Free Markets, Free People

Daily Archives: November 5, 2009


Open Thread – Ft. Hood Tragedy (updated)

It is way to early to come to any conclusions about what happened today at Ft. Hood.  What we do know is that 12 are dead – the shooter (MAJ Malik Nidal Hasan – a psychiatrist with the military there), a civilian policeman and 10 soldiers.  31 were wounded. Hasan was a convert to Islam and worked for 6 years at Walter Reed Hospital.  It is reported that he received a bad Officer Efficiency Report and was transferred to Ft. Hood.  Colleagues say he was a “loner” and against our presence in both Iraq and Afghanistan.  He apparently was against being deployed but was scheduled to deploy at the end of the year.  He was engaged with the chain of command trying to get the deployment canceled. He used two non-military handguns (9 mm) during his shooting spree.

There are reports of two other suspects in custody but what if any role they had is not known.  At this point, they are being said to be held for questioning. (update: AP reports both have now been released, confirmed by Rep. John Carter who represents the district in which Ft. Hood lays.  Rumor has it they had tired to stop the shootings.)

UPDATE: Shooter’s cousin says he has always been a muslim, not a convert. Claims Hasan underwent extreme harassment and wanted to get out of the military. His worst nightmare was being deployed. Says family is in total shock. Thinks impending deployment is what triggered this.

UPDATE II: Sen. Kay Bailey Hutchinson says he was shooting people he knew.

UPDATE III: Rep. John Carter says Ft. Hood authorities have taken a 3rd person into custody.  He also claims reports of automatic weapons fire at the scene of the shootings.

UPDATE IV: A bit of a shocker – Per Commanding General of Ft. Hood, shooter is alive and in custody.

More updates as they become available.

~McQ


GM Update – It Really Is “Government Motors”

Greg Mankiw reminds us of this bit of fantasy:

What we are not doing — what I have no interest in doing — is running GM. GM will be run by a private board of directors and management team with a track record in American manufacturing that reflects a commitment to innovation and quality. They — and not the government — will call the shots and make the decisions about how to turn this company around. – President Barack Obama

And this bit of reality:

Federal support for companies such as GM, Chrysler Group LLC and Bank of America Corp. has come with baggage: Companies in hock to Washington now have the equivalent of 535 new board members — 100 U.S. senators and 435 House members.

Since the financial crisis broke, Congress has been acting like the board of USA Inc., invoking the infusion of taxpayer money to get banks to modify loans to constituents and to give more help to those in danger of foreclosure. Members have berated CEOs for their business practices and pushed for caps on executive pay. They have also pushed GM and Chrysler to reverse core decisions designed to cut costs, such as closing facilities and shuttering dealerships.

As usual with this bunch, rhetoric and reality are miles apart. Intrusion by members of Congress into the decisions of the company are many, despite the promises of President Obama that “they” will call the shots:

Lawmakers say it’s their obligation to guard the government’s investments, ensure that bailed-out firms are working in the country’s interests and protect their constituents.

Executives say congressional demands gobble up time and make a rocky business environment even more unpredictable.

Or, to put it another way, GM now becomes another “constituent service” problem for members of Congress. And they really don’t care if GM’s business model dictates certain moves to regain profitability – if it hurts a constituent or their district, they just won’t stand for it:

In May, even before the government’s ownership became official, lawmakers erupted when GM disclosed it planned to produce a new subcompact car at its factories in China. Under congressional pressure, GM dropped those plans and promised instead to retool an existing U.S. facility in Michigan, Wisconsin or Tennessee for the new model.

Lawmakers from those states demanded and received high-level meetings in Washington to quiz GM on the criteria for site selection and to tout their states. GM in the end picked a site in Michigan.

The natural reaction to the above is to say “hey, that’s good, we saved or created jobs”? But is it good for the overall profitability of the company which is in hock for over 50+ billion to the taxpayer? Wasn’t the promise to infuse it with cash and allow the company to make the decisions necessary to move it into the black? Instead GM is beaten into line to serve the interests of Congress.

Additionally, closing dealerships has been questioned by any number of Congress members with GM reversing 70 closings. And serving its Democrat special interest groups is also a part of the meddling Congress has engaged in since the takeover:

In addition to the dealership issue, lawmakers have jumped into a union fight that pits GM and Chrysler against two trucking companies that haul new cars around the country. The auto makers want to give some of the work to cheaper nonunion contractors. But that raised the ire of lawmakers who support the International Brotherhood of Teamsters.

Rep. Dale Kildee, a Democrat from Michigan, sent letters on Sept. 30 to the chief executives of both GM and Chrysler, demanding they explain their positions and advising them to stick with their unionized carriers. At least four other lawmakers sent similar letters.

Chrysler defended its plans in an Oct. 2 letter, saying it would save $31 million over three years by shifting some of the work to other carriers. GM, then in the middle of contract talks, replied in its own letter that it had “no plans to phase out unionized hauling companies” but added that it was pursuing new contracts that made the most sense for the company.

So, as it turns out, President Obama’s statement was “just words”. Not only has government intruded, it is engaged in using GM as a tool for self-serving political needs. And that delays the company’s return to profitability and its ability to pay back the money it owes taxpayers. Ford posted a 1 billion quarterly profit recently (certainly driven by “cash for clunkers” but still, a profit). Ford took none of the bailout money. Ford, then, is engaged in running a profitable company which will be competitive in the auto market.

GM and Chrysler – don’t look for any of that to happen for them as long as government and Congress see them as a useful tool to further their own power base and help ensure they remain in office.  And as long as it remains useful for that, don’t expect the relationship to change – and you certainly shouldn’t expect the company to make a profit.  That’s simply not a priority for Congress.

~McQ


China Buying Oil Leases Off American Shore?

That’s the word from Mark Tapscott at the Washington Examiner:

Gas prices here in the U.S. are creeping back up towards the $3-per-gallon mark even as news breaks today that China’s state-owned energy firm just closed a deal to buy interests in four development leases on the American Outer Continental Shelf (OTS) in the Gulf of Mexico.

The deal, which requires approval of the U.S. government, is between Norway’s Statoil and China National Off-Shore Oil Corporation (CNOOC). This is the same CNOOC that would have bought Unocal four years ago for $18.5 billion but for pressure from Congress, according to The New York Times, quoting an energy industry trade publication.

Because it must be approved by the U.S. government, the Statoil/CNOOC deal puts President Obama and Ken Salazar, his Secretary of the Department of the Interior, which controls OTS leasing, in a difficult position.

Really? Why does it put the government in a “difficult position”? Oh, you mean the apparent willingness to sell these leases to foreign entities vs. opening them up to domestic American exploration?

The deal also focuses renewed attention on Salazar’s slow-walking of a new plan for approving energy exploration and development in the OTS, which includes approximately 1.7 billion acres, and, according to Interior, holds up to 86 billion barrels of recoverable oil and more than 400 trillion cubic feet of natural gas.

The administration is moving much too slowly to open more of the OTS to development for domestic U.S. uses, according to Jack Gerard, president of the American Petroleum Institute …

But it apparently isn’t moving too slowly to open up the OTS to foreign competitors.

In the meantime:

If the administration approves the deal, it will be more vulnerable to charges that the White House is being careless with U.S. national security issues in the energy sector, and that it is putting the interests of a foreign power before those of U.S. energy consumers.

If Obama and Salazar reject the deal, it will likely complicate relations with China, the emerging Asian superpower that defense experts predict will be able at will to challenge U.S. legitimate national security interests around the globe in the near future.

Oil isn’t going away anytime soon and its use is critical during any transition to alternate energy sources (which, for the most part are vaporware). Additionally, the charge that the Obama administration is playing fast and loose with US national security will resonate if the public becomes aware that domestic producers have been barred from OTC production but foreign producers are given access.

So the dilemma facing the administration is one of its own ideological making. Its “slow walking” of the plan for domestic producers to explore the OTC is a decision it made to thwart the desires of a majority of the nation to secure those assets for the US’s use. And now it’s going to hand them over to China?

That will not play well in at all in middle America.

~McQ


House To Try To Pass Its Version Of Health Care This Week

And it has a number of Democrats more than a little nervous (including 40 Dems who’ve signed a letter stating they won’t sign on as long as the abortion provisions in the bill remain).  Why are they nervous?  Well, 2010 is right around the corner, Republicans has just won some key special elections and Nancy Pelosi has said she’d be ok with losing a few seats if she could get this bill passed.  Here’s a summary:

For starters, the bill is a lot more expensive than advertised. The Congressional Budget Office (CBO) pegs its cost at $1.055 trillion over 10 years, not the $894 billion Mrs. Pelosi claims. Politico reports that “the legislation is projected to create deficits over the second five years” by front-loading revenue and benefit cuts and back-loading costs. The real cost, according to a Republican House Budget Committee report, could be $2.4 trillion for its first decade of operation.

In its first 10 years, the bill calls for $572 billion in new taxes (including a 5.4% income surtax on anyone making more than $500,000 a year), and $426 billion in Medicare and Medicaid cuts, which will hurt seniors and the poor and could lead to rationing of care.

The Congressional Joint Committee on Taxation reported recently that the House’s legislation will whack small businesses because they would pay $153.5 billion of the surtax. Small businesses unable to provide health coverage to their workers would also pay up to 8% in new payroll taxes. This would cost them $135 billion more over the next decade, thereby diminishing their ability to create jobs.

In the House bill there is a $2 billion tax on those who already have health insurance, $20 billion in taxes on medical devices, $8 billion in taxes on anyone who buys over-the-counter drugs with money from their health-savings accounts, and $140 billion in higher taxes on drugs.

Mrs. Pelosi’s bill will drive up premiums. A family of four with an income of $78,000 would pay $13,800 for insurance a year by 2016, according to CBO. Their tab would average $11,000 without the bill.

Every American would be required to buy health insurance or be fined up to 2.5% of their income.

If they vote “yes” this albatross will be hung around the neck of every Democrat in the House – the blue dogs are particularly squeamish about it. Adding those who don’t like the abortion provision (among Democrats) and you have more than enough to defeat it. So why is Pelosi pushing it now? Like Reid, she isn’t the sharpest knife in the drawer when it comes to pure intelligence, but unlike Reid, she knows here domain and how to count votes.

How will she pull this off without some major changes or major concessions? I’m not sure, but right now, experts who are just as adept at counting votes as the whip say there aren’t enough to pass it. Watch and listen carefully as the week finishes with a scheduled vote on Saturday. If she figures out she doesn’t have the votes, we should see a delay. But if she thinks she has them, she’ll be pushing like hell to have the vote this weekend.

~McQ