The cap and trade redistribution begins

Last Thursday Maryland utilities were among those bidding to pay for the privilege of creating and/or supplying electricity and natural gas. The first Regional Greenhouse Gas Initiative auction netted a total of $38,575,783 to be divided by the six states offering these allowances. Man, you talk about suckers.

On the other hand, perhaps I’m being too hard on the utilities and other bidders because the sole reason this auction occurred is because these respective state legislators were seduced by the twin thoughts of appearing to address the phantom problem of manmade global warming while adding a few dollars to their state treasuries – without overtly raising taxes. (Never mind that these utilities need to get that money back somehow – unfortunately for them they have far fewer methods to raise the revenue to maintain their own profitability.)

So where will this $38 million go to? I’m sure a piece of Maryland’s ill-gotten gains will go to replenish a program which was stiffed in the state budget, the grant program for solar and geothermal energy. Most of the rest will disappear into the maw of Maryland’s Strategic Energy Investment Fund as detailed (look around page 7) in Maryland law. (As it stands, we might get a quarter back on our electric bill. Woohoo!)

Of course, much of our booty is targeted toward low- and moderate-income homeowners. Certainly they could use the help but I’ve never seen the idea of redistribution from a private corporation through a governmental entity (who naturally gets their cut) to a targeted group as one which provides either efficiency or incentive for betterment of the lower class. But it sure provides votes to the elected officials who love nothing better than spreading the largesse around.

This is the first of what should be a quarterly series of RGGI auctions, the next one will occur in December. In an era where financial providers got in huge trouble from buying and selling a somewhat tangible asset like real estate, it’s mind-boggling to sell allowances to be allowed to create something that we humans naturally exhale. But that’s the way of the world these days, and another item which needs to be addressed in order to reestablish government in its proper role.

Black gold and natural gas from an industry point of view

On Friday last I was fortunate enough to be invited to participate in a conference call with the nice folks at the American Petroleum Institute (thanks to Jane Van Ryan for setting me up) along with thirteen other bloggers from across the country. And while I took reasonably copious notes, fortunately I don’t have to replicate the chickenscratchings that my notes tend to turn into when I’m writing quickly; instead the API folks were kind enough to reproduce the call via transcript and in audio form as well. (If you have a spare hour-plus it’s pretty informative, even with that somewhat nasal-voiced guy from monoblogue chipping in.)

We covered a wide range of subjects and I’ll be the first to admit I learned a little more about the business of petroleum. When most people think about the subject they consider just two areas, maybe three: the rig or well where the oil or gas is pumped out of the ground, the refinery where oil is processed, and the gas pump where you bring your car or SUV up to, gazing slack-jawed at the price numbers spinning ever upward. However, there’s a LOT more to the oil business than just those three factors.

I was a couple minutes late to the party, but I did manage to catch the initial topic of discussion – the late and unlamented Congressional moratorium on offshore drilling. Trouble is, like Lazurus, restoring the ban is one of the many aims of Congressional Democrats should they increase their majorities in both bodies and most certainly they would have a backer in Barack Obama if he’s elected. So while the lifting of the moratorium was cause for a little celebration, the industry is still holding its collective breath awaiting further action. (What’s really disgusting about this and many other free-market situations is that we have to rely on Congress to give a green light to items that the federal government has little or no business getting involved with. The business of America used to be business, now I think it’s waiting on political favors.)

On a related note, the topic of supply came up and the recent shortages of gasoline in the southeastern area of the country were mentioned. Right up there in the realm of “stuff I never knew about”, the situation of product movement has created this bottleneck as recovery from both Hurricanes Gustav and Ike is slow. It’s forcing supplies to take a circuituous route to that region and since oil only can travel at a few miles per hour because of pipeline limits, the situation is taking awhile to unravel.

Of course, that led into a discussion about refinery capacity and spreading the wealth, as it were. Most refineries are placed in areas with a healthy supply of crude oil, and even the ones which aren’t still exist near a pipeline which can bring the supply needed to run efficiently. One item I’ve referred to in the past and found intriguing was President Bush’s 2005 proposal to place new refineries on former military bases, but API President and CEO Red Cavaney countered by citing the economics of investing in expansion of existing refineries rather than building new, claiming the extra capacity comes at 60% of the cost of a new facility in half the time.

Perhaps that cost savings comes in part because of the smaller likelihood of legal snags. In terms of getting supply, one giant hurdle is the constant litigation that environmental groups and other gadflies subject energy producers to each time a new field is opened. Cavaney gave the recent example of a lease auction for Alaska’s Chukchi field – the government received $2.7 billion in bids yet not one hole has been drilled in the nearly eight months since the sale because of legal action against each and every lease acquired by the companies. This is one case which screams for tort reform!

Frequent readers of monoblogue know, however, that while I’m foursquare behind drilling here and now to help assure our energy independence my main focus on securing more energy supply is the number of good paying jobs that oil companies could create for Americans if only the hurdles placed in their way were cleared out. My question actually began a pretty robust conversation about the employment aspect, which I thought was a good selling topic for keeping the issue alive as prices declined:

This is Michael Swartz. I write for Monoblogue. Now, earlier, you talked about an education effort to inform the public about your goals. But originally, it was based on a supply. Obviously, when we are paying $4 a gallon for gas, the supply end of it is paramount on people’s minds. But now that gas prices are declining a little bit – it is down to 3.50, 3.40, 3.30 – and on the other hand, the unemployment rate is edging up to 6 and 6.5 percent. Do you – (inaudible) – see a change in strategy that is really required in terms of education and taking it more away from the supply – making a less emphasis on supply and more of an emphasis on the jobs that are created?

MR. CAVANEY: We are going to be doing both because they both are relevant. We have not seen – and obviously, people are on the watch for it – a drop-off in the support for drilling that materialized now that the prices have been falling. But one of the things that is very important to us going back to the discussion we had about the OCS and the moratoria is there are some tremendous job opportunities with well-paying jobs available if people will end up moving forward. These go beyond just the people who are going to man the various rigs and platforms and the like to the fact that particularly if you look at closer in – let’s say 50 miles from shore. Fifty miles from shore where better than half of the crude and natural gas is undiscovered, but technically recoverable has been identified. Those are lands where the technology is such that we can build the platforms. We can build the rigs. We can do all the offshore work in U.S. yards and in U.S. manufacturing operations. So there is a great deal of indirect labor that would flow and be connected to those things – much more so than would be in a case that you are out 100, 150 miles and you are going to rely on most of your platform work and drill ships and the like to be coming from abroad. So it goes to the point I made at the very beginning – if you expand the opportunities for becoming a sort of strategic energy center outside the traditional Gulf area or Southern California or a little bit less – let’s say, outside Philadelphia, there is a pretty good opportunity here for good paying jobs – not just the construction jobs that moderate when you are done, but of a permanent nature because this stuff will – has the potential to continue and grow for years to come.

Yeah, that’s why I write because my words don’t always come out as I’d hoped when I speak. Regardless, Red brought up a good point about all those spinoff jobs. Imagine the impact on the economy of the Eastern Shore if Virginia was brought into play as a producing state – apparently there is some commercially viable product not far offshore. We could use that economic shot in the arm and it would complement all that’s slowly developing around the Wallops Island space facility.

Needless to say, it was a learning experience for me because I’d only participated in something like this one time before and that was on a smaller, statewide scale. It’s most likely I was the little guy involved as far as readership goes but I appreciate the chance to speak with these industry leaders nonetheless – in order to get larger, one needs to hang out with a better crowd and that was one goal I achieved. So I’d like to thank both the API staff involved and the other bloggers who made the call both informative and interesting. A couple of them (Bob McCarty of Bob McCarty Writes and Greg Balch of The Barnyard) already have their take on the call, I’m just adding my thoughts to the list.

Outdoing each other in the wrong way

September 29, 2008 · Posted in Campaign 2008 - President, Inside the Beltway, National politics, Politics · Comments Off on Outdoing each other in the wrong way 

On Thursday I received an interesting release from the National Taxpayers Union. I’m pleased that it’s a private entity figuring this stuff out, I guess those who donate to the group are paying for the staffer or two who has to sit through watching the news videos and spend the rest of their time reading all of the press releases to ascertain what new spending program comes up next. Here’s the important portion of what the NTU said:

As John McCain and Barack Obama jockeyed for position in the race to appear “leader-like” over the economy and in upcoming debates, the latest update of the National Taxpayers Union Foundation’s (NTUF) candidate cost analysis project shows that despite their different styles, the major party Presidential hopefuls have one thing in common: both their agendas would add billions more to the taxpayer’s tab every year.

NTUF’s fourth and final round of assigning price tags to the candidates’ platforms since January 29 found that Sen. McCain (R-AZ) would increase yearly federal spending by $92.4 billion, compared to Sen. Obama’s (D-IL) $293.0 billion. NTUF also released a first-time analysis of Libertarian Party candidate Bob Barr, who would instead cut annual federal spending by $200.9 billion. The studies include proposals through September 19.

“Both the McCain and Obama campaigns have tried to keep pace with the political issues of the day — largely by responding with proposals for new programs and regulations that could reach deeper and deeper into taxpayers’ pockets,” NTUF Senior Policy Analyst Demian Brady said. “On the other side of the spectrum, Bob Barr’s Libertarian philosophy is strongly reflected in a platform that is built upon cutting programs and slashing spending.” (Emphasis in original.)

It’s notable that both Obama and Barr take “savings” from withdrawing our troops fighting the Long War. It accounts for almost half of Barr’s total cuts, with much of the rest coming from disbanding the Department of Education. Unfortunately the NTUF doesn’t figure out the numbers for Constitution Party nominee Chuck Baldwin, who is on Maryland’s ballot as an unaffiliated candidate – I suspect his may be similar to Barr’s.

One weakness insofar as I can tell with the NTUF study is that it doesn’t account for the inside the Beltway practice of “baseline budgeting”, where spending the exact same amount of money year-over-year (or even a small increase) is considered a “cut”. And let’s face a cold hard reality here: with a federal budget now north of $3 trillion and trillions more in unfunded liabilities because of entitlement programs built up over the last seventy years, even the cuts Barr proposes are but a drop in the bucket (about 7% of the total budget, including the withdrawal of troops.)

It’s a point I’m going to expand on in a later post, but Americans need a sea change in their attitudes about government before progress can be made. I applaud the Barr stance on cutting spending (except for troop withdrawals, of course) but if he gets 2% of the vote it would be cause for celebration among the Libertarians who read here. And that’s part of the problem – there are too many among us who talk the talk but only walk the walk until they find their pet program is the one under the meat cleaver.

The first thing which has to go in this new educational effort is support for the idea of privatizing profit but socializing risk. This bailout we’re going through is but the latest chapter in a sorry evolution, and it’s where I’m going to take this concept when I get back to it later this week.

Two views on the bailout

Tonight I’m going to let a couple other opinions on the proposed $700 billion financial system bailout take the place of my own opinion on the subject. I’m saving that for a later post because it’s also going to tie together with my lunchtime post tomorrow.

The first opinion is from my GOP cohort Dave Parker. This was an e-mail which Republicans and others on our e-mail list received as his thoughts on the situation at hand. I actually embed the video (it’s about 10 minutes and goes quickly), he just linked to it.

This will be almost a tirade, and I’m sorry about that. But with the talking heads pretending that the causes of the financial meltdown are beyond our understanding, blaming Republicans for deregulating the mortgage markets – even though the real causes are obvious – I’m really getting irritated!  Perhaps the talking heads are so stupid that they lack understanding (and that’s my generous appraisal since they are probably deliberately covering up the facts), but most people are bright enough to analyze the facts and understand what happened. This really isn’t all that complicated! And it wasn’t caused by Republicans pushing for deregulation (which is the spin coming from the Dems and their allies)! 

Why aren’t we hearing more about the real causes of the financial crisis? This isn’t rocket science!  Carter began it, Clinton pushed it forward, Bush and McCain tried to stop it — and corrupt thieves stole everything they could until the whole house of cards collapsed. No wonder the Democrat Party doesn’t want to investigate it! THEY CAUSED IT! And Obama’s right in the middle of the money, taking in donations and surrounding himself with advisers who picked up every loose dollar they could find. Here’s a video that points out most of the problem:

Watch it – and then send the link to anyone who has the ability to think! (I want to see if some of my so-called-intellectual, left-wing colleagues are able to ignore this!) Yes, this is biased pro-McCain – but with good reason! This mess was caused by people who believe that everyone deserves a good home, even if they don’t work hard to earn enough to afford homes. Equal OPPORTUNITY isn’t enough for socialists/communists – they want equal ALLOCATION of wealth and property, taking from those who have and giving it from those who do not. Karl Marx called this “redistribution of wealth” and it was a fundamental part of Communist theory. (People with lots of money are always evil, and they should have their money taken away from them and given to the poor. Sound familiar? Pander to the poor and demonize the wealthy.) Don’t they teach this in school anymore?

Perhaps at the next debate, McCain will go after Obama on this issue. I truly hope so! If he doesn’t, McCain risks losing – and losing big! McCain TRIED to end it; Obama and his friends let it happen. Don’t the voters deserve to know these important facts? Bad Democrat economic theories (actually socialist/communistic theories), started by Carter and forced upon banks by Clinton, embraced by crooked supporters of Obama – and here we are in a mess!

Now we’re supposed to pay off homes for people who bought them, even though they couldn’t (and can’t) afford them? Is that one of the results of the plan? (Listen to the people on TV. That’s what the Dems really want!) People who worked for what they have get to pay for Carter’s and Clinton’s failed social engineering – and for Obama’s friends’ greed? What’s wrong with this story? And why isn’t the mainstream media on top of this? Do I really have to ask?

The other opinion comes from Mark Alexander at the Patriot Post, who led off last Friday’s Digest with this editorial comment:

“For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac… and the sheer magnitude of these companies and the role they play in the housing market… If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.” —John McCain arguing for passage of the Federal Housing Enterprise Regulatory Reform Act (S. 190) which he co-sponsored in 2005.

While Sen. McCain is being pilloried by his opponent, Barack Hussein Obama, for asserting (correctly) last week that the fundamentals of most U.S. economic sectors are sound, clearly, Sen. McCain has understood for years that irresponsible lending practices for U.S. housing posed “enormous risk… to the housing market, the overall financial system, and the economy as a whole.”

While Obama was out politicking this week, ostensibly itching for a debate that he’d been avoiding all summer, McCain suspended his campaign to work with Republicans in Congress, outlining conditions for an agreement that would both protect the American taxpayer and thwart a meltdown of the U.S. economy. So, “Country First” is not just a campaign slogan…

The enormous risk that Sen. McCain warned of in 2005 has now become a financial crisis of staggering proportions. That crisis can trace its roots to Bill Clinton’s signature on legislation making it easier for minority constituents with bad credit to obtain mortgages. In 1995, he had his Treasury Secretary, Robert Rubin, rewrite the lending rules for the Community Reinvestment Act, opening the flood gates of mortgage lending to unqualified borrowers.

This legislation, in effect, applied affirmative action to the lending industry, which is to say that the current crisis is NOT a “free market failure” but the result of socially engineered financial policy by the central government. The financial markets welcomed their new customers with open arms, fueling a real estate boom across the board.

These so-called “subprime mortgages,” which were offered at variable interest rates, were widely perceived as good investments. Investors used the high-risk instruments to secure assets in other markets fueling profits for investment banks and mortgage lenders. The subprime market thus expanded rapidly and the mortgage instruments were used by other firms as collateral for investments in stocks, commodities and the like.

Unfortunately, no one questioned the pell-mell regulatory system of oversight for these transactions until large cracks appeared in our economy’s foundation, the first being the collapse of Countrywide, the nation’s largest subprime lender. Then banks and mortgage lenders large and small began downsizing, dumping assets and closing their doors. Bear Stearns filed for bankruptcy. Fannie Mae and Freddie Mac, holders of trillions of dollars in mortgages, were bailed out with 200 billion taxpayer dollars. Lehman Brothers filed for bankruptcy, and insurance giant AIG was given an $85-billion taxpayer prop to keep it solvent.

This morning, as Congress is debating whether to implement the Democrat-backed “bailout plan” or the Republican-backed “workout plan,” Washington Mutual Inc. has been seized by the Federal Deposit Insurance Corporation (FDIC) after collapsing under the weight of reams of bad mortgages. WaMu, listing $307 billion in assets, becomes the largest bank failure in U.S. history. The FDIC sold WaMu’s assets for $1.9 billion to JPMorgan Chase & Co., which bought Bear Stearns Cos. earlier this year.

(Congressional Republicans might also consider repeal of Sarbox, the Sarbanes-Oxley Public Company Accounting Reform and Investor Protection Act of 2002, which has maintained a choke hold on financial institutions and is high on the list of proximate causes for the failure of Countrywide and Bear Stearns.)

The serious economic calamity confronting our nation, and the world, is being labeled a “credit crisis.” But we are on the verge of a crisis of cascading confidence in the U.S. economy, which, in the absence of aggressive intervention, could, no, will result in a dramatic recession affecting every sector of the U.S. and, eventually, world economy.

The catastrophe looming just over the horizon is indeed that big, and we must all hope that the solution is big enough to interrupt the domino effect already underway.

The question that must be asked, however, is whether the people’s confidence in their government is sufficient to thwart this cascading effect. Far more often than not, in the inimitable words of Ronald Reagan, “Government is not the solution to our problem. Government is the problem.” Of course, the only institution big enough to address a problem of this magnitude is the government.

Perception v. Reality

Essentially, perception defines value, and the shared confidence in our perception of the value of one major sector of our economy, the housing market, has eroded dramatically.

To understand the notion of perceived value, consider all that paper we call currency. If I walk into a store and pull out one of these pieces of paper with Ben Franklin’s picture handsomely printed upon it, the store proprietor will accept that paper in trade for some of his products or services because he believes it to have intrinsic value (which it once did, when it was backed by hard assets—gold and silver). But make no mistake: The value of that piece of paper is nothing more than it is perceived to be. Thus, if the proprietor’s confidence in that perception becomes diminished, he may begin to think such a piece of paper is worth only half its face value, or perhaps nothing at all.

And if my paper is perceived to have no value, I will not be able to do commerce in this or any other store.

For two decades, our confidence in the perceived value of pieces of paper called mortgages has been growing rapidly, and because the prevailing perception has been that a house will be worth more tomorrow than it is today, financial institutions have aggressively enabled buyers to assume mortgages to purchase houses. (Actually, mortgages are now traded electronically as binary data—value that!)

However, in recent years, confidence in the perceived value of real estate has outpaced reality, as mortgage defaults have trended upward. That realization has resulted in what now has become a precipitous erosion of confidence in the value of real estate, and consequently, housing market values have collapsed in many areas of the country where they were unduly inflated.

While perception can be shaped and molded, reality is finite. The reality, in this case, is that a house and its outstanding mortgage are worth not a nickel more than a buyer is willing to and capable of paying for it.

Thus, the devaluation of mortgages has had an enormous financial impact on institutions that trade in “packaged mortgages,” and consequently, on other institutions that trade with them, and, well you get the picture. The dominos have begun to fall.

Moreover, in an effort to keep their domino standing, because of the potential that any new lending would result in additional foreclosure exposure if the housing market continues to decline, banks have tightened lending in order to preserve the capital necessary to cover the cost of a growing number of foreclosures. This constriction of the money supply extends far beyond the housing markets, as loans for business development and expansion are also drying up.

This combination of events creates the perfect economic storm, and it has dire consequences for all Americans.

Consequences of cascading confidence

Confidence in the perceived value of financial instruments, which are the foundation of our economy, is calculated minute by minute by indices such as Dow Jones, Standard and Poor’s, and other measures of financial markets. These measurements amount to investor confidence indices, polls of investor perception about the strength and stability of the economy. The stability and direction of these indices are a good indication of investor confidence.

If the indices indicate significant instability of investor confidence, that instability can cause the financial markets to collapse in a single day. (See: “Great Depression.”)

Here, it’s important to note that the vast majority of Americans are among the “investor class.” This isn’t just about “the rich.” Whether you trade millions of dollars in securities daily or like cream in your coffee, you are a shareholder in our economy.

Thus, the plan proposed by President George W. Bush and Treasury Secretary Henry Paulson—waiting for majorities in Congress to determine the details—is an effort to stabilize investor confidence by authorizing up to $700 billion in guarantees for institutions holding mortgages. In effect, this will relieve lenders of liability for mortgages considered to be at risk of default—about five percent of all mortgages.

It is hoped that Republicans can succeed in crafting legislation that is more workout than bailout, the former requiring much more market accountability, as proposed by Sen. McCain and former House Speaker Newt Gingrich.

President Bush addressed the nation Wednesday evening with a concise explanation of the current crisis:

“This is an extraordinary period for America’s economy. Over the past few weeks, many Americans have felt anxiety about their finances and their future. I understand their worry and their frustration. We’ve seen triple-digit swings in the stock market. Major financial institutions have teetered on the edge of collapse, and some have failed. As uncertainty has grown, many banks have restricted lending. Credit markets have frozen. And families and businesses have found it harder to borrow money. We’re in the midst of a serious financial crisis… So I’ve proposed that the federal government reduce the risk posed by these troubled assets, and supply urgently needed money so banks and other financial institutions can avoid collapse and resume lending. This rescue effort is not aimed at preserving any individual company or industry—it is aimed at preserving America’s overall economy. It will help American consumers and businesses get credit to meet their daily needs and create jobs. And it will help send a signal to markets around the world that America’s financial system is back on track.”

What about a free-market solution?

I concur, of course, with the principled objections from free-market advocates and hope that free-market solutions will be re-implemented in conjunction with the necessary mortgage backup. If not, the cure may be worse than the disease. After all, it was the suspension of free-market principles that got us into this mess.

But I agree with President Bush’s comments regarding the necessity of intervention: “I’m a strong believer in free enterprise. So my natural instinct is to oppose government intervention. I believe companies that make bad decisions should be allowed to go out of business. Under normal circumstances, I would have followed this course. But these are not normal circumstances. The market is not functioning properly. There’s been a widespread loss of confidence. And major sectors of America’s financial system are at risk of shutting down.”

Further, he is correct in this assessment: “More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically. And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs. Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And ultimately, our country could experience a long and painful recession.”

It is worth noting that $700 billion is a bargain compared to the implications for taxpayers if the economy spirals into a severe recession—or worse.

Can any of this colossal expense be recovered?

Fortunately, there are real assets backing up these mortgages—bricks and mortar, and the land upon which the foundations rest—but this is no “deal for taxpayers.”

While much of this mortgage backing may be recovered, as was the case with the savings and loan bailout of 1989, to suggest that the “taxpayers will be paid back” is ludicrous.

Congress is going to serve as the “watchdog” over the dispensing and recovery of these funds? Can you say, “fox in the henhouse”?

Even if Congress sets up a “trust fund” in order to use recovered funds to pay down the debt incurred to back financial institutions, we should consider that “lockbox” to be as safe as the Social Security Trust Fund lockbox. Every dime paid into Social Security has been spent on government programs, leaving that fund with a bunch of IOUs.

No doubt, every dime recovered from the private sector will be treated as revenue to expand government programs, and the debt will be left on the books.

To pay for the bailout, Democrats are sure to demand higher taxes from “the rich Wall Street fat cats who got us into this mess.” While this mess clearly ended on Wall Street, it didn’t start there, but, undeterred, the Democrats will always bank on this observation from George Bernard Shaw: “A government which robs Peter to pay Paul can always depend on the support of Paul.”

And, of course, if the current plan to restore economic confidence does not succeed, you know the Demos have “Plan B.” Don’t ask…

What role have politicians played?

One staple of the Democrats’ political playbook is the use of scare tactics to rally constituencies. Indeed, Obama and other Demos have been dishing out a steady stream of dire economic rhetoric in order to keep their constituents in line. Undoubtedly, all that economic hyperbole has influenced public perception of our economy and confidence in our economy. High on the list of issues President Bush discussed with candidates McCain and Obama Thursday was a request that they (read: “Obama”) cease and desist using the economic problems as political fodder.

It is our hope that the candidates will, indeed, arrive for debate in Oxford, Mississippi, this evening and begin the debate with a unified statement on economic recovery; then Sen. McCain can proceed to eviscerate Obama on foreign policy.

Footnote: There are significant, albeit unspoken, national security implications of a precipitous economic decline in the U.S. Where the our economy goes, the world economy follows, and their will be significant national security consequences. For example, if China’s economy contracts more rapidly than at present, keeping pace with U.S. economic decline, the consequences will likely be some significant internal and external “mischief” scripted by the Communist Party. As for India and Pakistan…you get the picture.

Tomorrow the House votes on the measure, and I truly hope that this doesn’t become good money after bad. Mark Alexander is correct that there are tangible assets being discussed here (95% of the 5% of houses in question have some sort of value to them, perhaps its not nearly the amount owed but there is value) but I believe he’s also correct in saying that we’re not going to see any payback to us in whatever those assets eventually are sold for.

The post I have for lunchtime tomorrow is slightly dated because of this new financial situation but the study I cite is still valid for the points I wish to make.

Fun with Obama

September 27, 2008 · Posted in Campaign 2008 - President, National politics, Politics · Comments Off on Fun with Obama 

I laughed, I cried, it was better than Cats (well, okay, in truth I’ve never seen the Broadway show but that’s how the phrase goes) when I was e-mailed this video from my buds at Our Country Deserves Better:

I like how they put the commercial together, placing the emphasis on experience first and then highlighting some of Barack Obama’s many gaffes, flip-flops, and misstatements. (Had they added “Slow” Joe Biden, the commercial would be another ten minutes longer – “Stand up Chuck!”)

The one drawback to this OCDB spot is that it’s pretty much destined to be an internet-only spot because of its extreme length. I understand that you can’t make a 30 second commercial out of Obama’s running mouth but perhaps they could have used some of the better highlights like the “57 states” and “above my pay grade” portions for something shorter.

But you can show this one in 60 seconds, and what makes it better is that Hillary Clinton does a lot of the dirty work:

This may be why a lot of Democrats who supported Hillary are lukewarm at best about Obama, and why Operation Chaos was such fun as it unfolded during the spring. This is actually the more effective spot in many ways, unfortunately Hillary has fallen out of the limelight a little bit. I must say though she’s not exactly gung-ho for Obama and it’ll be interesting to see how much help HillPAC is to him as opposed to their other chosen Congressional candidates, who I added to my watch list.

Last weekend I interviewed OCDB spokesperson Deborah Johns (who you saw in the Hillary spot) and earlier this week we may have found out one reason why she omitted the lone Maryland stop on her original itinerary – a Rasmussen poll had Barack Obama leading John McCain by 23 points in our state (h/t Danny Reiter at PolitickerMD.) It’s not completely unexpected with a heavily minority population that Obama would do well here but I was hoping it was a little closer than that. However, we still have a little over five weeks to go and Barack has plenty more opportunities to trip over his tongue again (and again, and again…) Unfortunately, it’s freeing up Maryland Democrats to work in Virginia and Pennsylvania – on the other hand they’re not toiling for Frank Kratovil. (That must be what the DCCC’s million dollar ad buy is for, let TV do the shoe leather work. Go right ahead.)

I’m all for letting the Democrats think they have things in the bag, though. It makes for nastier surprises for them on November 4th. Our side has been given the lower expectations all along by the partisan media so if the Democrats lose we’ll have a ball listening to their excuses.

Bring it on!!

My drive-by Kratovil commentors are back (at least one of them) – hitting a post I did a month ago and adding his two cents. Maybe as a group they’re feeling their oats because an internal poll they did shows the race between Frank Kratovil and Andy Harris as a dead heat – that would suggest a 14 point swing in the race in a month. Since both polls are internal for the respective campaigns, my guess is that the truth lies someplace in the middle and there’s a 5 to 7 point margin in Harris’s favor. Either way, the last month will tell.

But “Joe” also asserts that Frank Kratovil feels a certain way about particular issues, to wit:

  • Frank isn’t against all earmarks and would favor “responsible” ones to benefit his district.
  • Nor is he against offshore drilling, provided that the claimed 68 million leased acres are taken up first. (Nice try on your part. I suspect a lot of it has already been checked over and found to be most likely dry holes. I’ve asked a friend of mine who should be in the know if my suspicions are right.)
  • Kratovil also wants to crack down on illegal immigration. Fair enough, I think both candidates are in agreement there – the trick is to convince the leadership on both sides to do so and I haven’t seen much in the way of that from Frank’s party. (Some elements of the GOP fall woefully short there too.)
  • By the way, he is a Democrat and not an independent because he’ll caucus with Nancy Pelosi and company. If he votes with San Fran Nan even 50% of the time the voters would likely want him thrown out, and I’m willing to wager a steak dinner with Joe that, if elected, Frank will have an ACU rating lower than Wayne Gilchrest’s 2007 rating of 36.

On Tuesday evening, Joe can make it out to Salisbury University to watch his chosen fair-haired boy battle with Andy Harris and Libertarian Richard James Davis. I’m hoping that they cover a few subjects Joe didn’t bother to touch on, like the candidates’ positions on abortion, private property rights, gun control, taxation, and our continuing efforts in the Long War. I can safely say that there’s a lot of contrast to those issues and the results would likely not accrue in Frank Kratovil’s favor.

Wal-Mart to the rescue

September 26, 2008 · Posted in Business and industry, Delmarva items, Radical Green, Wal-Mart · 1 Comment 

Considering we’re talking about a geographically challenged Democrat governor this could fall under the heading of “blind squirrel” but this story by Jim Nolan in the Richmond Times-Dispatch shows some pretty good thinking by Virginia Governor Tim Kaine.

But it wasn’t necessarily all his doing, as several other states are using Wal-Mart to conduct similar energy audits for their state buildings. The article by Nolan also points out a report from the American Council for an Energy Efficient Economy (ACEEE) that Virginia could cut its energy usage by 20 percent by 2025 if they adopted some steps outlined in the piece. Of course, coming up with the $11 billion to implement all of these recommendations is one difficult part of the equation and what Suzanne Weston of ACEEE doesn’t make clear is the first and most obvious question I would ask: what is the payback period for that $22 billion in savings she promises?

I’ll tell you why the energy audit as performed by Wal-Mart is a pretty brilliant idea: you’re using the resources of a company which is dictated by its market to make things as efficient as possible, thus getting the best possible prices for its customers while assuring themselves and their investors a healthy return on investment. If they’re going in to do an energy audit chances are they’re loaded for bear.

It’s truly unfortunate though that this Wal-Mart approach is only going to apply to energy efficiency in buildings. The issue at hand is that government by nature tends to be less than as streamlined as it could be; mainly it’s the idea of those who draw their paychecks from government not to overwork themselves out of a job. If government ever truly fixed a problem, the department, bureau, or agency set up to deal with it would no longer have a reason for existing.

But fear not, denizens of the left wing, Governor Kaine hasn’t fallen off the liberal wagon yet. As the Nolan piece also notes:

The governor’s climate change panel has set a goal of reducing greenhouse gases 30 percent by 2025. The panel’s full report is due Dec. 15.

Kaine yesterday outlined his strategy for Virginia. It includes conserving 400,000 acres of open space, some 260,000 acres of which already have been preserved.

Kaine also said Virginia has allocated $600 million to Chesapeake Bay cleanup over a two-year period and is limiting development along the oceanside waters of the Eastern Shore.

With 40 percent of the state’s greenhouse gas emissions attributable to transportation, Kaine said the administration is promoting increased use of public transit and commuter and freight transportation by rail.

Would it not make a little more sense to limit development along the bay that they’re paying to clean up? My guess is that the ruling class in Virginia has more money invested in development along the western side of Chesapeake Bay than they do on the Eastern Shore. (If you’re not familiar with Virginia’s Eastern Shore, there’s not a lot there to begin with – its two counties account for less than 1% of Virginia’s population and Governor Kaine is limiting its potential even more.) Certainly the Eastern Shore of Virginia isn’t looming large on the radar screen for mass transit or rail transportation either.

At least the citizens who inhabit that backwater of Virginia do have a Wal-Mart or two to shop at.

California beat us on this one…

Having talked about the concept of “smart growth” last week, it’s time for me to bring up something which was buried a little bit in my e-mail box, but works right in with the theme I was establishing then. Certainly the Green Workplace blog where I noticed this was pleased with this development.

At the tail end of August, the California Assembly passed SB375, which will help achieve the state’s air pollution goals by essentially dictating to local government that their future planning cut the number of vehicle miles traveled. This is how the bill analysis put one example of its topdown planning:

SB 375 requires CARB (the California Air Resources Board), after considering the recommendations from a broadly based advisory committee, to provide targets to the MPOs (Metropolitan Planning Organizations) for greenhouse gas emission reductions for cars and light duty truck trips from the regional land use and transportation system by July 1, 2010.

Basically, as Reason.org’s Samuel Staley opined:

The state government has decided Californians are going to drive less, whether they like it or not. Want to buy a Prius or insulate your home as your contribution to lowering carbon emissions? Sorry, but that’s not doing enough for the government’s tastes. California wants politicians and planners to have a bigger say in where you live, shop and work so that they can make sure you don’t drive that Prius too far.

Senate Bill 375 is the state’s latest far-reaching piece of legislation intended to help to meet one objective: reduce greenhouse gas emissions by 30 percent by 2020.

To cut emissions, the government will take a more active role in where you live, how you get there, and what kind of home you live in. While this legislation thankfully stripped away specific regional targets that would have been far more draconian, the core governing values underlying California’s approach should sound alarms in and out of the state.

If you substitute a few acronyms you could easily picture the liberals in Annapolis adopting much the same thing. After all, Maryland and the Regional Greenhouse Gas Initiative we and nine other suckers states participate in just had our first auction of CO2 allowances – if people thought bundling mortgage-backed securities was pushing the envelope of risky financial investment, try placing a value on breathing. I wonder how much of a CO2 allowance I have to buy if I run a couple blocks after forgetting to use my inhaler first.

But an artificial limitation on the number of vehicle miles traveled has more effects than just a possible drop in greenhouse gases. It also regulates behavior by forcing commuters to live closer to their workplace or depending on slow and taxpayer-subsidized mass transit to get to their job sites. We saw this over the summer with $4 a gallon gas, but in that case it was mostly a function of market forces and not so much government intervention. You may also recall that the clamor wasn’t nearly as much for more mass transit options as it was for reducing the pump price through increased oil exploration and drilling. (Have we forgotten the “Drill Here, Drill Now, Pay Less” movement already?)

Even the movement toward smaller cars which would be enhanced by increasing CAFE standards has deleterious effects on state tax revenue, because per-gallon gasoline taxes obviously don’t supply as much cash if automobiles are more fuel-efficient. That’s one reason some in Congress quietly endorsed a ten cent increase in the federal gasoline tax rate.

It’s another weapon in the anti-personal freedom, anti-property rights arsenal Annapolis Democrats seem to unload every session. Something like this could even supplant the Impervious Surface Fee Annapolis liberals and their allies have tried and failed to enact in recent sessions as legislation that falls into my “love to hate” department. (They did get a Green Fund in the 2007 Special Session with different funding sources.) While I hate to give them ideas, something tells me they’re much more up to speed on the concepts of restricting growth via state mandates than even I am.

Unsolicited response

September 25, 2008 · Posted in Communications, Delmarva items, Inside the Beltway, National politics, Politics · Comments Off on Unsolicited response 

I saw this on my e-mail yesterday and it made me go, “hmmmmmm….” But then I realized why I got it, and I’ll fill you in after I reveal the note.

Dear Mr. Swartz:

Thank you for writing to me about the Bush Administration’s proposal to bail out the financial industry. It’s good to hear from you.

There’s no question that we are in a credit crisis. People who have saved for their retirement, been faithful in paying their mortgage, and worked hard to pay for college are wondering, ‘What is going on?’

They’ve watched Wall Street executives pay themselves lavish salaries. They’ve watched irresponsible lending practices. They’ve watched casino economics, gambling on risky investment mechanisms. Now those very same Americans who’ve worked hard and played by the rules are being asked to pay the bill for those who didn’t.

Congress must act promptly to restore confidence and stability in the economy. But I will not be stampeded into voting for the Bush Administration bill. During the last seven years, every time there’s a crisis, they generate fear and they generate bad ideas. This three-page bill gives the Secretary of the Treasury unlimited power to intervene in our financial markets without any review by Congress, agencies, or courts. It cannot be rubber stamped by the Congress.

At the minimum, the plan must be limited and temporary – not open-ended. There can’t be any golden parachutes that reward executives for their excesses and their recklessness. No blank checks. There also must be a plan for those who have been hit hardest by the mortgage crisis.

Knowing of your views is very helpful to me. I will keep them in mind as the Senate continues to debate the President’s economic plan.

Thanks again for getting in touch. Please let me know if I can be of assistance to you in the future.

Sincerely,
Barbara A. Mikulski
United States Senator

So I was sitting there wracking my brain about why I would get that note and then realized that it was sent on my behalf by the National Taxpayers Union – remember this post? Perhaps having that few signers made a little more impact because the note looked more original.

And, truth be told, this is one of the rare moments I agree with our state’s senior Senator – to a point. Yes, anything by Congress regarding this issue should be limited and temporary. But that’s true of almost any issue, yet our Senators have continued to regulate and seek to tax our economy so that there’s no incentive left for entrepreneurship, unless you count further socialization of our society. (They had no issue with subsidizing alternative energy sources at the expense of oil companies, for example.) I too am hoping cooler heads prevail on this issue, given that Congress only has a few days before adjourning for the elections.

Now let’s talk about golden parachutes. Many of those in Congress who allowed this problem to fester for years without being addressed are also due some pretty hefty pensions once they retire (I believe Senator Mikulski is one who’s been there long enough to maximize hers.) Much like Wall Street executives, they fiddled around with taxpayer money while Rome burned too, yet no one’s talking about their failures and threatening to yank their retirement. If it’s proven that these executives committed criminal acts of fraud then they rightfully should go to prison, but there were fair negotiations between them and their companies regarding compensation. I may not like the Big Three giving in to union demands and paying people for not working but these provisions were fairly negotiated, so why should Congress question the motives of these Wall Street executives? Also it seems to me that some of those “irresponsible lending practices” were in place because Congress wished them to be. Before Senator Mikulski plays the class envy card, she should take a hard look in the mirror and see what her hand has wrought in this affair over the years.

And let me question who’s been hit hardest by the mortgage crisis? Most likely it’s those who shouldn’t have gotten mortgages in the first place; still, there’s a lot more of us who do pay on time and aren’t playing speculator than there are “victims.” Unfortunately, we will be the ones hurt the most eventually (while the scofflaws will probably be right back with hat in hand, no lesson learned) because there’s no way our nation can continue on this fiscal path without serious ramifications. It may be better to take the blow now then to wait for yet another shoe to drop.

However, having never heard from her before (or seen her in these parts, normally we just see Senator Mikulski’s Eastern Shore representative) I’m pleased she’s keeping my views in mind. Being an optimist by nature I’ll hold out that slight bit of hope we can teach an old dog new tricks.

Red County debut

September 24, 2008 · Posted in Bloggers and blogging, Personal stuff · Comments Off on Red County debut 

I just finished an article to introduce myself to the readers there that I won’t post back here, I’ll just link to it.

But there are a couple things I found out quickly about doing a post there. One is that Movable Type defaults to publish. Being a guy who saves frequently I accidentally published about a paragraph of my work in progress. I figured that out right quick and five minutes later I got a call from the editor asking why I pulled the post – hey, I’m used to WordPress and it defaults to unpublished until you tell it otherwise. It’s bad enough that I’m a compulsive rewriter, now I have to pay mind to my status.

The cool thing though is seeing my name and face right up top – I saved the screen shot of that one. It will be interesting to see the reaction of those who read the RC site, hopefully it’s as positive as the reaction to my blogging and news over the course of the week. That was a nice birthday present – not as nice as the one from my parents but more than I expected from the folks here. Even Joe Albero congratulated me.

I really wasn’t planning on spending the blogging day navel-gazing but I thought my loyal readers would like to know that the Red County Wicomico site is up and running. You’re the ones who have driven me to excel in my verbosity so I have you to thank as well.  Now I’ll have to see when the little pushpin is graphically placed correctly because the Red County site is now practically coast to coast with my addtion.

As far as the RC side goes, for tonight they’ll get a few reruns of stuff you’ve already seen here so I have a little base of posts to work with, then tomorrow I’ll start posting both here and there. (If you’re really cool you’ll comment at both places and help our little corner of America stand out.) But since there’s something like 14 items in my “Blog ideas” folder in my Yahoo mail I guess I’d better get cracking, huh?

Announcement

September 24, 2008 · Posted in Bloggers and blogging, Delmarva items, Personal stuff · 4 Comments 

If all goes as planned, this evening I’ll begin a new adventure in my blogging career.

Sometime today the website Red County will continue its expansion eastward and will open up the Wicomico County, Maryland site. I’ve been chosen to be editor there and will also get to select my “blogpen” of other writers who I deem to be worthy of inclusion. It will be their first Maryland site and apparently I was selected over several other worthy writers for the task. The person at Red County who offered me the position to liked my site because it has a “ton of information” yet is pleasing to the eye.

One thing I really like about the Red County concept is that I can maintain the focus I have on issues at all levels (national, state, and local). To begin with I’ll populate the site with a few recent posts I’ve done, including my Deborah Johns interview and my WCRC meeting notes from last night. This flexibility with focus is one thing which sold me on doing this in addition to monoblogue – in essence I’ll be writing one post and placing it on two websites. This site isn’t going to disappear. And if you wonder about cannabalizing readership here to supply items there, bear in mind that I’ll still be writing on non-political items (like Shorebird of the Week or local music stuff) exclusively on monoblogue – plus you get the political posts here as well.

And because the Red County audience is many times mine (and growing with the addition of new sites) it allows me an introduction to a lot of people who may not read a Maryland-based site. (I told the Red County folks that I’m going to cover Delaware too, they get two states for the price of one. I won’t restrict my blogpen to Maryland either.) But because my writing has always based itself on a fairly simple set of arguments that have been built over time, I have this vast reservoir of over 1,000 previous posts I can refer to which wouldn’t be placed on Red County but instead bring traffic here. (You’ll notice I do frequently backstop my posts like that.) This wasn’t something I had in mind for the situation at hand but it does come in handy.

So once the Red County Wicomico site is up and running you can check it out and see how well I’m received there. But don’t abandon monoblogue, there’s still a lot which will go here exclusively and it’s fun to see the comments I get from my local sparring partners. This can still be our not-so-little secret.

I also have two people to thank. Obviously the first expression of gratitude is for Deborah Johns, who was gracious enough to answer my questions so well. The other is to Joe Wierzbicki, who included a link to my interview on two e-mails he sent on behalf of the Our Country Deserves Better folks. It’s because of them I’ve had two of my best days ever in terms of readers, second only to last year’s Rushalanche. (And the links continue, I approved a comment last night from yet another site linking here.)

Now it’s time to take things to the next level.

WCRC meeting – September 2008

For the most part our club stepped away from partisan politics last night and looked at one of the other key issues we in Maryland will decide come November 4th. Last night we heard from Harry Shaw, a representative of Marylanders United to Stop Slots.

Of course we didn’t entirely abandon the business at hand, getting reports from the Central Committee, Young Republicans, and the campaigns of Andy Harris for Congress and John McCain. Since that portion of the agenda was first I’ll begin with those accounts.

Wicomico County Republicans are unlike their state counterparts, noted county Chair Dr. John Bartkovich, in that we have endorsed a NO vote on both the slots and early (and often) voting Constitutional amendments. The state party didn’t take a position on slots, but we chose to. We’re also going to continue our practice of sign waving for another few weeks at our present location before moving to another better-lit location in October. John also exhorted us to “keep the excitement up”; the excitement being the enthusiastic response to the addition of Sarah Palin to the ticket. (I got my “Sarah Palin for Vice President” sticker yesterday as well.)

In the meantime, Mark Biehl told us that two new members were in the fold because of the Palin effect and announced the Lower Shore YR’s are preparing for their debut as a team in Wicomico County Relay for Life this weekend. (I’m part of that team, you can donate to my cause here.) They were about 70 percent of the way to their donation goal and right on the edge of the top 10 teams overall. Later this year, they’ll turn their attention to a canned food drive.

Dustin Mills, speaking on behalf of the Andy Harris Congressional effort, noted that the race between Harris and Democrat opponent Frank Kratovil was “tighter” than previously, placing the polling difference at 3-5 points. In the offing were several chances to help out, with phone banking, door knocking, and an upcoming fundraiser on October 12 co-hosted by Wicomico County Sheriff Mike Lewis. The biggest upcoming event is the first debate between Harris, Kratovil, and Libertarian officeseeker Richard James Davis – it will be held September 30 at Holloway Hall at Salisbury University. I’ll be there taking notes and hopefully sneaking in a question or two.

The final report came from Wicomico County for McCain co-chair Bonnie Luna, who thanked the club for its support of the Wicomico GOP headquarters. Her head count back on the 6th was 103 people, which is outstanding given the conditions at the time (that little windstorm called Tropical Storm Hanna.) So far it’s been a “huge success” and we “can’t keep up with the demand” for McCain/Palin signs and bumper stickers. A portion of that is being the only area county to have a headquarters this time around so we’ve become a regional hub of activity. Bonnie also reported that preparations are underway for a McCain/Palin rally on October 4th with around 300 to 400 expected to attend. I’ll be there, just don’t make too much of a mess for me to clean up!

It was one of our longer business sessions, so we kept Harry waiting awhile to say his piece. Speaking for MUSS, he maintained that slots were “not a partisan issue” but that many Democrats were afraid to speak out against them for fear of crossing Governor O’Malley, who Shaw felt was backing away from the issue somewhat as polls have shown support for the amendment declining. Harry also brought up the $2 million dumped into the pro-slots side by a Canadian firm, MI Developments. A subsidiary of theirs operates two horse racing tracks in the state.

Shaw also pointed out that several state newspapers had come out against the effort, most recently the Easton Star-Democrat. Moreover, adding slots to the state Constitution would require further changes to be made via referendum each time something new was desired.

But the main argument advanced by Harry was to follow the money. Originally the rationale behind video slot machines was to save Maryland’s dying horse racing industry, but then the pro-slots focus shifted to providing dollars for education. One handout Shaw brought with him was the fiscal note for the slots legislation (it was SB3 in the 2007 Special Session, here’s the full .pdf version) and what it shows clearly is that slots will do nothing to fix the state’s FY2010 (the budget year starting July 1, 2009) problems and little to assist in FY2011. Not until fiscal 2012 would video slots impact the budget to the tune of just over $1 billion – assuming the projections are correct and generally revenue projections from the beancounters in Annapolis have been through rose-colored glasses lately. In short, Shaw and MUSS say the dollars “won’t do the job.” He added, “practically speaking, (slots) won’t solve our (financial) problems.”

While much of Harry’s argument was on the financial side (he is retired after 13 years with the Office of Management and Budget in Washington and an Army career before that), he also briefly mentioned the moral side, asserting that video slots are the “crack cocaine of gambling” and again wondering why the Democrats aren’t talking about the issue in their forums. (While I can’t say for sure, my guess is that Shaw’s a registered Democrat – he claimed to be a fiscally conservative liberal.) He also related briefly about his frequent testimony against slots, dating back to the Ehrlich Administration.

On a personal level, I’m astounded that the judges who decided the ballot language wasn’t misleading after adding one word (so that the amendment will read licenses will be primarily for the purpose of raising revenue for education) could say that with a straight face when in truth as little as 48.5% could be allocated to school funding. Up to 1/3 goes to the video slot operators for their cut, with the rest divided between the horse racing industry (one passionate supporter in the room was in that industry but abandoned it because of the poor purses in Maryland compared to Delaware), local government, state lottery operations, and minority business investment. My question to Shaw was whether there was any guarantee that the percentages couldn’t change in the future, since the Constitutional amendment does not lock those figures in stone. No doubt the majority in the General Assembly can and probably will tweak those numbers after passage in order to buy whatever votes they need in 2010.

I’ll ask the same question next month and see if I can stump the pro-slots speaker, Tom Saquella of the Maryland Retailers Association. That meeting comes eight days before the election on October 27th.

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