Questions and Observations

Free Markets, Free People

Top Kill fails

Well it looks like I was a little premature, and I should have known better than to believe an LA Times story.

Live and learn.

The bottom line is that everyone, to include the President and a whole host of politicians (and me) thought the deep water oil leak had been plugged.

In the most serious setback yet in the effort to stem the flow of oil gushing from a well a mile beneath the Gulf of Mexico, BP engineers said Saturday that the “top kill” technique had failed and, after consultation with government officials, they had decided to move on to another strategy.

Doug Suttles, BP’s chief operating officer for exploration and production, said at a news conference that the engineers would try once again to solve the problem with a containment valve and that it could take four to seven days for the device to be in place.

“After three full days of attempting top kill, we now believe it is time to move on to the next of our options,” Mr. Suttles said.

Apparently the pressure of the escaping oil and gas was just too powerful to overcome and the disaster in the Gulf continues. BP’s next option is apparently a variation on the containment dome option they tried previously.

The new strategy is to smoothly cut the riser that the oil is leaking from and then place a cap. Pipes attached to the cap would then take the oil to a storage boat waiting at the surface.An effort at a containment dome was tried earlier this month, but failed when gases escaping from the oil, froze and blocked the pipe. Mr. Suttles said, however, that BP had learned from that experience and now believed that this cap, which is custom fitted to the riser, will be more successful.

Let’s hope they’ve figured out a way to prevent the causes of the failure the last time they tried to use a dome.

Option 2 is to attach another blowout preventer to the non-functioning one already at the wellhead.

If that doesn’t work, we’re most likely looking at a relief well (which will definitely stop the leak) sometime in August.

August.

If that’s true it is fair to say that Obama and his daughter will be having a few more bathroom conversations and that “plug the hole” failed.

In all seriousness though, this presents a big problem for the administration. Thinking they were past the leak and faced only with the clean up (a daunting problem, but not as visible as the leak), most of the building criticism of the way the President and his administration had handled the leak was subsiding. And, the President made an late PR effort by visiting the LA coast to blunt further criticism before heading to Chicago for the Memorial Day weekend.

All for naught now. Per the NY Times:

The latest failure will undoubtedly put more pressure — both politically and from the public — on the Obama administration to take some sort of action, perhaps taking control of the repair effort completely from BP — and increase the public outcry.

And what do we get from the Prez?

“It is as enraging as it is heartbreaking,” Mr. Obama said in a statement, “and we will not relent until this leak is contained, until the waters and shores are cleaned up, and until the people unjustly victimized by this manmade disaster are made whole.”

Manmade disaster? Wait I thought that’s what we were calling terrorism now. It’s all so confusing. As for the statement from Mr. Cool, Calm and Collected – a little over-dramatic maybe? All a part of keeping their boot foot on the neck of BP one supposes. In the meantime, the rest of us hope and pray that the “next option” BP tries succeeds. And we also have to hope that the government won’t “push BP out of the way and take over” or we’ll be out of options.

~McQ

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Le affair Sestak – in a nutshell

Hindenblog has a nice litany of the Sestak affair to this moment in time.

Somebody offered Sestak something. This is admitted.The offer was a clear quid pro quo; IF you do this, THEN we will give you this. This is admitted.

Sestak is a Congressman with senatorial aspirations.

Sestak refused the offer, choosing to continue his senate campaign.

Sestak made the covert offer public.

At points in time, the Obama DENIED the allegation.

At points in time, Sestak reaffirmed the allegation.

For months, the Obama stonewalled the story, paying a political price in the process.

Administration lawyers have reviewed the matter; nothing to see here, move on.

Yet, in certain circumstances, the Obama admit their actions could be highly ILLEGAL.

Bill Clinton, who could have come forward months ago to dispel the controversy, NOW is a player.

Sestak is now making statements that cannot be squared with his previous recorded remarks.

Eric Holder has been asked, and refused, to appoint a special prosecutor.

Now I don’t care who your are, that’s a pretty succinct summary.

And, after 10 days and an Obama/Bill Clinton luncheon the day before, the White House has finally issued a statement. You’re welcome to read it, but it essentially says “we clear ourselves, others have done this too, and besides, it wasn’t much of a position”.

But wasn’t it? I mean it is clear that we now have a convergence of minds as far as they’re concerned and the storyline is set. And, if everyone sticks to that version, not much will come out of all of this but a lot of accusations and the like. Unless, of course, the persons involved can be put in front of a grand jury. That, of course, is unlikely with a Holder as AG and the one who must appoint a special prosecutor – something he’s refused to do.

Moving on, the reason so many are having doubts about the story concocted by the trio (Obama/Clinton/Sestack)are many.

One has to do with the fact that Sestack has repeatedly spoken about a “job”. The unpaid appointment to a presidential commission isn’t a job (unless you’re giving up your real job – Congressional representative – and it’s pay to take this unpaid part-time position.

Two – an unpaid part time position would hardly be something any person would consider to be enough to get Sestak to withdraw from the Senate race. They’re a dime a dozen in DC and while they have some prestige, they don’t have the prestige of Representative or Senator.

Then there’s this interesting conversation recorded months earlier between Larry Kane and Joe Sestak:

KANE: “Were you ever offered a federal job to get out of this race?”SESTAK: “Yes.”

KANE: “Was it secretary of the Navy?”

SESTAK: “No comment”

Later Kane asks again, “Was there a job offered to you by the White House?” to which Sestak nods and replies “yes, someone offered it.”

Kane asks “It was big right?” Sestak replies, “Let me ‘no comment’ on it.”

“Was it high-ranking?” Kane asked. Sestak said yes.

Kane immediately called the White House for confirmation and they, later, denied it completely.

So again, it was a “big” job and it was “high-ranking”. To most observers, that wouldn’t be an unpaid gig on an “executive” committee.

That brings us to the question, who is not telling the truth here?

Sestak says it was a job, the obvious intent of the offer was to get him to withdraw from the Senate race and he refused it.

The White House initially denied it and then finally said, “oh, yeah, t’weren’t nothin’ folks, and Bill Clinton made the offer anyway” like that removes them from the fray.

So, you’re left to ask – was Sestak embellishing this to make is sound like more than it was? Or was he telling the truth and is now backing off a bit to make it sound much less than it was? Don’t forget, if it is an offer for something like SecNav, that’s against the law and he gets the Obama administration in some deep legal kimchi. This is the best course, career-wise, for him – but is it the truth?

This is also the best course for the administration. And having a cut-out (Bill Clinton – what does he have to lose?) as the fall guy if there is even the slightest problem, puts them in the “plausible deniability” range. “Well we ask him to find out how serious Sestak was about the Senate run, we didn’t tell him to offer him anything”. And of course, Clinton could then yuk it up and say “well heck, I was just trying to gauge the depth of his commitment – I knew he’s say no”.  All verbal, and now, all three agreeing.

All too sweet, all too nicely wrapped up and all to long to come out with an answer if this is really the answer. It’s not – but the chances of us ever finding out what the real answer might be, at least anytime soon, isn’t very likely.

~McQ

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Michigan legislator proposes law to license journalists

The idea that the states were to be the “laboratories of freedom” has been an idea expressed for years by advocates of liberty. New concepts, supposedly rooted in liberty, were to be tried in the states to see if they worked and could be applied more broadly within the nation.

But, as we’ve learned over the years, the states can also be laboratories of tyranny as well. Or at least attempts at tyranny. Michigan offers the latest example:

A Michigan lawmaker wants to license reporters to ensure they’re credible and vet them for “good moral character.”

Nothing nebulous or arbitrary there. More importantly, since when – given the 1st Amendment to the Constitution – does any legislative body have the power to regulate speech? The 1st Amendment was incorporated to apply to the states in 1925 (See Gitlow v. New York, 268 U.S. 652 (1925)(dicta)).

Here’s the interesting part – the legislator in question is a Republican and, according to the article, “practices Constitutional law.” He may practice it, but he doesn’t appear to understand it very well.

He claims his desire to regulate the licensing of journalists is in the public interest.

“Legitimate media sources are critically important to our government,” he said.

He told FoxNews.com that some reporters covering state politics don’t know what they’re talking about and they’re working for publications he’s never heard of, so he wants to install a process that’ll help him and the general public figure out which reporters to trust.

“We have to be able to get good information,” he said. “We have to be able to rely on the source and to understand the credentials of the source.”

If you missed the nuance, he’s essentially saying that government, through it’s licensing process, will determine what media is “legitimate” and what isn’t. No state seal of approval (i.e. license) equals illegitimate media.

The obvious problem, even to those a little slow on the uptake, is not just the licensing, but the power that gives government to show it’s displeasure with a journalist or the story (or investigation, etc.) the journalist has produced by pulling his or her license.

Instantly delegitimized.

These are the provisions of the bill:

According to the bill, reporters must provide the licensing board proof of:

–“Good moral character” and demonstrate they have industry “ethics standards acceptable to the board.”

–Possession of a degree in journalism or other degree substantially equivalent.

–Not less than 3 years experience as a reporter or any other relevant background information.

–Awards or recognition related to being a reporter.

–Three or more writing samples.

Reporters will also have to pay an application and registration fee.

The bill doesn’t prevent others who are not licensed by the state from covering Michigan (certainly not initially), but the intent is clear.

Bruce Patterson, the legislator in question, says there’s little chance his bill will pass. As others point out, it is a single sponsor bill. And Patterson is now claiming that he’s only trying to provoke a discussion with his bill to point out the difficulty of knowing if an information source is legitimate:

“What’s the definition of a reporter? I haven’t been able to find out? What’s a reporter? What’s a journalist?” Patterson said. “I thought you had to have a degree in journalism but apparently not. I could retire and be a journalist.”

Patterson said he wants a central place where members of the public can go to find out about reporters’ credentials, background and experience. “I’m talking about a central depository for information so someone can go find all that out,”

Patterson said, comparing his idea to the vetting process for expert witnesses who testify in court. The senator said that he feels that there’s no way to tell who’s a legitimate journalist and who’s just rewriting other reporters’ reporting and twisting facts.

Hmmm … how about assuming the responsibility on your own? I would guess that most of us who read the offerings on the net, for instance, and various blogs know which ones we can trust and which ones aren’t at all trustworthy. We also know enough check something controversial with numerous sources. Most of us have hear of snopes.com and factcheck.org where we can vet rumors. What we certainly don’t need is some state deciding the only “legitimate” reporters out there are some “J school” grad – not with what we’ve seen over the past few years from their ilk.

Anyway, I found this to be quite interesting. I don’t necessarily buy into his contention that he introduced this just to stir discussion (I’m guessing that’s his fall-back position after receiving a lot of resistance to this) but it certainly has.

The most important thing it suggests is there are people on both sides who would regulate your life to a point where most choice – the essence of freedom – would be removed from it. And, they are in both parties – an important point. What is important to do, and one of the function of blogs, in my opinion, is to expose such ideas to the light of day. Of course, had I done this under the auspices of the proposed Michigan law, I’d have been an illegitimate source and you would be advised to ignore me.

~McQ

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Quote of the day – correlation does not imply causation edition

Hillary Clinton provides our quote of the day. It’s not because she’s claiming the rich don’t pay their fair share – no Democrat will ever think the rich are paying their fair share until they’re paying 100% – and then there will still be some who say they have too many assets. No, Ms. Clinton’s quote provides us with an even more interesting look at the mind of the left:

“The rich are not paying their fair share in any nation that is facing the kind of employment issues [America currently does] — whether it’s individual, corporate or whatever [form of] taxation forms,” Clinton told an audience at the Brookings Institution, where she was discussing the Administration’s new National Security Strategy.

Clinton said the comment was her personal opinion alone. “I’m not speaking for the administration, so I’ll preface that with a very clear caveat,” she said.

Clinton went on to cite Brazil as a model.

“Brazil has the highest tax-to-GDP rate in the Western Hemisphere and guess what — they’re growing like crazy,” Clinton said. “And the rich are getting richer, but they’re pulling people out of poverty.”

The premise? That Brazil is doing well exclusively because the taxes on the rich are so high. In other words, if Brazil lowered taxes on the rich, it would slow the economy. Seriously – read the quote, tell me where I’m wrong. The taxes are what are enabling this growth, per Clinton, and that means the spending by government – the “they’re” in the last sentence – is “pulling people out of poverty”, not the private economy or the rich who are “getting richer”.

If only we’d tax the rich here much more than we do, our economic woes could be over.

Who was it who called her the “smartest woman in the world?”

~McQ

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Massachusetts Senate passes amendment cracking down on illegal immigration

The Massachusetts Senate delivered another message yesterday about illegal immigration and demonstrates, again, why I think it is the Democrats who are in hot water on this issue, not the GOP:

The measure, which passed on a 28-10 vote as an amendment to the budget, would bar the state from doing business with any company found to break federal laws barring illegal immigrant hiring. It would also toughen penalties for creating or using fake identification documents, and explicitly deny in-state college tuition for illegal immigrants.

The amendment would also require the state’s public health insurance program to verify residency through the Department of Homeland Security, and would require the state to give legal residents priority for subsidized housing.

Why, you wonder, would deeply blue MA pass anything like that?  Why would Democrats there go along?  Here’s why:

Democrats had resisted such a sweeping proposal, but spent last evening negotiating today’s measure, shortly after a new polled showed 84 percent of the liberal-leaning state’s voters supported tough immigration rules barring state services to illegal immigrants.

Taxpayers are dead freakin’ tired of paying for services for people who have entered the country illegally.  They’re dead freakin’ tired of watch the laws of the land being ignored.  And they’re especially dead freakin’ tired of those doing the ignoring.

You’re going to see more and more states do this until they force the Federal government and the Obama administration into doing its job.

~McQ

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Polling the oil spill

And unfortunately, as Gallup points out, the news isn’t good.  But I can’t say it is unexpected:

Between March and today, with the Gulf of Mexico oil spill intervening, Americans’ preferences for prioritizing between environmental protection and energy production have shifted from a somewhat pro-energy stance to an even stronger pro-environment stance.

And the shift isn’t subtle nor are we talking a bare majority:

While Republican voters remained precisely the same in regards to the percentage who gave energy production the nod over environmental protection, the oil spill saw a 13 point swing (for the environment) from independents (58 v 34) and a 15 point swing for Democrats.

The unfortunate thing is this doesn’t have to be an either/or situation. One of the problems faced by BP with this disaster was the fact that it is a deep water well and they had no practiced and tested method of dealing with a blow out in deep water. They’ve been dealing with similar problem in shallower water for deacades, quite successfully I might add.

However, 97% of the Outer Continental Shelf (OCS) is out of bounds, driving the producers of oil into deeper and deeper water. Although it may sound counter-intuitive, the best way to avoid problems like this in deep water is to open up more of the OCS. And no, I have no problem at all with requiring the oil industry to demonstrate their ability to quickly handle a similar situation in shallower water and the clean up as well as a condition of drilling in the OCS.

But at the moment, given the polls, BP and the oil industry in general have a hell of a public relations problem. The fact that the well appears to have been plugged doesn’t lessen the problem as now the massive clean up (and any fouled beaches and marshes) become the focus.

My guess is it will take quite some time to win public support back again. In the meantime, I’d further guess that an administration which has demonized Wall Street, health insurance companies, big Pharma and others, will use this swing in public opinion to go on the offensive against the oil industry as well – all in anticipation of a comprehensive energy bill which will see cap-and-trade as well as new and higher taxes on the oil industry to fund a “contingency fund” for any future problem like we’re experiencing today.

Hold on to your wallets

~McQ

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Dale’s Observations For 2010-05-27

The top 3 reasons to expect a double-dip recession is coming. http://bit.ly/9W2RCk #

Treasury gets solid bidding on 7-year notes. Is there a little fear about equity prices out there? http://bit.ly/9aSwVd #

LA County Supervisor Gloria Molina seeks boycott of AZ. Except for buying water and electricity from AZ, of course. http://bit.ly/cHaNMs #

Obama on oil leak: Since the horse escaped, we've done everything possible to close the barn door. http://bit.ly/9jUk4e #

Blumenthal's misstatements about his service "in Vietnam" don't appear to have hurt him much. http://bit.ly/9dExd6 #

Kentucky Libertarians say that Rand Paul isn't libertarian enough for them. No one electable ever is. http://bit.ly/cqg4mC #

USCG Adm. Thad Allen says the "top kill" has plugged the oil leak in the Gulf of Mexico. http://bit.ly/cRdZzH #

Blinding glimpse of the obvious: Jamaica violence tied to US drug trade. http://bit.ly/c2rILk #

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Top Kill works – thank goodness!

Short post on the good news from the Gulf:

Engineers have stopped the flow of oil and gas into the Gulf of Mexico from a gushing BP well, the federal government’s top oil-spill commander, U.S. Coast Guard Adm. Thad Allen, said Thursday morning.

The “top kill” effort, launched Wednesday afternoon by industry and government engineers, had pumped enough drilling fluid to block oil and gas spewing from the well, Allen said. The pressure from the well was very low, he said, but persisting.

Once engineers had reduced the well pressure to zero, they were to begin pumping cement into the hole to entomb the well. To help in that effort, he said, engineers also were pumping some debris into the blowout preventer at the top of the well.

Of course the huge clean-up continues so neither BP or the Federal government are off the hot-seat yet.  But hey, Obama said “plug the hole” and they did!

Who says that’s not leadership?

/sarc

Now he can spend the whole weekend in Chicago chillin’ instead of visiting the striken Gulf or honoring the fallen at Arlington National Cemetary as Commander-in-Chief in the midst of two wars.

No sarcasm intended there.

~McQ

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Setting us up for more spending and much more debt

Yesterday the CBO director, Douglas Elmendorf, released a synopsis of its analysis of the Stimulus bill’s effect.  The findings are listed below:

  • Raised the level of real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.2 percent,
  • Lowered the unemployment rate by between 0.7 percentage points and 1.5 percentage points,
  • Increased the number of people employed by between 1.2 million and 2.8 million, and 
  • Increased the number of full-time-equivalent (FTE) jobs by 1.8 million to 4.1 million compared with what those amounts would have been otherwise. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.)

The effects of ARRA on output and employment are expected to increase further during calendar year 2010 but then diminish in 2011 and fade away by the end of 2012.

A few points – A) part of GDP calculation is government spending.  Since we know how poor the rest of the economy was doing at the time of this analysis, most of the “increase” in GDP is government spending, not productive increases.  B) the spread is monstrous and mostly meaningless – which is it 1.7 or 4.2?  C) unemployment reductions are a result of spending.  Further on in the report, it is claimed that 700,000 jobs were reported to have been created by the money.  Whether or not those jobs were permanent or temporary is not mentioned, nor whether they still exist.  Over 8 million are out of work.  D) also note the final bullet – FTE can be as little as overtime.

So, with all of that understood, let’s go to the bill itself, something I mentioned yesterday via Keith Hennessey – H.R. 4213, The American Jobs and Closing Tax Loopholes Act of 2010.  In reality, it is another deficit building “stimulus” bill.  It’s main components are:

The bill:

  • increases infrastructure spending by $26 B over ten years;
  • extends a raft of expiring tax provisions, mostly for one year
  • provides funding relief for certain employer pension plans;
  • raises a bunch of taxes, mostly on businesses and a certain kind of partnership income called “carried interest;”
  • extends unemployment insurance benefits, increasing federal spending by $47 B over the next two years;
  • increases Medicare payments for doctors through the end of 2013 for eighteen months at a $63 B cost;
  • increases health insurance subsidies for the unemployed (through “COBRA”) by $8 B over the next two years; and
  • increases federal Medicaid spending by $24 B for a six-month policy change.

And, as I mentioned yesterday, CBO scored this as a bill which thoroughly trashes PAYGO to the tune of an increase of $134 billion deficit.

But the CBO report at the top of this post is going to be used as the impetus and reason for going ahead with it because the Democrats are still firmly convinced to two things – you can spend your way out of economic trouble and per the CBO it’s working.  Again, note the final paragraph in Elmandorf’s analysis cite.  The supposed benefits of what has been spent to this point will “diminish in 2011 and fade away by the end of 2012.”

Enter HR 4213 and more deficit spending.

James Pethokoukis gives us 5 good reasons why “son of stimulus” is a very bad idea.  But what caught my eye was a quote by one of the economists on President Obama’s deficit panel said yesterday:

The gross U.S. debt is approaching a level equivalent to 90 percent of the country’s gross domestic product, the level at which growth has historically declined, said Carmen Reinhart, a University of Maryland economist. When gross debt hits 90 percent of GDP, Reinhart told the commission during a hearing in the Capitol, growth “deteriorates markedly.” Median growth rates fall by 1 percent, and average growth rates fall “considerably more,” she said.

Reinhart said the commission shouldn’t wait to put in place a plan to rein in deficits. “I have no positive news to give,” she said. “Fiscal austerity is something nobody wants, but it is a fact.

It may be a fact, but it not a fact that this President or the Democrats want to face.

Meanwhile, other forces are at work in the economy which could very negatively impact all of this:

The M3 figures – which include broad range of bank accounts and are tracked by British and European monetarists for warning signals about the direction of the US economy a year or so in advance – began shrinking last summer. The pace has since quickened.

The stock of money fell from $14.2 trillion to $13.9 trillion in the three months to April, amounting to an annual rate of contraction of 9.6pc. The assets of insitutional money market funds fell at a 37pc rate, the sharpest drop ever.

“It’s frightening,” said Professor Tim Congdon from International Monetary Research. “The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly,” he said.

Don’t tell that to the Dems or the administration – in their view, it is because we’re spending our rear ends of that we are recovering:

The US authorities have an entirely different explanation for the failure of stimulus measures to gain full traction. They are opting instead for yet further doses of Keynesian spending, despite warnings from the IMF that the gross public debt of the US will reach 97pc of GDP next year and 110pc by 2015.

Larry Summers, President Barack Obama’s top economic adviser, has asked Congress to “grit its teeth” and approve a fresh fiscal boost of $200bn to keep growth on track. “We are nearly 8m jobs short of normal employment. For millions of Americans the economic emergency grinds on,” he said.

It “grinds on” because of economic stupidity being demonstrated in the continuance of massive deficit spending, its effect on private markets and perpetually extended unemployment benefits that no one can afford.

Remember all the talk about the panic that led to TARP and how the cool, calm and collected Obama played the crisis just right? Yeah, well that was then and this is now:

David Rosenberg from Gluskin Sheff said the White House appears to have reversed course just weeks after Mr Obama vowed to rein in a budget deficit of $1.5 trillion (9.4pc of GDP) this year and set up a commission to target cuts. “You truly cannot make this stuff up. The US government is freaked out about the prospect of a double-dip,” he said.

And a spending panic is in the offing.

We keep hearing the likes of Paul Krugman tell us we’re not Greece. But when debt reaches 97% of GDP next year and 110% in 2015, I hope Krugman’s still around to tell us again why we’re not Greece, don’t you?

I wonder who will be there to bail us out?

~McQ

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Mexico has spoken – hop to it Mr. Obama

Yesterday I mentioned the deployment of 1,200 National Guard troops to our southern border and Mexico’s reaction to it – i.e. they hoped it was for controlling the (mythical) flow of guns across the border and controlling crime, but not to enforce immigration laws.

I said I just couldn’t wait to see our reply.  Well, unsurprisingly, it conforms with Mexico’s desire on the subject:

US National Guard troops being sent to the Mexican border will be used to stem the flow of guns and drugs across the frontier and not to enforce US immigration laws, the State Department said Wednesday.

The clarification came after the Mexican government urged Washington not to use the additional troops to go after illegal immigrants.

President Barack Obama on Tuesday authorized the deployment of up to 1,200 additional troops to border areas but State Department spokesman Philip Crowley told reporters, “It’s not about immigration.”

He said the move was “fully consistent with our efforts to do our part to stem, you know, violence, to interdict the flow of dangerous people and dangerous goods — drugs, guns, people.”

This is absurd. It is malfeasance. It is again a blatant refusal to do what is necessary to secure the border, a task that is solely the responsibility of the Federal government. This is a token move to tamp down criticism. Pure politics and given in conformance with the desires of a foreign government who prefers to see our immigration laws ignored or unenforced.  And this all the while criticizing Arizona for trying to do the job the Obama administration refuses to do.

I see a number of pundits and commenters saying immigration is going to hurt the GOP at the ballot box. I’m not reading it that way at all. Americans have no problem with immigration per se. But as poll after poll tell us they have a huge problem with illegal immigration and want it stopped.

This is not going to sit well with that majority and it is not going to reflect well on either Obama or the Democrats.

~McQ

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