American Elephants

The United States Deficit Exceeds $1,000,000,000,000 by The Elephant's Child
July 14, 2009, 8:32 pm
Filed under: Capitalism, Politics, Progressivism | Tags: , , , ,


Count all those zeroes! That’s not the National Debt, but the Deficit — what we owe on our national credit card. And of course, just like a credit card, the interest charges pile up.  One trillion dollars.  If you need a picture, go here.

The stimulus isn’t working, and stimulus plans have a long history of not working.  Only 17 percent of Americans think the stimulus has been very effective according to the latest IBD/TIPP  Poll.  53 percent believe it has not been effective in getting the economy going in the right direction.

Since the start of the recession, 7.2 million people have lost their jobs. These are scary numbers, and many companies are asking people to reduce their hours.

Barack Obama has created quite a bunch of jobs with hefty salaries in his assortment of Czars, 28 domestic and 6 international.  No one is quite sure what these Czars are supposed to be doing, since most activities which are of proper concern to the government are represented by a department with a Secretary, an Assistant Secretary, a Deputy Secretary, and an Assistant Deputy Secretary or something like that, with dozens to hundreds of other employees, all of whose generous wages are paid by taxpayers.

The normal way of dealing with a recession is to try to alleviate some of the taxes on business, so that business is more able to create jobs.  And for government to reduce spending as much as they can after providing unemployment help for those who have lost their jobs.

This administration, however, has chosen to “not let a crisis go to waste”, and determined to “act swiftly” to get through a bunch of programs that they would never be able to get through Congress if the people were paying attention.

Of course when the President just turns over stimulus creation to Congress with only the stipulation of getting a lot of money into the economy quickly — then congressmen get lots of goodies to take home to their constituents.

Nancy Pelosi, for example, gets a $30 million program for renovating the salt marshes in San Francisco Bay to save the salt marsh harvest mouse.  A  cute little fellow that may be endangered.  There are probably  jobs involved, but they may not be those most needed by unemployed San Franciscans.

The usual rule is to avoid raising taxes during a recession.  Once you have done what can be done with unemployment benefits and food stamps, then you do everything you can to favor the small businesses that are always the source of new jobs.  Instead, this time Democrats plan to raise taxes on small business.  First, Obama has promised to let the Bush tax cuts expire.  That will raise the top personal rate from 35% to 39.6%.  If those taxes expire, so will various tax deductions and exemptions bringing the top marginal rate as high as 41%.

Chairman Rangel wants to impose a “surtax” on individuals with an adjusted gross income of more than $280,000 — “the rich.”  But more than six of every 10 who earn that much are small business owners, sole proprietors or subchapter S corporations who pay the individual rate.  Then phasing out various deductions and exemptions would bring the tax rate up to around 46% — a level that hasn’t been seen since 1986.

If that weren’t enough to discourage businesses from hiring or expanding; government has shown a willingness to take over private business, tell business how much they may earn, change regulations and add new ones, and impose economy-destroying mandates like the Waxman-Markey climate bill which would raise costs throughout the economy.

“Capital,” the late Walter Wriston said, “will go where it is wanted, and stay where it is well treated. It will flee from onerous regulation of its value or use and no government power can restrain it for long.”  Must be true.  Steven Ballmer has threatened to move Microsoft overseas, and businesses are leaving California in droves.

The cartoon is by Michael Ramirez at IBD Editorials

Just How Gullible Are You? Just Wondering. by The Elephant's Child
June 29, 2009, 10:12 pm
Filed under: Capitalism, Economy, Freedom, Progressivism | Tags: , ,

“Since when do we call it a “town hall” meeting when a bunch of pre-screened experts ask the president a bunch of pre-approved questions in the East Wing of the White House?
” Michael Cannon asked in the Corner at National Review Online.   Good question!

The president held a so-called “town hall” meeting with a pre-selected audience last Wednesday under the benevolent auspices of ABC.  Critics, other opinions, and disagreement were not included.  Republicans formally requested a chance to participate or time to respond, but those who were not fully in the Obama tank were not invited.

Health Care experts from the Cato Institute respond, in the video above, with some of the information you need.  Much of the ObamaCare plan is based on the idea that there is a best treatment for any situation, and with a modern Internet technology approach, and with all your health records online, the government can choose the best care for everyone, and by “incentivising” [fining the doctors who don't follow the rules] best care, they think they will improve care and reduce costs.  “One size fits all” says Michael Cannon.

But it doesn’t work that way.  My next-door neighbor can take only very small amounts of medicine. A full dose knocks her out.  I need the full dose and then some.  And as far as government management is concerned, a couple of notes.  When the car czar and his czarettes made the decision to close a large number of Chrysler dealerships [a very odd decision, since the dealerships were not owned by Chrysler, but were independent businesses privately owned, who bought their stock of vehicles from Chrysler], Representative Barney Frank (D-MA) immediately went to Chrysler to make sure that the dealer in his district, who was on the closure list, stayed in business.  This is only a tiny sample of how government control works.

These people are politicians and bureaucrats. What do they know about running the health care of 300 million people?  Canada has 33 million people and cannot manage their health care.  Great Britain has 66 million people, and theirs is a mess.  Even Massachusetts, population about 6.5 million, has a new health care plan that is a flop.  But the Great and Wonderful Obama —who has never run as much as a candy store — is perfectly sure that he can manage the whole system, cover the uninsured, reduce costs and insure a healthier, happier America.

The one thing that you most need to know about the “Kennedy Health Care Bill” working its way through the Senate, is that members of Congress, and the Administration and whoever else is currently on the admirable health care plan that they all love are excused from ever participating in the Health Care Plan they stick the rest of us with. And Obama has excused his friends in the Unions from any tax on their benefits.

A Very, Very Bad Bill, Passed Without Understanding. by The Elephant's Child

What were they thinking?  President Obama said in his Saturday morning weekly address that :

For more than three decades, we have talked about our dependence on foreign oil.  And for more than three decades, we have seen that dependence grow.  We have seen our reliance on fossil fuels jeopardize our national security.  We have seen it pollute the air we breathe and endanger our planet.  And most of all, we have seen other countries realize a critical truth; the nation that leads in the creation of a clean energy economy will be the nation that leads the 21st century global economy.

With all due respect, this is absolute nonsense.  The Waxman-Markey Climate bill attempts to switch our need for electricity from (evil) coal to “clean” wind and solar power. This has nothing whatsoever to do with our dependence on “foreign oil” which powers our transportation, not our electric power.  We are completely energy independent in our use of electric power.  Electricity generation accounts to a scant 1.5 percent of our petroleum use.

Our reliance on fossil fuels has not jeopardized our national security.  Oil from our own country, Canada and Mexico accounts for around 60 percent of our needs.  We buy 10 percent from Saudi Arabia and 7 percent from Venezuela, who could be considered somewhat unfriendly, but need the cash. The rest is scattered around the world market, but jeopardizing our security?  Let’s not exaggerate.

“Make no mistake,” the President said, “This is a jobs program.”  Spain has had vast experience with wind power, and an aggressive “green jobs” program. No other country has given such broad support to the construction and production of electricity through renewable resources.  A study by economist Dr. Gabriel Calzada of Rey Juan Carlos Universidad found that each new wind energy job cost $754,000, mostly installing towering turbines.  Switching to wind power destroyed 2.2 regular jobs for each “green job” because pricey “renewable” electricity caused employers to lay off employees.

New onshore wind power in the U.S. is 37 percent more expensive than new advanced coal technologies.  Solar-photo-voltaic technology is 300 percent more expensive.  And we have enough coal to last more than 300 years.  Mr. Obama has said several times that he wants to bankrupt coal companies.

The U.S. Energy Information Administration reported in 2008, on a dollars per MWh basis, the U.S. Government subsidizes wind power at $23.34 — compared to such reliable energy sources as natural gas at 25¢; coal at 44¢; hydro at 67¢; and nuclear at $1.59.

“This will lead to the creation of new businesses and entire new industries.  And that will lead to American jobs that pay well and cannot be outsourced”  Mr. Obama said.  But critics say that the bill’s restrictions will cause many American manufacturers to shift their operations overseas.  A look at the costs enumerated here shows why.

The Senate may not pass the bill so easily, or with such disgraceful shenanigans as dumping a 300 page addition to the bill at 3:00 am just before the vote that does not integrate the changes into the original bill.  Nobody has read the whole bill.  It was not made available.   The phone lines were simply shut down before the vote.

This bill must be defeated in the Senate.

What Do You Do About the Rich? And What Do You Do About the Poor? And What About All Those Folks In Between? by The Elephant's Child
June 16, 2009, 12:34 am
Filed under: Capitalism, Economy, Freedom | Tags: , ,

Economist Daniel Mitchell of the Cato Institute does a wonderful job of explaining economic concepts in an easy to understand way.  Or perhaps you just need what you know instinctively reinforced.  Dr. Mitchell is your man.  He offers you the arguments you need in your next conversation with a Liberal.  Enjoy.

That is a truly amazing tie.

Peak Oil Nonsense, and Clean Energy Hooey. by The Elephant's Child
May 20, 2009, 9:29 pm
Filed under: Capitalism, Economy, Energy, Freedom, Science/Technology | Tags: , ,


Did you wonder where our oil comes from?  Here are the sources of all that “foreign oil” that is so often declaimed.  [ Click on the image to enlarge]

Aside from the (erroneous) belief that “global warming” is a threat to the life of the planet, there is a widely held belief that we have reached and passed “peak oil,” and it’s all downhill from here on out.  So we have no choice but to move to smaller, more efficient cars, hybrids, electric cars, alternate fuels and clean renewable energy.  “Sustainable” is the euphemism of choice.  And the Obama administration doesn’t like coal.

So-called “clean renewable energy” has nothing to do with transportation.  Wind and solar produce some electricity, but do not power automobiles. Peak oil advocates point to declining oil production in Mexico as a sign of an imminent global peak, but ignore indications that the Mexican government has been starving the national oil company of capital.  Many academics assume that once prices retreat that they will continue to decline, or conversely, ignore the effects of price controls, tax changes or other economic changes.

A new study by the energy consultancy IHS-CERA (formerly Cambridge Energy Associates) notes that in 2000, Canada’s oil sands produced just 600,000 barrels of oil a day, while today they produce 1.3 million barrels.  By 2030 they could be producing as much as 6 million barrels.  If we have not antagonized our neighbors too much, perhaps we can buy some of it.

Only a very minor role for alternative energy over the next three decades is predicted by any reputable major forecaster.  Fossil fuels will continue to be the source of our transportation energy. The United States government has removed more than 31 billion barrels of oil, 154 trillion cubic feet of natural gas and 11 billion tons of coal from the market by laws that make it difficult if not impossible to prospect or produce energy on federal lands.  To keep our economy healthy and growing, we must have more oil.

But lawmakers in Congress have gone after our most important supplier with “buy American” provisions in the stimulus plan.  Officials have suggested perhaps Canada’s oil is too “dirty”, and would increase our “carbon footprint.” And Janet Napolitano, Secretary of Homeland Security, is suggesting that we need a wall and fences on our Northern border so that our Southern neighbors will not feel discriminated against.

I hope our friends to the North will forgive our foolishness when we are freezing to death in the dark.

Stimulus Funds Come With Strings! by The Elephant's Child
May 8, 2009, 9:00 pm
Filed under: Capitalism, Economy, Law | Tags: ,

Americans seldom pay much attention to the newspapers, or the news for that matter, from other countries so we are unprepared for the extent to which other countries pay attention to our news. The world has noticed  President Obama’s controversial  intervention into economic affairs. They have viewed his attempt to subvert the legal rights of lenders with alarm.  This is a matter of concern for anyone who does business in the United States or with the U.S. government.

Today the Obama administration established that this kind of banana republic power play is part of their new rule book.  The administration is threatening to rescind billions of dollars in federal stimulus money if Governor Arnold Schwarzenegger and state lawmakers do not restore wage cuts to unionized home healthcare workers which were approved in February as part of California’s budget problems.

Evan Halper of the Los Angeles Times reports:

Schwarzenegger’s office was advised this week by federal health officials that the wage reduction, which will save California $74 million, violates provisions of the American Recovery and Reinvestment Act.  Failure to revoke the scheduled wage cut before it takes effect July 1 could cost California $6.8 billion in stimulus money, according to state officials.

The news comes as state lawmakers are already facing a severe cash crisis, with the state at risk of running out of money in July.

The wages at issue involve workers who care for some 440,000 low income disabled and elderly Californians.  The workers who collectively contribute millions of dollars in dues each month to the influential Service Employees International Union and the United Domestic Workers, will see the state’s contribution to their wages cut fro a maximum of $12.10 per hour to a maximum of $10.10.

California is having major budget problems.  Many suggestions for reducing costs have made the news. I haven’t heard anyone from California suggest drilling for offshore oil which would bring in big money.  But California will have to solve their own problems.

The Democratic Party received $58 million from labor unions for the 2008 elections, and labor leaders came up with another $44 million for the Obama campaign, as well as turning out an estimated 450,000 union associates who took part in get-0ut-the-vote efforts.  The unions get what they want.

The larger problem is that actions have consequences.  Obama has inadvertently  informed investors and businessmen all over the world that legal rights are no longer sacred, contracts can be voided at will, and the risk of state intrusion into the private economy is as real in the United States as in a developing country.

And the News from Our Allies Is… by The Elephant's Child
May 8, 2009, 2:38 am
Filed under: Foreign Policy, Freedom, Military | Tags: , ,

From the Wall Street Journal:

Since World War II, U.S. military dominance has underpinned the Asia-Pacific region’s prosperity and relative peace.  So it’s cause for concern when one of America’s closest allies sees that power ebbing amid unstable nuclear regimes such as Pakistan and North Korea and the expanding military power of China.

In the preface to a sweeping defense review released Saturday Australian Defense Minister Joel Fitzgibbon writes: “The biggest changes to our outlook…have been the rise of China, the emergence of India and the beginning of the end of the so-called unipolar moment; the almost two-decade-long period in which the pre-eminence of our principal ally, the United States, was without question.”

Australia prepares for U.S. decline.  Read the whole article here.

Arbitrary Government Intervention Could Lead to Money Flowing Elsewhere. by The Elephant's Child
May 8, 2009, 1:56 am
Filed under: Capitalism, Economy, Law | Tags: , , ,

From the Guardian, in the UK:

(Reuters) – Political risk is becoming a growing concern for investors in the United States as the government plays a larger and more controversial role in private enterprise because of the financial crisis.

State intervention in economic affairs is always closely watched by investors for what it means for their decisions on where to allocate money, although this is usually more of a worry in emerging markets than in developed economies…

They view President Obama’s restructuring plan for bankrupt automaker Chrysler as an attempt to subvert the legal rights of lenders and say lenders will also be unfairly targeted if the U.S. Congress passes a bill to rewrite bankruptcy law to reduce home mortgage payments.

Investors concerned that politics could hurt them may demand a risk premium before they buy stocks or bonds or do a business deal.  That could make the U.S. less competitive and money might flow elsewhere.

“There is a much larger political risk premium on investing in the United States than there has been in years,” said Sean West, an analyst at Eurasia Group, a research and consulting firm that studies political risks.

“What we’re seeing now in the United States is much more like what we see in emerging markets, where the government either by choice or as a result of circumstance is in a position to decide which companies or banks survive and which ones don’t” he said.  “These were almost unthinkable risks a year ago.”

Ouch!  The Guardian is a left-of-center paper, and Reuters is, well, Reuters.  You can read the whole article here.  Sometimes it is helpful to discover what others are saying about you.

The Strange, Strange Goings-on at Chrysler. by The Elephant's Child

This whole Chrysler thing is simply unbelievable, and I’m not sure that I understand it at all.  In part this is because everything seems to be in flux. Chrysler is shut down, in bankruptcy, but not a ‘regular’ bankruptcy. The White House, Car Czar Steven Rattner and his deputy Ron Bloom are seeking to take property away from one group of people and give it to a more favored group.  And in the process, they are attempting to override contractual and legal rights of Chrysler’s senior lenders, and divide up the company between the government and the United Auto Workers.

The senior lenders are entitled, legally and contractually,  to be paid first, before the UAW, the UAW Pension Fund, or the taxpayers.  Some of the big banks, already cowering under administration threats, have buckled.  Obama forced the senior lenders to take 30¢ on every dollar that they had loaned to Chrysler.  Some hedge-fund managers pointed out that they have a legal and fiduciary responsibility to their investors — including pension funds — and decided to take their chances in bankruptcy court.

Obama has called them “speculators” and stated angrily that “I don’t stand with those who held out while everybody else made sacrifices.”

Creditors to Chrysler say that they were “taken aback” by the hardball tactics that the Obama administration took to try to force them into going along with administration plans to restructure Chrysler.

The government reorganization plan has the United Auto Workers Union eventually owning 55 percent of the stock in a restructured Chrysler LLC.  Fiat will eventually own 35 percent though they will put in no money whatsoever, but only offer their own technology for making very small cars, and the Government (the taxpayers) together with the senior lenders will own 10 percent of the company once it is reorganized.

This suggests that the government will be dictating what comes out of Chrysler’s production line.  The current owner of Chrysler, Cerberus Capital Management is one of the most wealthy and powerful private equity groups in the world.  They, according to Francis Cianfrocca, have access to billions of dollars that they could invest in Chrysler.  They have received over $5.5 billion from the federal government so far. The fact that they simply don’t want to invest their own money suggests that Chrysler isn’t  worth investing in.

It is highly improper for the government to take sides. Business is very much taken-aback at bullying tactics from the White House. And lawyers are aghast at the casual dismissal of the rule of law. This is the President who intruded into a publicly traded corporation and fired its CEO.  Something quite new in the exercise of presidential power.

The potential for Chrysler to turn a profit under government-imposed conditions seems slight.  I have explored some of the government-imposed problems lying-in-wait for the automobile companies here and here.  They are things that Congress has demanded in misguided laws, or that the White House intends to demand in the name of climate change.  And they are apparently quite unaware that they are making demands that cannot be met or would ruin the auto business anyway.

Absolutely, entirely unbelievable.

A fine college education should be available to everyone. shouldn’t it? by The Elephant's Child
May 1, 2009, 3:59 pm
Filed under: Education, Fun n Games, Humor | Tags: ,

If you have a kid in college, you are very aware of the costs. If you don’t, you probably don’t want to know. But tuition well-spent is reassuring.

(h/t: Jonah Goldberg)

President Obama had demanded that his cabinet come up with some significant budget cuts. by The Elephant's Child
April 28, 2009, 2:33 am
Filed under: Democrat Corruption, Liberalism, Progressivism | Tags: , ,

Here’s another visualization of the enormous budget cuts that President Obama has asked his cabinet for.  I suggested nixing the Kobe beef, the flown-in pizzas, and losing the full-time make up artist.  A little here, a little there and it all adds up, just not very much.

What do Americans know about energy and the environment? by The Elephant's Child

What do Americans believe about energy and the environment?  The Manhattan Institute undertook a poll, with the help of Zogby, to find out with a survey in January of 2009 of 1,000 Americans, chosen to be representative of public opinion generally.  Some examples:

  • 49 percent of respondents believe that Saudia Arabia exports the most oil to the U.S., while only 13 percent correctly identified Canada as our major supplier.  Only 16.1 percent of our imports came from the Persian Gulf region.
  • More than 67 percent believe that we can meet future energy demand through conservation and efficiency.  Historically, energy demand increases with efficiency gains.  The Energy Information Administration projects U.S. energy use to increase 11.2 percent from 2007 to 2030, while global energy consumption will increase by 50 percent.
  • Only 37 percent correctly answered that no one has ever died from the actual generation of nuclear power in the U.S.  The U.S. has not built a nuclear -power reactor since the meltdown at Three Mile Island in 1979, 104 active reactors safely generate roughly one fifth of our nations electricity.
  • 63 percent of those surveyed believe that human activity is the greatest source of greenhouse gases.  In fact, such emissions are significantly  smaller than natural emissions.  Most of the CO2 that enters the atmosphere comes from the oceans and the biosphere — 41.46 and 55.28 percent respectively.  The burning of fossil fuels accounts for only 3.27 percent  of the carbon dioxide that enters the atmosphere.
  • Fewer than 28 percent believe that U.S. air quality has improved since 1970.  The six most common pollutants have decreased by more than 50 percent.  Air toxins from large industrial sources have fallen by nearly 70 percent, and new cars are more than 90 percent cleaner.  During the same period, GDP tripled, energy consumption increased 50 percent and motor vehicle use increased almost 200 percent.

Offshore oil drilling can be accomplished in an environmentally sensitive manner.  Spent nuclear fuel can be stored safely. 91 percent of our electricity is generated by fossil fuels and uranium.  Renewables will not soon make any significant dent in that.


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