and economic policies.

The direct link to the podcast can be found here.

Observations

The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2007, they can be accessed through the RSS Archive Feed.

Energy Policy – “10 Inconvenient Truths”

Sometimes the little surprises life hands you are the most pleasant. While in Houston at the Offshore Technology Conference, my trip sponsored by API, I happened to meet another blogger who introduced himself to me as a “raging liberal”. In the course of three days and a few good beers, Chris Nelder and I had some very enjoyable and interesting conversations. And, interestingly, Chris and I agree on where the policy debate stands as it pertains to energy. Chris wrote an outstanding article detailing his observations about the current situation, and, for the most part, I agree completely with his well thought out assessment. Here is his list of “10 Inconvenient Truths” that he feels all policy makers must understand before they can effectively plan for the future:

1. We have extracted nearly all of the world’s easy, cheap oil and gas, and now we’re getting down to the difficult, expensive stuff. The largest untapped resources that remain are in extreme places like deepwater and the Arctic, and marginal formations like shale. As a result, global oil production has for all intents and purposes peaked. Natural gas production will also peak in 10 to 15 years. Neither technology nor high prices will change that. Therefore we must begin to replace those fuels with renewables, and use what remains much more efficiently, with the expectation that most of the world’s oil and gas will be gone by the end of this century.

While I agree with Chris’s point about renewables, I’m not quite ready to buy into the idea that “most” of the world’s gas and oil will be gone by the end of the century, especially if we make progress developing cheap, renewable and clean alternatives. That’s not to say he might not be right, but I continue to look at the improvements in technology and the fact that the same sort of predictions have been made for decades and here we are. But on the main point of gearing up renewables, we agree completely. We must prepare for the possibility Chris is right and we need to do that now.

2. Drilling for oil and gas drilling in the OCS and ANWR must and will be done; our need for those fuels is simply too great to pass them up. An additional 2-3 mbpd will put a dent in the roughly 12 mbpd we now import, but if we drill for it now, it won’t come to market for 10 years or more. By that time, it probably won’t even compensate for the depletion of conventional oil in North America, nor will it do much to reduce prices. But it will be crucially necessary, and producing it won’t make an ugly mess of the environment.

You see someone on the left here who has studied the problem, understands the processes used and has formed an opinion that is outside his side’s political mainstream. He understands that technology has advanced to the point that the oil and gas industry can drill for oil and gas safely and with a very small footprint. In fact, advances in sub sea technology are almost to the point where the entire process can be safely and productively located under the waves. So, in a “comprehensive” scheme, the left has got to drop its almost knee-jerk resistance to such drilling and understand it must be a part of an overall energy solution.

3. Renewables are clearly the long-term answer, as is an all-electric infrastructure that runs on its clean power. However, it will likely take over 30 years for renewables to ramp up from a less than 2% share of primary energy today to 20% or more. They probably won’t even be able to fill the gap created by the decline of fossil fuels. Oil and gas currently provide about 58% of the world’s primary energy, and they will remain our primary fuels for a long time to come.

To believe “green fuels”/renewables are the immediate and total answer to today’s energy needs is to deny reality. We have to remember that there is going to be a growing energy gap as more and more nations come on-line in the first-world and demand more energy as a result. Oil, gas, nuclear and coal are going to play a large and significant part of bridging that gap even as we work to develop renewables. As a nation we cannot afford that sort of short-sighted thinking. It is critical that everyone understand that while the preference is for renewable, clean fuels, the reality is they’re still quite a ways off, while the energy demand continues to grow unabated and certainly with no concern for our personal energy preferences.

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Someone Has To Pay For Health Care “Reform”

Today’s “Health Care Reform” day.

One of the myths Democrats are going to try to continue to promote is that 95% of Americans are getting a tax cut. Of course that means they’re politically prohibited from raising income taxes. But that certainly doesn’t mean that they must refrain from other taxes and fees which will impact 100% of Americans and, by the way, if they’re like the following, will be highly regressive:

The Center for Science in the Public Interest, a Washington-based watchdog group that pressures food companies to make healthier products, plans to propose a federal excise tax on soda, certain fruit drinks, energy drinks, sports drinks and ready-to-drink teas. It would not include most diet beverages. Excise taxes are levied on goods and manufacturers typically pass them on to consumers.

The proposal is also being touted as something which will help pay for “health care reform”:

The Congressional Budget Office, which is providing lawmakers with cost estimates for each potential change in the health overhaul, included the option in a broad report on health-system financing in December. The office estimated that adding a tax of three cents per 12-ounce serving to these types of sweetened drinks would generate $24 billion over the next four years.

Of course the article goes on to state that lawmakers aren’t considering the tax at present, but then the vast majority of our legislators don’t write or read the legislation they pass so saying they’re not considering it doesn’t mean it isn’t being considered by those who will write it (like the CSPI) or won’t be in legislation.

This sort of tax is also seen as a means of modifying behavior because a certain group considers the product it wants taxed as “unhealthy”.

Proponents of the tax cite research showing that consuming sugar-sweetened drinks can lead to obesity, diabetes and other ailments. They say the tax would lower consumption, reduce health problems and save medical costs. At least a dozen states already have some type of taxes on sugary beverages, said Michael Jacobson, executive director of the Center for Science in the Public Interest.

“Soda is clearly one of the most harmful products in the food supply, and it’s something government should discourage the consumption of,” Mr. Jacobson said.

Given that government is now seeking entry into the health care arena in a much bigger way than at present, and its stated goal is to make health care less costly, this fits supports the goal and gives the argument credibility that it wouldn’t otherwise enjoy. Note the phrase I’ve put in bold – it should send shivers down your spine. What sort of precedent would that set? And, what would be next?

Well, here you go:

Health advocates are floating other so-called sin tax proposals and food regulations as part of the government’s health-care overhaul. Mr. Jacobson also plans to propose Tuesday that the government sharply raise taxes on alcohol, move to largely eliminate artificial trans fat from food and move to reduce the sodium content in packaged and restaurant food.

And that’s the proverbial tip of the iceberg. The premise that it is the job of government to modify behavior through taxation (especially if it saves money) has obviously been swallowed whole.

Back to the original point about the myth of the tax cuts for 95% of Americans:

The beverage tax is just one of hundreds of ideas that lawmakers are weighing to finance the health-care plans. They’re expected to narrow the list in coming weeks.

But you can bet that the list won’t be too narrow – someone has got to pay for this. And, with mommy government deciding what you can and can’t eat, you might actually lose some weight. Not because you are necessarily eating healthy food, but because you can’t afford as much anymore. That’s because the one thing you can count on is your wallet will definitely lose weight as this “health care reform” abomination moves forward.

~McQ

What Will Be The Real Cost Of Health Care “Reform”?

From a Washington Post editorial commenting on the health care industry proposal yesterday to try to save 2 trillion dollars over 10 years:

But it is important to note what wasn’t included yesterday. None of the interest groups signed up for a specific number; no one is saying who will sacrifice what, or how much. All are promising to “do our part,” but the actual share of the $2 trillion that would fall on each pair of shoulders was not laid out. What would make up the substance of the plan? That remains to be seen. How would the private sector be held accountable for this promise to reduce costs? That, too, remains to be seen.

Of course, Barack Obama’s promises to save money through the usual nebulous “waste, fraud, and abuse” rhetoric are no more specific than those proposed by the “interest groups” yesterday:

Make Health Coverage Affordable. The plan must reduce waste and fraud, high administrative costs, unnecessary tests and services, and other inefficiencies that drive up costs with no added health benefits.

As is obvious, the assumptions in this sentence are legion and that includes the savings.

The White House has emphasized repeatedly that health-care reform is entitlement reform — that is, an answer to the nation’s long-term fiscal challenge. Yet, so far, it is backing a plan to expand coverage that would cost taxpayers between $1 trillion and $1.5 trillion over 10 years, while it has proposed health-care savings of only $309 billion.

Calling it an entitlement reform and “an answer to the nation’s long term fiscal challenge” effectively lumps all health care under government auspices. An entity which has managed to mismanage the portion it has assumed over the years into a “fiscal challenge’ now wants the rest of the industry under its effective control with an initial price tag of 1.5 trillion (anyone who has ever monitored government estimates of cost know they are always low ball estimates which end up costing many more times the initial estimate).

I’d like to see the WaPo challenge that estimate and this:

Financing Health Care Reform. The reserve fund is financed by a combination of rebalancing the tax code so that the wealthiest pay more as well as specific health care savings in three areas: promoting efficiency and accountability, aligning incentives towards quality and better care, and encouraging shared responsibility. Taken together, the health care savings would total $316 billion over 10 years while improving the quality and efficiency of health care, without negatively affecting the care Americans receive.

You can read the specifics of the administration’s plan below the cited paragraph, but in essence it consists of curbing waste, fraud and abuse (as if that’s actually measurable in terms of savings) and increasing “quality” of care (an “efficiency” that assumes the present “quality” isn’t good enough), stressing preventive care (and assuming everyone will take advantage of that) and reducing drug prices (a form of cost control).

How anyone assumes even $316 billion in savings based on those assumptions is beyond me. But what one can fairly claim, given experience with government proposals and estimates, is that 1.5 trillion as a “cost” figure is probably well below its eventual or real cost. If anyone actually believes the government will be more efficient in the delivery of health care than a market based system (something we don’t have, even now, as government’s intrusion has distorted that market) will gladly buy into the claims being made. Those of us who have seen these sorts of grand programs and estimates before (check into the promised cost of Medicare and its eventual real cost) know that we’re being led down the primrose path to ruin by a bunch of smooth talking politicians who really haven’t a clue … again.

~McQ