American Elephants


How to Destroy Trust In Seven Easy Lessons. by The Elephant's Child

How much should we worry about all these scandals? Professor William A. Jacobson tackles that question, and says “when everything is a crime, government data mining matters.” President Obama, who was elected on the idea that he was going to end the dissension in Washington, and bring people together, has quite clearly been unusually divisive. He has been clear that he believes that “bipartisanship” is when Republicans agree with his ideas.

When the IRS scandal proves that calling yourself a “patriot”, expressing interest in the Constitution, or in smaller government can lead the IRS to descend on you with all their authority, casts suspicion on accounts of how the government data mines phone records and email and search messages from internet companies. When Senator Dianne Feinstein insists that the data mining has prevented large attacks, her paranoia about guns and  lack of sound information make her statements on data mining seem untrustworthy. The level of regulations and mandates emanating from this administration speak constantly of a forceful, authoritarian approach to the public, which is directly oppositional to Americans understanding of individual liberty.

We have all read of the criminalization of life, the attack by the EPA on someone who has allowed rainwater to collect on their land, the attempts by the EPA to regulate trickles of water from snowmelt under their Congressional  authority to make sure that navigable waters are clean. The case of the Gibson Guitar Company shows that government regulators can attack your business and nearly destroy it even when you are obeying all the applicable laws. Overcriminalization is rife, and is becoming a matter of concern.

The United States has implacable enemies. The president’s insistence that he has decimated al Qaeda is not convincing. We continue to be attacked, and data mined from telephone calls between known terrorists or emails between this country and terrorist havens are probably essential to learning about potential attacks. We need intelligence, and good intelligence means trying to find out what the bad guys are doing. They must be found in the general population, and they don’t usually wear tee shirts labeled “bad guy.”

Where should we draw the line? Obama’s response is that we should trust the government. He is advocating a shield law to protect reporters against the sort of harassment that his attorney general and the FBI practiced against Fox News and the Associated Press. He is outraged that the IRS went after his political opponents, and fired the acting Head of the IRS who was scheduled to leave that office shortly, anyway. Victor Davis Hanson spells out the situational ethics practiced by the president. Read that one closely. Obama’s declarations vary from one day to another. Words are designed to please the listener, but have no permanent intent. Americans want to believe their president, but Obama has squandered that trust.

Ironically, the very success of economic and political freedom reduced its appeal to later thinkers. The narrowly limited government of the late nineteenth century possessed little concentrated power that endangered he ordinary man. The other side of the coin was that it possessed little power that would enable good people to do good. And in an imperfect world there were still many evils. Indeed, the very progress of society made the residual evils seem all the more objectionable. As always, people took the favorable developments for granted. They forgot the danger to freedom from  a strong government. Instead, they were attracted by the good that a stronger government could achieve — if only government power were in the “right” hands.
……………………………………………….Milton and Rose Friedman



There’s a “Regulatory Cliff” Too—A Cold Dead Hand on Small Business. by The Elephant's Child

There’s quite a list of hushed-up things that went unmentioned before the election, but now that it’s over, are appearing.  Business groups and Republicans see an approaching “regulatory cliff” that could be just as damaging to the economy as the “fiscal cliff” of tax increases and spending cuts.

The White House sought before the election to quiet Republican charges that President Obama was an overly extreme regulator who is killing U.S. jobs. The president has long denied that regulations have any effect on the economy, while small businesses protest and lay off workers. Now that the election is over, the regulatory pipeline has been turned back on.

The Environmental Protection Agency  has proposed rules to update water quality guidelines for beaches, and to deal with runoff from logging roads. The National Highway Traffic Safety Administration has proposed long-delayed regulations requiring auto manufacturers to include “event data recorders — “black boxes”— in all cars and light trucks beginning in 2014.

It’s now full-speed ahead, on a slew of new job-killing regulations that will be issued in a second term, said Senator James Inhofe (R-OK). Regulations will limit ‘greenhouse gas emissions,’ require cleaner gasoline, put controls on drilling for oil and natural gas.

The overall regulatory burden is now $1.8 trillion annually, according to the Competitive Enterprise Institute, and this year alone new rules have added $215 billion in compliance costs. Obama regulations cost 20-times estimates.

Current law rules that a regulation should not be at the White House longer than 90 days. The Office of Information and Regulatory Affairs admits that 84% of EPA rules have been delayed and 100% of energy regulation has been under review for more than 90 days. There is a great deal of uncertainty with many of these cost estimates. There is, in spite of promises, no transparency. Under the Regulatory Flexibility Act the White House must publish in the Federal Register a ‘regulatory flexibility agenda’ two times each year. The administration has not done this in 2012, and has not been forthcoming about costs and benefits of recent regulations.  The Administration avoids the regulations that govern their actions, yet want to impose regulations on everybody else. There’s a word for this.

The burden for businesses is staggering. For the regulations that have proposed versions, the paperwork burden is 37.6 million hours. A productive work year is 2,000 hours. The pending proposals could force 18,839 full-time employees into the role of complying with paperwork, at a cost that could top $100 billion. Regulators often fail to understand the burden that their bright ideas impose on business.

For example, the Department of the Interior is requiring private oil companies to hire marine mammal and sea turtle monitors if the companies are granted a lease to drill offshore. A marine mammal observer’s job is to watch for whales, dolphins, and similar sea creatures and to advise on minimizing the underwater noise created by offshore drilling which might affect the sea mammals. They are also required to observe while on vessels, to reduce vessel speed to 10 knots or less and maintain a 90 meter distance, when assemblages of cetaceans and sea turtles are observed.

The World Bank rates countries on “the ease of doing business.” 108 nations have implemented 201 regulatory reforms in 2011-2012, but the U.S. has not. It now ranks behind Singapore, Hong Kong and New Zealand.

During the first three years of the Obama administration 106 new major federal regulations were added, which is almost four times the number and five times the cost on the major regulations issued by the Bush administration during three years.

CEI also keeps track of Washington’s regulatory obsession, and has noted that by the end of 2012 the bureaucracy will have written nearly 3,900 new rules, spread out over almost 79,000 pages of the Federal Register.

This is an indicator of the Big Government philosophy of the Obama Administration, who believe that wise people in government can better tell people how to direct their lives and businesses than can individuals themselves. The Obama Administration favors central planning. Republicans point out that they aren’t very good at central planning, and when they get out of the way, the economy and the jobs will come back.



For a Feckless Foreign Policy: Rules Clarify. by The Elephant's Child

The conversation, plentiful, about the events in Egypt and Libya today, was mostly around Governor Romney’s very appropriate remarks — which the media was very anxious to turn into an undeserved and uncalled for attack on Obama, politicizing an unfortunate event… blah, blah, blah.  In the general comments sections, liberals attempted to brand Republicans with the term “war-mongers,” and I heard the term “neo-cons” bandied about for the first time in ages.

It is important for foreign policy to be decisive. Firm lines must be drawn — you may go this far and no further, for a reason. Not to be a bully, but to establish what the rules are. That’s why games have rules, otherwise you’d have all these men running around a football field in big shoulder pads and helmets randomly tackling each other with no purpose. No touchdowns and not very interesting. Rules clarify. And they don’t always stay the same. Football is no longer played with the 1920 rules. Foreign policy could be described as a big clumsy game with nations pushing and shoving each other and posing and pretending. The rules keep changing, but they really need rules.

Liberals are very confused about rules. They want lots of them for other people, but for themselves, not so much. Yet when it comes to a squalling child in the grocery store who is grabbing things off the shelves — if you give said child a smack on the behind, they may well call child protective services. The child may learn what is acceptable behavior and what is not. Nobody is advocating beating a child.

The Obama government has set records for issuing regulations, yet no administration in the nation’s history has been so lawless — simply choosing which  of the nation’s laws they will obey and which they will ignore, in spite of any annoyances like oaths. Overregulation can lead to contempt for rules. So when it comes to drawing firm lines for other nations, this administration is feckless. I looked it up: feckless, adj. – lacking purpose or vitality, feeble, ineffective, careless, irresponsible. (from the Scottish feck, short for effect). Sounds about right.

Libya is a mess, with essentially no government, and everybody running around causing trouble: that game with no rules. Egypt is a different deal. They are the most populous of Arab nations, and desperately poor. Some people exist solely on government handouts of bread. The U.S. sends around $1 billion in aid each year. The new Muslim Brotherhood  president, Mohamed Morsi, had been invited to the White House. He is reportedly seeking a reduction or cancellation of Egypt’s debt to the U.S. He also wants the release of the blind sheik Omar Abdel-Rahmani, who was behind the 1993 attack on the World Trade Center, a variety of other offenses, and was a deputy of Osama bin Laden. That seems to be a wealth of material for drawing firm lines, but I don’t expect much.



How Do We Fix The Economy? Let’s Outlaw Profit! by The Elephant's Child

The world’s manufacturers have fallen back into recession.  A key gauge of factory output shrank in August to its lowest point since July 2009 — to 49.6.  A reading below 50 is considered recessionary and the index has been below that key level three months in a row. The reason is the U.S. manufacturing sector.

Manufacturing  is mostly done by small to midsize companies, but due to a raft of new regulations under Dodd-Frank financial reforms, those businesses are struggling to get financing. But if they do get funds — under ObamaCare any company with more than 50 employees will pay steep penalties to insure its workers. So many will put off new investments and curb hiring plans to avoid higher costs. And they don’t know what other regulations may be coming down the pike. In Obama’s first term, manufacturers were hit with an average of 72 new regulations a year, an increase of 60% from the Bush era.

In this sluggish economy, factory output remains 4.7% below where it was when we entered the recession.

The United States took the top spot in the WEF’s Global Competitiveness Report as recently as 2007 and 200, but dropped to 2nd place in 2009, and now we have dropped to 7th place.  The business community is critical toward public and private institutions, and it’s trust in politicians is not strong (54th). Business leaders remain concerned about the government’s ability to maintain arm’s-length relationships with the private sector (59th) and consider that the government spends its resources relatively wastefully (76th). A lack of macroeconomic stability is the country’s greatest area of weakness (111th, down from 90th last year). We do beat Portugal though. The U.S. is 76th in the burden of government regulation behind Kenya and Thailand.

Here’s one reason why we find ourselves in this position. Peter Schiff posed as an anti-business crusader, and found a significant number of DNC delegates and attendees who support explicitly outlawing profit.  These are not the occupy people camping outside, but Democrats at their own convention.

Schiff is CEO of Euro Pacific Capital Inc, a broker-dealer in Westport, CT, and Euro Pacific Precious Metals LLC, a gold and silver dealer based in New York.

If people don’t have the most basic understanding of how the world works, no wonder…



Representative Mike Kelly Tells It Like It Is! by The Elephant's Child

Mike Kelly(R-PA), 3rd District, gave a barnburner speech on the House floor today to a standing ovation from house members. (The Republican ones)

The House passed legislation on July 26 that would bar agencies from making any significant changes to regulations before the economy improves.

The Regulatory Freeze for Jobs Act (H.R. 4078)— dubbed a “red-tape” prohibition—passed by a vote of 245 to 172.

The legislation would stop all new significant federal regulations until the national unemployment rate falls to 6 percent or below. The unemployment rate has been higher than 8 percent for 41 consecutive months. The one bill is a combination of seven bills that would either halt regulations or otherwise revamp the regulatory process.

House members approved an amendment that would expand the term “significant regulatory action” from the current threshold of a $100 million or greater cost to the economy to $50 million.

As the legislation goes to the Senate, the Obama administration has already said it opposes the bill. Officials have even threatened a veto if it came to the White House in the version the House passed. In the administration’s view, the bill would add layers of procedural burdens that interfere with the ability of agencies to carry out their statutory mandates. Translation: Private business needs lots of regulation to be sure that they act as wise Washington bureaucrats think they should.  Regulation is good. Who knows what they might do if they are not properly regulated?



How Bureaucracy Simplifies Our Lives: by The Elephant's Child

Diane Katz has the enviable job of wading through Washington’s massive webs of red tape to discover new and excruciatingly silly regulations that are strangling the economy. Barack Obama has insisted that regulation is NOT a problem, and besides the great mass of American people must be regulated to make them safe.

— The new Consumer Financial Protection Bureau (the one with the illegal head, appointed during a Congressional recess when Congress was in session ) is busily issuing regulations. It has devised a 1,099-page proposal to streamline the mortgage process. The creation of this blueprint for a more “consumer-friendly ” mortgage is described in a 533-page report titled “Evolution of the integrated TILA-RESPA disclosures.” (TILA stands for Truth in Lending Act, and RESPA is Real Estate Settlement Procedures Act).

They found the most effective way to reduce confusion surrounding the APR (annual percentage  rate) was to add the simple statement “This is not your interest rate.”

In only two years the CFPB has grown from zero to 900 employees.  However, to redesign the mortgage documents they required the assistance  of Kleimann Communication Group, a self-described “small, agile, woman-owned business: at a cost to taxpayers of nearly $900,000. Naturally next year they need a 32 percent budget increase to $448 million. As Diane Katz explains:

So let’s recap: We have a 2,300-page statute giving rise to a 1,099-page regulation to simplify mortgages, which is spelled out in a 533-page report that chronicles consumer testing from one end of the country to the other. All of which indicates that home loans would likely be a lot simpler if government was a lot less involved.

So what could the mindset of Christopher Dodd and Barney Frank have been that they thought this was a good idea?

— Here’s another: In its ceaseless quest to protect us from ourselves, Congress in 2009 compelled credit card companies to confirm an applicant’s “ability to pay” before approving an account. Lawmakers apparently decide that Visa, MasterCard, Discover and the like somehow lacked the incentive to manage their own credit risk, (As opposed to, say, the elected officials who have racked up $1.2 trillion in national debt this year).

The new regulation is widely interpreted as prohibiting millions of stay-at-home moms ( and a fed dads) from obtaining credit cards of their own altogether. That’s because the “ability to pay” regulation requires credit card applicants to have an independent source of income to open an account or else to find a so-signer.

— One of Ms. Katz’s more entertaining discoveries has been that the notorious diet dictator, “Nanny” Bloomberg, Mayor of New York City, the man who’s trying to ban the sale of soda in cups larger than 16 oz. (The Big Gulp)— is a big fan of hot dogs: (Beef, Water, Salt, Sorbitol, Sodium Lactate, Hydrolyzed Soy, Corn Gluten Protein and Wheat Gluten Protein, Paprika, Natural Flavorings, Sodium Diacetate, Sodium Phosphate, Sodium Erythorbate, Sodium Nitrate). Makes you want to run right out and get one with mustard and relish.

The first of these regulations is Number 35 on Diane Katz’s list. While it must be fun to seek out this nonsense, it is a flashing warning sign for the economy. Silly, unnecessary regulations impose tremendous costs in time and funds for struggling businesses. Imagine: a brand new agency to issue regulations— grown to 900 employees in just two years



Here’s How Obama Destroys American Jobs by The Elephant's Child

This video was made back in October of last year, when Henry Juszkiewicz , CEO of Gibson Guitar Company testified before Congress.  Gibson Guitars has been accused by the Obama Administration of running afoul of the Lacey Ace — one of the oldest U.S. environmental regulations. Gibson’s violations were deemed so severe that armed federal marshals entered its facilities in Nashville and Memphis in August 2011 and seized millions of dollars worth of guitars, which the government alleges may have been constructed of wood illegally harvested in Madagascar and India.

Under the Lacey Act, it is a federal offense “to import fish, wildlife or plants” in violation of any foreign law.” Congress passed the law in 1900 to protect states against poachers who fled with their goods to another state. It thus runs afoul of fundamental tenets of Anglo-American common law: that “men of common intelligence” must be able to understand what a law means. Good luck with that.

It has been nine months since the Gibson raid, and as yet they have not been charged with anything. Gibson was set up. The story here, according to Kim Strassel of the Wall Street Journal says:

The story here is about how a toxic alliance of ideological activists and trade protectionists deliberately set about creating a vague law, one designed to make an example out of companies (like Gibson) and thus chill imports—even legal ones.

The Lacey Act was passed in 1900 to stop trade in illegal wild game. Over the years it has expanded, and today it encompasses a range of endangered species. It requires American businesses to follow both U.S. and foreign law, though with most Lacey goods, this has been relatively clear. Think elephant tusks, tiger pelts or tropical birds.

That changed in 2007, when an alliance of environmentalists, labor unions and industry groups began pushing for Lacey to cover “plant and plant products” and related items. Congress had previously resisted such a broad definition for the simple reason that it would encompass timber products. Trees are ubiquitous, are transformed into thousands of byproducts, and pass through dozens of countries. Whereas even a small U.S. importer would know not to import a tiger skin, tracking a sliver of wood (now transformed into a toy, or an umbrella) through this maze of countries and manufacturing laws back to the tree it came from, would be impossible.

The drive to expand the Lacey Act was headed by” a murky British green outfit called tje Environmental Investigation Agency. The EIA is anti-logging, and understands that the best way to force developing countries to “preserve” their natural resources is to dry up the market for their products. They would prefer that wood be sourced from the US. and Europe where green groups have more influence over rules.”

Gibson has been trapped, as intended. The company is not accused of importing banned wood. The ebony it bought for frets is legal and documented.”The issue is whether Gibson ran afoul of a technical Indian law governing the export of finished wood products.  The U.S. government’s interpretation of Indian law suggests that the wood Gibson imported wasn’t finished enough.”

If you wondered why more jobs are not being created in our economy, you only have to look at Gibson, to see why businessmen might be scared and huddling down to wait Obama out. And Gibson is not alone. There are other companies suffering under the loony expansion of the Lacey Act. But there are Congressmen trying to amend the Lacey Act to see that criminal enforcement of the Lacey Act is unnecessary, and leads to miscarriages of justice. Laws should be clear so that people can understand what they must do to follow it.

The solution, of course is deregulation. According to Iain Murray of CEI , if deregulation were implemented correctly, it would provide an almost cost-free stimulus of a trillion dollars or more.  According to the Small business Administration, the regulatory burden on our economy is a staggering $1.74 trillion annually. The Obama administration is in full denial, and Cass Sunstein, who heads up the “Office of Information and Regulatory Affairs, calls it an “urban myth.”

In Wayne Crews annual report on the growth of the regulatory state Ten Thousand Commandments, notes that the number of pages in the Federal Register has grown from 67,000 to 81,405.  Each page delineates a rule that imposes costs on businesses while creating more jobs for bureaucrats. The costs of compliance with regulations average $10,585 per employee.  No wonder small businesses, th e usual engine of growth in the economy, have stalled. Over 60 percent of small businesses have no plans to hire in the next year.

Obama’s standard statement is “Private sector employment rose by 130,000 jobs in April. The economy has added private sector jobs for 26 straight months for a total of more than 4,25 million jobs over that period.” Those 130,000 jobs don’t sound like such a big deal when you realize that the economy would h ave to create 125,000 jobs each month just to keep up with population growth. But Mr. Obama has some trouble with math.




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