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R Street applauds reinsurance package from Citizens Property Insurance Corp.

Out of the Storm News - April 24, 2014, 2:51 PM

TALLAHASSEE, Fla. (April 24, 2014) – The R Street institute applauded today’s announcement from Citizens Property Insurance Corp. of a $3.1 billion risk transfer program for the 2014 hurricane season.

The program capitalizes on favorable market conditions to increase reinsurance coverage at a lower price.

“The Citizens board deserves credit for taking advantage of historically-low global reinsurance rates to transfer some of its enormous hurricane risk to the private market, thereby reducing the likelihood or severity of post-hurricane assessments,” said Christian Cámara, R Street Florida director.

The new risk transfer transactions will leave Citizens with approximately $3.1 billion in reinsurance available in the event of a major storm or series of storms this hurricane season. The package also includes a $1.5 billion catastrophe bond offering from Everglades Re. The offering is twice the size of the previous Everglades Re issuance, and is believed to be the largest cat bond in history.

This package and similar programs further reduce the burden on all Florida policyholders who may be assessed if Citizens exhausts its ability to pay claims.

“The Florida Hurricane Catastrophe Fund would do well in following Citizens’ example to further protect Florida taxpayers,” said Cámara.

R Street comments on FDA proposed regulations on e-cigarettes

Out of the Storm News - April 24, 2014, 1:28 PM

WASHINGTON (April 24, 2014) – The proposed regulations on e-cigarettes by the Food and Drug Administration released today will not require that existing products be removed from the marketplace while they are being reviewed and before they are approved. Additionally, the regulations will ban the sale of e-cigarettes to minors. Both of these developments represent positive steps forward on the ongoing education to the public about vaping said the R Street Institute today.

Keeping products in the marketplace in particular is important, as evidence has shown that e-cigarettes have proven to be far more effective in helping smokers to stop smoking tobacco products than any other cessation product, such as nicotine gum, patches or lozenges.

However, it is concerning that the regulations call for restrictions that would prevent e-cigarette makers from advertising that smokers can reduce their risk of tobacco-attributable diseases by switching. Available evidence suggests such risks may be reduced by as much as 98 percent.

“It is important for people to know that e-cigarettes are an effective tool in tobacco harm reduction,” said Professor Brad Rodu, endowed chair in tobacco harm reduction research at the University of Louisville and R Street associate fellow. “While we are in favor of e-cigarette regulation by the FDA, it should not come at the cost of educating the public about less harmful alternatives to tobacco cigarettes.”

Rodu also counseled the FDA to give more guidance on what health warnings will be required on e-cigarette packaging.

“There is ample medical evidence that shows that nicotine is addictive and should not be used by pregnant women, making those warnings appropriate. However, there is insufficient medical evidence of other negative health consequences of e-cigarettes. The FDA should set clear standards on the warnings that would be required under the regulations.”

R Street will express these concerns during the current public comment period.

VIDEO: Heartland Talks Earth Day with John Stossel

Somewhat Reasonable - April 24, 2014, 1:15 PM

Last week John Stossel hosted a segment on Earth Day featuring Heartland Senior Fellow James Taylor and Paul Gallay from the Riverkeeper environmentalist organization. Taylor (with some backup from Stossel) crossed swords with Gallay on a number of environmental subjects.

The discussion started on Gallay’s topic of interest, namely clean water, and he, Taylor and Stossel all happily agreed that our nation’s water is getting cleaner, though Gallay argued that it was not happening swiftly enough and that further government action was needed. Taylor deflated this line of reasoning by pointing out that current policies are working out quite well in an incremental fashion and that increasing government spending and power to accelerate the process would be wasteful and dangerous.

The program then turned its attention to alternative energy and the “sustainable future” of green energy lauded by Earth Day supporters and environmentalists the world over. Gallay’s position was that the only sustainable solution to our energy needs was to rely on “smart” energy, in other words green, renewable energy. Taylor rightly pointed out that the current green energy favorites, solar and wind energy, are both energy intensive and often inefficient. Solar energy in particular, he explained, was “very land and water-intensive.” The water-intensiveness is a particular problem, due to the fact that solar farms tend to be built in high-heat, water-scarce environments.

Gallay tried to answer Taylor by saying that non-renewable energy is given more subsidies than is green energy. Taylor would not be trapped, however, answering that if one considers the subsidy per-kilowatt hour of energy produced, then wind and solar receive ten times the subsidies as natural gas, and fifty times that of coal.

What the program really served to highlight was the major flaw in the mainstream environmentalist movement’s attitude, namely its fixation on what it perceives to be the problem at the expense of critically assessing the proposed solutions. Anti-carbon activists sing the praises of solar and wind energy while trying to ignore or obfuscate the issues surrounding those methods’ costs and efficiency. If supporters of green energy hope to win over a reluctant public, they need to be willing to debate the facts, not just feelings.

If an honest, informative debate is going to be had about America’s energy future, then the costs of alternatives must be honestly addressed. The fact is that lavish subsidies (often given as political favors) are the only thing that keeps most alternative energy suppliers in business. If those alternatives are to have a future in the energy sector, they need to stop suckling at the government teat and learn to compete in the real world economy. Then we might consider them a worthwhile addition to American energy production.

Categories: On the Blog

America’s Power Grid at the Limit: The Road to Electrical Blackouts

Somewhat Reasonable - April 24, 2014, 10:00 AM

Americans take electricity for granted. Electricity powers our lights, our computers, our offices, and our industries. But misguided environmental policies are eroding the reliability of our power system.

This past winter, bitterly cold weather placed massive stress on the US electrical system―and the system almost broke. On January 7 in the midst of the polar vortex, PJM Interconnection, the Regional Transmission Organization serving the heart of America from New Jersey to Illinois, experienced a new all-time peak winter load of almost 142,000 megawatts.

Eight of the top ten of PJM’s all-time winter peaks occurred in January 2014. Heroic efforts by grid operators saved large parts of the nation’s heartland from blackouts during record-cold temperature days. Nicholas Akins, CEO of American Electric Power, stated in Congressional testimony, “This country did not just dodge a bullet―we dodged a cannon ball.”

Environmental policies established by Congress and the Environmental Protection Agency (EPA) are moving us toward electrical grid failure. The capacity reserve margin for hot or cold weather events is shrinking in many regions. According to Philip Moeller, Commissioner of the Federal Energy Regulatory Commission, “…the experience of this past winter indicates that the power grid is now already at the limit.”

EPA policies, such as the Mercury and Air Toxics rule and the Section 316 Cooling Water Rule, are forcing the closure of many coal-fired plants, which provided 39 percent of US electricity last year. American Electric Power, a provider of about ten percent of the electricity to eastern states, will close almost one-quarter of the firm’s coal-fired generating plants in the next fourteen months. Eighty-nine percent of the power scheduled for closure was needed to meet electricity demand in January. Not all of this capacity has replacement plans.

In addition to shrinking reserve margin, electricity prices are becoming less stable. Natural gas-fired plants are replacing many of the closing coal-fired facilities. Gas powered 27 percent of US electricity in 2013, up from 18 percent a decade earlier. When natural gas is plentiful, its price is competitive with that of coal fuel.

But natural gas is not stored on plant sites like coal. When electrical and heating demand spiked in January, gas was in short supply. Gas prices soared by a factor of twenty, from $5 per million BTU to over $100 per million BTU. Consumers were subsequently shocked by utility bills several times higher than in previous winters.

On top of existing regulations, the EPA is pushing for carbon dioxide emissions standards for power plants, as part of the “fight” against human-caused climate change. If enacted, these new regulations will force coal-fired plants to either close or add expensive carbon capture and storage technology. This EPA crusade against global warming continues even though last winter was the coldest US winter since 1911-1912.

Nuclear generating facilities are also under attack. Many of the 100 nuclear power plants that provided 20 percent of US electricity for decades can no longer be operated profitably. Exelon’s six nuclear power plants in Illinois have operated at a loss for the last six years and are now candidates for closure.

What industry pays customers to take its product? The answer is the U.S. wind industry. Wind-generated electricity is typically bid in electrical wholesale markets at negative prices. But how can wind systems operate at negative prices?

The answer is that the vast majority of U.S. wind systems receive a federal production tax credit (PTC) of up to 2.2 cents per kilowatt-hour for produced electricity. Some states add an addition credit, such as Iowa, which provides a corporate tax credit of 1.5 cents per kw-hr. So wind operators can supply electricity at a pre-tax price of a negative 3 or 4 cents per kw-hr and still make an after-tax profit from subsidies, courtesy of the taxpayer.

As wind-generated electricity has grown, the frequency of negative electricity pricing has grown. When demand is low, such as in the morning, wholesale electricity prices sometimes move negative. In the past, negative market prices have provided a signal to generating systems to reduce output.

But wind systems ignore the signal and continue to generate electricity to earn the PTC, distorting wholesale electricity markets. Negative pricing by wind operators and low natural gas prices have pushed nuclear plants into operating losses. Yet, Congress is currently considering whether to again extend the destructive PTC subsidy.

Capacity shortages are beginning to appear. A reserve margin deficit of two gigawatts is projected for the summer of 2016 for the Midcontinent Independent System Operator (MISO), serving the Northern Plains states. Reserve shortages are also projected for the Electric Reliability Council of Texas (ERCOT) by as early as this summer.

The United States has the finest electricity system in the world, with prices one-half those of Europe. But this system is under attack from foolish energy policies. Coal-fired power plants are closing, unable to meet EPA environmental guidelines. Nuclear plants are aging and beset by mounting losses, driven by negative pricing from subsidized wind systems. Without a return to sensible energy policies, everyone must prepare for higher prices and electrical grid failures.

[Originally published at Communities Digital News]

Categories: On the Blog

It’s Hard Being a Black Conservative

Somewhat Reasonable - April 24, 2014, 9:41 AM

“We’re not being governed. We’re being ruled by incompetence.”

It is refreshing to read a book that reflects one’s own views and “Guardian of the Republic” by Allen West, a former Lieutenant Colonel in the U.S. Army for over twenty years and a former, one-term congressman from Florida, who is perhaps best known these days as a Fox News channel contributor, is such a book. He is a very conservative, articulate black American.

As he points out, “The Left must destroy black conservatives because it cannot afford to have freethinking, independent-minded black Americans. When the Left wins, our community loses. The result of such blind loyalty is that many black voters have come to resemble Vladimir Lenin’s ‘useful idiots.’ They make up an electorate that is completely taken for granted and no one even bothers to listen.”

It is ironic that the first black President will not only be remembered as our worst, but that his failure will reflect on the entire black community in America even while men like West and other blacks of real achievement exist.

For now, it is definitely an uphill struggle for black conservatives, particularly for those in public life. “The mainstream media,” says West, “have a clear tendency to recruit other blacks to denigrate and demean black conservatives” and have “sought to disrespect and deny the existence of black conservatives, but they’re losing the battle and they realize it. The big lie that has resulted in the twenty-first century economic plantation will be exposed and defeated, and our community will be restored.”

I don’t know when I first heard West, but I suspect it was during his run for Congress.  I do recall I was instantly and enormously impressed. He won that race and served from 2011 to 2013 representing Florida’s 22nd District. His race for reelection was a classic case of electoral tampering, misconduct, and political slander by those who wanted to defeat him.

“One of my biggest frustrations and concerns about America (is that) our electorate doesn’t have a clue about who we are or whence we came.” Much of his book is devoted to a mini-history lesson regarding the founders, the Constitution, and the principles that set America on the path to greatness among nations. West holds two masters degrees; one from Kansas State University in political science and the second from the U.S. Army Command and General Staff College in military arts and sciences.

He had just over twenty years to practice military arts, but he had set his heart on joining the Army early on, joining the ROTC in college and thereafter being recognized at every stage for his intellect and his leadership skills. He was deployed to Kuwait in 1991 and Iraq in 2003.

West is plain-spoken. He defines our fundamental governing principles as “limited government, fiscal responsibility, a free market, individual sovereignty, a strong national defense, and an understanding that all of man’s freedoms come ultimately from God.”

And then he says, “Measured against our fundamental governing principles, we clearly do not have good government—heck, we suck! We have excessive debt, growing poverty, exploding deficits, an expanding nanny-state, and an anemic economy.”

“The sad thing is,” says West, “there seems to be no reprieve in sight. Why? Because, as a nation, we have become uninterested, uninformed, and disengaged from the truth.”

Throughout his book, West mixes lessons regarding the system the Founders implemented and his fears about the present generations of Americans, given the last two elections. “I fear national-level elections have become nothing more than a version of American Idol,” says West at one point. He concludes his first book saying, “We have to turn off the brain-draining reality TV shows for a few hours and read, think, assess, and challenge ourselves to be better.”

West has had a remarkable life to this point and he could choose to make a lot of money in some corporate position or as an entrepreneur, but he wants to reach out, not just to the black community, but to all Americans because he is worried about where President Obama has taken the nation he loves and wants to see it saved from unimaginable and unconscionable debt.

We need a lot more men like Allen West. The black community needs to pay him and other black conservatives more attention. The rest of us should hope that a change in future administrations will bring his talent to bear on the restoration of America.


[Originally published at Warning Signs]

Categories: On the Blog

Internships are an important rung on the ladder of opportunity

Out of the Storm News - April 24, 2014, 8:30 AM

Prohibiting unpaid internships is an effective way to withhold economic opportunity from young and ambitious men and women, particularly those from modest backgrounds.

That, of course, is not the stated goal of those who seek to require that all interns collect a paycheck. Nor is it their goal to further concentrate opportunities in the hands of the powerful and connected. But for better or worse, these would be the likely consequences of such a policy.

Our economy has a credential fetish. Virtually all white-collar jobs require a bachelor’s degree – and increasingly, master’s degrees – even when such credentials have at most tangential relevance to a job. In economists’ jargon, much of the economic value of post-secondary education is about “signaling,” or conveying information that can otherwise be hard to attain. And the signaling value of higher education is a major reason that Americans now have around $1 trillion dollars in outstanding student loans.

Internships are also a form of signaling. Successfully completing an internship signals to future employers that you can show up for work, follow instructions and get along with your colleagues – the “soft skills” of the workplace. And unlike college, you don’t leave an internship potentially tens of thousands of dollars in debt.

Critics of unpaid internships usually argue that interns are just free labor for the organizations that sponsor them, but this ignores that most interns are actually quite costly to their sponsoring organizations. No matter how bright and well educated an intern may be, supervising him or her takes time and effort, and by nature of their lack of experience and their short-term stints, interns typically cannot produce much of value. Mentorship, instruction and education are all expensive investments relative to the value most interns provide.

It’s also hard to tell whether an internship primarily benefits the intern or the employing organization. This is a decision best made by interns and their sponsoring organizations, not by Department of Labor bureaucrats. If an intern feels her experience will add to her employability later on, who are we to prohibit her from taking an unpaid internship?

Eliminating unpaid internships won’t cause employers to just start paying their interns. Some no doubt will, but many more internships will likely be lost altogether. Those that remain will become still more competitive and more likely to go to the sons and daughters of the wealthy and connected. That is, internships will become more and not less elitist.

Shut out of the internship marketplace, many potential interns will simply take on more debt to get more and better credentials to make them look attractive to future employers. And in a credentialed society, what choice do they have?

At a minimum, internships should be treated the same across the board – that means that internships with for-profit firms, non-profits and government should be treated equally with respect to pay requirements. Currently, different pay rules apply to for-profit and non-profit interns. But if we are ostensibly trying to protect interns, surely the same rules should apply to all internships, regardless of the internship sponsor.

If we ban all unpaid internships, we must also prohibit volunteering on political campaigns as well, since this is the usual means of beginning a career in political staffing and could even be considered an unrecorded campaign donation.

Internships are an important rung on the ladder of opportunity for many, and we should be looking for more options to create economic opportunity. Shutting the door on unpaid internships would have many unintended consequences that would further restrict opportunity, not further social justice.

Federal e-cigarette data AWOL

Out of the Storm News - April 24, 2014, 8:00 AM

Americans are familiar with the census, taken every 10 years by the U.S. Census Bureau, but few are aware the bureau regularly collects information on a range of demographic, social and economic characteristics through Current Population Survey supplements, which are sponsored by various government agencies.

The National Cancer Institute regularly sponsors the CPS Tobacco Use Supplement, which was conducted most recently in May and August 2010, and January 2011. These datasets and accompanying technical documentation are available for download and analysis by tobacco researchers.

Surprisingly, another TUS, conducted in May 2011 and described in a technical document as a follow-up survey that includes information on e-cigarettes, has never been released. This conflicts with Census Bureau guidance that supplements “are available anywhere from 6 to 18 months after data collection.”

The 36-month-and-counting delay is troubling.

High-ranking government officials have been campaigning against e-cigarettes for some time, creating demand for FDA regulation. The NCI, sponsor of this TUS, has been a powerful opponent of anything related to tobacco harm reduction. Is it possible that NCI officials are not releasing e-cigarette data until FDA regulations are issued?

The NCI has suppressed positive positive data in the past. An NCI-sponsored supplement to the 2000 National Health Interview Survey asked current and former smokers the method they had used to try to quit smoking. One response was “switch to smokeless tobacco.” Carl Phillips and I published analysis of this survey, noting that it provided the first population-level evidence that American men have quit smoking by switching to smokeless tobacco.

Five years later, despite the fact that tobacco harm reduction had gained increased visibility and more American smokers were likely making the switch, the NCI struck the switch-to-smokeless query from the survey, denying the public information about this cessation option.

Public health requires public access to taxpayer-funded survey data. NCI should be an ally in this regard, not an obstacle.

America’s Tax Confusion

Somewhat Reasonable - April 24, 2014, 12:36 AM

On April 15, nearly 90 percent of American adults filed their income tax returns for the 2013 tax year. And at the end of that day, I finished drinking a glass of truly tremendous bourbon; 130 proof seems appropriate to numb the pain.

A big check to the state, and a much bigger one to the federal Treasury, reminds us of how little we get for the taxes we pay and how much the tax system is distorted to favor special interests and buy votes. (If you have to write a particularly egregious check to your state, you might want to consider this new and helpful Laffer Center calculator called “Save Taxes by Moving.” Those living in Tennessee get the best of both worlds: No earned-income tax but some very fine local whiskeys.)

With more than half of President Obama’s 442 proposed tax increases as well as some of the heftiest Obamacare taxes (since Chief Justice Roberts told us that that’s what they are) coming (or hoped by the administration to be imposed) in the next two years, we will soon look back on this tax season the way you fondly recall getting a filling when the dentist tells you that today you need a root canal.

But even now, the American people despite being woefully misinformed about our tax system — exactly as the left wants them — are adding the federal income tax to their many dissatisfactions with Obama administration.

According to a Gallup poll released on April 14, 10 percent more Americans now think their taxes are too high than think their taxes are about right. That level has only been matched once, and only briefly, since the Bush tax cuts of 2003 that Democrats hate with such a passion.

Not surprisingly, a majority of Democrats think their taxes are “about right,” whereas only 38 percent of Republicans share that view. Independents seem to be even more concerned about excessive tax rates (for their own taxes) than Republicans are — which should scare the bejesus out of Democrats going into the 2014 elections, as if they don’t have enough to worry about.

But beyond the expected partisan differences in satisfaction with taxes, this week’s polling also shows a remarkable cluelessness among the American population when it comes to “who pays what” in federal income tax. It proves, sadly, that class warfare rhetoric, as spouted by President Obama and the great unwashed of Occupy Wall Street and many others, is having an impact (because the well-off are apparently too ashamed of success to mount a credible defense of economic liberty).

Forty-nine percent of Americans, according to another Gallup poll, believe that the middle class pays too much in taxes. It is by far the highest number on this question since Gallup started asking it 15 years ago. A stunning 41 percent believe that lower-income Americans pay too much in taxes, this despite the fact that most of them are net receivers of tax dollars.

Yet 61 percent of Americans continue to believe that their upper-income friends pay too little.

A Rasmussen Reports survey released last year, offers an explanation: “68% believe middle-class Americans pay a larger share of their income in taxes than wealthy Americans do” and “only 24% think the wealthy pay their fair share.”

But it’s all BS.

Ronald Reagan, paraphrasing Civil War-era humorist Josh Billings, put it this way: “The trouble with our liberal friends is not that they are ignorant, but that they know so much that isn’t so.”

Like a noxious weed, Warren Buffett’s hypocritical ramblings about his secretary have taken root in the American psyche. Unfortunately, Republicans who should be the “Roundup” of economic debates, often act instead like weed fertilizer — allowing the unchecked spread of misinformation and bad policy by being too stupid or too timid to tell the public the truth they desperately need to know. Perhaps manure is a better metaphor since the GOP does such a crappy job where it’s needed most. (Did I mention how good this bourbon is?)

A few facts to consider, based on 2010 Congressional Budget Office data:

The bottom 40 percent of earners in this country, with average pre-tax earnings up to nearly $50,000, have a negative tax rate. The bottom 20 percent have a negative tax rate averaging more than 9 percent. In other words, if you earn $24,000, not only do you not pay income tax, you receive over $2,000 in income tax transfers (in addition to other forms of welfare) from those who do pay tax.

The average federal tax rate — individual income taxes, excluding payroll taxes — for those in the fourth quintile, meaning those between 60 percent and 80 percent of earners ranked by income (average pre-tax earnings of about $95,000) is about 5 percent. That is not a typo.

For those in the highest quintile (average earnings $239,000), the average tax rate is just under 14 percent, but even that understates how steeply “progressive” our tax code is: Breaking down the top quintile further, the average tax rate for those in approximately the 85thpercentile (income about $135,000) is 8 percent. Those earning about $275,000 pay 15 percent of their income to the Treasury. And the evil “top 1 percent” (average pre-tax income of $1.4 million) pay over 20 percent of their income in taxes.

On the other hand, the middle 20 percent of American earners, average income just over $65,000, had an average tax rate of — wait for it — 1.6 percent.

[If you wonder about why average tax rates are so low, a few considerations: First, the lowest levels of income aren't taxed. Second, there are large deductions and exemptions available. As a simplified example, imagine a scenario where there is zero tax until $15,000 of income with a tax rate of 10% above that threshold and a $7,500 personal exemption. Someone who earns $30,000 will have $22,500 of adjusted gross income, but no tax on the first $15,000, leaving a 10% tax on $7,500 for a tax due of $750, representing an average tax rate of 2.5% (one quarter of the marginal rate) on the total income. Additionally, upper-income earners can have a substantial percentage of their income derive from tax-free municipal bonds and from long-term capital gains which partially explains why their average rate is substantially lower than their marginal rate of approximately 40%. Their high marginal rate also encourages deductible charitable contributions.]

The idea that the rich pay less than the middle class is one of the most dangerous myths propagated by knowing leftists and their useful idiots throughout society, including among people like Warren Buffett who should know better and those like most Democrats in Congress and every talking head on MSNBC who have no clue nor an interest in getting one.

So what does all this mean in real money?

That the top 20 percent of earners paid (in 2010) 93 percent of all individual income taxes. Again, even that understates the penalty for success in the United States (which is not to say that it is a lot better in other places): The top 1 percent paid 39 percent of all taxes; the top 5 percent paid over 63 percent, and the top 10 percent paid 78 percent. Meanwhile, the bottom 40 percent collected 9 percent of income taxes paid by the more financially successful among us.

While the distribution of tax payments was slightly less “progressive” in 2011, America remains a society suffering — even if most people don’t know it — under steeply progressive taxes which former President of Estonia Mart Laar described (in a must-watch speech from 2006) as “the grand idea of Karl Marx.”

Liberals will argue, fact-free as always, that “the rich” who are funding approximately everything in this country should be doing so because they pay too little compared to their earnings. In fact, the top 1 percent pay nearly twice as big a share of all individual income taxes as their share of national income.

Others who still make very good incomes in this country, such as those earning $100,000, pay a lower proportion of the nation’s taxes than they earn of the nation’s wealth. The bottom 50 percent of earnings bring in (in 2011) 11.5% of the national income but pay less than three percent of the taxes, and — bear with me here — all of that 2.9 percent is among those at the top of the bottom 50 percent (because the bottom 40 percent have a negative tax rate.)

OK, enough numbers, especially because I’m well through my glass of bourbon.

When it comes to the changing views of Americans regarding income taxes, facts are useful intellectual ammunition but politicians must deal with the reality of an uninformed populace.

And that reality is a double-edged sword (which mostly cuts the wrong way): On one hand, the public has bought substantially into the view that the rich don’t pay enough, and that’s a recipe for extremely damaging public policy — attempting to “soak the rich” even more than our system already does and thereby damaging the incentive to be entrepreneurial, take risk, and create jobs and wealth for others.

Since the richest among us can often structure investments and income to delay paying the tax man, and since many of them can simply quit working (somewhere Ayn Rand is shouting “preach it, brother!”), raising income tax rates is unlikely to bring in more tax revenue. This is the message of the Laffer Curve and the lesser-known but even more on-point Hauser’s Law. (It’s also the reason the left so desperately wants to add a national sales tax.)

On the other hand, despite Barack Obama’s protestations that he hasn’t raised taxes, the public knows he is (how to put this politely?) a liar. When it comes to describing his tax hikes as anything but what they are, President Obama channels Humpty Dumpty: “When I use a word, it means just what I choose it to mean — neither more nor less.”

Still, the middle class is starting to feel resentful of their increasing tax burden. The problem is that those who are truly the median income earners in America pay almost nothing in tax so their focus will remain on going after the top quintile of earners — which is precisely the goal of Democrats in spreading their Through-The-Looking-Glass fabrications about tax fairness in America.

As our own Ben Stein’s brilliant father, Herb, noted, “If something cannot go on forever, it will stop.” Few things describe our nation’s fiscal path, including our tax policies, as accurately and as frighteningly.

Unless and until that message sinks in, as reality must eventually require but probably not before there is great national pain (and even then it does not necessarily lead to wiser political choices by voters), those who understand what is really happening in America can find a modicum of solace in knowing we’re right — though I also suggest a really fine glass of bourbon.

[First published at The American Spectator.]

Categories: On the Blog

How To Liberate America From The Poverty Trap That Is Enslaving Us

Somewhat Reasonable - April 23, 2014, 8:12 PM

In the latest Bureau of Labor Statistics jobs report, for March, the Obama economy finally reached a long overdue milestone. More than six years after the latest recession began, in December, 2007, the economy has finally at long last recovered all of the jobs lost during the recession.

The gross failure is that in the 11 previous recessions since the Great Depression, the economy recovered all jobs lost during the recession after an average of 25 months after the prior jobs peak (when the recession began). So the job effects of prior post Depression recessions have lasted an average of about 2 years. But President Obama’s supposed recovery has taken three times longer than prior post-Depression recoveries on average to achieve that same result.

That is just further confirmation that President Obama has misled America into the worst recovery from a recession since the Great Depression. And, no, Obamabots cannot say the recovery was so bad because the recession was so bad. America’s historical record is the worse the recession, the stronger the recovery, as the economy races ahead during the recovery faster than normal, to catch up to America’s world leading, long term, economic growth trendline.

These extremely poor results are the direct consequence of Obama’s meticulously anti-growth economic policies. Instead of cutting tax rates, as both Kennedy and Reagan did to such astounding, historic success, Obama has raised the rates of every major federal tax, except for corporate income taxes, where the top marginal tax rate is now the highest in the world for any significant economy. Obama only postures as favoring corporate tax reform to lower those rates, which would be enacted with broad, bipartisan support in his absence.

Instead of deregulation to reduce unnecessary, stifling regulatory burdens and barriers, as both Carter and Reagan did to such fully documented success, Obama regulates mercilessly as if regulation is cost free to the economy, as the most interventionist President in American history.

Most destructively, Obama has stifled the still world leading American energy boom, still straining to completely break out, by shutting down exploration and development of oil and gas on federally controlled lands and seas, and constantly threatening the regulatory shutdown of exploding private energy development. Implementation of that has already begun in regard the coal industry, all of which evidences a President who seems to be at war with his own economy.

This punitive energy overregulation only barely beats out the massively destructive overregulation of Obamacare, which has long been causing havoc and chaos in America’s labor markets, and only threatens to get far worse, as Obama implicitly recognizes with his illegal delays in key components of his own legacy legislation. Exactly contrary to the dense fog of fascist style propaganda of the current times, unprecedented in American history, Obamacare health care overregulation has only sharply increased rather than reduced health costs, further stifling the economy.

The Fed’s wild-eyed monetary policies, which Obama has enthusiastically supported like a football coach orchestrates his team’s offensive and defensive game plans, only further discourage the capital investment that is the lifeblood of capitalism by destabilizing the currency, and planting the seeds for the return of double digit inflation. In a later column, I will explain why the Fed cannot engineer a soft landing from the years long flight of monetary policy fantasy with virtually zero interest rates and money printing to cover the Obama/Democrat record shattering deficits that exploded from the Democrat takeover of Congress in 2007.

Moreover, the revival of runaway federal spending, deficits and debt that exploded with the new Democrat Congress in 2007, further accelerated by Obama’s $1 trillion, so-called stimulus spending bill in 2009, is not pro-growth, as Keynesian witch doctors tell us, but anti-growth, as the real world record, and fundamental logic, tell us. Explaining the double counting illogic of Keynesian policies would just be excessively repetitive of prior columns. The only real question is whether there will be any accountability, and consequences, for blind advocates of these costly, fallacious policies, which have failed regularly for going on nearly 100 years now.

But while Obama’s recovery has at long last reached the jobs milestone of at least getting us back to where we were 6 years ago, America’s jobs market and economy are still deeply troubled. Unemployment at 6.7% nearly 5 years after the recovery began is way too high. Unemployment fell to 4.4% under President Bush in 2006 and 2007. The Bureau of Labor Statistics reports the U6 unemployment rate, which includes those marginally attached to the work force who still cannot find work, and those working part-time because they can’t find full time work, was still well into double digits in March, 2014 at 12.7%. Black unemployment was also still well into double digits, at 12.4%, where it has been during Obama’s entire time in office.

Moreover, the employment rate, which means the proportion of adult Americans who have a job, has fallen from 62.2% in 2007 to 58.9% today. That decline means 10 million Americans currently not working.

The labor force participation rate, which measures the portion of those of working age who are working or actively seeking work, stands today at 63.2%, the lowest level since August, 1978. That rate fell only a quarter of a point during the recession, but it has fallen an additional three percentage points since President Obama’s recovery began in the summer of 2009. Just as the unemployment rate falls during a recovery, the employment rate, and labor force participation, is supposed to rise. The Wall Street Journal in an editorial on April 4 asked why the latter has not happened during this supposed recovery.

Obama apologists are quick to point to the start of the retirement of the baby boom generation. But those born during 1946 and 1947, when the baby boom began, did not reach the full Social Security retirement age, currently 66, until 2012 and 2013. Yet, the recovery is officially dated as starting in the summer of 2009, according to the National Bureau of Economic Research. The Journal noted that it is still problematic if the weak economy is causing older workers to retire early.

Moreover, the declining employment rate and labor force participation have not been limited to older workers, but have declined sharply for those in the prime working ages of 25 to 54 as well. A 2012 study by the Federal Reserve Bank of Chicago estimated that only about one-fourth of the decline in labor force participation since the recession was due to retirements.

Part of the reason for the declining measures of work is simply that the recovery has been so weak. Real economic growth in 2013, the fourth year of the recovery, was still less than 2%, and during Obama’s first term it was the slowest of any Presidential term since the Great Depression.

But there is another predominant factor, going back to before Obama became President, though Obama has greatly added to the problem. Taxpayers are paying mostly the bottom 20% of the income ladder a trillion dollars a year basically not to work, through close to 200 federal means tested welfare programs. Those include Medicaid, Food Stamps, 27 low income housing programs, 30 employment and training programs, 34 social services programs, another dozen food and nutrition programs, another 22 low income health programs, and 24 low income child care programs, among others. The famous Seattle/Denver Income Maintenance Experiments (“SIME/DIME”) conducted from 1971 to 1978 confirmed the impact of such substantial, unconditional, welfare subsidies on the incentive not to work.

Even worse, when those in poverty try to go to work, they are effectively subject to extra, higher, marginal tax rates. Since welfare is phased out as income rises, the loss of welfare benefits is economically the same as a tax on the rising earnings. Art Laffer and Steve Moore call this “The Poverty Trap,” explaining:

Needs tests, means tests, and income tests exclude people [from welfare] as their incomes progressively increase, ensuring that funds are not squandered on those who are less in need. While ‘needs’ tests may be rationalized on both moral and budgetary grounds, when combined with payroll and income taxes, the phased reduction of welfare benefits has meant that spendable income actually rises very little as gross wages increase, and for some income thresholds, spendable income (total spending power) actually declines as wages increase.

Laffer examined the total effect of all the needs tests and taxes affecting an inner city family of four on welfare in Los Angeles. He found:

What was clear from this analysis is that marginal tax rates for inner city inhabitants were prohibitively high—in some cases, the poorest people actually faced the highest marginal tax rates of all income groups. Over the entire range from no wages to wages of $1,300 per month, the family in my analysis faced marginal tax rates that ranged from a low of 53 percent (a poor family gained only $47 in spendable income when its gross monthly wages increased from $0 to $100) to a high of 314 percent (a poor family lost $214 in spendable income when its gross monthly wages increased from $1,000 to $1,100 a month.)

A 1996 Urban Institute study by Linda Ginnarelli and Eugene Steuerle on the same issue similarly found that the poor faced effective marginal tax rates of 70% to 101%.

President Obama has only made this problem far worse. He has aggressively sought to sign up more and more Americans for these programs, running up the number dependent on them to close to 100 million. He has increased the number on food stamps by nearly 50%, close to 50 million, an all-time record, prompting Newt Gingrich to call him the “food stamp President.” CBO estimates that Obamacare will ultimately increase the number of Americans dependent on Medicaid to 100 million in less than 10 years.

Obamacare also includes new entitlement welfare to help with the high cost of government mandated health insurance for families earning soon as much as $100,000 a year. That subjects all of these families to poverty trap effective taxes as well, because the health insurance welfare is reduced as income rises. This is why CBO recently estimated that Obamacare would reduce the labor force.

The Journal editorial admonished that, “The Republican Party needs policies that address this erosion of work that go beyond the Federal Reserve’s easy money.” Republicans in fact have a readily available, comprehensive, reform alternative that can abolish the poverty trap entirely, building on bipartisan reforms of the past that they already led the way to enacting.

Former House Speaker Newt Gingrich led Congress to enact reforms of the old, New Deal, Aid to Families with Dependent Children (AFDC) program in 1996, which ultimately received more than 100 Democrat votes, and signature into law by Democrat President Bill Clinton. Under those reforms, the old AFDC rolls were reduced by two-thirds nationwide, even more in states that pushed work most aggressively, because the poor formerly on the program went to work, or married someone working. Because of all this renewed work effort, the total income of these low income families formerly on welfare increased by about 25% over this period, as Ron Haskins of the Brookings Institution reports in his 2006 book evaluating the 1996 welfare reforms, Work Over Welfare.

The resulting decline in poverty “was widespread across demographic groups…caused by increased employment and earnings of female headed families.” Poverty among these female headed households declined by one-third, which meant that nearly 4.2 million single mothers and children climbed out of poverty. Haskins cites a study by the liberal Isabel Sawhill of the Urban Institute and Paul Jargowsky concluding,“So great was the decline in poverty that the number of neighborhoods with concentrated poverty fell precipitously, as did the number of neighborhoods classified as underclass because of the concentration of poverty and the high frequency of problems such as school dropout, female headed families, welfare dependency, and labor force dropout by adult males.”

Yet, in real dollars total federal and state spending on TANF by 2006 was down 31% from AFDC spending in 1995, and down by more than half of what it would have been under prior trends. Consequently, poverty declined sharply, while taxpayers saved on 50% of the cost of the program.

These same block grant reforms can and should be extended to all of the remaining nearly 200 federal means tested welfare programs. The states could experiment with all this new power and control over funding by replacing the entire current, outdated, counterproductive, welfare system with a work safety net for the able bodied, where public assistance is provided only in return for work first. Those who report to their local welfare office before 9 am would be guaranteed a work assignment somewhere paying the minimum wage in cash for a day’s work, 8 hours. A private job assignment would be the top priority. But if that is not available for that day, the applicant would be assigned to some government directed and financed activity, serving the community in some way, city, county or state. The worker would be paid in cash at the end of the day. Those who needed more money would come back to work the next day.

The government would provide free day care for those with small children who desired it, which it has done under TANF since 1996. For those who come back regularly, the welfare office would find them a private job assignment. Indeed, states could contract out their welfare offices to private temp companies, in business to provide immediate job assignments to those who show up needing immediate work.

As a result, instead of taxpayers paying a trillion dollars a year to the bottom 20% not to work, as under the current welfare system, private employers would be paying them much more to work, and contribute to economic growth and prosperity for all. This new system would effectively eliminate the poverty trap and incentives for not working. Assistance would be provided only for working (for the able-bodied), so working and earning more would not reduce benefits. Rather, the incentive is to take whatever private sector job is available, since the able bodied will have to work to support themselves anyway, and in the private sector the worker will gain skills, raises, promotions, and new opportunities over time.

For those who do show up for work assignments, their need is likely to be short term, as the incentive is for them to take available private sector jobs that do open up. People are not going to show up for these day jobs for years, as many have done for free welfare. Moreover, for those who continue to show up, their public support will be minimized in any event, as the state agency and associates find them private job assignments that will provide the bulk of their support in place of the taxpayers. That private employment will grow into or lead to permanent employment growing the worker mostly and likely completely out of public assistance with wage gains due to experience, learned skills, promotions, and the new opportunities that work will lead to over time.

Arguably, by abolishing the Poverty Trap, such a new system would ultimately eliminate poverty in America. As I showed in a previous column, already under current law, the minimum wage, plus the Earned Income Tax Credit, plus the Child Tax Credit adds up to more than the poverty line for every possible family combination. The disabled who could not work would be provided assistance under separate programs designed for them, which would not cost much.

[First published at Forbes.]

Categories: On the Blog

IRS Rewards Tax Dodgers Who Work for IRS

Somewhat Reasonable - April 23, 2014, 7:50 PM

This is the start of a story I just spotted on the Chicago Tribune website. Remember, this is not from The Onion or other spoof news site. This is real.

“More than 2,800 Internal Revenue Service workers who had been disciplined recently received millions of dollars in bonuses and time off as part of an employee recognition program, a new government audit shows.

“The IRS has a program that rewards its employees for a job well done, but a report released Tuesday by the Treasury Inspector General for Tax Administration found that, between October 1, 2010, and December 31, 2012, more than 2,800 recently disciplined IRS workers got more than $2.8 million in monetary awards and more than 27,000 hours in time-off awards.

“The employee infractions included not paying their taxes.

“’While not prohibited, providing awards to employees who have been disciplined for failing to pay federal taxes appears to create a conflict with the IRS’ charge of ensuring the integrity of the system of tax administration,’ J. Russell George, Treasury Inspector General for Tax Administration, said in a statement.”

Read the whole thing here.

This is our government — a government that punishes us if we’re even one day late paying our taxes while giving cash bonuses and other perks to Internal Revenue Service employees who fail to pay their taxes. Is this a great country or what!

Categories: On the Blog

Reflections on My 45th Earth Day

Somewhat Reasonable - April 23, 2014, 5:02 PM

I remember the first Earth Day in 1970. I was a freshman in high school and we had an Earth Day Assembly. There was a play with Steppenwolf’s “The Monster” blaring. They changed the words, “America where are you now, don’t you care about your sons and daughters?” to “America where are you now, don’t you care about your parks and waters?” The young ladies from the drama club and the cheerleaders were dressed up as trees running around on stage. When I saw that, I wanted to become a tree-hugger, but alas, none of the trees were interested in hugging a 5 foot 2 inch, 160 lb. freshman nerd.

Years later this has grown into a borderline religious holiday for some. I thought Earth Day Eve caroling would be a good idea until I was pelted with recycled cans and organic waste. And getting dressed up as a tree was not a good idea since every dog in the neighborhood was howling at my lousy singing and trying to use me as a place to relieve themselves.

Thank you, thank you very much. I’m here ’till the editors get tired of me. Try the Tofu Veal.

Given the myth and reality of what is going on with our planet and the evolution of this movement into some kind of socio-political-economic-religious-intolerant machine, I thought I would infuse some humor into the situation while reminding people that the planet is not in danger of becoming a wasteland by what we hear from these people. Other things, perhaps, but not global warming.

There are far more pressing problems facing mankind today, chief among them the long standing one of man’s inhumanity to man, which seems to be the root cause of many ills. But when I look at some of the things that are being spouted as evidence of environmental disaster, it’s easy to see how this issue is far from the end of existence it’s portrayed as. The most visible high priest of Gaia is perhaps Nobel prize winner Al Gore. Yet the doom and gloom since his Academy Award-winning movie “An Inconvenient Truth” came out has burned up like paper in fire.

The movie was a major accomplishment, though whether you wish to admit it or not, it did for the global warming movement what “Triumph of the Will” did for Germany in the eyes of many in the 1930s. How ironic that we find people on my side of the AGW issue being demonized with terms that bring up memories of arguably the greatest case of man’s inhumanity to man by the very people that put out this movie recently. Yet the inconvenient truth in both cases is the missive was proved false.

But let’s try to keep a joyful warrior spirit. The use of facts is convenient for that.

I will use some of the more choice worries from “An Inconvenient Truth.”

The melting of the ice caps? Global sea ice is above normal.

The Southern Hemisphere is breaking daily records and threatening to reach all-time high anomaly records!

Earth does this back and forth act in all things. When some places are warm, others are cold. Because the oceans have been in their warm cycle and this affects most the northern ice cap, it has been well below normal. It does so by warming the land masses of the Northern Hemisphere which have greater temperature ranges, and by doing so, influences the Arctic, a land locked ocean. But notice how its heyday was at the time the Southern Hemisphere was below normal at the start of the satellite era. The testable theory is that once the Atlantic shifts to its cold cycle in the coming 5-10 years, the Arctic ice cap recovers. It’s then that AGW proponents will try to shift attention to the shrinking southern ice cap (at least it better be shrinking). That is the whole natural cyclical theory for ice caps – when one expands, the other shrinks. So it’s a test. And yes, the Arctic ice cap has decreased overall since 1978, but you don’t need to be a math major to understand that if global sea ice is above normal, it means that there is a greater compensating increase, counter to the missive we have heard for all these years.

Then there is the issue of hurricanes. Again, aren’t we looking at this globally? Since the movie and the dire pronouncements, global tropical activity has sunk to record lows! The chart below by Dr. Ryan Maue through the 2013 season shows the fall of the ACE index – the overall activity in the tropics – since the release of “An Inconvenient Truth.”

This should return toward normal and even go back above in the coming years. Why? The simple answer is because nature swings back and forth in cycles. You see in spite of trying to make this more complex (certainly the details are more complex) the main missive remains the same: The earth by its design has no “perfect” climate but is in constant search for a balance it can never attain – in spite of the people wishing to tell you regulating this or that will.

Then there are tornadoes. For the third year in a row, after the one major year of 2011, we see abnormally low tornado production. It should pick up next week, but as of this writing we are at record lows for the date.

Then there is the 10-year running global temperature since the Pacific started its change to a colder mode. The NCEP CFSR is regarded as perhaps the gold standard measurement of global temperatures. This is against a 30-year mean, or just a bit after the satellite era started, which means there is little anyone can do to adjust temperatures down in the pre-satellite era to make today look warmer. It’s an apples to apples comparison; before 1978 we did not have the kind of reliable satellite data we do now. So since the year of “An Inconvenient Truth,” the inconvenient truth is temperatures have started a jagged descent.

For the record, the National Centers for Environmental Prediction (NCEP), where this data is derived, is not a right wing think tank.

Regarding all those computer models that had so many in a tizzy about the impending doom of the planet, this chart from Dr. Roy Spencer shows plainly that basing policy on computer modeling is a fool’s errand. People that forecast every day understand that no event is true until it actually happens.

We can go on and on here. The fact is this: Given the actual geological record of earth’s temperatures vs CO2, it’s cherry picking to use the intervals of warming in the past century to claim it’s man causing it.

CO2 is in purple, temperature blue.

As far as the Hockey Stick, here is a list of all the scholarly articles that show the earth has been warmer before. By my count there are around 100. How is it we are to trust one without even being able to see the data behind it?

As I sit here writing this reflection of Earth Day, I will end with this. I believe the intent of the original Earth Day was good even if the cheerleaders dressed as trees would not allow me to become a tree hugger back in 1970 (they probably couldn’t get their arms around me anyway). I think that being good stewards of this garden called earth (I don’t believe it’s Gaia, but something that is given to us by God, and as such we should take care of it) is spot on. But to deal with reality, one must face reality, and there is demonstrable evidence that runs counter to the missive this has grown to now. And to show you what a good sport I am, I like the movie “An Inconvenient Truth.” But I like a lot of movies where fantasy is involved.

It’s up there with the Wizard of Oz, a movie in the day where tornadoes were not caused by man as they try to make you believe now. But given my love of the weather, saying I like “An Inconvenient Truth” the way I like the Wizard of Oz (I like Star Wars too!) is high praise indeed.

Hope you had a holly, jolly Earth Day.

[First posted at The Patriot Post.]

Categories: On the Blog

TNCs need to go on the offensive…nicely

Out of the Storm News - April 23, 2014, 2:00 PM

In the past year, so-called “transportation network companies” like Uber and Lyft have gone from fighting for explosive growth to fighting for survival. They won their first fight in San Francisco, but now are waging battles across the globe, from Houston to Berlin. Brussels banned Uber last week; there have been police stings to arrest drivers in Washington; and the Seattle City Council just passed an ordinance capping the number of active drivers at any given time to 150.

The same progression of events plays out time and time again: A TNC opens up shop in a new city. The taxi industry or the city government starts making noise. Then, the TNC fights against whatever is proposed, often by pouring staggering amounts of money into advertising to fight the measure and relying on their massive public support. In Seattle alone, Uber and Lyft put $400,000 into getting 36,000 signatures to suspend the caps and send the decision to a referendum vote.

It appears the industry’s strategy is:

  1. Expand to as many new cities as rapidly as possible.
  2. Build public support in each new city as rapidly as possible.
  3. Insist they aren’t taxis, shouldn’t be regulated as taxis and that city governments can’t fight the future.

Simply put, this strategy isn’t working.

As soon as the first TNC regulation started to gain traction, it encouraged the taxi industry in every other city to start fighting. City councils started looking to previous legislation as precedent. To compound the TNC industry’s relative disadvantage, the taxi industry has a long history of working with city governments, while the TNCs are actively fighting against, disregarding and disrespecting them. This pattern doesn’t exactly win over city councils to support something new.

The one thing TNCs have on their side in these fights is public opinion. But given that several street protests and thousands of phone calls and emails in Seattle had no effect on passage of legislation capping active TNC drivers, public opinion may not be much of a trump card. One could argue that going against such fierce public opinion is a dangerous move for an elected official, but rarely will those elections be timely enough to save TNC service in the area in question.

If the TNCs want to survive, they have to change their strategy. They need to stop taking a reactive and combative approach, and start taking a proactive, collaborative one.

When moving into a new city, they should meet with city council members, explaining who they are, how they work and the safety systems they have in place. They should demonstrate they have appropriate insurance coverage. They should take the initiative to come forward with a proposal that shows how they’ll work with the city to maximize transparency, including a data-driven approach to safety and consumer happiness (something the taxi industry can’t do) and explain how the city will make money from the TNCs.

Car2Go is another car-sharing service that has executed this strategy beautifully. In Seattle, they approached the city council with a detailed proposal explaining how everything was going to work and requesting approval to deploy 330 cars. They got full authorization from the council to launch and, four months later, they were happily granted an increase to 500 cars, making Seattle the biggest Car2Go city in the United States.

It’s worth noting that Car2Go is owned by German car manufacturer Daimler AG, previously DaimlerChrysler. Car2Go’s parent company clearly has experience working with governments in regulated industries, and it shows.

If Lyft, Uber and Sidecar want to survive, they need to take a lesson from Car2Go. They need to:

  • Slow down expansion and focus on strengthening government relations in their new and existing cities.
  • Build a positive, collaborative relationship with the local government and city councils first.
  • Proactively propose regulation themselves, rather than fighting any regulation tooth and nail.

The TNCs are going to have to work with local government one way or another. They can either continue to deny the reality of the situation, or they can take a proactive approach and get ahead of the problems.

This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

EPA’s Tower of Pisa Policies

Somewhat Reasonable - April 23, 2014, 12:32 PM

Built on a foundation of sand, the Leaning Tower of Pisa would have toppled over long ago, if not for ingenious engineering projects that keep it from tilting any further. The same thing is true of ethanol, automobile mileage, power plant pollution and many other environmental policies.

Not only are they built on flimsy foundations of peak oil, sustainability, and dangerous manmade climate change. They are perpetuated by garbage in-garbage out computer models and a system that rewards activists, politicians, bureaucrats, and corporations that support the hypotheses and policies.

At the heart of this system is the increasingly secretive and deceptive U.S. Environmental Protection Administration. Among its perpetrators are two ideologically driven regulators who are responsible for many of today’s excessive environmental regulations. When the corruption is combined with the EPA’s history of regulatory overkill and empire building, it paints a portrait of an agency that’s out of control.

EPA’s culture of misconduct has already raised congressional hackles over the misuse of government credit cards (a recent EPA audit found that 93% of purchases were personal and contrary to agency guidelines); former regional EPA administrator (and now Sierra Club officialAl Amendariz wanting to “crucify” oil companies to make examples of them; and former EPA administrator Lisa Jackson, who masqueraded as “Richard Windsor” to avoid revelation and oversight of her emails with activists.

However, these sorry tales pale in comparison to damaging EPA malfeasance detailed in a new U.S. Senate Environment and Public Works Committee minority staff report about convicted felon and con artist John Beale. This guy was convicted of bilking taxpayers out of $900,000 – by convincing EPA bosses and colleagues that he was a CIA agent, failing to show up for work for months, but continuing to receive his six-figure salary. However, these were minor transgressions compared to what he was not prosecuted for.

Beale has admitted he had no legislative or environmental policy experience prior to being hired. Yet he became the lead official for the nation’s National Ambient Air Quality Standards for Ozone and Particulate Matter. He and Robert Brenner, his friend and immediate supervisor at EPA, concocted a nefarious plan that used manipulated scientific studies, faulty or even bogus regulatory cost assessments, “heavy-handed management of interagency review processes,” and evenillegal experiments on human test subjects to impose increasingly tougher, job-killing regulations on U.S. industries.

One of Beale & Brenner’s first actions was to work with the American Lung Association in 1997 in a sue-and-settle arrangement, which led to ozone and particulate matter standards. This underhanded practice enables EPA officials to meet with environmentalist groups behind closed doors and agree to new proposed regulations. Later, the group files a “friendly suit,” and a court orders the agency to adopt the pre-arranged rules. Meanwhile, EPA awarded the ALA $20 million between 2001 and 2010. (Had a business had such an arrangement, it would likely have been prosecuted as an illegal kickback.)

The EPW Committee’s report notes that Beale & Brenner fine-tuned the sue-and-settle idea – and then intentionally overstated the benefits and understated the costs of new regulations. As a result, Beale & Brenner successfully rammed the PM2.5 and ozone standards through the EPA’s approval process and set the stage for myriad additional regulations that likewise did not receive appropriate scientific scrutiny.

In the case of PM2.5 soot particles, the ALA worked with Beale & Brenner to claim tougher regulations would eliminate up to 35,700 premature deaths and 1.4 million cases of aggravated asthma annually. Scientists questioned the figures and said EPA’s flawed research merely “assumed” a cause-and-effect relationship between soot and health effects, but failed to prove one. Indeed, EPA’s illegal experiments exposed people to “lethal” doses of soot, but harmed only an elderly woman with heart problems.

Beale & Brenner pressed on. Not only were the initial PM2.5 and ozone regulations put into effect, but the questionable and non-peer-reviewed data has been used repeatedly as the basis for additional regulations. According to the Senate report, “up to 80 percent of the benefits associated with all federal regulations are attributed to supposed PM 2.5 reductions… [and] the EPA has continued to rely upon the secret science … to justify the vast majority of all Clean Air Act regulations issued to this day.”

As a House subcommittee has pointed out, the long and growing list of EPA regulations involves costly changes to automobiles, trucks, ships, utilities, cement plants, refineries, and gasoline, to name a few. The rules also raise consumer prices, eliminate jobs, and thus actually reduce human living standards, health, and welfare – all of which EPA steadfastly ignores, in violation of federal laws and regulations.

Just one EPA industrial boiler emissions regulation will put as many as 16,000 jobs at risk for every $1 billion spent in upgrade or compliance costs, IHS Global Insight calculates. The Administration’s regulatory War on Coal, amply illustrated by President Obama’s call to bankrupt the coal industry in the name of alleged manmade climate change, could eliminate up to 16,600 direct and indirect jobs by 2015.

Despite the economic damage, EPA applauded Beale’s regulatory success, and he quickly became one of the federal government’s most powerful and highest paid employees. Even Administrator Gina McCarthy had a hand in advancing his fraudulent and pernicious career, when she appointed him to manage the office of Air and Radiation’s climate change and other international work in 2010.

Then in June 2011, Beale stopped going to work. Despite having filed no retirement papers, under an arrangement with McCarthy, he was allowed to continue receiving his salary. When she finally met with him 15 months later, he said he had no plans to retire.  Two months later, Beale’s long-term unexcused absence was finally referred to the Office of Inspector General for investigation.

After McCarthy became the EPA Administrator in July 2013, Beale pleaded guilty to fraud and was sentenced to 32 months in federal prison. His partner-in-crime Brenner had retired in 2011 — before the agency could take action against him for accepting an illegal gift from a golfing buddy serving on the Clean Air Act Advisory Committee. But again, these crimes pale in comparison to the tens of billions of dollars that their junk science, sue-and-settle lawsuits and other actions have cost US businesses and families.

Now Republican members of the Senate Environment and Public Works Committee are trying to get to the bottom of the Brenner-Beale-EPA “secret science” that has been used to justify so many regulations. On March 17, Sen. David Vitter (R- LA) sent a letter to Dr. Francesca Grifo, EPA’s Scientific Integrity Official, asking for the original scientific data and voicing concerns about EPA’s apparent violations of international guidelines for ensuring best practices and preventing scientific misconduct. EPA thus far is claiming the research and data are proprietary or the agency cannot find them. Teachers demand that students show their work; we should demand the same from EPA – especially since we pay for it.

The agency’s onslaught of carbon dioxide and other climate change regulations – including proposed rules on cow flatulence (!)  – is similarly founded on fraudulent EPA and IPCC reports, false and irrelevant claims of scientific “consensus,” and computer models that bear no relationship to temperature, hurricane, drought and other planetary realities. Even worse, it is on this flimsy, fraudulent, lawless foundation that our government’s costly, intrusive environmental and renewable energy policies are based – threatening our economy, employment, living standards and families.

Meanwhile, Ms. McCarthy is conducting business as usual. She recently presented her proposed EPA’s FY 2015 budget to Congress. She says the increased funding should be viewed as an “investment in maintaining a high performing environmental protection organization.” You cannot make this up.

Governors, attorneys general, state legislatures, and private citizen groups need to initiate legal actions and demand full discovery of all relevant EPA documents. Congress too needs to take action. Along with one on the IRS targeting scandal, it needs to appoint a select committee or independent counsel to determine which data, computer models and studies EPA used – and which ones it ignored – in reaching its decisions.

Otherwise our nation’s downward economic slide, and distrust of government, will accelerate.


[Originally published at CFACT]

Categories: On the Blog

The Government Giving the Left What They Want: More Terrible Policy

Somewhat Reasonable - April 23, 2014, 12:17 PM

The federal government is yet again acquiescing to the ridiculous anti-free market demands of the Left. We the People will yet again be forced to pay dearly for the resulting damage.

We have looming before us a wireless spectrum crunch. Spectrum being the finite airwaves we use for all things wireless – from cell phones to car key fobs.

More people are using more wireless data all the time. Video is an especially hay-yuge bandwidth devourer – and we’re watching ever more wireless video.  So things spectrum are getting uber-tight.

In an alleged attempt to address this problem, the Feds created the bass-ackwards Spectrum Incentive Auction Legislation. The purported objective of which is to get swaths of over-the-air broadcasters’ spectrum to cell phone companies.

But the Feds absurdly mandated that they be the middlemen. Broadcasters can’t auction spectrum directly to the cellular companies – they must instead sell to the Feds, who then auction it off to the cell cos.

A straight line between sellers and buyers would make too much free market sense – and prevent the Feds from messing with the process.

Getting Broadcasters to voluntarily give up their businesses’ lifeblood is tenable at best – under optimum conditions.  If the Feds decide to mess with the process – by, say, limiting auction bidders – the process will rapidly implode.

We the People need maximum bidder participation – because we need the cellular networks to keep up with our ever-increasing use.  Broadcasters need maximum bidder participation – because they understandably want to get maximum spectrum coin.

TV Broadcasters Remain Wary of Incentive Auction

(National Association of Broadcasters’ Executive Vice President for Strategic Planning Rick) Kaplan explained that TV broadcasters are worried that the (Federal Communications Commission) FCC will change or modify its auction rules during the 600 MHz auction or after it is completed.

He said such changes could imperil the revenues broadcasters are hoping to gain from the spectrum the FCC is asking them to give up in the auction….

(M)any worry that broadcasters might not give up their spectrum based on…uncertainty over how much money they will ultimately receive….

It ain’t just the Broadcasters – and we consistently free market-types – who are worried.

Dems Write Wheeler on Incentive Auctions

Almost 80 (Democrat) lawmakers signed onto a letter sent to (FCC) Chairman Tom Wheeler on Friday…directing regulators to do what they can to boost broadcaster participation and incentivize wireless industry bidding.

“In fact, inviting as many bidders as possible to compete in an open and fair auction on equal terms will allow for the full market price for spectrum to be realized and, in turn, lead to higher compensation to incent greater broadcaster participation resulting in more spectrum for the auction,” the letter reads.

The only people that want auction-and-market-damaging government-imposed bid limits?  The Media Marxist Left.

While no qualified entity should be barred from participating in the upcoming auction, clear, transparent, and fair limitations on how much low-frequency spectrum any one carrier can acquire do not bar participation.

So is the FCC listening to the full cadre of:

1.     Broadcasters they manifestly need to participate,

2.     We free marketeers and

3.     Even oodles of Democrats?

Or are they listening to the oh-so-lonely Media Marxist Left?  I’ll bet you’ve already guessed.

The (FCC) is expected to impose limits on an upcoming airwave auction….

The Media Marxists promised us that limiting bids wouldn’t limit bidders.  As usual, they are oh-so-wrong.

AT&T…warned that if the FCC adopts rules that restrict how many licenses AT&T can bid on, it will not participate at all.

Bad for the auction – means bad for the spectrum crunch.

Not only would it likely negatively affect how much revenue the FCC could raise from the auction, but it would also mean…less interoperability among LTE devices for wireless consumers.

Which means bad for the economy.  Which is why the Media Marxist Left wants it.

Why is the federal government about to give it to them?

[Originally published at Human Events]

Categories: On the Blog

Obama’s War on U.S. Energy

Somewhat Reasonable - April 23, 2014, 12:04 PM

A nation without adequate energy production is a nation in decline and that has been the President’s agenda since the day he took office in 2009. He even announced his war on coal during the 2008 campaign even though, at the time, it was providing fifty percent of the electricity being utilized.

It’s useful to know that the U.S. has huge coal reserves, enough to provide energy for hundreds of years and reduce our debt through its export to nations such as Japan. It increased coal-fired power generation by ten percent in 2013 while Germany’s coal use reached the highest level since 1990. Both China and India are increasing the use of coal. So why is coal unwelcome in the U.S.? Because Obama says so.

On April 15, the White House held a “Solar Summit” to continue promoting subsidies for solar panels and the Obama Energy Department has announced another $15 million in “solar market pathways” to fund local government’s use of solar energy. Its “Capital Solar Challenge” is directing federal agencies, military bases, and other federally subsidized buildings to use solar power.

According to the Institute for Energy Research, “solar energy provides two-tenths of one percent of the total energy consumed in the United States. While the amount of solar electricity capacity in the U.S. has increased in recent years…it still only accounts for 0.1% of net electricity generated…the least among the renewable sources of hydroelectric, biomass, wind and solar.”

So, in addition to the millions lost in earlier loans to solar companies like Solyndra that failed not long after pocketing our tax dollars, Obama is using the power of the federal government to waste more money on this unpredictable—the Sun only shines in the daytime and clouds can get in the way—source of energy whose “solar farms” take up many acres just to provide a faction of what a coal-fired or natural gas powered plant does.

This isn’t some loony environmental theory at work although the Greens oppose all manner of energy provision and use whether it is coal, oil or natural gas. They always find an excuse to mine or extract it. This is a direct attack on the provision of energy, fueled by any source, that America needs to function and meeting the needs of its population, manufacturing, and all other uses.

The most recent example of this is the further extension of the delay on the construction of the Keystone XL pipeline from Canada to refineries on the Gulf Coast. That too is part of Obama’s war on energy for the nation, but it may also have something to do with the fact that the Burlington Santa Fe Railroad owns all of the rail lines in the U.S. connecting to western Canada. They haul 80% or more of the crude oil from Canada to the Midwest and Texas, earning a tidy sum in the process. It is owned by Warren Buffett’s Berkshire Hathaway, a major contributor to Democrat causes and candidates. The Keystone XL pipeline could divert more than $2 billion a year and if its delay is not crony capitalism, nothing is.

This is what the Sierra Club is telling its members and supporters as of Monday, April 21: “Keystone XL means cancer. It means wolf blood spilled. And it’s nothing short of a climate disaster.” It is a lie from start to finish.

Keystone has become a political issue and the announcement by the Obama State Department that is giving agencies “additional time” to approve its construction due to ongoing litigation before the Nebraska Supreme Court that could affect its route brought forth protests from red-state Democrats in Congress who even threatened to find ways to go around the President to get the project approved. Eleven Democratic senators have written to the President to urge him to make a final decision by the end of May. Some of them will be up for reelection in the November midterm elections.

Even Congress, though, seems incapable of over-ruling or overcoming Obama’s war on the provision of energy sources. In early April, the Bureau of Land Management (BLM) released new data showing that federal onshore oil and natural gas leases and drilling permits are at the lowest levels in more than a decade. Leases to companies exploring the potential of oil and natural gas reserves were down in 2013 from 1.8 million acres the year before to 1.2 million, the smallest area since records began to be maintained in 1988!

We have a President who gives daily evidence of his contempt both for those who voted for him and those who did not. His anti-energy agenda impacts on the creation of jobs, causes manufacturing to delay expansion or to go off-shore, reduces the revenue the government needs to reduce its debts and deficits, and drives up the cost of energy for everyone.

And he is doing this in one of the most energy-rich nations on the planet.


[Originally published at Warning Signs]

Categories: On the Blog
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