Free Markets, Free People

Government

Trade War?

It would appear the first shots in what could develop into a global trade war have been fired:

Ordered by Congress to “buy American” when spending money from the $787 billion stimulus package, the town of Peru, Ind., stunned its Canadian supplier by rejecting sewage pumps made outside of Toronto. After a Navy official spotted Canadian pipe fittings in a construction project at Camp Pendleton, Calif., they were hauled out of the ground and replaced with American versions. In recent weeks, other Canadian manufacturers doing business with U.S. state and local governments say they have been besieged with requests to sign affidavits pledging that they will only supply materials made in the USA.

Outrage spread in Canada, with the Toronto Star last week bemoaning “a plague of protectionist measures in the U.S.” and Canadian companies openly fretting about having to shift jobs to the United States to meet made-in-the-USA requirements. This week, the Canadians fired back. A number of Ontario towns, with a collective population of nearly 500,000, retaliated with measures effectively barring U.S. companies from their municipal contracts — the first shot in a larger campaign that could shut U.S. companies out of billions of dollars worth of Canadian projects.

Reports are Canadian McDonalds are only using Canadian potatoes and calling them “freedom fries” – okay, I’m kidding. But this isn’t a kidding matter. You remember how, when caught with the “buy American” clause in the stimulus package, Obama tried to wave it away by saying it didn’t mean what it said and Congress promising to water it down?

Yeah, like many political promises made by Congress and the President, this one has now proven to be false.

The buy American provisions in the stimulus package, signed into law in February, were just the beginning. Last week, Obama unveiled a series of proposals aimed at increasing taxes by nearly $200 billion over the next decade on U.S. companies doing business abroad. At a White House event, Obama said the measures were designed to “close corporate loopholes” that permit companies to “pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, N.Y.”

Those sorts of measures are sure to speed the recovery. [/sarc]

Clueless.

~McQ

Obama: “Unsustainable Deficit” And Spending

Who is Obama lecturing here?

President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.

“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”

Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”

In the same article:

Earlier this week, the Obama administration revised its own budget estimates and raised the projected deficit for this year to a record $1.84 trillion, up 5 percent from the February estimate. The revision for the 2010 fiscal year estimated the deficit at $1.26 trillion, up 7.4 percent from the February figure. The White House Office of Management and Budget also projected next year’s budget will end up at $3.59 trillion, compared with the $3.55 trillion it estimated previously.

Oh, and I loved this:

“Most of what is driving us into debt is health care, so we have to drive down costs,” he said.

Private health care isn’t borrowing from China is it? It is the government run side of things which is doing that. So after admitting government can’t manage cost effective health care the message is to hand them the rest of it as well?

Physician, heal thyself.

~McQ

An Open Letter to California

We have a special election here in California on Tuesday the 19th.  We all have to go to our polling places, and decide whether Propositions 1A-1F–which were put on the ballot by the legislature–will be accepted.  Of those propositions, 1F, which denies pay increases for elected officials if the state’s budget is all higgeldy-piggeldy–is the only one worth passing.

The rest of them amount to nothing more than allowing the legislature to loot the revenues from things like the lottery or child health programs, that the current law prevents them from touching.  But the legislature wants to loot those programs, so that it can use the money in the general fund, instead.  And, the general fund certainly needs something.  At this rate, there is an excellent chance that California will be out of money by July.   That means no money for teachers.  No money for the DMV.  Or the CHP, or CDF.  The state will be, well, broke.

So, who do we blame for this, California?

Some people, Like Tom McClintock, the former Republican state senator and now Congressman, blame Arnold Schwarzenegger.  Indeed, McClintock says that Schwarzenegger lied to the people of California when he ran against Gray Davis in the now-famous recall election.  “He promised to stop the crazy deficit spending, cut up the credit cards, live within our means. And he did exactly the opposite. Schwarzenegger increased spending faster than we saw under Gray Davis.”  McClintock, of course, was one of the people who ran against Schwarzenegger during that election.

(By the way, a side note to Rep. McClintock:  Barring an act of divine providence, the sun will set in a blazing red sky to the east of Casablanca before you ever become governor.  You may be a great guy, for all I know, and truly committed to reducing the size and scope of government.  You may be popular in little the red-state enclave that makes up your Congressional district.  But the electorate at large is not going to send someone with your crazy, helter-skelter eyes to the governor’s mansion.)

But should we blame Arnold for this mess?  After all, he promised to reform the budget process, and ensure that California would never, ever be in the position that Gray Davis left us in, with a massive budget shortfall.  And yet, he did.  In fact, the animating issue of that recall election was Davis’ proposed increase to the car registration fee, which would  make the annual regiatration fee average something like $600.  Now, Schwarzenegger is supporting pretty much the same thing.  So, it’s certain that the Governator has been a failure.

But, you know what?  I don’t blame him, California.  I blame you.  Not every individual one of you, of course.  By “you”, I mean the electorate as a whole.  We aren’t in this position because Arnold changed his mind about reforming the budget process.  He did, in fact, put sweeping changes to the process before you for approval  in a series of ballot propositions in a special election.

And you told him to go f*ck himself.

Not only did you kill his reform plans by sizeable majorities, you then proceed to approve nearly every state bond issue that reared its ugly head.  More money for schools?  No problem.  More money for the CDF? Let’s borrow it. More money for a shelter for developmentally challenged kittens?  Might as well slap that on the card, too.

You listened when the Service Employees Union, the California Teachers Association, and the AFSCME union for government workers told you that if we attempted to reform the budget, disaster would ensue.  We’d have to slash thousands of jobs for teachers, firemen and cops.  Those of us who weren’t lucky enough to be murdered in our beds or die shrieking in horrific pain as our bodies were engulfed by flame would be able to look forward only to a life shameful unemployment due to our abject ignorance, cowering under the heel of our new Chinese overlords. You believed them they told you, “education spending  is being cut, and our children are suffering,” despite the fact that, while the school age population has been declining, education spending since 2003 has risen from $45 billion to $54 billion.   That’s a 20% increase, at a time when school enrollment was falling.

So, when the special interests or politicians asked to spend or borrow more money via ballot propositions, you told them to go right ahead.  “Spend away, Sunshine!  Let the good times roll!” And that’s exactly what we did.  It seems never to have occured to you that the only way the government can spend money is to take it from the economy–that is to say, you.

So, now, the state’s got nothing left to spend.  But, by your votes to increase spending, and to reject any reform of the budget process, that’s apparently what you wanted to happen.And since the state has no other way to get money, Sacramento is reaching onto your pocket yet again. So, when you get that $600 bill for vehicle registration renewal, see the prices of goods get higher as the sales tax goes up, and watch your state income tax bill rise, you need to just smile, suck it up, and be a man.  After all, that’s exactly what you asked for.

Now you’re getting it.

Nanny Wants New Credit Card Rules

Why not just wrap us all up in bubble wrap and bottle feed us?

“We like credit cards — they are valuable vehicles for many people,” said Senator Christopher J. Dodd, Democrat of Connecticut, the chairman of the Senate banking committee and author of the measure now being considered by the Senate. “It’s when these vehicles are being abused by the card issuers at the expense of the consumers that we must step in and change the rules.”

Doug Bandow provides the proper pithy reply to Sen. Dodd:

“Abused by the card issuers.” Of course. The very same card issuers who kidnapped people, forced consumers to apply for cards at gunpoint, and convinced merchants to refuse to accept checks or cash in order to force everyone to pull out “plastic.” The poor helpless consumers who had nothing to do with the fact that they wandered amidst America’s cathedrals of consumption buying wiz-bang electronic goods, furniture, CDs, clothes, and more. The stuff just magically showed up in their homes, with a charge being entered against them against their will. It’s all the card issuers’ fault!

Certainly card issuers are raising their rates arbitrarily to very high rates. And, as I did recently, card holders are calling them up and very politely saying “stuff it – and while you’re at it do it with my canceled card”.

Credit cards aren’t a ‘right’, and the fact that someone gets themselves into trouble with them doesn’t make them a ‘victim’ deserving of special legislation to “right a wrong”.

What in the world ever happened to individual responsibility and accepting the consequences for your actions?

~McQ

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

Rising Thugocracy?

First we have the “car czar” threatening investors with audits and vilification, and now we have a report that a union was inappropriately involved in matters in which it should not have been included:

Officials in the governor’s office say a politically powerful union may have had inappropriate influence over the Obama administration’s decision to withhold billions of dollars in federal stimulus money from California if the state does not reverse a scheduled wage cut for the labor group’s workers.

The officials say they are particularly troubled that the Service Employees International Union, which lobbied the federal government to step in, was included in a conference call in which state and federal officials reviewed the wage cut and the terms of the stimulus package.

The SEIU is of the opinion the state is “breaking the law” as it concerns the use of “stimulus” funds. The state sees it otherwise. But that doesn’t explain the inclusion of the union on the call. Said state officials:

During the conference call, state officials say, they were asked to defend the $74-million cut scheduled to take effect July 1. The cut lowers the state’s maximum contribution to home health workers’ pay from $12.10 per hour to $10.10.

The California officials on the call, who requested anonymity for fear of antagonizing the Obama administration, said they needed the savings to help balance the state budget.

Most know that California is a budgetary basket case, but they should also know that SEIU members are the one’s effected by the cut. The phrase which is most chilling in the last cite is that which indicates a fear of “antagonizing the Obama administration” among state workers.

Is that really the atmosphere that should exist between the states and the feds? And, given their inclusion in the call, isn’t it fair to claim that the SEIU has had “undue” influence with the administration?

So how is this different than the alleged inappropriate lobbyist influence the left liked to holler about during the Bush years?

~McQ

This Is “Rich”

I‘m still amazed that many people who put their support behind Obama in the presidential election, are suddenly discovering things about him they don’t like.

Really? Now they discover Obama is a class warrior? It comes as no surprise for those of us who took the time to assess where he came from and what (little) he’d done.

Suddenly, the rich are concerned that the guy they backed may not be what they hoped he was (notice that’s the correct context in which “hope” should be used when “hope and change” is spoken):

Some of Barack Obama’s richest supporters fear they have elected a “class warrior” to the White House, who will turn America’s freewheeling capitalism into a more regulated European system

Ya think? What was your first clue – his remarks about “spreading the wealth” to Joe the Plumber or the thousands of other things he said which might imply such a tendency?

And as an aside, America’s capitalism is about as “freewheeling” as a modern waterslide is “death defying”.

Chris Edwards of the Cato Institute, a free enterprise think tank, said Democrats in Congress were unnerved by the president’s latest plan to raise $210 billion over 10 years from multinational corporations.

The money is needed to pay for a national debt that will double over the next five years; and triple over the next 10 years to $17.3 trillion. But the crackdown already faces fierce Democratic resistance.

“These big companies are based in New York Boston, Seattle and Silicon Valley, where Democrats dominate,” Mr Edwards said. “Obama’s tax plan is already cleaving him from his big corporate supporters,” he said.

The good news in this, of course, is that Congress has to pass the legislation that enables this, and per Edwards, they’re getting cold feet. The reason is also obvious – any “cleaving” of Obama from “big corporate sponsors” also means the rest of the Democrats suffer the same fate.

The level of taxation necessary to pay for the profligate spending now taking place will have to be massive as anyone with a 5th grade education understands. But the Dems also understand that any taxation that takes place must be other than income taxes because it is important to maintain the mirage that “95% of all Americans” are getting tax cuts. That leaves “the rich”, corporations and smoke and mirrors.

The rich have been identified ($250k or more), corporations are on the block with much higher taxation in the offing. So the investor class and the engine of the economy are under assault. The smoke and mirrors show? Wait until health care and cap and tax trade hit. 100% of Americans will be paying large sums for both.

But back to the point – the deeper we get into the Obama administration, the more we come to understand how gullible a good portion of the American public appears to be. There is a certain level of satisfaction with the buyer’s remorse being seen among many of his supporters as they see what their vote has actually bought. I sure hope they don’t shop for other important items as badly as they apparently shop for presidents.

~McQ