When 300,000-500,000 of your closest friends, depending on who is doing the estimating, show up for a rally on the Washington Mall you would think it was somewhat newsworthy, no?  Of course it is, that’s why the New York Times published the story on page fifteen.  If you were walking by a newsstand and glanced at the front page, you wouldn’t have know that a half million of your fellow citizens got together with Glenn Beck to restore honor in America.  The front page would entice you with:

• Graft-Fighting Prosecutor Fired in Afghanistan
• For Obama, Steep Learning Curve as Chief in Time of War
• Upstarts Chip Away at Power of Feudal Pakistani Landlords
• Years Later, No Magic Bullet Against Alzheimer’s Disease
• In Hard Times, One New Ban (Double-Wide)

I guess our friends at the times couldn’t find any fabricated stories of someone shouting the “N-word” at Dr. Martin Luther King’s niece Alveda King, who was one of the featured speakers, to elevate the story to the front page.  Perhaps it would have been too embarrassing to mention on the front page that Al Sharpton’s counter-demonstration where “several hundred people packed a football field at Paul Laurance Dunbar High School to stage a rally commemorating Dr. King’s ‘I Have a Dream’ speech.”  Yesterday, you would have thought both rallies were the same size with crowd estimates of several thousand for each.  Perhaps this shows the true value of racial politics today.  America is tired of the race baiting and the false charges.   President Obama was elected with hope and change to become the post-racial leader of the country.  It appears the country has moved on without his leadership.

In another piece in the Times two Progressive women pine for a “Palin of Our Own”, to win the hearts and minds of America.  The problem is America doesn’t want to listen to Janeane Garofalo or Joy Behar sneeringly spouting off about Sarah Palin.  As far as any women Progressive politicians, who is there other than Hillary Clinton and we’ve seen that act and passed on it.

In another piece titled “Party Down”, Marc Ambinder tells us about the anti-incumbent mood, “Unlike parties, which often recruit candidates who would appeal to the average voter in a general election, these activists care only about nominating the person who accurately represents their own views and frustrations.”  Appeal to the average voter?  The problem with the Republican Party in the past is that they have been listening to the main stream media reports about who the “average voter” is.  So they have elected so called “moderates” who get their clocks cleaned by real Progressives in the election.  The left snickered in their sleeves while growing the government into the bloated, ineffective, couch potato that it is.  It alarms those on the left that the Tea Party movement has changed all this and tone deaf incumbents are getting tossed left and right.  They have unmasked the average voter to be conservative and by measuring candidates against a conservative yardstick, they have struck a chord with the voters who have long felt ignored and disenfranchised.  Now those voters are energized and can’t wait to get to the polls.  Reason for panic on the left, indeed.

To say today’s “Restoring Honor” event in Washington will be historic is an understatement.  Gauging by the biased reporting on the news pages of the New York Times and the seething, sputtering outrage from Bob Herbert and Charles Blow on the Op-Ed pages should give you a pretty good indication of the focus this event will garner.

Kate Zernike opens her report, titled “Where Dr. King Stood, Tea Party Claims His Mantle”, saying it is the ultimate “thumb in the eye” to stand on the anniversary of Dr. Martin Luther King’s “I Have a Dream Speech” in the place he stood and talk about restoring honor.  How dare he?  Isn’t that what racists said of Dr. King when he stood in front of the Lincoln Memorial with these words?

“Five score years ago, a great American, in whose symbolic shadow we stand today, signed the Emancipation Proclamation. This momentous decree came as a great beacon light of hope to millions of Negro slaves who had been seared in the flames of withering injustice. It came as a joyous daybreak to end the long night of their captivity.”

Ms. Zernike reminds us of the case of Shirley Sherrod, who was fired by the Obama administration when a videotape of her redemptive speech about how she first discriminated against a white farmer but later helped him was shown across the Internet.  She writes about video tape being heavily edited by failing to show how she mended her ways and helped that farmer.  But Ms. Zernike doesn’t finish the story where later in her speech Ms. Sherrod says that those who opposed Obama’s health care plan had racist motives because President Obama is black.  Ms. Sherrod’s redemption is far from complete.

She then says that the Tea Party’s talk of states’ rights raises the specter of Jim Crow and George Wallace.  But it was the federal government that passed and enforced the Fugitive Slave laws and it was independent states of the north, exercising their states’ rights, who supported the Underground Railroad and refused to actively assist returning slaves to the South.  So states’ rights cut both ways.

She concludes that, “Even if Tea Party members are right that any racist signs are those of mischief-makers, even if Glenn Beck had chosen any other Saturday to hold his rally, it would be hard to quiet the argument about the Tea Party and race.”  It’s hard to quiet the argument because those on the left keep falsely making it.  They cannot prove racism so they feel that by repeating often enough, they can make it stick.

I was at a street fair manning a booth for a Tea Party organization this spring.  An African-American teacher approached us tentatively to ask what we were about.  I asked her if she wanted the rumors or the truth and she opted for the truth.  I told her that we were a policy based organization focusing on accountable government, fiscal responsibility, limited federal government and following the Constitution.  She said she didn’t know any of that, she got e-mails from Moveon.org all the time and before leaving she signed our e-mail list.  When the truth reaches the ears of people over the screeching of the New York Times and the main stream media, it is generally well received.  The racial of mix of the Tea Party rallies will change over time when we can speak to the folks one on one without the lies of the left.

The Opionators

Bob Herbert begins his Op-Ed piece in a very open minded fashion, “America is better than Glenn Beck. For all of his celebrity, Mr. Beck is an ignorant, divisive, pathetic figure.”  Thank you for sharing that, Bob, but there’s no need to pull punches here.

“There is a great deal of hatred and bigotry in this country, but it does not define the country. The daily experience of most Americans is not a bitter experience and for all of our problems we are in a much better place on these matters than we were a half century ago.”

So why to you and your fellow travelers throw down the race card every time someone disagrees with a policy, if they are not of the same race?  Object to ObamaCare, that’s racism.  Object to the stimulus, racism.  Wanting Obama to fail to turn America into a socialist states, racism straight up.  Yes there is hatred and bigotry in this country, but it is primarily coming from the left.

Not to be outdone in the outrage department, Charles Blow titled his Op-Ed piece, “I Had a Nightmare.”  Mr. Blow said the following, “I find it curious that many of the same people who object so strenuously to the Islamic cultural center proposed for Lower Manhattan, many on the grounds that it is inappropriate and disrespectful, are virtually silent on the impropriety and disrespect inherent in Beck’s giving a speech on the anniversary of King’s address.”  This would be an excellent point, if he could point to 3,000 blacks that Glenn Beck has murdered in the name of restoring honor.  But Mr. Blow can make no such connection, so his analogy to the Ground Zero mosque falls flat.  Curious indeed.

After venting his spleen, Mr. Blow suggests we re-read Dr. King’s speech “and to recommit ourselves to the nobility of righteous pursuits.”  Let’s do that.

“But there is something that I must say to my people, who stand on the warm threshold which leads into the palace of justice: In the process of gaining our rightful place, we must not be guilty of wrongful deeds. Let us not seek to satisfy our thirst for freedom by drinking from the cup of bitterness and hatred. We must forever conduct our struggle on the high plane of dignity and discipline. We must not allow our creative protest to degenerate into physical violence. Again and again, we must rise to the majestic heights of meeting physical force with soul force.” –“I Have a Dream Speech”

How do the actions of the left, throwing down the race card at every turn, accusing everyone who disagrees with Barack Obama to have racism at the core of that disagreement comport with not “drinking from the cup of bitterness and hatred”?  It arrogantly assumes that it is impossible not to see the glorious benefit of the government running every last aspect of our lives, therefore the only reason to disagree has to be racism.  With regard to violence, where do we see the violent demonstrations on the left or the right?  Breaking windows, looting, SEIU members beating down street vendors for selling anti-Obama buttons, etc. are all on the left.  When the police show up at rallies organized by the left they show up in riot gear, at Tea Party rallies the mounted police have to decide whether to let people pet their horses or not.

“I have a dream that one day this nation will rise up and live out the true meaning of its creed: ‘We hold these truths to be self-evident, that all men are created equal.’” –“I Have a Dream Speech”

Didn’t America elect an African American President of the United States with 53% of the vote?  More than voted for Clinton either time, or Jimmy Carter?  Barack Obama wasn’t elected by minority votes alone.

“I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.” –“I Have a Dream Speech”

Who more closely shares that dream, Glenn Beck, or those on the left who insist that forty years after Dr. Martin Luther King gave his speech that blacks can’t get into college or get a job without affirmative action; that black families have not been destroyed by government programs like welfare that drove fathers away; that government run schools that can’t graduate its students are far better for blacks than school vouchers that will let them escape those hellholes?  Dr. King’s speech says nothing about racial preferences.  Dr. King’s speech talks about color blindness.  Dr. King’s speech says give us an equal chance.  Glenn Beck believes that.  Those on the left do not.  It is those on the left who believe African Americans cannot compete without more government programs to help them.  Glenn Beck believe they can succeed if government gets out of their way and if the left stops the lies of dependency that hold them back.  It is the New York Times, Charles Blow, Bob Herbert who wrap themselves in racial division and then say, “Why can’t we come together?”  If you want us to come together, stop standing in the way.

In the August 23, 2010, New York Times, Paul Krugman decries that if we don’t let the Bush Tax cuts expire and thus have a massive tax increase in the midst of a weak Obama recovery, it will be so unfair, so evil… 

First let’s look at how twisted the logic of the left has become.  Mr. Krugman says, “These same politicians are eager to cut checks averaging $3 million each to the richest 120,000 people in the country.” Er, not really, Paul, unless the richest 120,000 people are stupid enough, with all their financial advisors, to have that much tax withheld from their incomes.  You see, Paul, the only reason the government would have to cut them checks is if they paid too much in taxes during the year, and since the current rates are already in place it is unlikely that they would change their behavior to suddenly have an extra $3 million sent to Washington.  Here’s the problem with your thinking, Paul.  It is not your money, it is not my money, it is not the government’s money to begin with.  It belongs to the people who have earned it.  It is the people to provide revenue to the government.  It is not the government who gives money to those who produce.  Got it?

Like most on the left Mr. Krugman always associates tax cuts with a loss of revenue and tax increases with a gain in revenue, and ignores how people change their behavior with regard to these changes.

As this chart shows, at the end of the Clinton administration and the dot.com bubble the economy fell into recession.  The Bush tax cuts were implemented in 2001 and they were across the board tax cuts, not just for the wealthy.  A second set of tax cuts came in 2003.  As you can see revenues started to fall before the tax cuts, but bounced back sharply after the cuts in 2001 and 2003.  But Mr. Krugman would have you believe that if you cut taxes, revenues fall and if you leave them along or increase them, revenues increase.  You can also see that Clinton’s tax increase in 1993, didn’t have much effect in changing the rate of revenue growth, but when the Republicans took over Congress in 1994 and instituted tax cuts in 1997 you can see the slope of the curve bend upwards and it is even steeper with the Bush tax cuts.  So in the absence of the 2001 recession, revenues collected increased with tax cuts, not tax increases.

Let’s look at who is paying what share of the taxes.  The follow chart shows what percentage of the tax burden was paid by what percentile of the income earners by Adjusted Gross Income.

So even as the Bush tax cuts reduced tax rates across the board, the “evil” rich still ended up carrying a larger share of the overall tax burden than they did before the cuts.  So just what is Mr. Krugman’s beef? 

I argue that were are nearing a dangerous threshold politically, where the majority of voters may soon find they pay no taxes and the minority pays all.  If that tipping point is reached, what is to prevent this majority from voting for massive tax increases that will only affect the minority?  All Americans should carry some share of the cost of government.  It should not be a free ride for some and a minority pays the tab. 

To further emphasize the fairness issue look at the following chart from the IRS in 2004.  The brown bars show the share of the income that the percentile on the vertical axis earns.  The blue bar shows the share of the total income tax bill they pay. 

The problem folks is spending.  As the first chart makes pretty clear, we have not been suffering from a revenue problem, we have been suffering from a spending problem.  This administration and their instigators, like Mr. Krugman, have been urging reckless spending upon reckless spending and even decrying that the administration has not spent nearly enough.  Krugman is sloppy in making his case and tries to convince his readers that we will be carrying buckets of money to the wealthy when the truth is that he wants to open the spigot wider from those who produce in this country to the profligate government who can then spend it on more turtle crossings in Florida, and to prop up the unions, and bankrupt states.  Stop spending, cut taxes, shrink the federal beast, and we will be in good shape in short order.

As many people have said, “I never got a job from a poor man.”  In looking back at my own career, I have worked for several companies that were started by entrepreneurs and who became wealthy. Do I care if they were wealthy?  No.  Do I wish they were taxed to the eyeballs?  No.   If they were, those are jobs I would probably wouldn’t have had.  Opportunity is what made America the country where people around the world fight to get into, not bashing the successful.  All who stive to come here want to become those wealthy successful people and give the same opportunity to their children.

In today’s New York Times there is a story about Rick Lazio latching on to the Ground Zero mosque issue as his new campaign theme.  The first television ads I have seen regarding his run for governor are about this issue.  He is strongly opposed.  Okay, but he wants us to  elect him governor to do what, exactly?  New York has a lot of problems, from a state government that is completely dysfunctional to being broke and since everyone seems to agree that the mosque at Ground Zero is not about the right to build there but about the propriety of building there, what does it have to do with the office of governor?

When he pinch hit for Rudy Giuliani running for the senate against Hillary Clinton, after Mr. Giuliani dropped out of the race with prostate cancer, Mr. Lazio took a similar tack.  You probably remember their first debate when Mr. Lazio famously walked across the stage to a startled Mrs. Clinton and asked her to sign his pledge on campaign finance reform.  She refused and that was his theme.  The problem is that although many people feel our political process is corrupt, when it comes to campaign finance reform, most people don’t care about it.  Those who care about it are incumbents, who want to cripple those who run against them.  Some of the so called “reforms” have politicians spending so much time chasing $50 donations that they can’t do what they were elected to do.  Either that or we can only run multi-millionaire candidates who can spend their own money without limits.  (Simple solution: let anyone contribute any amount to any campaign at any time and just post the information on the Internet within 72 hours in a database that is fully searchable. Done.)  It only took a little time for the novelty of the debate video to fade and Mr. Lazio had no campaign.

Another challenger in this year’s governor’s race, Carl Paladino, one of the aforementioned millionaires, has been hitting the airwaves more frequently and more effectively than Mr. Lazio.  He is not a one trick pony.  His first ads hit Andrew Cuomo on being a career politician and that he, Paladino, was a business man who knows how to create jobs.  What do we desperately need now?  Jobs.  What are we sick of? Career politicians, like Mr. Cuomo, who played a role as HUD Secretary in the Clinton administration of feeding the real estate frenzy and the subsequent housing collapse that created the financial crisis.

On the mosque situation, agree or disagree with him but Mr. Paladino says exactly what he will do about it.  He will take the property away under Eminent Domain (thanks to the activist judges on the Supreme Court who gave us Kelo v. City of New London) and use the property to create a war memorial.  He doesn’t just say he will oppose it he tells us what he will do about it.

In the interest of full disclosure, I contributed to Rick Lazio’s senate run in 2000 and I have no connection with the Paladino campaign.  But if Mr. Lazio is serious about defeating Andrew Cuomo for governor, he has to find some issues that not only resonate with the people of New York but that are the responsibility of the governor to address.  If not, rather than split the conservative vote, he should step aside and help ride the anti-incumbent wave that Carl Paladino is surfing.

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.

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.

An in depth article in the New York Times titled, “Lapses Found in Oversight of Failsafe Device on Oil Rig,” covers at length the problems surrounding the technology and methods employed to prevent the disaster that we see every day on our television screens, newspapers, and the Internet.  It also points to the nearly complete lack of oversight and enforcement by the federal government to protect us.  Politicians like to write legislation and put flowery titles on the same and gather for the cameras for signing ceremonies, but when it comes to the heavy lifting of enforcing the laws put in place they often fall down on the job.

When disaster strikes the typical Washington reaction is to add more regulations that eventually become so complex and contradictory that compliance becomes nearly impossible (e.g., Internal Revenue Code).  In the case of the oil spill in the Gulf the article points out that studies were conducted in 2003, seven years ago, on failure points to prevent the situation we are living with today, but no requirements to put them in place or test them were instituted.

The article focuses on a device called a blind shear, whose purpose is, in the event of an accident like what happened on the Deepwater Horizon, to activate a pair of shear blades to cut the pipe that rises from the well and seal the well shut.  The reliability of single blind shears has only proved to be about 46%.  With this empirical data, new wells are installing two such devices for redundancy and backup.  Such a recommendation was made to the Materials Management Service (the government agency regulating drilling) in 2001, nine years ago, but the MMS took no actions on the recommendation.  In 2003, the MMS received a recommendation that would require the necessary underwater robots and testing of emergency backup systems, but again the MMS, demurred.  The practice has been that the MMS simply took the drilling industries word that they were taking steps to prevent problems.

In 2003, the Deepwater Horizon rig has a problem in a storm that caused the rig to break away from the well it was drilling, the blind shear worked perfectly in that case giving the company a false sense of confidence in the technology.  What happened next is revealing:

The following year, BP opted to remove a layer of redundancy from the blowout preventer. It asked Transocean to replace one of the blowout preventer’s secondary rams with a “test ram” — a device that would save BP money by reducing the time it took to conduct certain well tests. In a joint letter, BP and Transocean executives confirmed that BP was aware that the change “will reduce the built-in redundancy” and raise Transocean’s “risk profile.” – New York Times, 20 June 2010, pA1

Since the MMS did not require two blowout preventers, BP was in the clear to remove one.  Also, consider the term “risk profile,” and think of this in terms of a free market where insurance companies played a role.  If you increased the risk profile and didn’t want to have your policy canceled in its entirety for hiding that fact, the insurance company would no doubt increase BP premiums for the increased “risk profile.”  Since this effort was a cost saving measure, having to pay more in insurance might have changed the equation such that BP would leave things as they were with two blowout preventers.  But the government encouraged deep water drilling, the government put a cap on the amount of damages that a drilling company would have to pay that created a moral hazard, the government ignored recommendations to required greater safety measures and the government was lax in enforcing those regulations it had in place, instead relying on taking the industry’s word that all was well.

On a separate issue regarding the cleanup, in an article in the Wall Street Journal titled, “The President Does a Jones Act,” it states that in the two weeks following the disaster, thirteen countries contacted our government offering assistance with the clean up.  Our government turned the offers down.  As the State Department put it:

“While there is no need right now that the U.S. cannot meet, the U.S. Coast Guard is assessing these offers of assistance to see if there will be something which we will need in the near future.” One month later, many of these offers are still outstanding. – Wall Street Journal, 19 June 2010

The Belgians reportedly have the ships and technology that could clean up the mess in the Gulf in one-third the time than is currently estimated.  All it requires is suspending the Jones Act of 1920.  Bush did it almost immediately in the wake of Hurricane Katrina so that foreign ships could come in and provide temporary housing for the hurricane victims.  Officials in the Obama Administration weakly respond that “no one has asked them yet,” to suspend the Jones Act.  What are they waiting for?  Doesn’t Obama and everyone in his administration to hit the Sunday talk shows tell us that they has been on top of this since day one?  One plausible reason for the hesitation is that it might offend the maritime unions. 

We are continually told by this administration that we need more government expertise telling us how to run our lives.  Surrender your liberties, we’ll take care of you.  I don’t think so.  What do you think?

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.

If the news hasn’t reached you yet, we are all on an express train heading over a cliff due to public unions and the ridiculously generous pay and benefit packages they have gotten from the taxpayer, and we never even got to sit at the bargaining table.  A report in the New York Times  yesterday reports that there are 8,074 employees of the Metropolitan Transportation Authority, the entity that runs the commuter railroads and subways in and around New York City, that made more than $100,000 per year.  This includes a conductor who retired in April that made $239,148 which was $4,000 more than the Chief Financial Officer made.

By the way, did I mention, that the MTA had a budget deficit of $400 million?  Did I mention that they went through a series of service cutbacks to try to close the gap?  Perhaps, I can suggest another place to look?  But there’s more.

Two train car repairmen and twelve police officers who guard the bridges and tunnels under the MTA’s control were among 50 employees that pulled in more than $200,000.  Mr. Thomas J. Redmond, the aforementioned conductor had a base salary of $67,772, overtime of $67,000 and he took in almost $100,000 in unused sick days and vacation time. 

A locomotive engineer earned $75,000 in base salary, with overtime of $52,000, but wait there’s more.  He also received $94,600 in penalty payments.  What are those, you might ask?  Union rules say that because the engineer worked in a storage yard, he gets paid extra if he is assigned to move a locomotive outside of the storage yard, for example to a nearby maintenance facility.  I don’t understand your pique.  Don’t you have a similar arrangement with your employer?  You mean you don’t get a penalty payment when you have to go to a meeting on another floor in your building? I am shocked!

But don’t feel sorry for the senior management.  The new president of the Long Island Railroad, part of the MTA, now earns $350,000 plus a $3,500 monthly housing allowance.  I guess $350,000 is not enough to get by on so we have to pay the guy’s mortgage too.

This is what the politicians give to the unions when they negotiate contracts with them.  The unions in turn, make sure those politicians get re-elected, through the unions electioneering efforts.  Does that sound like collusion to you?  New York State is broke, just like California but we will have to pay for all these sweetheart contracts that make the federal budget deficit look like chump change.

You don’t have to go too far to find a story about people suffering in these tough economic times, and your heart goes out to them.  Some have lost houses, are living in cars, really tough stuff.  But there is another story under the surface that reflects common attitudes developed growing up in the nanny state kicked into high gear by Franklin Delano Roosevelt.

In the midst of these tough economic times, instead of getting out of the way by cutting taxes and red tape, the Obama administration is focused on piling on more government programs.  Worthless stimulus packages, health care reform, and efforts to push cap and trade have not moved the unemployment needle a whit.  They extend unemployment benefits and keep whistling past the graveyard hoping they won’t get swallowed up.

Personal Responsibility

Since the Great Depression and the growth of the nanny state, more and more people have bought into the myth that the government can provide all, and our responsibility is to enjoy the ride.  An article in today’s New York Times writes about people benefitting from a government program to keep them in their houses if they face becoming homeless.  But there are some subtleties in the hard luck stories that give me pause.

There is the case of Antonio Moore who lost his job as a mortgage consultant that paid him $75,000 per year.  He lost his 3-bedroom house with a Jacuzzi and his Lexus sedan.  He is now faced with eviction from his apartment.  The article doesn’t go into details, but in most cases you don’t lose your house and car if they are all paid for.  Again, it doesn’t say if Mr. Moore bought his car new or used, but when I think of a car like a Lexus I usually don’t think that fitting in the budget of someone making $75,000 living in the San Francisco Bay area.  Had Mr. Moore purchased a Toyota Corolla instead of the Lexus would he be in better shape?  Again, I don’t know the details.  I am just wondering.

Then there is the case of Dawn Martin.

Ms. Martin is mortified to be asking for help. She grew up wealthy, with vacations spent on Caribbean cruises. “I had everything I ever wanted,” she says.

She and her husband have a painting business that until 2008 was grossing $100,000 per year, but in this tough economy it dropped to $38,000.  That’s hard.  But then here is the between the lines story:

Her father has money to help if it really comes down to it, she acknowledges.

“I don’t see him letting his grandkids land on the street,” she says, “but he’d hold it over our heads for a long time. That would lower me to a level that I wouldn’t want to go.”

So she is here, at Samaritan House, filling out the paperwork for the homeless prevention program.

So because of her pride, she turns to your family and mine, through higher taxes to fund a government program, to help her through her rough spot before she will turn to her own family.  But don’t worry.  When our money is gone, she will turn to Dad.  The painting business is picking up so Ms. Martin is confident they will be able to sustain themselves.  She is able to take our money to tide her over and still maintain her pride. 

But what did Ms. Martin learn about money when “growing up wealthy”?  Is Dad responsible for not teaching her or was she a rebellious child who ignored him and perhaps that is why he would hold it over her head for a long time.  Will she do something different this time around or hope for another government program?

Perhaps I was a little torqued before reading this story by another in the Wall Street Journal that wrote about the homes underlying the Goldman Sachs fraud case.  This article talks about a Ms. Onyeukwu, a 43-year old nursing home assistant with pre-tax income of $9,000 per month.  She is having trouble paying her $688,000 mortgage at $5,000 per month which is 56% of her pre-tax income.  Her solution?  Refinance it with a $786,250 mortgage.  But hey, the interest rate is lower so her payments of $5,000 per month will stay the same.  What is she thinking?  I could be way off base here but I’ll bet she could get a nice apartment for significantly less than $5,000 per month.  Sell the house, live within your means.

Government as Savior or Government as Pusher?

This is a tale of two government programs and personal responsibility.  We had or still have a massive government program that uses threats, goals, and sleight of hand to help millions achieve the American dream of home ownership.  This is not through thrift, like our parents did it, but by the government threatening banks with charges of racism (there’s the race card again) if the banks didn’t lower their lending standards.  As the housing market took off, the feeding frenzy intensified and everyone was trying to buy houses or finance them with less and less money down.  The Community Reinvestment Act, HUD, Fannie Mae, Freddie Mac were all players in this debacle, but don’t expect our elected officials to wade into that swamp to see what happened.  No, they will pile the blame on the banks and Wall Street, while they take Wall Street’s massive donations and do nothing but pass meaningless “reform legislation”.  Now we need new government programs to keep these people hanging on.  How similar is this to the drug pusher who gives you your first hit for free to get you hooked and dependent on them forever.

What About Personal Responsibility?

Unlike the people in the articles, I believe I have responsibility first and foremost for my actions.  If I need help beyond myself I turn to my family and then the charity of my church.  I believe many conservatives share my views, which is why on average conservatives give 30% more to charities than liberals.  It is why I gave the moniker “Buck a Day Biden” to Vice President Joe Biden because in his financial disclosure forms he reported give only about $300 a year to charity.  Here is a man who has been drawing six figure salaries from the taxpayers for years, is a millionaire, but will not reach very deep into his own pocket to help his fellow man, but has no problem reaching into your pocket and mine to create some government program to give your tax dollars to someone else.

There is a man named Dave Ramsey, who was a millionaire in his mid-twenties but later lost it all and declared bankruptcy.  He now teaches others how to live without debt and take responsibility for their financial lives.  It is a lesson all of us should learn and if we do, I’ll have to find something else to write about that sets me off.  But in the mean time we have a lot of work to do.  First we have to stop the federal government’s runaway train.  Next, we have to shrink government.  Then we have to go back to being responsible for ourselves and wean ourselves off the government.