Time2Time

Climategate 2.0

2011-11-26T11:00:00.000-05:00

A new batch of 5,000 emails between pro-global warming scientists were anonymously released to the public yesterday, igniting a new firestorm of controversy nearly two years to the day after similar emails ignited the Climategate scandal.

Three themes are emerging from the newly released emails: (1) these scientists view global warming as a political “cause” rather than a balanced scientific inquiry; (2) prominent scientists central to the global warming debate are taking measures to conceal rather than disseminate underlying data and discussions; and (3) many of these scientists frankly admit to each other that much of the science is weak and dependent on deliberate manipulation of facts and data.

The purported negative effects of industrialization and population growth on the environment (viz., Anthropogenic Global Warming (AGW)) are central to the Administration’s adoption of progressive regulation that negatively impacts individual liberty and free-market economic activities. These regulatory initiatives include removal of large tracts of land and natural resources from development, promotion of feel-good energy technologies, and increasing reliance on international bodies to “save us from ourselves.”

Maybe it is time for us to save ourselves from politically motivated scientists.

Putting a “Happy Face” on Progessivism

2011-09-21T20:37:00.000-04:00

Jefferson said “The course of history shows that as a government grows, liberty decreases.” Well, the government has been working diligently over the past several years to keep up its end of the bargain by taking away "life" (legislated healthcare rationing) and "liberty" (promotion of Comprehensive Planning on the state and local level that separates property ownership rights from development rights). If that were not enough, the government now seeks to eliminate all vestiges of our God-given rights, by taking away our individual "happiness" and replacing it with that of the collective.

Case in point: Maryland’s state website has established a "Genuine Progress Indicator” that advocates for the adoption of the so-called “Happy Planet Index," developed by the New Economy Foundation (NEF) with support from Friends of the Earth. To calculate the HPI, authors use the following equation: Life Satisfaction times Life Expectancy divided by the community's Ecological Footprint, as measured by environmental regulation. (see http://bit.ly/q8kbTx). It is left to the reader to plumb the philosophical depths (the “dark” depths, I may add) of this thinking by visiting the link and exploring Maryland’s “happiness metrics,” which not only describe the Happy Planet Index, but promote the concepts of “Gross National Happiness” and “Subjective Measures of Human Wellness.”

The idea that government can define “happiness” much less use government resources to promote its secular, communal definition on a website should scare the hell out of any reasonably informed, freedom-loving American citizen. In effect, the state of Maryland is attempting to put the final post-modernist nail in the Constitution’s coffin by hypothecating that ALL rights come from the state (man) and not man’s Creator: that is, rights are not individual, but collective.

So, keep this in mind. Using the HPI definition and simple math, if you have low life satisfaction and life-expectancy because the government makes you worker harder and longer in a job you do not like because it’s the only job you can find, you can help the planet as a whole by reducing your ecological footprint.

Searching for New Sources of Energy and Looking in all the Wrong Places

2011-09-17T12:39:00.000-04:00

Recently, Frank Luntz, a pollster, corrected a Fox News pundit, who stated that Americans were in favor of drilling for more oil. Luntz stated that Americans did not want to drill for more oil, they “wanted to explore for new energy sources.” Personally, I believe this is a distinction without a difference; however, it appears that the liberals and environmentalists have convinced Americans that drilling equals environmental apocalypse. So, following the lead of Albert Einstein, I decided to perform some “thought” experiments to see what sources I could find and thereby meet the needs of my fellow citizens, who currently are sitting on 86 billion barrels of oil, with 85% of it off limits to drilling (USA Today, June 13, 2008, pg 2A).

Serendipitously, I came across a 2006 USA Today article “Feds: Obesity Raising Airline Fuel Costs,” in which USA Today suggests, based on a 2000 Center for Disease Control study, that the 10 additional pounds gained by the average American in the 1990s, costs the American airlines an additional 350 million gallons of fuel per year and produces 3.8 million additional tons of carbon dioxide. The article states that this represented a fuel price increase of $275 million. I was “flabbergasted,” pardon the pun, which resulted in an epiphany. What if I could turn “flab” into “gas?”

First, I needed to confirm some facts. I had to determine the scope of the opportunity. First, I checked the projected benefits of simply reducing the cost of airline fuel. I found it circumspect that 350 million gallons of fuel could cost only $275 million dollars (78.9 cents per gallon). Lo and behold, to my surprise, the International Air Transport Association (www.iata.org) tracks the weekly price of aviation fuel. In 2000, a gallon of gas traded at 87 cents per gallon, which compares favorably to that reported). Even more surprising, the cost of a gallon of aviation fuel on June 13, 2008 was listed as $4.03 per gallon. Then I knew I was really onto something. The potential savings from solving this problem alone was worth almost 5 times the originally reported cost savings – $1.27 billion.

But were there other benefits? Several came to mind: reduction in food cost, better health were obvious… how about generating energy from the fat stored in the bodies of all these overweight individuals.

Additional research was required to estimate the additional benefits that could accrue to my fellow Americans – those sitting on 86 billion barrels of oil, 85% of which is off limits to drilling (are you starting to see a theme here). Here is what I learned:

- 65% of adult Americans are overweight or obese (source: CDC). This is defined in terms of body mass index (BMI), but it is generally accepted that it would include individuals who are at least 20% above their ideal body weight. Using the mid-point weight, by BMI, an average weight of 147 pounds for a 5 foot, 9-inch height individual was calculated. Using the 20% factor, “overweight or obese” was determined to be 30 pounds of fat.

- 75.4% (226.3 million) of all Americans (299.4 million) in 2006 were older than 18 (source: Census Bureau).

- Various newspaper reports state that the average American (those sitting on 86 billion barrels of oil, 85% of which is off limits to drilling) consumes 4,000 calories per day. According to the calculator on www.health.com, a 147-pound person doing office work and light reading 16 hours per day and sleeping 8 hours per day, requires 2,399 calories per day. Other sources indicate a minimum need of 2000 calories per day. These statistics are comparable to those reported by the Food and Agriculture Organization (FOA) of the United Nations which states that the average American consumes 3,790 calories per day compared to some third world countries that consume 2,020 calories per day. Conservatively, Americans consume at least 1,500 calories each day more than they need.

- According to www.health.com, 1 hour of vigorous walking exercise consumes about 368 calories. For purposes of this analysis, I will assume it is all fat; clearly that is not the case, but this is a blog not a scientific journal.

- There are 9 calories per gram of fat (source: www.wikipedia.com ). There are approximately 500 grams in one pound (source: basic high school education, circa 1967).

- According to a University of Washington Cooperative State Research, Education, and Extension Service (CSREES) study (March 2008), Adam Drewnoski, checked the prices of 372 foods sold at local supermarkets in the Seattle, WA, area, comparing the prices with calorie density. High calorie density foods include things like peanut butter and granola; low-density foods included things like fruits and vegetables. “Based on a standard 2000 calorie diet, the researchers found a diet consisting of calorie dense foods costs $3.52 per day, but a diet consisting primarily of low-calorie foods, costs $36.32 a day. The average American eats a variety of foods, throughout the day, spending $7 per day.” Further, the study reports that during a the two year study period, the price of high –calorie foods decreased by 1.8% and the price of low-calorie foods increased 19.5 percent. While the $7 per day seems high, it does compare favorably to the number reported in Agriculture Fact Book, 2000 – 2001, food expenditures in the United States were $2,964 per capita or $8.12 per day, which represents a higher caloric intake than 2000 calories per day. Based on this data, I non-scientifically extrapolated the data to state that the cost of 200 calories of food is $0.43 (200 x $8.12 per day / 3,790 calories per day).

So, what can you deduce from all this? Assuming the 147 million average Americans, who are either overweight or obese, (and sitting on oil, etc) were to walk one hour per day five days per week and reduce their food consumption from almost 4,000 calories per day to 2,500 per day, they would:

- Lose 4.4 billion pounds of fat over a period of 1.3 years, resulting in better health and a feeling of self worth due to their accomplishment.

- Save the American airline industry ~ 800 million gallons of fuel per year (350 million gallons per 10 lbs multiplied by 30 pounds per person and divided by 1.3 years) costing $3.2 billon dollars (800 million gallons multiplied by $4.00 per gallon), but probably an overstatement, because the cost of fuel would most likely come down due to supply / demand … so discount this by a third, and reduce the savings by $1 billion a year to $2.2 billion). This is the equivalent of one-day’s energy consumption for the whole United States (20 million barrels per day at $137 per barrel, as of this writing).

- Reduce individual adult food cost by at least 32%, assuming a 2,500-calorie diet (i.e., (3,790 calories – 2,500 calories)/(3,790 calories)) or a savings of $948 per year per adult. Assuming a family of four, comprised of two adults and two minors, this represents a family savings of almost $1,900 per year or 4.5% of the average American family income (assumed to be $42,000). Not factored into the calculation is the costs required to produce the food which can be 12 to 100 times as energy intensive as the calories consumed (i.e., it requires 12 calories of energy to produce 1 calories of corn; 96 calories of energy to produce 1 calorie of beef).

- Reduce carbon dioxide emissions by 9 million tons per year. The US electric utility industry releases 2.8 billion tons of carbon dioxide per year (source: Washington Post). Airline savings would equate to a little more than 1 day of carbon dioxide savings.

- Even though it is beyond the scope of this blog post and will be the subject of another blog, if the walking energy expended by these 147 million Americans was harnessed on treadmills and converted to useful work (assuming a conversion ratio of 0.7), then we could generate approximately 85 watts per person or approximately 12,500 Megawatts (Mws) in total capacity. Assuming each person walks1 hour per day, five days per week, for 1.3 years, this is equivalent to approximately 50,000 Mw-hr in generation. This is approximately 4 days of generation from a 600 Mw coal fired fossil unit.

In spite of these benefits, I suspect that the average American (who is currently sitting on 86 billion barrels of oil, with 85% of it off limits to drilling) will not choose to capture them. Instead, they will use the additional calories to generate hot air, the energy content of which cannot be captured for useful purposes, and only will contribute to global warming and the eventual energy death of the world. That assumes that the flawed ideas and inaction generated by their talking doesn’t destroy it first.

A Lesson from the Other Side of the Rabbit Hole

2011-07-23T21:46:00.000-04:00

I love connecting the storyline of two separate newspaper articles, which the editors see as disparate, but are actually interrelated. On July 19, 2011, the Wall Street Journal published two articles: “Get ready for 70% marginal tax rate" by Michael J. Boskin and "Notable and Quotable" a quote of a Heather McDonald statement on the University of California's diversity obsession. When read as one, the two articles lay bare an assumption that is critical to the liberal progressive view of government: government never has a spending problem – it is always a revenue problem. Really? Only if you are Alice in “Wanderland.”

When progressives look at government – as Alice might have – “through the looking glass,” they see a well-oiled, efficient, and effective machine, which can only be harmed if taxes are not raised. When conservatives look at government through a microscope, they see an out-of-control bureaucracy whose tax-and-spend profligacy robs them of their individual rights to life, liberty, and the pursuit of happiness – the basis of which is economic freedom.

In “Get ready for a 70% marginal tax rate," by Michael J. Boskin, the author addresses the perilous nature of our economic future under a tax-and-spend scenario. Boskin states “the current top federal rate of 35% is scheduled to rise to 39.6% in 2013 (plus one-to-two points from the phase-out of itemized deductions for singles making above $200,000 and couples earning above $250,000). The payroll tax is 12.4% for Social Security (capped at $106,000), and 2.9% for Medicare (no income cap). While the payroll tax is theoretically split between employers and employees, the employers’ share is ultimately shifted to workers in the form of lower wages.” Using California as an example, state income tax is about 10.5%. Thus the marginal tax rate paid on wages is approximately 44.1%. As Boskin points out, this is a net figure because state income taxes are deducted from federal income. Under this scenario, for a California citizen, the expiration of the Bush tax cuts in 2013 will result in the addition of a 0.9% increase in payroll taxes to fund the Affordable Health Care Protection Act. Obama's proposal to eventually uncap Social Security taxes will lead to a combined marginal tax rate in California of 58.4%.

But things get worse. The non-partisan Congressional Budget Office projects that an additional $841 billion deficit in 2016. Assuming a goal of a balanced budget through tax increases, all income tax rates will have to be increased by 31.7%, raising the combined marginal tax rate for a California citizen to 68.8%. Mr. Boskin then uses this argument to make the point that a California teacher, earning $60,000 a year, would keep approximately 30% of her wages or about $18,000. He states, “At the margin, virtually everyone would be working primarily for the government, reduced to a minority partner in their own labor.”

In the second article, Heather McDonald paints a clear picture of California’s true situation as it stares at the brink of economic disaster. She states that “California's budget crisis has reduced the University of California to near-penury, claim its spokesmen.” “Our campuses and UC Office of The President already have cut to the bone," the university system's vice president for budget and capital resources warned earlier this month. According to Ms. McDonald, they have not cut their staff to the bone. “The University of California at San Diego is creating a new, full-time Vice Chancellor for Equity, Diversity, and Inclusion." This position will augment UC San Diego's already massive diversity apparatus which includes the following:

· The Chancellor's Diversity Office

· An Associate Vice Chancellor For Faculty Equity

· The Assistant Vice Chancellor For Diversity

· Faculty Equity Advisors

· Graduate Diversity Coordinators

· Staff Diversity Liaison

· Undergraduate Student Diversity Liaison

· Graduate Student Diversity Liaison

· A Chief Diversity Officer

· The Director Of Development For Diversity Initiatives

· The Office Of Academic Diversity And Equal Opportunity

· The Committee On Gender Identity And Sexual Orientation Issues

· The Committee On The Status Of Women

· The Campus Council On Climate, Culture, and Inclusion

· The Diversity Council

· Directors of the Cross-Cultural Center

· The Lesbian, Gay, Bisexual, Transgender Resource Center and

· The Women’s Center.

I wonder if the California teacher – whose take home pay is about 30% of what she earns – believes that the University of California may have a little further to go before they “reach the bone.” That is unless she works for UC, in which case, the progressives’ view of the Utopia has come almost full circle: the teacher will be working almost full time to pay the taxes that pay her own salary.

Alice would be proud.

Economics In One Page

2011-07-23T18:26:00.002-04:00

In the article “Rebuild wages to restore economy," by Holly Sklar, (Virginian Pilot July 23, 2011), the author states "it's time to stop stuffing the penthouse of the economy with gold and rebuild the crumbling foundation." She argues that minimum wage should be raised to $10.00 per hour because $7.25 per hour ($15,080 per year) does not pay “… for rent, groceries, transportation, medicine and everything else.” She asserts that this will not harm the economy. She quotes John Shepley of the Business for A Fair Minimum Wage: “ … the notion that raising the minimum wage will kill jobs is just bunk. People at the lower end of earnings tend to spend 100% of their after-tax income. They put it right back into local businesses buying food, clothing, car repairs and other necessities. When the minimum wage is too low it not only impoverishes productive workers, it weakens the key consumer demand at the heart of our local economy." While this article quotes many "facts," these facts do not tell the truth.

First, it is neither an employer’s fiduciary responsibility nor the government’s Constitutional responsibility to “rebuild wages.” Wages are set by supply and demand. In fact, if an employer is able to produce a high-quality, high-demand product at a market-based price and produce that product with absolutely no employees, it will do so. Businesses are concerned with productivity not employment. To the extent that employees can provide a function that can be done more economically than by a machine, they will be employed. This is demonstrated by the history of manufacturing in the United States since 1940.

Second, the author correctly asserts artificially raising wages does keep employees employed and provides them with more money to spend in the economy – at least for a time. However because they are adding no additional value to the product or service they are providing, within a short period of time the increase in wage is subsumed into the ongoing cost of business, increasing the price of the product to the consumer. The employee may be better off, the consumer is not. The consumer’s increased price for a hamburger represents dollars that are no longer available to be spent on other innovative, productivity enhancing products or services like personal education. In fact, minimum wage only increases the inefficiency of the marketplace, making overall business less competitive. This is the lesson we have learned and will continue to learn from India and China.

Last, Ms. Sklar points out that minimum-wage workers have only $15,080 to pay for the basic necessities of life, but she fails to mention that these workers qualify for a plethora of government programs that subsidize their basic income, including food stamps, housing allowances, back to work programs, et cetera. These benefits are part of government “entitlements” that in total represent about 70% of our annual federal budget, which the guys in the “Penthouse” make possible through the jobs they do provide.

Fundamentally, conservatives and progressives have two diametrically opposed views of the way the world works. A conservative believes that one creates wealth through one’s labor, first saving for future investment, and then taking a risk to start a business that meets a real demand. Progressives believe that wealth is created by the government through printing paper money, distributing it to those who are dependent upon the government, who save none of it, and who seek some fictitious future that never materializes. If a conservative fails, the business’s capital – which was created by the owner – is redeployed to alternative economic uses. If a progressive fails, the government simply prints more money.

So, if one is concerned about low-wage workers well-being, perhaps he or she should donate through their church or a local charity. Raising minimum wage is an ineffective, inefficient way to accomplish this objective, as proven by the fact that almost half of all citizens receive some form of government subsidy. Instead, we have created is a large, centralized progressive government that threatens to destroy liberty and freedom for everyone.

CAFE Anyone?

2011-07-08T10:51:00.000-04:00

More and more I'm beginning to understand how Alice felt when she fell down the rabbit hole into Wonderland. We are now living in a world in which political science trumps engineering science. Don’t even think about applying engineering economics principles. In this brave new world, the consequences of big business being in bed with big government are becoming readily apparent. Nothing illustrates this better than the Obama administration decree – using linear thinking in a non-linear world – that car manufacturers achieve a 56.5 mile per gallon average efficiency standard by the year 2015. The current standard is 35.5 mpg.

In the Wall Street Journal article "Over Caffeinated CAFÉ" by Holman Jenkins (July 6, 2011), Mr. Jenkins correctly points out "engineering is absent." No consideration is given to the state of the technology or our ability to deliver this mandated efficiency goal. Sean McAlinden of the Center for Automotive Research reports that to meet the stated goal the demand for materials needed to produce ultra high-mileage cars will exceed the supply by several times over. This is in a world where the latest Honda Civic is 42% heavier than its 1990 model and has nearly twice the horse power. The consequences of this mandate will be the production of cars Americans do not want at a price they cannot afford. What is the auto industry’s response to this? They have asked that the timeframe for achieving this goal be extended so that they have time to lobby for its repeal under a new administration. They do not want to directly confront Obama on this issue because they do not want to bite the hand that bailed them out.

So just like the electric utility industry, where over the past 10 years the number of electronic devices owned by each American has gone up by a factor of four to five, but the administration wants to replace high-energy density conventional electricity production with low-energy density solar and windmill production, at three to four times the cost of these conventional sources, the Obama administration wishes to raise fuel efficiency goals without any consideration of technical or economic feasibility.

Just like Alice in Wonderland – where up is down and down is up – the Obama administration will not allow engineering reality to stand in the way of political goals. The overarching natural principle of government is at work – the law of unintended consequences. Taking every gasoline powered vehicle off the road and replacing them with electric vehicles will substitute the carbon dioxide they otherwise would have produced with carbon dioxide that is generated by fossil fuel coal plants to produce the electricity they will require. In the process, as Obama has correctly stated, “prices … will skyrocket.” Does this sound like a good use of precious investment capital to you?

Economic Discovery "Turns To"

2011-07-05T14:42:00.001-04:00

In “Economic Recovery Turns 2: You Feel Better Yet,” (Paul Wiseman, VA Pilot 7/5/2011), the author quotes many facts to make the same old progressive talking point: because corporate profits are up 59% (since 2009) and CEO pay is up 25% (since 2009), “evil” [my word] corporations, the CEOs who run them, and stockholders are doing well, but the average employee, whose wages are down 1.6% (since 2010) is not. Translation: “evil” corporations are not meeting their social obligation to hire people or pay them a fair wage.

First, profits are not necessarily a bell-wether of the state of the economy. Most companies on the stock exchange are large corporations (20% of all companies in the US) and are generally multi-national. A large portion of their operations are outside the United States. A better measure of corporate health is gross revenues, generated by business units within the United States.

Second, most new job creation is from small and mid-sized businesses (80% of all companies in the United States). The revenue (and profits) within this segment have been and are currently stagnant.

Third, and most important – listen carefully – the purpose of a company is not to create jobs and hire people (wages). Its purpose is to produce a product or service as efficiently as possible (productivity), thereby generating profit. So, if my small business can produce a high-quality, low-cost, high-demand product or service, without one employee, that is what it will do. Wages are set by local / global market forces. If government wants companies to employ more people, it should encourage a business environment in which companies thrive and employing more workers is economically attractive: an environment of limited but appropriate regulations, low taxes, and a fair legal system.

Government never has nor ever will create wealth: productive people -- free of government regulation and taxation -- do that.

Is the Left Running Out of Gas?

2011-06-23T19:31:00.000-04:00

In the opinion piece “Running Out of Oil?” (Virginian Pilot, June 11, 2011), the author uses literary repetition of one fact to make the point that a recent 700-million barrel oil field discovery in the Gulf is sufficient to meet only 28 days of United States oil consumption. While this is great theatre, it is a meaningless argument.

First, one oil well never has and never will provide sufficient oil supply to meet United States oil demand for an extended period of time. That’s why the oil industry is called the oil industry: it’s in the business of drilling more than one oil well at a time.

Second, the author provides no alternative to oil drilling, but leaves that to the reader’s imagination: sort of like “hope and change.” According to the Energy Information Administration, about two-thirds of oil consumption in the United States is used for transportation, where little substitution is possible from other energy sources. In other words, the planes, trains, trucks, and automobiles that drive our economy use oil-based fuel sources, and for the foreseeable future cannot be powered—neither technologically or economically – by relatively-low energy density, unproved, alternative energy sources.

Third, it is true that Americans, who represent about 5% of the world’s population, consume approximately 25% of the world’s oil. What is left unstated is that America produces 25% of the world’s gross domestic product. In other words, economic prosperity is directly correlated to energy consumption per capita. I guess that might be one of many reasons that Obama’s economic recovery plan is not working: anti-growth energy policy necessarily limits economic growth.

Last, today (June 23, 2011), the administration announced that it will release 30-million barrels from the 727-million barrel strategic reserve (only about 28 days of national supply, as the Virginian Pilot repeatedly points out), and oil prices dropped 4% immediately. So much for that liberal argument that drilling for oil, even in small amounts, will not affect global price. But then again, progressives never have been big on supporting their "beliefs" with historical fact.

You Choose 2012: Liberty or Regulation

2011-05-16T13:34:00.001-04:00

In June 2010 while the American people were focused on the Gulf oil spill, Obama issued Executive Order (EO) 13544. This EO indirectly links America’s health policy to the UN’s “voluntary” standard “Codex Alimentarius” (CA) – the UN’s worldwide plan for food standards – through the World Trade Organization. WTO has adopted CA as an international reference standard for the resolution of disputes concerning food safety and consumer protection. As a participant in WTO, the United States must comply with “findings” by WTO on international trade policy disputes.

Specifically, Executive Order 13544, Section 6, paragraphs (f) and (g) state that the National Prevention, Health Promotion, and Public Health Council – yet another bureaucratic committee -- shall submit a report to the President annually that “contains specific plans to ensure that all Federal health-care programs are fully coordinated with science-based prevention recommendations by the Director of the Centers for Disease Control and Prevention and contains specific plans to ensure that all prevention programs outside the Department of Health and Human Services are based on the science-based guidelines developed by the Centers for Disease Control and Prevention.”[Emphasis mine]

In other words, by embracing the standard that all programs outside of DHS are “science-based,” Americans must subordinate their freedom to choose what is right for them to the fiats of an international body. How so? All WTO has to do is claim that alternative medicines, vitamins, and health supplements are “non-scientific” or impose mandatory labeling / testing requirements that make them uneconomic, and they will be effectively banned, as a condition of trade.

Evidence exists to support that this scenario. In 1996, the German delegation to the Codex Alimentarius Commission put forward a proposal that no herb, vitamin or mineral should be sold for preventive or therapeutic reasons, and that supplements should be reclassified as drugs. The proposal was agreed, but protests halted its implementation. At the 28th Session of the Commission, held in July 2005, the "Guidelines for Vitamin and Mineral Food Supplements" were adopted during the meeting as new global safety guidelines. Many member countries can choose to regulate dietary supplements as therapeutic goods or pharmaceuticals or by some other category. Supplements are not explicitly banned, but the language subjects them to labeling and packaging requirements, sets criteria for the setting of maximum and minimum dosage levels, and requires that safety and efficacy are considered when determining ingredient sources.

Actions like the one described above will result in alternative / homeopathic medicine, including supplements, being regulated out of existence. This is a direct assault on individual liberty: if enacted it will ultimately limit an individual’s medicinal choices to only those regulated by the federal government and "big "pharma. A point may come in every American citizen's life when pharmaceutical drugs may not be affordable, and he or she must rely more heavily on lower cost, homeopathic remedies. That is an individual’s choice, not the government's.

The President’s action violates every American’s right to life, liberty, and the pursuit of happiness. It is inconsistent with American values and adds more complexity to an already overly complex regulatory schema.

Commons Cent$: You Should Get More Than What You Pay For

2011-05-13T19:30:00.000-04:00

Today was a bizarre day: first, I was approached by a woman at Starbuck’s who thought I was a liberal and then was sucked into a threaded discussion by what appeared to be a group of conservatives discussing whether or not the Ryan plan would save the Ponzi scheme we know as Medicare. I easily convinced the Starbuck’s patron she had seriously misjudged me. I am not so sure that I had any luck convincing anyone that whatever the Ryan plan “saves” is immaterial: Medicare in its current form is a Ponzi scheme much grander than anything Maddoff concocted and, not withstanding its arguable unconstitutionality, it is unsustainable on a purely economic basis.

To understand why Medicare and “entitlements,” in general, are economically unsustainable, one need only apply common sense and understand the simple psychological principle that all behavior is motivated, you only need to understand the motivation.

If the Government offers to an electorate a good or service, which they otherwise individually cannot afford, they demand it. “Hey, Kris is paying for it and, besides, I NEED it.”

Once the electorate becomes accustomed to receiving the good or service and figures out all they have to do is vote for it and not work to pay for it, they demand even more. “What’s going to happen to me, if I lose my coverage? I can’t afford it, but I can vote for Harry Reid, who will pass a law that Kris must pay for it, or he will go to prison. And besides, he can afford it.”

When the government cannot afford to cover the benefit anymore because too few people are working to support the “benefits” being drawn from the system (“tax revenues are down”), the Government passes euphemistically titled laws (“the Affordable Healthcare Protection Act”) to reduce the “price” (not the cost) of the good or service below what it actually costs to produce it ("make healthcare affordable for everyone"). This sends a false signal to the market that more supply exists than demand, so demand goes up further.

The people supplying the good or service (doctors in this case) become overwhelmed with work, are undercompensated for their work (hey, the government has set an “affordable’ price for the consumer), and are unable to invest in their practices because they are not covering their cost. Quality of care goes down, the practice suffers from lack of ongoing investment, and ultimately the doctor closes his practice or simply walks away.

Overwhelmed, the whole healthcare system collapses on itself and instead of price controlling the market, some so-called “overworked, underpaid” un-elected bureaucrat, who only works from 9 – 5, M-F rations healthcare. Waiting lines go up, and mortality rates for previously easily treatable, common diseases go up (but theoretically there is equality of outcome: “rich people” paying of the good or service die at the same average age as “poor people”).

The social progressives justify this healthcare scenario and other social programs as a “right” based on Article 1, Section 8, Clause 1 of the Constitution which states “The Congress shall have power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and General Welfare [emphasis mine] of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.” From a social progressive’s perspective, this authorizes limitless government spending to take care of the masses. Unfortunately, this was not the perspective of James Madison, the principal author of the Constitution. James Madison, when asked if the "general welfare" clause was a grant of power, replied in 1792 in a letter to Henry Lee, “If not only the means but the objects are unlimited, the parchment [the Constitution] should be thrown into the fire at once.” [Brant, Irving the Fourth President - A Life of James Madison, Eyre & Spottswoode (Publishers) Ltd. London, 1970] Instead, the Founding Fathers saw relief as local and voluntary, and the Constitution gave no federal role for government provision of charity. Madison observed, “No man is allowed to be a judge in his own cause, because his interest would certainly bias his judgment and, not improbably, corrupt his integrity.” [Madison, Hamilton, Jay in Federalist, No. 10] In other words, if charity were the responsibility of the government, the process would be (and has) become compromised and politicians would conspire with special interest to trade votes.

What is it about logic and common sense that liberals do not get? If they wish to better mankind, then they should eliminate an inefficient, ineffective government from being the middleman and use the wealth THEY create to: (1) directly meet the needs they see; (2) build and invest in non-profits; or (3) ASK their family, friends, or church for a handout. If asking is so painful, perhaps they would opt to get a job.

Progressives have perverted the old sayings that served this country well: instead of “charity starts at HOME,” they believe “charity starts at HUD.”

If something does not change, we all will need to learn the new progressive tagline: “you SHOULD GET MORE than what you pay for.”

USA Overboard: Port Side

2011-05-10T13:00:00.001-04:00

In the Virginian Pilot editorial “Going Overboard in Quest for Oil” (Pilot, May 10, 2011), the Pilot implies that Rep. Rigell and Rep. Wittman abandoned reason and, like lemmings, voted en masse with the their “partisan bosses … to force Virginia to exchange its interests for what amounts to promises that have proven empty time and time again.” In its tirade, the Pilot cites some facts. But facts are not necessarily the same as truth, although that is a hard concept for progressives – even when they actually use facts – to accept.

Assume the Pilot was right on two points: “… the United States does not have enough oil to affect global markets” and “ … despite the fact that if there is oil off Sandbridge, it will be years before it hits the pump.” Add to these “facts” that: (1) America has more energy reserves from ALL sources than any other country in the world and (2) technologically and economically it is feasible to extract oil based products from shale, coal, and sources of oil supply which 40 years ago were non-economic. The problem statement changes: it is not that we do not have sufficient fungible sources of energy to “bend” the cost curve; it is that we conflate “engineering economics” with “political science.” Put bluntly, if all options were on the table and the free market were allowed to work, oil off the coast of Virginia will not be extracted if is not technologically and economically viable to do so. However, by irrationally raising public fear, the progressive left hopes to raise regulatory transaction cost and eliminate energy options they don’t like. That is the same path we ventured down 40 “years ago” with nuclear energy, which is now considered “green.” Today, if we had safe, abundant nuclear energy like France, which is 80% nuclear, we would be converting coal to oil and driving electric vehicles.

In fact, I believe Rep. Rigell and Rep. Wittman, among others, recognize that the solution to our energy problems is to start now if we want to be energy independent in 40 years, embrace all technologically viable energy sources, and let them compete on their intrinsic economics not on fear, hybperbole, villiany, and politics.

The 2011-2012 Virginia Beach Budget Battle: I See Trouble on the Way

2011-05-05T10:53:00.000-04:00

The Virginian Pilot’s article “Good News, Bad News” (Pilot, May 4, 2011) reports that that Virginia Beach real estate and personal property taxes will remain unchanged, but homeowners will start paying a trash bill and higher storm water fees. In the City Manager's inimitable words “If we kick the can down the road again, we’ll pay more later …” I guess he hasn’t noticed, but it is later, we are paying more, and we do not have any more money to pay (See blog $2B or not $2B: That is the Question).

The article implies that fee increases and raising the debt limit are needed to save Virginia Beach’s aging infrastructure. That is not what the proposed budget suggests. The year-to-year increase in proposed expenditures is approximately $35M. Buried in the $1.7B City Budget Proposal Executive Summary, the table entitled “City and School Expenditures by Expenditure Account” reveals that of the $35M increase, $20M is related to salary, $15M is related to fringe benefits, and $6M is related to increases in pay-as-you go capital improvement projects, which is offset by $6M in other operating categories. Similarly, the $176M increase in the debt limit is not intended to improve basic infrastructure such as water and sewer, but to fund private / public sector projects that favor big business, such as the convention center hotel and redevelopment of the dome site.

Virginia Beach citizens are late to the game. The budget approval process is moving toward a May 10, 2011 vote, and the only public input was solicited at a public meeting on April 21, Maundy Thursday. In spite of a clear message – that now is not the time to raise taxes , raise the debt, and increase spending – which was sent to City Council by Republican Party conservatives, the Virginia Taxpayer Alliance, Campaign for Liberty, and the Hampton Roads Tea Party, it appears that City Council intends to do so.

Immediately following the public meeting, the Hampton Roads Tea Party (HRTP) provided City Council with a letter identifying areas in which it proposed $43M in spending cuts. While some of the recommended cuts may not be able to be made this year because of ongoing contractual obligations, HRTP has stated that it will be watching closely to ensure that:

1. Council makes sure that the City does not obligate itself to similar expenditures in the future and takes the necessary steps to not perform or privatize services that are non-core, discretionary / core, discretionary and are more appropriately performed by private enterprise;

2. Council makes clearly visible the funding of Comprehensive Plan “sustainability” initiatives that are tied to unelected, third-party mandates and drive up the cost of business (i.e., “green” building requirements that have increased the cost of proposed new schools and facilities and have questionable ROI); and

3. Council establishes performance benchmarks that ties City performance to costs and performance standards in the private sector and not to other government entities and cities that are clearly inappropriate (i.e., benchmarking Virginia Beach to Fairfax County).

Citizens are also very concerned about the City raising the per capita debt limit to raise hundreds of millions of dollars over the next several years to fund private / public partnerships. Government is not the public’s investment banker. Government’s purpose is not to pick winners and losers in the private sector in order to grow government revenue. Government should be in the business of constitutionally-limited governance that provides a level playing field for all. The City should limit its focus to public safety, education, and infrastructure (roads, water, sewer, public buildings, etc.)

It appears that it is not going to be easy to win back fiscal control over our City government. But it is a battle many of us are willing to fight. Maybe Council is better served by listening to the inimitable words of Creedence Clearwater Revival, “I see the bad moon arising … I see trouble on the way … I see bad times today.”

Gas or Hot Air – The Sequel

2011-05-04T19:16:00.000-04:00

According to Thomas Rosch in the Wall Street Journal (“Obama’s Political Price Gouging,” Opinion Section, May 2, 2011), the President and his Attorney General are forming a new “working group” to investigate “price gouging” at the gas pump (“White House’s Task Force to Probe Oil, Gas Markets,” U.S. News, April 22). This working group will come under the Financial Fraud Enforcement Task Force, which was constituted to prevent fraud in the financial and lending markets. This group will duplicate the functions of existing agencies – the Federal Trade Commission – which is already empowered to investigate and prevent “price gouging.”

Besides spending money on two different organizations to work at cross purposes on the same “problem,” this action demonstrates just how clueless the President really is: simple math demonstrates that it is the government itself that is “price gouging” the American public.

The following is based upon a blog I wrote May 18, 2008, when the Democrat-controlled Congress saw gas prices rising and the political left attacked the oil companies. Does it sound familiar?

“Congress is holding congressional hearings this week. They are beating up the oil executives in hopes that they will reduce their salaries so that the common man can make it to work tomorrow. At $4.00 per gallon for gas, reducing gas prices through means other than the law of supply and demand has become a national pastime. What have we learned from this circus?

“Congress has learned that the cost of a barrel of crude represents about 75% of the cost of a gallon of gas. Corporate profit represents 4% of the cost of a gallon. What about the other 21%?

“Well, here are some facts from the Energy Information Administration. In 2005, when gas was $2.27 per gallon, component costs were: (1) 10% distribution and marketing; (2) 18% refining cost and profit; (3) 19% Federal and State taxes; (4) 53% crude oil price. So, subtracting out the present day cost of the oil (75%) and profit (4%) and assuming the other costs remain proportionate to those in 2005, we can reliably state the following:

1. 75.0% goes to the crude oil provider (principally OPEC, Venezuela, Canada, Mexico).

2. 9.3% goes to Federal and State government.

3. 6.8% goes to refining;

4. 4.9% goes to distribution and marketing; and

5. 4.0% of a gallon of gas goes to oil company profits.”

Miracle of miracles! The oil companies are making less than 50% of that collected by the state and federal government AND the state and federal governments take no business risk. In fact, the government’s “profit” increases directly as the price of a gallon of gas rises, with no downside risk. Maybe we should ask our representatives, who seem not to understand economics OR basic math, to take a pay cut. Then again, maybe we can harness the energy in the hot air. We know they will never vote to use clean coal, oil in Anwar, or nuclear energy, which are in abundant supply.

The point today is the same as the point made in 2008: it’s not the oil companies that are “gouging” the American public. It is our government. Our Organizer in Chief needs to be sent a message: the average American is fed up with it, understands his game, and will stand with the free market before we stand with him.

A last thought: if the Republican-controlled Congress wishes to save some money, it should defund the President’s so-called “working” group. It might be good to remind him that Congress holds power over the purse.

$2B or not $2B: That is the Question

2011-04-21T10:09:00.002-04:00

The article title is a bit of an overstatement: however, like knowing you are going to be hung tomorrow, it does tend to focus one's attention.

The City of Virginia Beach is proposing that City Council adopt a $1.74B budget for 2011-2012, a $35M expenditure increase with a 2% increase in various taxes to cover these additional costs. The City characterizes its budget proposal as necessary because “city employees have not received raises in two years, infrastructure and maintenance needs have been deferred, and the waiting list for city services is growing.”

While the City’s needs, from its perspective, are many, the City's needs are no different than those of the average Virginia Beach family. Using the City Council’s own budget proposal and publicly available data, a Virginia Beach family-of-four over the past two years has seen its annual disposable income decrease by $9,500 (14%) and its home’s value decline by up to 17%.

The majority of the City’s proposed $35M increased cost is driven by an increase in payroll ($20M), an increase in fringe benefits ($15M), and an increase in “Pay-as You-Go” capital projects ($6M). This is offset by an overall reduction in other operating expenditures and capital borrowing (-$6M). Payroll costs are driven by raises and not by an increase in overall headcount (a year-to-year reduction from 17,313 to 17,208 (-0.6%)).

So, it appears – just like the City – the citizens’ income is declining, our homes are in need of repair, and every government agency is lining up with its hand out. Maybe it is time for the City to make some tough choices: they work for us -- not the other way around -- and we are out of money.

Progressives Lament Lack of Holes in the Pockets of the “Super Rich”

2011-04-18T11:38:00.000-04:00

The Virginian Pilot newspaper article “Super rich keeping more in their pockets” (April 18, 2011) is misleading and is an example of what is wrong with journalism today. The subtitle reads: “Federal Tax Rate has plunged for group with incomes averaging $345 million, and half of American households pay no income tax.” This article conflates several facts in an attempt to lead the reader to a specific conclusion: the so-called “rich” are not paying their fair share, when the opposite is true.

According to the article itself: (1) the top 10% of earners pay more than 50% of all tax revenue ; (2) the bottom 45% of earners pay nothing, even though they enjoy the same benefits as all other Americans; (3) the bottom 50%, on a absolute dollar basis, enjoy the majority of the tax break benefits (interest deduction on mortgages ($77B), earned income tax credits ($55B), child tax breaks ($54B), deducting state and local taxes ($61B)). In fact, the Federal Tax Rate – which is commonly understood to mean the rates at which we are taxed by the federal government — as well as “tax breaks” available have not changed for anyone, including the “rich.” However, because the “rich’s” income has dropped like everyone else's and their deductions have remained constant, their taxes to the Treasury have dropped as a percentage of their income.

I know Americans have a reputation for not being good at math, but this citizen can do simple arithmetic. Call it what you will, but the percentage decline in revenues to the Treasury from the “rich” is not the Federal Tax Rate ... at least not yet.

Does Goosing the Tax Payer Lay More Golden Eggs?

2011-04-17T09:19:00.000-04:00

In his article entitled, “It’s the spending, stupid,” Wesley Messamore (The Daily Caller, December 6, 2010) states, “ … annoyingly, tax cuts still seem to pervade our discussion of fiscal policy.” He argues “The real fiscal issue of our era is Washington’s spending, and whether or not Bush’s tax cuts expire is simply a negligible issue in the face of deficits that have now started to measure in the trillions of dollars for the first time in our nation’s history. It’s time to get serious about cutting spending, not taxes. Republicans should offer the Democrats this compromise: that they’ll let the tax cuts for the wealthy expire if the Democrats will help them to substantially reduce federal spending across the board.”

Interesting argument, but it misses the larger point: the average tax payer has no more money to spend on anything, especially taxes.

• Over the past two years, the average family-of-four’s disposable income in Virginia Beach has dropped 14%, house values have dropped 17%, and the city government wants to raise taxes 2%.

• 47% of all wage earners pay NO federal income tax.

• As the recent spending reduction battle in Washington shows, when all is said and done, more is said than done: of what was thought to be a $68B reduction, approximately $350M will be realized according to the CBO.

Four times in history, the US government has lowered federal tax rates and in each case actual tax revenues to the Treasury increased (in dollars, not percentage of GDP). Unfortunately, progressive government continues to spend more money than it raises in revenue. In other words, the goose can no longer lay its golden eggs fast enough, so the government wants to kill it.

The best path forward is to curb our appetite for the things the goose’s gold buys, feed the goose, and encourage it to breed. This is best done by setting annual spending caps, with automatic triggers; lowering tax rates, especially corporate tax rates; and increasing the tax base to include more of those individuals who enjoy America’s freedoms and fleeting prosperity but pay nothing to the Treasury.

A Blazing Trail of Destruction or Political Theatre: You Decide 2012

2011-04-09T15:49:00.000-04:00

In the April 8, 2011 Virginian Pilot (Letters to the Editor, “Devastating Cuts,” April 8, 2011), Joe Cook (Hampton Roads Coordinator, MoveOn.org) asserts that Rep. Scott Rigell’s (R-2VA) support of Congressional Bill HR 1 to cut $100 billion from the budget was a “blazing trail of destruction” leading to a loss of 19,500 jobs in Virginia. He further asserts “This is a moral issue; the budget is a moral document.” In between these two statements, he inserts his favorite social programs, which may face cuts, and then sounds the clarion alarm to eliminate corporate subsidies and cut defense. While this is great political theatre, it misses two points.

First, whether the cuts are “moral” or not, stealing money from the next generation by spending money that we do not have is clearly immoral. Because the government borrows forty-three cents on each dollar of its $3.8T budget, Mr. Cook’s argument over the $100B cut is similar (in rough numbers) to our family having a monthly credit card bill of $10,000, but we can only pay $6,000 so my wife and I argue heatedly and incessantly about how to cut $26 of spending.

Second, I agree with Mr. Cook that all cost should be on the table; however, the determination of what should be cut is not just a moral decision, it is also a Constitutional decision. It is not clear to me that all of his priorities (i.e., job training grants) are Constitutional, whereas defense, for example, is clearly a Constitutional priority.

So let’s agree on this: we need to find a way to cut another $3,974 from our “home” budget. If we can’t agree, then let’s carve out those things that are clearly Constitutional expenditures and reduce everything else on a pro rata basis. That will force us to discuss what this political battle is really about: what is the purpose and scope of government and where does government’s responsibility end and the individual’s begin. In this regard, Rep. Rigell is on the right track.

Brother Can You Spare 43 Cents on the Dollar?

2011-04-06T16:46:00.003-04:00

Over the next several weeks, Congress faces a tough debate over the 2012 budget. My back of the envelope calculation indicates that the country must cut $500 billion per year out of the budget if it has any hope of remaining solvent in the long term. I do not think that Congress is up to the challenge – they have been unable to cut $60 billion out of last year's budget, which is yet to be approved. And now, according to the Wall Street Journal, groups facing funding cuts are re-defining their marketing message to pander to the concerns of the conservative right. Specifically, Legal Services Corporation, a nonprofit that provides legal assistance to the poor, has been emphasizing that its programs exist to carry out the Founding Fathers’ desire to create fair courts. They cite the preamble to the Constitution. The House voted to reduce the corporation's $394 million appropriation for 2011 by $70 million dollars, but 68 Republicans joined with 191 Democrats to vote down a proposal to cut all funding. More community action programs are lined up behind them.

No matter how empathetic one is to social causes, the money does not exist to fund them. We are currently borrowing 43 cents of every dollar Congress spends. Second, in many cases I do not think that some of these activities are even constitutional. That said, Congress should eliminate funding that the country cannot afford, provides no return on investment, and / or is clearly unconstitutional. For example, included in this category (by way of example, but by no means inclusive) are: (1) elimination of foreign aid to countries who consistently vote against us at the UN and want to kill us, (2) funding that goes to the World Bank / IMF, (3) funding to National Public Radio, and (4) funding that goes to the National Endowment of The Arts. For me these would be straight forward decisions, but apparently not for Senator Thad Cochran of Mississippi, the top Republican on the Senate Appropriations Committee, who keeps a grand piano in his office. Perhaps instead of having the public support NEA, he should simply give concerts in his office. And if he supports NPR, I suggest that he help the public out by personally giving more money to this endeavor.

Last, I do not think any Congressional Republican should entertain visits from George Schultz, who has been asked by the United States Institute of Peace, a federally-funded think tank, to ask Congress to restore its $42.7 million funding in 2011, all of which was eliminated by the House in February. Apparently the group's charter does not allow it to raise private funds: perhaps it should.

Meanderings about Gerrymandering: A Stake in the Grass Roots

2011-04-06T11:36:00.002-04:00

Community leaders and concerned citizens turned out Monday to protest proposed redistricting maps at the Virginia General Assembly’s final public hearing. The hearing was held by the House and Senate elections committees as the General Assembly convened for a special session on redistricting. Sen. Janet Howell (D-32) presented Senate Bill 5001, the plan expected to be voted upon and approved by the full Virginia Senate, which has a 22-18 Democratic majority. In Howell’s proposed plan, the Senate Democrats grouped Republican Sens. Frank Wagner and Jeff McWaters, both of Virginia Beach, into the one district, and shoehorned Sens. Ralph Smith of Roanoke and Lynchburg's Steve Newman into another one. Sen. Frank W. Wagner, R-Virginia Beach, spoke out against the proposed redistricting plan: "They [Virginia Beach citizens] deserve — as a community of over 435,000 people — they deserve, they warrant, they earn two senators," said Wagner. “You want a yardstick for gerrymandering?” Carl Wright, a Virginia Beach resident asked the committee. “Come to our city! It’s been gerrymandered, gerrymandered, re-gerrymandered, and gerrymandered again ... “I’m asking you all today, when you look at the city of Virginia Beach, please consider all of the citizens with a fair and true representation. That’s all I ask.”

In the run-up to these hearings, Governor McDonnell appointed a bipartisan commission to make redistricting recommendations. The commission published maps that look more sensible. Three students from George Mason University showed the committee their map, which won the Virginia Redistricting Competition. Nicholas O’Boyle, one of the map’s designers, said the students’ map reduced the splits of counties to 161 from more than 300 in Howell’s map. The students’ map does not pay much attention to incumbents or political partitioning. Neither the Senate nor the House paid any attention to their inputs. Then again, since when do progressive elected officials listen to citizens when they can re-district them and thereby discount their vote.

Howell said she anticipates changes will be made to the legislation, but said her bill meets all federal and state requirements including the federal Voting Rights Act, which requires, among other things a percentage of voting districts in which minorities are a majority of the population. Not everyone agrees. In a letter to Senator Howell , Clarke County Board of Supervisors chairman Michael Hobert (Berryville) said “Clarke County strongly objects to being divided as part of the Virginia General Assembly redistricting process.” Hobert, an attorney, said that the plan also violates numerous legal precedents regarding election district creation. Citing the Guide to Local Redistricting for 2011, Hobert said that election districts are required to be “reasonably compact with irregular district shapes justified because the district line follows a political subdivision boundary or significant geographic feature” and must “represent communities of interest.” Hobert told Howell that her redistricting proposal achieves neither requirement and will divide Clarke County, a jurisdiction of less than 15,000 people and less than 10,000 registered voters, and violates the principles stated in the Guide to Local Redistricting for 2011 published by the Virginia Division of Legislative Services.

Robin Lind of the Virginia Electoral Board Association and Chesterfield County General Registrar Larry Haake said the new plans could create a substantial financial burden on Virginia's 134 counties and cities because of the number of voting precincts that would be split. Haake said that in Chesterfield alone, the plans could cost the county $600,000 to $1 million in the creation of precincts. State-wide cost is estimated at $6.2 to $6.7 million.

The governor can still fix this mess. McDonnell will get a shot at the final map. Then again, it must be approved by Obama's Department of Justice. Wonder how that will work out for the citizens of Virginia, especially Virginia Beach?

Congress's Choice: Rude Awakening or Rule Making

2011-03-28T12:13:00.001-04:00

Recent actions by the administration clearly demonstrate the President’s intention to circumvent enacted laws and clear direction by Congress, through regulation, on matters on which Congress has taken a firm, opposing position. Specific recent examples include:

• FCC regulation of the Internet (so called Net Neutrality) even though the FCC has no legal authority to regulate the Internet and the Congress expressly voted against his rule-making in December 2010.

• Proposed rule-making by the EPA to regulate carbon emissions (so called Cap and Trade) even though the Congress expressly voted against these policies in December 2010.

• The President’s and his Justice Department’s decision to provide special protections to non-uniformed, non-state combatants (terrorists) under so-called Protocol 1 Amendment to the Geneva Conventions, even though this provision was rejected by Congress and former President Reagan during his administration.

This should concern every American, who believes in the rule of law, as expressed by our Constitution. Only legislation that passes both Houses and is signed by the President should be enforced as law. These actions by the President and his administration marginalize the Congress, by-pass the constitutional process, and over time are intended to establish a precedent for unilaterally enacting “law” through Presidential fiat. Beyond this, it is an example of how secular progressives have and will continue to transfer power from the people to the “elected few” in their goal of global governance and a establishment of a new world order, at the expense of our individual, God-given liberties.

It is time that Congress takes action to re-establish Constitutional limits on presidential authority and reassert Federalism under the Constitution by taking one or more of the following actions:

• Pass resolutions in the House that DIRECTLY and CLEARLY repudiate the rule-making actions that are being taken by the President and are in contravention to the expressed direction of the will of the people, their elected representatives in Congress, and the Constitution of the United States.

• Under Article 2, Section 2 of the Constitution explicitly limit the number of “inferior officers” (this would include cabinet heads, Czars, and other regulatory officers) that can be appointed by the President and, instead, have them appointed by Congress.

• Use the budgeting process to cut funding to those administration departments that choose not to follow Congress’s expressed will.

If the foregoing actions do not produce the desired result and instead the President continues to contravene the will of the Congress, the aforementioned resolutions should be used to draw up a bill of particulars that would form the basis for impeachment, which is a power granted solely to the House of Representatives under Article 1, Section 2 of the Constitution.

I fear that without action by Congress, continued Presidential “legislative action through rule-making” will make the constitution irrelevant.

Progressive Energy Policy: Too Much Sun, Too Little Sense

2010-10-21T08:03:00.002-04:00

In the article, “Sierra Club slams Gov. McDonnell's Va. energy plan,” Associated Press, October 11, 2010, Steve Szotak writes that the Sierra Club is not happy with Governor McDonnell’s energy policy. In its report, entitled "Power Failure: How Virginia is Losing the Competition for Clean Energy Jobs," the Sierra Club states that the Governor has failed “to recognize and take advantage of abundant opportunities that exist with energy efficiency and renewable energy.” In addition to the criticism of McDonnell's proposed energy strategy, the Sierra Club report also recommends a series of proposals, among them:

• Utility rate structures that increase in price based on power consumption, and reduced rates for customers who use less power.

• Programs to help homeowners evaluate and retrofit their homes for energy efficiency.

• Adoption of a standard that requires at least 20 percent of electric demand be met by renewable energy by 2025.

• Rescinding tax credits paid to coal mining companies and utilities.

• Rebates or tax credits for investments in energy efficiency and renewable energy.

In effect, the Sierra Club wishes to replace market demand with political demand.

So how is the replacement of economic science (the law of supply and demand) by political science (the law of unintended consequences) working out so far in the real world? All we have to do is turn to two other recent reports.

In a July 31, 2010, Wall Street Journal Review & Outlook article, entitled “Peak Water,” it was reported that the state of Arizona has mandated that utilities produce 15% of their electricity from “green sources” by 2025. With more than 10 months of plentiful sunshine and vast tracts of desert, Arizona would appear to be ideal for solar. There is only one problem: because of solar’s low energy density, the steam turbine that drives the electrical generator requires twice as much water than a conventional coal plant. And that’s a big problem: there is limited water in the desert. In fact, in 2009, the Congressional Research Service examined the consequences of a solar expansion in the southwest, and reported that it could consume as much as 1% of the state's finite water resources within a few years. So, Arizona – which is currently a net exporter of conventional electricity to surrounding states (most notably California, the “greenest” of all states), is about to create a water shortage to meet some artificial environmental emergency.

How about electric vehicles (EVs)? In the Wall Street Journal article, “Bumpy road for electrics”, by Mike Ramsey, October 18, 2010, the Obama administration is spending more than $5B in tax credits, subsidized loans, and grants to automakers with the goal of getting one million EVs / hybrids on the road. Ford, Honda, Toyota, and various battery suppliers caution that this goal is too optimistic. According to Ramsey, “Many experts say the trade-offs and economics of the cars don’t make sense for most drivers – even with a $7,500 US tax credit to buyers.” Cars, like the Nissan Leaf and GM Volt will cost between $33,000 and $41,000: about twice the cost of similar conventional vehicles. Johnson Controls, which makes batteries for the cars, found that the pool of potential buyers, for which the cars make sense, is very small – about 3% of all drivers. What needs to occur to drive demand? According to Boston Consulting Group’s Xavier Mosquet, gas prices must rise to $8 to $9 dollars per gallon before electric cars will be cost effective.

Add to these unintended consequences, the fact that the Obama administration is promoting the idea of increasing the ethanol content of gasoline from 10% to 15%. Not only may such a move have a harmful effect on older automobile engines, but will provide additional incentives to agriculture to convert arable acreage from food production to fuel production. Based on various sources, one acre of land produces a paltry 12 to 20 gallons of gasoline per year or can feed 8 people.

So what can we conclude? In order to save the planet, we will have to make sure its inhabitants are living in poverty and hunger first. This is readily achieved by artificially raising the price of gasoline by taxing it so that electric vehicles are more “cost-effective.” In parallel, we can divert our water and agricultural resources to other uses, so that the price of food and water goes up. Not to worry, we can pay for it with the money we “save” from our now cost-effective transportation: that is, if we have enough food to eat or water to drink.

Maybe, just maybe, these folks should come in from the sun.

Fact Re-distribution: The Myth of Meritocracy

2010-10-17T15:30:00.001-04:00

In a letter to the editor of the Washington Post on October 17, 2010, “The myth of meritocracy,” Philip Allen asserts, without facts, that “Wealth in America is more often accumulated by the already wealthy, privilege by the entitled, and impoverishment by the already poor.” “... risk-taking diligents who ‘make it’ are far outnumbered by the fortunate and privileged who start ‘ready-made.’” While I cannot speak to privilege and impoverishment, I can speak to the accumulation of wealth by the "risk-taking diligents" and support my argument with facts.

The “wealthy” I assume are the top income earners: the people who either own small businesses in America or receive employment from those businesses. The small businesses they own are recognizable in every town: gas stations, laundries, retail franchises, and other boutique family businesses. According to 10 Secrets that Millionaires Keep, by Daren Fonda of Smart Money, the financially successful, defined as those who have a net worth of $1M, are 90% more wealthy than other US households, earn on average $366,000 per year, and are in the top 1% of taxpayers. Their number has doubled since 2002, with half of them earning their wealth in their lifetime from small business, one-third from large corporations, and less than 3 percent through inheritance. Most come from families, which would not be classified as wealthy, and have enjoyed their financial success for less than 15 years. Their median grade-point average in college was 2.9, with an average SAT score of 1,190. Fifty-nine percent attended a state college or university.

What is a “wealthy” person’s secret to success? In their words, it is hard work, discipline, education, and treating others with respect. This seems to be borne out by the Year 2000 Census data. Of the 39 million people representing the bottom 20% of income earners only 8 million heads of household worked. Of the 64 million people representing the top 20% of income earners 19 million worked.

Other than their wealth, the “wealthy” seem to be a lot like the average American, except they have taken extraordinary risks, worked smarter and harder, and converted the opportunities presented to them into greater financial success.

Mr. Allen is entitled to his opinion; he is not entitled to his own facts.

November is Nye Upon Us

2010-10-10T17:46:00.000-04:00

This weekend, I traveled to Richmond to hear the second congressional district candidates defend their positions before the Virginia Tea Party convention. I was surprised to learn that Congressman Glenn Nye had backed out at the last minute. This behavior was not totally unexpected: he has previously canceled breakfast meetings, scheduled town halls on military bases where civilians could not participate, and in general, deferred forming an opinion on controversial issues until the last minute so that he did not have to defend them.

However, I did get the answer to the question I wanted to ask him. In a posting on the Hampton Roads Tea Party Facebook page, announcing Congressman Nye’s withdrawal from the forum, he was asked if he would vote for Nancy Pelosi again as speaker of the house. “He said, he would ‘cast a vote for whoever the Democratic Caucus put forward.’ … and if Pelosi was put forward? Glen[n] Nye responded, ‘Yeah, I’d vote for her.’”

That is why I am voting for Scott Rigell. Not only is Mr. Rigell qualified, but a vote for Nye or Ken Golden – the unelectable independent in the race – is in effect nothing more than a vote for Nancy Pelosi. It is time for a return to smaller government, fiscal responsibility, and constitutional principles.

Another Mickey Mouse Idea: A Call to Preserve the Estate Tax

2010-08-31T18:14:00.001-04:00

In an August 31, 2010 article in the USA Today (“Mickey Mouse, the estate tax and me”), Abigail Disney makes the case that the estate tax “is not the bogeyman you might think it is.” In the last paragraph of her article, she states her real premise: "the estate tax is the cornerstone of a progressive system that leaves wealthy heirs with ample funds while providing the government with the resources it needs to build an environment for the common good. By preserving it, we not only restore billions in revenue to the national treasury – we also restore our most cherished collective ideals as a nation." [emphasis mine] Restated: government is the source of the common good and must be amply funded by the “wealthy.” I think not. The source of the common good is individual, unalienable rights endowed by our Creator. Through exercise of each individual’s personal rights – among these, life, liberty, and the pursuit of happiness – comes the creation of individual wealth, which in turn benefits society, not vice versa, as Ms. Disney would lead one to believe. It is government’s role to protect those rights not redistribute wealth these rights produce, in the pursuit of the greater good.

Ms. Disney supports her argument with what she calls three “truths:”

• First, the estate tax is not a double tax. “People like me and, who inherit assets, such as Disney stock, can spend our lives watching [emphasis mine] those assets grow, and when we pass them along to our children, they have not been touched or diminished at all by the tax system. The only thing I have paid taxes on is the interest from these assets, not their increased value.”

• Second, “opponents of the estate tax claim family farms will have to be broken up to pay the tax, but good luck finding an example of this."

• Third, “the estate tax incentivizes people like me to do good [emphasis mine] with our wealth because there is no estate tax on donations to charity. My filmmaking and foundations rely [emphasis mine] on a tax code that supports a vigorous non-profit sector, a vital part of our society..."

Ms. Disney, like most progressives starts her argument in the middle. She does not discuss the creation of wealth. Unlike most of America, she inherited her wealth: more than 80% of all Americans who have a net worth of more than $1 million, earned it in their lifetime. When I sold my first business, because I had no access to financial capacity, I had to liquidate 51% of the stock value I had created to pay the capital gains tax. I had worked for 12 years to build a very profitable business, and over a period of two years, wrote checks to the IRS that represented 51% of the value of the portion of the company I had built. It took 12 years to earn back this money through Ms. Disney’s “investment in the stock market” approach, while paying taxes on the interest, dividends, and capital gains earned (notice she conveniently left capital gains out as a tax). This is a triple tax: first on the wealth that is created, second on the earnings that flow from future investment, and last at death through the estate tax. So much for her argument on double taxation.

As for her second point, most small business persons have their fortunes inextricably tied up in their business. While I know little about farming, I know a lot about service-oriented small businesses. Most of them are “S” corporations, which are taxed at the personal income tax rate. So, each year, after deducting employee salaries, benefits, corporate payroll taxes, and legitimate operating expenses, the remaining income is taxed at the individual income rate. Retained cash – that which is left after paying taxes at the individual rate – is then used in the business to buy equipment and grow the business. If the small business person dies, his or her ownership in the business is included in his or her net worth and is subject to estate tax. If that tax cannot be paid with cash – not equipment or investment – then the business’s assets will be sold and the business closed. So much for her argument about losing the farm.

Last, I find it amusing that Ms. Disney believes a progressive tax code is both a necessary and sufficient condition for individuals, wealthy or otherwise, to “do good” in the world. In fact, she states her own “filmmaking and foundations rely on the tax code.” Implicit in her statement is that government must be funded because it is the principal agency through which “good” – as she defines it – is effected. Not necessarily: moral people do moral things, independent of the government and its tax code. Personally, I tithe because God, not government, has placed this burden on my heart. I only hope that the government allows me to keep enough of the wealth I created to meet the needs I find around me. So much for her argument about taxes as moral force for good.

Come Nye and Hear the Truth

2010-08-25T14:44:00.001-04:00

On August 19th, Glenn Nye faced off in a debate against his 2nd Congressional District rivals for the first time. According to him, he has been: (1) fiscally conservative, (2) a leader in standing against issues that were not in the 2nd District’s best interest, and (3) a faithful provider who has brought home the bacon for his constituents. As is true of any good lie, there is an element of truth in each claim.

First, Nye did vote against the Health Care bill. Unfortunately, he then voted to fund the 10,000 IRS agents that must be hired and trained to ensure small business compliance with this monstrosity. According to the National Federation of Independent Businesses, the health care legislation will create 68 grant programs, 47 new bureaucracies, 29 pilot programs, six regulatory systems, six compliance standards, and two new entitlements. So, I guess he was against it, until he was for it.

Second, my experience with Nye’s voting record is that he never decides until the last minute. When I call his office, the night before a key vote, his position is reported by his staff to be “undecided.” I can only surmise that either he (a) is still diligently reading all 2,000 plus pages in order to form a conclusion OR (b) is waiting to be told by Nancy Pelosi if his yea vote will be required to push the bill forward. She certainly does not want to unnecessarily require a junior legislator on the House Armed Services Committee, facing a hotly contested re-election campaign, to explain his yea vote to his constituents if she does not have to. A real leader forms a reasoned opinion, communicates it to his constituency, and defends it in public forums.

Last, Nye has been supportive of his active duty and retired military constituents (he is on the Veterans Affairs Committee). Unfortunately, he has been ineffective in addressing the concerns of his small business constituents (he is on the Small Business Committee). According to the federal Bureau of Economic Analysis, as reported in the USA Today, August 17, 2010, “Military towns enjoy big booms,” military compensation (after adjusting for inflation) rose 84% from 2000 through 2009. Compensation grew 37% for federal civilian workers while only growing 9% for private sector employees. While I do not begrudge our average soldier, sailor, and marine the $122,263 in total individual compensation received in 2009, Nye and his fellow progressives need to figure out how stimulate the private sector economy to create jobs so that he can afford the public sector bill.

You cannot de-Nye it: if you want a closet progressive – who takes direction well from above, keeps all options open, and is only concerned about creating, growing, and protecting well paying government jobs – Glenn is your guy.

Alinsky, you Magnificent B******, I Read Your Book

2010-08-12T14:14:00.000-04:00

The next government salvo has been fired by the Obama administration for the hearts and minds of voters in Hampton Roads: elimination of JFCOM’s 5,000 jobs. While this decision does represent a potentially grave personal and regional economic threat, there is a bigger lesson to be learned: what the government gives, the government can take away.

The larger story is that our elected representatives apparently did not know this was coming. The timing, speed, and targeting of this decision is circumspect. Its real objective is to cripple a state and region, whose voters have decidedly chosen to repudiate the Obama administration’s policies by overwhelming electing a republican governor, who has taken action to balance the state's budget, placed the state on a growth path, and legally confronted his health care and immigration policies.

The Obama administration's strategy is taken straight out of Obama's mentor's (Saul Alinsky’s) book Rules for Radicals: the particular ends justify the particular means. The ends are to divide and defeat voters of the Commonwealth, in detail, by diverting our dialog and energies from opposing the abysmal failure of the Obama administration’s policies. Instead, they prefer we bicker among ourselves during campaign season and dedicate a larger portion of the news cycle to divining how to remain on the statist government’s form of crack cocaine: federal money. If we don’t play, they will give the crack to someone else.

Instead, we should come together and turn lemons into lemonade by: (1) publizing that we acknowlege and understand the tactic; (2) taking reasonable, coordinated action to delay JFCOM’s demise without diverting resources from our prinicipal mission -- defeating Obama's / Pelosi's / Reid's progressive policies; (3) re-deploying JFCOM's human resources, technology, and facilities to create private sector jobs in the high-tech global marketplace, and (4) firing every progressive representative in Washington in November.

If we think and act strategically, we will be able to say -- as George C. Scott said in the film "Patton," portraying Patton's defeat of forces under the command of Erwin Rommel -- "... you magnificent b******, I read your book!"

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So this is progress[ivisim]?

2010-08-10T13:25:00.000-04:00

Two articles in the Pilot on August 9, 2010 illustrate how out of touch and out of control our current government is. "Optometrists say state’s Medicaid cuts lack vision” and asserts a new budget measure “barring them from Medicaid reimbursements limits eye-care access for the poor, harms their practices, and generally is an affront to the profession.” This dire state of affairs is attributable by this interest group to Governor McDonnell’s actions to balance the state budget. This page 1 story is followed by a page 5 story "Lackluster effort to combat Medicare fraud examined,” which discloses that out of $835 million in questionable Medicare payments, the government has only been able to recover $55 million. These two stories make the point: we have created a statist mentality that communicates everyone is entitled, enabled it with an incompetent government, and raised a generation of reporters who cannot draw a direct connection between the two.

Personally, I'm tired of funding out of control,inefficient, ineffective government that has lost any congruence with the intent of our founding documents. It's not government's job to meet our individual moral obligation to provide goods and services to the poor - we should meet that directly, through our churches, our communities, and not-for-profit organizations. The government's job is to protect our individual liberty not redistribute our wealth. It is our responsibility to use our secured liberty in a morally responsible way to create wealth and use that wealth to advance our personal and collective interests as a society.

Nancy Pelosi Was Right

2010-08-08T18:20:00.000-04:00

Nancy Pelosi was right about one thing: it is time to “drain the swamp.” This week we learned that Maxine Waters is under ethics investigation for abusing her position by asking regulators to help a bank in which her husband had a financial interest. This follows allegations that Charlie Rangle, the Chair of the House Ways and Means Committee, allegedly broke the laws his committee imposes on the rest of us.

While I can do nothing about Pelosi, Waters, and Rangle, I can help fire one person who was responsible for these alligators: Congressman Glenn Nye (D-VA2). Nye voted for Nancy Pelosi to serve as Speaker of the House. He voted for Charlie Rangle ( twice) to serve as chairman of the House Ways and Means Committee. Nye did oppose the health-care bill in the 11th hour (after making sure Pelosi had sufficient votes for passage), but later voted to fund the 10,000 IRS agents required to implement it. So, I am voting for Scott Rigell. A successful businessman and former Marine, he knows what it means to make commitments and to keep them. He has committed to let America’s founding documents guide his decisions, cut federal spending, impose fiscal restraint, and bring accountability back to Washington. This is what we used to call leading by example.

LOOKING FOR LOVE IN ALL THE WRONG PLACES

2010-07-28T08:36:00.000-04:00

It’s an old, but familiar tune: big government in bed with big business giving birth to big problems.

In a USA Today article, dated July 21, 2010, inspection of oil wells has not been a priority. The number of federal inspectors at Deepwater oil facilities has not kept pace with the industry's growth. According to a House hearing on the BP oil spill, the federal agency regulating offshore drilling has just 60 inspectors in the Gulf of Mexico for nearly 4,000 facilities, just five more inspectors than it had in 1985, according to a memo prepared by the Democratic majority staff of a subcommittee to the Committee on Energy and Commerce. The number of producing Deepwater Wells has increased from 65 in1985 to 602 in 2009.

The memorandum, prepared for Henry Waxman, Democrat California, and other lawmakers alleges that the minerals service:

• approved changes to the BP wells design that may have increased the risk of a blowout.

• failed to act upon a series of reports prepared for the minerals service in 2001, 2002 and 2003 that recommended two blind shear rams on blowout preventers, the safety devices that are supposed to seal a well should a blowout occur.

• failed to require more stringent standards and the cementing of wells. In 2000 the MMS decided not to impose any cementing requirements.

This report is eerily reminiscent of the lack of oversight by the Security and Exchange Commission (SEC), during the decade 1990 to 2000. During this period, the fee on stock transactions was increased ostensibly to fund better oversight, and approximately $10 billion in revenue was generated by this fee. However, the SEC only retained $2 billion of this money. During the height of the Enron and WorldCom scandals, the SEC employed approximately 100 accounting and legal staff to regulate well over 15,000 publicly held firms. Of these 100 staff, only four were qualified to audit firms of WorldCom's size and complexity.

Now we have an understaffed, out of control MMS. This is one of the largest fee generating agencies in the US Government. Inspite of their large revenue base, MMS appears to be understaffed, and yet has enough time on its hands to fraternize with the industry they are supposed to be regulating. According to the New York Times (Interior Probe Finds Fraternizing, Porn and Drugs at MMS Office in La., by Noelle Straub, May 25, 2010), the MMS Inspector General report on the New Orleans MMS discloses:

• "E-mails for MMS inspectors from the Lake Charles [MMS] office revealed that in 2005, 2006, and 2007, various offshore companies invited MMS personnel to events such as skeet-shooting contests, hunting and fishing trips, golf tournaments, crawfish boils, and Christmas parties," the report says.

• One former MMS official wrote an e-mail saying he had "good friends" in the industry that he "wouldn't write up."

• "Prior to our investigation of [Don] Howard [,the former regional supervisor at the MMS office in New Orleans, who was fired in 2007 for accepting a gift], receiving gifts such as hunting trips, fishing trips, and meals from oil companies appears to have been a generally accepted practice by MMS inspectors and supervisors in the Gulf of Mexico region."

• The IG found numerous instances of pornography and other inappropriate material on the e-mail accounts of 13 employees, six of whom have resigned. There were 314 instances in which the seven remaining employees received or forwarded pornographic images and links from their government e-mail.

So much for regulation. One of these days we will learn that regulation does nothing more than inefficiently and ineffectively spend money that could be deployed in a free market to generate more wealth. Instead, we create rules and regulations that provide a burden on small business, while creating barriers to entry for them against much larger firms. Large business, on the other hand, has the economy of scale to comply with the regulation and build that cost into their pricing structure. So what we get is big government in bed with big business – literally.

Brother, Can You Spare a Fish?

2010-07-20T16:00:00.003-04:00

Obama criticized Senate Republicans on Monday for blocking a $33.9 billion extension of jobless benefits and leaving more than 2.5 million Americans without jobs and no unemployment checks. Obama's position: "they finally decided to make their stand on the backs of the unemployed. They've got no problem spending money on tax breaks for folks at the top, but they object to helping folks laid off in this recession.”

Republicans are not against helping the jobless but they do want spending to be offset by budget cuts so that it does not increase the deficit. “The Democrat way is to insist we add to the national debt at the same time, while blocking Republican efforts to pass the same extension without the debt,” said Don Stewart, spokesman for Senate minority leader Mitch McConnell.

It is about time that this administration wake up and understand that the best path to economic growth is to teach people how to fish, not continue to fish for them. While fishing for others does assuage our personal inner need to believe we are helping others, it actually is inefficient, produces continued dependency, and prolongs the day of reckoning.

For people who need a history lesson, I refer you to a book by William Easterly, The White Man’s Burden. Easterly is a former senior research economist at the World Bank. His book quantitatively and qualitatively examines the efficacy of 50 years of the United States war on global poverty only to find that: (1) many people are fated to live horribly stunted miserable lives and die early deaths and (2) after 50 years and more than $2.3 trillion in aid from the West addressing the first tragedy there is shockingly little to show for it. Easterly’s conclusion: we will never start to solve the first tragedy, unless we figure out how to solve the second.

Throwing large amounts of money at the problem – especially from the top down – does nothing to solve the poverty problem. It only makes it worse. Why? Because when rules are imposed from the top and large amounts of money are involved, those at the top benefit first due to graft, corruption, and inefficiency, and the bureaucratic rules that come with the largesse destroy small business, who are unable to comply with all the red tape. Only businesses “too big to fail” have the economies of scale and capital structure to take advantage of this approach. So what you get is more of the same: failing societies.

For those of us who own small businesses, we understand this to be true, even in America. The Obama administration needs a lesson in creating wealth, not redistributing it. Until then, brother can you spare a fish?

Let’s Talk About Real Performance (TARP)

2010-04-23T16:02:00.004-04:00

Every month I examine my financial statements to see how I am doing. I think most Americans do that, especially in these times. We compare where we were years ago to where we are now, and generally find that we have stayed even or lost money. Now, in a USA today article entitled “Banks receiving US assist[ance] cut loans,” (April 22, 2010) American University's (AU’s) Investigative Reporting Project studied the impact of the Toxic Asset Relief Program (TARP) on 940 United States banks, receiving those loans versus the 7,400 that did not. What did they find? Exactly what you would expect: rewarding bad behavior results in continued poor performance.

According to the AU report, during its first year of TARP, ending September 30, 2009, TARP distributed $247 billion to 940 banks. American University identified performance differences between TARP and non-TARP banks.

- Lending at TARP banks fell 9.2% versus a decline of 6.2% at non-TARP banks.
- Average employee pay at a TARP bank increased by 9.4%, whereas non-TARP banks raised their average pay by only 1.8%.
- TARP banks added 2.7% new branches, whereas non-TARP banks cut their number of branches by 1.2%.
- Expenses at TARP banks declined by 3.9%, whereas non-TARP banks cut expenses by 6%.

Contrast TARP bank performance with BBVA Compass Bank, a Spanish-owned bank, located in Birmingham, Alabama, that did not qualify for TARP funds. BBVA cut its workforce 10% (1,200 persons), while increasing its lending by 17% to profitable sectors of the market. The same was true at Hancock Bank. “… it was definitely a tale of two worlds: banks that took TARP, and those that did not," said Michael Achary, Chief Financial Officer. Hancock ($3.5 billion in assets) raised $175 million on its own during this period, acquired assets of a failed Florida bank, and increased lending.

What is true in everyday life is true in business: if you don’t expect much, you will not get much. Unfortunately, in this case it cost us $247B and created nothing more than 940 banks that are “too big to fail.”

Hare Today, Gone Tomorrow

2010-04-09T21:21:00.001-04:00

When discussing ObamaCare with some of his constituents, Illinois Congressman Phil Hare said "I don't worry about the Constitution on this." Really. And it was all caught on video.

Hare today, gone tomorrow.

USA Today: Trust public sector more than private to spend your money

2010-04-09T21:05:00.002-04:00

In a letter to the editor, USA Today, dated April 9, 2010, J.T. Brown asserts “ … I have to strongly disagree with his [Jonah Goldberg’s] supposition that the private sector is somehow inherently more wise and judicious with its resources than the public sector is.” The principal evidence given to support this thesis is: (1) the “common” workers (I assume the author means employees) did not get to democratically elect the company’s leaders; (2) the reason executive salaries are higher is that they set their own salary; and (3) executive compensation in private sector firms has grown at a faster rate than the average American worker’s salary. The author’s conclusion: “Now which sector is it that is taking money without representation again?”

Wow, this writer is factually inaccurate and his or her conclusions are empirically disprovable. The writer misrepresents how corporations work. First, shareholders (who may or may not be “common workers”) do elect directors, who in turn hire company officers, who manage the company. If J.T. Brown wants a vote, he or she can simply invest in company stock or contribute to the 401K plan rather than put his or her money into a flat screen TV. Second, the elected directors, not the officers themselves, set the officer’s salary, and in all organizations with which I am familiar review and approve all compensation policies in the company. Third, the rate at which executive compensation has grown relative to worker’s compensation is irrelevant to whether or not the corporation “judiciously or wisely” employs its resources. In a private corporation – either for-profit or not-for-profit – the marketplace makes that determination and the business either stays in business or goes out of business. If the business fails, its capital is redeployed in the marketplace. The same cannot be said for government, which has no competitors, enacts and enforces its own laws, and prints money when it has none.

So, let’s see: social security is bankrupt, Medicare is bankrupt, Medicaid is bankrupt, and our current levels of debt as a country are unsustainable. Does not sound like judicious and wise use of resources to me.

USA Today: Tax policy works well

2010-04-09T10:31:00.003-04:00

The following is my response to a letter to the Editor, USA Today, April 9, 2010. I am tired of the factually inaccurate drival that passes through the pages of our media. Does anyone in the print media vet articles to determine if the facts are accurate or do they simply select those that support their editorial board's progressive view? I believe we need to stand up to this.

Dear Sir or Madam -

Rick Marcell asserts in his editorial “Tax policy works well” (USA Today April 9, 2010) that Jonah Goldberg fails to mention that “much of the debt happened under George W. Bush’s presidency. Bush left the debt at $10.6 trillion after inheriting a budget surplus.” This statement, while essentially factually correct, is intentionally misleading: there is not necessarily a connection between surpluses and deficits and overall debt nor is George W. Bush responsible for $10.6 trillion in debt, as the letter tries to imply.

An everyday example best illustrates the attempted obfuscation. If I buy a $200,000 house, my debt increases by $200,000. If my annual income is $50,000 and I have money left over at the end of the year after I pay off everything I owe, including the $18,000 per year mortgage on my $200,000 debt, I have a surplus. In other words you can run a surplus while still increasing your debt. So, according to Obama’s current Presidential Budget (Table 7.1, Federal Debt at the End of the Year) at the end of 1992 the debt was $4.002 trillion, at the end of 2000 it was $5.628 trillion, and at the end of 2008 it was $9.986 trillion. The debt under Clinton grew $1.626 trillion, and under Bush it grew $4.358 trillion. The difference? My opinion is that Clinton benefited from two things: (1) Newt Gingrich and the Contract with America, which imposed fiscal control on the President by limiting spending and forcing him to dramatically curtail welfare entitlement spending and (2) the dot.com bubble, which dramatically inflated stock prices on which capital gains taxes were paid, increasing tax revenue to the Treasury. Bush on the other hand faced: (1) two recessions (most of the spending to address both the dot.com bubble and housing bubble was incurred during his administration), (2) the cost of two wars, (3) the expansion of government to address terrorist threats, and (4) out of control social spending by both parties in congress.

While we can have an honest debate on the wisdom of the decisions that were made by various administrations, we should not have to debate the facts. However, in a socially progressive, post-modern world where the “truth” is eschewed and the ends-justify-the-means, we should expect nothing less than factual misrepresentation especially if such misrepresentation isolates, focuses on, and seeks to destroy the representation and credibility of the other person.

List of Rejected Republican Amendments to Health Care Bill

2010-04-07T20:58:00.000-04:00

At various points during the passage of the recent health care legislation, Republicans offered a number of amendments that were rejected by the Democratic majority. The fact that these amendments were rejected gives insight into what the Democratic majority hopes to accomplish. The following summary of the proposed amendments was circulated by Randy Forbes (R-VA). Read them and then ask yourself: does this seem like a reasonable request, and if it is why was it rejected? As you see the consequences of the health care legislation play out over time, your questions will be answered!

1. Stop the government-run health plan. Rep. Paul Ryan (R-WI) offered an amendment to improve the legislation by taking out the section of the bill that would create a government-run health plan to compete with private sector health plans. Reps. Phil Roe (R-TN) and John Kline (R-MN) offered similar amendments in the Education & Labor Committee. The amendments were all killed in committee.
2. Prevent bureaucrats from making personal medical decisions for patients. Rep. Phil Gingrey, M.D. (R-GA) offered an amendment in the Energy & Commerce Committee to bar federal political appointees and bureaucrats from intervening in patient treatment decisions. The Gingrey amendment would have ensured patients and doctors remain as the sole individuals responsible for making these critical decisions. Chairman Henry Waxman (D-CA) led Democrats in opposition to the amendment, which was defeated.
3. Require all Members of Congress to get their health insurance through the proposed government-run plan. Rep. Dean Heller (R-NV) offered an amendment in the Ways & Means Committee that would have required Members of Congress to enroll immediately in the government-run health plan that would be established under the Democratic bill. Rep. Joe Wilson (R-SC) offered an amendment to put his committee on the record in support of enrolling Members of Congress in the government-run plan as well. While the Wilson amendment was approved by voice vote in the Education & Labor Committee, the Heller amendment was killed in the Ways & Means Committee.
4. Establish a $1 trillion deficit cap. During Energy & Commerce Committee consideration of the Democrats’ government-run health care plan, Rep. Lee Terry (R-NE) offered an amendment to delay “disease prevention” spending for items like municipal jungle gyms and bicycle trails until Washington’s budget deficit dips below $1 trillion. Democrats defeated the amendment, paving the way for more unchecked spending.
5. Keep the federal government out of health care decisions. Rep. Wally Herger (R-CA) offered an amendment to prohibit the federal government from conducting so-called comparative effectiveness research, in which the federal government would ultimately help determine which medical treatments are administered to whom in America – otherwise known as government rationing of health care. The Herger amendment was defeated. Days later, in a July 22 prime-time press conference, President Obama told the nation the health care bill “will keep government out of health care decisions,” despite the fact that the comparative effectiveness language remains in the bill.
6. Protect Americans from “hurry up and wait.” Rep. Kevin Brady (R-TX) offered an amendment that would repeal the government-run health plan if wait times exceed the average wait times in private plans. The Brady amendment was not passed.
7. Stop the job-killing employer mandate. Rep. Sam Johnson (R-TX) offered an amendment in the Committee on Ways & Means to improve the Democratic legislation by taking out the section of the bill that requires American employers to provide health coverage for all of their employees, and Reps. Brett Guthrie (R-KY) and Cathy McMorris Rodgers (R-WA) offered similar amendments in the Committee on Education & Labor. Independent analysts agree this Democratic mandate on employers is likely to result in the elimination of millions of American jobs, and it could hardly come at a worse moment for the nation’s economy. The GOP amendments were killed in committee.
8. Suspend the job-killing employer mandate if the national unemployment rate reaches 10 percent. Reps. Wally Herger (R-CA) and Pete Hoekstra (R-MI) offered amendments in their committees that would suspend the job-killing employer mandate in the bill if the national unemployment rate reaches or goes above 10 percent. (It is currently at 9.5 percent.) The Herger and Hoekstra amendments were killed in both the Ways & Means and Education & Labor Committees.
9. Waive the employer mandate if it will cause layoffs, worker salary cuts, or reductions in hiring. Rep. Dave Reichert (R-WA) offered an amendment that would waive the employer mandate in the Democrats’ health care bill for any employer who certifies, under procedures developed by the Secretary of the Treasury, that it would pose a financial hardship resulting in layoffs of existing workers, reductions in salary of existing workers, or the inability to expand via hiring new employees. Rep. Duncan Hunter (R-CA) offered a similar amendment in the Education & Labor Committee, and it was adopted by voice vote. However, the Reichert amendment was killed in the Ways & Means Committee.
10. Protect employers from unfair taxation. Under the Democratic bill as written, if an employer offers qualifying health care coverage but an employee rejects it for any reason, the employer can still be slapped with an 8 percent tax on the value of that employee’s wages as a result of the job-killing employer mandate in the bill. Rep. Geoff Davis (R-KY) offered an amendment to fix this problem and protect employers from such unfair penalization. The Davis amendment was killed in committee.
11. Protect employers who offer health care coverage to their workers. As written, the Democratic health care bill would gut ERISA (the Employee Retirement Income Security Act), the federal law that makes it possible for millions of American workers to receive quality health care benefits and other benefits through their employers. Rep. John Kline (R-MN) offered an amendment to fix this flaw and shield employers who offer health care coverage to their workers from being caught up in a web of legal liability systems that would vary from state to state. The Kline amendment was killed in committee.
12. Create small business health plans. Rep. Howard P. “Buck” McKeon (R-CA) offered an amendment that would modify the bill to allow the creation of small business health plans (also known as Association Health Plans) that allow trade, industry, professional, or other business associations to form and purchase health care coverage at a lower cost. The McKeon amendment was killed in committee.
13. Keep unnecessary lawsuits from driving up health costs. Under the Democratic bill, Americans would be required to obtain their health care through a “national health insurance exchange” that is limited to “qualified” providers. In the Ways & Means Committee, Rep. John Linder (R-GA) offered an amendment that would keep the so-called exchange from operating in states that do not have reasonable limits on lawsuits relating to medical care. Unnecessary lawsuits have long been identified as one of the primary factors in rising health costs nationwide. Rep. Glenn Thompson (R-PA) offered a similar amendment in the Education & Labor Committee that would prevent the creation of the so-called “exchange.” Both the Linder and Thompson amendments were voted down.
14. Prevent taxpayer-funded health benefits from going to illegal immigrants. Rep. Dean Heller (R-NV) offered an amendment that would increase safeguards to ensure taxpayer-funded benefits do not go to individuals who are not lawfully present in the United States. This amendment, too, was killed.
15. Prevent taxpayer funding of abortion. Reps. Sam Johnson (R-TX), Eric Cantor (R-VA) and Mark Souder (R-IN) offered amendments to remove language from the legislation that would result in American taxpayers subsidizing abortion-on-demand. A recent Zogby survey determined that more than 70 percent of Americans are opposed to taxpayer funding of abortion. The amendment did not pass.
16. Ensure states are not forced to provide abortion benefits. In the Energy & Commerce Committee, Rep. Nathan Deal (R-GA) offered an amendment to ensure that states are not required to provide coverage for abortion – or even procedures such as Botox injections and hair plugs. Under the Democrats’ legislation, the federal government could deny the states funding if such services are not provided. Rep. Deal’s amendment was rejected in a party-line vote.
17. Prevent health care providers from being forced into a government-run plan. Rep. Charles Boustany, M.D. (R-LA), a physician, offered an amendment to prevent American health care providers from being forced into the government-run plan established under the Democratic bill. The Boustany amendment was killed in committee.
18. Require the government-run plan to operate under the same rules as private health plans. Rep. Boustany offered an amendment to improve the Democratic legislation by requiring that the government-run plan established in the bill maintain reserves and other margins in amounts consistent with the standards that apply to private plans. Reserves would have to come from premiums, not federal subsidies. This amendment was not passed.
19. Specify that Congress should read the health care bill before voting on it. Rep. Kevin Brady (R-TX) offered an amendment expressing the sense of Congress that Members of Congress should read the health care bill before they vote on it. More than 80 House Republicans have signed a pledge vowing they will not vote to enact a health care bill they have not read and which has not been posted online publicly for at least 72 hours. The Brady amendment was defeated in committee.
20. Keep President Obama’s tax pledge not to raise taxes. Last year, in his campaign for the presidency, President Obama pledged he would not raise taxes on anyone making less than $200,000 ($250,000 for those filing jointly), but the health care legislation written by House Democrats would violate this pledge. Rep. Paul Ryan (R-WI) offered an amendment that would keep the new taxes proposed in the Democratic legislation from applying to those with incomes under $200,000 ($250,000 for those filing jointly). The Ryan amendment was killed in committee. Rep. Cathy McMorris Rodgers (R-WA) offered a similar amendment in the Education & Labor Committee. It was not even allowed to come to a vote.
21. Keep President Obama’s pledge that health care reform will not add to the deficit. Rep. Tom McClintock (R-CA) offered an amendment to prohibit the government-controlled health care system from taking effect unless the legislation is and remains “deficit neutral.” The Congressional Budget Office (CBO), the nonpartisan “scorekeeper” for Congress, has determined that the bill as drafted will add hundreds of billions of dollars to the deficit. The McClintock amendment was killed in committee.
22. Ensure that workers who like their current health plan can keep it. Reps. Judy Biggert (R-IL) and Tom Price (R-GA) offered an amendment to ensure that Americans who like their current employer-provided coverage can keep it by shielding such coverage from the costly and complex new mandates in the Democratic health care bill. Under the amendment, employer –based health plans that comply with ERISA (the Employee Retirement Income Security Act), the federal law that makes it possible for millions of American workers to receive quality health care benefits and other benefits through their employers, would be considered as having met all of the mandates specified in the bill. The Biggert-Price amendment was killed in committee.
23. Stop seniors from being stripped of their health care choices. Rep. Brown-Waite offered an amendment that would remove portions of the health care bill that would cut the Medicare Advantage program. Such cuts would impact millions of seniors nationwide, taking away their choices and forcing them into a government-run health care plan with fewer options. The Brown-Waite amendment was killed in committee.
24. Prohibit unfair advantages for government-run health plan. The Democratic health care bill would create a government-run health care plan to “compete” with private sector plans that currently provide health coverage for millions of Americans. House Republican Conference Chairman Mike Pence (R-IN) has warned that a government-run health care plan will compete with private sector health plans “the way an alligator competes with a duck,” and the legislation written by Democrats would allow the government-run health plan to have distinct advantages at the expense of taxpayers and private plan enrollees. Rep. Peter Roskam (R-IL) offered an amendment that would prohibit the Secretary of Health & Human Services from basing payment rates for the government-run health plan established under the Democratic bill on Medicare rates, and instead would require that they pay an average of what private plans in the market pay. The Roskam amendment was killed in committee.
25. Keep the federal government from choosing “favored” physicians. Rep. Tom Price (R-GA), a physician, offered an amendment to keep eliminate the flawed “tiered” payment structure in the health care bill, which would give preference to physicians who participate in the government-run health care plan. This provision would allow the government to reward physicians who play by its rules while financially harming those who do not. The Price amendment was defeated.
26. Allow states to opt out. Bipartisan opposition to the Democratic health care bill has been expressed by governors and state legislators throughout the country. Rep. Price offered an amendment to permit states that have crafted their own health plans to apply for waivers from the Democratic legislation’s requirements. The Price amendment was killed in committee.
27. Preserve Americans’ health care freedom and choice. Many Americans favor Health Savings Accounts (HSAs), which give individual Americans more direct control over their health care spending, but the Democratic bill as written would wreak havoc on HSAs and similar tools that empower individuals and consumers. Rep. Eric Cantor (R-VA) offered an amendment to improve the Democratic bill by ensuring that HSAs would not be shut down or gutted by federal mandates. Specifically, the Cantor amendment stated that HSAs tied to high deductible health plans are deemed to meet the “minimum benefit level requirements” under the Democratic bill, and struck changes to the bill’s “definition of allowable medical expenses” for HSAs and similar accounts. The Cantor amendment was defeated in committee. Rep. Tom Price (R-GA) offered an amendment to provide greater portability and individual control over health care by allowing employers to contribute to “defined contribution” health care plans, which workers could use to purchase the coverage and services of their choice. The Price amendment was defeated in the Education & Labor.
28. Allow Americans to continue to enroll in private individual market health plans. Rep. Dave Reichert (R-WA) offered an amendment to repeal the bill’s prohibition on new enrollees in private individual market plans. This amendment was killed.
29. Slow Medicare’s march toward bankruptcy. Concerned about the coming fiscal tsunami that will result from out-of-control spending on entitlement programs, the GOP-led Congress earlier this decade passed legislation specifying that if 45 percent or more of the Medicare program's funding came from general tax revenues for two consecutive years, the President had to submit to Congress legislation that would slow spending and make the program financially stable. Democrats gutted this rule as part of their rules package for the current Congress. Rep. Paul Ryan (R-WI) offered an amendment to restore it. The amendment was killed in committee. Prohibit new taxes until Medicare fraud rate is reduced to below 1 percent. Rep. Dave Camp (R-MI) offered an amendment to improve the bill by specifying that the new taxes that would be imposed on Americans under the bill could not take effect unless the fraud rate in Medicare is reduced to below 1 percent of the amount of taxpayer money spent on the program. The Camp amendment was killed in committee.

Stuck in the Middle Again: Money Ain’t for Nothing But the Checks are for Free

2010-03-31T09:45:00.003-04:00

Have you ever noticed that progressives always start conversations “in the middle?” What I mean by that is their arguments are about “moral” inequities and the “grand funk” of the present: they never, ever want to document the efficacy of their “proven” solutions by citing historical fact nor are they willing to commit to metrics against which the consequences of “new” policies will be measured in the future. We need to hold them accountable for both.

Social security is a good example. When an accountant quizzed Roosevelt about the Ponzi scheme-like economic issues with social security, he said “I guess you are right about the economics, but those taxes were never a problem of economics. They are politics all the way through … with those taxes in there, no damn politician can ever scrap my social security program.” [“Statements on Taxes by Members of this Administration in 1939,” in Morgenthau Diary, January 5, 1939]. Both the accountant’s and Roosevelt’s perspective proved to be correct. Seventy years later, Social security, Medicare, and Medicaid have an off-balance sheet liability of $50T to $55T. This is equivalent to the annual GDP of all the people on the planet (currently 6B) working for one year or approximately 4 years of the GDP of the United States. In fact, Social Security, like nationalized healthcare, was presented as insurance, when in fact the “revenue” received from current payees was never invested in a sinking fund, but instead was transferred to the treasury, in exchange for an IOU, to meet ongoing obligations. As of today, Social Security has just reported, for the first time in history, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office. Stephen Goss, chief actuary of the Social Security Administration, has said that although the CBO projection will probably be borne out, the change will have no effect on benefits in 2010 and retirees will keep receiving their checks as usual. Perhaps we should adopt a variant of the Dire Straits’ song as our national anthem: money ain’t for nothing but the checks are for free!

Health care will be no different. Progressives are remiss to discuss the disastrous future financial implications of the bill. Instead, they stack the cards to get an “acceptable” Congressional Budget Office score, while leaving out the cost of the “doctor fix [$250B],” they raise taxes for four years before realizing most of the benefits and all of the annualized cost of the legislation, and they double count the cuts in Medicare [$500B]. To paraphrase Joe Biden, our erstwhile Vice President, “ you have to spend money to keep from going bankrupt.” Only one problem, Joe, the government is not a business that creates wealth, it is no more than corporate overhead, whose purpose is to redistribute created wealth.

Conservatives need to transform the debate from the progressive’s mantra that somehow the absence of present pain and suffering is the moral pinnacle of a civilized culture. Using this logic, providing crack to a heroin addict – with no regard for the long term personal, societal, or economic consequences – is a morally acceptable solution. In fact, morally correct choices many times come from pain and suffering. As the saying goes, “good judgment comes for experience and experience comes from bad judgment.” Bad judgment is minimized through an understanding of history and a healthy respect for measuring and comparing future performance against objective reality, which we used to call Truth.

Until then, we will continue to be "Stuck in the middle, again."

Beck's Rhetoric Fuels Anger

2010-03-30T09:32:00.001-04:00

The following is my response to a letter to the USA Today editor (March 30, 2010), entitled Beck’s Rhetoric Fuels Anger. I think it is important that we stand up to obfuscation of fact, tortured logic, and hysteria coming from an uninformed public, all of which fuels vitriolic rhetoric from the left. The letter to the editor follows.

In her letter to the USA Today editor (March 30, 2010), entitled Beck’s Rhetoric Fuels Anger, Marilyn Mulvihill of Sewickley, PA, asserts that “Beck teaches revisionist history at best,” yet does not cite one example. Exactly what is he saying that is revisionist? Historical events to which he refers either occurred or did not occur. Second, she states “[the] recent ugly taunts toward members of Congress, the violence at congressional offices, and the yelling of ‘baby killer’ on the House floor are proof that his tactics are working.” I have two problems with this statement: (1) the quote is incorrect – “it’s a baby-killer” is the correct quote and was directed toward the legislation and not an individual – and (2) correlation does not imply cause – she provides no factual evidence these events were directly attributable to any actions by Glenn Beck. While, Ms. Mulvihill is entitled to her opinion, she is not entitled to her own facts nor is she entitled to twist logic beyond what the facts can support. I do acknowledge her First Amendment right to express her opinion, but I have carefully reviewed the Constitution, and cannot find her right not to be offended.

“Re-Peeling” Health Care Legislation

2010-03-29T16:52:00.001-04:00

After “passing” health care reform – like passing a kidney stone – the Obama administration is hard at work re-framing the debate, much like a used car salesman following you home after buying a lemon to make sure you understand the car did come with new tires.

The reframing goes something like this: “can you believe those uncaring Republicans want to repeal free health care for all Americans …,” followed by a list of benefits with which any reasonable human being (including most Republicans) would agree. What they do not list is ALL the bad stuff, with which no person would agree, unless you were a Marxist. For example, a minimum of $2.5T in additional debt, 182 government agencies between you and your doctor, cuts in Medicare of $500B, 4 years of taxes before benefits really kick in, and a litany of other unintended (or possibly intended) consequences that are just starting to come out.

Within days of the bill’s passage, several major corporations, including AT&T, Caterpillar, Deere, and others are setting aside between $31M to $1B in one-time, current quarter charges to cover unfunded liabilities that they will incur because of loss of deductibility of certain pension related deductions. In all S&P 500 companies will take a combined hit of $4.5B to first quarter earnings, estimates David Zion, an analyst with Credit Suisse. Of course the administration says that these firms are exaggerating the impact of the loss of these deductions. Bottom line, companies will be less profitable and have less capital to invest in a market that is trying to find a bottom and put people back to work.

So, before the Obama administration has too much time to reframe the debate and repeat the lie for months, thereby moving it from opinion to truth, I want to do some reframing myself. My narrative goes like this: The benefits of Obamacare have much in common with crack cocaine: once you get on it, you’ll love the high, until your health fails and you run out of money. But not to worry, the administration is working on a clean needles program so that we can comfortably rest assured we will not catch a “bad” disease administering a fatal overdose.

The healthcare legislation needs to be “re-peeled:” common sense and market based approaches can achieve better benefits at lower cost.

A Show of Bigotry at Health Care Tea Party Rally

2010-03-29T08:55:00.002-04:00

In a letter last week to the editor of the USA Today, Tom Geronimo, from Crystal River, FL, stated “Saturday, outside the U.S. Capitol, we saw people using the N-word and spitting on a black congressman. This demonstrated what we've known, and what the Tea Party has been denying, all along: this is not about policy; it's about race. Bigots control the conservative movement in this country, and the Republican Party panders to them.” Having framed the discussion as a racial one, Mr. Geronimo then went on to quote financial facts that he believes indicates the country is on right track.

While Mr. Geronimo is entitled to his own opinion, he is not entitled to his own facts. Subsequent news interviews and investigation by the Capitol police revealed no video evidence or audio evidence that supports his purported claim of racial epithet or spitting to be true. At best, we have one person’s word against another. Vitriolic, unsubstantiated attacks do little to advance the debate, which is not about race, but about smaller government, fiscal responsibility, personal accountability, and a return to constitutional principles.

So Much Money, So Little Time - Really?

2010-03-25T07:18:00.002-04:00

You have heard the saying, "So much money and so little time." Well, when it comes to Hampton Roads and the Stimulus Bill money, this aphorism should more appropriately read "So little money and such a long time."

In a March 21 article entitled "Stimulus Money Mired in Red Tape," the editorial board of the Virginian Pilot reported "that a Chesapeake city audit indicated only 4 percent of $12 million in stimulus money awarded to the city was spent in 2009 ... so far, only two jobs have been created in Chesapeake ..." The article goes on to state that "even though audits have not been done in the region's other cities ... the results would have been similar. Norfolk, for instance, has spent only $836,000 out of $15.3 million. Most of the money allocated to Virginia Beach, Portsmouth, and Suffolk is also unspent, including funds to end [emphasis mine] homelessness, hire new police officers, and make city buildings more energy efficient." The article then goes on to explain that money is starting to flow to long-term, high tech investments that will make us more economically competitive in the world, like construction projects to fix pot holes, widening roads, pouring elementary school footings. The editorial board blames the delay on "City officials [who] were forced [emphasis mine] to expend too much time and energy to qualify for stimulus funding, and that's unacceptable [emphasis mine]." The article concludes "Whatever you think of the stimulus package [emphasis mine], the Chesapeake audit doesn't mean that money is being wasted or that it won't create jobs. It just confirms the old axiom that government bureaucracy can get in the way of progress [emphasis mine]."

My conclusion is different: the FACT is that the stimulus is not delivering and the progressive's choice of delivery systems -- statist government -- is incapable of efficiently and effectively allocating scarce resources that have alternative uses. When I was a child, I believed in the magnamity of the tooth fairy, but, as it turned out, the tooth fairy just could not deliver. At ten cents a tooth and a limited time horizon for tooth loss, I ran out of teeth, time, and money. I had to grow up and get a real job. It turned out, junior entrepreneurship won the day and bridged the gap between fantasy and reality.

Unfortunately, the editorial board's conclusion is that we need to believe centralized allocation of resources will work out, only if bureaucracy gets out of the way. Of course, centralization of allocation of resources requires larger bureaucracies: approximately 182 new ones for health care. So instead of "believing" in this new religion, perhaps we should examine how it has worked out in the real world.

Thomas Sowell in his book, "Basic Economics," page 17, reports that two soviet economists, Nikolai Smelev and Vladimir Popov described a situation that occured during an era of soviet directed economy "where prices were not set by supply and demand but by central planners who sent resources to their various uses by direct commands, supplemented by prices that the planners raised or lowered as they saw fit." In this situation, the planners raised prices on moleskin pelts:

"State purchases increased, and now all the distribution centers are filled with these pelts. Industry is unable to use them all, and they often rot in warehouses before they can be processed. The Ministry of Light Industry has already requested Gokomsten twice to lower purchasing prices, but the question has not be decided yet. And this is not surprising. Its members are too busy to decide. They have no time: besides setting prices on these pelts, they have to keep track of another 24 million prices." [Emphasis mine.]"

So, let's recap. We have thousands of trailers sitting in Mississippi and Lousiana that are toxic and were never delivered to "persons in need." It has cost the government $300 million to store these trailers. The government has obligated almost $800B to stimulus, 30% of which nationally has been spent, with few jobs created. The government has nationalized health care, increased the national debt by several trillion dollars, and created 182 new bureaucracies AND no one can adequately explain how any of this will work.

I think it is time we reject "progressive" religion -- belief in statist government -- and return to real religion -- a belief in God and the rights he has given to each individual. True "progress" is the product of free people, free markets, and limited government.

Open Letter to Congressman Glenn Nye March 22, 2010

2010-03-22T07:50:00.001-04:00

Thank you for voting NO on passage of the health care legislation.

I hope that you will continue to vote in a manner that: (1) reaffirms constitutional principles (viz., the government's responsibility is to protect our individual rights, which come from God not government, and health care is not a right, it is a good or service); (2) precludes enactment of regulatory reforms that carry the force of law, while circumventing the congress and the will of the people; and (3) acting in a fiscally responsible manner that reduces the on-balance sheet and off-balance sheet liabilities of the Country.

To accomplish such an agenda will require moral courage and persistence. It will also require you to be honest with your constituents about what we can afford and what we cannot afford; what is a right and what is a privilege; and what you have authority to do and what you do not have authority to do under the Constitution. I know this will be difficult because Democrats think so much of the rule of law that they appointed Congressman Alcee Hastings to the rules committee. He was a Federal Judge for 10 years. Jimmy Carter appointed him a U.S. District judge in 1979 and, two years later, Hastings accepted a $150,000 bribe which led to his impeachment. Seven years later, House Democrats weighed in to add perjury to the charges against him and in 1989 he became "the sixth federal judge in the history of the United States to be removed from office by the Senate." He is also the congressman who recently stated " when the deal [health care] goes down, all this talk about rules, we make them up, as we go along."

We are in historic times and I really do appreciate your NO vote on health care. But if you think that it was simply good political calculus, voting NO because sufficient YEA votes were present to pass the bill and therefore voting in the negative would allow you to fight another day, rest assured, your constituents are far more actively engaged in this process now and will examine every vote you make. My pledge to you is that I will keep an open mind and judge your performance by your record and not the company you keep.

Do Not Confuse Me With the Facts on Health Care

2010-03-18T10:27:00.003-04:00

A recent e-mail crossed by desk, which contained some facts that I found interesting and want to share with you. What follows is the e-mail, with facts confirmed, my redactions, and my personal thoughts.

To place the subject in context, I ask you to consider a quote by former Sen. Daniel Moynihan, a liberal democrat: “You’re entitled to your own opinion, but you’re not entitled to your own facts.” Or for those of us who love sports analogies: “It ain’t bragging if it is in the record book.” (Yogi Berra). So, as you consider a government takeover of health care and the actual business experience of those behind this monstrosity, you should consider the facts, which my liberal friends are remiss to do. Typically, all conversations with them start in the middle, with a lack of willingness on their part to judge the outcome of their actions against history or establish metrics against which their proposed policies will be judged. They are always in the moment: there is a moral crisis that needs to be solved and if we do not do it “people will be hurting.” If they were to consider the historic performance of their policies – social security is insolvent, medicare is insolvent, medicaid is insolvent, welfare is insolvent, the federal government is insolvent and most (but not all) of this is due PRINCIPALLY to PAST social engineering policies and entitlements which have not economically performed – they would find that their policies have caused more “people to hurt” and no basis for the average American to trust the future economic performance of any policy they might propose. And yes, Republicans and Democrats are at fault, but the root cause of this problem is traceable DIRECTLY to progressive thought in both parties. Progressives are the villains, as I see it.

So here are the facts. A recent "Investor's Business Daily" article provided very interesting statistics from a survey by the United Nations International Health Organization.

Percentage of men and women who survived a cancer five years after diagnosis:

U.S. 65%
England 46%
Canada 42%

Percentage of patients diagnosed with diabetes who received treatment within six months:

U.S. 93%
England 15%
Canada 43%

Percentage of seniors needing hip replacement who received it within six months:

U.S. 90%
England 15%
Canada 43%

Percentage referred to a medical specialist and see one within one month:

U.S. 77%
England 40%
Canada 43%

Number of MRI scanners (a prime diagnostic tool) per million people:

U.S. 71%
England 14%
Canada 18%

Percentage of seniors (65+), with low income, who say they are in "excellent health:”

U.S. 12%
England 2%
Canada 6%

These statistics speak for themselves!

Now consider the business experience of those persons who are responsible for advising the President on policy and administering the departments that will bring us an enlightened utopia. What follows is a listing, by President and party of the percentage of the president’s cabinet who had business experience prior to entering the administration in which they served.

Pre-1950 Presidents

T. Roosevelt (R) ........38%
Taft (R) ................... 40%
Wilson (D) ............... 52%
Harding (R) ............. 49%
Coolidge (R) .............48%
Hoover (R) ...............42%
F. Roosevelt (D) .......50%
Truman (D) ..............50%

Post-1950 Presidents:

Eisenhower (R) ..........57%
Kennedy (D) ............ 30%
Johnson (D) .............. 47%
Nixon (D)................ 53%
Ford (D).................. 42%
Carter (D)............... 32%
Reagan (R) .............. 56%
G H Bush (R) ............51%
Clinton (D) ............. 39%
G W Bush (D) ........... 55%
Obama (d) ................. 8% !!!

The Obama administration’s cabinet is filled with persons who are the least experienced by far of the last 19 presidents! And this administration is telling our big corporations how to run their business? They know what's best for GM, Chrysler, Wall Street, and you and me? How can the president of a major nation and society – the one with the most successful economic system in world history – talk about business when he's never worked for one? Or about jobs when he has never really had one or had the responsibility for making payroll? Neither have 92% of his senior staff and closest advisers.

I have never been hired by a poor man. I have never worked for anyone who did not have a track record of success and whom I thought incapable of successfully leading the organization to accomplish its mission. However, many Americans cannot see beyond the veneer of his eloquence and his physical attractiveness to discern his total lack of experience, incompetence, and ideological commitment to move our country toward socialism, which in the history of mankind and through the demonstrated insolvency of our own social entitlements, has consistently proved to be a failure. This is not high school, where the best looking gal or guy or the best athlete who has the best GSA poster should be elected to be leader of the free world. Unless good people become engaged in the political process, understand that it is not government’s role to provide us with goods and services, but to protect our rights – which come from God not the Government and therefore cannot be taken away – we will enter into a period of decline from which it will be difficult to overcome.

I urge each person to actively engage your political representatives and do what you can to stop this administration’s agenda in its tracks. Most importantly, I urge each person to: (1) understand the issues and the facts; (2) test proposed policies against what has historically worked or not worked; (3) vet political candidates running for office based on their moral character, business experience, and elected community service; and (4) take the necessary action to remove incumbents whose progressive views have no constitutional basis or have proved to be unworkable in the real world. What we need is smaller government, fiscal responsibility, and a return to the rule of law, as envisioned in our constitution. Underlying all of this is the need for each individual to be accountable for his or her own actions, within the context of moral code that abandons post-modern relativistic thought.

"All that is necessary for the triumph of evil is for a few good men to do nothing." Anonymous

Dangerous, Dysfunctional Intellectual Elitists

2010-01-02T12:14:00.005-05:00

On December 21, 2009, Paul Krugman wrote in his NY Times Op Ed, Dangerous, dysfunctional government, “Unless some legislator pulls off a last-minute double-cross, health care reform will pass the senate this week. Count me among those who consider this an awesome achievement. It’s a seriously flawed bill, and we’ll spend years if not decades fixing it, but it’s nonetheless a huge step forward.” [Emphasis mine] Makes one wonder what he thinks is the “huge step forward.” The only thing that is seriously flawed is Paul Krugman’s world view and his fundamental understanding of the Constitution.

In this moment of progressive (some would say socialist or Marxist) elation, Krugman, a Nobel prize winning economist (that may say it all), columnist, and author, gives us a rare glimpse into the “progressive” thinking that is going on behind the Wizard-of-Oz like curtain we call Washington, DC. Though thinly veiled, his comments suggest that passage of the most recent senate verison of the health care bill is not about improving health care: it is about promoting a socialist agenda in which individual rights flow from the state and individual freedom is replaced by economic slavery. It is about making the Constitution irrelevant.

Consider the following statements from Krugman’s article:

· “… the fact that it was such a close thing shows that the Senate – and, therefore, the US government as a whole – has become ominously dysfunctional.”
· “Democrats won big last year. In any other advanced democracy, this would have given them the mandate and the ability to make major changes. But the need for 60 votes to cut off Senate debate and end a filibuster – a requirement that appears nowhere in the Constitution … gave a handful of wavering senators extraordinary power to shape the bill.”
· “We need fundamental financial reform … climate change … long-term budget deficit [reduction]. What are the chances we can do all of that – or any of that – if doing anything requires 60 votes in a deeply polarized Senate?”

Krugman continues his blathering, quoting Barbara Sinclair – a professor of political science at the “ultra conservative” University of California Los Angeles -- that she finds extended-debate-related problems affected only 8% of major legislation in the 1960s, 27 % in the 1980s, and 70% after 2006. Wow! What about the 1970s, the 1990s, or all of the 2000s? Sounds like data cherry picking to me. But, you have to love his conclusion, and I quote “… Bush-era Democrats weren’t as nearly determined to frustrate the majority party, at any cost, as Obama-era Republicans. Certainly, Democrats never did anything like what Republicans did last week: GOP senators held up spending for the Defense Department in an attempt to delay action on health care.”

Actually, they did worse, according to my recollection of that period: as a minority party, the Democrats attempted to use this 60 vote majority rule to preclude George Bush from bringing his Supreme Court chief justice nomination to the floor. They effectively used their minority power to preclude enacting Bush era health care, immigration, and energy policies, which passed in the House, but were denied seeing the light of day in the Senate.

But let’s not dwell on this tit-for-tat childishness, even though I might remind Krugman his beloved Social Democrats hold a supermajority in the House, in the Senate, AND control the presidency. Instead let’s focus on his conclusion: “But if such legislation is itself blocked by a filibuster, reformers [emphasis mine] should turn to other means [emphasis mine]. Remember the constitution sets up the Senate as a body with majority – not supermajority – rule. So the rule of 60 can be changed.”

I guess Krugman has selective memory. When the Social Democrats tried to filibuster Bush’s nomination of John Roberts as Chief Justice, the Republican’s stated they were prepared to “go nuclear” [Democrats actually coined that phrase] – eliminate the 60 vote supermajority rule. The social Democrats howled – it took away the minority’s rights, they claimed. Cooler heads prevailed and the moderates came forward. What they realized – and apparently Krugman and his other socialist/ Marxist friends do not want to admit – is the United States is not a democracy, as he asserts, in which the majority necessarily rules. It is a republic that operates on the rule of law and, in many cases, requires supermajorities to get things done, like amend the constitution. Therefore, the senate 60 vote rule to move major legislation to the floor, even though it does not “appear in the Constitution,” is consistent with the founding fathers’ principle that in a republic – when 100 people are going to determine the fate of the republic – it is sometimes better to have legislation vetted by a supermajority before it is put to a majority vote. It gives the minority some leverage in decision making.

Similar thinking pervades our whole legal framework. Suppose you were a member of a posse and you captured a cattle rustler. In a democracy, a simple majority of the posse could vote to hang the rustler. In a republic, the majority has no such rights: the rustler is turned over to the sheriff who arrests him. The rustler has a right to a trial and jury of twelve peers. In a death penalty case, he must be found guilty unanimously by all twelve jurors not a simple majority. If the verdict is not unanimous, then he is let go.

Krugman’s argument rings hollow. However, it does clearly illustrate the Social Democrats’ strategy: legislate us into economic slavery through growing big government at the expense of personal liberty and the rule of law. The government currently controls 30% of the economy. With health care, no matter how bad the bill is, they will control an additional 17% of the economy’s spending – or a total of 47%. For them it is a tipping point. With fully 43% to 47% of all Americans currently not paying any federal income tax, the final nail in the coffin is to make us all dependent on the government for the most fundamental of all rights: our health. In effect, if they control our health and our wealth, they control everything.

To paraphrase Admiral Farragut at the battle of Mobile Bay, their battle cry is: “Damn the Constitution, full speed ahead.”

Unemployment: You Do the Math

2010-01-02T10:12:00.003-05:00

In the Wall Street Journal article, Labor Market Shows Signs of Progress, by Luca Di Leo and Sarah N. Lynch, (Jan 2, 2010), the authors claim “The number of people filing new claims for unemployment benefits in the U.S. fell in the latest week to its lowest level in nearly 18 months, a sign the labor market may be turning the corner.” They illustrate their claim with a graph showing a steady state initial jobless claim rate in 2007 of 300,000, a peak in the rate in early 2009 of 650,000, and a current rate of 460,000. They also stated that 4.8M people had been collecting jobless benefits for more than a week.

I am not a research analyst, just a guy trying to find a job and feed my family, so my research resources and time are limited. However, even a person like me, with a government (public) high school education, can do the math.

According to Wikipedia, the United States employs a total of 155M workers. According to news reports, 10% of the workforce is unemployed or 15.5M. Assume in the best of times, 5% unemployment is the norm and monthly initial claims are 300,000 (WSJ data). That means approximately 7.5M people need to be put to work. According to the WSJ data, 4.8M are drawing unemployment for at least a week, which means that 2.7M are long term unemployed who have given up looking, an assumption we will come back to later.

According to the Bureau of Labor Statistics over the last decade (1999 – 2008), JOB CREATION has averaged approximately 65,000 jobs per month. This means that at historical job creation rates AND at a stable initial claims rate (300,000), it will take 115 months to regain the 7.5M jobs that represent 5% unemployment. The truth is that initial claims rates are still at 450,000 per month (we are losing jobs but at a lesser rate), two-thirds of the jobs CREATED OR SAVED (I love that term ... another Obama sleight of hand) are GOVERNMENT (read OVERHEAD) jobs, AND there is no guarantee that the jobs even exist to be filled because companies may choose not to rehire because they have realized PRODUCTIVITY INCREASES THROUGH AUTOMATION over the past 10 years and the future in an Obama world is extremely risky from a regulatory and tax perspective.

For those political hacks that believe I chose my data to help George Bush, note that I did include 1999, a Clinton year (average 264,000 jobs per month) AND I did not include 2009, a bad year for Obama (-340,000 jobs per month). I know, I know, political ideologists would claim 2009 was Bush’s fault. My rebuttal to that is to get a meaningful mathematical result, one must treat the data between presidencies consistently. Therefore, perhaps a better way to treat the data is to assume that the market discounts the jobless rate by ANTICIPATING changes in policies between administrations so that an administration’s impact actually starts in the year preceding its actual election or re- election. Under this theory, 1999 (264,000 jobs per month) was really Bush’s first year and not Clinton’s last year and 2008 (-265,000 jobs per month) was Obama’s first year and not Bush’s last year. As a laymen statistician, I can find some support for this argument by noting the inverse correlation between Obama’s popularity in the polls, starting in the April – May 2008 timeframe, and the gains and losses in the stock market. Another interesting analysis might be to focus on who controls congress rather than who is president. Ahhh, this is an analysis for a different day. As they say, so little time and so little money!

Assuming you and I disagree on the preceding analysis, let’s examine what happens if we split the difference. In that case the average job creation rate across the Bush and Clinton Administrations AND eliminating 2009 as an anomalous year, results in an average monthly job creation rate of 82,000. If we agree on the other numbers and relax all my prior assumptions and constraints, then the best we can expect from the economy is recovery in 91 months, assuming 7.5M unemployed or 58 months if you assume 4.8M unemployed.

No matter how you cut it, the picture is not as rosy as the social progressives (Social Democrats) want you to believe. The only way to stimulate the economy is to reduce the size of the government and its need for taxes and let American innovation in the free market do the rest.

Those who think the government is going to fix this are relying on a false god.

Health Care: The Next Round

2009-10-31T15:07:00.003-04:00

Open Letter to Senators Warner and Webb

Thank you for voting against cloture on the Senate Health Care Bill. I do appreciate your willingness to vote against your party so that the American people and members of the Senate have some time to read the bill they will be voting on.

In prior communications, I have expressed my concerns around this unprecedented takeover by government of 17% of our economy. I am not in favor of the bill and do not share many of your views about its perceived benefit. In prior correspondence with you, I have outlined my suggestions for “reforming” health care, and will not repeat them here.

When voting on this matter, please take into consideration the actual “accomplishments” of government run programs:

· In 1965, the "Great Society" was created. Eight billion dollars was spent that year; today we are spending $500B annually.

· In 1977, the Department of Energy was created to "make us independent of foreign oil." Now it is a bureaucracy of 18,000 people with a $25B annual budget. We are still dependent on foreign oil, are not allowed to drill off our own shores (but foreign governments can), and have not built a new nuclear power plant since the late 1970s.

· In 1983, a Trust Fund was created to ensure that Social Security was sound for the retirement of baby boomers in 2011. After 25 years of increased payroll taxes, $2.5T was “borrowed” from that fund and every penny spent on something else. Now we want to” borrow” another $1T to "fix" health care while cutting Medicare entitlements to retiring seniors by $500B.

· In 2008, TARP and "stimulus" bills authorized another $1.5T, which is new debt, has not stimulated much of anything except "creating or saving" government – not private sector – jobs.

Not a good track record. I think you need to cut your losses and go back to old fashioned Keynesian economics. Harding / Coolidge in the mid-1020s, Kennedy in the mid-1960s, Reagan in the early 1980s, and Bush in his first administration – contrary to predictions by opponents – cut taxes and government income rose and economic activity and prosperity increased. Hong Kong became an economic powerhouse under a low flat tax. Estonia, Latvia, Lithuania, and Russia have adopted flat taxes ranging from 13% to 33%, all with very positive economic effects. These successes are being copied by the Ukraine and the Slovak Republics. Canada is starting to dismantle portions of its Universal Health Care system because it does not work. In contrast, Japan tried to “spend” its way out of its 1980 recession and it still has not recovered.

Our recent economic meltdown is not traceable to free enterprise run amok. Damage to large portions of our economy is traceable to government social programs and government regulation that create improper economic incentives: the Community Reinvestment Act’s emphasis on lending to unqualified borrowers; Department of Energy and the Environmental Protection Agency regulations, which are at cross purposes; and government graft and corruption (i.e., 13% graft in Medicare and Medicaid, as documented by independent watchdog agencies), to mention only a few.

The next “bubble” is going to be the American debt. Only capitalism – not socialism – will fix this problem, if it is fixable. To paraphrase Margaret Thatcher, “The problem with [the Democrats' ] socialism is, at some point, you run out of other peoples’ money.” The insertion is mine.

Which is More Dense: Solar Energy or Politicians?

2009-10-25T08:45:00.003-04:00

In a prior article, (Cure for Energy Depression – More Sun?) , I conservatively estimated that 8,800 acres of solar collectors would be needed to replace the generating output of a 50 year old, 2259 Mw fossil plant that sits on 800 acres of land: 400 acres for generation and 400 acres of ecological preserve. Well, now the results are in: Florida Power and Light has just announced the opening of its Arcadia, Florida, DeSoto Next Generation Solar Energy Facility, at which Obama will preside and tout the benefits of solar energy.

According to FP&L information, the DeSoto Next Gen plant will produce 25 Mw, consists of 90,500 solar panels, and sits on 180 acres of land. It will produce “enough electricity for 3,000 homes.”

So, if my math is correct, for a modern, solar plant to produce 2,259 Mw of power, 16,265 acres of land are required (180 x (2,259/25)). If one corrects my original estimate of 8,800 acres by eliminating the fossil plant’s ecological preserve acreage from the calculation, the original calculation yields an estimated 17,600 acres of solar cells. In other words, the electricity need of the 2.7 million people in the Tampa Bay area will require more than 160,000 acres (250 square miles) of solar panels. Alternatively, ten fossil plants – 2,259 Mw capacity each – sitting on a total of 4,000 acres (6.2 square miles) will provide the electricity needs of 2.7 million people.

Okay, so “Next Gen” solar photovoltaic arrays are more efficient than I estimated, or perhaps the solar insolation in Florida is higher than I assumed in my calculation. Still, the estimate is pretty accurate AND it PROVES that solar energy is arguably less dense than most politicians and environmentalists. You will never smelt steel, produce semi-conductors, or manufacture any other high-technology, high energy density products using this form of energy BECAUSE you will run out of land. In fact, any right thinking (pardon the pun) individual, using the same logic an environmentalist would use, should be concerned about denuding large acreages of virgin swamp (or pristine forest, if that is more ecologically appealing to you) to produce “clean energy.”

So which is denser: solar energy or politicians? From an engineering science perspective, solar energy is less dense. From a political science perspective, politicians are less dense. Politicians are not concerned about the science or economics of the situation; they are only concerned about votes. And when it comes to voting, the politicians know they can garner more votes per square mile promoting solar energy at the expense of our economy and our long energy interests.

VDOE Standards of Learning for Economics and Personal Finance

2009-10-09T09:57:00.002-04:00

The Virginia Department of Education (VDOE) has requested comments on its proposed economics and personal finance standards of learning. The following comments were provided by me on October 9, 2009. If you are a Virginia resident, I suggest that you review the proposed standards and comment.

Open Letter to Virginia Department of Education Concerning Proposed Standards of Learning for a Public School Curriculum to Teach Economics and Personal Finance

I agree with the VDOE’s goal that an understanding of economics and personal finance is important to young people, as they learn to manage successfully their own time, money, and resources, and become informed citizens in a increasingly globally integrated, interdependent society. However, establishing standards of learning is only the first step in this process. The SOLs, as you have stated them, provide a broad roadmap for what needs to be taught. They do not address the expected outcomes, how it will be taught, or the actual content of instruction. My comments: (1) request clarification on objectives, which appear to be loosely defined, (2) request that VDOE specify the textbooks that will be used, and (3) request that VDOE identify the qualifications of and preparatory instruction that will be provided to teachers who will conduct this very important course.

After a review of the curriculum’s stated objectives, my particular concerns are with specific objectives that explore the interrelationship between a free market economic system and the role of government in that system. Specifically, I am interested in understanding what will be taught in these areas. I am concerned that, like so much of current public education, it can be co-opted by persons who do not share my traditional, historical perspective on the formation and objective success of American free-market economics. Specific comments on the SOLs are:

EFP.7 b) describing government’s role in stabilizing the economy; c) describing sources of government revenue; and d) explaining balanced-budget, deficit, and national debt.

What exactly is to be taught as part of this objective? If the bias is to promote the virtues and success of Keynesian economics as practiced by Roosevelt or the current administration, I would oppose such instruction. However, a balanced discussion that compares and contrasts the practices of the Hoover, Kennedy, Reagan, and G.W. Bush administration to that of Roosevelt, Johnson, Carter, and Obama administrations would be fair. Text references: Folsom, B., New Deal, Raw Deal and Simon, W., A Time for Truth.

EFP.8 in its entirety, which requires the student to demonstrate knowledge of the role of government in a market economy by d.) explaining that governments redistribute wealth.

Again, what is to be taught as part of this objective? While it is a fact the government does redistribute wealth the real question that must be answered is to what purpose and to what extent is this necessary? A good text that addresses the role of government in a free market is Thomas Sowell’s text Basic Economics.

ALL terminal objectives (which is what I assume you have listed in your document) should be broken down into enabling objectives that include a measure of acceptable accomplishment. For example, “Upon completion of this objective, the student will be able to state the three root causes of the Great Depression: (1) ‘Cause 1,’ (2) ‘Cause 2,’ (3) ‘Cause 3’). This would go a long way to “flesh out” what is required and make it clear to the teacher, student, and public if that objective has been accomplished.

Noticeably absent from the learning objectives is a requirement that the students complete an actual income tax return. In this context, it would be good to teach each student that 50% of American taxpayers pay 97% of all federal income tax. Twenty percent pay 3%. Thirty percent either pay nothing or receive transfer of payments (Earned Income Tax Credit) from the top fifty-three percent. This might prove to be an interesting discussion if compared and contrasted to the redistribution of wealth discussion alluded to in EFP 8.

With respect to a text, I recommend that VDOE disclose, at this point in time, the textbooks that will support the curriculum. While I fully anticipate that such a request will be declined because the curriculum will not be taught for several years and it will be argued that it is impossible to select a text at this time, I suggest that you refer to existing texts that you find acceptable today to give the public a feel for content and set an expectation against which the public can judge your final selection. In the absence of any response from VDOE, I recommend that you consider Thomas Sowell’s Basic Economics. The book is unique in that it does not present economics from a mathematical perspective, but utilizes real world examples to illustrate economic principles. It can be understood by anyone using simple logic.

Last, I propose that you disclose required teacher qualifications and the approach, schedule, and training program content that you plan to use in preparing teachers to present this material. This is as important as the instruction itself.

I have posted this letter on my blog and the HR Teaparty blog. I am encouraging other Virginia citizens to review and comment on the proposed SOLs. I have also forwarded a copy of these comments to my state representatives and Del. Bob Tata. I will be following the progress of curriculum implementation closely. Over the past thirty years, traditional values-based Americans have not paid sufficient attention to the actions of government and as a result have ceded the moral high ground to post-modern relativists, who have undermined the nuclear family, the church, education, the media, and government institutions. Control of our economy and the principles that underlie economic freedom are one of their last objectives. Rest assured that I will continue to work diligently to make sure any economics curriculum is taught from a factual and balanced perspective.

DNR: Health Care Reform

2009-10-06T11:20:00.005-04:00

Open Letter to the Congress of the United States

As we debate whether health care reform lives or dies, I want to reiterate my opposition: Do Not Resuscitate (DNR) the bills in their current form. I believe the current bills should be scrapped, and congress should tackle health care with the following principles in mind.

1. No public option
2. No coverage for illegal aliens.
3. Allow individuals to OWN their own policies with health savings accounts and make them transportable between jobs.
4. No reduction in Medicare, Social Security. If you think $500B over the next 10 years can be saved through reduction in graft and corruption, then go after that. You should be doing that anyway ... that is your job. Funnel ACTUAL savings from your graft and corruption initiatives DIRECTLY to the states so that they can provide catastrophic health services to those without coverage via Medicaid, an EXISTING program. No more government programs that are incapable of paying for themselves... use what you have and use the existing government workforce more efficiently and effectively.
5. Remove barriers to insurance companies so that they can provide coverage across state boundaries.
6. Eliminate pre-existing conditions from insurance policies.
7. Require insurance providers to disclose costs, coverage, and other performance statistics on the internet. Allow insured persons to post their experience with the insurer on the internet.
8. Require posting of drug prices, at the point of provision, on the internet.
9. Create incentives for drug companies, insurance companies, government, and non-profit organizations to invest in student scholarships and health care infrastructure to allow ALL qualified students to go to medical school.
10. Take on the AMA if they proscribe through licensure the MAXIMUM number of doctors entering the profession. Their job should be define and measure competence, not regulate supply in order to artificially raise salaries.
11. Tackle medical malpractice tort reform.
12. Tackle medical regulation reform: I believe the government in general OVER REGULATES industries.

In short, create a FREE Market, where supply and demand can seek a balance. As Ronald Reagan said, "Government is the problem, not the solution."

National Security

2009-10-02T18:18:00.000-04:00

Open Letter to the Congress of the United States

My understanding is that the President has held one national security briefing in the last month. The number of Presidential appearances on television and at town halls has been greater than the number of days he has been in office. His administration has spent more time seeking partnerships between government and large business (GE), between government and corrupt private non-profit organizations (ACORN), and between government and federally funded organizations that indoctrinate and promote administration programs (the National Endowment of the Arts), than he has with his cabinet.

Having managed large businesses, I am familiar with the concept of span of control and the need to focus on key issues in order to achieve a business’s core objectives. This president does not appear to appreciate this concept, abrogating his responsibility to DIRECTLY involve himself in the two most important issues facing this country: security and economic recovery. This raises serious questions about who is in charge, in my view. Instead, he wants to “remake” the country by asserting government control over large segments of our economy, bypassing the checks and balances of the constitution through the appointment of “czars” of questionable fealty to historical American principles, and making the world more unsafe by not supporting democratic movements in Georgia, Poland, Czechoslovakia, and Iran.

I suggest that you counsel the president on his responsibilities and faithfully uphold your responsibility to ensure that ALL legislation be passed by congress rather than abrogate this responsibility to the administration’s ever expanding federal regulation. In the absence of perceived progress toward these goals, I will ensure that I exercise the small influence I have on my family, friends, communities, and the organizations that I support to oppose the unconstitutional practices, policies, and profligate spending of this administration. The results of my actions will be measured at the ballot box.

Census

2009-10-02T18:15:00.000-04:00

Open Letter to the Congress of the United States

With respect to the upcoming Census, I request that you support legislation that reaffirms the Congress’s position that the Census conforms to the specific requirements of the United States Constitution, as amended. My reading of the document would lead me to believe that said Census (enumeration) would apply only to citizens of the United States, and exclude illegal aliens and other persons who are residing in the United States but are legal citizens of other countries. Also, the Constitution calls for an enumeration: a counting of persons not collection of personal or private information which could be inappropriately used by the government to expand its powers and influence over the personal freedoms which are guaranteed by the Constitution.

With respect to the manner in which this information is collected, the process should be open, visible to the public, and performed by a part of the government that is subject to oversight and control by congress and not by the executive branch. Because of the political value of the census (representation in congress and apportionment of government funds), the process should be a non-partisan as possible.

Senate Climate Control Legislation

2009-10-02T17:53:00.006-04:00

I do not support the current Senate bill nor the prior House of Representative’s bill to reduce greenhouse emissions. My opposition is based on actual science not political science. Read on if you are interested in the scientific basis; count the vote if you are only interested in politics.

When my daughter was five, she asked me how the trees flapped their leaves to make the wind blow. She taught me a very valuable lesson: correlation does not mean cause. And so it is with CO2 and global warming. Perhaps it is a lesson that the congress of the United States needs to learn.

As the senate considers fast-tracking a climate bill that will require a 20% decrease in greenhouse gas emissions by 2020 – at an unstated cost to the taxpayer and to our economy – one should ask some fundamental questions about the cause of “global warming,” before taking action. Otherwise, the economic consequences will be more disastrous than the government’s mandate to supplement gasoline with ethanol, providing farmers with economic incentives to allocate up to 30% of the United States arable land to produce less than 50 gallons of fuel per acre. As a result, food prices have risen and actual vehicle miles per gallon have decreased, because ethanol does not contain the same higher heating value (energy content) as carbon-based fuels.

My global warming conclusions are supported by a scientific study, Increased Effects of Increased Atmospheric Carbon Dioxide, by Robinson, A.B., et al, reviewed and endorsed by more than 9,000 Ph.D.s (http://www.petitionproject.org/) , and the testimony of David Evans, the scientist who wrote the carbon accounting model (FullCAM) that measures Australia’s compliance with the Kyoto protocol (http://mises.org/story/2571 and http://mises.org/story/2795).

The conclusion of the Robinson research is that the earth is warming at a rate of 0.5 degrees Centigrade per 100 years, that this trend is naturally occurring, as the earth recovers from what is referred to as the Little Ice Age, and is driven by solar radiation, not man-made CO2 production. The current warming trend can be traced to about 1800. The researchers conclude that over the last 3,000 years, the earth’s temperature has varied within a 3 degree Celsius range. Arctic temperature variation correlates strongly with solar activity and not with world hydrocarbon use.

In fact, the study concludes that overall the climate has improved. The number of tornados has decreased, the number of hurricanes has remained constant, and rainfall has increased. During the past 50 years, atmospheric carbon dioxide has increased 22%, much of that due to human activity, but no correlation exists between temperature increase and carbon dioxide production. In fact the major effect has been to increase plant growth and biological diversity (that is, a positive effect).

Van Go ... Van Gone

2009-09-07T09:31:00.003-04:00

Letter to the Editor, Virginian Pilot, September 7, 2009

In your September 7, 2009, article “Critics led Obama adviser to resign, he says,” you selectively quote facts to infer that the principal reasons “conservatives” called for Van Jones’ resignation as the “Green Jobs Czar” was his inadvertent signature on a “9/11 Truther” petition and his public statement that Republicans are “A—holes.” Nothing could be further from the “truth.” Being called names does not offend this conservative: I have come to expect it from the left. What offends me about Jones are facts that you do not report in your paper: he is a self avowed Communist, who was selected and vetted solely by the Obama administration and not the congress, operates outside the purview of congressional oversight, and controls $30B in public funding.

In 1992, Jones was quoted as saying, “In jail I met all these young radical people of color – I mean really radical, communists and anarchists. And it was, like, ’This is what I need to be a part of.’ I spent the next ten years of my life working with a lot of those people, I met in jail, trying to be a revolutionary … I was a rowdy nationalist, on April 28 and then the verdicts came down on April 29. By August, I was a communist.” In 2005 he said, “ I’m willing to forgo the cheap satisfaction of the radical pose for the deep satisfaction of the radical ends.” His four year old son is named after a militant Marxist guerilla. This is not a person I, or any American, should want advising the President, unanswerable to Congress, and controlling a $30B budget.

President Obama said during his campaign that if one wanted to know how he would govern to examine those to whom he would look for advice. Well, I did, and the picture is not pretty. Van Jones is one of many in his cadre of 37+ “Czars” who have questionable ties to socialist, Marxist, Communist ideology and organizations.

Reframing the Health Care Debate

2009-09-05T08:51:00.005-04:00

An Open Letter to the President, Congressman Nye, Senator Webb, and Senator Warner

Nancy Pelosi has recently indicated she may be willing to substitute a "trigger" in the healthcare legislation in place of a binding requirement for a "public option." Her "thinking," if you want to call it that, is to give insurance companies time to drive costs down or else the public option will be implemented. The fallacy of this argument is that the "trigger" levels can never be met by insurance companies, without a concomitant elimination of layers of regulation and artificial Medicare fee schedules, set by government and to which private insurance rates are tied. In fact, I believe her strategy is to ADD regulation and price controls, which would in effect "trigger" the public option.

Let this citizen be clear. Reframing this debate by using "words that work" phraseology or substituting new concepts of "triggers" and "co-ops" for the concept of a public option will not work and do not change the underlying facts of the debate. I do not want out of control government managing another one-sixth of the economy through social engineering. Congress would be better off spending its time figuring out how to pay for the debt it has incurred and scaling back the programs that are driving that debt: inefficient, corrupt, and in most cases, ineffective government programs like Medicare, Medicaid, and VA run healthcare (among many others).

My freedom is more important to me than my health, which I seem to be managing just fine on my own because I OWN IT. It is unfortunate that I was not given the option to own and manage my own "social security" (viz., a private option to Social Security, an ironic concept, don't you think). If I had been given that option, I would have three times the amount of money I expect to receive from Social Security, under present forecasts. Unfortunately, the government did not invest that money, they traded it for IOUs to China and spent it on programs like the National Endowment of the Arts, which the administration is now trying to co-opt into producing art, music, and slogans, to market its policies. Why should I believe that "public" health care should turn out differently?

In closing, I recommend that you obtain a copy of Thomas Sowell's book, Basic Economics, AND READ IT. Apparently, either Congress does not understand basic free-market economics or they choose to ignore it in an attempt to "remake" America in the image of European socialism.

Where Have All The Marxists Gone?

2009-08-27T12:00:00.004-04:00

An Open Letter to Senators Webb and Warner and

Congressman Nye

I have extensively studied the background of Mark Lloyd, who was recently hired to be FCC Chief Diversity Officer, a new position at that agency. It is clear to me, based on the facts, that he is a committed Marxist -- at best -- and should not be allowed to serve in this position. I request that you investigate his qualifications and fitness to serve in this position, including conduct of a thorough FBI Background Check.

Mr. Lloyd has proposed that private broadcasters pay licensing fees equal to 100% of their operating budget, which would then be used to fund National Public Radio, the employer of people like Bill Moyer, a disciple of Herbert Marcuse (see http://www.marcuse.org/: he is listed on this site). Marcuse was a disciple of the Frankfurt School, the author of Critical Theory, the basis of Marxist Cultural Revolution. If private broadcasters do not meet Lloyd’s definition of “diversity,” they can be fined up to $250 million.

His appointment is ridiculous, and shows how out of touch congress is with the assault on American freedoms and values. Lloyd has similar designs on the Internet.

In an age of 200+ cable channels, 1000s of radio channels, our country is better served by terminating the funding to public radio and let choice and the free market determine what we listen to or watch. In fact, Mr. Lloyd's proposal at best is nothing less than an attempt to re-impose the Fairness Doctrine through the back door. At worst, it is an attempt by the Government to control the media and eliminate first amendment rights.

You have been elected to represent the people. The Constitution, which you do not seem to understand, is about personal freedom not government control. Your authority is derived from the people: not the other way round. Because you do not seem to understand this concept, I will do everything in my power to make sure it is driven home in the next election cycle.

Healthcare -- An Executive Summary

2009-08-24T08:23:00.003-04:00

The following was sent to me by Dave Leather, a personal friend, who reports he received it from a friend who voted for Obama.

"Obama's health care plan will be written by a committee whose head says he doesn't understand it, passed by a Congress that hasn't read it and whose members will be exempt from it, signed by a president who smokes, funded by a treasury chief who did not pay his taxes, overseen by a surgeon general who is obese, and financed by a country that is broke."

Elections matter.

Congressman Nye's Stealth Town Hall Meeting

2009-08-15T10:11:00.003-04:00

The following is an open letter to Congressman Glenn Nye (D-VA). I think it is self explanatory.

Dear Congressman Nye:

I was hoping that you would have a town hall meeting during August in Virginia Beach to discuss healthcare. After reviewing your online calendar, it was apparent this was not in the cards. The closest event was office hours at Little Creek, on August 17, at the Base Exchange. As a civilian, I am sure that I would not be allowed on base. So, I just chalked this up to the fact you wished to duck and cover on probably the most important domestic issue facing the country -- Healthcare Reform, Health Insurance Reform, or whatever euphemistic title the democratically controlled congress is using today.

So it was with surprise, that I learned that you have scheduled a breakfast get together with your democratic supporters on August 22 at Mom's Kitchen / Scandal's Lounge (how appropriate!) to entertain their questions on HR 3200. As a conservative, I have been following your votes carefully and have actually been somewhat impressed with your fiscally conservative position on many issues; but, after this duck and cover, you have lost all credibility with me.

I will keep in touch with your office and make a point to attend a future, local public event, if you decide to come out of hiding.

Regressive Taxation With Progressive Representation

2009-08-12T19:10:00.002-04:00

The following allegory describing the inequity and fragileness of the current progressive tax system was sent to me via e-mail. It has been attributed to various authors, including various economic professors all of whom have denied authorship. Even so, when questioned, none of the economists have denied the truth of the underlying argument. As summarized in the e-mail: “For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.”

The underlying assumption of this allegory is that 40% of Americans pay NO federal income tax. This is an indisputable fact: some may argue that the number is as high as 47%. The remaining federal taxpayers progressively pay the income tax, with the top ten percent paying approximately 60% of the total income tax dollars paid to the federal treasury. It is true that ALL taxpayers pay payroll taxes, which cover THEIR PORTION OF social security, Medicare, Medicaid, and the federal portion of unemployment. THAT SHOULD NOT BE CONFUSED WITH THE FACT THAT ONLY 53% TO 60% OF TAXPAYERS PAY THE INCOME TAX WHICH FUNDS EVERYTHING ELSE THAT RUNS THE COUNTRY.

The allegory says it all:

Suppose that every day, the same ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this: The first four men (the poorest) would pay nothing.The fifth would pay $1.The sixth would pay $3.The seventh would pay $7.The eighth would pay $12.The ninth would pay $18.The tenth man (the richest) would pay $59. So, that's what they decided to do.The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. 'Since you are all such good customers,' he said, 'I'm going to reduce the cost of your daily beer by $20.' Drinks for the ten now cost just $80. The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.

But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so: The fifth man, like the first four, now paid nothing (100% savings).The sixth now paid $2 instead of $3 (33%savings).The seventh now pay $5 instead of $7 (28%savings).The eighth now paid $9 instead of $12 (25% savings). The ninth now paid $14 instead of $18 (22% savings).The tenth now paid $49 instead of $59 (16% saving s). Each of the six was better off than before. And the first four continued to drink for free.

But once outside the restaurant, the men began to compare their savings. 'I only got a dollar out of the $20,'declared the sixth man. He pointed to the tenth man, 'but he got $10'.

'Yeah, that's right,a exclaimed the fifth man. 'I only saved a dollar, too. It's unfair that he got ten times more than I got'

'That's true' shouted the seventh man. 'Why should he get $10 back when I got only two? The wealthy get all the breaks!'

'Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the poor!'The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill! And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

Curbing B-Czar Behavior: an Open Letter to Congress

2009-07-25T10:02:00.004-04:00

To Senators Warner and Webb and Congressman Nye:

The bloom is off the rose. The picture is becoming clearer to the average citizen, who is interested in his or her unalienable rights to life, liberty, and the pursuit of happiness as envisioned by our founding fathers. This administration's agenda is to "re-make" America in a way that is not congruent with the fundamental principles that underlie the Constitution of the United States, which is the basic contractual agreement between the People of the United States and its appointed representatives.

The appointment -- without any review and consent by the congress-- of 32 "Czars," whose roles, responsibilities, and actions directly impact large segments of the US economy, is unconstitutional and an abrogation by Congress of its fidicuary responsiblity under Article 2, Section 2, Clause 2 of the Constitution. Furthermore, this action -- when viewed in the context of the recent "firings" of the Inspector Generals (IGs) overseeing Americorp and Amtrak, reckless deficit spending, and nomination of a supreme court justice whose writings and racist remarks make it clear she is more interested in social justice than constitutional justice -- clearly demonstrate that the administration's socialist / fascist agenda is being forced on America while bypassing the checks and balances required by the Constitution.

This citizen asks that you oppose this administration's unconstitutional policies and practices. Czars, cap and trade, healthcare "reform,", and expanded deficit spending are nothing more than ruses whose real purpose is to choke capitalism, place more control in the hands of a centralized government, and limit the People's fundamental rights to life, liberty, and the pursuit of happiness.

I oppose the administration's continued usurpation of legislative powers that legitimately are the congress's responsibility. Perhaps, congress's time would be better spent ignoring the president and focusing on representing the people and making the constitutional system we have work.

Social Justice in the Supreme Court

2009-07-15T09:07:00.007-04:00

On Tuesday (July 14, 2009), the Senate Judiciary Committee met to review the nomination of Sonia Sotomayor as the next Justice to the Supreme Court. The most effective examination of her record was by Lindsey Graham (R-SC), which has been captured on You Tube in four parts: Graham vs. Sotomayor (Part 1); Graham vs. Sotomayor (Part 2); Graham vs. Sotomayor (Part 3); Graham vs. Sotomayor (Part 4) . If you are concerned about the direction of the country and what this nomination could mean to our constitutional form of government, this is a must watch.

If one examines Sotomayor's judicial record, you will find one that most have characterized as left of center, but within mainstream thinking. But, if you look beyond this record to her character and ideology, as documented by her associations, her evaluation by peers, and her speeches over years, you see a different person. My take away is this: she, in many respects, is just like Obama -- a social progressive, rags to riches success story, with a lot of help from affirmative action. However, when you dig deeper, you have to ask the question, based upon her expressed worldview, how will she vote when she is not constrained by established court precedent but is able to decide what is and what is not precedent and has life-time job security? In making your decision, perhaps you should listen to the Chicago WBEZ 2001 interview with Obama on his view of the Constitution and how it has negatively influenced civil rights. Do you think he nominated Sotomayor because she might share these views?

Unfortunately, I believe we are about to find out because there is no way to stop it.

Resisting the Solar Impulse

2009-07-04T19:11:00.004-04:00

If modern politics teaches us anything, it is that one needs to frame political debate around a “poster child” that illustrates the point to be made. In the case of solar energy as a serious alternative to more dense energy sources – such as oil, coal, natural gas, fission, or fusion – the poster child is the Solar Impulse, a sun- powered airplane prototype.

In June, a Swiss team, headed by Bertrand Piccard announced the completion of the $98-million (USD) Solar Impulse airplane (left), which has a wingspan of a Boeing 747, weighs less than a small car, and powers itself through energy gathered by approximately 12,000 solar cells. The airplane has four engines, which develop 40 horsepower (viz., the power of the Wright Brothers’ original aircraft), allowing the craft to takeoff at 22 mph and cruise at a maximum speed of 44 mph. Its payload: two men in cramped quarters and a 400 kg (880 lb) lithium ion battery, which supplies power during periods of no sunlight. The goal: circumnavigation of the world in 2012 over a 25 day period. Oh, I forgot to mention that it cannot be flown in adverse weather: it is too delicate.

While the Solar Impulse is a technological novelty, it truly illustrates the practical limitations of solar energy. All one has to do is compare the Solar Impulse to planes that are conventionally powered and of similar wingspan … like the Boeing 747 to which its designers have compared it. According to the official Boeing website, the 747-200 (2 class-configuration)with a wingspan of 195 ft., 8 inches, carries 452 passengers, 6,190 cubic feet of cargo, with a maximum lift off weight of 833,000 pounds. It flies at Mach 0.84 (555 mph), with a range of 7,900 statute miles. For the math challenged, this performance would allow circumnavigation of the earth, by 452 passengers and 6,190 cubic feet of cargo in approximately 2 days.

So let’s bring this rainbow down to the ground: the sun’s energy – while it may be plentiful and even prove technologically feasible AND economical to accomplish some tasks – cannot provide a practical, continuous source of production grade energy for aviation or most other commercial purposes, which is the mother’s milk of an advanced, technological, competitive society.

To further illustrate my point, in May 2009, Obama promoted the government’s construction of a 140-acre solar array at Nellis Air Force Base, at a cost of $100M USD. The installed capacity is 14 megawatts of power or 30.1 gigawatt-hours of energy per year. Compare this to the three-unit Arizona Public Service Palo Verde nuclear plant built in the late 1970s, built at a cost of $5.6B USD (in 1970s dollars). In 2007, the three Palo Verde units produced 26,782 gigawatt-hours of electricity. Correcting the construction cost of the reactors for inflation, each reactor unit costs approximately $4.35B in 2009 dollars or 41 times the cost of the solar array but produces 297 times more electricity, while occupying far less land. An equivalent Nellis Air Force Base solar array would require approximately 125,000 acres. Considering the nuclear plants have a projected operating lifetime of 50 years versus 30 for the solar array and the fact that nuclear plant design is cheaper by half to build today than it was thirty years ago, the life cycle cost of the solar alternative is about 15 times more expensive than the nuclear one.

According to Access to Energy, (October 2008, Vol. 36, No.3), “[i]f one ten-reactor Palo Verde nuclear plant were built in each of the 50 states, the United States could be a net exporter of $200 billion per year of energy rather than a net importer of $300 billion per year." While some might say this is electric energy and our dependence is principally on oil and therefore an unfair comparison, cheap nuclear electric energy (estimated at 1.6 cents per kilowatt – hour) can be used to directly power vehicles as well as transform carbon-based fuels such as oil shale, tars, coal, and methane calthrates, into fossil fuel. This would require an investment of approximately $2T USD, which would produce jobs, prosperity, and energy independence. Instead, our government is planning to spend $2T in stimulus, TARP, and social program deficit spending and proposes to transition our country to a energy infrastructure that, at best, might support the Gross Domestic Product of a third world country.

My advice to Obama: resist the Solar Impulse and place your bet on proven technology. Unfortunately, in the end , I do not believe the president or many on the left will take my advice. “Political” science always overshadows engineering science.

Who Says Politics is Not Logical

2009-06-26T20:03:00.003-04:00

The Virginian Pilot (June 26,2009) reported that Congressman Glenn Nye, D-2nd District of Virginia, authored and passed an amendment to the 2010 $680 billion defense appropriation bill that cancels spending $46.3 million to dredge the harbor at Mayport, FL. The purpose of the dredging was to prepare the Mayport harbor to receive a new carrier, which the Navy had previously indicated they might transfer from Norfolk (Nye’s District) to Mayport, next year. Nye said that the amendment was not a hard sell in the house: “I think we had the power of logic on our side.” Nye, and his two republican co-sponsors, asserted that it does not make sense to authorize spending money for the dredging when the Navy has yet to definitively decide if it will deploy the carrier. Let's see ... if the port were dredged, that might favorably influence the Navy to redeploy the carrier, don't you think? Its also true it is not in Norfolk's interest to do so.

I find it amazing that in the case of the carrier -- which represents millions of dollars of revenue to the local economy – that the congress will delay spending money until it has a plan. But, in the case of bailouts, energy policy, and healthcare, congress is willing to spend trillions of dollars before any plan is in place.

The difficulty appears to be determining when logic is on your side.

Supplemental Appropriations Act 2009 - Open Letter to Congressman Glenn Nye

2009-06-23T18:44:00.003-04:00

While I agree on continuing to fund the wars in Iraq and Afghanistan, I do not agree with combining continuing funding resolutions for the war on terror with other funding. I would prefer seeing an up or down vote on defense matters.

Also, it is my recollection that Bush's continuing funding resolutions were ~$60B whereas this administration's continuing funding resolution is over ~$100B. Both parties' resolutions contain other funding measures. My recollection is that the democrats were irrate at continuing resolutions by Bush, but simply pass those proposed in a democratically controlled congress. Where is the outrage? What is the difference, other than an additional $40B for social programs? You guys are amazing in your ability to obfuscate the truth! However, I believe there are some of us that are watching and evaluating. Perhaps its time to be fiscally and morally responsible.

Open Letter to Congress and The President of the United States

2009-06-23T17:48:00.001-04:00

I agree with 90% of what Bob Basso presents in his portrayal of Thomas Paine (http://www.youtube.com/watch?v=jeYscnFpEyA). Perhaps you guys in congress AND the president need to wake up and smell the coffee. To the extent that I am able, I will see to it that each of you is not returned to office. You are out of contact with the American people.

This message was sent via Congress.org, which uses the Capwiz·XC system. Congress.org is a free public service of Capitol Advantage and Knowlegis, LLC. You may access Congress.org here: http://congress.org

Lions, Tigers, and Health Scare – Oh My!

2009-06-17T13:29:00.005-04:00

Its six months after Obama took the oath of office of the Presidency of the United States, and the car industry is for all practical purposes nationalized. The next target is healthcare.

As the administration’s argument goes, the impetus for big government reform is that, based on Census Bureau estimates, between 40 million and 50 million Americans are medically uninsured. Based on this fact, the administration further asserts that the uninsured are either not receiving healthcare or, if they are, that it is too expensive, inferior, and inefficient. They then infer from the General Welfare Clause of the Constitution that “healthcare“ is a “right” to be secured by Government and that the cost and inefficiencies in the current system can be remedied only by having private insurers compete with the federal government. Stated simply, the problem is big, the problem involves a constitutional right, and the problem can only be solved by government.

The Problem is Big

According to the Heritage Foundation, the 40M to 50M uninsured number includes “ roughly 7 million … illegal immigrants; roughly 9 million … persons on Medicaid; 3.5 million … persons already eligible for government health programs; and approximately 20 million [who] have, or live, in families with incomes greater than twice the federal poverty level, or $41,300 for a family of four.” So where is the problem other than adults who should take personal responsibility for their own health by personally investing in it. Otherwise, the proposal pays $1.5T over ten years to cover 7M illegal immigrants. This may be popular with social progressives who would like to attract this voting base, but not with the 53% of Americans who pay 100% of the Federal Income Tax.

Healthcare is a Right

The social progressives point to what is referred to as the General Welfare Clause of the Constitution (Article 1, Section 8) to justify healthcare and other social programs as a “right.” Article 1, Section 8, Clause 1 states “The Congress shall have power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and General Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.” From a social progressive’s perspective, this authorizes limitless government spending to take care of the masses. Unfortunately, this was not the perspective of James Madison, the principal author of the Constitution. James Madison, when asked if the "general welfare" clause was a grant of power, replied in 1792 in a letter to Henry Lee, “If not only the means but the objects are unlimited, the parchment [the Constitution] should be thrown into the fire at once.” [Brant, Irving the Fourth President - A Life of James Madison Eyre & Spottiswoode (Publishers) Ltd. London, 1970] Instead, the Founding Fathers saw relief as local and voluntary, and the Constitution gave no federal role for government provision of charity. Madison observed, “No man is allowed to be a judge in his own cause, because his interest would certainly bias his judgment and, not improbably, corrupt his integrity.” [Madison, Hamilton, Jay in Federalist, No. 10] In other words, if charity were the responsibility of the government, the process would be (and has) become compromised and politicians would conspire with special interest to trade votes. The New Deal was characterized by this type of political corruption. [Folsom, B., New Deal Or Raw Deal, © 2008] The Founders, I believe, intended the General Welfare Clause to be interpreted as the pre-amble to the specifically enumerated powers that follow in the remaining clauses of Article 1, Section 8, which specifically define the terms introduced in Clause1.

Only Big Government Can Solve this Problem

Big government is not good at solving large problems: politicians’ behavior is generally motivated by political expediency and the next election cycle. George Santayana wrote in Reason in Common Sense, The Life of Reason, Vol.1, "Those who cannot remember the past are condemned to repeat it." In other words, perhaps one should look to government’s past success in solving large problems, like Social Security, before another 20% of the economy is nationalized. When an accountant quizzed Roosevelt about the Ponzi scheme-like economic issues with social security, he said “I guess you are right about the economics, but those taxes were never a problem of economics. They are politics all the way through … with those taxes in there, no damn politician can ever scrap my social security program.” [“Statements on Taxes by Members of this Administration in 1939,” in Morgenthau Diary, January 5, 1939]. Roosevelt’s perspective proved to be correct. Seventy years later, Social security, Medicare, and Medicaid have an off-balance sheet liability of $50T to $55T. This is equivalent to the annual GDP of all the people on the planet (currently 6B) working for one year or approximately 4 years of the GDP of the United States. In fact, Social Security, like nationalized healthcare, was presented as insurance, when in fact the “revenue” received from current payees was never invested in a sinking fund, but instead was transferred to the treasury, in exchange for an IOU, to meet ongoing obligations. The federal government makes Bernie Madoff look like a piker.

I could expand the list of examples of government mismanagement beyond social security to Fannie Mae, Freddie Mac, Amtrak, and others. In fact, I cannot think of one large government project that has been brought in on scope, on time, on budget and then economically operated. So suppose I am incorrect, the progressives faith in government management is well placed, and Obama is correct: 50M people need to receive healthcare and currently are not receiving it because they are uninsured. Well the bad news is even the Chief Organizer cannot appoint a Medical Czar who can create a sufficient number of qualified, licensed MDs, within the next ten years, to cover the new demand (some subset of ~45M people) that will be placed on the system. Because of caps placed on licensure of doctors in the 1980s and 1990s, during which period the population grew by 45 million, and the fact that over 200,000 licensed physicians start to retire in 2012, sufficient medical doctor capacity will not be available to meet the demand unless the government attracts doctors from abroad. So, according to the law of supply and demand, either the price will go through the roof OR care will have to be rationed. Personally, at the age of 60, I do not like this last option, given that I have acted responsibly to fund my own retirement, medical care, and (hopefully) some small pittance of social security.

Conclusion

I am opposed to the government competing with private enterprise in the area of healthcare. I think Obama has it backwards. Maybe just maybe, healthcare is a mess because the government has imposed itself in the free market. Instead of private insurers’ greedy profit motive, the lack of substantive tort reform, layers of regulation, and establishing artificial prices for services in Medicare and Medicaid have contributed to a system that is broken. Currently more than 1,500 private companies provide health insurance: competition is not an issue. Government intervention will only use the power of the public purse to impose further mandates that will break the system further. In the process, government will tax us further, making us into economic slaves with unaffordable healthcare.

Last, if the government is such a great manager, why are Social Security, Medicare, and Medicaid facing economic collapse? Using the social progressive's logic, perhaps government could use some competition from private enterprise. Sorry, I forgot, that was a Republican proposal.

An Open Letter to Sen. Jim Webb

2009-05-06T09:27:00.002-04:00

I recently received a reply from you to a message that I sent through www.opencongress.org . In essence the message said that you will not respond to communications sent through third parties.

The purpose of this letter is to register my disappointment in your decision to not accept electronic e-mail correspondence through third parties such as www.opencongress.org because sites like this allow citizens to track, read, and evaluate legislation and directly, efficiently, and effectively contact their representatives about matters important to them. It also allows individual citizens to follow the progression of the bill through congress and monitor the way individual representatives voted on that piece of legislation.

Clearly, your interest is to reframe the communication between you and your constituents in a way that makes it more convenient for you rather than the citizen. That is precisely why Washington is a problem and why I will work as hard as I can to see that the voters of Virginia do not return you to your elected office at the first opportunity.

Environmental Taxation without Scientific Representation

2009-04-18T18:12:00.001-04:00

“The Obama administration declared Friday that carbon dioxide and five other industrial emissions threaten the planet. The landmark decision lays the groundwork for federal efforts to cap carbon emissions -- at a potential cost of billions of dollars to businesses and government.” (WSJ, J. Weisman and S. Hughes, April, 18, 2009).

According to the article "Environmental Effects of Increase Carbon Dioxide" (Robinson, et al, which has been peer reviewed), the MAGNITUDES of human produced carbon dioxide per year over the past 100 years is so inconsequential relative to exchanges between the oceans, land masses, and the air that it is difficult to determine if any deleterious effects can be attributable to man. In fact, the strongest correlation between global warming and any other physical variable is to solar activity. In fact this article concludes "A review of the research literature concerning the environmental consequences of increased levels of atmospheric carbon dioxide leads to the conclusion that increases during the 20th and early 21st centuries have produced no deleterious effects upon Earth’s weather and climate. Increased carbon dioxide has, however, markedly increased plant growth. Predictions of harmful climatic effects due to future increases in hydrocarbon use and minor green house gases like carbon dioxide do not conform to current experimental knowledge." In effect, this carbon dioxide scare is nothing more than an attempt to promote a state sponsored "religion," funded by taxpayer dollars While well intentioned, these folks are on the wrong side of science and will tax us into oblivion to fix a problem that simply does not exist.

Taxing the Rich is Really Taxing All of U.S. (Part II)

2009-02-26T15:58:00.000-05:00

In the Wall Street Journal’s “Review and Outlook” section (The 2% Illusion, February 26, 2009), the WSJ editors estimate that, based on 2006 tax data (the most recent available), that raising the tax rate to 100% on all income over $500,000 on the wealthiest 2% of all Americans would generate an estimated $1.3T in “revenue” to the government. Further, the WSJ estimates that if all the income generated by Americans earning over $75,000 were taxed at 100%, it would generate about $4T, which is what the Congress proposes to spend in fiscal 2010. While this is an interesting analysis, it is immaterial because it wrongly assumes that Americans will continue to work simply to pay money to the federal government.

In 1989, then Senator Bob Packwood requested that the Joint Committee on Taxation estimate the revenues that would be generated on all Americans earning more than $200,000. The JTC estimated the “revenue” to be $440B over a three year period. This was enough to balance the budget. Sen. Packwood was shocked at this analysis: “Our models assume that people will work forever to pay all of their money to the government. Clearly anyone in their right mind will not.” Sen. Packwood had discovered the principle of the Laffer curve: there is a point beyond which an increase in tax rates causes tax payers to evade taxes, stop working, and stop investing. Reagan understood this principle. By reducing personal, corporate, dividend, and capital gains taxes, he created the longest sustained period of prosperity in the history of the United States. After Reagan reduced taxes in the 1982 – 1986 timeframe, the tax rates have remained relatively unchanged, except for hikes by George H.W. Bush and Bill Clinton. The effect of this long term tax rate reduction, over the period 1982 to 2005, includes:

· Over Reagan’s term, the stock market more than tripled to 3,000. At the height of the George W. Bush term, the market reached 12,500.
· Between 1982 and 2000, stock values soared by 12% per year.
· The net worth of American households increased by $30T.
· The number of Americans owning stock increased from 16% to 50%, investing the average American in the ownership of American business.
· Tax revenues to the Federal government doubled from $1.2T to $2.5T.
· The percentage of tax revenues paid: (1) by the richest 5% has increased from 38% to 60% and (2) by the richest 10% from 48% to 71%.
· The percentage of tax revenues paid by the bottom 50% have dropped from 8% to 3%.
· From 1981 through 2007, the United States was a net importer of $5.2T in capital.

Liberals need to disabuse themselves of the idea that tax rate reductions result in deficits. In fact, tax rate reductions result in increased revenue to the Treasury, capital formation, and increased personal wealth of the average American. Deficits are created by SPENDING MORE THAN THE REVENUE YOU RECEIVE.

From a financial perspective, spending not tax rates is the problem. But this is not the problem the social democrats are trying to solve. They want to buy votes and that takes more money than the American taxpayer can generate.

The "After Math" of The Stimulus Bill

2009-02-23T14:29:00.003-05:00

The following is a quote sent to me by my cousin, Mark George. Short, sweet, and to the point.

"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it." Dr. Adrian Rodgers

Just like physical laws, certain behaviorial and economic laws may be defied temporarily. At some point, what goes up must go down.

How Much Debt Do We Carry?

2009-02-16T20:22:00.002-05:00

Fox News reported today that America's debt is comprised of three basic components: (1) entitlement program future obligations ($55T); (2) debt from government operations ($16T); and (3) debt associated with insurance and other guarantees ($7T). For those who are math challenged, this $78T. How much money is this? Well, it is equal to the World's annual Gross Domestic Product (GDP). That's right: it would take the world (6-billion people) working for one year to pay off the United States current debt.

I hope Obama's stimulus plan works. But, I doubt it. He simply is doing what he has criticized the average American citizen of doing and what he claims got us into this mess: spending money we do not have, putting it on the credit card, and not saving. The difference between his plan and the average American's plan is that he can print money.

Stimulus Package – An Open Letter to Congress

2009-02-12T11:26:00.000-05:00

I am extremely disappointed in the stimulus package that the congress has chosen to enact.

While our country’s future success does require "investment," the investment should be in business not government and in capital not social spending programs. In capitalist (not socialist) America, this typically means investment in a business’s human capital (equipping people to contribute to the success of the business), financial capacity, technology, and infrastructure that will increase FUTURE competitiveness and performance, not simply placate the “crowd.” Because placating the crowd is a politician's raison d'etre, a politician's objectivity in business decision making is highly suspect to begin with. Based upon congress’s historical performance on welfare, social security, energy, health, government’s actual track record isn't great either.

The country would be better off if government did nothing (I think the Congressional Budget Office agrees with me on this one). However, if you really have to do something, cut corporate taxes, provide ALL American workers with a payroll tax holiday, eliminate the mark to market rule, and if you are going to put us into debt, FOCUS spending money on building PROVEN energy supplies including off shore drilling, investment in refineries, building nuclear plants, and completing the Alaska natural gas pipeline.

I think that 300 million American’s are better able to direct the resources of this country than 535 elected representatives, 9 supreme court justices, and 1 president. Case in point: Where is the $78 billion dollars Congress overpaid in the first round of TARP? This is equivalent to $260 per person, or over $1,000 for a family of four. I suspect they would know where they had lost their money.

The American’s Creed

2009-02-11T07:45:00.000-05:00

As a child, my wife was a member of the Children of the American Revolution. Each month, when they met, they participated in a Flag ceremony, in which they recited the American’s Creed, written by William Tyler Page (Clerk of the House of Representatives). The Creed was originally adopted by the House of Representatives in 1918, and reads as follows:

“I believe in the United States of America as a Government of the people, by the people, for the people; whose just powers are derived from the consent of the governed; a democracy in a republic; a sovereign nation of many sovereign states; a perfect union and one and inseparable, established upon those principles of freedom, equality, justice and humanity for which American patriots sacrificed their lives and fortunes.

“I therefore believe it is my duty to my country to love it; to support its Constitution; to obey its laws; to respect its Flag; and to defend it against all enemies.” William Tyler Page

I wonder if the House of Representatives has recited this creed recently? If they have, they either do not understand it or choose not to follow many of these principles.

While America Bleats

2009-02-10T08:56:00.000-05:00

As Obama travels the country framing the current recession as the worst economic crisis since the depression – even though to date it is not – so that he can politically position himself as the economic savior of the free world, most Americans are standing by like sheep while his foot soldiers deftly position themselves to attack the country’s “right flank.” Two measures are moving along in congress, with little or no attention. The first would grant through legislation the District of Columbia the status of statehood so that it could seat one representative (The D.C. House Voting Rights Act, HR 238). The second is to move the responsibility for the 2010 census from the Department of Commerce and place the responsibility for it under the White House Chief of Staff, Rahm Emanuel. These moves will allow the socialist Democrats to consolidate political power and over time shift the balance of power more to the left.

George Will points out in his excellent article “With Utah’s help, pretender is closer to statehood,” the problem with D.C. statehood is that Article I, Section 8 identifies D.C. as the “seat of the government of the United States” and is not a state. Article I Section 2 states “The House of Representatives shall be composed of Members chosen every second Year by the People of the several States.” That is why, in 1978, the District’s advocates sent to the states a constitutional amendment requiring that “for the purposes of representation” the district would be “treated a though it were a state.” Only 16 states ratified it, 22 short of the required number. As Will points out “So the District’s advocates decided that an amendment is unnecessary – a statute will suffice because the Constitution empowers congress “to exercise exclusive legislation” over the District. They argue that this power can be used to, in effect, amend the Constitution by nullifying Article I, Section 2’s requirement.” As Will concludes, “This argument, that Congress’ legislative power trumps the Constitution, means that congress could establish religion, abridge freedom of speech and of the press and abolish the right of peaceful assembly in the District.” As we have seen in the recent past, if this occurs, it is a short step to extending this thinking to granting the District the right to two senators and creating all sorts of rights for other special interests. In the last twelve elections, D.C. has voted 74.8% democratic. This will strengthen the socialist democratic stranglehold on the congress, extending its absolute control over socially progressive legislation and spending.

A second wave of attack on the “right flank” is Obama’s decision to place the 2010 census under Rahm Emanuel, the White House Chief of Staff. The argument for making this move is that Obama has nominated Senator Judd Gregg, a republican, to lead the Commerce Department, which has been historically responsible for the census and that he cannot be fair. Democrats rightly understand that a fair census is important and a lot is at stake: the census is the basis for re-districting, apportionment of federal funds to the state, and allocation of electoral votes in presidential elections. So they want to protect the census process and outcome to their advantage. How does moving the census to the White House do this? Because the White House is not bound by the same regulations as the Commerce Department, Emanuel need not be as transparent as the Commerce Department in publishing its rules for comment, explaining its process, or defending the results. In fact, conservatives are concerned that even though Article 1, Section 2 and Amendment 14 of the Constitution require that apportionment of representation be based on an actual count of population, a census directed by a democratically controlled White House, which may not be subject to open and full review provided by regulation, will opt to use statistical extrapolation to determine population in areas where it is difficult to “count,” such as traditionally democratic voting areas like the inner cities of America. Republicans should be reasonably concerned, given that the Speaker of the House, Nancy Pelosi, recently demonstrated her inability to count when she commented that the economy is so dire that we should expect to lose 500 million jobs unless we pass the $1 trillion bailout bill. I guess she did not look at recent census data: America as of this writing consists of only of 305,788,014 persons.

At some point Americans need to realize that democracy is about equality of opportunity not equality of outcome. Democracy does not guarantee us happiness; it guarantees individuals – not collective groups – the right to pursue happiness. These rights are inalienable, endowed by our Creator, and expressed in the form of laws, to which we collectively agree to abide. When these laws are directly circumvented by those whom we have elected to represent us, then we no longer have an obligation to follow them.

Alice in Wander Land – An Alternative View of Economic Reality

2009-02-09T13:47:00.004-05:00

I generally try to back my arguments up with facts; however, I think facts are no longer necessary, as those on the left have proven. Facts simply confuse the issue. So, like a good conspiracy theorist, I will mix some truth with speculation to arrive at a conclusion that is really a premise: Obama is not our economic savior, he is our economic problem. So here goes! I encourage you to have some fun with this: it could be the last fun we have for a while.

If you listen to a business news channel, the talking heads assert that today’s market performance discounts the future. That is, today’s market results are driven by what investors perceive the future to hold. A brief scan of the attached Dow Jones Industrial Average chart shows that the market reached its peak in May 2008, just as the Democrats stumbled (perhaps the word should be “bumbled”) to the finish line endorsing Obama as their candidate for president. Shortly preceding this historic event, Obama had submitted the only piece of legislation that I know of that is in his name: The Global Poverty Act (S.2433). This bill proposes that the United States send 0.7% of GDP to the UN to fight global poverty. This was in addition to his campaign spending proposals amounting to an estimated $1.4 trillion dollars (which ironically is just about the cost of his stimulus “package” including interest).

Anticipating a competitive race, the markets started to “discount” the risk of an Obama future, starting in the June through September timeframe. Alas, when McCain dropped behind in September - October, the markets dropped precipitously and have remained at low levels. Ironically, on the day of his historic inauguration, the markets dropped 332 points, the worst inauguration day sell off in 113 years.

So what does this mean for our economy? According to my alternative view of economic reality, the market will only go down. For an administration that believes that you can only spend money and conserve energy to generate prosperity – economic principles that only Lewis Carroll could appreciate – but has NO experience to prove these theories, I think this will be the most expensive education Obama has every received – including his time at Harvard and Columbia. Unfortunately, you, your children, and their progeny will be paying for it, perhaps forever.

Stimulus or Enema?

2009-02-09T07:56:00.002-05:00

The stimulus package is wrong for America. It is an expenditure we cannot afford without putting the long-term fiscal security of this country at risk (I refer to the recent CBO study on the Stimulus Package). On one hand, congress chides Americans for spending beyond their means, mortgaging their future, and not saving enough and then turns around and does precisely that on a national level.

Beyond simply bad fiscal policy, the stimulus spending does not meet the administration’s own test for what constitutes a good stimulus package: it is not timely, it is not targeted, and it is not temporary. It is an attempt by tax-and-spend liberals to push through congress their progressive socialist agenda without debate. Two-thirds of the spending is structural and will remain with us for years and years to come, further increasing the interest we will have to pay on our "revolving" credit card account.

Last, our experience to date on the TARP program suggests that the spending will be ineffective: preliminary indications are for every $100 of spending we receive $66 of value. If you want to stimulate the economy, reduce the marginal individual and corporate tax rates to put money back into the hands of those who create value. My hometown of Virginia Beach does not need another tennis court, which is what we will receive under the Obama plan. It needs the ability to compete in a world that is becoming more competitive and connected.Every financial decision I have ever made that was driven by deadlines created by fear has not turned out so good. I cannot imagine that a $1 trillion dollar, 30 day decision will turn out any better. Perhaps the congress should stick to capitalism and try fact based decision making. That would be refreshing.

Department of the Interior Public Comment Period on Off-Shore Leasing

2009-02-03T09:45:00.001-05:00

My understanding is that the Interior Department is soliciting public comment, for a sixty day period, starting January 21, on a five-year plan to lease offshore properties for oil and gas exploration. As is the case with most things in big government, I have searched for a web site that would allow me to provide my input, but to no avail. So instead, I wrote ALL of my elected representatives to provide them with my input so that they make sure my comments were placed in the hands of the proper bureaucrat. I suggest that you provide your comments to your elected representatives www.congress.org. My input to the Department of the Interior follows.

Dear Sir or Madam:

To place my comments in context, energy independence is not only a matter of economic prosperity; it is a matter of national defense. It represents a path forward for putting people back to work, while displacing $700B of payments to countries that are not friendly to us. Gross domestic product and per capita energy consumption are directly correlated: as we consume more energy, GDP goes up. The converse is also true.

This said, regardless of the current price of a barrel of oil, the United States should aggressively pursue development of all of its natural energy resources, starting with those that are proven, abundant, and under its direct control or the control of friendly nations. The following technologies should be deployed / developed in the order shown.

· Energy conservation education should be funded.
· We should be drilling for oil and natural gas wherever it is the least expensive to do so and where a high probability of success exists.
· We should be building more nuclear plants, an energy source that reduces greenhouse gases; is a “high density” energy source (viz., produces more power per acre of land than any other); is abundant in America, Canada, and Australia; is renewable if the country were to reprocess fuel; and could be the basis for conversion of coal to oil or supply of electric energy to automobiles.
· Clean coal should be pursued, because the United States has greater reserves of energy in the form of coal than Saudi Arabia has in oil. As noted above, coal and oil shale can be converted to oil through the use of electricity produced by nuclear power plants.
· The natural gas pipeline from Canada should be completed and the use of natural gas as an alternative to gasoline should be developed. Natural gas is also important to the development and deployment of fuel cell technology, which could over time become a significant source of residential energy supply as well as power transportation solutions.
· Monies should be invested in battery storage technology and fuel cells. These technologies are the key to unlocking the commercial potential of alternative energy sources, because they allow energy to be stored and deployed in mobile form.
· Wind power should be developed and deployed in those situations where it economical to do so. At present, this is a “feel good” technology. The energy density of a “wind farm” is .01 Megawatts per acre of land used compared to 2.8 Megawatts per acre of land used by a commercial electric coal plant (this calculation not only takes into consideration the capacity of the energy source but also its availability). Translation: a 2,259 Mw super-critical fossil plant uses 800 acres of land; an equivalent wind farm uses 200,000 acres of land. Even so, it is a proven technology that has more market share than any other alternative energy source, except conventional hydroelectric power. Wind power is followed closely by biomass.
· Other alternative energy sources should be explored based upon an “investment in success” principle rather than some “religious” fanaticism that we need to save the earth. Photovoltaic technologies should continue to be developed, but one should come to grips with the fact we have been investing in this technology for almost 40 years and to date solar represents 498 Mw of summer capacity in the United States out of 998,837 Mw of total deployed capacity. It is also very expensive in terms of dollars per kilowatts installed. A more promising source, in my view, is algae based oil production, which has demonstrated the ability to produce 18,000 to 22,000 gallons of fuel oil per year per acre of non-arable land, compared to the government’s “ethanol” mandate that produces 12 gallons of gasoline per arable acre of land.

Last, I do believe that global warming is occurring; however, I do not believe that man’s presence is contributing in any significant sense to that warming. I believe – based on scientific evidence – that the principal driver behind the warming is solar activity and that this is a naturally occurring, cyclical phenomenon. Spending billions and billions of taxpayer dollars to counter it will be throwing money down a rat hole. In fact, the wrongheaded belief that man’s carbon based activities are the culprit will exacerbate the problem by moving us toward investing in “green technologies” that are high cost, low energy density. The developmental costs will be borne disproportionately among the “successful” (otherwise known by “the rich” in progressive / socialist circles) so that the “poor” can have access to these energy sources. The end result of this will be another failed government program that has negative economic consequences, especially for the poor, which in turn affects our ability to address more pressing matters.

Geithner Confirmation

2009-01-27T11:06:00.001-05:00

The following is an open letter to my elected senators, from Virginia, Messrs. Webb and Warner:

“I respectfully request that you vote NOT to confirm Geithner as Secretary of the Treasury. Character counts.

“I am sure that at least one qualified democrat, out of a population of 300 million citizens, can be found to fill this position other than Geithner. If Obama can make the argument that the means does not justify the ends when it comes to interrogating terrorists using water boarding, then confirming a person who has an absolute disregard for the tax code to head the agency that makes those laws does not "hold water" either.

“I also reject the argument that "time is of the essence." Since when has time been of the essence to congress? If congress had addressed the housing issue, social security, Medicare, and energy issues over the last thirty years, we would not be facing this crisis.”

I encourage you to write your elected representatives and let them know what you think.

Where is Obama’s Aunt?

2009-01-27T10:53:00.001-05:00

In late November, 2008, I contacted by elected representatives concerning the illegal immigration status of President Obama’s Aunt Zeituni Onyango. The content of my communication was:

“In a local newspaper article (The Virginian Pilot), it was reported that president-elect Barack Obama's aunt (Aunt Zeituni Onyango) has been in this country for 4 years illegally. She violated a deportation order and has taken up residence in subsidized housing in Boston. Because this is a country that is based on the rule of law, I respectfully request that you notify the appropriate authorities of her status, and have her deported immediately. I look forward to your positive response to my request. I will expect a follow-up from you within 30 days. If I do not hear from you, I will report this to my local newspaper as well as the 200 people I reach through my blog. I will have them direct their concerns to your office.

“I realize that, as democrats, this places you in a tough spot, since Aunt Zeituni is a close relative of the president-elect. However, a price exists for doing the right thing.”

Well … surprise, surprise … my elected senators, Jim Webb and Mark Warner, did not respond, so I am moving to plan “B.” If you are a Virginian and wish to contact your senators, you may reach them electronically through www.firstgov.org. You may have to fax Mr. Warner. He is our former governor and was elected, in part, because of his experience as a high-tech, IT executive. Unfortunately, he does not have an e-mail address, as of this writing. You will have to contact him by fax or snail mail. Perhaps that is why he has not responded. Apparently he is too busy to communicate with his constituents, and instead is voting for a stimulus package to build infrastructure for everyone else but those who are in charge of spending the peoples’ money.

If you are not from Virginia, I urge you to contact your representatives directly and ask them to simply enforce the law. Unfortunately in America today, we do not recognize laws anymore unless they seem to be ones that fit our political agenda.

Obama on Redistribution of Wealth

2008-11-15T18:33:00.003-05:00

Somehow I missed this one, but you should not: a You Tube 2001 radio interview with Barack Obama in his own words on government's responsibility to redistribute wealth. No wonder the markets are in a turmoil: with three branches of government controlled by the socialist democrats, the economy in turmoil (aided and abetted by the republicans), Obama's social engineering programs will drive the final nail in the coffin of capitalism.

The Road Not Taken

2008-10-22T04:56:00.003-04:00

As we wind down the 2008 presidential election, I think we will look back on it and ask ourselves many questions about how we ended up with a Marxist-socialist in the White House. This election will have profound negative consequences on us as a people and on the world. As I have stated in previous postings, this trip did not start yesterday, it started over 70 years ago. It will take us at least 70 years to reverse this course, if we can do it all. I doubt that we can, but that does not mean that we cannot -- or I will not -- try.

So, for those of you who are committed to an Obama presidency, I would ask you to consider three decision criteria in selecting our next president: character, experience, and accomplishment. In the business world, these three criteria are generally evaluated through a review of a written resume, validated through a personal interview, and a final hiring decision confirmed through personal references. With respect to a personal resume, you have Obama's own books (Dreams from My Father and Audacity of Hope) and books written about him (The Obama Nation by Jerome Corsi and The Case Against Barack Obama by David Freddoso). With respect to interviews, you have Rick Warren's Saddleback debate, the Presidential Debates, and interviews with numerous cable pundits. However, one is hard pressed to confirm the hiring decision through personal references, as this is not an area the media wants to fully explore. So, I decided to find the most comprehensive list I could so that you could make an informed decision. They are summarized and illustrated through video documentary in the Cloward Piven Strategy - Part 2 - Political Allies and Advisors. As my father told me "You will be judged by the company you keep." I guess this does not apply to Barack Obama.

As for me, I think I will stay on The Road Not Taken (Robert Frost, 1920).

"I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference."

Second Open Letter to the United States Congress

2008-10-17T14:41:00.000-04:00

The following letter was sent to my elected representatives on October 17, 2008. I suggest you write one to your elected rerpesentatives requesting your "stock" certificates be sent directly to you for safe keeping.

"The purpose of this letter is to request information about the contractual nature that the US Treasury has with the various financial institutions, which Congress has authorized the Treasury to nationalize. Specifically, is the Treasury receiving voting shares for its investment? If so, how and by whom will these shares be voted? If shares are being issued, I would like to receive mine in the mail. Otherwise, I am concerned that when these shares appreciate, as they must according to Mr. Paulson (as he knows that the mark to market rule allowed him to buy these shares at a depressed value), then I want to make sure that my pro rata share of the proceeds are returned to me. Otherwise, I fear they will be absorbed by the US Government and returned to organizations such as ACORN, Fannie Mae, Freddie Mac, and other entities who do not have my best interest in mind.

While I await word from you, I will spend my time in retirement working to recover one-third of my life savings. Plan B is to figure out how to die 33% sooner than my actuarial age, which will be bad for me, but even worse for those who were depending on my continued contribution to their prosperity and ultimate realization of the 'American Dream.' ”

Money Ain’t For Nothing … and the Checks are for Free!

2008-10-12T19:58:00.000-04:00

As stated in Comments on The 2008 Second Presidential Debate, the only difference between the state of our country and its institutions and the Titanic is that the Titanic had a band. So, after a little thoughtful reflection and a strong sense that we are about to inaugurate the first social Marxist to be president of the United States , I propose that we celebrate (with the little money we have left) by hiring the band Dire Straits. With a little twist on the lyrics, their classic hit “Money Ain’t for Nothing” could become American pop culture’s new national anthem! Unfortunately for Obama and his fellow Marxists, the euphoria will be short lived, tempered by economic reality. The “wealthy,” upon which the left’s tax and spend economic policy depends, are fleeing the market. Apparently, they understand that replacing the free market with a large central government controlled entirely by “Democratic” socialists – propped up by a $100B stimulus package, a $700B bailout, and yet another $150B stimulus package currently under discussion – will not work .

America is at a “strategic inflection point” in its history. I believe that if Obama is elected, our children and grandchildren will look back in history and identify this election as the point in time we transitioned from a free, capitalist society – one nation under God with equality of opportunity for everyone – to a Marxist socialist one – a multi-cultural, secular humanistic post-modern society that seeks equality of outcome for everyone but its “intellectual elite,” who view themselves as saviors of the common man and worthy of special dispensation. The Bush Administration’s policies are not the cause of the recent economic implosion, as much as the left would like to us to believe. The cause is the result of a relentless, long-term strategy that was implemented by Marxists starting in the 1920s, brought to the United States in the 1930s, and fully implemented starting in the 1950s (see Taking America to School … and Other Places We No Longer Recognize for background, discussion, and links to Obama’s world view).

The principal thesis of this movement (Critical Theory) was that Marxism could not defeat Capitalism through direct conflict or economic means but had to first undermine its culture by attacking its underlying institutions: the nuclear family, its Christian faith, education, media, entertainment, and popular culture. As the theory goes, success in subversion of these institutions would lead to economic, political, and military collapse. This is exactly what we have seen. Future articles will examine trends in each of these areas; however, suffice it to say that the current economic meltdown is simply a result of this much larger strategy. Our current economic woes are the result of 70 years of social engineering, which has year-by-year – in 2007 inflation adjusted dollars – driven federal spending in 1965 from $628 billion to $2.7 trillion in 2007 (a 334% increase), while the median income of the average American has risen 35% ($28,346 to $38,386 per year). Over this period, mandatory spending on entitlement programs (social security, Medicare, Medicaid, Welfare, etc.) has grown from 26.9% of the budget to 52.9% of the budget. These programs had their genesis in the 1930s through democrat president Franklin D Roosevelt’s “New Deal” and came into full bloom under democrat president Lyndon Johnson’s “Great Society.” When interest is considered (8.3%), only 38.8% of the budget is discretionary (within the control of the President).

One of these social engineering programs was the Community Reinvestment Act (CRA), signed into law by democrat president Jimmy Carter in 1977 and further expanded by democrat president Bill Clinton in 1999 to offer sub-prime mortgages to low and moderate income persons, who otherwise could not afford them. This fiscally irresponsible, social engineering program targeted at providing “affordable housing” to those who could not “afford” it directly resulted in the economy crumbling under the weight of credit that could not be repaid. In true socialist fashion, the democratically controlled congress – aided and abetted by a minority of clueless Republicans – have now exacerbated the problem by throwing more fuel on the fire, in the form of $700B in cash guarantees. Instead, they should have taken action by unleashing the power of free market capitalism: eliminating insane mark to market rules, reducing capital gains taxes, reducing corporate income taxes, and debating the merits of new tax systems like the fair tax or flat tax system. Note: all solutions proposed by democrats require the government to be in the middle, and that is the problem.

So, what is the bottom line (pun intended)? The progress made by the Bush administration over the past six years has been erased in two weeks by long-term, systemic socialist policies that have been at work for 70 years. A little over a year ago, consumer confidence stood at a two-and-one-half year high, regular gas sold for $2.19 per gallon, the unemployment rate was 4.5%, the Dow reached record highs, and Americans were buying new cars. Over the six year period, the Bush administration has put forward proposals to regulate Fannie Mae and Freddie Mac, address social security, address energy policy, and address health care. Many of these proposals passed the House, only to die in committee in the Senate because they were blocked by the democrats. Since the democrats have taken control of congress, every one of these economic indicators has reversed and to borrow a phrase from one of their social justice theorists, Rev. Jeremiah Wright, “the chickens have come home to roost.” Consumer confidence has dropped, the Dow is trading in ranges we have not seen since the 1970s, a record number of homes are in foreclosure, unemployment has risen by 10% (to 5.5%) , and the federal deficit has ballooned.

May be the market understands, better than the voters, the true cost of Obama’s Change: you give him a dollar and he gives you back two cents.

Comments on the 2008 Second Presidential Debate

2008-10-08T09:31:00.000-04:00

Last night’s debate was mind numbing. The questions did not take us where the American people have a right to go: to questions of world-view, personal character and integrity, and demonstrated experience.

Rick Warren's Saddleback debate was the most informative of all the candidate debates. If the first two presidential debates had followed the Saddleback format and / or asked similarly insightful questions on key issues like the economy, energy, the war, education, and healthcare, perhaps the American people could determine the difference between each candidate’s position. To me the choice is straightforward. We can either vote for the McCain / Palin team, which supports a Judeo Christian worldview, demonstrates high personal moral character and integrity, and has a proven track record or we can vote for Obama, who has a Marxist / humanist world view, a questionable moral character, and no proven track record. I purposely left Biden out because his views are immaterial: he has demonstrated consistently that he cannot even get his facts straight. As the mortgage guy on the radio says, "This must be the biggest no brainer in the history of the earth." Any further discussion is little more than rearranging the deck chairs on the Titanic ...

... at least they had a band.

Obamanomics 101 – The Root Cause of Our Current Economic Crisis

2008-10-02T10:48:00.000-04:00

Recently, I was notified by the Naval Postgraduate School that as an alumnus I could have access to their online research resources. I guess they gave that privilege to the wrong guy!

Attached is an article published in the Urban Affairs Quarterly, March 1979, discussing the topic of “Financing Home Ownership, The Federal Role in Neighborhood Decline.” It traces the history of home financing from 1934 to 1979. Its conclusion, ironically, is that even at the time of its writing in 1979 that “federal policies and programs designed to expand the opportunities for home ownership have often contributed to neighborhood decline rather than curing it.” It also describes the credit market that was created for “community organizers” by federal policies. In essence, these federal policies view communities as “sophisticated conglomerates, whose major subsidiaries, the housing market, the business sector, and the social institutions, are themselves composed of smaller economic units, such as households, individual organizations, and enterprises – all of which are integrated through interdependent financial interactions, each depending upon a supply of credit to expand its own capital and make new investment in order to survive.”

In contrast to a capitalist view of the market where monetary investment is made by individuals and by corporations in ideas and capital equipment and the consumer determines winners and losers, the community organizer model relies on the federal government passing socially progressive legislation that makes monetary investment in the “conglomerates,” described above, through quasi-governmental agencies like Freddie Mac and Fannie Mae. Freddie and Fannie provide tax-payer money and access to easy credit to persons who otherwise could not afford it. Enter the “community organizer,” who trains the so-called “disenfranchised” to believe that they are victims of a corrupt capitalist society, that they are entitled to the “American Dream,” and then indoctrinates them in a liberal, socialistic ideology. For the organizer, the medium of exchange for the “American Dream” no longer becomes money, but instead a vote. The “organizer” organizes the communities to believe that they are “companies,” in which society has a moral mandate to “invest.” The “organizer” then forms organizations like the Association of Community Organizers for Reform Now (ACORN) – funded at taxpayer expense – to encourage low income, poorly educated, disenfranchised persons, whose principal asset is that they are over 18 years old but otherwise are clueless, to vote for socially progressive legislators, who will further expand these socially progressive programs. In essence, the “social progressive” seeks to replace equality of opportunity, with equality of outcome. Obama’s euphemism for this model is “being neighborly.” My definition is Marxist socialism.

So the real question is this. If we are about to elect “The Organizer in Chief” to be the next President of the United States of America, does his “trickle up” economic model work? I guess some would point to Europe as a success story; I would think most Americans would disagree. So instead of debating that issue, a better question to ask is “how has the ‘organizer’ model benefitted the community represented by Barack Obama – Chicago?” Chicago is a good example, because of Obama’s long history of service in the community, as a community organizer, state congressman, state senator, and US senator. The elected representatives from this area are all democrats – no republicans to blame! So here goes:

1. In the last six months, more people have been murdered in Chicago (292) than killed in combat in Iraq (221).
2. The state pension fund is $44B in debt – the worst in the country.
3. The Chicago school system is one of the worst in the country.
4. Cook County Illinois (Chicago) sales tax is the highest in the country – 10.25%.

I know, I know – we have not invested enough, the folks have been victimized, and they are entitled to better. I submit we have invested more than we can afford in this 30 year social engineering project. It has resulted in the need to enact a $700B bailout of the credit system that will have to be borne by all of us, our children, and their grandchildren. This “investment” in the alternative economic world of social progressive politics has bankrupted all of us. For someone whose self described strong suit is “economics,” Obama would be well advised to read the modern version of the “Goose that Laid the Golden Egg” by Richard Cummings.

An Open Letter to the Virginia Members of the United States Congress

2008-09-29T09:03:00.000-04:00

As I have stated in other letters to you, correlation does not mean cause. So it is with the bailout of our economy. The democrats state that the root cause of the problem is principally attributable to an over emphasis on free market economics and a lack of regulation. Their answer: more government. In fact, the recent failure of the banking system is not principally a failure of the free market or lack of regulation, but is a prime example of the effect of socialism in a free market economy. Through the Community Reinvestment Act, the government provided economic incentive to provide loans to low income people who otherwise could not afford them. In fact, it was even worse than this: the government punished lenders who did not market these loans. As a result, demand was created that needed a supply. Homes were built that people could not afford. Sarbanes Oxley further exacerbated this situation through its “mark to market” requirements, in essence artificially overvaluing these assets and allowing lenders to lend even more money. Now that we are on the downside of this disaster, the government wants to interpose itself back into the equation, by thinking big government solutions can get us out of the mess. I do not believe it will work. As evidence I cite: failed energy policy over the past forty years, especially nuclear power; a failing social security system; a health care system that is broken; and an education system that spends more per capita than any other nation, but whose students rank first in only one category – “self confidence.”

Taking money out of the hands of “hard working” Americans and putting them in the hands of politicians has resulted in a 334% increase in Federal spending since 1965 (from $628 billion to $2.7 trillion in 2007 inflation adjusted dollars), while the median income of the average American has risen 35% ($28,346 to $38,386). Over this period, mandatory spending on entitlement programs has grown from 26.9% of the budget to 52.9% of the budget. When interest is considered (8.3%), only 38.8% of the budget is discretionary (within the control of the President). A better solution is to take the decision making out of the hands of a do-nothing, socially progressive government and let the average “hard working” American decide for himself or herself how to spend his or her income.

In my mind the decision is simple. Do we want a country in which individuals create and distribute wealth (equality of opportunity -- capitalism) or one in which the government taxes the successful and puts it in the hands of a few (the Government) who then redistributes it as it sees fit (equality of outcome – socialism)? We are rapidly moving from an economy where the medium of exchange is one of money to one of votes (47.3% of wage earners do not pay federal income tax, but receive benefits and tax credits). We would be well served to remember the advice of Thomas Jefferson: ““Every government degenerates when trusted to the rulers of the people alone. The people themselves, therefore, are its only safe depositories.” – Thomas Jefferson, Notes on the State of Virginia, Query 14, 1781.”

What Happened to Our Economy?

2008-09-27T08:45:00.000-04:00

Over the past two weeks, we have seen our economy decline precipitously. Many Americans are asking, how did we get to this point? Who is responsible? As they say a picture is worth a thousand word. In this case a video is worth a million words. Go to the following link for a complete crisis history and identification of those who are responsible.

Taking America To School … And to Other Places We No Longer Recognize

2008-09-10T21:16:00.000-04:00

When I was a young adult, I played a lot of pickup basketball. Each time you faced off against your opposite on the other team, you took the measure of the other player. Invariably, words were exchanged about each other’s alleged competency on the court. My recollection is that more often than not, the player who understated his potential threat was the one you really needed to watch; otherwise, you ended up “being taken to school.” America is being “taken to school” by Barack Obama and the media is doing nothing to warn us. The media have been strangely silent on his college years, during which he solidified his world view, and his experience as a “community organizer” in south side Chicago, during which he put his world view into practice. According to Ryan Lizza of the New Republic, “Publicly, as well, Obama has made his organizing days central to his political identity. When he announced his candidacy for president, he said the ‘best education’ he ever had was not his undergraduate years at Occidental and Columbia or even his time at Harvard Law School, but rather the four years he spent in the mid-1980s learning the art and science of community organizing in Chicago. The night after Obama's announcement speech, he made a similar point on "60 Minutes" as he led Steve Kroft around the old neighborhood.” When there is silence in the liberal media, it is a clear indication that someone should be asking questions.”

My first indication there was a real problem was on September 7, 2008, when Eric Shawn of Fox New’s Weekend Live asked Bob Beckell why Obama had not released his college transcripts and his college thesis, a requirement for graduation. Apparently, Obama’s wife had already released hers. Beckell’s response was that the average American didn’t wake up in the morning asking about Obama’s college transcripts. Alarm bells went off. So, I did some immediate investigation and learned that Obama was a Political Science major at Columbia University. The alarm bell got louder. I remembered reading in Pat Buchanan’s book Death of the West (DOW) that Columbia University was the home to the transplanted Frankfurt School, a school of German Marxist thinkers, and to Herbert Marcuse who championed this cultural revolution school of thought in America in the 1960s. With a little additional research I found that Marcuse’s son, Peter Marcuse, retired as a professor at Columbia and is the “keeper” of the official Marcuse home page (www.Marcuse.org). Disciples of this ideology include Frank Marshall Davis, Malcom X, and Saul Alinsky, all of whom were identified by Barack Obama in his books (Dreams from My Fathers and The Audacity of Hope) as either mentors or influential thinkers in the formation of his world view. In fact, Alinsky was the founder of the Industrial Areas Foundation, the school that taught Obama how to organize. Alinsky was also the subject of Hillary Clinton’s undergraduate thesis.

So what is the Frankfurt School and how has had it shaped political thought on the left in America and possibly the world view of one of our candidates for President? The Frankfurt School was originally established in 1923 as the Institute of Social Research at Frankfurt University by Gyorgy Luckacs and other German communists. According to Pat Buchanan in his book Death of the West (pg. 75), it grew out of a recognition by them that “capitalism was not impoverishing the workers. Indeed their lot was improving, and they had not risen in revolution because their souls had been saturated in two thousand years of Christianity, which blinded them to their true class interests … In biblical terms, the word of Marx, seed of revolution, had fallen on rock-hard Christian soil and died … the Marxist had bet on the wrong horse.” In his work, History of Class Consciousness, Luckacs reiterated his commitment to dialectical materialism: “It is not men’s consciousness that determines their existence, but on the contrary, their social existence that determines their consciousness ... Only when the core of existence stands revealed as a social process can existence be seen as the product, albeit the hitherto unconscious product, of human activity." Translation: man’s social nature shapes the core of his existence, that is his consciousness. There is no room for God. To bring the world into alignment with this thinking, Luckacs “… saw the revolutionary destruction of society as the one and only solution. A world-wide overturning of values cannot take place without the annihilation of the old values and the creation of new ones by the revolutionaries.” Lukacs’s ideas became known as “cultural terrorism.” As the Hungarian Peoples Republic Commissar for Education and Culture, Luckacs put his program into action by instructing students in free love, the archaic nature of the middle-class family codes, rejection of monogamy, the irrelevance of religion, and called women to rebel against the sexual mores of the times. His basic aim was to destroy the institution of Christianity, which is the foundation of western culture. Fifty years later, these ideas were adopted by the baby boomers. Is this starting to sound familiar?

Antonio Gramsci, a contemporary of Luckacs, was an Italian communist, who also understood that traditional Marxism had failed. John Fonte of the Hudson Institute argues that Gramsci believed in “absolute historicism, meaning that morals, values, truth, standards, and human nature itself are products of different historical epochs. There are no absolute moral standards that are universally true for all human beings outside of a particular historical context: rather, morality is socially constructed.” In other words, truth and morality were not absolute, they were relative. Gramsci argued the culture must be changed, starting with the arts, cinema, theatre, schools, colleges, seminaries, newspapers, magazines, and the new electronic medium radio. Through these institutions the public could be captured and converted to the cause. He encouraged fellow Marxists to form alliances with Western intellectuals who embraced human secularism.

In 1930, Max Horkheimer (Traditional and Critical Theory) became the director of the Frankfurt School and the school began to systematically translate Marxism into cultural terms. Musician Theodor Adorno, psychologist Erich Fromm (Escape from Reason), and sociologist Wilhem Reich (The Mass Psychology of Fascism and The Sexual Revolution) joined the school. In 1933, Hitler’s rise to power interrupted the school’s development of its cultural Marxist ideology. The school relocated to America at Columbia University were it developed its Critical Theory, which has been described by Buchanan in DOW (pg.80) as the “essentially destructive criticism of all the main elements of Western culture, including Christianity, capitalism, authority, the family, patriarchy, hierarchy, morality, tradition, sexual restraint, loyalty, patriotism, nationalism, heredity, ethnocentricity, convention, and conservatism … the crimes of the West flow from the history of the West, as shaped by Christianity.” Buchanan then concludes, “Critical theory ultimately results in ‘cultural pessimism,’ a sense of alienation, of hopelessness, of despair where, even though prosperous and free, a people comes to see its society and country as oppressive, evil, and unworthy of its loyalty and love. The new Marxists consider cultural pessimism a necessary precondition of revolutionary change.”

During the fifties, Herbert Marcuse, an ex-OSS officer and Brandeis University professor, defined the proletariat of the American Cultural Revolution: radical youth, feminists, black militants, homosexuals, the alienated, and the asocial. His battle cry: “make love, not war.” In Carnivorous Society, he wrote: “One can rightfully speak of cultural revolution, since protest is directed toward the whole cultural establishment … there is one thing we can say with complete assurance. The traditional ideal of revolution and the traditional strategy of revolution have ended. These ideas are old-fashioned … what we must undertake is a type of diffuse and dispersed disintegration of the system.”

Critical Theory forms the basis of Western Marxism and post-modernist thought. Malcom X, Frank Marshall Davis, Saul Alinsky – all self-described by Obama as being influential in his life – studied and practiced the principles of Critical Theory. In his Rules for Radicals, a book that Alinsky ironically dedicated to Lucifer, "the very first radical" [2], Alinsky – Obama’s mentor – outlines his strategy in organizing, writing,

"There's another reason for working inside the system. Dostoevsky said that taking a new step is what people fear most. Any revolutionary change must be preceded by a passive, affirmative, non-challenging attitude toward change among the mass of our people. They must feel so frustrated, so defeated, so lost, so futureless in the prevailing system that they are willing to let go of the past and change the future. This acceptance is the reformation essential to any revolution. To bring on this reformation requires that the organizer work inside the system, among not only the middle class but the 40 per cent of American families - more than seventy million people - whose income range from $5,000 to $10,000 a year [in 1971]. They cannot be dismissed by labeling them blue collar or hard hat. They will not continue to be relatively passive and slightly challenging. If we fail to communicate with them, if we don't encourage them to form alliances with us, they will move to the right. Maybe they will anyway, but let's not let it happen by default."

Why haven't we heard anything about this in the media? The silence is deafening. Do you think we need to know more about Obama’s mentors, his world view, and how it came to be formed? He is asking us to place our country and its future in his hands. With such trust comes transparency. We are not getting that from the media or the man.

America is "being taken to school."

“Neighborliness” – The New Form of Social Redistribution of Wealth

2008-09-09T19:58:00.000-04:00

On September 8, 2008, Barack Obama appeared on Bill O’Reilly’s The Factor (Fox News Channel) to answer questions about his proposed economic policies. A key point of contention was Obama’s intent to raise federal income and capital gains tax rates on the “rich” (which he defines as anyone earning over $250,000 per year) AND remove the upper limit on social security payroll taxes (currently capped at 6.2% of an individual’s first $97,500 of income AND matched by the employer (i.e., a total of 12.4%)). Obama believes that because the “rich” can afford it, then they should pay to fund a “tax cut” for 95% of all Americans. He further views his tax proposals as ”neighborly,” which he rightfully identifies as an American virtue. The problem, I believe, is that the average American does not interpret being “neighborly” as a virtue that requires Washington to be in the middle nor does it view “neighborliness” as a redistribution of wealth between Americans. Instead, they see “neighborliness” as neighbor helping neighbor, as individuals, and not as classes. The average American believes in equality of opportunity and not in Obama’s social Marxist view of equality of outcome. So who are the “rich?” What do they do with their wealth? What are the potential consequences to all Americans of Obama’s plan?

Who are the “rich?” By “rich,” Obama means those who have been financially successful. This is distinction that deserves emphasis, because the term “rich” is not necessarily the same as being “financially successful.” To the average American, “rich” has a negative connotation, and it is easier to tax the “rich” than it is to tax success. In fact, many people are “rich,” but would not be classified as financially successful. For example Mother Teresa was rich but she was not what the world would claim to be financially successful. Second, it is important to distinguish exactly who Obama wishes to tax: those who have taken financial risks far beyond those of the average employee, who in many cases failed multiple times before succeeding, who worked hard, who invested in their businesses, and who created the jobs that ALL Americans enjoy.

The “rich” are typically people who either own businesses in America or receive employment from those businesses. From a demographics perspective, 80% percent of these businesses are sole proprietorships, partnerships, or S-Corporations (which are taxed at individual tax rates) and 20% are large C-corporations (which are taxed at corporate rates). The small businesses they own are recognizable in every town: gas stations, laundries, retail franchises, and other boutique family businesses. According to 10 Secrets that Millionaires Keep, by Daren Fonda of Smart Money, the financially successful, who have a net worth of $1M, are 90% more wealthy than other US households, earn on average $366,000 per year, and are in the top 1% of taxpayers. Their number has doubled since 2002, with half of them earning their wealth from small business, one-third from large corporations, and less than 3 percent through inheritance. Most come from families, which would not be classified as wealthy, and have enjoyed their financial success for less than 15 years. Their median grade-point average in college was 2.9, with an average SAT score of 1,190. Fifty-nine percent attended a state college or university. Their secrets to success, in their words: hard work, discipline, education, and treating others with respect. Other than their wealth, the “rich” seem to be a lot like the average American, except they have taken extraordinary risks, worked smarter and harder, and converted the opportunities presented to them into greater financial success.

How do the “rich” spend their money? Before they can spend it, they must pay taxes to the government. The top 1% of earners pay 40% of America’s federal income tax. In fact, the top 10% of earners pay 70%, and the top 50% pay 97%. Like all other wage earners, in addition to FICA, the “rich” pay 6.2% on their personal wages to fund social security, up to a maximum salary of $97,500 and 1.45% on all wages to fund Medicare. Because the average wage earner makes approximately $50,233 (2007 Census Bureau), the average wage earner pays, on average, $3,868 in payroll taxes. This is matched by the employer, who pays an additional $3,868. Under the current tax scheme, the financially successful, who earn over $97,500, will pay $7,459; however, fifty percent of them who own their businesses or are sole-proprietors will pay twice this, or $14,918, because they have to pay their own matching contribution. In effect they are paying 3.9 times more than an average wage earner working for a large corporation. These taxes are paid before any other taxes are paid. If Obama eliminates the cap on the Social Security payroll tax, so that all income is exposed to this tax, the average “rich” person who owns his own business will pay 12.4% on his or her full $366,000 in earnings or $45,384, or 3 times his or her current payroll tax level and almost 12 times that of the average American. This is before he or she pays increased marginal capital gains and income tax rates under the Obama plan (see Taxing the Rich is Really Taxing All of Us). Is this fair? It does not seem fair to me, especially in light of the fact that the financially successful person will never receive a payout from social security that even comes close to what was paid in. Based upon projections provided to me over the years by the Social Security Administration, I expect that I will receive approximately $1,500 per month in benefit. This will be substantially offset by income from other financial sources: in effect, my contribution will be transferred to others – simply another tax and redistribution of wealth.

So what does the financially successful person do with what is left? He or she invests it or spends it. Investment means capital formation that leads to further business growth and jobs. Spending includes both consumption and charitable contribution. Expenditure on consumption – you guessed it – creates jobs and opportunities for others to become financially successful. Charitable contributions meet the many social needs of our communities and fund that aspect of “neighborly” which can only be met by monetary investment. According to Arthur C. Brooks, of the American Enterprise Institute, charitable giving in America, which was $265B in 2006, has risen faster than the growth of the American economy over the past half-century. For example in 1995, “Americans gave per capita three and half times as much to causes and charities as the French, seven times as much as the Germans, and 14 times as much as the Italians.” The top ten percent of American earners are responsible for seventy-five percent of giving, and the top 1% of earners represents half of the giving. So who gives more, conservatives or liberals? According to Brooks, “The fact is that self-described ‘conservatives’ in America are more likely to give – and give more money – than self-described ‘liberals.’ In the year 2000, households headed by a conservative gave, on average, 30 percent more dollars to charity than households headed by a liberal. And this discrepancy in monetary donations is not simply an artifact of income differences. On the contrary, liberal families in these data earned an average of 6 percent more per year than conservative families.”

What are the implications of Obama’s tax policy? Simply put, instead of returning a tax rebate to wage earners based upon their contribution (viz., a rate reduction across the board), he proposes to tax the “rich” and return their tax receipts in the form of payments to a majority of Americans who pay little or no income tax. In effect, he is going to take from the financially successful – the backbone of the American economy – and redistribute the wealth to those who did not earn it to ostensibly meet their day-to-day “needs.” In the process, he will: (1) remove capital from the economy that creates opportunities and jobs; (2) drive down charitable contributions by individuals that fund truly “neighborly” projects and place decision making for social concerns in the hands of government rather than individuals; and (3) most importantly, destroy the incentive of financially successful people to compete in the marketplace while incenting those who are either unwilling or unable to compete to “vote” rather than work for their financial success. This is not capitalism; it is social Marxism.

Global Warning on Global Warming

2008-08-31T20:03:00.000-04:00

Recently, the American Water Resources Association (AWRA) held a three-day, 300-person conference at Regent University, in my hometown of Virginia Beach, VA. An objective of the conference was to create carbon offsets to mitigate the carbon footprint created by the conference attendees. To meet this objective, attendees planted 115 trees and shrubs on the campus. According to Al Todd, the conference committee’s chairman and a watershed program leader for the US Forest Service, the “carbon cost” of the conference, excluding air travel, was 15 to 20 metric tons of carbon dioxide. When confronted with the fact that one acre of forest can sequester between 0.5 and 2.5 metric tons of carbon dioxide annually, Todd admitted it would take 20 more years to offset the conference’s energy consumption. In his words, “We’ve got a lot of work to do, don’t we?”

This report makes you wonder if the AWRA accomplished anything in its three day conference other than planting trees. At a minimum it does suggest that before America commits all of its resources, energy, and economic prosperity to saving the planet and what some believe to be settled science, it would be prudent to ask ourselves some important questions. Principal among these are: “Is global warming real?” and “Does man’s activity contribute to global warming?” My conclusions are:

1. Yes, the planet is warming.
2. No, man’s activity has no appreciable impact on global warming.

My conclusions are supported by a scientific study, Increased Effects of Increased Atmospheric Carbon Dioxide, by Robinson, A.B., et al, reviewed and endorsed by more than 9,000 Ph.D.s (http://www.petitionproject.org/) , and the testimony of David Evans, the scientist who wrote the carbon accounting model (FullCAM) that measures Australia’s compliance with the Kyoto protocol (http://mises.org/story/2571# and http://mises.org/story/2795 ).

The conclusion of the Robinson research is that the earth is warming at a rate of 0.5 degrees Centigrade per 100 years, and that this trend is naturally occurring, as the earth recovers from what is referred to as the Little Ice Age. The current warming trend can be traced to about 1800. The researchers conclude that over the last 3,000 years, the earth’s temperature has varied within a 3 degree Celsius range. Arctic temperature variation correlates strongly with solar activity and not with world hydrocarbon use.

In fact, the study concludes that overall the climate has improved. The number of tornados has decreased, the number of hurricanes has remained constant, and rainfall has increased. During the past 50 years, atmospheric carbon dioxide has increased 22%, much of that due to human activity, but no correlation exists between temperature increase and carbon dioxide production. In fact the major effect has been to increase plant growth and biological diversity (that is, a positive effect).

The results of this study are confirmed by David Evans, one of the principals behind the global warming theory. His conclusions:

“After further research, new high-resolution ice core results (data points only a few hundred years apart) in 2000–2003 allowed us to distinguish which came first, the temperature rises or the CO2 rises. We found that temperature changes preceded CO2 changes by an average of 800 years. So temperature caused the CO2 levels, and not the other way around as previously assumed. The world should have started backpedaling away from blaming carbon emissions in 2003."

"There are several possible causes of global warming, and they each warm the atmosphere at different latitudes and altitudes — that is, each cause will produce a distinct pattern of hot spots in the atmosphere, or ‘signature.’ The greenhouse signature is very distinct from the others … There is no hotspot in the tropics at 10 km up, so now we know that greenhouse warming is not the (main) cause of global warming — so we know that carbon emissions are not the (main) cause of global warming.”

So what are the potential effects of global warming? I am not sure we know yet, except that the effects will not be principally due to man-made carbon dioxide production. In fact, by committing our resources, energy, and economic future to eliminating carbon production, we will deliberately make the situation worse. The well being of our society, the well being of the world, and the solution to the real effects of global warming depend upon low cost, abundant energy sources, of which carbon-based fuels is the backbone and will be the backbone for the next twenty years.

My solution is to develop ALL energy sources, including alternative energy sources and conservation. In the near term, we need to drill in America. We need to further develop natural gas and nuclear to build an energy bridge to the future. As I have documented in prior blogs, alternative energies, today, will not provide our energy need – they only satisfy a psychological need. Unfortunately, that psychological need is not based on science.

Speculating on Speculation

2008-06-25T22:16:00.000-04:00

Now that we are facing an energy crisis, the social progressives (“democrats”) are doing what they do best: reinforcing their message that we are all “victims” and are “entitled” to all the energy we want at a price we can afford. The most recent target is the “speculators,” formerly known in more respectable times as “energy traders.” The social progressives answer – surprise, surprise: regulate them. Unfortunately, regulation will do nothing to address the underlying issue, except to eliminate what is a useful market function that provides us with an early warning of impending market movement (both good and bad) and counterbalances the market alternative, cartels.

First, let me say I am not an expert in this area by any means. However, in my consulting practice, I did assist a large energy marketing firm re-engineer its business processes, and through this experience, did come away with a good appreciation for what drove their business.

Energy marketing has nothing to do with selling energy. In fact, the objective of the business is to never, never … ever … to end up having to fulfill a physical contract. That is true: other companies deliver the product. The energy marketers job is price discovery: to predict the future price of a commodity, in this case energy, and buy and sell contracts that profit on the uncertainty in the market price. The politicians would have us believe this is “reckless wagering,” except behind each “bet” is market knowledge (actual data), information gathering (information technology), forecasting (sophisticated statistical analysis), and risk management (arbitrage and hedging). On every “wager,” there are at least two sides to the transaction – a party that will ultimately win and one that will ultimately lose, both of which are intelligently looking at the market. So, when large uncertainty in the price exists, large uncertainty in the underlying ability of the market to meet supply and demand exists. If there were no uncertainty, no price volatility would exist nor would any profit potential for an energy marketer.

The real question is “what is driving the risk?” Prospectively, I believe the energy marketers believe the answers are: (1) world demand is starting to outstrip supply (see my blog “To Drill or Not to Drill, That is the Question”), (2) America consumes a disproportionate share of the oil resource, which drives world price, and (3) America will elect a president and congress that: (a) will withdraw from Iraq, leaving 60% of the worlds oil supply in the hands of our adversaries, (b) are not willing to tap potential sources of energy within our borders; and (c) will not commit to proven energy technologies but will replace them with less dense, passive technologies and conservation that will never meet our energy needs. In short, oil is in short supply and we do not want to do anything to increase that supply except talk. We need the oil and some else owns it. My bet is the price is going to go up.

So, the moral to the story is this. When the “speculator” watchdog starts barking, let’s shoot it. Or as John Preston, of Boston University, said “The nicest thing about not planning, is that failure comes as a complete surprise and is not preceded by a period of anxiety.”

To Drill or Not to Drill, That is the Question

2008-06-24T09:46:00.000-04:00

The debate is raging. Should the United States drill or not drill within our borders for more oil? With prices at an all time high, the answer would appear to be simple. At the energy summit, ongoing in Jiddah, Saudi Arabia, Gordon Brown, the Prime Minister of the United Kingdom asserted that the issue is about too much demand and too little supply. The U.S. Energy Secretary, Samuel Bodman, said that insufficient oil production, not financial speculation, was driving soaring crude oil prices. However, this issue is as much about ideology as it is about technology and economics. In other words, one needs to look beyond the politicians and rhetoric to understand what is going on.

Production and Consumption. Fortunately, someone has provided us with a scientific (versus political) analysis of oil production over time. In 1998, Richard C. Duncan and Walter Youngquist forecast the world peak in oil production, “which will be a turning point in human history.” Their results are presented a series of three papers (referred to by them as Issues #1, #2, #3) entitled the World Petroleum Life Cycle , which was presented to the Petroleum Technology Transfer Council. Their methodology uses historic oil production data from the top 42 oil producing countries and statistical and heuristic modeling techniques. The 1998 paper (Issue #3), predicted that the peak in world energy production would occur in 2006. Prior analyses in 1996 (Issue #1) and 1997 (Issue #3) predicted a peak in world production in 2005 and 2007, respectively. The conclusions from this study are:

- Prediction 1: “Compounding world energy demands will be increasingly industrialized nations (particularly SE Asia, China, and India) wanting more energy per capita. China, Southeast Asia, and India now with some 60% of the world’s population are getting motorized wheels. If China used oil on a per capita basis as does the United States, China alone would be responsible for approximately 14 million barrels a day more than the present world’s entire world oil production.” [emphasis mine]
- Prediction 2: “A recent analysis by the Centre for Global Energy Studies (CGES), London, using a technique called logistic curve analysis, created one scenario in which even if non-OPEC countries discovered a further 500 billion barrels of oil, non-OPEC production would peak in about 2002 at 50 million barrels per day and decline more rapidly under conventional analysis. We are in full agreement with the CGES about the nearing of the non-OPEC peak.”
- Prediction 3: “Issues #1 through #3 of the Program predicted the world peak in the tight range of 2005 to 2007. However, Issue #3, Section 5, entitled ‘Can We Delay the World Oil Peak?” … concluded, ‘Yes, new production brought on stream well before the 2006 base-line peak can delay it, but only by few billion barrels of new production. However, even large increments of new production brought on after the peak is not likely to have any effect whatsoever on delaying the base-line world oil peak.” CGES’s review noted that oil production was once expected to peak in the 1980s, but has been successively pushed back into the first decade of the next century. However, CGES concludes that the peak may not be pushed back much further. “We are in full agreement with the CGES about the inertia of the world oil peak.”
- Prediction 4: Any oil strike in the former soviet socialist republics surrounding the Caspian Sea would be modest, contributing about 3% of the world’s oil supply. By contrast the Middle East holds about 60% of the world’s oil supply.

Remember these predictions were made in 1998. Based on the US government’s Energy Information Administration forecast (2007), historical consumption is shown in the graph to the left. In 2007, world consumption was 31Gb per year, which was what was projected.

So, what does this analysis tell us:

· Based on 1998 estimates of technology capability, historical production rates, and forecasting techniques, we have reached peak world production, and the production market is now driven by OPEC countries.
· Production is in decline. It could have been mitigated but not reversed, by additional drilling as soon as possible.
· As production declines and demand from China and India increase, the law of supply and demand will drive oil commodity prices up. Prices will be driven higher by uncertainty of supply due to perceived and real threats to supply. Clearly, energy “speculation” (viz., trading) is driving up prices in the short-term; however, trading tends to discount future volatility in a market and therefore is a pre-cursor of a larger, looming problem.

Beyond the oil forecast, other historical facts are relevant to a decision to drill or not drill.

· Due to environmental protectionism, the United States currently sits on the world’s second largest coal supply (China is first). The United States coal supply is adjudged by some to contain three times the energy content of proven OPEC oil reserves, which comprise 60% of the world’s known oil reserves.
· United States Oil consumption is approximately 20 million barrels per day (7.3 billion per year) of which 50% is imported.
· The United States has known reserves of 86 billion barrels of oil offshore, of which 85% is off limits to drilling. This is equivalent to 12 years of total energy needs, or 24 years of imported needs, at current consumption rates.
· China is currently drilling off our coast, but we are not allowed to.
· Since 1998, the United States has developed new methods of exploring for oil, deep ocean drilling techniques, technology to recover sand tars, and methods for extracting oil from shale. This has opened up additional potential areas for energy recovery, including areas in the Rockies, Wyoming, Montana, and parts of the Dakotas. Although I have not researched this, my understanding from media reports is that exploration in these areas will require permission from the Federal government, much like the current situation in Anwar.
· During the 1960s and 1970s, nuclear power was commercialized in the United States, with the intention of producing low cost electrical energy, which would make electric residential heating and electric vehicles abundant and cheap. Where utilities have been allowed to commercially operate nuclear plants, in spite of their excessive regulatory cost, they are the lowest priced sources of electrical energy and are operated as base-loaded facilities.
· The United States is ranked 8th in the world in proven uranium reserves; Australia is ranked 1st and Canada is ranked 3rd.
· No new plants have been ordered in the United States since the late 1970s because of environmental activism. At that time, America was the world’s technology leader in the commercialization of nuclear power, which we ceded to the French and Germans. Today, France is 80% nuclear.
· Starting in the 1970s and until this year, the environmentalist have opposed nuclear power through political activism, fear, quack science, and distortion of the the facts. In the meantime, the existing 104 commercial nuclear units are reaching their end of useful life. Now, the high priests of environmentalism have declared nuclear to be green. As of this writing 14 applications have been made within the last year to the Nuclear Regulatory Commission for new plants. Unfortunately, burial of the waste at Yucca Mountain is mired in red tape and will not open until at least 2017, almost 40 years after discussion of this project started.

My conclusions are:

· In the near term we need to drill everywhere it is technically and economically feasible. Our economy and physical security rely on the internal combustion engine, and that technology will not be replaced for many years to come, no matter what alternative energy sources we develop. To address environmental concerns, we can let the Norwegians and the Danes do it. Apparently, like the French who mastered nuclear power and we could not for political reasons, the Scandinavians have safely and economically continued to explore, exploit, and place into production offshore oil drilling.
· Due to the ideology of environmentalism, we have missed the opportunity to bridge our economy from an oil based one to a nuclear one. We should license and build as many plants as we can. Because the average age of the nuclear thought leadership in this country is approximately 53 years and is retiring, we can ask the French and Chinese to head up this project.
· Offshore drilling restrictions should be relaxed. Funds from the lease of these properties should be put into technologies that show near term promise: nuclear, clean coal, fuel cells, and electric vehicles, especially battery technology. The energy density of solar and wind is not sufficient to provide the backbone of our energy infrastructure (see prior blogs). These technologies, with conservation, do have a place in the energy mix, but will never be more than 10 to 20% of our total energy supply.
· Put in place long term (10,20, 30 year) incentives to achieve energy independence goals.
· Learn from our mistakes. Environmental ideology and politics of fear prevented us from developing a critical technology, nuclear power. Since the 1970s, the French and Germans have been the technical leaders in this field and the principal suppliers of technology to others, including Pakistan, Iran, Iraq, and Libya. These nations not only control the oil but also now seek to develop nuclear weapons. They are not only a threat to our energy security, they are now a threat to our physical security.

Just like many other aspects of our society, energy policy in this country has been hijacked by those on the left. In fact, they are as bad if not worse than the energy traders, whose “speculation” simply quantifies in monetary terms what is otherwise bad policy and the inevitable consequences of ignoring the laws of supply and demand. By historically preventing the development of commercial nuclear power in this country, the environmentalist have effectively destroyed our “energy bridge” to the future. Now, we are in a declining oil-based market, where production has peaked, demand is increasing, and prices will certainly rise. Just like a “speculator,” the environmental left has created a perfect “straddle.” By now declaring nuclear environmentally safe, they have now given the “green” light to develop a technology supported by an aging infrastructure, an aging workforce, a mind numbing spider’s web of regulation, and nowhere to bury the waste. When this fails to address our energy needs in a timely manner, they will simply state it wasn’t their fault, and continue to push their agenda to develop passive energy technologies that do not have the energy density to meet the needs of a growing, technologically competitive society. For the environmental left, it is all about ideology and the science of the probable; it is not about common sense and the science of the possible.

A Cure for Energy Depression – More Sun?

2008-06-19T19:55:00.001-04:00

By education and training, I am a nuclear engineer. By necessity, I am a business and information technology consultant. So it is, when you must feed a family of five, and the industry you believed would fuel the economy of the 21st century was killed in its nascence by environmental special interests, media disinformation, and government regulation. That is a subject for another posting; however, as my mother used to tell me, “Whatever does not kill you, will make you a stronger person.” And so it was with that attitude that I developed an interest in solar engineering, and almost took a job in that field in 1979. Maybe, I should have, but I came to the conclusion that solar would never be a serious solution to our basic energy needs, and I still believe that. It has its place in the energy mix, but you will never build a free, technology-based economy that can smelt steel and produce silicon chips from solar energy. I have two basic objections: (1) capital / operational costs and (2) energy density. A third reason for not supporting the technology, negative net energy generation (viz., more energy is required to manufacture the system than can be recovered over its life-cycle), has been overcome, at least in some system designs.

In prior postings, I have tried to provide you with the basic facts, so that you could follow my logic and conclusions. However, in this case, I have the facts straight from a proponent of solar energy: so, you don’t have to believe me, you can believe them.

The Montana Green Power (MGP) organization (http://www.montanagreenpower.com/) has produced a series of lessons to promote “green energy” in the schools. Lesson 8, “Are PV [Photovoltaic] Systems Cost-Effective?” This lesson has three objectives: (1) analyze the costs related to PV; (2) calculate the environmental cost savings of PV compared to fossil fuels; (3) investigate tax incentives or rebates [I guess they mean subsidies] that would make PV systems more affordable.

With respect to cost, the MGP lesson plan states:

“Today in Montana, a 2- to 4- kilowatt (kw) grid-intertied [viz., connected to the power grid] PV system will have an installed cost of between $9 and $16 per watt, with electricity produced over the life of the system costing 25 to 30 cents per kw-hour. In comparison, residential electricity purchased from the utility grid costs about 7 cents per kw-hour.

“We must also consider hidden environmental costs, called external costs. While the above information suggests that fossil fuels are much cheaper than renewable energy, consider these facts [emphasis mine]:

- Extracting fossil fuels causes environmental damage from the extraction equipment and from the pollution that is a by-product of burning those fuels.
- Fossil fuels are not free. They cost money to bring out of the ground. This means as fossil fuels run out, their price will increase.
- Fossil fuels give off gases whey they are burned. Most of these gases – sulfur oxides, nitrous oxides, and carbon dioxide, for example – may be [emphasis mine] causing a change in the global climate, sometimes, green house effect, climate change, or global warming.”

Let’s look at the stated financial benefit of solar, and put it in context. The installed cost is all cost required to design the system, purchase its components, purchase the site, install the components, and bring the system to the point of commercial operation. In the case of solar, this cost is $9 to $16 per watt. Using an average of $12.50 per watt, this is equivalent to $12,500 per kilowatt (kw). According to an article by Matthew Wald of the International Herald Tribune, “Price of new power plants rises sharply,” July 10, 2007, quoting a Duke Energy spokesman, he reported that it would cost $1.83 billion to build a new 800 Mw fossil plant, which represents a cost of $2,288 per kilowatt. The same article reported the cost of a nuclear plant to be in the same range: $2,000 to $3,000 per kw. In other words, a solar facility with the same capacity is more than five times as expensive to build as a modern fossil plant, with full environmental controls.

To check my facts, I went to a source where you would expect the source to be biased in favor of alternative energy sources: the California Energy Commission. They reported the capital cost of the following energy sources:

If you believe California, PVs are more cost competitive, but still twice the cost of fossil: just for the equipment.

From an operating perspective, GMP reports that the ongoing cost of solar generation is 25 to 30 cents per kw-hour compared to 7 cents per kw-hour for fossil generation, or 4 times as expensive.

What about energy density? In a prior posting, I compared the energy density of fossil generation to the energy density of wind power. A 2,259 Mw fossil plant requires 800 acres (TVA’s Paradise Fossil Plant). Assuming that the fossil plant operates 70% of the time, then in one year it generates 17,315 Mw-hr/acre-year. To calculate the energy density of solar, the 1 – axis, tracking, flat-plate collector with a north-south axis data published by the National Renewable Energy Laboratory (http://www.nrel.gov/rredc/) was assumed, with the collector oriented relative to the horizon at latitude – 15 degrees. For Helena, Montana, the 30 year average of monthly, solar radiation, 1961 – 1990 is 6.3 kw-hr/meter square – day. Assuming 10.76 square feet per meter, 43,560 square feet per acre, and 365 days per year, solar radiation at the surface of the PV array is 9,309 Mw-hr/acre-yr. However, one must consider the conversion efficiency of the PV – its ability to take the solar radiation falling on it and convert it to electricity. According to Wikipedia, solar cell conversion efficiency for commercially available solar cells is 14% to 19%. Assuming 17%, then the energy supplied by a solar array in Helena, Montana, is 1,582 Mw-hr/acre-year. Therefore, fossil power is almost 11 times more efficient, from an energy density perspective, than solar power. In more practical terms, if you want to supply the energy requirements for 100,000 people, you can either build an 800 acre fossil plant or an 8,800 acre solar plant.

But GMP claims we should consider other external costs. But should we? The cost of mining coal, burning the coal, and meeting all the environmental standards is included in the cost of operations: 7 cents per kw-hr. It should not be included twice in the comparison, unless the objective is to kill the technology and one is willing to pay 4 times the price for solar. With respect to gas emissions, it is not scientifically proven that global warming is even occurring. If it is, the extent to which man’s activities contribute to it certainly has not been established. In fact, some studies suggest that volcanic activity and even cows contribute more to greenhouse gas than does man.

According to the American Coal Foundation, “Coal supplies in the United States are far more plentiful than domestic oil or natural gas; they account for 95 percent of the country's fossil fuel reserves and more than 60 percent of the world's fuel reserves. The United States has about 275 billion tons of recoverable coal, which could last us more than 250 years if we continue using coal at the same rate as we use it today. In addition, the United States has more than 25 percent of the world's estimated coal reserves.” Some estimate that America’s coal reserves, in terms of energy content, are more than three times that of the Saudian Arabia oil reserves.

In conclusion, when solar generation is compared to fossil generation, solar is five times more expensive to build, four times more expensive to operate, and requires eleven times as much land. The threat to the environment is at best unproven and at worst is overstated. Solar proponents are really using fear to advocate an ideological position that is not supported by the economics. That said, solar does have a place in the energy mix. In locations where there is high solar radiation for long periods of time and the location is not proximate to the existing electrical grid, solar may prove economic. Otherwise, let the free market rule: if an individual wants to make a commitment to the technology for personal reasons let him or her do so. No compelling basis exists to create a public policy that must be funded by the rest of us at a substantially greater cost.

The cure for energy depression is less sun.

True Colors – The Re-run

2008-06-19T13:37:00.000-04:00

True Colors is a 1991 film written by Kevin Wade. The movie opens with Peter Burton (John Cusack) and his best friend Tim Garrity (James Spader) nervously awaiting the results of Peter’s congressional election and ends with Peter facing jail time and Tim, disillusioned and bitter. Tim, a top manager in the Department of Justice and who comes from an affluent family, is an idealistic person who wants to do what is right. Peter, who is embarrassed by his lower-class roots, is willing to use and manipulate anyone to get ahead. He plans a career in politics. In his blind ambition, Peter ultimately falls under the influence of organized crime, uses manipulation of his best friend and the truth, public corruption, and physical infirmity of his Senator father-in-law to gain support for his run for congress. Ultimately, Peter’s egotism and arrogance lead him to reveal his “true colors,” to Tim, who secretly captures Peter’s admission of guilt on surveillance tape and turns in his best friend.

Similarly, social progressives (“democrats”) ("Peter") have spent the past fifty years manipulating the American people ("Tim") and the truth to achieve their conversion of a capitalistic America to a socialistic America. They are starting to demonstrate their “true colors.” And we have it on surveillance tape (http://www.youtube.com/watch?v=PUaY3LhJ-IQ&feature=related) at least when it comes to their understanding of how America’s energy policy and markets should work.

The brouhaha started about two weeks ago, when Congresswoman Maxine Waters (D-CA) challenged the President of Shell Oil, John Hofmeister, to guarantee the American people that the prices they pay at the pump will go down if the oil companies are allowed to drill wherever they want off of US shores. Mr. Hofmeister responded, “ I can guarantee to the American people, because of the inaction of the United States Congress, ever increasing prices unless the demand comes down and five dollars will look like a very low price in the years to come if we are prohibited from finding new reserves and new opportunities to increase supplies.” To which, Ms. Waters responded, “ Guess what this liberal would be all about. This liberal will be all about socializing … ahhh, ahhh, (3 second pause), will be about (3 second pause), basically taking over and the government running all of your companies.” The word that this social progressive could not find in her vocabulary was “nationalize.” Not to be outdone and to clarify the record, on June 18, 2008, Maurice Hinchey (D-NY), explicitly stated the social progressives’ intent: “So if there is any seriousness about what some of our Republican colleagues are saying here in the House and elsewhere about improving the number of refineries, maybe they would be willing to have these refineries publicly owned by the people of the United States so that the people of the United States can determine how much of the product is refined and put out on the market. To me that sounds like a very good idea.” It sounded so good, that Malia Lazu, of Oil Change International, an Obama supporter, unequivocally stated that the oil companies should be taken over by the government.

So there it is. The democrats’ strategy is to nationalize … or euphemistically, socialize, if you listen to the eloquence of Maxine Waters … a major segment of the United States economy because, at the core of it, they do not understand basic economic theory. I guess when all you have in your tool chest is a hammer, all problems look like a nail. Hopefully the government will be able to “nationalize” the oil industry better than they have regulated the commercial nuclear electric industry, which they managed to kill. After almost 30 years of discussion on the burial of nuclear waste at Yucca Mountain, we are still 8 to 11 years away from a final decision. In the meantime, France has no problem with nuclear waste: they have been vitrifying it for 20 years, and now nuclear power represents 80% of their electricity production.

Unfortunately, no rational, prospective decision will be forthcoming from the “democrats.” Generally, they do better when a lot of polling data and prior historical data exist, which they can second-guess. Hindsight is always 20-20. However, when pushed to make a critical decision, rest assured they will show their “true colors.”

A New Idea – Tax the “Poor!”

2008-06-17T20:29:00.000-04:00

A number of years ago, the manager of energy trading at a major electric utility taught me a lesson he called “thinking through the bottom of the box (TTBB).” We have all heard of “thinking outside the box (TOB),” but TTBB offered a whole new way of thinking about the world around us and creating possible solutions to the problems we face.

I was intrigued, so I asked him how it worked. He illustrated TTBB with a story. “Suppose,” he said, “that you and I were contenders for the world heavyweight boxing title. To improve my chances of winning, I hired a world-renowned trainer and asked him for his advice. He stated that, after some reflection, you and I were the same weight, had the same reach, and had the same record. Despondent, I asked how I could possibly beat you. He quickly responded, "Hit him below the belt." Appalled, I retorted, "But that is illegal!" To which he responded, "Contact is illegal. Fake a punch to the groin with your left, he will try to protect himself with his right, which will allow you to use your left hook, which is your best punch."

So what does this have to do with my idea of taxing the poor? Well, we all know that traditional wisdom would say this proposition is ridiculous on its face: the poor need money. They do not have money. However, if you apply TTBB and relax all constraints, evaluate all possibilities, put together a plausible alternative, and then re-evaluate the constraints, you can devise creative, plausible alternatives where none initially appear to exist. In this case, what the poor have is time, not money.

So the thinking goes like this. The revenue to the federal treasury is estimated to be $2.7 trillion dollars per year in 2008. In 2006, the population was estimated to be almost 300 million, with approximately 75% over the age of 18, or about 225 million. Approximately 37 million of these are over 65. Approximately 50% of all taxpayers’ pay 100% of all tax, which means 50% of the people pay nothing but receive their pro rata share of the benefits, at a minimum. So, if one assumes all persons over the age of 18 are beneficiaries of this wonderful system, then the “benefit” [50% of $2.7 trillion] to the 50% not paying taxes [50% of 188 million (225 million over age 18 less the 37 million over age 65], represents $14,361 per person not paying tax. Imputing to these individuals a median income of $38,387 [2006, Heritage Foundation, which really represents a "raise" for their time, because they are in the lower 50% of the income pool] and a work year of 1,928 hours [2,080 hours per year, less 2 weeks vacation, and 9 holidays), this equates to 721 hours per year to pay for their benefits.

So, here is my proposal. Require those over the age of 18 and less than 65, who pay no taxes whatsoever, to contribute only 416 hours per year (one day per week, not the 721 they “owe”) to the rest of us, who are paying the taxes. This time can be “donated” in a variety of ways. Several come to mind immediately: participating in rehab; working on their GED; serving in the military reserves; picking up trash. I am open to any activity which has the following features: (1) the work must contribute to the betterment of the individual, the community, and the country (responsibility); (2) the work must be performed EVERY week at a standard time (discipline); (2) the work must be supervised (accountability); (3) the work must be performed until either mutually agreed goals are achieved or the individual becomes a tax payer (results). Maybe, just maybe, some of these folks will be so successful, they will end up owning their own business and experience first hand the “privilege” of making payroll, week in and week out, and reducing the tax burden on the rest of us.

A Recipe for Economic Disaster: Coming to Your Home Soon

2008-06-17T12:20:00.000-04:00

In my blog on June 12, 2008 (“Taxing the Rich Really is Taxing All of Us”), I summarized the economic consequences of Barack Obama’s proposed tax policy. In it, I described at a high level his proposals for paying for at least $1.4 trillion in new federal spending over the next five years. This is the largest proposed tax increase since Bill Clinton’s 1993 tax increase of $240.6B over five years, which Sen. Daniel Patrick Moynihan (D-NY) called the “largest tax increase in the history of public finance in the United States or anywhere else in the world.” But Obama's proposal would increase spending $300 B in a single year. I thought it might be instructive to compare and contrast his tax proposals to those of his rival Senator McCain, and put this all into some quantitative perspective.

Individual Tax Increases. With Bush’s tax cuts scheduled to expire in 2011, Congress will be under pressure to pass legislation to extend or replace them. Obama opposes continuance of these tax cuts and, with a social progressive (“democratic”) majority in the house and senate, will most likely eliminate them. This action will increase income taxes on “hard working Americans” in the top two tax brackets, raising the marginal rate on ordinary income from 35% to 39.6%, according to William Ahern, spokesman for the Tax Foundation, a nonpartisan research group. Mr. Ahern also asserts, as does Senators Wayne Allard (R-CO) [source: Amendment 4246 to the senate budget bill (3/14/2008)] and Richard Burr (R-NC) that the social progressives have proposed more spending than could be paid for by the tax increases they have discussed. According to Ahern, “they are likely to seek even higher taxes.” [source: The tax Foundation, “Summary of the Presidential Candidates’ Tax Plans”]. In contrast, Sen. McCain not only intends to make the tax cuts permanent, he has stated that he would reduce the corporate tax rate, now 35%, to 25% in a bid to stimulate the economy.

AMT. The Alternative Minimum Tax (AMT) "was created in 1969 to target 21 -- yes, 21 -- millionaires who had managed to avoid paying any taxes at all. According to the Wall Street Journal, April 14, 2007) more than three million taxpayers were affected by the Alternative Minimum Tax on their 2006 income. The Wall Street Journal estimated that the number could rise to 23 million in 2007. In fact, it did not, only because Congress passed a so-called "patch" to prevent it. This year, the AMT “adjustment” to index the tax to inflation will potentially cost taxpayers $63 billion. McCain has stated he would phase out the AMT (www.JohnMcCain.com). Obama voted not to repeal it but has yet to provide more detailed plans. Obama has criticized McCain for not specifying how he would pay for the revenue reduction associated with the loss of the AMT; however, McCain has responded that he would entertain a fair tax or flat tax that have as one of their objectives the elimination of the IRS as we know it. The IRS employs 91,000 employees with an annual budget of $11.4 billion. The Cato institute estimates that business and individuals spend 6.4 billion hours per year in tax compliance, which the Tax Foundation estimated to be worth $265.1 billion in 2005. Between these two expenses, McCain should be able to cut $65 billion and “re-purpose” (a government euphemism for spend) the rest. Tacitly assumed in Obama’s argument is the assumption that every penny needs to be replaced, as though it is well spent. In 1993, the General Accounting Office (GAO) audited the IRS for the first time in its history and found widespread evidence of financial malfeasance and gross negligence, including the fact that the agency was unable to account for 64% of its congressional appropriation.

Corporate Taxation. Obama is in favor of raising the current 15% tax rate on long-term capital gains and dividends to 28%. Raising the tax rate would lower after-tax returns on equities, just as baby-boomers enter retirement, further impacting their retirement incomes, as well as throwing a wet blanket on the economy, as it is trying to avoid recession. Obama also advocates treating dividends as ordinary income. McCain has pledged to keep current rates on dividends and capital gains at their present level. “When rates are low, companies pay out more retained earnings and dividends, and dividends spur economic growth as investors plow the money back into other companies,” says Raj Chetty, professor of economics at UC-Berkley, who has studied how corporations respond to a favorable dividend rate.

Social Security, Medicare, Medicaid. Neither candidate has proposed definitive approaches to solving the Medicare and Social Security issues facing the country. If healthcare costs continue to outpace the growth in GDP, do not expect the estate tax, which is scheduled to be reinstituted and jump from 0% in 2010 to 55% in 2011 for estates over $1M, to close this gap. McCain has suggested he would support higher exemption levels and lower tax rates: a 15% estate tax with a $10 million exemption for couples. Obama has no plan other than to let the tax expire. According to Sandra Day O’Connor (former Supreme Court Justice) and James R. Jones (former Ambassador to Mexico), in their OpEd piece “What we owe our young,” Virginian Pilot, June 17, 2008, “Even if every dollar of wealth of every millionaire in the United States were magically diverted to pay these costs [Social Security, Medicare, and Medicaid bill that are coming due over the next several decades], 80 percent of the unfunded liabilities forecast for these three programs would remain on the books.” [Emphasis mine]

America’s problems are grave. However, proposing new spending and raising tax rates to cover them is only a band-aid fix: they must be seriously addressed. Taking money out of the hands of “hard working” Americans and putting them in the hands of politicians has resulted in a 334% increase in Federal spending since 1965 (from $628 billion to $2.7 trillion in 2007 inflation adjusted dollars), while the median income of the average American has risen 35% ($28,346 to $38,386). Over this period, mandatory spending on entitlement programs has grown from 26.9% of the budget to 52.9% of the budget. When interest is considered (8.3%), only 38.8% of the budget is discretionary (within the control of the President). A better solution is to take the decision making out of the hands of a do-nothing, socially progressive government and let the average “hard working” American decide for himself or herself how to spend his or her income. Clearly, Obama’s proposals would make this much, much more difficult.

For additional information on this subject, see the Heritage Foundation, 2008 Federal Revenues and Spending Book of Charts, at:

http://www.heritage.org/research/features/budgetchartbook/index.html

Statistics Are Not a Substitute for Good Judgment

2008-06-14T22:07:00.000-04:00

When my daughter was five, she asked me if the trees created the wind by flapping their leaves. As Yogi Berra once said, “you can observe a lot by just looking.” I suppose it is also true that you can learn a lot by just listening, especially to children. What I learned from my daughter was that correlation does not mean cause. And so it is with current polls – especially political polls – which supposedly divine the political will of the American people. But do they?

Suppose, just suppose, that the media, 85% of which proudly describe themselves as “liberals,” are using the polls to test the effectiveness of their message. My understanding is that five major companies control what we hear and read. They fill their 24 by 7 cable networks and radio talk shows with “information,” which must be obtained as quickly as possible and is poorly vetted (i.e., the erroneous reporting on the deaths in the Katrina disaster). This information is filtered through their biased world-view (i.e., the fabricated stories in the New York Times). Then, they perform polls to see if their message is being received! Based on the polls, they refine their message.

As Benjamin Franklin said, freedom of the press belongs to him who owns the press. Joseph Goebbels, Hitler’s Propaganda Minister, further emphasizes the point:

“Success is the important thing. Propaganda is not a matter for average minds, but rather a matter for practitioners. It is not supposed to be lovely or theoretically correct. I do not care if I give wonderful, aesthetically elegant speeches, or speak so that women cry. The point of a political speech is to persuade people of what we think right. I speak differently in the provinces than I do in Berlin, and when I speak in Bayreuth, I say different things than I say in the Pharus Hall. That is a matter of practice, not of theory. We do not want to be a movement of a few straw brains, but rather a movement that can conquer the broad masses. Propaganda should be popular, not intellectually pleasing. It is not the task of propaganda to discover intellectual truths.”

So, the next time you consider the import of a poll, remember the poll was commissioned by a select group of people – people who control the channels of media communication, who have a world-view bias, who educated the respondees on the subjects for which they are requesting an opinion, and whose success is measured by ratings.

Statistics are never a substitute for good judgment!

Searching for New Sources of Energy and Looking in all the Wrong Places

2008-06-13T22:07:00.000-04:00

Recently, Frank Luntz, a pollster, corrected a Fox News pundit, who stated that Americans were in favor of drilling for more oil. Luntz stated that Americans did not want to drill for more oil, they “wanted to explore for new energy sources.” Personally, I believe this is a distinction without a difference; however, it appears that the liberals and environmentalists have convinced Americans that drilling equals environmental apocalypse. So, following the lead of Albert Einstein, I decided to perform some “thought” experiments to see what sources I could find and thereby meet the needs of my fellow citizens, who currently are sitting on 86 billion barrels of oil, with 85% of it off limits to drilling (USA Today, June 13, 2008, pg 2A).

Serendipitously, I came across a 2006 USA Today article “Feds: Obesity Raising Airline Fuel Costs,” in which USA Today suggests, based on a 2000 Center for Disease Control study, that the 10 additional pounds gained by the average American in the 1990s, costs the American airlines an additional 350 million gallons of fuel per year and produces 3.8 million additional tons of carbon dioxide. The article states that this represented a fuel price increase of $275 million. I was “flabbergasted,” pardon the pun, which resulted in an epiphany. What if I could turn “flab” into “gas?”

First, I needed to confirm some facts. I had to determine the scope of the opportunity. First, I checked the projected benefits of simply reducing the cost of airline fuel. I found it circumspect that 350 million gallons of fuel could cost only $275 million dollars (78.9 cents per gallon). Lo and behold, to my surprise, the International Air Transport Association (www.iata.org) tracks the weekly price of aviation fuel. In 2000, a gallon of gas traded at 87 cents per gallon, which compares favorably to that reported). Even more surprising, the cost of a gallon of aviation fuel on June 13, 2008 was listed as $4.03 per gallon. Then I knew I was really onto something. The potential savings from solving this problem alone was worth almost 5 times the originally reported cost savings – $1.27 billion.

But were there other benefits? Several came to mind: reduction in food cost, better health were obvious… how about generating energy from the fat stored in the bodies of all these overweight individuals.

Additional research was required to estimate the additional benefits that could accrue to my fellow Americans – those sitting on 86 billion barrels of oil, 85% of which is off limits to drilling (are you starting to see a theme here). Here is what I learned:

- 65% of adult Americans are overweight or obese (source: CDC). This is defined in terms of body mass index (BMI), but it is generally accepted that it would include individuals who are at least 20% above their ideal body weight. Using the mid-point weight, by BMI, an average weight of 147 pounds for a 5 foot, 9-inch height individual was calculated. Using the 20% factor, “overweight or obese” was determined to be 30 pounds of fat.

- 75.4% (226.3 million) of all Americans (299.4 million) in 2006 were older than 18 (source: Census Bureau).

- Various newspaper reports state that the average American (those sitting on 86 billion barrels of oil, 85% of which is off limits to drilling) consumes 4,000 calories per day. According to the calculator on www.health.com, a 147-pound person doing office work and light reading 16 hours per day and sleeping 8 hours per day, requires 2,399 calories per day. Other sources indicate a minimum need of 2000 calories per day. These statistics are comparable to those reported by the Food and Agriculture Organization (FOA) of the United Nations which states that the average American consumes 3,790 calories per day compared to some third world countries that consume 2,020 calories per day. Conservatively, Americans consume at least 1,500 calories each day more than they need.

- According to www.health.com, 1 hour of vigorous walking exercise consumes about 368 calories. For purposes of this analysis, I will assume it is all fat; clearly that is not the case, but this is a blog not a scientific journal.

- There are 9 calories per gram of fat (source: www.wikipedia.com ). There are 1000 grams in one pound (source: basic high school education, circa 1967).

- According to a University of Washington Cooperative State Research, Education, and Extension Service (CSREES) study (March 2008), Adam Drewnoski, checked the prices of 372 foods sold at local supermarkets in the Seattle, WA, area, comparing the prices with calorie density. High calorie density foods include things like peanut butter and granola; low-density foods included things like fruits and vegetables. “Based on a standard 2000 calorie diet, the researchers found a diet consisting of calorie dense foods costs $3.52 per day, but a diet consisting primarily of low-calorie foods, costs $36.32 a day. The average American eats a variety of foods, throughout the day, spending $7 per day.” Further, the study reports that during a the two year study period, the price of high –calorie foods decreased by 1.8% and the price of low-calorie foods increased 19.5 percent. While the $7 per day seems high, it does compare favorably to the number reported in Agriculture Fact Book, 2000 – 2001, food expenditures in the United States were $2,964 per capita or $8.12 per day, which represents a higher caloric intake than 2000 calories per day. Based on this data, I non-scientifically extrapolated the data to state that the cost of 200 calories of food is $0.43 (200 x $8.12 per day / 3,790 calories per day).

So, what can you deduce from all this? Assuming the 147 million average Americans, who are either overweight or obese, (and sitting on oil, etc) were to walk one hour per day five days per week and reduce their food consumption from almost 4,000 calories per day to 2,500 per day, they would:

- Lose 4.4 billion pounds of fat over a period of 1.3 years, resulting in better health and a feeling of self worth due to their accomplishment.

- Save the American airline industry ~ 800 million gallons of fuel per year (350 million gallons per 10 lbs multiplied by 30 pounds per person and divided by 1.3 years) costing $3.2 billon dollars (800 million gallons multiplied by $4.00 per gallon), but probably an overstatement, because the cost of fuel would most likely come down due to supply / demand … so discount this by a third, and reduce the savings by $1 billion a year to $2.2 billion). This is the equivalent of one-day’s energy consumption for the whole United States (20 million barrels per day at $137 per barrel, as of this writing).

- Reduce individual adult food cost by at least 32%, assuming a 2,500-calorie diet (i.e., (3,790 calories – 2,500 calories)/(3,790 calories)) or a savings of $948 per year per adult. Assuming a family of four, comprised of two adults and two minors, this represents a family savings of almost $1,900 per year or 4.5% of the average American family income (assumed to be $42,000). Not factored into the calculation is the costs required to produce the food which can be 12 to 100 times as energy intensive as the calories consumed (i.e., it requires 12 calories of energy to produce 1 calories of corn; 96 calories of energy to produce 1 calorie of beef).

- Reduce carbon dioxide emissions by 9 million tons per year. The US electric utility industry releases 2.8 billion tons of carbon dioxide per year (source: Washington Post). Airline savings would equate to a little more than 1 day of carbon dioxide savings.

- Even though it is beyond the scope of this article and will be the subject of another blog, if the walking energy expended by these 147 million Americans was harnessed on treadmills and converted to useful work (assuming a conversion ratio of 0.7), then we could generate approximately 85 watts per person or approximately 12,500 Megawatts (Mws) in total capacity. Assuming each person walks1 hour per day, five days per week, for 1.3 years, this is equivalent to approximately 50,000 Mw-hr in generation. This is approximately 4 days of generation from a 600 Mw coal fired fossil unit.

In spite of these benefits, I suspect that the average American (who is currently sitting on 86 billion barrels of oil, with 85% of it off limits to drilling) will not choose to capture them. Instead, they will use the additional calories to generate hot air, the energy content of which cannot be captured for useful purposes, and only will contribute to global warming and the eventual energy death of the world. That assumes that the flawed ideas and inaction generated by their talking doesn’t destroy it first.

Taxing The Rich Really is Taxing All of Us

2008-06-12T10:52:00.000-04:00

If elected, my understanding is that Barack Obama has proposed at least 188 new spending proposals, the cost of 111 of which has been estimated to be $1.4 trillion over 5 years, according to Sen. Wayne Allard (R-CO), as stated in Amendment 4246 to the senate budget bill (3/14/2008). Because of timing, Sen Allard was unable to complete the analysis of the remaining 77 proposals, which will add millions if not billions more to this estimate. To put this into perspective, these proposed increases are 10% more than President Bush’s proposed FY2009 spending bill, 5 times the amount of money spent by the entire United States on imported oil in 2007, 4.5 times the annual general fund expenditures of 42 states combined, and the estimated first year expenditure increase of $300B is 60% larger than any one-year federal spending increase ever.

According to the Congressional Budget Office, Bill Clinton’s 1993 tax increase raised taxes $240.6B over five years. Sen. Daniel Patrick Moynihan (D-NY) called it the “largest tax increase in the history of public finance in the United States or anywhere else in the world.” But Obama's proposal will increase spending $300 B in a single year.

To pay for this, Obama proposes to: (1) eliminate all Bush tax cuts over the past 8 years; (2) increase taxes on the top 5% of wealthiest Americans; (3) increase estate taxes; (4) increase the corporate tax rate; (5) increase the top individual tax rate; (6) impose “excess profits” taxes on the top five oil US oil companies; (7) increase payroll taxes; and (8) probably a half a dozen other actions I have forgotten. He claims that this is “fair” and would reduce the taxes on 95% of all Americans.

Well, here are some facts. The top 5% of wage earners pay almost 60% of total individual income taxes, while the top 10% pay about 70%, and the top 50% pay approximately 97%. Translation: Just half of all taxpayers pay almost 100% (96.93%) of all income taxes, while almost 50% pay no income taxes at all. So in effect, Obama’s comment is partially true: from a socialist perspective, those paying no tax (ironically referred to by Obama as “hard working” Americans) will receive additional benefit at the expense of those who are already paying the taxes (ostensibly NOT “hard working” Americans). What is fair about this? Nothing. However, it will have support because … you guessed it, the 50% receiving the benefit at no additional cost to themselves will more than likely put these socialists in charge of all three branches of government.

To drive the point home, here is an estimate by Senator Richard Burr (R-NC) of Obama’s proposal. Burr argued that Obama’s promise to raise taxes just on the Democrats’ “attractive target” of people earning over $250,000, will only generate $225 billion over 5 years, far short of the estimated $1.4 trillion which represents only 60% of Obama’s proposed programs over the same time frame. According to Burr:

“ If Obama wanted to raise taxes on only the top 1% (earning over $365,000) to fund his plans, those citizens’ tax bills would have to rise by over $40,000 annually, an increase of 57%. Given the impossibility of that scenario, even under complete Democratic control of government, the tax hikes would have to trickle down to the American middle class.

“So if Congress decides to widen the pool of taxpayers footing the bill, it would have to raise taxes on the top 5% by 38%; or the top 10% by 32%; or the top 25% by 26%; or the top 50% of taxpayers by 23%. The top 50% of American taxpayers, who already pay 96.9% of all federal income taxes, are those who earn $31,000 (AGI) or more.

“To translate this point into language everyone can understand: if you have an income of $104,000 or more, the plan will cause your tax bill to go up at least an additional $5,300 a year; if you have an income of $62,000 or more, the plan will cause your tax bill to go up at least $2,300 a year. This is on top of the $2,300 increase already assumed by the failure to extend current tax policy.”

So, alas, the tax on the rich really is a tax on the rest of us. Clearly, it appears that there is less and less incentive to work … at least for the rest of them.

America’s New Strategy: Talking

2008-06-11T14:30:00.000-04:00

Prior to post-modern thought in America, hard lessons learned over many years were captured in the form of aphorisms that were passed from one generation to the next, such as “talk is cheap” and “you get what you pay for.” Today, we discount the collective wisdom of prior generations, believing instead that “it isn’t true, unless I discover it to be true and 51% of my closest friends agree with me (unless they are Europeans, in which case maybe you need only 40%).” In effect, modern man believes that when it comes to addressing the evils of the world and the problems in the world, he is more enlightened, self-empowered, and discerning than all who went before him. Such thinking is naïve, misguided, and will prove to be disastrous for our country.

By way of example, let’s examine the lessons that follow from the two aphorisms: “talk is cheap” and “you get what you pay for.” “Talk is cheap” may be interpreted in two different ways. The first interpretation is that talking about a decision costs nothing and by exploring many alternatives, one can decide on the optimal alternative before investing in action. An alternative statement of this lesson is “action is expensive and comes at a real cost.” “You get what you pay for” implies that if you are not willing to invest in something – whether it be your health, your education, your career, your family, or you country – you will get nothing. In other words, what you get is in direct proportion to the action that you take.

Putting these two sayings together, if “talk is cheap” and “you get what you pay for,” then talking, in and of itself, results in little until there is proof through action. Or alternatively, as someone much wiser than I put it, “talking is what comes between thought and action and does justice to neither.” If true, this does not bode well for our country, if Barack Obama is elected president: his strategy for America is to talk. In fact, his whole presidential platform is based on the rhetoric of “Change We Can Believe In,” even though he has provided few details about the change he believes in. In those few cases where he has given us a glimpse of the Obama Future, the projected benefits of his proposed actions have no basis in history of ever being effective: unilaterally renegotiating trade agreements between our closest trading partners; raising taxes across the board during a period of economic softness; dialoguing with despots with whom we have little in common ideologically, with no preconditions; further taxing the rich for the sole purpose of transferring wealth to the poor; selectively capping profits in industries he does not like and believes are too profitable; declaring victory in battle while retreating from the field of battle; meeting the energy growth demands of a technology based economy through conservation and less dense, “green” energy sources. The list could be expanded. Not only have these strategies proven historically ineffective, Mr. Obama has either little or no demonstrated personal or legislative experience in any of these areas. He has not produced any results. Alas, after all is said and done, more will be said than done. Unfortunately, what is done might come at a mighty cost.

Having it Your Way: A Different Type of Value Meal

2008-06-09T17:10:00.000-04:00

Every now and then, I come across a classic statement that epitomizes the depth of the moral divide that exists between values-based conservatives and the self-appointed intellectual elite: progressives, socialists, and secular humanists, among others. In a recent poll, Gov. Mike Huckabee (http://www.huckpac.com/) asked visitors to identify the top grassroots issue they would be willing to fight for: Protecting Marriage in States, Fair Tax, Border Security, Controlling Spending, or Energy Reform. The following is one of the blog responses posted:

“I feel like this is an episode of ‘Which of these things does not belong?’ Of the five issues listed, Protecting Marriage in States does not belong. If two men or women wish to marry to show their dedication to one another, I say let them. It's no skin off my nose. All the rest of the issues effect [sic] us on an everyday basis.

This is the main reason I will not join the Republican or the Democratic parties. Too much time and effort is wasted on trying to legislate morality while the economy goes to hell in a hand basket.

Let's get our noses out of other peoples bedrooms and back to the grindstone. We need to fix this fiscal mess and fast.” Jonathan Reid on the Huckpac.com Website, 6/09/2008

Mr. Reid's response wrongly asserts that no connection exists between morality (in this case the institution of marriage) and economic prosperity.

While I do believe that homosexuality is a sin against God (Lev 18:22, among others) and therefore is morally wrong, that is not the only basis for opposing it. First, homosexuality does not produce children. Without children (approximately 2.1 per adult couple) or accretion in population from other sources, a society will die out. As the society declines in population, its economy will decline.

Second, our elected representatives legislate morality every day. Legislating, at its core, is explicitly about creating laws that define the moral accountability and relationship between the government and the governed. In fact, it is the defined moral relationship in our law that creates our economic institution and not vice versa. The concepts of individual and corporate property ownership, fairness, truth in lending, contract law, adjudication of conflicts, etc., are all moral concepts. The real question is what is the basis of the government’s moral authority to legislate? The last time I checked, in America the Declaration of Independence and the Constitution of the United States provide this moral authority. Both of these documents have as their basis Judeo – Christian principles as expressed through a biblical worldview. In this worldview, marriage is explicitly created and is defined, by God, to protect the family and populate the world. A secondary benefit of marriage then is the creation and protection of the economic engine that Mr. Reid is worried about.

So, if Mr. Reid were worried about the long-term viability of our society, in both a moral and economic sense, and about understanding how we as a society have arrived at this point in time, he would be concerned about marriage as well as many other moral issues. But, alas, most humanists are not; they are worried only about themselves. Unfortunately, truth is absolute not relative and ignoring it has real consequences. I guess Mr. Reid will have to choose between the moral principles that made this country great or the value system instituted by other nations and their children when they populate this country. Hopefully, they will produce satisfactory economic results.