Business and industry – Page 88

Waste not, want not?

I wasn’t familiar with the ads in question, probably because I don’t hang out in the DC area. But writing in the openmarket.org blog, Sam Kazman of the Competitive Enterprise Institute thinks that Vladimir Putin should be Chevron’s Man of the Year because Russia recently cut off the natural gas pipelines to Europe which run through the Ukraine over a payment dispute between Naftogaz Ukrainy and Gazprom, the two state-run gas companies serving Ukraine and Russia.

Nominally, that’s not really worth the post by itself – after all, the Russia-Ukraine dispute has simmered for a few years and Europe has shivered in prior winters when one of the host countries for these vital gas pipelines decided to teach a lesson to a country farther down the line.

One has to wonder, though, about what happens if one of our energy suppliers gets into a disagreement with us. Suppose Israel escalates their excursion into Gaza farther and flattens the Hamas forces. Would our support for Israel be again translated into an OPEC embargo? While that would only take away perhaps 1/3 to 1/2 of our total usage since Canada and Mexico are our main foreign oil suppliers, the toll on our gasoline price and supplies would be severe. Overnight we could be back at $4 a gallon – or more. That cutoff could also leave many in colder areas of the country needing to decide whether to heat or eat because their heating oil would be spiking in cost as well.

While Europe doesn’t have a great deal of choice in the matter because of the scant reserves of oil and natural gas under much of that continent, America does have options because we’re blessed with abundant supplies of both.

Unfortunately, shortsighted people who seem to care more about what scare tactics they could conjure up of oil platforms blocking the sunrise on your favorite beach or vast environmental damage killing the caribou and polar bears frolicking like they’re in a real-life holiday Coke commercial on the snowy Alaskan tundra are hampering efforts to secure our own supplies of these vital fuels. They’re doing it through a compliant Congress or via a byzantine court system which has been a weapon of choice for environmentalists to block oil exploration because of the perceived impact on wildlife.

Recently my friend Jane Van Ryan at API pointed out to me that drilling expenditures in 2007 doubled their previous record, set way back in…2006. Each new oil well cost oil companies about $4 million apiece, while natural gas wells were ever-so-slightly cheaper at $3.9 million a pop. Overall oil companies invested $220 billion into oil exploration in 2007, and I’ll stack the jobs created by that $220 billion up against those created by the $700 billion bailout scheme Congress passed last year any day of the week.

However, one item that I could not find in the information provided by API is just how much of that $4 million or so per well goes to comply with the red tape created by regulations and the lengthy court battles which may need to be won before exploration can even begin. It’s overhead OPEC sure doesn’t have to put up with. (Maybe Jane knows that number too, she seems like a pretty smart lady.)

As a return to the Kazman piece, while Chevron advertises John Q. Public stating in various ways that, “I will use less energy,” (I found the ticker of oil and gas consumption running during my site visit fairly humorous), it’s interesting to note that the company itself is using plenty of energy rebadging their local gasoline outlets with the old “Pure” moniker. While it’s refreshingly retro, they have nothing on the Sinclair dinosaur signs.

More importantly, think of the energy used in the process of seeking and securing new sources of energy and compare that with the energy burnt up in some courtroom or back office inside the Beltway attempting to hold the former process up. Which is truly the better investment and which may leave us freezing like Europeans whose natural gas supply was cut off over a payment dispute between two faroff countries?

Time to sink a SCHIP

It’s a program which lends itself to a lot of great plays on words, but what’s not funny about the State Children’s Health Insurance Program is the means Congressional Democrats want to use to pay for it.

After an expansion of SCHIP was vetoed twice in 2007, the issue’s laid low for awhile but is likely to be reborn in Congress in the next few weeks. Already there are a couple shell bills introduced which can be vessels easily amended to not only expand the reach of the children’s health insurance program but increase the federal cigarette tax as well. In 2007, the figure used was a 61 cent per pack increase (making the revised federal tax a round dollar per pack) so most research has been based on that tax increase number. It comes on the heels of the General Assembly here in Maryland adopting a $1.00 per pack increase effective in January 2008. Other states have adopted similar increases over the last couple years.

Unfortunately for Maryland (and those other jurisdictions which have attempted bolstering the revenue stream from tobacco), the revenue generated by that 2008 tax increase has fallen short of expectations. Instead of grinning and bearing the added cost, many smokers voted with their feet and purchased their smokes in places where the tax bite was lower. Others managed to kick the habit, which was a goal the state had set but brings up the age-old question of why government at all levels levies a tax on something they simultaneously discourage the use of by restricting where the public can consume the product in question.

One study done using the 2007 tax increase figure of 61 cents per pack (h/t NetRightNation and Americans for Limited Government) illustrates the effect such a federal tax increase could have on residents in the Free State. In this case, the loss of revenue could reach $47 million, at a time when the state is already scrambling for funds. (Bear in mind this study was completed before the current economic recession reached its full fury so the shortfall could now be greater.)

In effect, one of three things needs to happen if the federal government decides to go this route in order to fully fund the Democrats’ vision of SCHIP:

The smokers who already have the habit would need to smoke more cigarettes, with a resultant increase in maladies from first- and second-hand smoke. (While the effects of second-hand smoke are debatable, most states and cities adopted their public smoking bans in order to combat diseases which were claimed to be linked to second-hand smoke.)
Related to the above, those same effects would result from the increased number of smokers required to keep revenue constant if per-capita smoking didn’t increase significantly. One source pegs the number at 22 million new smokers needed.
If neither of the above happened – and the long-term trend has been one of fewer smokers who smoke less per user – the revenue required would need to come from some other source (read: increased taxes on everyone, not just cigarette smokers.)

In terms of limiting government, reauthorizing SCHIP and including a dedicated tobacco tax for purposes of funding it is another expansionistic step on the evolutionary path to nationalized health care. Government involvement in health care began with an idea proposed by President Truman in the 1940’s, became law as part of the Great Society (Medicare and Medicaid were enacted as part of Social Security reform in 1965 under President Johnson) and slowly morphed from strictly medical coverage solely for the elderly and poor into coverage for children with the birth of SCHIP in 1997 and the inclusion of prescription drugs (Medicare Part D) during the most recent Bush Administration. Other recent proposals like one lowering the age for Medicare eligibility to 55 haven’t cleared Congress – yet. But the possibility for more incremental steps always remains.

There is even a proposal in the current Congress to dictate that health care is a Constitutional right.

While taking care of one’s body and mind is of paramount importance in maintaining the lifestyle each of us wants, the solution to all ills does not lie in having someone inside the Beltway be the final arbiter of what is required for the purpose of keeping one’s self healthy. The basic economics of supply and demand for services and the real-life examples of other nations like Canada or Great Britain – where “free” health care comes at a cost of long waits for procedures and confiscatory tax rates – should easily and quickly teach America that a system such as theirs isn’t one our nation needs to follow.

While it won’t be an easy task to achieve nor a politically popular one, revamping SCHIP into total mandated coverage for almost anyone under 30 years of age and enacting yet another tax which never goes away but only increases is an idea which desperately needs to be placed into the circular file, never to be heard from again. The health of our Republic depends on it.

Another sort of stimulus?

If you’re a longtime reader of monoblogue, you should recall that back in May I advocated for a particular industry’s expansion because they had the capital to help break our economic slide if they could put that profit to work.

The other day I received an e-mail note which suggested perhaps another approach could be tried, and it actually involves a legitimate function of our federal government. Since a portion of the Preamble to our Constitution is to “provide for the common defense”, certainly maintaining the best military we can rates as a priority. This tip also pointed me to two concurring opinions on the subject, Jeff Emanuel’s piece on Politico.com and another by John Ruberry, who writes for the blog Marathon Pundit.

What they have in common is a bid to save the F-22 stealth fighter jet, a program purportedly on Obama’s chopping block. The writer also noted a Maryland connection:

As you might know, Lockheed Martin, with offices in Bethesda, makes the advanced jet fighter. GE also works on the project at their Germantown location. These facilities will be at risk if the program is not funded. Many other facilities in states across the country will be facing similar uncertainty. By passing over the F-22 fighter project, the nationwide impact risks 95,000 jobs that contribute $12 billion of domestic production to the economy. With the federal government looking to boost economic activity and to stem unemployment, domestic manufacturing and production projects like the F-22 fighter are best suited to deliver maximum results on both fronts.

Living on the Eastern Shore, I actually didn’t know that. What I do know, though, is there are a lot of nations who are looking at the incoming President as one who may be easily manipulated into making a number of defense cuts and weakening our military in a time where they may be needed more than ever. It seems to be a roller coaster of late where Democrats in the White House cut military spending and Republicans have to ramp it back up in order to keep pace with those who threaten us.

Where this policy could more directly affect the Eastern Shore is in space exploration. Over the last few years the Wallops Island facility on the Eastern Shore of Virginia has increased its stature in the national space program, which in turn has helped an economically challenged area with job creation. Trading jobs at Wallops for infrastructure jobs which will be generally targeted for more Democrat-friendly areas will put our economic health at risk. I can see the pattern of pork now; despite what Obama says about earmarks he wouldn’t apply a veto to one of his cherished stimulus programs regardless of what’s thrown into them. True, some aspects of space exploration can be done better through the private sector but the military does have a stake in maintaining a healthy space program.

While the target has shifted over the weeks since his election, Obama has vowed to save or create a huge number of jobs – the latest number I’ve heard is 3 million. As one of a few specifically enumerated tasks given to the federal government by our Constitution, let’s hope that a large number of jobs saved come in maintaining our national defense.

Subsidies for our plenty

I’m having an interesting conundrum pondering this particular video from the CATO Institute that came to my attention. It’s about 5 1/2 minutes long and may hit some of my readers where they live.

In a lot of respects I can see CATO’s point; however, there is something to be said for helping out the smaller farmers rather than the large multinational corporations. Perhaps there’s a better way than just handing them checks, though.

Farming is by all accounts a risky business. In order to make a profit, a farmer has to have three things simultaneously occur: good weather for growing the crops or allowing the purchase of their feedstock at a reasonable price, a steady market for the product (which can be an export market as well), and a price per unit which enables the grower to sell at a profit. Factor in the increasing costs for fuel, labor, equipment, property taxes, insurance, and regulatory compliance – mainly due to environmental concerns – and it’s small wonder that the tiny 40-acre family farm has all but disappeared.

On the other hand, a portion of the tax burden comes from paying for those subsidies the farmers enjoy and the price of many commodities is propped up artificially by mandates such as the one corn farmers profit from regarding ethanol. And in case the weather doesn’t cooperate, farmers can generally take advantage of federally-backed low-interest financing to stave off the bill collectors until the crops come in a more plentiful manner.

Like many other businesses, those who work the land for a living are forced to keep an eye on the doings in Washington and their state capitals. However, it’s also an unfortunate fact of life that just one regulation change can wipe out years worth of planning. While that is the right states are given thanks to the Tenth Amendment, I’m quite convinced that farmers in the end would be better off with at least the subsidies from Washington phased out – in return, federal regulations can and should be sunsetted as well.

Another topic which wasn’t brought out by the CATO video but I feel is worth discussing briefly is the relatively recent practice of rural landowners selling their future development rights for cash up front, akin to taking a smaller lump-sum payment in lieu of lottery winnings normally paid out over a number of years.

My contention is that these tradable development rights should not be made permanent but instead only be in effect for a limited period of time; appropriate to me would be a 20- or 25-year term. Since farming tends to be a generational pursuit and families have been known to stay on the same homestead for a century or more, I think it’s quite fair to allow each succeeding generation to decide for themselves whether they wish to place their land off-limits to development or not. They can re-evaluate their circumstances based on the conditions present at the time – perhaps they’d like to take advantage of their frontage on what used to be a sleepy country lane when it becomes a major artery decades later. Or, instead of going to the bank for another loan because of a poor harvest, they could sell a small portion of their land if local usage creates a demand for the acreage. It’s a matter of highest and best use, as land policy should generally be.

On a personal note, I appreciate the kind words about monoblogue which were shared by some of the attendees at our Tri-County Central Committee meeting tonight. I’m sure I gained a few extra readers there, so I hope this article served as a good introduction to what I try to write as thought-provoking insight and reporting. If I may, I’d also like to suggest reading two other sites I contribute to, Red Maryland and Red County, where I edit and contribute to the Wicomico County subsite as well as post to the national site on occasion.

A Quixotic effort

From the “why doesn’t this surprise me?” department, courtesy of Bill Wilson and Americans for Limited Government:

Americans for Limited Government President Bill Wilson has called upon Labor Secretary Elaine Chao to launch an immediate investigation into plans by a coalition of union officials and environmentalists to raid employee pension funds in order “to pursue a dubious political agenda.”

Wilson’s call came in a letter to the Secretary hand delivered on Tuesday, December 30th. In the letter, the ALG executive warned that the announced union/environmentalist action directly violates Employment Retirement Income Security Act (ERISA) provisions by draining working pension funds to wage a political war on global warming. The letter specifically cites the Investor Network on Climate Risk (INCR) as culpable in what he terms an “elaborate shell game.”

The INCR’s Action Plan has 49 signers, including leaders of pension funds, union officials, state treasurers, state and city comptrollers, financial service firms, asset managers, and foundations.

(snip)

Dating back to December of 2007, the Department of Labor has repeatedly informed union officials that it rejects “a construction of ERISA which would rend the Act’s tight limits on the use of plan assets illusory, and which would permit plan fiduciaries to tap into ERISA trusts to promote myriad public policy preferences….”

Wilson’s letter to Secretary Chao calls upon the Department of Labor to ensure that the union/environmentalist coalition properly acts in the best interests of participants and beneficiaries under the plan. It states, “We urge you to take the actions necessary to ensure the fiduciaries within your jurisdiction are complying with ERISA… and are investing solely for the benefit of the participants and beneficiaries of their plans.

Wilson noted that that the success of the investment strategy, by its own admission, is actually necessarily tied to restrictions in carbon emissions that the federal and state governments have yet to enact, thus posing greater uncertainty and risk to investors.

“The INCR with its Big Labor and state participants create the very financial risks to investors its own action plan portends to reduce,” said Wilson in a statement. “In the process, it is putting the retirement savings and investments of thousands of investors, workers, and retirees in jeopardy by tying financial returns to projected government actions that have not yet taken place, and to a disputed science that may not be factual.”

The union/environmentalist plan ostensibly seeks to “reduce climate risks” in investor portfolios by requiring investments to consider climate risk, investing capital in “developing and deploying clean technologies”, reducing by 20 percent energy use in real estate portfolios, and to support policy actions to enact a “mandatory national policy to contain and reduce national greenhouse gas emissions economy-wide, making sizable, sensible, long-term cuts in accordance with the 60-90% reductions below 1990 levels by 2050 that scientists and climate models suggest are urgently needed to avoid the worst and most costly impacts from climate change.”

Wilson contends that “reducing climate risk” is not the real intention of the investment plan, nor should it be allowed even if it were. “This amounts to an elaborate shell game to reduce carbon emissions by endangering retirements,” he said.

“All of which has nothing to do with protecting the savings of investors from risk to their portfolios,” Wilson added.

Wilson warned that left unchecked, “[t]his green-union pension raid will not only endanger workers’ retirement benefits, but the greater economy. The American people have yet to seriously question the cost of going green.”

There are a couple of things which stick out in the information provided within the links.

First is that one of the 49 signatories to the INCR Action Plan is our own State Treasurer, Nancy Kopp. Little surprise there; in fact I’m more shocked that Peter Franchot didn’t jump on board too.

However, the second item is noticing the Action Plan dates back to early last year by my reckoning. Unfortunately, Secretary Chao is going to be replaced by an Obama appointee soon, his initial pick was California Congresswoman Hilda Solis. Her selection was praised by labor leaders so you can bet your bottom dollar Wilson’s request for an investigation will be quickly shelved once Solis takes over, assuming she’s confirmed.

Living once upon a time in a state where pension fund investment in non-traditional avenues became a celebrated scandal (I’m reaching waaaay back in the archives for this one, all the way back to my old blog), the question of whether this investment is appropriate given ALG’s concern is valid; unfortunately we can see just how much of a story this has become in the media because Wilson and ALG are seemingly the lone voices bringing this up.

It’s quite possible that the best route to circumvent this is a similar route taken against Maryland’s so-called Fair Share Act in 2006 – through the court system. There was another case where the ERISA statute came into play, but for a completely different reason. In this case, it may be much more appropriate because the signatories and their pension funds represent a number of different states.

Where Wilson is absolutely correct is citing the dubious science of manmade climate change, particularly when the INCR Action Plan openly supports government action to combat it. In general, the solution sought is one of draconian, job-killing restrictions on industrial and human activity which would do little to stop global warming even if it were present. Of course, an end result which balances the monetary gain possible from increased energy efficiency with the demands of those who want to attain a higher standard of living has been well-achieved by the free market for decades. And where efficiency ran into limits, until recently bold entrepreneurs were encouraged to seek new and better energy sources and supplies.

The push away from those items which were tried-but-true, such as incandescent light bulbs and domestic oil, has accelerated over the last decade as liberal environmentalists (as I repeat myself) demand substitutes which are more expensive and/or require heavy subsidies to remain viable in the market, such as compact fluorescent light bulbs or electric-powered cars. Until then, it seemed that technology and innovation flowed naturally – in less than a normal lifespan we went from our first flight to walking on the moon.

And while it can properly be argued that the latter achievement came as a result of federal government involvement, the same is not true within the evolution of wireless technology or in the manufacture of thousands of goods one uses on a regular basis. In most cases, we’ve advanced without needing a subsidy – only recently has the norm become going to the Beltway bureaucrats and lawmakers with outstretched hands.

Regardless, asking for the financial security of retirees to be based on the risky schemes and straight-up lobbying that the INCR Action Plan suggests is far from proper fiduciary prudence. Wilson is correct to be calling for an investigation and for action, but I fear he is far too late.

Could Joe be right (for once?)

Readers in my locality know that there’s a particular blogger who I am more often than not at odds with; the “Joe” in question is one who delights in attempting to hasten the demise of our local newspaper. This story is for him.

It came to me over the last few days from the folks at Pew Research. According to this report, the internet has overtaken the newspaper as a main source for national and international news. More striking are the figures for the Millennial Generation (ages 18-29) where the internet and television are dead even as a news source – 59% of young people cited one or both as a main news source.

A graph showing the percentage of Americans who receive their news from various sources, from the Pew Research Center.

After skimming through the report, I had two immediate conclusions.

One is that the claim of media bias in the news may pale in comparison to the chasm in conservatism vs. liberalism on the internet.

The second is that, with the lack of journalistic standards practiced in some quarters, people (particularly the youth) may be more ill-informed than ever.

In this age of wireless technology and video streaming, certainly it’s possible to witness events in real time and make up one’s mind about what goes on within the range of the camera taking the video. However, the vast bulk of news isn’t from eyewitness accounts, but from someone reporting the news. In olden days, we counted on newspapers to relate the story but often the information was at least second-hand if not more remote. This improved to some extent with the advent of radio and television; the former allowed newsmakers to speak directly with the people while the latter could be present where news was being made.

Now we have the technology that allows people to be their own reporters in real time. Certainly, the age of videotape allowed news gathering by non-professionals (one example was the Rodney King beating, caught on videotape by a person playing around with a camcorder) but that still needed the prism of someone at the evening news deciding it was a story worth relating. With the advent of Youtube and other video streaming repositories, that filter is eliminated to a much greater extent.

On the other hand, as a society we still must by necessity gather our news via a second-hand source who relates events to the reader, listener, or viewer through their eyes. Obviously my post is one example – I’m taking an event which happened (a survey of adults concerning their preferences for learning about the national and international news affecting them) and shaping it in a second way, the first being what Pew Research chose to report on. In this instance, I’m adding my opinions to the mix about what I feel was newsworthy and why it was so. Unless we happen to be witness to a momentous event in person, practically everything we gather as information will by necessity come as at least second-hand knowledge, regardless of whether we read it in the newspaper, hear it on the radio, or see it on television or the internet.

And here is where a nonbiased view and accuracy come in; that is, journalism in the truest sense of the word. Sadly, that seems to be lacking more and more in the 24/7 news cycle we now live in. What good is all the incredible amount of information we can gather if it’s presented in a slanted manner which highlights only one side of the story? Even worse, if people act in a particular manner on information which is later found incorrect, the future direction of society can be altered negatively.

In 2008, America had a Presidential election where even the most hardened observers noted the coverage of candidates was slanted negatively toward one and positively toward the other. (Pew did some research of election news and how the candidates were perceived within that coverage.) While there were opportunities to hear what the candidates had to say directly in joint appearances – to the extent that a moderator shaped debate questions he or she felt were appropriate for the electorate to hear – there was still spin afterward as spokesmen and network coverage talking heads let everyone know what they needed to think about what they just saw.

While I’m fairly pleased that the medium I dabble in most is beginning to penetrate a greater audience, the truth remains that those who look for news generally just go to the website of whatever news source they trust instead of flipping to their channel or buying that particular paper at the newsstand. It’s unfortunate that Pew apparently didn’t ask further whether the internet sources used by respondents were connected in that manner; however, much of my sourcing to do monoblogue comes from sites affiliated with either newspapers or television networks, and for the near-term future bloggers will rely heavily on those same sources to put their own spin on things.

If we denizens of the internet really want to be informative and take advantage of the growing audience, we need to put an emphasis on accuracy and hold ourselves to the journalistic standards which seem to be missing from more and more news outlets who’ve become cheerleaders for one side or another. It’s a goal I strive for when I report on events and if more sites would take that into account when they place what they do for all of us to see, we could turn America into a more well-informed nation.

Pay-for-play in America?

Hopefully your Christmas went well! But for Big Labor, Christmas came a little early, say November 4th. And apparently the situation in Illinois was just the tip of the iceberg (h/t NetRightNation):

The group is called Americans for Job Security, and frankly I hadn’t heard of them before I was alerted to this commercial. (Apparently this spot is intended for the North Dakota media market, such as it is. Reminds me of the Delaware media market, except North Dakota is much larger geographically.)

Regardless, AJS is on point in believing that there is a payback anticipated for those millions dumped into Democratic campaigns across the country; dollars that found their way to a whole lot of Congressional races including our very own First District battle. Big Labor ended up donating six figures to Frank Kratovil’s victorious-by-plurality campaign.

As the situation in Illinois slowly resolves itself, perhaps it’s time to revisit the “culture of corruption” theme the Democrats used so effectively in 2006 to unseat the Republicans as the majority in Congress. As Lord Acton famously noted, “Power tends to corrupt; absolute power corrupts absolutely.” We have a number of examples in government everywhere which prove Acton exactly correct, but Illinois is one where the light shone and the roaches scurried for cover.

Giving money away for nothing

Hans Bader of CEI is a blogger I’ve quoted before, and last week he posited that the Federal Reserve’s rate cut is truly going to punish savers and resume blowing up the credit bubble that popped this year, splattering effects like shrapnel throughout the economy. He brought up something that’s sort of rolled around in my mind for awhile but basically flew under the radar screen in this era of bailout.

A lot of us (myself included) have money socked away in a savings account that’s drawing pitifully low interest – even some of the best rates are about 3% and that’s not keeping up with inflation long-term. However, many may also be invested in a stock market where the Dow Jones Industrial average dropped by almost half in the space of about 14 1/2 months; possibly they could be in commodities which have also tanked in the last year. The only thing that seems to be going up is the tax burden of government, as even consumer prices have settled back into an almost deflationary cycle.

Normally conservatives call for a cut in the capital gains tax to help stimulate investment and promote growth, but with the current economic bust in full swing and many people needing to sell assets to survive it’s not at all a certainty that there would be gains to tax. That sea of red ink people see on their 401.k’s and portfolio programs may well actually serve as a deduction from income as a capital loss if they indeed need to hold a fire sale of their holdings. In turn, the tax collector would get just that much less because 15% of nothing is…nothing. And less income to tax means less revenue – but a larger refund because the withholding may have been based on higher expected income, which is good news for the recipient but terminates their interest-free loan to the federal and state governments.

Then we have the complicating factor of all the bailout funding finding its way to a point where it can help the economy. Unfortunately those who placed their trust in banks restarting the credit market have thus far been disappointed as they instead firmed up their bottom line or purchased smaller banks with their cut of the bailout cash.

And what of the states? They also want bailout cash as all but a handful of the 50 states are staring down the barrel of a budget deficit but aren’t inclined to alienate voters by raising taxes (which likely would be counterproductive in raising revenue anyway) or making cuts to popular programs.

Our nation finds itself in desperate times, and as a supporter of our incoming President noted in one memorable audio clip, “America’s chickens…are coming home…to roost.” It almost seems like we have to look back at the last few years and do certain things in reverse, particularly when it comes to the growth of government and branching it out into many areas where it doesn’t belong or can’t do anything about (think climate change.)

In that aspect, America needs a leader – someone to step up and say, “I’m willing to invest my fortune in America and will do my part to create wealth. In return, I want the tax and regulatory burden lowered on the producers and a shifting of items which are more properly done in the private sector back to where they belong.” One industry that I’ve argued could effectively do this job is the oil and natural gas industry, but there are others which might qualify – even the Big Three could do so if they were freed from the more egregious shackles of their union contracts.

Barack Obama has pledged to create millions of jobs through the repair and replacement of infrastructure. Fair enough, as there are needs in that sector which can and should be addressed; but when the project is complete where does the next job come from if the private sector is still prevented from stepping in because of tax burdens or excess red tape? The only answer then would be more government-sponsored infrastructure at inflated cost. Obama’s plan has the dubious potential of choking off other possible investment by being the 800-pound gorilla of monetary policy, another Fedzilla beast which needs more raw meat to survive on.

Unfortunately, hindsight is the only sight which can truly be 20/20 and we haven’t learned a whole lot from the past. A perfect time to really streamline and trim government would have been the time when everyone was fat and happy because those pencil-pusher jobs would have been absorbed by a growing economy. Now it’s a little bit more difficult, and we may have to put up with the situation we’re in for a little while.

The next time the worm turns (and it will) is the time to be ready to make the call. The private sector is getting leaner and meaner in bad times, so when we get back to the roaring economy it must become government’s turn.

Feds crunch credit creators

Today federal regulators announced a number of pro-consumer changes to the credit card industry that are slated to take effect in July 2010. Most consumers would benefit from a change that ends the practice of credit card companies increasing the interest rate on accounts carrying a balance.

As expected, banks and other card issuers were less than pleased with this change, claiming that credit would be tightened and cards more difficult to get. One study pegged the cost of the new rules for the banking industry as $10 billion a year.

Previously I’ve had this sort of game played on accounts I’ve had, with one card issuer who shall remain unnamed (hint: it’s not in my wallet anymore!) deciding to jump my interest rate from 7.9% to 12.9% while I had an outstanding balance. Never mind I paid the bills on time and generally well over the minimum monthly payment! Fortunately I read the change in terms that was enclosed with my bill and opted out, allowing the company to close the account while I paid it off at the lower rate. Most likely they decided to penalize me since I wasn’t using their card to make purchases.

With this drop-dead date all but certain, I can see 2009 as a year of transition for credit card issuers. Already I’ve had one card issuer tell me that effective early next year, my card will suddenly have a $10 monthly fee attached to it. (They must be mad because I’m taking my sweet time paying off a balance they’re charging 3.99% interest on for the life of the offer. No one told them to offer me that deal, and I would have been a fool not to take it and cut my interest rates and payments significantly.) Fortunately I have plenty of room elsewhere to transfer the balance should I choose to do so.

That’s one practice which doesn’t appear to be placed off-limits by the new rules. Also there’s no restriction on changing the interest rates on future purchases significantly, so anticipate any new items purchased after July 2010 on existing accounts to be placed at higher rates. Moreover, credit card companies will likely put the squeeze on consumers like me who pay more than the minimum payment in an effort to get out from under debt by raising interest rates in the latter half of 2009 and early 2010.

By providing a long lead time for these rule changes, the federal government is attempting to keep the credit spigot relatively open for another eighteen months – while credit remains tight – before locking out much of the subprime credit market by making it much less lucrative for lenders to inhabit. Some of these cards for people with poor credit are comparable interest- and fee-wise to payday loan outlets but consumers have little choice in the matter if they want to build or rebuild credit.

The lead time will also provide a chance for lobbyists and lawyers to squint through all the fine print and points of law in the rules and work out ways to avoid making these new restrictions hurt the card companies’ bottom line. In other words, the phrase caveat emptor applies more than ever.

Seeking more ‘make-work’ jobs

As someone who makes his living in that realm, I can emphatically assure you that 2008 has been far from a banner year in the building industry. Beginning with that loud popping sound many heard around the beginning of 2007 as the housing bubble burst (maybe it was mistaken for the champagne corks unsealed for various New Years celebrations), continuing through the subprime mortgage crisis, fueled in part by the spike in energy costs, and culminating in the near-collapse of the banking industry and tightening of credit, building activity has all but ceased in many portions of the country.

One of Barack Obama’s solutions to the problem is a program to focus on infrastructure, and it’s no surprise that every left-wing lobbying group wants to get its fingers into the pie. Certainly the United States Green Building Council was ecstatic about an Obama victory and saw his agenda as a way to get major portions of its agenda enacted:

USGBC is now working to promote sound policies in the next administration that will stimulate a green economy, create millions of green jobs, reduce greenhouse gas emissions, advance greener, more energy-efficient buildings, and spur green infrastructure.

Apparently they want to become yet another lobbying group who has bright ideas they’d like to see put into practice. However, if you look deeper into what they want to achieve, their agenda raises a few red flags. Let’s begin with “Green Buildings.”

President-Elect Obama has proposed the expansion of federal grants to assist states and localities in building more efficient public buildings through the use of LEED. In addition, under President-Elect Obama’s plan, all new federal buildings would have to be carbon-neutral by 2025. This plan also would commit all new federal buildings to a 40% improvement in efficiency within five years and would seek a 25% improvement in the efficiency of existing federal buildings within the same period.

By the language being used, there’s already a program in place for these grants – in essence the USGBC wants the federal government to put even more money that it already doesn’t have into these programs. The scratching of USGBC’s back occurs when a LEED mandate is placed on the buildings, since certification is a money-maker for the USGBC. As for the efficiency improvements, that’s all well and good if there’s a reasonable payback period on the investment. I don’t think carbon-neutrality is nearly as admirable of a goal though.

Next up is “Building Efficiency Goals and Incentives.”

President-Elect Obama has proposed a goal of carbon-neutrality for all new buildings by 2030. This will be achieved by establishing a goal of 50% greater building efficiency for new buildings and 25% greater efficiency for existing buildings over the next decade. Under the plan, the federal government would award grant funds to states and localities that implement new, energy efficient building codes, and would provide matching grants to states that promote building retrofitting through public benefits funds.

Again, more grants where the money’s not in place yet. It wouldn’t surprise me if there wasn’t eventually a cap-and-trade scam adopted on the federal level to pay for these grants. Welcome to Maryland, the canary in the coal mine for liberal lunacy – we already have adopted a similar idea.

Let’s talk about building codes, though. The idea of building codes originated out of concern for life safety, and energy efficiency was added into the mix much later. The problem with this approach is that retrofitting existing buildings will actually be discouraged, since building codes generally dictate full compliance if a change of use occurs. This also leads to the carrot-and-stick approach to lawmaking; sooner or later the grants will be turned into funds withheld for non-compliance with the items Fedzilla wants.

Next up, “Green Jobs and Job Training”:

President-Elect Obama has proposed an investment of $150 billion over 10 years to spur the development of renewable and other technologies, promote energy efficiency, and advance new fuel and smart electricity infrastructure. This plan would direct funding to the manufacturing sector for job training and transition programs, and would create an estimated 5 million new green jobs. Additional training programs, including a Green Jobs Corps for disadvantaged youth and a Clean Energy Corps, have been proposed to stimulate the development of a highly skilled workforce.

It’s not “investment”, it’s taxpayer money being taken from possible private-sector usage, confiscated from the wage-earners, passed through a layer or two of bureaucracy, and spent to reward certain industries who may or may not be heavy campaign contributors or have the ear of lobbyists. Moreover, there’s a fairly good chance that whatever the government picks out to spend funding on turns out to be an expensive boondoggle or needs further subsidization to succeed in the marketplace.

I’d also love to see what types of jobs those in the “Green Jobs Corps” and “Clean Energy Corps” are trained to do, and where they’d apply in the real world. I guess the world needs ditchdiggers, so it needs tree planters too.

Speaking of tree planting, I suppose that can work as a segue to the next part, “Transportation and Infrastructure”:

President-Elect Obama has proposed the consideration of smart growth principles in the transportation funding process, as well as renewed support for public mass transit projects. The President-Elect’s proposed plan also includes the creation of a National Infrastructure Reinvestment Bank to direct $60 billion over 10 years to infrastructure projects that could create some 2 million new jobs and $35 billion annually in economic activity.

Back in September, I detailed California’s new laws in the area of transportation funding as part of the Smart Growth concept; apparently the Obama plan is to take this nationwide. Combine that with the bid to push mass transit over highway funding, and it becomes woefully apparent that Detroit’s bailout becomes a true waste of money. People aren’t going to be able to use their cars before too long, so why buy new ones?

And I can already see the infrastructure projects Obama will want: four-lane bike paths, pedestrian connectors, conversion of traffic-filled downtown streets to pedestrian plazas, and the like. There may be a bridge replacement here and there, but a disproportionate amount of the funding will surely go toward less efficient and/or less private modes of transportation, modes which will sooner or later need more subsidies.

Don’t get me wrong, I have no issue whatsoever with adopting certain building code provisions leading toward more energy-efficient buildings; perhaps it can be handled as a reward basis much like the inclusion of sprinkler systems allows a building of a particular construction type to be larger and/or have more stories. And if highway widening includes space for a bicycle path, that’s no issue for me either. (I like Maryland’s practice of widening shoulders for creating bicycle lanes because it’s safer for both driver and rider.) These and similar issues are ones that firstly should be up to individual states to adopt without federal interference and secondly need to be done in such a manner that leaves maximum flexibility to the building owner or developer.

The Obama Administration has a number of hot-button issues which must be addressed in order to improve our economy and our society in general; foremost among them on the domestic side will be straightening out the financial mess our poorly-considered lending legislation put global markets in. Instead of tightening the noose around the building industry by adding more expensive mandates to the already high cost of construction, it’s better for the near-term future that we ignore the green building lobby and work on simply getting the building industry back on its feet by loosening regulations and credit. Simply allowing market forces to return would kickstart the industry where I make my own living in a much better manner than the throwback to the inefficient and wasteful Works Progress Administration version 2.0 that Obama proposes.

Senator against government waste

I have Pat Toomey and the Club For Growth to thank for this one.

Earlier this month one of my favorite Senators, Oklahoma’s Tom Coburn, put out a report on the worst examples of government waste in 2008. (I suppose one could argue this report by one who’s on the public payroll and his publicly-funded staff would be an example of wasting money and time compiling such nonsense, but it is a small price to pay.)

Really, the first paragraph in the executive summary says it all:

Politicians in Washington outdid themselves in 2008, wasting taxpayer money in ways and amounts once thought unimaginable – all without blushing. So outrageous was the spending, an outside observer would be forced to think that not only do Americans love to pay taxes, but that the federal budget was in a state of perpetual surplus. This report is an attempt to pull back the curtain on 65 examples of wasteful Washington spending worth more than $1.3 billion, and by doing so, provide a mechanism to hold Congress accountable for fiscal responsibility. It is time for Washington to stop recklessly spending other peoples’ money and burdening future generations with insurmountable national debt.

I’ll have to admit that when we’re looking at a budget deficit which could be 1,000 times the amount of waste Senator Coburn found the effort is fairly symbolic at best. But it serves as a talisman to point out that we really have stuck our federal (and state) governments into many places they don’t belong, like my other example.

As we found out on Friday, the proposed $15 billion bailout to the Big Three (read: United Auto Workers) died for lack of cloture in the Senate. In the same e-mail the Club For Growth handily put in the House and Senate votes on the issue. While it’s not unexpected that the local Maryland and Delaware delegations basically split along party lines, it’s more telling that neither of the two local participants in the 110th Congress who won’t return failed to vote; neither Biden or Gilchrest recorded a vote. Particularly in the Senate, where 13 Senators did not vote and the measure failed by eight, the timing of the lame duck session made a difference – most of the non-voters were leaving the Senate after this term.

In any case, for the moment American taxpayers have dodged one expensive bullet – unfortunately the Democrats are rolling into Washington with an arsenal of bright ideas to spend your money on.

Plugging the holes by digging the earth

I have my API friend Jane Van Ryan to thank for alerting me to a news item from just up the road in Pennsylvania as part of another update she sent me. Apparently the Commonwealth is allowing oil and gas companies to take advantage of the Keystone State’s natural resources for a price set by the market, and Governor Rendell is taking advantage of the unexpected windfall to help plug his own state’s $1.6 billion budget deficit.

Not surprisingly, the green lobby is up in arms about this transfer idea, at least according to this article by Robert Swift in the Hazleton Standard-Speaker. Swift is correct in that this is one of the oldest accounting tricks in the book, and the $190 million would apparently be many times the amount of money normally found in the fund.

The first question I have though is whether there’s any such prospect of this happening in Maryland. Earlier this year a number of private owners out on the western edge of Maryland in Garrett County were fortunate enough to take advantage of the opportunity to lease their properties for natural gas drilling rights, and while it’s not quite money for nothing (let alone chicks for free) it might be worth checking out that option on the vast swaths on land in that region the state controls.

Rendell’s situation also brings up a budgeting question common in Maryland, where money is subdivided into numerous smaller pots in addition to the state’s General Fund. Each year, there seems to be a new crop of specificially-devoted funds added by the General Assembly for a myriad of purposes; for example a new Education Trust Fund was set up by the legislation (SB3) which was passed for video slot machines in 2007 for the 48.5% of eventual slots revenue committed to education. A similar shell game was played by Martin O’Malley (with the help of the General Assembly) in balancing the FY2009 budget and the extreme situation Pennsylvania finds itself in points out the weakness in having that sheer number of funds rather than allowing money to go where it’s most useful. In particular, environmental programs benefit greatly from having dedicated funds created by the General Assembly when the money could be better used in other areas. (Program Open Space is one example which truly frosts me.)

Similarly, in Pennsylvania Governor Rendell seems to have the sensible idea that reallocating money to where it would do the most good is a better alternative than “monitoring the impact of gas development, improving park and forest hiking trails, acid mine drainage cleanup, buying sub-surface mineral rights in state forest areas and buying heavy equipment for park operations” that environmental activists wish to spend the $190 million windfall on. Certainly the situation creates a good argument for streamlining the budget and eliminating those dedicated funds.

It’s a question of how to spend the money most wisely, and if using the money from the Marcellus Shale rights can allow Governor Rendell to avoid taking more out of the pockets of Pennsylvanians that’s the wisest way to spend it. (Considering Rendell is a Democrat, I’m not even going to hold my breath on him cutting the fat out of the budget – I’ll just assume he spends every nickel he can get.)

When there’s a private-sector industry out there willing to spend money to create jobs and not looking for a handout or a subsidy to put people to work, that’s something responsible governance needs to explore further. If the resources in Maryland are there and the charge is to create a highest and best use, it’s only right that we should take advantage of opportunities where we can.