Free Markets, Free People

Monthly Archives: March 2012

Why the EPA’s new regulation will increase electricity prices significantly

Because, as you know, the laws of supply and demand can’t be repealed, no matter how much some want that to be true.

Today, the EPA will act to make electricity more expensive.

How?

The Environmental Protection Agency will issue the first limits on greenhouse gas emissions from new power plants as early as Tuesday, according to several people briefed on the proposal. The move could end the construction of conventional coal-fired facilities in the United States.

The proposed rule — years in the making and approved by the White House after months of review — will require any new power plant to emit no more than 1,000 pounds of carbon dioxide per megawatt of electricity produced. The average U.S. natural gas plant, which emits 800 to 850 pounds of CO2 per megawatt, meets that standard; coal plants emit an average of 1,768 pounds of carbon dioxide per megawatt.

If you can’t get Congress to pass a “cap and tax” law, then simply go it alone and direct executive agencies to implement regulation which will cap CO2 by making it too expensive to operate if the plant produces CO2 above the arbitrary limit you set.

“After Congress refused to pass carbon caps, the administration insisted there were other ways to skin the cat, and this is another way — by setting a standard deliberately calculated to drive affordable coal out of the electricity market,” Popovich said.

And that’s precisely what Obama’s done here.

Result?

Well it gives lie to the “all-of-the-above energy plan” that Obama has been pushing in stump speeches around the country:

Industry officials and environmentalists said in interviews that the rule, which comes on the heels of tough new requirements that the Obama administration imposed on mercury emissions and cross-state pollution from utilities within the past year, dooms any proposal to build a coal-fired plant that does not have costly carbon controls.

“This standard effectively bans new coal plants,” said Joseph Stanko, who heads government relations at the law firm Hunton and Williams and represents several utility companies. “So I don’t see how that is an ‘all of the above’ energy policy.”

Nor do I.

And it will have a significant effect:

The proposal does not cover existing plants, although utility companies have announced that they plan to shut down more than 300 boilers, representing more than 42 gigawatts of electricity generation — nearly 13 percent of the nation’s coal-fired electricity — rather than upgrade them with pollution-control technology.

Michael Brune, executive director of the Sierra Club, said the new rule “captures the end of an era” during which coal provided most of the nation’s electricity. It currently generates about 40 percent of U.S. electricity.

So the war on coal continues apace despite claims of an inclusive energy policy.

This is a preview of a 2nd Obama term.  As mentioned yesterday, public opinion will be of no consequence in January 2013 if he’s re-elected.  Hence, there’ll be no need to concern himself with it again.  4 years of unilateral action by agencies such as the EPA can certainly be expected:

The EPA rule, called the New Source Performance Standard, will be subject to public comment for at least a month before being finalized, but its backers said they were confident that the White House will usher it into law before Obama’s term ends.

“The Obama administration is committed to moving forward with this,” said Nathan Willcox, federal global warming program director for the advocacy group Environment America. “They’re committed to doing it this, and we’re committed to helping them do it.”

Fair warning.

~McQ

Twitter: @McQandO

Economic Statistics for 27 Mar 12

The following statistics were released today on the state of the US economy:

Retail sales look lackluster according to ICSC-Goldman, whose year-on-year same-store sales increase is only 2.7% for the week. Redbook is more positive, though, with a same-store sales increase of 3.8%.

The S&P Case-Shiller Home price index was unchanged for the month on a seasonally adjusted basis. Unadjusted, however, the index is down -0.8% for the month, and -3.8% from last year.

Consumer Confidence dipped slightly in March, to 70.2 from 70.8 last month.

The Richmond Fed Manufacturing Index fell to 7 in March from 20 last month.

~
Dale Franks
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Why “tax the rich” rarely lives up to expectations

Bruce Bartlett takes a look at Britain’s experience and a study that documents it and concludes the same is probably true for here:

The study concluded that the behavioral effect of raising the top rate was much more powerful than anticipated. Two factors in particular had a large effect on revenues.

There was a timing effect. People moved income that they anticipated receiving forward so it would be taxed before the new higher rate took effect. They also postponed the receipt of income into the future in anticipation of a change in the tax rate after the election of a new government.

Also, because the British top rate had increased above that in all other major countries except Japan, many Britons relocated in reaction. For example, 1,379 people in high-income occupations moved to Switzerland in 2010, a 29 percent increase over the previous year.

The point, of course, is those who fall in the bracket in which the tax is increased are going to do what is necessary to minimize the impact of that tax.

Human nature 101.  Consequently, the revenue projections are almost always high – and wrong.

Additionally, the Democrats like to imply that taxing the rich is a panacea for the spending problems we have.  In the name of “fairness” they imply that if the rich would only pay their “fair share” well everything would be hunky dory.  Of course we know the real problem is spending not revenue.  But regardless, the real effect of the “Buffet Rule” for instance, is negligible:

But a March 20 analysis from Congress’s Joint Committee on Taxation estimates that implementation of the so-called Buffett rule, which would require those making $1 million or more a year to pay an effective federal income tax rate of at least 30 percent, would raise only $46.7 billion over the next 10 years. That’s a drop in the bucket compared with the $41.2 trillion in federal revenues expected to be collected under current law.

Note that last number and remember, this is a government which is claiming that it can’t get by on $41.2 TRILLION over 10 years.

Where again is the problem?

~McQ

Twitter: @McQandO

Hot mic reveals more than one thinks

Barack Obama was caught on a hot mic saying to President Dmitri Medvedev of Russia that after his re-election he’d have more “flexibility” to deal with “controversial issues” like missile defense.

In essence, he’s not saying what every other President has thought when running for his second term.  In the case of Barack Obama, though, it could be worse than we think.

Obama is the consummate political animal.  That doesn’t mean he’s a particularly good one, but it does mean he weighs every move he makes in terms of the politics of the issue.  You can see it throughout his presidency.  The most current example is the Keystone XL pipeline.  He turned down the cross border part and pleased his environmental constituency, but displeased much of the American public who want more energy resources made available.  He then tried to claim credit  for the construction of the southern portion of that pipeline that doesn’t need either his permission or his help.  If it was his second term, the attempt to claim credit would never have been made.  In fact, my guess is he’d have tried to slow that portion of the pipeline too.

His Afghanistan “strategy” was to underman the surge (but still surge to satisfy one set of constituents) while at the same time setting a withdrawal date, there by satisfying a different set of constituents.  Had that been his second term, no surge would have been made and only the withdrawal date would have been announced.

There have also been times when he has said to hell with public opinion and decided he’d push an unpopular agenda item, like ObamaCare, even while the majority of the people made very clear they didn’t want it.  The calculation then was quite evident.  Do it early in your tenure and by the time reelection rolls around it will be old news.  Unfortunately for him, it is now before the Supreme Court as election time draws ever nearer.

And then there are the executive departments and agencies, like the EPA and Department of Energy, which have been let loose to implement his radical energy and environmental policies.  Just today the EPA got called down by a District Judge for doing something they had no power or authority to do.

The point? 

What you’ve seen during his first term is nothing compared to what you’ll see if he gets a second term.  There will be no constraints on him by the need for re-election. Although it may be hard to believe, that has held him back somewhat this term.   He has also shown more than a slight propensity to go off on his own if he doesn’t get what he wants from Congress.  Given how the Congressional races are shaping up, that seems to be something he’ll probably suffer again during his second term.

While that may slow him down a bit, he feels he’ll have enough “flexibility” that he’ll be able to act on his own and through the agencies and departments he owns to push his agenda.  If, by some horrendous turn of events he is re-elected and the Democrats somehow wrest full control of Congress from the Republicans again, then the scenario becomes even darker.  We can’t afford to take that chance.

The hot mic reveals a man biding his time and planning an unrestrained second term in which he’ll pursue his agenda by whatever means are available to him.  

Hopefully, by this time next year, the only flexibility he’ll be exercising is deciding whether or not he should go golfing, work on planning his library or do both on a beautiful Chicago day.

~McQ

Twitter: @McQandO

The economy: A little graphic context

This chart will blow you away (via James Pethakoukis):

 

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The NY Fed explains:

The first figure shows how these three labor market variables evolved over the four post-1973 business cycles (excluding the short 1980 cycle), along with developments in the Great Recession and current recovery. We start at the lowest level of the unemployment rate before the recession and then follow the changes for three years after the rate reaches its maximum level. For the current expansion, the maximum unemployment rate occurred in October 2009.

The employment-to-population ratio displays a classic V-shape recession and recovery pattern in the 1970s and 1980s. In the recession and recovery of the early 1990s, however, the employment-to-population ratio instead displays a U shape, only returning to its pre-recession level three years after the peak in the unemployment rate. In the recession and recovery of the early 2000s, neither the participation rate nor the employment-to-population ratio returns to its previous level, so we see an incomplete U-shape pattern.

In the most recent cycle, the employment-to-population ratio traces out an L shape, but the unemployment rate falls because the participation rate declines substantially (a much more gradual decline was expected by many given the aging of the baby boomers); in other words, a larger share of the population is out of the labor force rather than participating and being unemployed.

We’ve seen a lot of happy talk about how well the economy is doing now.  Most of that comes from the media which has about as much of a grasp on the economy and how it works as does the current occupant of the White House.

A look at those four recessionary cycles gives context to the depth of the one we’re currently battling.    If you look closely at the part of the chart depicting our current situation, you realize that while we’ve seemingly bottomed out, the employment-to-population ratio is not rising.   And that, of course, is because of the horrendous drop in the labor force participation.

It points out two things – one that the “official” unemployment rate should be taken with a grain of salt.   And two, that the stimulus had little apparent effect (sorry, but I don’t buy the “it could have been worse” argument.  We have no way of knowing that) if the purpose was to shorten the recessionary cycle and keeping employment below 8%.  It did neither of those things.

Finally, no matter what numbers and happy talk the media and administration throw out there, unemployment and the state of the economy are a very personal things to voters.  Those who remain unemployed certainly aren’t seeing an “improvement” in the economy from where they sit.  And it is from there they’ll make their decision as to who they’ll vote for in November.  All the media smoke and mirrors about the improving economy aren’t likely to sway those who remain unemployed or are underemployed to see it their way.  They’ll, instead, vote the reality of their situation and are unlikely to vote for the candidate who they feel has done little to ameliorate their situation.

~McQ

Twitter: @McQandO

Economic Statistics for 26 Mar 12

The following statistics were released today on the state of the US economy:

The Chicago Fed National Activity Index fell to -0.09, mainly on a drop in production. The weakest factors, though, remain consumption and housing.

The Pending Home Sales Index fell -0.5% in February, to a reading of 96.5. All of the earlier optimism about a housing recovery seems to have been scorched by all the bad readings for February.

Expansion has slowed in the Dallas Fed region according to the Dallas Fed Manufacturing Survey which fell to 10.8 from 17.8.

~
Dale Franks
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Trayvon Martin, George Zimmerman and the digital lynch mob

I have to admit watching this “discussion” over the who, what, when, where and how of the shooting of Trayvon Martin by George Zimmerman with disgust.  I refrained from commenting on it when it first hit the news because I have learned enough over the years to recognize stories where one needs to let it develop a bit for all the facts to come out.

Of course that didn’t at all stop the usual suspects from pouncing on what seemed a perfect story with which they could push their favorite racial themes (Jesse Jackson’s “Blacks are under attack” for instance) and for others to involve themselves in something that they really have no business involving themselves in.

It has laid bare the polarization within this country and how extreme it has become.

The story, if you’ve taken time to research it, is nothing like the cut and dried “whitey killed a black man because he was black” meme the race baiters are pushing.   In fact, if you’ve bothered to research the story, it appears that race had little if anything to do with this tragedy.  It is not a racial issue, even if it has been portrayed as such by the Al Sharptons, Jesse Jacksons and Louis Farrakhans of this world. 

George Zimmerman, if anything, appears to have been an overzealous neighborhood watch person with a history of calling in suspicious activities he saw in his neighborhood.  Treyvan Martin, who lived 250 miles away from that neighborhood, was apparently acting suspiciously (rummaging through garbage cans, etc.) when Zimmerman spotted him.  I doubt that Zimmerman cared one whit what Martin’s skin color was at the time.   Apparently somewhere during that time, a confrontation took place, a fight ensued and Zimmerman killed Martin with a shot to the chest.

A witness has come forward saying he saw Martin on top of Zimmerman punching him in the face. Martin, aged 17 and 6 foot 3, was not the innocent “child” the media has tried to portray.   He was a probably bigger than Zimmerman and was on a 10 day suspension from school.  Obviously that doesn’t justify killing him but it sheds a little different light on the situation.

I can’t get inside the heads of either of these people but is it reasonable to assume, given the situation, that Zimmerman might have feared for his life?   Possibly.  I don’t know – and neither does anyone else.

Does that justify the shooting.  Again, I don’t know.

But of course all the race pimps do. Just ask them.  And so they’ve essentially initiated a vendetta against George Zimmerman, who, by the way, isn’t white even though that assumption was immediately made by many given his name.  Zimmerman’s mother is Peruvian and of Indian stock. 

An example of the thoughtless incitement that is going on can be found with none other than Spike Lee who, uninformed jerk that he is, published Zimmerman’s address on Twitter.    Numerous threats to Zimmerman have been published on Twitter as well.  The New Black Panthers have put a $10,000 bounty on Zimmerman’s head.  Louis Farrakhan tweeted that the “law of retribution may soon be applied”, a not-so-veiled threat against Zimmerman.

The irony, of course, is this is a typical lynch mob mentality being stirred up here.  These are calls for violence outside the law. 

No one is claiming that George Zimmerman isn’t at fault here.  He may very well be. We don’t know yet.   That’s for a court of his peers to decide.  Certainly not a marginally informed and inflamed mob.  If something happens to Zimmerman before his day in court, you can most likely look to the digital lynch mob for the source.  I’ve always considered the racist white lynch mobs of the past to be one of the most horrific and disgusting manifestations of the racism of the past.  I find what is happening now no less horrific or disgusting.

There’s also another reason this is on the national radar.  And it has nothing to do with race.  I’ll let my favorite leftist hack columnist at the New York Times lay it out for you:

Florida’s now-infamous Stand Your Ground law, which lets you shoot someone you consider threatening without facing arrest, let alone prosecution, sounds crazy — and it is. And it’s tempting to dismiss this law as the work of ignorant yahoos. But similar laws have been pushed across the nation, not by ignorant yahoos but by big corporations.

If you are inclined to want to see guns controlled or banned and citizens required to flee any sort of confrontation vs. defending themselves, Paul Krugman is right there with you and has the goods on this now “infamous” law.

Except, as usual, it is a mish-mash of half-truths and innuendo cobbled together to make you think that corporate America is actually the villain in all of this.

We talked about this case on the podcast last night.  What is going on right now is all too predictable.  And it again points out how polarized this country is.  And it isn’t getting less polarized.

Final thought.  As I recall, President Obama was supposed to be the “post-racial” President, or that was his claim.  Yet he has inserted himself in two local incidents that I know of (the Skip Gates incident being the first) and inflamed the incidents with his remarks.  That, my friends, is not leadership. 

But then, he’s not a leader, and those of us who have actually been in leadership positions in our lives have known that from the beginning.   Instead he has difficulty denying his liberal roots and not succumbing to their siren call.

He’s an agitator.  And, as usual, he’s stepped in on something he should have stayed out of and made it far worse.  Inserting himself has given impetus, cover and justification for the Frarrakhans, Lees, Jacksons, Sharptons and the New Black Panthers to do what they’re doing.  Instead of calming the waters and talking about trusting the legal system and letting it do its work, he’s done exactly the opposite.

Congrats, Mr. Prez.  If anything happens to Zimmerman, you’re on the hook too as far as I’m concerned.

~McQ

Twitter: @McQandO

Observations: The QandO Podcast for 25 Mar 12

This week, Michael, and Dale talk about the Trayvon Martin case, and the Supreme Court arguments on Obamacare.

The direct link to the podcast can be found here.

Observations

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 2010, they can be accessed through the RSS Archive Feed.

Quote of the Day: Obama’s new found love for the Keystone XL pipeline edition

And from none other than Mr. Etch-A-Sketch:

“Apparently, the slipping poll numbers have convinced him [Obama] to announce the lower half of that pipeline,” Romney said. “If we can get his poll numbers just a little lower, we may be able to get the other side, too. So let’s get that job done.”

A reminder, one more time with feeling – the portion that Obama is now for doesn’t need his permission or approval to be built.

Just to be clear.

This is a blatant and obvious political attempt to pretend he’s behind something that was going happen anyway.  But, of course, we knew that, didn’t we?

~McQ

Twitter: @McQandO

Economic Statistics for 23 Mar 12

Today’s economic release schedule is pretty sparse. The only thing on tap for today is new home sales. Speaking of which, new home sales fell 1.6% in February to a lower than expected 313,000 annual rate. Prices, though, rose by 8.3%, though this is counterbalanced by a 5.3 month supply of homes, the third lowest supply amount of what I laughingly refer to as "the recovery". February sales rose in the Northeast and West but fell sharply in the South, which is the key region for this series of data.

~
Dale Franks
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