Fighting to Preserve Liberty in America
I received an e-mail from my congressman introducing his new “Big Oil Welfare Repeal Act”. It was one of those proposals that was either a political ploy or demonstrative of the potential damage that can be done by politicians who spent their lives closeted from the real world in either the ivory towers of academia or as life long members of the ruling class. I wrote a reply: Click to read more
There was the Empire State Building: the world’s tallest building at 102 stories taking just over 13 months to build, opening on May 1, 1931.
There was the Hoover Dam: 726 feet high, holding 6.6 million tons of concrete, holding back the mighty Colorado River, taking less than two years to build. It was started in 1931, completed in 1933 and turned over to the Federal Government in 1936, two years ahead of schedule.
There was the Golden Gate Bridge, a four year project completed in 1937, the longest span suspension bridge in the world at the time.
As they say, when it rains it pours. The Obama administration famously boasted about having its boot on the neck of BP and extorting $20 billion from the company without the benefit of due process, but now a different assessment emerges.
According to a report in the Wall Street Journal, the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, faulted the administration on several fronts. “A White House spokesman didn’t immediately respond to a request for comment.”
It is quite clear that this administration stumbled and bumbled along at the start of the disaster, once again fully displaying its inexperience in executive matters. Here are some of the salient points from the commission.
Two disparate news items this weekend got me thinking. The main stream media is all abuzz with Chelsea Clinton’s wedding, even to the point of throwing the term royalty around. It is estimated that the wedding will cost $3-$5 million, although Sally Quinn of the Washington post puts the bill at closer to $1 million. The comparison was then made to the cost of Jenna Bush’s wedding, a mere $100,000. This became fodder for The Joy Behar Show. Comedian Judy Gold leaped at the opportunity to take a shot at Bush, “Yeah, well, if he could have found a way for us to pay for Jenna`s wedding, he would have done that, okay, he likes to spend other people`s money.” An interesting perspective on other people’s money that I will return to later.
The other news items was an article in The New York Times, by Bob Herbert titled “A Sin and a Shame,” lamenting that corporations are hording cash and not hiring people and it is all so unfair, in fact, sinful. This is while this government is spending huge amounts of money that someone will have to pay back, massive new programs like ObamaCare that we are still uncovering what that will cost, and enormous tax increases about to kick in on January 1 when the Bush tax cuts expire. Perhaps they are hording cash for a reason? Perhaps they are not hiring because they don’t know what any new employees will cost under these new programs, or for that matter what their existing employees are going to cost? Perhaps it is because the latest economic reports show GDP shrinking and if that continues why would you start hiring if your business is going to slow down with the rest of the economy?
We have two very divergent views of the economy today. One view is held by those who actually work in the private economy and the other view is held by those in the ivory towers of government, which brings me back to the weddings. I really don’t care what the Clintons or the Bushes spend on their daughter’s weddings. It’s their money. But perhaps it is instructive to look at where that money came from.
George Herbert Walker Bush, Jenna’s grandfather, was born into a successful family. His father was a banker and a Senator. But after getting out of the Army after WWII he went to Yale and upon graduation, moved away from that family and settled in Texas to start an oil company. He went into private business and put his own money at risk. What that means, to those who never took that chance, is you may be successful and make a lot of money, you may be successful and make a little money, you may fail and lose your money. Chances are greater that you will lose than win, but that is the American Dream. If you lose, you have to start over by trying to earn and save up what you lost to try again, if you have the guts and drive. Bush succeeded in forming Bush-Overby and later with Zapata Petroleum. He became President of Zapata for ten years and then Chairman for another two, before going into politics. By then he was a millionaire in his own right.
George Walker Bush, Jenna’s dad, attended public school in Midland, Texas, where his parents had settled. He went to private school after the family moved to Houston. He later attended Yale University and became the only president to get an MBA which he did, from Harvard. Like his father, he went into the oil business starting several independent oil exploration companies. He later bought a stake in the Texas Rangers baseball team for $800,000 and was instrumental in building the team’s attendance. He later sold his stake for $15 million. Then he went into politics.
The two Bushes know risk, know about taking chances and became millionaires on their own before going into politics. They also learned lessons about spending money and doing so prudently.
Bill Clinton went into politics almost immediately after getting his law degree. He was Attorney General and then Governor of Arkansas. As governor he had a governor’s mansion. He ran for president and upon winning traded in his governor’s mansion for the Executive Mansion, aka the White House. He had been on the government payroll and living in government provided housing almost his entire working life. The sweat of the people in who paid their taxes paid him. After leaving office, Mr. Clinton was able to write books about his experience and make speeches commanding six figures a pop. His wife did pretty much the same. They lived off the people and ended up very rich. They didn’t create a product or service, they didn’t create jobs, and they didn’t meet a payroll.
I can hear the screams from the left right now, “What do you mean he didn’t create a job or meet a payroll?” Try this test. If Bill Clinton’s opponent was elected rather than Bill Clinton, would there still be a government payroll and government jobs? If yes, Bill Clinton didn’t create them. If either of the Bushes didn’t create their companies would there be jobs at those companies or payrolls? No.
What about some other famous politicians who tell us what to do? Let’s look at Al Gore. Here is another individual that spent the bulk of his career in government. He was a member of Congress, a United States Senator, Vice President and presidential candidate. Today he is very rich. It is said he may become the first “green billionaire”. If he went into his current endeavors before a life in government, would the story be the same? Or is it because of his name, reputation, and connections that he made at the public trough, that he is wallowing in riches, and telling the rest of us to reduce our carbon footprint while his mansions consume ten times the energy of his neighbors?
Charlie Rangel spent most of his life in government. He rose through the ranks and now has a waterfront condominium in the Dominican Republic, writes the tax laws but does not observe them, and is a wealthy man. Conservatives don’t believe in rent control or rent stabilized apartments, but Charlie does. After all, how can poor and middle income people afford to live in places like Manhattan if greedy landlords have their way. So Charlie Rangel who makes $174,000 per year, plus his chairmanship pay, has not one, not two, not three, but four rent controlled apartments. Is he poor or middle class? No, he is the political class. He took three adjoining rent controlled apartments and had them joined together, while the fourth apartment served, illegally, as his campaign headquarters. What about the poor and blue collar workers who could live in Manhattan if three of your four rent controlled apartments weren’t being horded by you? Let them eat cake.
John Kerry is in the news for trying to avoid $500,000 in taxes on his new yacht. Here is another individual who spent his entire working life in government. He can tell the rest of us to pay more taxes while he garners favors spending our money. He is the richest man in the Senate but with prenuptial agreements with his wife he only lists personal assets of between $400,000 and $1.8 million and joint assets with his wife of $300,000 – $600,000. So how does he buy a $7 million yacht? I am not suggesting anything nefarious, it’s obvious his wife paid for it, but do you think he is in touch with someone trying to make a payroll in the private sector? You pay taxes; John Kerry has advisors to figure out how to avoid them.
So those evil corporations started by those evil men like George Herbert Walker Bush and George Walker Bush, know the value of a dollar. They know we are not out of the woods yet and so to protect the jobs that their companies still have they are not hiring but are building their rainy day funds. Perhaps Bob Herbert should ask why his employer is shedding jobs left and right. Perhaps this is his safe way of doing so, but on the other hand the New York Times is hardly hording cash. Its circulation is crashing because people like Bob Herbert are so out of touch with the rest of America; no one wants to read his rants any longer.
So perhaps Bill Clinton spends millions on Chelsea’s wedding because he didn’t learn the value of a dollar. He lived of the government for many years and then just held out a basket and it was miraculously filled with more money than he can count. George Bush spent $100,000 on a wedding because he knows how hard it is to earn a dollar. What we need is less of the political class telling us what to do, and then handing us the bill and more entrepreneurial Americans who risk their own money, watch it like hawks, create jobs and generate wealth that they then reinvest in America.
Best wishes to Chelsea and Marc.
I received an e-mail from my Congressman telling me how he was on top of the situation in the Gulf:
“I am a member of the Committee on Transportation and Infrastructure, which is at the forefront of an aggressive (sic) Congressional response to BP’s oil spill. Last week, I voted in Committee to approve a comprehensive legislative response to environmental and economic liability issues raised by the spill.”
As I had written about previously (The Regulators are Dead, Long Live the Regulators), this was just one more case of government failing us but then rushing out more legislation and control so it won’t happen again. If government was doing its job, it shouldn’t have happened in the first place. So I wrote back to the Congressman.
Dear Congressman Bishop,
I read with interest your e-mail to me about the Committee on Transportation and Infrastructure, which you say is at the forefront of an aggressive Congressional response to BP’s oil spill. Excuse my skepticism but this sounds like one more “we’re really gonna fix it this time,” response to the failure of government to do what they are already empowered to do.
You say the Oil Spill Accountability and Environmental Protection Act of 2010 “will ensure that responsible parties will be responsible for 100% of the oil pollution cleanup costs.” If I am not mistaken it was the Congress that passed a law limiting the damages from an oil spill to $75 million, which created a moral hazard that perhaps encouraged BP to cut corners. But wasn’t it BP who voluntarily waived the $75 million limit and has promised from the start that they would pay the full costs, thereby helping Congress remove the egg from their collective faces for including the limit in the first place? Don’t get me wrong, BP has a lot to answer for but at the same time BP applied to the government regulators for several waivers of safety tests and requirements that the government granted. If government had been doing their job, perhaps this would never have happened in the first place.
Aside from closing the barn door after the horse has escaped, I see no mention in your e-mail about holding Congressional hearings to ask the Obama Administration why they have not yet suspended the Jones Act and accepted the offer of help from twelve countries in the cleanup effort. When asked, Thad Allen and Carol Browner offered the weak excuse that no one asked them for a waiver. Why did the administration stand in the way of Louisiana building sand berms to stop the oil from reaching the coast because of environmental reasons? From an environmental disaster standpoint, doesn’t the oil gushing in the Gulf trump other concerns? We seem to have multiple agencies operating in the Gulf and each one is getting in the way of each other and no one in the administration is taking the lead to clear the red tape. Why is that Congressman?
Instead of talking about preventing avoidable disasters in the future, why don’t you find out why this avoidable disaster was not prevented by the regulations we have on the books and by the agencies in charge of doing so? For once, perhaps you can wait until those facts are known before you rush out to craft more legislation to fix a problem like you did with the financial services industries when it will be months before the Angelides Financial Crisis Inquiry Commission has finished its investigation.
Government that works is more important than signing ceremonies for ill considered legislation that is rushed and voted upon but unread by our representatives.
Sincerely yours,
William R. O’Connell
I am sure there will be a signing ceremony and tough talk about how we’re really putting an end to this wild unfettered market, but if you trace it back this disaster had government leading the way. It forced the oil companies to drill in deeper water; it created a moral hazard by capping their liability for any spills to $75 million (which BP waived and accepted responsibility for the full costs); the regulatory agency in charge both collects royalty payments from the oil companies and assesses penalties for failure to comply with regulations; and that same agency granted BP several waivers to take shortcuts before the well failed. But don’t worry Congress is really going to get tough now.
An article in today’s New York Times is just one more, “Don’t let a crisis go to waste,” move from this administration. The article, titled “As Oil Industry Fights a Tax, It Reaps Billions From Subsidies,” uses the same tired talking points to justify another tax increase that will ultimately be passed along to consumers.
The article talks about how the oil companies take advantage of tax credits and breaks and then it also talks about how many oil based companies re-incorporate in countries like Panama, the Marshall Islands, the Cayman Islands, and Switzerland because it will lower their taxes. When with the Statists get it? If you raise taxes both corporations and people will change their behavior to lower their taxes. Impose a millionaire’s tax in Maryland and Maryland discovers they have one-third fewer millionaires a year later and hundreds of thousands of dollars in less revenue. Impose among the highest tax rates in the developed world on businesses and businesses will move to where the taxes are lower. Create tax breaks and then somehow the Progressives are surprised that companies took advantage of them.
The initial thrust of the article was that the tax on oil companies was necessary to pay for the cleanup of the oil spill in the Gulf. Pardon my confusion, but didn’t the government just get BP to pony up $20 billion into an escrow fund for this purpose? Hasn’t BP said from day one that they will pay the cost for the clean up? So why are the Progressives in Congress rushing to put a new tax in place other than to take advantage of a crisis to reach into your wallet?
Another unintended consequence of our onerous tax policy is that when companies incorporate in other countries, those countries often have lower engineering and environmental standards.
I am no fan of corporate welfare so why don’t we take the IRS code and run it through a shredder? Get rid of the tax breaks across the board. Lower the tax rate to a fixed number that is on par with other developed countries. According to the Heritage Foundation, the freest economy in the world is Hong Kong, which oddly enough is located in Communist China. The Chicoms were smart enough to leave well enough alone when Hong Kong reverted to their control from Britain in 1997. Their individual tax rate is progressive ranging from 2% to 17% or an option for a 15% flat rate depending on which liability is lower. The top corporate tax rate is 16.5%. Their five-year compound annual GDP growth rate is 5.7%; unemployment is 3.5%; and their inflation is 4.3%. By comparison, our top corporate tax rate is 35%, more than double that of Hong Kong; our five year compound annual GDP growth rate is 2.2%; unemployment is 9.4% (at the time of this study); and inflation is 3.8%.
If we could implement real tax reform it would not only simplify our lives, save several hundred billion dollars in compliance costs, reduce uncertainty for business, create jobs, and grow the economy. With a larger pie, overall tax revenues will also increase.
In that Heritage study the United States has the eighth freest economy in the world, down one place from the year before; not the direction we should be going. Imagine if we set a goal to become the freest economy in the world. Americans like a challenge so let’s set our sights on becoming number one. The first three to concentrate on passing are those directly in front of us: Canada, Switzerland and Ireland. On this Fourth of July, let’s plant our flag and get to work.
As President Obama used his first Oval Office address to push for another massive government takeover of our economy in the energy sector, it is time to debunk the myth regarding regulation versus free markets. The Statists like to claim that the financial crisis, the lack of health care, and the disaster in the Gulf are all proof that free markets are evil and we need the benevolent care of our federal government to keep us safe and warm.
Regulation
Let’s focus on the current crisis, the oil spill in the Gulf of Mexico. Here is the government’s role in this mess:
Free Markets
Let’s look at what would happen in a truly free market:
The end result would be more cautious companies because they could be wiped out if they cut corners. Insurance companies would have a second set of eyes making sure that things were done properly, because they make money when nothing goes wrong and are indifferent to whether any oil is recovered or not as long as the premiums are paid. The government would be out of the business of micromanaging the industry; providing incentives and penalties under the same agency; having key personal asking “mother, may I” before taking any steps, and we wouldn’t need a dozen agencies with overlapping responsibility trying to take control.
Free markets have incentives that do work. What is often complained about is the myth of a free market where the government has placed perverse incentives on companies and then act surprised when said companies follow the incentives. Their response is always more regulation with more perverse incentives and the cycle repeats. More government is not the answer, it is the problem.
Not surprisingly, we hear the administration telling us how they have been in charge since day one regarding the BP oil gusher. But as I have often said before, if there is a major problem in America look for government to be right in the thick of it and this is no exception.
Statists like to blame the free market for such problems and that more government is the answer. You will also hear them mistakenly say that conservatives don’t want any government involvement in the marketplace. Conservatives believe in government, albeit limited government, but we also expect that the government that is in place do its job. There was plenty of regulation in the BP case, perhaps too much government in that there was no one clear responsible agency but an overlapping mess. When it comes to regulation I like to use the sports analogy of a baseball umpire. Congress writes the rulebook and the executive branch is the umpire that makes sure the rules are followed. If the umpire is looking at an attractive girl in the stands instead of the play on the field, he is apt to blow the call. Blown calls seemed to be a way of life in the BP case.
Deepwater exploration progressed faster than the regulations could keep up with the technology, and government was providing incentives to accelerate that exploration. So there we have our first example of the government acting in a push-me, pull-you fashion, that is, incentives to explore but lacking regulations to make sure it is done safely and orderly. Rather than looking at deep water drilling where the physics are different as a different animal needing a comprehensive review of the regulations, the regulations were piecemeal approvals of shallow water regulations.
When BP first looked at drilling in this area they requested from the federal regulators an exemption from a rigorous environmental review. That exemption was granted. They also used riskier equipment that deviated from their own company safety policies. Regulators also approved testing the blowout preventer at a pressure that was lower than federally required. When BP wanted to delay mandatory testing of the blowout preventer when they lost “well control” in the weeks before the rig exploded, again the regulators granted the delay.
One federal agency, the Minerals Management Service, is in the dual role of both promoting drilling and regulating it. They both collect royalty payments and issue fines for violations. Do you think there may be a conflict here? Is this the most effective form of government? Here is a core beef of mine and of other conservatives. The free market should provide the incentives for off shore drilling. Either it is worth doing from a business standpoint or it is not. The government’s role should be in the regulation. When government wades into the middle trying to work both sides, it is doomed to fail.
There are multiple agencies that all have responsibility for regulation in this area in addition to the Minerals Management Service including, the Environmental Protection Agency, the Coast Guard, and the National Oceanographic and Atmospheric Administration. Where there are gaps in regulation, whose responsibility is it to plug the gap? When there is overlap, whose regulations controls?
The Minerals Management Service approved BP’s drilling plan that projected a “worst case” blowout as producing 250,000 barrels per day of escaping oil. However, the agency did not require BP to develop a contingency plan on how they would deal with such an occurrence. The agency also did not require companies to have a backup systems to trigger in the event a blowout preventer failed.
There were early indications of problems with the well but federal regulators approved proceeding with the drilling rather than order it be halted until the issues were addressed.
So once this disaster spun out of control how did our government respond? Based on laws written after the Exxon Valdez spill the government and BP were supposed to cooperate. How did the administration show their cooperation? They said they were going to keep their “boot on the neck of BP.” Do you feel inspired to cooperate with someone who tells the world they will keep their boot on your neck, or do you start looking for ways to protect yourself? Instead of concentrating on giving BP whatever assistance it needs to cap the well and focusing on containing the spread of oil, the administration sends in lawyers to start a criminal investigation. Can’t that wait until the well is capped? Why divert attention from the problem and have BP start losing focus on the well and more on assembling a legal team?
When governor Bobby Jindal of Louisiana wanted to build a sand barrier to stop the oil from reaching the wetlands in his state, he was told to wait while our federal government dithered for three weeks haggling among the White House, Coast Guard, Army Corps of Engineers, Fish and Wildlife Service, National Oceanic and Atmospheric Administration, and Environmental Protection Agency over the best approach. If this administration, as they have claimed, has been in charge since day one and all of these agencies fall under the administration, why couldn’t this be hashed out in a day or two? They finally approved one barrier rather than the 23 that were requested but eventually allowed more. For an in depth story see New York Times
For the last year and a half we have been told we don’t have enough government running our lives and telling us what to do. Yet here is a classic case of government regulator piled on top of regulator, and regulators trying to promote and control businesses at the same time. We have regulators granting waiver after waiver of regulations that ultimately led to disaster and our administration instead of stepping up and taking responsibility is trying to look like they are in charge while at the same time blaming everyone else, yes even Bush, for what happened. The head of the Materials Management Service resigned and President Obama says he learned about it afterwards. Interior Secretary Salazar said she resigned on her own volition and that she wasn’t fired. Why not? For all the exemptions and waivers that were granted by the government that could have prevented the worst environmental disaster in history, this administration doesn’t think anyone other than BP should be responsible.
So we are supposed to let this administration grow government and control more of our lives when they can’t take responsibility for what is already under their control. But don’t look for a serious investigation of government’s responsibility unless a large number of incumbents are flushed out of Congress and replaced by new members who actually represent the people.
The Incumbent Protection Act, aka McCain-Feingold, took a big hit yesterday from the Supreme Court. It is particularly timely with so many incumbents nervously eying the exits. The McCain-Feingold bill prohibited corporations and unions from “electioneering communications” within in 30 days of a primary, or 60 days of a general election. Those time limits probably match pretty nicely with when most people start paying close attention to elections. So if this kind of communication is cut off, who is left with the power of name recognition? That’s right, the incumbent and that is probably why 90% of incumbents are re-elected.
Outrage on the Left
President Obama immediately came out swinging saying it was a victory for “big oil, Wall Street banks, health insurance companies, and other special interests.” He somehow overlooked the SEIU union whose president topped the list of visitors to the White House. Unions will have unfettered communications as well. Chuck Schumer promises hearings and the Naderite Public Citizen group is proposing a constitutional amendment banning free speech for “for-profit” corporations. I’ll give you a moment to ponder that; a constitutional amendment to eviscerate the First Amendment.
The Momentum is Building
On April 15 it will be the first anniversary of the Tea Parties that were held across the country. Let’s raise a cup of tea, that the Ship of Liberty that was foundering on the rocks may at last be turning it’s guns on the enemy and turning the tide of battle. Virginia, New Jersey, a close loss in NY23, Massachusetts, the First Amendment, the momentum is building. But let’s not forget the words of Churchill:
Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning. — Winston Churchill
Don’t let up until we have our country back.
There was a commercial not too long ago where a young man looked out his window to the village green where a bundle of money had just fallen. He calls his wife/girlfriend over to show her. She suggests running down and getting it, but he says, no, let’s wait. Next you see a frizzy headed guy down on the green who screams, “MONEY!!!!” In seconds, people came out of the woodwork and scoffed up all the money while the young couple looked on.
The image of that commercial popped into my head as I considered the job summit being led by President Obama. To me, the young couple represented the government pondering how to direct the economy to achieve this specific goal or that. The mob on the green was the free market. While the government dithers over what kind of legislation to write, which special interest groups to pay off to pass it, how to develop incentives to get private industry to do this or that, if they would just cut taxes and get out of the way, the free market would get to work creating jobs where they are needed, not where some bureaucrat thinks they should go.
Uncertainty
The biggest cloud overhanging this economy is uncertainty. The Obama administration is slamming through enormous changes: a $787 billion Porkulus package, cap and trade, health care. Businesses look at this combined with the accumulation of massive government debt, tax increases rather than cuts (yes letting the Bush tax cuts expire is a tax increase, not just the expiration of tax cuts as Speaker Pelosi tries to spin it) and they don’t know what hiring that extra employee is going to cost, let alone what it will cost to keep the employees they already have. So they don’t hire until the dust settles and they can calculate the impact.
“Tax incentives for job creation are “worthy of further consideration,” he said, while adding that the administration is also set on making a big push in the area of green jobs.” – President Obama at Jobs Summit
“Worthy of further consideration”? Since conservatives have been calling for tax cuts for a year now, this kind of statement in Obama-ese translates thusly, “I have to make a nod to the right, to acknowledge that I heard them, but it ain’t happening.” Couple that with the “big push in the area of green jobs.” We are in the midst of the scientific scandal that the “settled science” of man-made global warming could be the greatest hoax since Bernie Madoff, and Obama wants a big push in the area of green jobs. What if that area collapses because the urgency that Al Gore has been screaming about is no longer urgent? It’s government planning on the order of Soviet five-year plans or Mao’s Great Leap Forward programs. It harkens back to Jimmy Carter’s giant Synfuels project that was going to convert coal into oil, until oil prices fell and the project imploded, but not before billions of tax dollars were poured into that rat hole.
How Simulating!
If you listen to Joe Biden, the stimulus plan is working better than expected. But let’s take a closer look. As of about three weeks ago only $120 billion of the stimulus money had been spent. (So why is Congress looking at another stimulus with over $600 billion left to spend in the first one?) Of that money, 80% went to the Department of Education, Health and Human Services, and the Department of Labor. What about all the “shovel ready” projects? Only about $4 billion has gone to the Department of Transportation. Feel better?
Jobs Summit Attendees
So who is meeting with President Obama at the jobs summit? Well first let’s look at who was not invited:
I don’t know about you, but I think they might have an idea or two about how to create conditions that let the free market create jobs. As for the attendees:
How many jobs do unions create, not occupy, create? Think of the auto industry, steel industry, public K-12 education, the Postal Service, and government in general. Do they bring images of thriving, vibrant, engines of job creation? Or is the image more of the basket cases of the U.S. economy? This is not a slight against the union workers themselves, but rather of their leadership who create so many restrictions on job rules to artificially create the need for more jobs. There motto is: why have three people do the work, when you have five do it?
As far as big business is concerned, let me dispel the thought that conservatives and big business go hand in hand. In many cases big business looks to cut deals with the government to protect their industries and markets from upstart companies. They have gotten big and lethargic, rather than nimble and vibrant. Small businesses create about 80% of the jobs in the U.S. and they didn’t have a seat at the table.
So was the jobs summit about creating jobs or just jive talk? If you want a real jobs summit see what American Solutions was hosting in Cincinnati, Ohio and Jackson, Mississippi. They actually discussed ideas that would work.
