Shoals ahead?

I'm not a big fan of Art Laffer but his piece in the WSJ
recently is worth your time:

On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.

Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there's always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere.

Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.

Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession.

I wouldn't go as far as claiming that we will experience a "double dip" recession, but overall, I agree with Mr. Laffer---tough economic times lie ahead.

Printing Press Ben

One of the best video's I have seen from the Ludwig Von Mises Institute that explains the role of the Federal Reserve and its current open market operations; also covered is fractional reserve banking and why Bernanke is a very dangerous man.

Shortsighted environmentalism endangers humanity

With these two recent posts (here and here), Harrison Price over at Just Politics got me thinking about the damage that environmental groups are clearly responsible for and their knack to weasel out of complicity with skillful deflection when things go terribly wrong. Harrison reminds us of how enviro's in Alaska prevented an oil pipeline to be built overland to carry the oil that had to be shipped out by tanker; shipping oil by tanker is far more riskier than transporting it over pipelines--the Exxon Valdez disaster was ample proof of this.

But this also reminded me of hurricane Katrina. While the media focused on characterizing G.W. Bush as an uncaring bumbling jerk, little was brought to light about why the city of New Orleans flooded as easily as it did. Well, to make a long story short, environmentalists blocked the building of emergency floodgates that would have prevented a Katrina-like storm surge from causing the horrible damage. (Read the L.A. Times article on this here.) But somehow, the environmentalist groups that were responsible for putting the lives of hundreds of thousands of people in harm's way got little notice. This is a testament to the power of their emotional message while having powerful friends in politics and media.

Glenn Beck on Mao

Unemployment rate drops but most of the jobs created are temp jobs

From L.A. Times:

A burst of hiring of temporary census workers helped push down the unemployment rate in May, but the nation's private-sector employers added a mere 41,000 new jobs last month, the Labor Department said Friday.

The jobless rate edged down to 9.7% in May from 9.9% in April, but that was because the federal government added 411,000 jobs for the decade population count. Those jobs were expected and will disappear quickly over the summer.

Where are the green shoots?

So according to the BLS 431K jobs were created in May…41K were in the private sector and 390K were temporary government census workers. This is hardly good news particularly since this temporary bump will be short lived.

Based on employment patterns for the 2000 census, nearly all such census employment gains should reverse out of the data by the end of September, with June payrolls reflecting the first outright contraction in the reversal of current hiring.

Let's face facts, the "stimulus" was a very expensive joke that essentially pushed off the inevitable hardship that states are going to have to deal with sooner or later and that taxpayers are going to have to pay back with interest to China. And all the "green collar" jobs that Obama promised would save us all? It was all B.S. This is an epic train wreck.

The cold hard fact is that Obama's economic plan is not working and is not going to work: it's all a wealth transfer scheme while printing dollars in order to evoke the short-term Philips Curve. But this time, unlike other times, the coming (and current) tax burden to businesses and citizens due to massive debt is dampening economic growth.

Are we heading towards the Spanish model of employment?

Jaime Levy Moreno over at LVMI writes the following sobering thoughts on the Spanish labor market:

For the last ten years, and especially since the recent financial crisis started, Spanish unemployment has risen astronomically, reaching a record of around 20 percent. This, of course, does not count the thousands of illegal immigrants, who don't appear in the official state statistics...

The headline unemployment rate we get fed by our government is useless too. But here's the real kicker regarding employment:

...In order to explain why it is so hard for recent graduates to obtain a decent job in Spain, it is important to know that labor costs are very high for employers — a consequence of strict laws that protect workers. Four weeks' vacation a year is the mandatory minimum. An artificially high minimum wage places a floor under the supply of workers and the demand for jobs, creating a devastating imbalance. This means there is a huge demand for jobs and little desire on the part of employers to fulfill it.

Additional reasons for the lack of job offers in Spain include the excessive finiquito, the final pay a worker is entitled to under Spanish law when fired: 45 days of salary for each year worked at the company. Furthermore, taxes on employers are very high — at least a 50 percent of each worker's annual salary, which means that if someone is paid €20,000 a year, it costs their employer at least €30,000 a year to hire them. All this makes an employer very reluctant to hire an employee, which creates a high rate of unemployment and a huge number of "garbage contracts." These taxes also promote black-market activity, which either sidesteps the established rules or ignores them altogether.

The taxes on employee wages are very high as well, which brings us back to the mileurista social status. These taxes create a substitution effect: firms have become desperate for new technologies to reduce labor inputs. One recent example in Spain is McDonald's move to start substituting workers with new machines that take the order for the customer, reducing the number of workers. The goal is to leave only two sets of employees — the ones in the kitchen and ones that hand the food to you at the counter.

The lesson here is that the harder and more expensive it is made for employers to hire, the less jobs will be created. Unfortunately, we have too many in the political class that believe that having the sort of "safeguards" that Spanish firms have to deal with is acceptable and a matter of fairness. Of course, what they don't tell you that there is a cost to implementing these labor regulations---less jobs.

Less Rigs, less work, more unemployed

From CNN:

The White House responded Thursday to concerns that the ban on drilling for oil in the deep waters of the Gulf of Mexico will cost the region thousands of jobs.

"The six month moratorium on deepwater drilling was instituted for a clear reason," White House spokesman Ben LaBolt told CNN. "The President believes we must ensure that the BP Deepwater Horizon spill is never repeated."

But Louisiana Governor Bobby Jindal said that prohibiting deepwater drilling could cost the state up to 6,000 jobs this month, and 10,000 jobs over the next few months, in a letter sent Wednesday to president Obama.

If the ban continues for an "extended period," Jindal said, the state could lose up to 20,000 existing and new jobs by next year.

The moratorium was extended last week from 30 days to six months pending the outcome of an investigation into what caused an oil rig operated by BP to explode and sink last month.

The ban requires all Gulf wells in more than 500 feet of water to shut down, and also prevents permits from being issued for any new deepwater drilling.

However, there are 4,515 shallow-water wells in the Gulf that will not be affected, according to the Louisiana Mid-Continent Oil and Gas Association (LMOGA)...

...According to the LMOGA, roughly 33 floating drilling rigs in the Gulf will be idled as a result of the ban. Jindal said 22 of those deepwater rigs are off the coast of Louisiana.

And the group estimates that as many as 1,400 jobs are at risk for each of the 33 idled rigs.

Those jobs pay an average of $1,804 per week, which means the potential for lost wages for all 33 rigs could be as much as $330 million per month, LMOGA said.

Comment: I understand that people are upset about this horrible spill that continues unabated as I write this, but there is already a strong indication coming from the Obama administration to curtail or prevent future off-shore drilling. Some of this is to appease the radical "greenies" in the Democratic party but also to look like he is being tough on BP and Big Oil. Less drilling for our resources means less American jobs and less tax revenue. It also means more reliance on foreign sources for a product that, despite what "greenies" tell us, we will continue to use and need for decades to come.

Self-righteousness and force

Why go to college when public sector jobs are so SWEET!

Obama's Katrina?

This piece by Charles Krauthammer on the BP oil spill is too good to go unmentioned:

Here's my question: Why were we drilling in 5,000 feet of water in the first place?

Many reasons, but this one goes unmentioned: Environmental chic has driven us out there. As production from the shallower Gulf of Mexico wells declines, we go deep (1,000 feet and more) and ultra deep (5,000 feet and more), in part because environmentalists have succeeded in rendering the Pacific and nearly all the Atlantic coast off-limits to oil production. (President Obama's tentative, selective opening of some Atlantic and offshore Alaska sites is now dead.) And of course, in the safest of all places, on land, we've had a 30-year ban on drilling in the Arctic National Wildlife Refuge.

So we go deep, ultra deep -- to such a technological frontier that no precedent exists for the April 20 blowout in the Gulf of Mexico...

...Federal officials who rage against BP would like to deflect attention from their own role in this disaster. Interior Secretary Ken Salazar, whose department's laxity in environmental permitting and safety oversight renders it among the many bearing responsibility, expresses outrage at BP's inability to stop the leak, and even threatens to "push them out of the way."

"To replace them with what?" asked the estimable, admirably candid Coast Guard Adm. Thad Allen, the national incident commander. No one has the assets and expertise of BP. The federal government can fight wars, conduct a census and hand out billions in earmarks, but it has not a clue how to cap a one-mile-deep out-of-control oil well.

Stingy, stingy!

Austrian economist Walter Block hails the miser!

Happy Memorial Day!

A great day to relax with family and don't forget to thank a vet too.

Walter E. Williams on Discrimination

Cities going broke

I hate to say it but I have a bad feeling that we are going to see more of these in the next couple of years.

Liberal economic plan is working to perfection...

From USA Today we find out that government payouts are now larger than private paychecks:

Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.

At the same time, government-provided benefits — from Social Security, unemployment insurance, food stamps and other programs — rose to a record high during the first three months of 2010.

Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.

The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs. Government-generated income is taxed at lower rates or not at all, he says. "This is really important," Grimes says.

The recession has erased 8 million private jobs. Even before the downturn, private wages were eroding because of the substitution of health and pension benefits for taxable salaries.

The Bureau of Economic Analysis reports that individuals received income from all sources — wages, investments, food stamps, etc. — at a $12.2 trillion annual rate in the first quarter.

This is a worrisome trend that I don't see curtailing anytime soon with the wretched policies coming out of Washington.

The problem with regulation

Can you say regulatory capture? Economists have been studying this phenomenon for decades but some people simply are not convinced that it really does happen.

The Rand Paul kerfuffle

It is amazing how in three days so much has been written about Rand Paul and his statement about the Civil Rights Act of 1964. Here is one of the best I've read yet:

Even if Mr. Paul was speaking out of a principled belief in the rights of voluntary association, he was wrong on the Constitutional and historic merits. The Civil Rights Act of 1964—and its companion laws, such as the Voting Rights Act of 1965—were designed to address abuses of state and local government power. The Jim Crow laws that sprang up in the South after Reconstruction and prevailed for nearly a century were not merely the result of voluntary association. Discrimination—public and private—was enforced by police power and often by violence.

In parts of the mid-20th-century South, black men were lynched, fire hoses and vicious dogs were turned on children, and churches were bombed with worshippers inside. By some accounts, two-thirds of the Birmingham, Alabama, police force in the early 1960s belonged to the Ku Klux Klan. State and local government officials simply refused to acknowledge the civil rights of blacks and had no intention of doing so unless outside power was brought to bear.

The federal laws of that era were necessary and legal interventions to remedy the unconstitutional infringement on individual rights by state and local governments. On Thursday Mr. Paul finally acknowledged this point when he told CNN, "I think there was an overriding problem in the South so big that it did require federal intervention."

One tragedy of that era is that the frequent use of "states rights" arguments to defend Jim Crow discredited those arguments for decades and eased the way for federal intrusions on state power that really are unconstitutional.

Here is another one.

Contending that only government power saved us from slavery and Jim Crow, it ignores the role of private power – the abolitionists, and the civil rights movement – that brought about that government power. More important, it invites us to believe that government had little or nothing to do with slavery and Jim Crow in the first place when in truth we would have had neither without government’s creation of those legal institutions, with legal sanctions that kept them in place. Indeed, it is limited government, government limited to securing our rights, that is the surest guarantee against those twin evils.

Comment: If Paul had explained the historical fact that it was government power (in this case, state power) that knuckled private businesses to impose a racist law they did not want, he would have weakened the liberal notion that if private businesses are left to their own devices that they will certainly all be discriminatory. That is simply not the case. Jim Crow was state sanctioned racism. It is a historical fact that private owners of streetcar, bus, and railroad companies in the South lobbied hard against the Jim Crow laws. After the law was passed, they unsuccessfully challenged the law in court. These private businesses also implemented the law very sporadically in the beginning until some employees and even management were threatened with jail time if they didn't stop ignoring the law.

Private business did not want Jim Crow.

More from Power Hungry...

More from Robert Bryce's book "Power Hungry" --Chapter 13.

In this chapter, I learned that all hybrid vehicles like the Toyota Prius are manufactured with rare earth materials called lanthanides. In fact, these rare materials are used heavily in solar panels and wind turbines too. And without these materials, there can be no hybrids, wind turbines, or solar panels. Guess who has a de facto monopoly on lanthanides? China. And guess who also has a lot of the lithium for those high tech batteries in hybrid vehicles? China. (Chile, Argentina, and Bolivia also have lithium.) So, while we hear from environmentalists about the evils of imported oil from countries that hate us, depending on “green” technology will have us dependent on rare earth materials from at least some countries that don’t like us—China and Bolivia. We would be back in the same boat. Incidentally, the above is another reason why solar panels and wind mills are manufactured in China. They have the raw materials and the cheap labor. So when Obama spoke about “green” collar jobs making solar panels and wind mills…well, those jobs would actually be created in China.

The Median CPI and Bees explained!

This is a fun video explaining median CPI.

HT: Carpe Diem

The Big Payoff and the Big Comedown

This portion from Mortimer Zuckerman's article in the WSJ
needs some attention:

It is not an accident that in framing the national stimulus program in 2009 Congress directed a stunning $275 billion of the $787 billion as grants to the states to support public-service employees in health care, education, etc.

So now that stimulus funds have dried up, I guess states are going to have to do what they were able to push off with stimulus funds--make some deep cuts to state spending. The public sector workers and their unions got a sweet deal from Obama. Now it's time to sober up.

More from Power Hungry...

More from Robert Bryce's book "Power Hungry" --Chapter 12. The most salient point in this chapter could be summed up easily:

1) “Every megawatt of wind power that is added to a given electricity system must be backed up with a megawatt of gas-fired generation.” That’s right. If your city or county or state decides to add wind mills to it electricity generation, it then needs to either add a back up or it needs to currently have enough energy capacity in the existing system to kick in when the wind doesn’t blow. And those “back-up” forms of generation must always be manned 24/7 just in case they are needed. Think about that for a minute. If you are a public utility and you are mandated to generate some of your power from wind, you know that this means more employment, more overtime pay for you workers, more capital equipment expenditure—all at the expense of taxpayers and customers that have to pay higher prices. This is a pretty sweet deal for utilities. Additionally, you have “green wash” cover by politicians, environmentalists, and the poor deluded average citizen that believes that something good is being done for the environment while shelling out more for electricity.

More to come.

Arizona threatens to cut L.A.’s electricity!

Whoa! This whole “boycott” thing is getting out of control and ugly.

Does Free Trade Exploit the Poor?

Power Hungry--The truth about "green" energy exposed continued

More from Robert Bryce's book "Power Hungry" . Chapter 11 deals primarily with T. Boone Pickens and his attempt to sell Americans on his plan. Of course, and no surprise to me, the Pickens plan was just an elaborate way of separating taxpayers from their money. However, there was one piece of information that I found interesting in chapter 11 concerning wind farms and that gets very little press:

1) Oil companies and power utilities have been fined heavily for killing birds. Many of which are protected under the Migratory Bird Treaty Act (MBTA).

2) Despite the fact that wind mills are very effective bird Cuisinarts, they seem to have been exempted from MBTA.

3) “Michael Fry of the American Bird Conservancy estimates that between 75,000 and 275,000 birds per year are being killed by U.S. turbines.” This includes golden eagles.

4) Wind turbines also threaten bats.

At the end of this chapter, I concluded that the environmental movement and wind farm advocates consider birds to be an acceptable collateral damage on the road to the renewable energy utopia. Funny that they don’t hold wind power as accountable as other forms of energy generation when it comes to preserving nature.

Power Hungry--The truth about "green" energy exposed

A couple of days ago, I downloaded Robert Bryce's book "Power Hungry" to my kindle and I am about 1/3 of the way through it. The book is a trove of information on alternative energy and how unrealistic it is as a quick fix replacement for the much derided fossil fuels we depend on. I'm going to post some of the more salient points from some of the chapters as a reference for myself and others who may be interested in the information.

Chapter 10 dealt with Denmark and its wind-power generation. Here are some quotes and notes to ponder:

1) "Despite massive subsidies for the wind industry and years of hype about the wonders of the Denmark's energy policies, the Danes now have some of the world's most expensive motor fuel. And in 2007, their carbon dioxide emissions were at about the same level as they were two decades ago."

2) Denmark is an oil exporter because it has been very aggressive with its off-shore oil drilling in the North Sea. "Between 1981 and 2007, the country's oil production jumped from less than 15,000 barrels per day to nearly 314,000 barrels per day--an increase of 2,000 percent."

3) Despite its wind power generation, Denmark continues to import coal for electricity generation: Wind power will always need a back-up when the wind doesn't blow. Denmark also supplements their wind power with hydropower from Sweden when the doldrums come for an extended stay.

4) Denmark boasts near-zero energy consumption between 1981-2007 but this is achieved primarily due to near zero population growth and high energy taxes.

5) Electricity rates in Denmark are the highest in Europe. Danes shell out $.38 per kilowatt hour while the French pay $.17 per kilowatt hour. Americans pay $.10 per kilowatt hour.

6) "The Danes are among the most oil-reliant people on earth. In 2007, Denmark got about 51 percent of its primary energy from oil. That's far higher than the percentage in the U.S. (40%) and significantly higher than the world average of 35.6...Denmark is also more coal dependent than the U.S., getting about 26% of its primary energy from coal while America gets about 24% of its primary energy from the carbon-heavy fuel."

More to come.

Greece is the start of the avalanche

This is a great video by Freedomain Radio. Here are some salient points:

1) 20-30% of the Greek population works for the government.

2) Many Greek government workers can retire with a pension in their 40's!

3) Greek government workers work for 12 months but get paid for 14!

4) Greece was able to join the E.U. only by hiding its debt through swap agreements.

5) Greek taxpayers pay 44% (employees pay 16% and employers pay 28%) of salary for social security!

6) You will notice in this video that protestors have a penchant for red flags and Marxist inspired signs.

7) The ending comments on inflation, debt, and statism are spot on.

Deficits, Debts and Unfunded Liabilities

Some the trenchant points in this Center for Freedom and Prosperity video:

1) Federal deficits will average $1 trillion per year from now on.

2) The national debt is 60% of GDP today but is set to rise to 90% of GDP by 2020.

3) The Public Held Debt is how much money the federal government has borrowed from private credit markets to finance deficit spending--this stands at $9.9 trillion!

4) The Gross Federal Debt includes the Public Held Debt plus what the treasury has borrowed from other government accounts--such as the social security trust fund--and this debt stands at $14.5 trillion!!

Is it no wonder why gold has hit a new record high of $1,242.70 an ounce.

Another "Stimulus" failure

Now that stimulus funds are drying up, states are going to have to do what they should have done over a year ago--tighten their belts, come clean with residents. They were able to "kick the can down the road" waiting for a better tomorrow that hasn't come. Now the pain will be more severe.

This is one of the reasons why I was against the "stimulus" package. It was obvious to me that state politicians would much rather take the easy way out of not doing the unpopular task of cutting public services but accepting a federal crutch to buy time out of a financial disaster. The incentive to do the wrong thing was simply too juicy to pass up.

The Toxic Twins keep on sucking taxpayer funds

Two of the main causes of the housing boom and bust, Fannie Mae and Freddie Mac, continue to weigh heavily on taxpayers. Here is an abstract from the Boston Globe:

Fannie Mae has again asked taxpayers for more money — this time $8.4 billion — after reporting another steep loss for the first quarter. The taxpayer bill for rescuing Fannie and its sibling Freddie Mac has grown to $145 billion — and the final tally could be much higher.

The rescue of Fannie and Freddie is turning out to be one of the most expensive aftereffects of the financial meltdown, and Fannie Mae’s first-quarter financial report yesterday made it clear there is no end in sight.

“The losses are not going to stop soon,’’ said Anthony Sanders, a finance professor at George Mason University, who warns the housing market is likely to drop sharply again this year.

Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Fannie and Freddie, lifting an earlier cap of $400 billion. And with the housing market still on shaky ground, Obama administration officials say it is still too early to draft any proposals to reform the two companies or the broader housing finance system.

Republicans, on the other hand, argue that the sweeping financial overhaul before Congress is incomplete without a plan for Fannie and Freddie. They propose amending the legislation to transform Fannie and Freddie into private companies with no government subsidies or shut them down completely.

The legislation “touches nearly every corner of the economy,’’ Alabama Senator Richard Shelby said in the GOP weekly radio and Internet address over the weekend. “But these major contributors to the crisis are left unscathed,’’ he said, singling out Fannie Mae and Freddie Mac.

Democrats call such arguments a diversion. They say Congress already gave the government far more power over Fannie and Freddie nearly two years ago when lawmakers passed a bill that set the stage for a government takeover over of the companies in September 2008.

Fannie and Freddie operate “in a manner entirely different than they had been during the crisis period, precisely because Democrats acted — in collaboration with the Bush administration,’’ Representative Barney Frank, Democrat from Newton, Mass., wrote last week in a memo to White House chief of staff Rahm Emanuel. Their losses “occurred before we took the first step towards reforming them . . . nothing we could do today will diminish those losses.’’

Comment: I find it extraordinary that Democrats still want to run interference for these two entities. When Fannie and Freddie were nationalized, I knew that they would continue to be used as a political tool for the current administration. BTW, all of their debt is "off the books." So, most Americans are not aware of the $5.5 trillion liability looming in the shadows. Can anybody say--Greece?

Here is another news link on Fannie Mae and it's massive debt.

Economics in one lesson

Henry Hazlitt can be heard reading a passage from his classic book; it is still very relevant today.

The Louisana oil spill and liberal dreams

This WSJ piece on off-shore drilling and the Louisiana accident is right on the mark:

As the oil in the Gulf of Mexico moves toward the Louisiana and Florida coasts, the left is already demanding that President Obama reverse his baby steps toward more offshore drilling. The Administration has partly obliged, declaring a moratorium pending an investigation. The President has raised the political temperature himself, declaring yesterday that the spill is a "massive and potentially unprecedented environmental disaster."

The harm will be considerable, which is why it is fortunate that such spills are so rare. The most recent spill of this magnitude was the Exxon Valdez tanker accident in 1989. The largest before that was the Santa Barbara offshore oil well leak in 1969.

The infrequency of big spills is extraordinary considering the size of the offshore oil industry that provides Americans with affordable energy. According to the Interior Department's most recent data, in 2002 the Outer Continental Shelf had 4,000 oil and gas facilities, 80,000 workers in offshore and support activities, and 33,000 miles of pipeline. Between 1985 and 2001, these offshore facilities produced seven billion barrels of oil. The spill rate was a minuscule 0.001%.

According to the National Academy of Sciences—which in 2002 completed the third version of its "Oil in the Sea" report—only 1% of oil discharges in North Americas are related to petroleum extraction. Some 62% of oil in U.S. waters is due to natural seepage from the ocean floor, putting 47 million gallons of crude oil into North American water every year. The Gulf leak is estimated to have leaked between two million and three million gallons in two weeks.

...As for a drilling moratorium, it is no guarantee against oil spills. It may even lead to more of them. Political fantasies about ending our oil addiction notwithstanding, the U.S. economy will need oil and other fossil fuels for decades to come. If we don't drill for it at home, the oil will have to arrive by tanker and barges. Tankers are responsible for more spills than offshore wells, and those spills tend to be bigger and closer to shore—which usually means more environmental harm.

Comment: The wailing at liberal blogs regarding this horrible accident has, of course, reached its expected perfervid pitch. And I see the usual cavil arguments about a de-regulated oil industry prompted by George W. Bush prevented the use of an acoustic switch which would have prevented all of this mess. All of this is of course unfounded. Some countries do mandate the use of an acoustic switch (Norway, Brazil) and some do not (U.K.). U.S. regulators decided against the use of the switches because of cost and reliability issues. I tried to point out to one guy that all the acoustic switch does is set off the more central blowout preventer remotely and that subs had tried to activate the blowout preventer manually with no success which means that the acoustic switch may not have mattered one way or another. The blowout preventer is malfunctioning. He was not impressed with my argument but instead deleted my post. Classy.

I also made the following observation at other blogs when liberal bloggers were quick to jump on the "drill, baby, drill" crowd and their point on how safe off-shore drilling is: When an airliner tragically crashes and kills everyone aboard, does anyone suggest that society should revert back to ocean liners to get from, let’s say, Boston to London? No. When there is a pile up of cars where passengers are killed, does anyone suggest that society revert to the alternative of horse and buggy? No. Accidents happen even in a perfect world and no reasonable person is going to revert to a lower standard of living because of the threat of the odd incident. So why is oil held to a different standard than other technologies?

Oil is utilized in some form in every stage of production for a constellation of goods. How are you going to make medical devices, medicine, fertilizer, parts for vehicles, etc. without petroleum? Our economy would come to a standstill without it.

There are almost 4,000 oil rigs in the Gulf of Mexico that have been operating for years without an accident of this magnitude. This event is a clear outlier in an industry that has done a remarkable job with safety.

The usual argument I read at some liberal blogs is that we need to reduce our consumption of oil so that we don't have to drill as much. I find it astonishing that anyone could believe that this is possible with a growing population and a growing (I hope) economy. Even Denmark which is held up as a wind-mill utopia by liberals has INCREASED its off-shore drilling aggressively and its IMPORT OF COAL in order to meet rising demands. Additionally the Danes have to live with some of the most expensive gas and electricity prices in the world. And that's with very little population growth (just slightly above zero) compared to the U.S. Between 1998 and 2008, the Danish population grew by just 200,000 people. During the same time period, the U.S. population grew by 33 million people. So, I find it shocking that anyone would believe that we could "conserve" our way to less oil consumption.

Trust me, if the U.S. stops its off-shore drilling, countries like Denmark, Norway, Brazil, the U.K., China and others, are going to continue to expand and to be aggressive with their off-shore programs and we will have to depend on them to supply us and the rest of the world.

Catching the imposters!

Here are some great pictures of Tea Party infiltrators getting identified.


Pictures of this anti-war protest in March are fascinating!

Feeling sorry for Big Oil

Rothbard explains why an oil spill, which occurred some time ago, brought out the hysteria in the press and the environmentalists too. It's not any different from what we are witnessing today.

We don't need less investing and savings, folks

Dan Mitchell does a brilliant job at explaining the dis-incentive to save and invest with the capital gains tax.

Price controls, write-downs, and ObamaCare

I'm still guest posting over at The Bobo Files once a week. This week's entry deals with the write-downs that several major companies are going to have to do because of ObamaCare. Last week's post dealt with price controls and ObamaCare. Check them out when you can.

The Greeks will get some of your hard earned money

Congratulations, dear American taxpayer. You get to shore up Greek profligacy. Ruminate on this when the austerity measures fail and the welfare-state loving Greeks are back to the streets putting bricks through windows. I've read several news articles on this and not a one mentions that the International Monetary Fund is largely supported by American taxpayers. I wonder why?

So you want to build a wind farm?

From The Boston Globe:

The nine-year regulatory battle over the nation’s first proposed offshore wind farm is expected to end this week, when US Interior Secretary Ken Salazar plans to issue a final federal decision on whether to permit 130 turbines in Nantucket Sound.

But some opponents of the wind farm are making it clear that if Salazar approves the project, they will go to court to try to overturn his ruling.

The Aquinnah Wampanoag Tribe, on Martha’s Vineyard, issued a statement yesterday saying they will sue if Salazar approves the project in the 560-square mile sound. The group is one of two Wampanoag tribes that say the proposed turbines, which would be more than 400 feet tall, would disturb spiritual sun greetings and threaten ancestral artifacts on a seabed that was once exposed land.

The Aquinnah tribe said it has hired a lawyer experienced in tribal historic preservation efforts to “fully prepare for administrative and judicial relief should the project move forward.’’ The statement said the tribe has identified more than 14 “legal shortcomings’’ by the Minerals Management Service under the National Historic Preservation Act and may also allege violations of other federal laws.

The Alliance to Protect Nantucket Sound, the main opposition group to the proposed wind farm, has also indicated it will probably sue if the project is permitted.

Advocates for wind energy are closely watching the progress of the Cape Wind project. A flurry of wind farms have been proposed along the East Coast over the past several years, and as technology improves, more are expected.

Supporters say approval of the Nantucket Sound project would pave the way for the United States to catch up to European countries that already have offshore wind farms, and even to surpass them eventually.

But wind energy advocates are also worried that if Salazar denies the project over the concerns of the tribes, other Native American groups — or owners of historic properties — will be emboldened in their efforts to quash proposed wind farms elsewhere.

All I can say is---Go Wampanoag Tribe! Don't trust government! They have screwed you for hundreds of years and they will screw you now for a deranged cause!

Wind farms are the great pie-in-the-sky "clean" energy that environmentalists and their political enablers love to trumpet whenever they find an appropriate situation that may be susceptible to their argument. In this case, it's a great swath of land that can be easily exploited, in their opinion, at the expense of a lowly Indian tribe in the "Blue" state of Massachusetts. The truth about wind farms is that they take up a LOT of land to produce a comparable amount of power that a nuclear power plant could. So imagine massive amounts of land being carpeted by these ugly beasts. Of course, those that are well connected and politically powerful--like a Kennedy--will always be able to stop any plans to block their beautiful view with ugly wind mills. But in Massachusetts, a lowly band of Indians are acceptable fodder.

Advice to Tea Partiers

The Cato Institute has 5 pieces of advice for Tea Partiers:

1. Republicans aren’t always your friends.
2. Some tea partiers like big government.
3. Democrats aren’t always your enemies.
4. Smaller government demands restraint abroad.
5. Leave social issues to the states.

Rothbard tackles the insidious VAT

In this essay criticizing the possible implementation of a Value Added Tax back in the 1970’s by the Nixon administration, Murray Rothbard once again exhibits the sharp insight and the scalpel like perspicuity that he would readily wield into a cogent libertarian argument. In the case of the VAT, the argument raised by Rothbard against it still remains strong and very convincing. Here is an abstract:

The American public will pay a high price indeed for the clandestine nature of the VAT. We will be mulcted of a large and increasing amount of funds, extracted in a hidden but no less burdensome manner, just at a time when the government seemed to have reached the limit of the tax burden that the people will allow. It will be funds that will aggravate the burdens on the already long-suffering average middle-class American. And to top it off, the VAT will cripple profits; injure competition, small business, and new creative firms; raise prices; and greatly aggravate unemployment. It will pit consumers against business, and intensify conflicts within society.

I urge you, dear reader, to read this essay. It is as relevant today as when it was written thirty-eight years ago.

Cash for dishwashers!

From SFGate:

The federal government is giving away $35.2 million to Californians who are buying energy-efficient appliances, but consumers will have to act fast to get the mail-in rebates provided by the latest federal stimulus program.

Rebates will be distributed through the "cash for appliances" program beginning Thursday — Earth Day — to boost the economy and cut energy use in the nation's most populous state.

Hundreds of thousands of people are expected to buy energy-efficient appliances, recycle their old ones and take advantage of the program's three rebates: $200 for refrigerators, $100 for clothes washers and $50 for room air conditioners.

The federal program was created last year, but each state is distributing the money according to its own rules. In California, the Energy Commission is administering the rebates.

Here we go again. They are transferring wealth from one group of taxpayers to another group--One group doesn't need to buy anything but they still have to chip in for the group that was going to buy anyway. Absurd. Well, at least appliance makers and suppliers make a killing, right? Of course, our government doesn't have the cash to fund this program so it has to do some borrowing by selling government bonds, and therefore pay interest to bondholders, to "give away" these rebates. Ladies and gents, your tax dollars at work.

What ever happened to protesting being patriotic?

Partisan liberals are currently working hard (again!) on a smear campaign against Tea Party protestors. Here are two great excerpts of posts by conservative bloggers on the subject. The first one is Rossputin.com:

The narcissistic and condescending views of Presidents Obama and Clinton is not peculiar to them. Such views are an inherent part of being a true-believing Progressive. Progressivism is based on a fundamental lack of faith in individual citizens or in organizations of citizens to make the best decisions for themselves or for the nation. Progressivism’s key attribute is its insistence that the “smart people", the technocrats, the people who really “care", should be handling the levers of power over every important aspect of our lives, from education to resource allocation.

It is of no matter to a Progressive that every such political construct has failed in the past, with the size of the failure proportionate to the size of the implementation of Progressive (i.e. socialist) ideas. For a Progressive, past failures only mean that not-quite-smart-enough people were put in charge, or that the government domination of the private sector wasn’t complete enough for their plans to work.

The other is by our old friend Harrison Price at Just Politics:

Liberals across the country are on the ropes so it’s time to pull out the slander and lies and they are already trying to sell the story that Tea Party protesters (whom Obama said he was “amused by”) are violent and will cause violence.

During the presidency of George W. Bush “protest is patriotic” however during the time of Obama it is… seditious?

Uncle Milton on wealth transfer

Is the minimum wage racist?

Walter Williams thinks that it is:

One of the more insidious effects of minimum wages is that it lowers the cost of racial discrimination; in fact, minimum wage laws are one of the most effective tools in the arsenals of racists everywhere, as demonstrated by just a couple of examples. During South Africa's apartheid era, its racist unions were the major supporters of minimum wages for blacks. South Africa's Wage Board said, "The method would be to fix a minimum rate for an occupation or craft so high that no Native would likely be employed."

What's a demagogue to do?

How does a country that relies so much on energy exports suffer rolling blackouts due to an energy shortage? This paradox is playing right now in Venezuela where socialist big mouth, Hugo Chavez, has gone a long way to crush the private economy for the sake of a larger role for his left leaning regime. Now Mr. Chavez, whose popularity has hit new lows because his many promises have failed to materialize, has new friends in China who will throw $20 billion into the sparse Venezuelan coffers, so that Chavez can go on a public relations spree fixing up highways and various other languishing public works projects. Hmmm...this whole thing sounds kinda familiar.

Links for today

1) My weekly guest post over at The Bobo Files is now posted. Subject: Obama and his Big Labor friends are getting snuggly by the day.

2) The Independent Bloghorn has excellent economic analysis from STRATFOR, an international affairs organization, on China that is worth your time.

3) Just Politics has very interesting comments on unemployment benefits.

Baaaah, baaah! I love government!

Here are some of the lame signs brought to the recent Boston Tea Party protest by some anti-Tea Party sheeple.

Happy Tax Day!

Arrggghh! The beast needs to be starved. Here's what tax forms looked like in 1913.

If only they had read Thomas Sowell...

The emotional issue of "price gouging".

Around The Horn...Newsworthy Links And Posts!

1) From The Economist's Cookbook: Do you know how to assert your rights when being confronted by police?

2) Also from The Economist's Cookbook, one of the best comment I've read lately on Abraham Lincoln.

3) Jeff Perren on liberty and Thomas Jefferson.

4) An entertaining video of a guy who can be deadly accurate with business cards from Freaky Frugalite.

5) The Division of Labor and love.

6) That home-buyers tax credit comes with a hefty price tag.

7) Cracked World has a great post on racism and the Tea Party movement.

Unicorns and Rainbows ride the rails

The California high-speed rail project is a perfect example of how citizens in California have slowly committed economic suicide by believing in unicorns and rainbows:

Is it a high-speed rail ride to the future or a Bay Bridge boondoggle times 10? That's what lawmakers are wondering as more and more questions arise about the plan to build a multibillion-dollar bullet train between San Francisco and Los Angeles.

"I'm all for high-speed rail, but I want it to be high-speed rail done right," says state Sen. Joe Simitian.

Simitian has plenty of reasons to be concerned. Not only will the rail line go right through his Peninsula district, but also he chairs the Senate budget subcommittee that oversees the $9 billion in voter-approved bonds for the project.

In addition to worries about how many backyards will be torn up for the line, he and other key legislators are asking question's about the High Speed Rail Authority's business plan - which remains murky at best.

For example, no sooner had voters approved the bond package than the initial $33.6 billion price estimate jumped to $42.6 billion because the authority had failed to account for inflation. And that cost could climb even higher if the rail goes underground through the Peninsula, as many communities are now requesting.

Then there is the estimated ticket price for a trip from L.A. to San Francisco, which has jumped to $105 one way - making the line much less competitive with the price of an airline ticket...

One of the biggest fears, however, is that the state will not be able to keep the explicit promise made to voters that they would not be on the hook if the finances fall short.

This is becoming a common scenario in California; in this case, gullible voters approve billions for high-speed rail bonds without really knowing the total cost. The whole project was sold as a solution to a host of issues like pollution reduction, congestion reduction, and besides, Europe has high speed rail and we should be just like them. All good reasons, I guess, to blow through billions of state funds on a project that smells like a boondoggle.

The cost of complying with the IRS

Public Pension Crisis

Why the heck did I go to college? I could have joined a public union early on as a roadside sign inspector or something and been better paid than most people in the private sector. Additionally, the pension benefits are SWEEEET!

Around The Horn...Newsworthy Links And Posts!

1) Good luck in trying to tax the rich to close the deficit.

2) Nearly half of U.S. homes escape taxes.

3) Mortgage rates jump higher as Fed stops buying mortgage-backed securities.

4) Another liberal crusade and another evil chemical that they need to save us from.

5) Milton Friedman on hope.

6) Is the Tea Party like the KKK?

Lemon capitalism

GM loses billions in the fourth quarter of 2009. Didn't the federal government "lend" GM billions of tax payer funds?

Our health care future

If you want to see what the likely future of national health care will be like in the future, look to what is happening in the state of Massachusetts:

The standoff between Massachusetts regulators and health insurance companies intensified yesterday, as most insurers stopped offering new coverage to small businesses and individuals, and state officials demanded that the insurers post updated rates online and resume offering policies by Friday.

People seeking to buy health insurance for the first time, or customers looking to change policies, found they could not do so, at least temporarily.

The confusion — or market chaos, as one insurance industry official called it — followed the state Division of Insurance’s rejection last week of 235 of 274 premium increases proposed by insurers. The increases were for policies covering what is known as the small group market, which includes more than 800,000 people across Massachusetts.

Insurance Commissioner Joseph G. Murphy said he has asked insurers to quote rates for new coverage through the state’s Health Connector website by week’s end, and reminded them that they are required by law to do so. The new quotes would use base rates set last year, plus additional factors such as the age and size of a company’s workforce, Murphy said.

“If we don’t see the rates posted by the end of the week, we have a variety of enforcement tools at our disposal, including the ability to fine carriers,’’ warned Murphy. “It’s imperative that consumers have information available to them as they consider their purchasing options,’’ he said.

Health insurers, however, said they could not calculate new rates until a judge rules on their request for an injunction to prevent the state from continuing to block increases for the coverage period that started April 1. Insurance carriers had proposed premium rate increases averaging 8 to 32 percent, which the state found excessive. The case is expected to go before a Superior Court judge in Boston as early as tomorrow.

What a mess, but it's really not a surprise. Hang on tight because this is coming to a theater near you.

Creating more problems...

Ever wonder why that McDonald's salad costs more than the Big Mac? Well, it's no surprise that our government has something to do with it.

Too little, too late

I'm getting a real kick out of finding articles in liberal newspapers about the ravages that ObamaCare will inflict on states and small towns. It's too bad that they didn't do this kind of reporting BEFORE the bill was passed.

Today's post...

...is another guest post at The Bobo Files

Happy Easter!

The Free Lunch Myth

"Government is that fiction whereby everybody believes that he can live at the expense of everybody else."---Frederic Bastiat

The Abuse of Civil Asset Forfeiture

Civil forfeiture is absolutely unconstitutional, but so is most of what the federal government does every day as far as I'm concerned.

The Flat Tax

What could possibly be bad about a lower tax rate on work, savings, investment, risk-taking, and entrepreneurship?

Why didn't they say something before!

From the WSJ:

In the wake of Washington's health-care overhaul, some companies are taking big one-time charges for anticipated costs, fanning tension with the administration over the legislation's impact on corporate America.

Three companies that were among vocal opponents of the legislation have warned they would see an immediate impact on their earnings as a result of the loss of deductions on tax-free subsidies they receive for providing retiree prescription-drug benefits.

On Thursday, Deere & Co. said it would take a $150 million one-time charge in the current quarter related to the loss of deductions. Earlier in the week, Caterpillar Inc. reported a $100 million charge and AK Steel recorded a $31 million charge.

Beginning in 2006, companies have received a 28% federal subsidy, up to $1,330 per retiree, tax-free, to help pay for prescription-drug coverage. Until now, companies could deduct the subsidy from their taxes, essentially getting a second benefit from the money. Under the new law, companies will no longer be able to deduct the subsidy, but it remains tax-free.

Although the changes don't go into effect until 2013, companies say they have to take the charge to earnings now, to reflect the loss of the future tax deductions. In all, the S&P 500 companies will take a combined hit of $4.5 billion to first-quarter earnings, estimates David Zion, an analyst with Credit Suisse.

Administration officials say companies are exaggerating the impact of the loss of the deduction because of their general unhappiness with health reform.

VH: Henry Waxman of California, chairman of the Oversight and Investigations panel, announced plans to hold a hearing on this issue. This means that he wants to put the CEO's of these companies under the hot lights and intimidate them. You have to love Chicago politics.

Assorted links and news

1) We keep hearing that our government wants "affordable" housing yet it continues to attempt to prop up housing prices by using money it doesn't have. What a waste. Let prices fall already. The sooner they do, the sooner the economy bounces back. Instead, we have the Obama regime trying to reverse a waterfall.

2) Fidel Castro endorses Obamacare. Great minds think alike.

3) If you haven't heard the latest from Venezuela, liberal icon and Code Pink fave, Hugo Chavez arrested Guillermo Zuloaga, president of Globovision Television, the only remaining television station on public airwaves critical of Hugo Chavez. Also arrested was lawmaker Wilmer Azuaje for being a critic of the Chavez regime.

Today's post...

Is a guest post at The Bobo Files.

Hoping for a rich uncle, part two

From the WSJ:

A sudden drop-off in investor demand for U.S. Treasury notes is raising questions about whether interest rates will finally begin a march higher—a climb that would jack up the government's borrowing costs and spell trouble for the fragile housing market.

For months, investors have focused their attention on the debt crisis in Europe, but there are signs the spotlight is turning to the ability of the U.S. to finance its own budget deficit.

This week, some investors turned up their noses at three big U.S. Treasury offerings. Demand was weak for a $44 billion 2-year note auction on Tuesday, a $42 billion sale of 5-year debt on Wednesday and a $32 billion 7-year note sale Thursday.

The poor demand, especially from foreign investors, sent the bonds' prices sharply lower and yields higher. It lifted the yield on the 10-year note to 3.9%—its highest since last June, and approaching the psychologically important 4% mark. That mark has been pierced only briefly since the financial crisis in 2008.

Investors' response marked a big shift from auctions in recent months in which major foreign buyers, such as central banks, had snapped up Treasurys. It could spell trouble for the U.S. housing market; the rates on many mortgages are linked to the yield on the 10-year note.

The move up in its yield coincides with the impending end of the Federal Reserve's program to support the mortgage market. The Fed has bought $1.25 trillion of mortgage-backed securities, bolstering their prices and thus holding down their yields.

Concerns about the U.S. budget deficit are beginning to hurt the Treasury market, says Steve Rodosky, head of Treasury and derivatives trading at bond giant Pacific Investment Management Co. He says he is increasingly worried about the U.S. fiscal outlook. "The government needs to take real action rather than pay lip service" to addressing the fiscal problems.

In all, the U.S. government is expected to sell $1.6 trillion in debt this year, including the $118 billion sold this week.

VH: Those little green pieces of paper that the government pumps out is looking a lot less attractive nowadays. Helicopter Ben must be thanking his lucky stars that Greece came in to save his arse. BTW, the latest news on Greece is that the responsible E.U. countries and the American taxpayer (surprise!) via the IMF are going to float the spendthrift Greeks some moolah if it fails to pay its debt. This is going to get interesting.

Hoping for a rich uncle

From Boston.com:

WASHINGTON — Social Security will pay more in benefits than it receives in payroll taxes in the current fiscal year, six years earlier than expected, the Congressional Budget Office reported yesterday.

Last spring, Social Security trustees reported that expenses would exceed revenue beginning in 2016. Since then, applications for benefits have increased because people are retiring early due to the recession, and that, combined with high unemployment, means fewer workers paying taxes.

“There’s so much unemployment,’’ said Robert Pozen, chairman of Boston-based MFS Investment Management. “There’s less going in, and more people are taking early retirement.’’

The CBO projects that the trust fund will be $29 billion in the red during the fiscal year ending Sept. 30, and will run deficits for the next three years. After projected surpluses in 2014 and 2015, the trust fund again would have deficits from 2016 onward.

VH: I'm shocked.

Treasury yields are higher than Corporate yields. Opps!

From Bloomberg:

Two-year notes sold by the billionaire’s Berkshire Hathaway Inc. in February yield 3.5 basis points less than Treasuries of similar maturity, according to data compiled by Bloomberg. Procter & Gamble Co., Johnson & Johnson and Lowe’s Cos. debt also traded at lower yields in recent weeks, a situation former Lehman Brothers Holdings Inc. chief fixed-income strategist Jack Malvey calls an “exceedingly rare” event in the history of the bond market.

The $2.59 trillion of Treasury Department sales since the start of 2009 have created a glut as the budget deficit swelled to a post-World War II-record 10 percent of the economy and raised concerns whether the U.S. deserves its AAA credit rating. The increased borrowing may also undermine the first-quarter rally in Treasuries as the economy improves.

“It’s a slap upside the head of the government,” said Mitchell Stapley, the chief fixed-income officer in Grand Rapids, Michigan, at Fifth Third Asset Management, which oversees $22 billion. “It could be the moment where hopefully you realize that risk is beginning to creep into your credit profile and the costs associated with that can be pretty scary.”

This of course means that our government is having to sweeten U.S. Treasury bonds to investors in comparison to corporate bonds; I don't know what this means in the short run but it is disconcerting since the federal government has run the credit card to very high levels. Something to think about.

Self-execution!

Maybe it should be the country in the hot seat.

The cost of "flimsy" lending

From the L.A. Times:

Though signs of recovery in the housing market are emerging, thousands of people throughout the Southland are still in a precarious position on the brink of foreclosure, struggling with monthly bills and mortgage payments.

Duchemin and Ashraf are an extreme example because they've gone through foreclosures on two homes and are in danger of losing a third. They aren't alone: Flimsy lending practices mean that thousands of other borrowers face the prospect of repeated foreclosures, mortgage and foreclosure experts said.

The problem is especially visible in areas that attracted speculative buyers during the boom. In Maricopa County in Arizona, which includes Phoenix, at least 283 individuals have received a foreclosure notice on two or more properties since 2006, according to data provided by RealtyTrac Inc.

Multiple foreclosures are "probably more common in this decade than they've ever been because everyone was running to get into the real estate investing business," said Rick Sharga, a senior vice president at RealtyTrac.

Clark County in Nevada, another area that attracted house flippers, had at least 179 buyers who were foreclosed on more than once over the same period, the data show...

Because people thought the price of real estate would keep climbing, O'Toole said, they figured that the more homes they bought, the more they'd earn eventually.

"In a lot of cases, you had folks in this gold rush mentality: 'Real estate is going up, the more houses I buy, the more money I'll make.' "

The article mentions "flimsy lending practices" but doesn't explain how the lending industry came to offer easy credit in which speculation was encouraged. Instead, it builds sympathy for the Duchemin's without really looking into the big picture, like the politicization of the mortgage lending industry in which lenders were coaxed into providing credit to borrowers it would never have under normal circumstances. Why anyone would lend the Duchemin's funds for three homes is beyond me. Also, notice how the article never mentions the Duchemin's bad decision to "buy" three houses?

Run out of oil, eh?

Shell discovers a large oil reserve in the Gulf of Mexico. Don't build those bunkers yet.

90 seconds to ObamaCare

The CBO scores the latest vesion of ObamaCare

1) 3.8% in new taxes for medicare unearned income.
2) Not indexed for inflation.
3) New Social Security tax to pay for ObamaCare.
4) Lot's of double counting too.

My lord, what a massive weight on our economy.

The "Jobs" Bill makes it through the Senate

From NPR:

Companies that hire unemployed workers will get a temporary payroll tax holiday under a bill that easily won final congressional approval Wednesday.

The bipartisan 68-29 vote in the Senate sends the legislation to the White House, where President Barack Obama has promised to sign it into law.

It will be the first of several election-year jobs bills promised by Democrats to be enacted into law, though there's plenty of skepticism that the measure will do much to actually create jobs. Optimistic estimates predict the tax break could generate perhaps 250,000 jobs through the end of the year, but that would be just a tiny fraction of the 8.4 million jobs lost since the start of the recession.

The measure is part of a campaign by Democrats to show that they are addressing the nation's unemployment problem...

Here we go again. More political running in place to "do something" about the weak job market. Congress sure has passed many laws to move the economy into a positive place with little, if not weak, results. But here we are again with half measures and soap box speeches. That's OK, it's not like they're spending their money anyway. And besides, the farce of "pay-go" was once again obliterated by reality. Liberal economists are hoping that a cyclical recovery and low interest rates by the Fed move the economy along--we can already see plenty of postive indicators--so that soon to be laws like the "Jobs" bill, will look like it was just the right thing to do. Sorry, but any recovery will not be due to a "Jobs law" or a massive pork program like the "stimulus." It will be due to the business cycle and the private economy. So for those that voted for this bill and the stimulus, thanks for nothing.

Welcome Back!

The Chef is back to blogging at The Economist's Cookbook. This is a great free-market blog and well worth visiting often. The more free-market bloggers, the better.

Does spending more on school lunches benefit kids?

Benjamin Burr at The Independent Bloghorn has first hand experience on this matter. Here is the crux of his argument:

...the government spends $2.68 a day per child, while only spending $.93 a day on food. The problem isn’t that the government isn’t spending enough money. $1.75 per meal per day on operations is an absolute pathetic joke that reflects an egregious example of government incompetence. When I was catering school lunches, we charged $2.50 (less then the government pays), spent $1.60-1.75 per meal on average on food, covered our operational costs including labor, and still made a decent profit. Sorry, Chef Ann Cooper, the problem isn’t that we aren’t spending enough money, the problem is that people like you fail to recognize the broken nature of this system, and despite its flaws still advocate that the government should be involved in something that clearly sucks at doing.

You are never going to increase the overall nutritional value of lunches as long as the Department of Agriculture, (a massive, entrenched, worthless government bureaucracy that has worn out its usefulness) uses the National School Lunch program for dumping all the excess commodities that it is responsible for creating through inefficient subsidies.

You want to see the quality of school lunches increase? Privatize the whole thing.

VH: I agree with Benjamin, privatize school lunches. The core mission of schools should be teaching and not running an expensive unionized cafeteria; Mr. Burr runs a school lunch software business that deserves your attention.

Where are the jobs?

Some California counties posting Depression era unemployment numbers. Where are the "green" jobs, Mr. Obama?

Need tax revenue? Collect it from social security benefits! What fun!

A little–noticed law could soon result in smaller Social Security checks for hundreds of thousands of the elderly and disabled who owe the U.S. money from defaulted loans and other debts more than a decade old.

Social Security benefits are off–limits to creditors, such as credit–card companies and banks. But the U.S. can collect debts to federal agencies by "offsetting," or withholding Social Security and disability payments.

The Treasury currently withholds benefits of 3.1 million Social Security recipients to recover defaulted student–, farm– and small–business loans, unpaid income taxes, amounts veterans owe for health care, and other debts to the government.

Previously, the U.S. hasn't been able to withhold Social Security payments to recover most debts delinquent for more than ten years.

But a provision in the 2008 Farm Bill lifted the ten–year statute of limitations on the government's ability to withhold Social Security benefits in collecting debts other than student loans—for which the statute of limitations was lifted in 1997—and income taxes, where the limit remains 10 years.

A provision in the 2008 Farm Bill? I can only think that this was added as a revenue generator to offset the cost of Farm subsidies

This means that a person who defaulted on a small–business loan in 1995, for example, and who is receiving Social Security could be notified that his benefits may be reduced each month until the debt, with interest, fees, and penalties, is paid. The Treasury can withhold 15% of the benefit, though it can't be reduced to below $750. Tax debts have no floor.

The change will add more than $6 billion to the $75 billion in delinquent debt individuals owe the government, according to the Financial Management Service, the Treasury's debt collection unit.

In 2003, the U.S. began withholding $173 a month in Social Security benefits from Annie Brown, a paralyzed 75–year–old widow living in a nursing home to repay a defaulted $8,823 student loan the Education Department says she took out in 1989. The offset reduced Mrs. Brown's benefit to about $980 a month.

Mrs. Brown said a granddaughter had forged her signature on a loan application. Her daughter and a lawyer spent more than four years disputing the debt with the owner of the loan, United Student Aid Funds, a student–loan guarantor that also was acting as one of the Education Department's 21 debt collectors.

Read it all here.

VH: I don't know what to think about this except to repeat my thoughts on entitlement programs: Citizens that freely allow themselves to be wards of the state will reap what they sow. The state can and will hold your livelihood and well-being hostage to its greater political ends. Ask yourself, why the hell does the 2008 Farm Bill have anything to do with Social Security? It only does when one group is deemed worthless enough to be thrown under the bus for another group that is better connected and has better lobbying: The whims of the State change with the political winds. Who in their right mind wants to take a chance in their golden years with the state holding your livelihood in its grubby hands while listening to apologists for social security utter: "mistakes can happen, but over all, the process works?" I'm afraid too many. It is very sad that some of the senior citizens in this story have had to deal with the perniciousness of raw bureaucracy.

He is also fiscally challenged

A Disgruntled Republican asks, "Is Obama a Harvard educated financial illiterate?"

Let them fall

While defaults on homes rise (people are now just walking away from mortgages they can't afford), the Obama administration continues to burn through billions of taxpayer dollars to prevent the unavoidable. I say that if the government wants "affordable" housing as they have been telling us for decades, then let housing prices fall and stop blowing through tax payer funds in an attempt to buy votes by looking compassionate. Does anybody else notice that being "compassionate" with other peoples' money is far too easy for politicians?

Coming soon: The spin on raising taxes

From CNN:

If President Obama's 2011 budget were put into effect as proposed, the U.S. federal government would add an estimated $9.8 trillion to the country's accrued debt over the next decade, according to a preliminary analysis from the Congressional Budget Office.

Of that amount, an estimated $5.6 trillion will be in interest alone.

Yes, fiscal conservatives know that the budget proposal's from the Obama administration are simply not sustainable. But the analysis doesn't stop there:

The CBO cited two big contributors to the jump in debt.

One is the president's proposal to extend the 2001 and 2003 tax cuts for the majority of Americans. The other is the proposal to protect middle- and upper-middle-income families from having to pay the Alternative Minimum Tax (AMT).

Together those proposals would cost $3 trillion between 2011 and 2020.

Ahh, here is the meat of the matter. You see, the Obama administration has skilfully had the CBO score their proposed budgets (with bloated new entitlements like ObamaCare and Cap and Tax) along with the Bush tax cuts. What a better way to explain to citizens that taxes must rise in order to avoid a fiscal train wreck sometime in the future.

The administration has also called the budget trajectory unsustainable and the president has created a fiscal advisory commission to recommend ways lawmakers can get annual deficits down to 3% of GDP by 2015.

Yes, a blue ribbon commision will tell us what we already know...that taxes must go up and the Bush tax cuts must end. The commision runs interference for the administration and for liberal democrats who hate anything George W. Bush did. Wait for it, folks...wait for it.

Milton Friedman - The Social Security Myth

Not an Austrian but still great.

The unpopular truth about ObamaCare

Jeff Perren writes the following regarding health care:

...the health care bill(s) are not bad chiefly because they're too costly. That's true, but far from fundamental. They're bad because they restrict liberty, they violate rights — to freedom, property, and voluntary trade.

They do so on the ever-useful excuse that it's morally mandatory to "help the poor obtain medical care," which is not merely false, but pernicious. We are no more obligated to "insure the uninsured" than we are to provide food, housing, or anything else to those who can't afford them.

Apart from all the other arguments that might be made, one has to wonder why altruists refuse to make any distinction between those who deserve assistance — even privately — and those who do not. All 'poor people' are somehow presumed to be that solely through no failure of their own.

But that, too, is not essential. Even those who find themselves in need of medical care they can't afford after trying their utmost have no moral or legal claim on the public coffers.

VH: Truer words have rarely been written on the subject: Health care is not a "right." In order for some to get it, others have to be compelled, by force, to provide it. There is no difference between bailing out AIG and ObamaCare. Additionally, in either case, we whistle down the primrose path towards fiscal ruin.

Williams with Sowell - Academic Intellectuals

Worth a listen.

Happy Birthday, Murray Rothbard

He would have been 84 today.

Ah, Unions...

The transportation union in San Francisco is doing what unions do best--drive the city into bankruptcy.

The terror of Global Warming

A suicide pact hatched by parents that feared Global Warming. Why do the children have to suffer this insanity?

Make your vote count

Grade Obama on his job performance thus far. So far, the results are as I expected.

The Fannie Mae monster needs to burn more cash

OK, hang on to your hat's, dear friends. The vacuum cleaner known as Fannie Mae is about to swallow gobs of taxpayer dollars again---$15 billion worth of it:

Fannie Mae needs another $15.3 billion in federal assistance, bringing its total to more than $75 billion. And worse, the mortgage finance company warned that its losses will continue this year.

The rescue of District-based Fannie Mae and sister company Freddie Mac is turning out to be one of the most expensive after-effects of the financial meltdown. The new request means the total bill for the duo will top $126 billion.

And the pain isn't over. Fannie warned Friday that it will need even more money from the Treasury, as unemployment remains high and millions of Americans lose their homes through foreclosure.

Fannie Mae reported Friday that it lost $74.4 billion, or $13.11 a share, last year, including $2.5 billion in dividends paid to the government. That compares with a loss of $59.8 billion, or $24.04 a share, a year earlier.

Fannie Mae, which was seized by federal regulators in September 2008, has racked up losses totaling $136.8 billion over the past three years.

The WaPo article fails to mention that Fannie Mae debt is NOT added to the federal budget. So it is essentially "off the books." Anyone that is following the financial crisis in Greece knows how dangerous and dishonest it is to have massive government debt hidden away from public view.

BTW, remember how Barney Frank defended Fannie Mae? Now, he wants to eliminate Fannie and Freddie. Incredible.