The Media and the First Amendment. By BERT GALL and STEVE SIMPSON
The Washington Post scandal is really about double standards.
WSJ, Jul 13, 2009
Our nation's capital is abuzz over the Washington Post's recent indiscretion. The newspaper planned to host a now-canceled salon at the home of Katharine Weymouth, the Post's publisher. For $25,000, lobbyists and corporate executives would be granted exclusive access to members of the Obama administration, Congress, and Post journalists.
Pundits have condemned the Post for acting as an influence peddler. But other news publications routinely host similar events. This shouldn't come as a shock. Media corporations have always had the privilege of influencing politics without the restrictions -- like campaign finance laws -- that other corporations face.
So while this episode has been treated as a scandal of journalistic ethics, it is really about double standards. When other business corporations attempt to influence politics -- by running political ads during elections -- editorial boards rush to condemn the corporations for "buying" elections or "unduly" influencing candidates. We should be concerned, the boards say, because those corporations have too much influence over the political debate. The public needs strict campaign finance laws to protect it from that influence.
The New York Times recently featured an editorial about the Supreme Court's current major campaign finance case, Citizens United v. Federal Election Commission (2009). The editorial counseled the high court against overturning precedent, referring to Austin v. Michigan Chamber of Commerce (1990). That case allows the government to prevent corporations from spending money on electoral advocacy. According to the Times, eliminating the government's power to ban corporate political speech "would be a disaster for democracy."
But if excessive influence is a reason to censor the speech of every other kind of corporation, then it is also a reason to censor the speech of media corporations. After all, the media spend millions of dollars each year on news stories about candidates and editorials endorsing them. This press is worth a lot. For example, the Washington Post's endorsement of Creigh Deeds is widely credited as the biggest factor in his rise from obscurity to victory in Virginia's Democratic gubernatorial primary this year.
So where are the editorials calling for limits on the amounts of "money" -- in the form of coverage and editorials -- media companies devote to candidates?
Of course, you'll hear no such thing from the nation's newspapers and media outlets. Media companies are exempt from campaign finance laws. Many in the press think that the First Amendment entitles them to special protections that don't apply to anyone else.
This is wrong. The Supreme Court has repeatedly made clear that the media's right to free speech is no greater than anyone else's. And in Austin and other campaign finance cases, the Supreme Court noted that the media's exemption from campaign finance laws was discretionary, not mandatory.
In short, the press's favored status is only as strong as Congress says it is, at least under current First Amendment jurisprudence. If, in the wake of the Post scandal, the public begins to believe that media companies are as corrupt as the press claims other corporations are, Congress's view on the matter could change. Alternatively, Congress may come up with some other reason to start limiting the freedom of the press. Congress is currently considering a bill that would throw struggling newspapers an economic lifeline by allowing them to operate as nonprofits -- thereby making their advertising and subscription revenue tax-exempt. The catch? Newspapers that take the deal would no longer be able to endorse political candidates.
This precarious position -- free speech at Congress's discretion -- is not exactly a recipe for a strong and independent press. It's tempting to think that media companies that have called for limits on everyone else's speech will ultimately get what they deserve when Congress gets around to censoring theirs. But that would be a mistake.
The press remains one of the most important bulwarks against tyranny. The solution is to protect free speech on principle, regardless of the identity of the speaker. Banning a corporation from spending its own money for political advocacy is censorship, plain and simple. The sooner the press understands this, the safer its rights -- and ours -- will be.
Messrs. Gall and Simpson are senior attorneys at the Institute for Justice.
Monday, July 13, 2009
Federal President's comments on Moscow about the Cold War
Obama Rewrites the Cold War. By LIZ CHENEY
The President has a duty to stand up to the lies of our enemies.
WSJ, Jul 13, 2009
There are two different versions of the story of the end of the Cold War: the Russian version, and the truth. President Barack Obama endorsed the Russian version in Moscow last week.
Speaking to a group of students, our president explained it this way: "The American and Soviet armies were still massed in Europe, trained and ready to fight. The ideological trenches of the last century were roughly in place. Competition in everything from astrophysics to athletics was treated as a zero-sum game. If one person won, then the other person had to lose. And then within a few short years, the world as it was ceased to be. Make no mistake: This change did not come from any one nation. The Cold War reached a conclusion because of the actions of many nations over many years, and because the people of Russia and Eastern Europe stood up and decided that its end would be peaceful."
The truth, of course, is that the Soviets ran a brutal, authoritarian regime. The KGB killed their opponents or dragged them off to the Gulag. There was no free press, no freedom of speech, no freedom of worship, no freedom of any kind. The basis of the Cold War was not "competition in astrophysics and athletics." It was a global battle between tyranny and freedom. The Soviet "sphere of influence" was delineated by walls and barbed wire and tanks and secret police to prevent people from escaping. America was an unmatched force for good in the world during the Cold War. The Soviets were not. The Cold War ended not because the Soviets decided it should but because they were no match for the forces of freedom and the commitment of free nations to defend liberty and defeat Communism.
It is irresponsible for an American president to go to Moscow and tell a room full of young Russians less than the truth about how the Cold War ended. One wonders whether this was just an attempt to push "reset" -- or maybe to curry favor. Perhaps, most concerning of all, Mr. Obama believes what he said.
Mr. Obama's method for pushing reset around the world is becoming clearer with each foreign trip. He proclaims moral equivalence between the U.S. and our adversaries, he readily accepts a false historical narrative, and he refuses to stand up against anti-American lies.
The approach was evident in his speech in Moscow and in his speech in Cairo last month. In Cairo, he asserted there was some sort of equivalence between American support for the 1953 coup in Iran and the evil that the Iranian mullahs have done in the world since 1979. On an earlier trip to Mexico City, the president listened to an extended anti-American screed by Nicaraguan President Daniel Ortega and then let the lies stand by responding only with, "I'm grateful that President Ortega did not blame me for the things that occurred when I was 3 months old."
Asked at a NATO meeting in France in April whether he believed in American exceptionalism, the president said, "I believe in American Exceptionalism just as I suspect that the Brits believe in British exceptionalism and the Greeks believe in Greek exceptionalism." In other words, not so much.
The Obama administration does seem to believe in another kind of exceptionalism -- Obama exceptionalism. "We have the best brand on Earth: the Obama brand," one Obama handler has said. What they don't seem to realize is that once you're president, your brand is America, and the American people expect you to defend us against lies, not embrace or ignore them. We also expect you to know your history.
Mr. Obama has become fond of saying, as he did in Russia again last week, that American nuclear disarmament will encourage the North Koreans and the Iranians to give up their nuclear ambitions. Does he really believe that the North Koreans and the Iranians are simply waiting for America to cut funds for missile defense and reduce our strategic nuclear stockpile before they halt their weapons programs?
The White House ought to take a lesson from President Harry Truman. In April, 1950, Truman signed National Security Council report 68 (NSC-68). One of the foundational documents of America's Cold War strategy, NSC-68 explains the danger of disarming America in the hope of appeasing our enemies. "No people in history," it reads, "have preserved their freedom who thought that by not being strong enough to protect themselves they might prove inoffensive to their enemies."
Perhaps Mr. Obama thinks he is making America inoffensive to our enemies. In reality, he is emboldening them and weakening us. America can be disarmed literally -- by cutting our weapons systems and our defensive capabilities -- as Mr. Obama has agreed to do. We can also be disarmed morally by a president who spreads false narratives about our history or who accepts, even if by his silence, our enemies' lies about us.
Ms. Cheney served as deputy assistant secretary of state and principal deputy assistant secretary of state for near eastern affairs from 2002-2004 and 2005-2006.
The President has a duty to stand up to the lies of our enemies.
WSJ, Jul 13, 2009
There are two different versions of the story of the end of the Cold War: the Russian version, and the truth. President Barack Obama endorsed the Russian version in Moscow last week.
Speaking to a group of students, our president explained it this way: "The American and Soviet armies were still massed in Europe, trained and ready to fight. The ideological trenches of the last century were roughly in place. Competition in everything from astrophysics to athletics was treated as a zero-sum game. If one person won, then the other person had to lose. And then within a few short years, the world as it was ceased to be. Make no mistake: This change did not come from any one nation. The Cold War reached a conclusion because of the actions of many nations over many years, and because the people of Russia and Eastern Europe stood up and decided that its end would be peaceful."
The truth, of course, is that the Soviets ran a brutal, authoritarian regime. The KGB killed their opponents or dragged them off to the Gulag. There was no free press, no freedom of speech, no freedom of worship, no freedom of any kind. The basis of the Cold War was not "competition in astrophysics and athletics." It was a global battle between tyranny and freedom. The Soviet "sphere of influence" was delineated by walls and barbed wire and tanks and secret police to prevent people from escaping. America was an unmatched force for good in the world during the Cold War. The Soviets were not. The Cold War ended not because the Soviets decided it should but because they were no match for the forces of freedom and the commitment of free nations to defend liberty and defeat Communism.
It is irresponsible for an American president to go to Moscow and tell a room full of young Russians less than the truth about how the Cold War ended. One wonders whether this was just an attempt to push "reset" -- or maybe to curry favor. Perhaps, most concerning of all, Mr. Obama believes what he said.
Mr. Obama's method for pushing reset around the world is becoming clearer with each foreign trip. He proclaims moral equivalence between the U.S. and our adversaries, he readily accepts a false historical narrative, and he refuses to stand up against anti-American lies.
The approach was evident in his speech in Moscow and in his speech in Cairo last month. In Cairo, he asserted there was some sort of equivalence between American support for the 1953 coup in Iran and the evil that the Iranian mullahs have done in the world since 1979. On an earlier trip to Mexico City, the president listened to an extended anti-American screed by Nicaraguan President Daniel Ortega and then let the lies stand by responding only with, "I'm grateful that President Ortega did not blame me for the things that occurred when I was 3 months old."
Asked at a NATO meeting in France in April whether he believed in American exceptionalism, the president said, "I believe in American Exceptionalism just as I suspect that the Brits believe in British exceptionalism and the Greeks believe in Greek exceptionalism." In other words, not so much.
The Obama administration does seem to believe in another kind of exceptionalism -- Obama exceptionalism. "We have the best brand on Earth: the Obama brand," one Obama handler has said. What they don't seem to realize is that once you're president, your brand is America, and the American people expect you to defend us against lies, not embrace or ignore them. We also expect you to know your history.
Mr. Obama has become fond of saying, as he did in Russia again last week, that American nuclear disarmament will encourage the North Koreans and the Iranians to give up their nuclear ambitions. Does he really believe that the North Koreans and the Iranians are simply waiting for America to cut funds for missile defense and reduce our strategic nuclear stockpile before they halt their weapons programs?
The White House ought to take a lesson from President Harry Truman. In April, 1950, Truman signed National Security Council report 68 (NSC-68). One of the foundational documents of America's Cold War strategy, NSC-68 explains the danger of disarming America in the hope of appeasing our enemies. "No people in history," it reads, "have preserved their freedom who thought that by not being strong enough to protect themselves they might prove inoffensive to their enemies."
Perhaps Mr. Obama thinks he is making America inoffensive to our enemies. In reality, he is emboldening them and weakening us. America can be disarmed literally -- by cutting our weapons systems and our defensive capabilities -- as Mr. Obama has agreed to do. We can also be disarmed morally by a president who spreads false narratives about our history or who accepts, even if by his silence, our enemies' lies about us.
Ms. Cheney served as deputy assistant secretary of state and principal deputy assistant secretary of state for near eastern affairs from 2002-2004 and 2005-2006.
Congress prepares to kill more jobs - minimum wage
Mandating Unemployment. WSJ Editorial
Congress prepares to kill more jobs.
WSJ, Jul 13, 2009
Here's some economic logic to ponder. The unemployment rate in June for American teenagers was 24%, for black teens it was 38%, and even White House economists are predicting more job losses. So how about raising the cost of that teenage labor?
Sorry to say, but that's precisely what will happen on July 24, when the minimum wage will increase to $7.25 an hour from $6.55. The national wage floor will have increased 41% since the three-step hike was approved by the Democratic Congress in May 2007. Then the economy was humming, with an overall jobless rate of 4.5% and many entry-level jobs paying more than the minimum. That's a hard case to make now, with a 9.5% national jobless rate and thousands of employers facing razor-thin profit margins.
There's been a long and spirited debate among economists about who gets hurt and who benefits when the minimum wage rises. But in a 2006 National Bureau of Economic Research paper, economists David Neumark of the University of California, Irvine, and William Wascher of the Federal Reserve Bank reviewed the voluminous literature over the past 30 years and came to two almost universally acknowledged conclusions.
First, "a sizable majority of the studies give a relatively consistent (though not always statistically significant) indication of negative employment effects." Second, "studies that focus on the least-skilled groups [i.e., teens, and welfare moms] provide relatively overwhelming evidence of stronger disemployment effects."
Proponents argue that millions of workers will benefit from the bigger paychecks. But about two of every three full-time minimum-wage workers get a pay raise anyway within a year on the job. Meanwhile, those who lose their jobs or who never get a job in the first place get a minimum wage of $0.
Mr. Neumark calculates that the 70-cent per-hour minimum wage hike this month would kill "about 300,000 jobs for those between the ages of 16-24." Single working mothers would also be among those most hurt.
Keep in mind the Earned Income Tax Credit already exists to help low-wage workers and has been greatly expanded in recent years. The EITC also spreads the cost of the wage supplement to all Americans, not merely to employers, so it doesn't raise the cost of hiring low-wage workers.
For example, consider a single mom with two kids who earns the current $6.55 minimum at a full-time, year-round job. In 2009 she receives a $5,028 EITC cash payment from Uncle Sam -- or about an extra $2.50 per hour worked. Other federal income supplements, such as the refundable child tax credit, add another $1,900 or so. Thus at a wage of $6.55 an hour, her actual pay becomes $10.02 an hour -- more than a 50% increase from the current minimum. (See nearby table.)
But that single mom can't collect those checks if she doesn't have a job, and the tragedy of a higher minimum wage is that it will prevent thousands of working moms striving to pull their families out of poverty from being hired in the first place.
If Congress were wise and compassionate, it would at least suspend the wage hike for one or two years until the job market recovers. We know this Congress won't do that, but someone has to speak up for the poorest, least skilled Americans.
Congress prepares to kill more jobs.
WSJ, Jul 13, 2009
Here's some economic logic to ponder. The unemployment rate in June for American teenagers was 24%, for black teens it was 38%, and even White House economists are predicting more job losses. So how about raising the cost of that teenage labor?
Sorry to say, but that's precisely what will happen on July 24, when the minimum wage will increase to $7.25 an hour from $6.55. The national wage floor will have increased 41% since the three-step hike was approved by the Democratic Congress in May 2007. Then the economy was humming, with an overall jobless rate of 4.5% and many entry-level jobs paying more than the minimum. That's a hard case to make now, with a 9.5% national jobless rate and thousands of employers facing razor-thin profit margins.
There's been a long and spirited debate among economists about who gets hurt and who benefits when the minimum wage rises. But in a 2006 National Bureau of Economic Research paper, economists David Neumark of the University of California, Irvine, and William Wascher of the Federal Reserve Bank reviewed the voluminous literature over the past 30 years and came to two almost universally acknowledged conclusions.
First, "a sizable majority of the studies give a relatively consistent (though not always statistically significant) indication of negative employment effects." Second, "studies that focus on the least-skilled groups [i.e., teens, and welfare moms] provide relatively overwhelming evidence of stronger disemployment effects."
Proponents argue that millions of workers will benefit from the bigger paychecks. But about two of every three full-time minimum-wage workers get a pay raise anyway within a year on the job. Meanwhile, those who lose their jobs or who never get a job in the first place get a minimum wage of $0.
Mr. Neumark calculates that the 70-cent per-hour minimum wage hike this month would kill "about 300,000 jobs for those between the ages of 16-24." Single working mothers would also be among those most hurt.
Keep in mind the Earned Income Tax Credit already exists to help low-wage workers and has been greatly expanded in recent years. The EITC also spreads the cost of the wage supplement to all Americans, not merely to employers, so it doesn't raise the cost of hiring low-wage workers.
For example, consider a single mom with two kids who earns the current $6.55 minimum at a full-time, year-round job. In 2009 she receives a $5,028 EITC cash payment from Uncle Sam -- or about an extra $2.50 per hour worked. Other federal income supplements, such as the refundable child tax credit, add another $1,900 or so. Thus at a wage of $6.55 an hour, her actual pay becomes $10.02 an hour -- more than a 50% increase from the current minimum. (See nearby table.)
But that single mom can't collect those checks if she doesn't have a job, and the tragedy of a higher minimum wage is that it will prevent thousands of working moms striving to pull their families out of poverty from being hired in the first place.
If Congress were wise and compassionate, it would at least suspend the wage hike for one or two years until the job market recovers. We know this Congress won't do that, but someone has to speak up for the poorest, least skilled Americans.
Don't Shoot the Speculators
Don't Shoot the Speculators. By L. GORDON CROVITZ
They predict prices, not set them.
WSJ, Jul 13, 2009
Speculators don't get much respect. Short sellers last year were blamed for their trades warning about the credit crisis, and commodities traders are now accused of causing higher oil prices. Even when traders are later proven right -- maybe especially when they're proven right -- we blame them for delivering the bad news.
Maybe it's human nature to reject Shakespeare's warning and shoot the messenger. The good news is that a recent proposal aimed at one group of speculators could prove that speculators of all kinds deserve our thanks -- or if that's too much to ask, at least to be left alone to bring valuable information to markets.
The Commodity Futures Trading Commission is considering requiring more disclosure, intended to ferret out what politicians like to call "excessive speculation." Whatever the intention, enough transparency could instead show that oil speculators are heroes, not villains.
Last week, new CFTC head Gary Gensler said the agency might set new limits on oil speculators now that oil prices have doubled this year from a low of $34 a barrel. This was surprising because just last fall, the agency issued an exhaustive study concluding that speculators were not to blame for the runup in oil prices that reached $145 last summer. It's also telling that no one accused traders of harmful speculation when oil prices tumbled from their earlier highs.
The more interesting part of the CFTC proposal is for new transparency to the positions that different kinds of traders take in futures trading. Under current rules, the CFTC sets limits on trading positions based on Commitment of Traders reports, which date back to the 1920s. These put trading in two key categories, based on the type of user, not the positions they have in various contracts. This anachronism has long led to uncertainty about why prices move, a lack of transparency that also feeds the blaming of speculators.
Business users such as airlines and oil companies are considered in the "commercial" category, with hedge funds and other financial traders in the other, more regulated "noncommercial" category. But many commercial users have active trading desks. Likewise, financial firms need to hedge against movements in commodities such as oil because they have trading contracts that leave them as exposed to price risks as the companies that actually use the physical product.
More-detailed reporting on who has which kinds of positions in oil would make the market more understandable. It would show that so-called financial speculators are trying to predict price movements, but also trying to hedge risk. Likewise, commercial traders that take delivery of oil are hedging risks, while also predicting future prices. As oil expert Daniel Yergin points out, more visibility "will give a better sense of how much is the market responding to supply and demand in physical oil and how much is it responding to the supply and demand of money on the part of investors."
It doesn't make sense to shoot either kind of messenger. Markets are collections of information, translated through trading into prices. These prices, unless there is manipulation, are the best estimate of future supply and demand. Such price discovery should not be controversial, though it too often has been.
"Oil market speculation is back in the news," Bob McTeer, a former Dallas Federal Reserve president, wrote on his blog. "I'm afraid I don't have much to contribute since Milton Friedman convinced me long ago that profitable speculation is stabilizing and destabilizing speculation is unprofitable. Speculation is profitable if the speculator buys lower than he sells; it's unprofitable if he sells lower than he buys. Even if they don't make a profit, they are trying."
Or, as the sign in the 19th century saloon put it, "Don't shoot the piano player; he's doing the best he can." Oil industry experts, whether "speculators" or not, do their best to predict price movements. Some focus on uncertainty about Iran. Others point to demand trends from China and India. There's the inherent volatility in this market due to the OPEC cartel having a firm grip on the supply spigot.
Finally, there's the growing role that commodities are again playing as a hedge against inflation and a weak dollar. Increased trading in commodities is a danger-ahead warning about U.S. fiscal and monetary policies. While Washington might like to stifle these particular messengers for the warning they're sending, the rest of us should welcome information about troubles to come.
Congress has succeeded in rattling regulators at the CFTC into doing something about speculators. They have more regulation in mind, but if the CFTC can bring more transparency to oil trading, the result will be excellent even if unintended: We can focus our attention on the real pressures on oil prices instead of wallowing in searches for scapegoats. Better disclosure can reduce the human tendency to blame traders for rising prices when the responsibility lies elsewhere.
They predict prices, not set them.
WSJ, Jul 13, 2009
Speculators don't get much respect. Short sellers last year were blamed for their trades warning about the credit crisis, and commodities traders are now accused of causing higher oil prices. Even when traders are later proven right -- maybe especially when they're proven right -- we blame them for delivering the bad news.
Maybe it's human nature to reject Shakespeare's warning and shoot the messenger. The good news is that a recent proposal aimed at one group of speculators could prove that speculators of all kinds deserve our thanks -- or if that's too much to ask, at least to be left alone to bring valuable information to markets.
The Commodity Futures Trading Commission is considering requiring more disclosure, intended to ferret out what politicians like to call "excessive speculation." Whatever the intention, enough transparency could instead show that oil speculators are heroes, not villains.
Last week, new CFTC head Gary Gensler said the agency might set new limits on oil speculators now that oil prices have doubled this year from a low of $34 a barrel. This was surprising because just last fall, the agency issued an exhaustive study concluding that speculators were not to blame for the runup in oil prices that reached $145 last summer. It's also telling that no one accused traders of harmful speculation when oil prices tumbled from their earlier highs.
The more interesting part of the CFTC proposal is for new transparency to the positions that different kinds of traders take in futures trading. Under current rules, the CFTC sets limits on trading positions based on Commitment of Traders reports, which date back to the 1920s. These put trading in two key categories, based on the type of user, not the positions they have in various contracts. This anachronism has long led to uncertainty about why prices move, a lack of transparency that also feeds the blaming of speculators.
Business users such as airlines and oil companies are considered in the "commercial" category, with hedge funds and other financial traders in the other, more regulated "noncommercial" category. But many commercial users have active trading desks. Likewise, financial firms need to hedge against movements in commodities such as oil because they have trading contracts that leave them as exposed to price risks as the companies that actually use the physical product.
More-detailed reporting on who has which kinds of positions in oil would make the market more understandable. It would show that so-called financial speculators are trying to predict price movements, but also trying to hedge risk. Likewise, commercial traders that take delivery of oil are hedging risks, while also predicting future prices. As oil expert Daniel Yergin points out, more visibility "will give a better sense of how much is the market responding to supply and demand in physical oil and how much is it responding to the supply and demand of money on the part of investors."
It doesn't make sense to shoot either kind of messenger. Markets are collections of information, translated through trading into prices. These prices, unless there is manipulation, are the best estimate of future supply and demand. Such price discovery should not be controversial, though it too often has been.
"Oil market speculation is back in the news," Bob McTeer, a former Dallas Federal Reserve president, wrote on his blog. "I'm afraid I don't have much to contribute since Milton Friedman convinced me long ago that profitable speculation is stabilizing and destabilizing speculation is unprofitable. Speculation is profitable if the speculator buys lower than he sells; it's unprofitable if he sells lower than he buys. Even if they don't make a profit, they are trying."
Or, as the sign in the 19th century saloon put it, "Don't shoot the piano player; he's doing the best he can." Oil industry experts, whether "speculators" or not, do their best to predict price movements. Some focus on uncertainty about Iran. Others point to demand trends from China and India. There's the inherent volatility in this market due to the OPEC cartel having a firm grip on the supply spigot.
Finally, there's the growing role that commodities are again playing as a hedge against inflation and a weak dollar. Increased trading in commodities is a danger-ahead warning about U.S. fiscal and monetary policies. While Washington might like to stifle these particular messengers for the warning they're sending, the rest of us should welcome information about troubles to come.
Congress has succeeded in rattling regulators at the CFTC into doing something about speculators. They have more regulation in mind, but if the CFTC can bring more transparency to oil trading, the result will be excellent even if unintended: We can focus our attention on the real pressures on oil prices instead of wallowing in searches for scapegoats. Better disclosure can reduce the human tendency to blame traders for rising prices when the responsibility lies elsewhere.
O'Grady: Why Honduras Sent Zelaya Away
Why Honduras Sent Zelaya Away. By Mary A O'Grady
WSJ, Jul 13, 2009
"Two incidents earlier this year make the case. The first occurred in January when the country was preparing to name a new 15-seat Supreme Court, as it does every seven years. An independent board made up of members of civil society had nominated 45 candidates. From that list, Congress was to choose the new judges.
Mr. Zelaya had his own nominees in mind, including the wife of a minister, and their names were not on the list. So he set about to pressure the legislature. On the day of the vote he militarized the area around the Congress and press reports say a group of the president's men, including the minister of defense, went to the Congress uninvited to turn up the heat. The head of the legislature had to call security to have the defense minister removed."
WSJ, Jul 13, 2009
"Two incidents earlier this year make the case. The first occurred in January when the country was preparing to name a new 15-seat Supreme Court, as it does every seven years. An independent board made up of members of civil society had nominated 45 candidates. From that list, Congress was to choose the new judges.
Mr. Zelaya had his own nominees in mind, including the wife of a minister, and their names were not on the list. So he set about to pressure the legislature. On the day of the vote he militarized the area around the Congress and press reports say a group of the president's men, including the minister of defense, went to the Congress uninvited to turn up the heat. The head of the legislature had to call security to have the defense minister removed."
Sunday, July 12, 2009
The release of the Irbil Five - Quds Force commanders from Iran’s Islamic Revolutionary Guards Corps (IRGC)
Obama Frees Iranian Terror Masters. By Andrew C. McCarthy
The release of the Irbil Five is a continuation of a shameful policy.
NRO, July 11, 2009 7:00 AM
There are a few things you need to know about President Obama’s shameful release on Thursday of the “Irbil Five” — Quds Force commanders from Iran’s Islamic Revolutionary Guards Corps (IRGC) who were coordinating terrorist attacks in Iraq that have killed hundreds — yes, hundreds — of American soldiers and Marines.
First, of the 4,322 Americans killed in combat in Iraq since 2003, 10 percent of them (i.e., more than 400) have been murdered by a single type of weapon alone, a weapon that is supplied by Iran for the singular purpose of murdering Americans. As Steve Schippert explains at NRO’s military blog, the Tank, the weapon is “the EFP (Explosively Formed Penetrator), designed by Iran’s IRGC specifically to penetrate the armor of the M1 Abrams main battle tank and, consequently, everything else deployed in the field.” Understand: This does not mean Iran has killed only 400 Americans in Iraq. The number killed and wounded at the mullahs’ direction is far higher than that — likely multiples of that — when factoring in the IRGC’s other tactics, such as the mustering of Hezbollah-style Shiite terror cells.
Second, President Bush and our armed forces steadfastly refused demands by Iran and Iraq’s Maliki government for the release of the Irbil Five because Iran was continuing to coordinate terrorist operations against American forces in Iraq (and to aid Taliban operations against American forces in Afghanistan). Freeing the Quds operatives obviously would return the most effective, dedicated terrorist trainers to their grisly business.
Third, Obama’s decision to release the five terror-masters comes while the Iranian regime (a) is still conducting operations against Americans in Iraq, even as we are in the process of withdrawing, and (b) is clearly working to replicate its Lebanon model in Iraq: establishing a Shiite terror network, loyal to Iran, as added pressure on the pliant Maliki to understand who is boss once the Americans leave. As the New York Times reports, Gen. Ray Odierno, commander of U.S. forces in Iraq, put it this way less than two weeks ago:
Iran is still supporting, funding, training surrogates who operate inside of Iraq — flat out. . . . They have not stopped. And I don’t think they will stop. I think they will continue to do that because they are also concerned, in my opinion, [about] where Iraq is headed. They want to try to gain influence here, and they will continue to do that. I think many of the attacks in Baghdad are from individuals that have been, in fact, funded or trained by the Iranians.
Fourth, President Obama’s release of the Quds terrorists is a natural continuation of his administration’s stunningly irresponsible policy of bartering terrorist prisoners for hostages. As I detailed here on June 24, Obama has already released a leader of the Iran-backed Asaib al-Haq terror network in Iraq, a jihadist who is among those responsible for the 2007 murders of five American troops in Karbala. While the release was ludicrously portrayed as an effort to further “Iraqi reconciliation” (as if that would be a valid reason to spring a terrorist who had killed Americans), it was in actuality a naïve attempt to secure the reciprocal release of five British hostages — and a predictably disastrous one: The terror network released only the corpses of two of the hostages, threatening to kill the remaining three (and who knows whether they still are alive?) unless other terror leaders were released.
Michael Ledeen has reported that the release of the Irbil Five is part of the price Iran has demanded for its release in May of the freelance journalist Roxana Saberi. Again, that’s only part of the price: Iran also has demanded the release of hundreds of its other terror facilitators in our custody. Expect to see Obama accommodate this demand, too, in the weeks ahead.
Finally, when it comes to Iran, it has become increasingly apparent that President Obama wants the mullahs to win. What you need to know is that Barack Obama is a wolf in “pragmatist” clothing: Beneath the easy smile and above-it-all manner — the “neutral” doing his best to weigh competing claims — is a radical leftist wedded to a Manichean vision that depicts American imperialism as the primary evil in the world.
You may not have wanted to addle your brain over his tutelage in Hawaii by the Communist Frank Marshall Davis, nor his tracing of Davis’s career steps to Chicago, where he seamlessly eased into the orbit of Arafat apologist Rashid Khalidi, anti-American terrorists Bill Ayers and Bernardine Dohrn, and Maoist “educator” Michael Klonsky — all while imbibing 20 years’ worth of Jeremiah Wright’s Marxist “black liberation theology.” But this neo-Communist well from which Obama drew holds that the world order is a maze of injustice, racism, and repression. Its unified theory for navigating the maze is: “United States = culprit.” Its default position is that tyrants are preferable as long as they are anti-American, and that while terrorist methods may be regrettable, their root cause is always American provocation — that is, the terrorists have a point.
In Iran, it is no longer enough for a rickety regime, whose anti-American vitriol is its only vital sign, to rig the “democratic” process. This time, blatant electoral fraud was also required to mulct victory for the mullahs’ candidate. The chicanery ignited a popular revolt. But the brutal regime guessed right: The new American president would be supportive. So sympathetic is Obama to the mullahs’ grievances — so hostile to what he, like the regime, sees as America’s arrogant militarism — that he could be depended on to go as far as politics allowed to help the regime ride out the storm.
And so he has. Right now, politics will allow quite a lot: With unemployment creeping toward 10 percent, the auto industry nationalized, the stimulus revealed as history’s biggest redistribution racket (so far), and Democrats bent on heaping ruinous carbon taxes and socialized medicine atop an economy already crushed by tens of trillions in unfunded welfare-state liabilities, Iran is barely on anyone’s radar screen.
So Obama is pouring it on while his trusty media idles. When they are not looking the other way from the carnage in Iran’s streets, they are dutifully reporting — as the AP did — that the Irbil Five are mere “diplomats.” Obama frees a terrorist with the blood of American troops on his hands, and the press yawns. Senators Jeff Sessions and Jon Kyl press for answers about the release of the terrorist and Obama’s abandonment of a decades-old American policy against trading terrorists for hostages, and the silence is deafening.
Except in Tehran, where the mullahs are hearing exactly what they’ve banked on hearing.
— National Review’s Andrew C. McCarthy is a senior fellow at the National Review Institute and the author of Willful Blindness: A Memoir of the Jihad (Encounter Books, 2008).
The release of the Irbil Five is a continuation of a shameful policy.
NRO, July 11, 2009 7:00 AM
There are a few things you need to know about President Obama’s shameful release on Thursday of the “Irbil Five” — Quds Force commanders from Iran’s Islamic Revolutionary Guards Corps (IRGC) who were coordinating terrorist attacks in Iraq that have killed hundreds — yes, hundreds — of American soldiers and Marines.
First, of the 4,322 Americans killed in combat in Iraq since 2003, 10 percent of them (i.e., more than 400) have been murdered by a single type of weapon alone, a weapon that is supplied by Iran for the singular purpose of murdering Americans. As Steve Schippert explains at NRO’s military blog, the Tank, the weapon is “the EFP (Explosively Formed Penetrator), designed by Iran’s IRGC specifically to penetrate the armor of the M1 Abrams main battle tank and, consequently, everything else deployed in the field.” Understand: This does not mean Iran has killed only 400 Americans in Iraq. The number killed and wounded at the mullahs’ direction is far higher than that — likely multiples of that — when factoring in the IRGC’s other tactics, such as the mustering of Hezbollah-style Shiite terror cells.
Second, President Bush and our armed forces steadfastly refused demands by Iran and Iraq’s Maliki government for the release of the Irbil Five because Iran was continuing to coordinate terrorist operations against American forces in Iraq (and to aid Taliban operations against American forces in Afghanistan). Freeing the Quds operatives obviously would return the most effective, dedicated terrorist trainers to their grisly business.
Third, Obama’s decision to release the five terror-masters comes while the Iranian regime (a) is still conducting operations against Americans in Iraq, even as we are in the process of withdrawing, and (b) is clearly working to replicate its Lebanon model in Iraq: establishing a Shiite terror network, loyal to Iran, as added pressure on the pliant Maliki to understand who is boss once the Americans leave. As the New York Times reports, Gen. Ray Odierno, commander of U.S. forces in Iraq, put it this way less than two weeks ago:
Iran is still supporting, funding, training surrogates who operate inside of Iraq — flat out. . . . They have not stopped. And I don’t think they will stop. I think they will continue to do that because they are also concerned, in my opinion, [about] where Iraq is headed. They want to try to gain influence here, and they will continue to do that. I think many of the attacks in Baghdad are from individuals that have been, in fact, funded or trained by the Iranians.
Fourth, President Obama’s release of the Quds terrorists is a natural continuation of his administration’s stunningly irresponsible policy of bartering terrorist prisoners for hostages. As I detailed here on June 24, Obama has already released a leader of the Iran-backed Asaib al-Haq terror network in Iraq, a jihadist who is among those responsible for the 2007 murders of five American troops in Karbala. While the release was ludicrously portrayed as an effort to further “Iraqi reconciliation” (as if that would be a valid reason to spring a terrorist who had killed Americans), it was in actuality a naïve attempt to secure the reciprocal release of five British hostages — and a predictably disastrous one: The terror network released only the corpses of two of the hostages, threatening to kill the remaining three (and who knows whether they still are alive?) unless other terror leaders were released.
Michael Ledeen has reported that the release of the Irbil Five is part of the price Iran has demanded for its release in May of the freelance journalist Roxana Saberi. Again, that’s only part of the price: Iran also has demanded the release of hundreds of its other terror facilitators in our custody. Expect to see Obama accommodate this demand, too, in the weeks ahead.
Finally, when it comes to Iran, it has become increasingly apparent that President Obama wants the mullahs to win. What you need to know is that Barack Obama is a wolf in “pragmatist” clothing: Beneath the easy smile and above-it-all manner — the “neutral” doing his best to weigh competing claims — is a radical leftist wedded to a Manichean vision that depicts American imperialism as the primary evil in the world.
You may not have wanted to addle your brain over his tutelage in Hawaii by the Communist Frank Marshall Davis, nor his tracing of Davis’s career steps to Chicago, where he seamlessly eased into the orbit of Arafat apologist Rashid Khalidi, anti-American terrorists Bill Ayers and Bernardine Dohrn, and Maoist “educator” Michael Klonsky — all while imbibing 20 years’ worth of Jeremiah Wright’s Marxist “black liberation theology.” But this neo-Communist well from which Obama drew holds that the world order is a maze of injustice, racism, and repression. Its unified theory for navigating the maze is: “United States = culprit.” Its default position is that tyrants are preferable as long as they are anti-American, and that while terrorist methods may be regrettable, their root cause is always American provocation — that is, the terrorists have a point.
In Iran, it is no longer enough for a rickety regime, whose anti-American vitriol is its only vital sign, to rig the “democratic” process. This time, blatant electoral fraud was also required to mulct victory for the mullahs’ candidate. The chicanery ignited a popular revolt. But the brutal regime guessed right: The new American president would be supportive. So sympathetic is Obama to the mullahs’ grievances — so hostile to what he, like the regime, sees as America’s arrogant militarism — that he could be depended on to go as far as politics allowed to help the regime ride out the storm.
And so he has. Right now, politics will allow quite a lot: With unemployment creeping toward 10 percent, the auto industry nationalized, the stimulus revealed as history’s biggest redistribution racket (so far), and Democrats bent on heaping ruinous carbon taxes and socialized medicine atop an economy already crushed by tens of trillions in unfunded welfare-state liabilities, Iran is barely on anyone’s radar screen.
So Obama is pouring it on while his trusty media idles. When they are not looking the other way from the carnage in Iran’s streets, they are dutifully reporting — as the AP did — that the Irbil Five are mere “diplomats.” Obama frees a terrorist with the blood of American troops on his hands, and the press yawns. Senators Jeff Sessions and Jon Kyl press for answers about the release of the terrorist and Obama’s abandonment of a decades-old American policy against trading terrorists for hostages, and the silence is deafening.
Except in Tehran, where the mullahs are hearing exactly what they’ve banked on hearing.
— National Review’s Andrew C. McCarthy is a senior fellow at the National Review Institute and the author of Willful Blindness: A Memoir of the Jihad (Encounter Books, 2008).
Democrats For a Flat Tax in California?
Democrats For a Flat Tax? By JOE MATHEWS
Some California legislators realize revenue from the rich is too volatile.
WSJ, Jul 11, 2009
Los Angeles
Karen Bass is an unlikely tax cutter. She's the Democratic speaker of the California State Assembly, a fierce defender of the labor movement, and an advocate for repealing a constitutional provision that requires that tax increases pass the state legislature with a two-thirds majority.
But as California faces a budget crisis that defies efforts to resolve it, there is a woman-bites-dog story developing with Ms. Bass at its center. By the end of the month, a commission she pushed to create is expected to recommend that the state adopt a flat (or at least flatter) personal income tax and cut or repeal corporate and sales taxes.
Normally, such proposals would be dead on arrival in Sacramento. But now many Democrats, including the speaker, are realizing that what they need is a tax base that will provide steady funding for their programs. In other words, they need a tax base that doesn't count on a large slice of revenue from taxes on a relatively small number of wealthy residents who can flee the state or who are themselves vulnerable to losing a substantial portion of income in a recession.
No one understands the political dynamics of volatile state revenues better than Ms. Bass. She's a progressive who has made finding more money for foster care and children's services a top priority. And after negotiating three rounds of budget cuts in the past year she has grown weary of deficit politics. So, determined to modernize the tax system, Ms. Bass is pledging to put whatever recommendations the commission comes back with to an up or down vote.
If that happens, California's tired budget debate -- which usually pits Democrats against Republicans -- will take on a new twist. This time the debate to watch will be among Democrats as they hash out whether taxes are too progressive to accomplish progressive political goals.
In a public meeting last month, a majority of the commission's 14 members -- seven of whom were appointed by Ms. Bass and her Democratic counterpart in the state Senate, the other seven by California's nominally Republican governor -- seemed to favor replacing the state's six income-tax brackets with a single 6% rate. The plan they mentioned would also eliminate corporate and sales taxes and replace them with a business net receipt tax.
"You have to admit," commissioner member Fred Keeley, a Democrat who is the treasurer of Santa Cruz County, said after the meeting, "that the package is a game changer."
In recent days, Mr. Keeley and other Bass appointees, have countered liberal objections with other proposals. But each adopts the logic of simpler taxation. One would create three income-tax brackets (0%, 4% and 7%). Another would cut corporate taxes and the income-tax rate for top earners while imposing a new fuels tax.
It remains unclear how much Ms. Bass will fight for the commission's recommendations. Underscoring the political sensitivity of tax reform, she has been cautious in recent public comments, emphasizing that she is "open-minded" about supporting the recommendations herself. She told me she didn't like the idea of a "flat tax" if it meant raising the tax burden on poorer and middle-class Californians. But she also said she worried about the state's heavy reliance on about 144,000 wealthy people to pay half of all income taxes for a state with a population of 38 million. "It's a crazy statistic," she said.
Late last year, Ms. Bass convinced Gov. Arnold Schwarzenegger and the state senate's Democratic leader, Darrell Steinberg, to create the Commission on the 21st Century Economy with a mandate for tax reforms that would reduce volatility in state revenue. The Democratic appointees include state tax expert Richard Pomp and Berkeley law school dean Christopher Edley Jr. The governor's appointees include economists Michael Boskin and John Cogan, as well as businessman Gerald Parsky.
"One of the reasons why Californians go through the annual budget ritual in a way that is most years very, very frustrating is that our sources of revenue are far too volatile," Mr. Steinberg said at a December press event.
Other Democrats have made similar points. U.S. Sen. Dianne Feinstein recently explained her state's problems to the New York Times by saying that 55% of state tax revenues come from income tax and 45% of that comes from the top brackets.
Susan Kennedy, a Democrat who serves as Mr. Schwarzenegger's chief of staff and who is the most important unelected official in the Capitol, was recently asked at a business event what the state tax system needed. "Flatness," she replied. "Our revenue stream is way too progressive."
But as the commission gets close to making recommendations, opposition is forming on the left. Liberal-leaning groups that study the budget argue that all taxes are volatile and that the state should raise taxes, particularly on property, to balance its budget. Public employee unions are demanding in blunt terms that Democrats make the tax code more progressive. The American Federation of State, County and Municipal Employees recently asked legislators to sign statements supporting some $44 billion in new taxes, much of them on the wealthy and industry.
Robert Cruickshank, a contributing editor at the progressive blog Calitics, says of the commission's expected recommendations: "Most progressives are not going to support these kind of regressive solutions. You would see a fight if the Democratic legislature made a move to do this."
The commission poses a political quandary for Republicans. Joel Fox, a former president of the Howard Jarvis Taxpayers Association, predicts that libertarians could embrace the flatter taxation while conservative populists might oppose the commission out of fear its reforms would increase government revenues.
But supporters of the commission's proposals are likely to get a fair hearing. Frustration with the California status quo crosses all ideological lines. Even those who disagree with the commission's thrust are glad to have something new to discuss. "I'm really glad they're trying something," said Rick Jacobs, chairman of the Courage Campaign, a progressive Internet network with more than 700,000 members. He argues that the existing state tax system is too regressive. "It's important to push the discussion out."
Privately, some Democrats hope that the commission sparks a debate that will lead to a tax hike. These Democrats want to end the two-thirds vote requirement on tax hikes and lift limits on commercial property taxes put in place by Proposition 13 in 1978. But regardless of the aims of some heading into this debate, the result is that by starting a discussion on tax reform Democrats could create a flatter, simpler tax code for California. These are strange times in the Golden State.
Mr. Mathews, a senior fellow at the New America Foundation, is the author of "The People's Machine: Arnold Schwarzenegger and the Rise of Blockbuster Democracy" (Public Affairs, 2006).
Some California legislators realize revenue from the rich is too volatile.
WSJ, Jul 11, 2009
Los Angeles
Karen Bass is an unlikely tax cutter. She's the Democratic speaker of the California State Assembly, a fierce defender of the labor movement, and an advocate for repealing a constitutional provision that requires that tax increases pass the state legislature with a two-thirds majority.
But as California faces a budget crisis that defies efforts to resolve it, there is a woman-bites-dog story developing with Ms. Bass at its center. By the end of the month, a commission she pushed to create is expected to recommend that the state adopt a flat (or at least flatter) personal income tax and cut or repeal corporate and sales taxes.
Normally, such proposals would be dead on arrival in Sacramento. But now many Democrats, including the speaker, are realizing that what they need is a tax base that will provide steady funding for their programs. In other words, they need a tax base that doesn't count on a large slice of revenue from taxes on a relatively small number of wealthy residents who can flee the state or who are themselves vulnerable to losing a substantial portion of income in a recession.
No one understands the political dynamics of volatile state revenues better than Ms. Bass. She's a progressive who has made finding more money for foster care and children's services a top priority. And after negotiating three rounds of budget cuts in the past year she has grown weary of deficit politics. So, determined to modernize the tax system, Ms. Bass is pledging to put whatever recommendations the commission comes back with to an up or down vote.
If that happens, California's tired budget debate -- which usually pits Democrats against Republicans -- will take on a new twist. This time the debate to watch will be among Democrats as they hash out whether taxes are too progressive to accomplish progressive political goals.
In a public meeting last month, a majority of the commission's 14 members -- seven of whom were appointed by Ms. Bass and her Democratic counterpart in the state Senate, the other seven by California's nominally Republican governor -- seemed to favor replacing the state's six income-tax brackets with a single 6% rate. The plan they mentioned would also eliminate corporate and sales taxes and replace them with a business net receipt tax.
"You have to admit," commissioner member Fred Keeley, a Democrat who is the treasurer of Santa Cruz County, said after the meeting, "that the package is a game changer."
In recent days, Mr. Keeley and other Bass appointees, have countered liberal objections with other proposals. But each adopts the logic of simpler taxation. One would create three income-tax brackets (0%, 4% and 7%). Another would cut corporate taxes and the income-tax rate for top earners while imposing a new fuels tax.
It remains unclear how much Ms. Bass will fight for the commission's recommendations. Underscoring the political sensitivity of tax reform, she has been cautious in recent public comments, emphasizing that she is "open-minded" about supporting the recommendations herself. She told me she didn't like the idea of a "flat tax" if it meant raising the tax burden on poorer and middle-class Californians. But she also said she worried about the state's heavy reliance on about 144,000 wealthy people to pay half of all income taxes for a state with a population of 38 million. "It's a crazy statistic," she said.
Late last year, Ms. Bass convinced Gov. Arnold Schwarzenegger and the state senate's Democratic leader, Darrell Steinberg, to create the Commission on the 21st Century Economy with a mandate for tax reforms that would reduce volatility in state revenue. The Democratic appointees include state tax expert Richard Pomp and Berkeley law school dean Christopher Edley Jr. The governor's appointees include economists Michael Boskin and John Cogan, as well as businessman Gerald Parsky.
"One of the reasons why Californians go through the annual budget ritual in a way that is most years very, very frustrating is that our sources of revenue are far too volatile," Mr. Steinberg said at a December press event.
Other Democrats have made similar points. U.S. Sen. Dianne Feinstein recently explained her state's problems to the New York Times by saying that 55% of state tax revenues come from income tax and 45% of that comes from the top brackets.
Susan Kennedy, a Democrat who serves as Mr. Schwarzenegger's chief of staff and who is the most important unelected official in the Capitol, was recently asked at a business event what the state tax system needed. "Flatness," she replied. "Our revenue stream is way too progressive."
But as the commission gets close to making recommendations, opposition is forming on the left. Liberal-leaning groups that study the budget argue that all taxes are volatile and that the state should raise taxes, particularly on property, to balance its budget. Public employee unions are demanding in blunt terms that Democrats make the tax code more progressive. The American Federation of State, County and Municipal Employees recently asked legislators to sign statements supporting some $44 billion in new taxes, much of them on the wealthy and industry.
Robert Cruickshank, a contributing editor at the progressive blog Calitics, says of the commission's expected recommendations: "Most progressives are not going to support these kind of regressive solutions. You would see a fight if the Democratic legislature made a move to do this."
The commission poses a political quandary for Republicans. Joel Fox, a former president of the Howard Jarvis Taxpayers Association, predicts that libertarians could embrace the flatter taxation while conservative populists might oppose the commission out of fear its reforms would increase government revenues.
But supporters of the commission's proposals are likely to get a fair hearing. Frustration with the California status quo crosses all ideological lines. Even those who disagree with the commission's thrust are glad to have something new to discuss. "I'm really glad they're trying something," said Rick Jacobs, chairman of the Courage Campaign, a progressive Internet network with more than 700,000 members. He argues that the existing state tax system is too regressive. "It's important to push the discussion out."
Privately, some Democrats hope that the commission sparks a debate that will lead to a tax hike. These Democrats want to end the two-thirds vote requirement on tax hikes and lift limits on commercial property taxes put in place by Proposition 13 in 1978. But regardless of the aims of some heading into this debate, the result is that by starting a discussion on tax reform Democrats could create a flatter, simpler tax code for California. These are strange times in the Golden State.
Mr. Mathews, a senior fellow at the New America Foundation, is the author of "The People's Machine: Arnold Schwarzenegger and the Rise of Blockbuster Democracy" (Public Affairs, 2006).
Thursday, July 9, 2009
Why We'll Leave L.A.
Why We'll Leave L.A. By RICK NEWCOMBE
The business climate is worse than the air quality.
WSJ, jul 10, 2009
Los Angeles
If New Yorkers fantasize that doing business here in Los Angeles would be less of a headache, forget about it. This city is fast becoming a job-killing machine. It's no accident the unemployment rate is a frightening 11.4% and climbing.
I never could have imagined that, after living here for more than three decades, I would be filing a lawsuit against my beloved Los Angeles and making plans for my company, Creators Syndicate, to move elsewhere.
But we have no choice. The city's bureaucrats rival Stalin's apparatchiks in issuing decrees, rescinding them, and then punishing citizens for having followed them in the first place.
I founded Creators Syndicate in 1987, and we have represented hundreds of important writers, syndicating their columns to newspapers and Web sites around the world. The most famous include Hillary Clinton, who, like Eleanor Roosevelt, wrote a syndicated column when she was first lady. Another star was the advice columnist Ann Landers, once described by "The World Almanac" as "the most influential woman in America." Other Creators columnists include Bill O'Reilly, Susan Estrich, Thomas Sowell, Roland Martin and Michelle Malkin -- plus Pulitzer Prize-winning political cartoonists and your favorite comic strips.
From the beginning, we've been headquartered in Los Angeles. But 15 years ago we had a dispute with the city over our business tax classification. The city argued that we should be in an "occupations and professions" classification that has an extremely high tax rate, while we fought for a "wholesale and retail" classification with a much lower rate. The city forced us to invest a small fortune in legal fees over two years, but we felt it was worth it in order to establish the correct classification once and for all.
After enduring a series of bureaucratic hearings, we anxiously awaited a ruling to find out what our tax rate would be. Everything was at stake. We had already decided that if we lost, we would move.
You can imagine how relieved we were on July 1, 1994, when the ruling was issued. We won, and firmly planted our roots in the City of Angels and proceeded to build our business.
Everything was fine until the city started running out of money in 2007. Suddenly, the city announced that it was going to ignore its own ruling and reclassify us in the higher tax category. Even more incredible is the fact that the new classification was to be imposed retroactively to 2004 with interest and penalties. No explanation was given for the new classification, or for the city's decision to ignore its 1994 ruling.
Their official position is that the city is not bound by past rulings -- only taxpayers are. This is why we have been forced to file a lawsuit. We will let the courts decide whether it is legal for adverse rulings to apply only to taxpayers and not to the city.
We work with hundreds of outside agents, consultants, independent contractors and support services -- many of whom pay taxes to the city of Los Angeles. This spurs a job-creating ripple effect on the city's economy. Yet I suspect many companies like ours already have quietly left town in the face of the city's taxes and regulations. This would help explain the erosion of jobs.
Regardless of the outcome of our case, the arbitrary and capricious behavior of some bureaucrats is creating a lose-lose situation for everyone involved. If we win in court, the taxpayers of Los Angeles will have lost because all those tax dollars will have been wasted on needless litigation.
If we lose in court, the remaining taxpayers in Los Angeles will have lost because their burden will continue to swell as yet another business moves its jobs -- and taxpayers -- to another city.
As long as City Hall operates like a banana republic, why is anyone surprised that jobs have left the city in droves and Los Angeles is teetering on the brink of bankruptcy?
Mr. Newcombe is president of Creators Syndicate.
The business climate is worse than the air quality.
WSJ, jul 10, 2009
Los Angeles
If New Yorkers fantasize that doing business here in Los Angeles would be less of a headache, forget about it. This city is fast becoming a job-killing machine. It's no accident the unemployment rate is a frightening 11.4% and climbing.
I never could have imagined that, after living here for more than three decades, I would be filing a lawsuit against my beloved Los Angeles and making plans for my company, Creators Syndicate, to move elsewhere.
But we have no choice. The city's bureaucrats rival Stalin's apparatchiks in issuing decrees, rescinding them, and then punishing citizens for having followed them in the first place.
I founded Creators Syndicate in 1987, and we have represented hundreds of important writers, syndicating their columns to newspapers and Web sites around the world. The most famous include Hillary Clinton, who, like Eleanor Roosevelt, wrote a syndicated column when she was first lady. Another star was the advice columnist Ann Landers, once described by "The World Almanac" as "the most influential woman in America." Other Creators columnists include Bill O'Reilly, Susan Estrich, Thomas Sowell, Roland Martin and Michelle Malkin -- plus Pulitzer Prize-winning political cartoonists and your favorite comic strips.
From the beginning, we've been headquartered in Los Angeles. But 15 years ago we had a dispute with the city over our business tax classification. The city argued that we should be in an "occupations and professions" classification that has an extremely high tax rate, while we fought for a "wholesale and retail" classification with a much lower rate. The city forced us to invest a small fortune in legal fees over two years, but we felt it was worth it in order to establish the correct classification once and for all.
After enduring a series of bureaucratic hearings, we anxiously awaited a ruling to find out what our tax rate would be. Everything was at stake. We had already decided that if we lost, we would move.
You can imagine how relieved we were on July 1, 1994, when the ruling was issued. We won, and firmly planted our roots in the City of Angels and proceeded to build our business.
Everything was fine until the city started running out of money in 2007. Suddenly, the city announced that it was going to ignore its own ruling and reclassify us in the higher tax category. Even more incredible is the fact that the new classification was to be imposed retroactively to 2004 with interest and penalties. No explanation was given for the new classification, or for the city's decision to ignore its 1994 ruling.
Their official position is that the city is not bound by past rulings -- only taxpayers are. This is why we have been forced to file a lawsuit. We will let the courts decide whether it is legal for adverse rulings to apply only to taxpayers and not to the city.
We work with hundreds of outside agents, consultants, independent contractors and support services -- many of whom pay taxes to the city of Los Angeles. This spurs a job-creating ripple effect on the city's economy. Yet I suspect many companies like ours already have quietly left town in the face of the city's taxes and regulations. This would help explain the erosion of jobs.
Regardless of the outcome of our case, the arbitrary and capricious behavior of some bureaucrats is creating a lose-lose situation for everyone involved. If we win in court, the taxpayers of Los Angeles will have lost because all those tax dollars will have been wasted on needless litigation.
If we lose in court, the remaining taxpayers in Los Angeles will have lost because their burden will continue to swell as yet another business moves its jobs -- and taxpayers -- to another city.
As long as City Hall operates like a banana republic, why is anyone surprised that jobs have left the city in droves and Los Angeles is teetering on the brink of bankruptcy?
Mr. Newcombe is president of Creators Syndicate.
King Canute at the G-8
King Canute at the G-8. WSJ Editorial
World leaders tell the Earth's temperature not to rise.
WSJ, Jul 10, 2009
"When King Canute of lore wanted to teach his citizens a lesson, he set his throne by the seashore and commanded the tides to roll out. Canute's spirit was back in business this week at the G-8 summit in Italy, where the assembled leaders declared that the world's temperature shall not rise: 'We recognize the scientific view that the increase in global average temperature above pre-industrial levels ought not to exceed 2 degrees [Celsius],' or 3.6 degrees Fahrenheit, said the summit declaration.
So let it be written, so let it be done.
As for how they will achieve this climate-defying feat, well, the leaders were somewhat less definitive: 'we will work . . . to identify a global goal for substantially reducing global emissions by 2050.'"
World leaders tell the Earth's temperature not to rise.
WSJ, Jul 10, 2009
"When King Canute of lore wanted to teach his citizens a lesson, he set his throne by the seashore and commanded the tides to roll out. Canute's spirit was back in business this week at the G-8 summit in Italy, where the assembled leaders declared that the world's temperature shall not rise: 'We recognize the scientific view that the increase in global average temperature above pre-industrial levels ought not to exceed 2 degrees [Celsius],' or 3.6 degrees Fahrenheit, said the summit declaration.
So let it be written, so let it be done.
As for how they will achieve this climate-defying feat, well, the leaders were somewhat less definitive: 'we will work . . . to identify a global goal for substantially reducing global emissions by 2050.'"
Fact Sheets: U.S. Commitment to Development
Fact Sheets: U.S. Commitment to Development
State Dept, Bureau of Public Affairs
Office of the Spokesman, Washington, DC, Thu, 09 Jul 2009 13:16:33 -0500
“To the people of poor nations, we pledge to work alongside you to make your farms flourish and let clean waters flow; to nourish starved bodies and feed hungry minds.”-President Barack Obama, Inaugural Address, January 20th, 2009
“We are committed to pursuing peace and prosperity in every corner – not only in the marble halls of governments, but also in the rural villages and distant cities where people strive to live, work, learn, raise families, contribute to their communities, and grow old with dignity. These are universal dreams that we seek to make a reality for more of the world’s people.”-Secretary Hillary Clinton, Remarks on World Refugee Day, June 20th, 2009
The United Nations reaffirmed the 2002 Monterrey Consensus for development at the International Conference on Financing for Development at Doha in 2008, calling on developing countries to establish sound economic, social and governance policies and calling on developed countries to support these efforts through an open trading system, private capital flows, and development assistance. The United States is working with other donors and multilateral development banks to ensure that all sources of development finance are available to developing countries as we pass through and beyond the global economic crisis. The United States is strongly committed to helping the world's poor through a broad variety of mechanisms. Preliminary 2008 U.S. Official Development Assistance (ODA) indicates that ODA has tripled over the last decade, and President Obama has pledged further increases.[1]
The U.S. Record
[1] All 2008 ODA data cited are preliminary figures. Final 2008 ODA data will be released in November 2009.
PRN: 2009/697
State Dept, Bureau of Public Affairs
Office of the Spokesman, Washington, DC, Thu, 09 Jul 2009 13:16:33 -0500
“To the people of poor nations, we pledge to work alongside you to make your farms flourish and let clean waters flow; to nourish starved bodies and feed hungry minds.”-President Barack Obama, Inaugural Address, January 20th, 2009
“We are committed to pursuing peace and prosperity in every corner – not only in the marble halls of governments, but also in the rural villages and distant cities where people strive to live, work, learn, raise families, contribute to their communities, and grow old with dignity. These are universal dreams that we seek to make a reality for more of the world’s people.”-Secretary Hillary Clinton, Remarks on World Refugee Day, June 20th, 2009
The United Nations reaffirmed the 2002 Monterrey Consensus for development at the International Conference on Financing for Development at Doha in 2008, calling on developing countries to establish sound economic, social and governance policies and calling on developed countries to support these efforts through an open trading system, private capital flows, and development assistance. The United States is working with other donors and multilateral development banks to ensure that all sources of development finance are available to developing countries as we pass through and beyond the global economic crisis. The United States is strongly committed to helping the world's poor through a broad variety of mechanisms. Preliminary 2008 U.S. Official Development Assistance (ODA) indicates that ODA has tripled over the last decade, and President Obama has pledged further increases.[1]
The U.S. Record
- World’s largest donor of bilateral foreign assistance.
- World’s largest donor of combined multilateral development assistance.
- The United States disbursed $26 billion in Official Development Assistance (ODA) in calendar year 2008, a $4.2 billion, or 19% increase from the 2007 level.
- U.S. bilateral ODA to sub-Saharan Africa increased to $6.5 billion in 2008 from $4.6 billion in 2007.
- U.S. bilateral ODA to least developed countries increased to $6.9 billion in 2008.
- $6.4 billion committed to Millennium Challenge poverty reduction Compacts in 18 countries.
- $25 billion in bilateral and multilateral HIV/AIDS and tuberculosis funding through 2009.$4.4 billion in U.S. humanitarian assistance provided in 2008.
- Top net goods importer from developing countries at $610 billion in 2008 ($1,089 billion in imports minus $479 billion in exports). Excluding China, net developing country imports total $325 billion in 2008 ($733 billion in imports minus $408 billion in exports).
- World’s largest provider of private financial flows to the developing world with net capital flows exceeding $99 billion in 2007.
[1] All 2008 ODA data cited are preliminary figures. Final 2008 ODA data will be released in November 2009.
PRN: 2009/697
Do We Need a Second Stimulus? Why so little is being spent from the first
Do We Need a Second Stimulus? By EDWARD P. LAZEAR
A more troubling question is why so little is being spent from the first.
WSJ, Jul 09, 2009
In "Brewster's Millions," a comedy starring Richard Pryor, a man is told he can keep $300 million if he manages to spend $30 million in one month. The movie documents -- with a great deal of humor -- his difficulties getting the money spent. The Obama administration is currently facing a similar problem with its "stimulus" spending, only without the humor.
With the economy weak and the labor market continuing to decline, there is now talk of a second stimulus (which is actually the third, counting President Bush's 2008 tax rebates). This would be a mistake. The truth is there hasn't been any stimulus to speak of so far this year. Moreover, what's being called stimulus is just a smoke screen for a permanent expansion of government. Let's start with some facts.
By June 26, about $56 billion was spent on the stimulus from the American Recovery and Reinvestment Act of 2009, passed Feb. 17. A large proportion of that actually reflects mere transfers from the federal government to state governments, so the amount that has gotten into the economy is significantly lower.
But even if we call all of the $56 billion spending, it's still not enough to make a meaningful impact. By this point of the year in 2008, the Bush administration's tax-rebates got out about $80 billion. Most economists believe the rebates had a positive but hardly dramatic effect on the economy.
The Obama stimulus, being significantly smaller, cannot possibly be expected to turn the economy around. The economy will improve. But it will do so because the financial sector is recovering, largely due to the Fed policies to enhance liquidity and the success of the Bush administration's Troubled Asset Relief Program, continued by the Obama team, in helping to recapitalize the banks.
Congress and the Obama administration have used the economic downturn as an excuse to expand the size of government. Calling it a stimulus, they have instead put in place a spending agenda that will unfold over the next two years. Although a little over one-third of the American Recovery and Reinvestment Act of 2009 goes to tax relief, the rest is in the form of spending programs that will be difficult to stop once they are up and running.
Only a small share of the spending will occur in 2009, even though Keynesians would argue that stimulus spending should be frontloaded to kick-start growth. The Congressional Budget Office estimates that the largest share of the spending will occur in 2010, with the amount in 2011 being slightly larger than in 2009. Again, the timing exacerbates the problem: It will be tough to cut back on spending written into budgets as far out as 2011.
Additional evidence that the Obama administration wants to expand government rather than stimulate the economy comes from the president's own statements about deficit reduction. When the budget came out, he announced a goal of reducing the deficit to around 4% of GDP by 2013, at which point the administration believes the economy will be fully recovered. Yet to keep the ratio of public debt to GDP constant, the deficit must actually stay below about 2.7%.
For perspective, recall that the Bush deficit, which has been criticized for being too large, reached a peak of 3.6% of GDP in 2004. But it fell steadily to 1.2% of GDP by 2007 before rising again to about 3% after TARP.
Some argue that a tax cut is a weaker stimulus than direct government spending. This point is debated among economists. But it is clearly much easier for Treasury to write checks to the public than it is to get agencies to rev up spending programs and do so in a way that does not simply throw away money.
It's a bit odd that the reaction by the Obama administration and some congressional leaders to a policy that has not worked is to consider putting a similar policy in place. One interpretation is that this is yet another opportunity to spend more on programs that Democrats have wanted for years.
It may be the case that the country wants more government, that Americans now believe the European model of big government is best. That is a decision that society must make. But it should do so with no illusions: The current stimulus and calls for a future one are primarily government growth policies, not strategies to shorten the current recession.
Mr. Lazear, chairman of the President's Council of Economic Advisers from 2006-09, is a professor at Stanford University's Graduate School of Business and a Hoover Institution fellow.
A more troubling question is why so little is being spent from the first.
WSJ, Jul 09, 2009
In "Brewster's Millions," a comedy starring Richard Pryor, a man is told he can keep $300 million if he manages to spend $30 million in one month. The movie documents -- with a great deal of humor -- his difficulties getting the money spent. The Obama administration is currently facing a similar problem with its "stimulus" spending, only without the humor.
With the economy weak and the labor market continuing to decline, there is now talk of a second stimulus (which is actually the third, counting President Bush's 2008 tax rebates). This would be a mistake. The truth is there hasn't been any stimulus to speak of so far this year. Moreover, what's being called stimulus is just a smoke screen for a permanent expansion of government. Let's start with some facts.
By June 26, about $56 billion was spent on the stimulus from the American Recovery and Reinvestment Act of 2009, passed Feb. 17. A large proportion of that actually reflects mere transfers from the federal government to state governments, so the amount that has gotten into the economy is significantly lower.
But even if we call all of the $56 billion spending, it's still not enough to make a meaningful impact. By this point of the year in 2008, the Bush administration's tax-rebates got out about $80 billion. Most economists believe the rebates had a positive but hardly dramatic effect on the economy.
The Obama stimulus, being significantly smaller, cannot possibly be expected to turn the economy around. The economy will improve. But it will do so because the financial sector is recovering, largely due to the Fed policies to enhance liquidity and the success of the Bush administration's Troubled Asset Relief Program, continued by the Obama team, in helping to recapitalize the banks.
Congress and the Obama administration have used the economic downturn as an excuse to expand the size of government. Calling it a stimulus, they have instead put in place a spending agenda that will unfold over the next two years. Although a little over one-third of the American Recovery and Reinvestment Act of 2009 goes to tax relief, the rest is in the form of spending programs that will be difficult to stop once they are up and running.
Only a small share of the spending will occur in 2009, even though Keynesians would argue that stimulus spending should be frontloaded to kick-start growth. The Congressional Budget Office estimates that the largest share of the spending will occur in 2010, with the amount in 2011 being slightly larger than in 2009. Again, the timing exacerbates the problem: It will be tough to cut back on spending written into budgets as far out as 2011.
Additional evidence that the Obama administration wants to expand government rather than stimulate the economy comes from the president's own statements about deficit reduction. When the budget came out, he announced a goal of reducing the deficit to around 4% of GDP by 2013, at which point the administration believes the economy will be fully recovered. Yet to keep the ratio of public debt to GDP constant, the deficit must actually stay below about 2.7%.
For perspective, recall that the Bush deficit, which has been criticized for being too large, reached a peak of 3.6% of GDP in 2004. But it fell steadily to 1.2% of GDP by 2007 before rising again to about 3% after TARP.
Some argue that a tax cut is a weaker stimulus than direct government spending. This point is debated among economists. But it is clearly much easier for Treasury to write checks to the public than it is to get agencies to rev up spending programs and do so in a way that does not simply throw away money.
It's a bit odd that the reaction by the Obama administration and some congressional leaders to a policy that has not worked is to consider putting a similar policy in place. One interpretation is that this is yet another opportunity to spend more on programs that Democrats have wanted for years.
It may be the case that the country wants more government, that Americans now believe the European model of big government is best. That is a decision that society must make. But it should do so with no illusions: The current stimulus and calls for a future one are primarily government growth policies, not strategies to shorten the current recession.
Mr. Lazear, chairman of the President's Council of Economic Advisers from 2006-09, is a professor at Stanford University's Graduate School of Business and a Hoover Institution fellow.
Systemic Risk and the Fed
Systemic Risk and the Fed. By ROBERT C. POZEN
It is a mistake to give the central bank vast new regulatory powers.
WSJ, Jul 09, 2009
Congress is currently debating how to cope with the widespread ripple effects when a large financial institution fails or a risky financial product blows up. The U.S. Treasury has proposed that a council of eight regulatory agencies be appointed to monitor the so-called problem of systemic risk. Treasury also wants the Federal Reserve to become the exclusive regulator of all financial institutions deemed systemically risky.
This gets things backward.
If the risk monitoring function is delegated to a council, no single agency will take the lead or likely take responsibility. Moreover, the U.S. needs one contact point to coordinate risk monitoring with other countries.
The most logical choice to monitor systemic risk is the Fed. This function is consistent with the Fed's broad review of economic and market developments, which is part of its traditional role in setting interest rates. In this role, the Fed takes a long-term perspective, which is critical to risk monitoring.
More importantly, the Fed has emergency lending powers to prevent a financial institution from suddenly failing. If the remedial action involves a bank holding company, it already has the power to act. If another type of financial institution is at risk, the Fed should work with the relevant regulatory agency to implement a plan. Disagreements should be settled by the council.
But the Fed should not be the exclusive regulator of all institutions posing a systemic risk. It's not possible to identify in advance such institutions; they'll change as market conditions change. Systemic risks also can arise from new products, like credit derivatives, which are used by institutions of various sizes. The Fed would not be able to develop enough expertise to regulate so many different types of financial firms -- hedge funds, pension plans, money funds and insurance companies, as well as banks.
Instead, large financial institutions should continue to be supervised by their functional regulators, such as the SEC in the case of money market funds. The other great benefit of this approach is that it avoids labeling an institution in advance as systemically risky. Once the government uses this label, investors will assume that the institution will always be bailed out by the government.
Giving the Fed the authority to monitor risk but not new regulatory authority also avoids granting it too much power. A good case can be made that the Fed already has too much power, and should give up its current authority to set customer rules for mortgages and credit cards. The Fed should be focused on macroeconomic issues -- not consumer protection.
To be sure, there are gaps in the current system of regulation that should be closed. For example, Congress should require most managers of hedge funds to register with the SEC under the Investment Advisers Act.
Such registration would subject those managers to periodic inspections without limiting their investment strategies. Furthermore, a handful of very large hedge funds (e.g., with assets over $25 billion) should submit to the SEC and the Fed nonpublic reports that include information, such as their leverage ratios, which are relevant to the monitoring of systemic risk.
Congress also should create a federal charter and agency for a small number of giant life insurers. AIG's collapse shows that a giant insurer can have adverse repercussions for the entire financial system. For that reason, almost all countries have a federal regulator of large insurance companies. The states will no doubt object, but they can continue to regulate property-casualty insurers and most life insurers.
In short, I believe the Treasury's proposal for dealing with systemic risk is misguided. To ensure that a risk monitor is accountable, the function should be located in a single entity. To supervise specific financial institutions and practices, however, Congress should look to the traditional functional regulators that already have the expertise necessary to understand and resolve issues specific to these institutions.
Mr. Pozen, chairman of MFS Investment Management, is the author of "Too Big to Save? How to Fix the U.S. Financial System," forthcoming from John Wiley.
It is a mistake to give the central bank vast new regulatory powers.
WSJ, Jul 09, 2009
Congress is currently debating how to cope with the widespread ripple effects when a large financial institution fails or a risky financial product blows up. The U.S. Treasury has proposed that a council of eight regulatory agencies be appointed to monitor the so-called problem of systemic risk. Treasury also wants the Federal Reserve to become the exclusive regulator of all financial institutions deemed systemically risky.
This gets things backward.
If the risk monitoring function is delegated to a council, no single agency will take the lead or likely take responsibility. Moreover, the U.S. needs one contact point to coordinate risk monitoring with other countries.
The most logical choice to monitor systemic risk is the Fed. This function is consistent with the Fed's broad review of economic and market developments, which is part of its traditional role in setting interest rates. In this role, the Fed takes a long-term perspective, which is critical to risk monitoring.
More importantly, the Fed has emergency lending powers to prevent a financial institution from suddenly failing. If the remedial action involves a bank holding company, it already has the power to act. If another type of financial institution is at risk, the Fed should work with the relevant regulatory agency to implement a plan. Disagreements should be settled by the council.
But the Fed should not be the exclusive regulator of all institutions posing a systemic risk. It's not possible to identify in advance such institutions; they'll change as market conditions change. Systemic risks also can arise from new products, like credit derivatives, which are used by institutions of various sizes. The Fed would not be able to develop enough expertise to regulate so many different types of financial firms -- hedge funds, pension plans, money funds and insurance companies, as well as banks.
Instead, large financial institutions should continue to be supervised by their functional regulators, such as the SEC in the case of money market funds. The other great benefit of this approach is that it avoids labeling an institution in advance as systemically risky. Once the government uses this label, investors will assume that the institution will always be bailed out by the government.
Giving the Fed the authority to monitor risk but not new regulatory authority also avoids granting it too much power. A good case can be made that the Fed already has too much power, and should give up its current authority to set customer rules for mortgages and credit cards. The Fed should be focused on macroeconomic issues -- not consumer protection.
To be sure, there are gaps in the current system of regulation that should be closed. For example, Congress should require most managers of hedge funds to register with the SEC under the Investment Advisers Act.
Such registration would subject those managers to periodic inspections without limiting their investment strategies. Furthermore, a handful of very large hedge funds (e.g., with assets over $25 billion) should submit to the SEC and the Fed nonpublic reports that include information, such as their leverage ratios, which are relevant to the monitoring of systemic risk.
Congress also should create a federal charter and agency for a small number of giant life insurers. AIG's collapse shows that a giant insurer can have adverse repercussions for the entire financial system. For that reason, almost all countries have a federal regulator of large insurance companies. The states will no doubt object, but they can continue to regulate property-casualty insurers and most life insurers.
In short, I believe the Treasury's proposal for dealing with systemic risk is misguided. To ensure that a risk monitor is accountable, the function should be located in a single entity. To supervise specific financial institutions and practices, however, Congress should look to the traditional functional regulators that already have the expertise necessary to understand and resolve issues specific to these institutions.
Mr. Pozen, chairman of MFS Investment Management, is the author of "Too Big to Save? How to Fix the U.S. Financial System," forthcoming from John Wiley.
A comparatively poor, high-immigration town across the border from super-violent Ciudad Juarez is one of the safest big cities in America
The El Paso Miracle. By Radley Balko
How can a comparatively poor, high-immigration town that sits across the border from super-violent Ciudad Juarez be one of the safest big cities in America?
Reason, July 6, 2009
By conventional wisdom, El Paso, Texas should be one of the scariest cities in America. In 2007, the city's poverty rate was a shade over 27 percent, more than twice the national average. Median household income was $35,600, well below the national average of $48,000. El Paso is three-quarters Hispanic, and more than a quarter of its residents are foreign-born. Given that it's nearly impossible for low-skilled immigrants to work in the United States legitimately, it's safe to say that a significant percentage of El Paso's foreign-born population is living here illegally.
El Paso also has some of the laxer gun control policies of any non-Texan big city in the country, mostly due to gun-friendly state law. And famously, El Paso sits just over the Rio Grande from one of the most violent cities in the western hemisphere, Ciudad Juarez, Mexico, home to a staggering 2,500 homicides in the last 18 months alone. A city of illegal immigrants with easy access to guns, just across the river from a metropolis ripped apart by brutal drug war violence. Should be a bloodbath, right?
Here's the surprise: There were just 18 murders in El Paso last year, in a city of 736,000 people. To compare, Baltimore, with 637,000 residents, had 234 killings. In fact, since the beginning of 2008, there were nearly as many El Pasoans murdered while visiting Juarez (20) than there were murdered in their home town (23).El Paso is among the safest big cities in America. For the better part of the last decade, only Honolulu has had a lower violent crime rate (El Paso slipped to third last year, behind New York). Men's Health magazine recently ranked El Paso the second "happiest" city in America, right after Laredo, Texas—another border town, where the Hispanic population is approaching 95 percent.
So how has this city of poor immigrants become such an anomaly? Actually, it may not be an anomaly at all. Many criminologists say El Paso isn't safe despite its high proportion of immigrants, it's safe because of them."If you want to find a safe city, first determine the size of the immigrant population," says Jack Levin, a criminologist at Northeastern University in Massachusetts. "
If the immigrant community represents a large proportion of the population, you're likely in one of the country's safer cities. San Diego, Laredo, El Paso—these cities are teeming with immigrants, and they're some of the safest places in the country."
If you regularly listen to talk radio, or get your crime news from anti-immigration pundits, all of this may come as a surprise. But it's not to many of those who study crime for a living. As the national immigration debate heated up in 2007, dozens of academics who specialize in the issue sent a letter (pdf) to then President George W. Bush and congressional leaders with the following point:
Numerous studies by independent researchers and government commissions over the past 100 years repeatedly and consistently have found that, in fact, immigrants are less likely to commit crimes or to be behind bars than are the native-born. This is true for the nation as a whole, as well as for cities with large immigrant populations such as Los Angeles, New York, Chicago, and Miami, and cities along the U.S.-Mexico border such as San Diego and El Paso.
One of the signatories was Rubén G. Rumbaut, a sociologist who studies immigration at the University of California, Irvine. Rumbaut recently presented a paper on immigration and crime to a Washington, D.C. conference sponsored by the Police Foundation. Rumbaut writes via email, "The evidence points overwhelmingly to the same conclusion: Rates of crime and conviction for undocumented immigrants are far below those for the native born, and that is especially the case for violent crimes, including murder."
Opponents of illegal immigration usually do little more than cite andecdotes attempting to link illegal immigration to violent crime. When they do try to use statistics, they come up short. Rep. Steve King (R-Iowa), for example, has perpetuated the popular myth that illegal immigrants murder 12 Americans per day, and kill another 13 by driving drunk. King says his figures come from a Government Accountability Office study he requested, which found that about 27 percent of inmates in the federal prison system are non-citizens. Colorado Media Matters looked into King's claim, and found his methodology lacking. King appears to have conjured his talking point by simply multiplying the annual number of murders and DWI fatalities in America by 27 percent. Of course, the GAO report only looked at federal prisons, not the state prisons and local jails where most convicted murderers and DWI offenders are kept. The Bureau of Justice Statistics puts the number of non-citizens (including legal immigrants) in state, local, and federal prisons and jails at about 6.4 percent (pdf). Of course, even that doesn't mean that non-citizens account for 6.4 percent of murders and DWI fatalities, only 6.4 percent of the overall inmate population.
What's happening with Latinos is true of most immigrant groups throughout U.S. history. "Overall, immigrants have a stake in this country, and they recognize it," Northeastern University's Levin says. "They're really an exceptional sort of American. They come here having left their family and friends back home. They come at some cost to themselves in terms of security and social relationships. They are extremely success-oriented, and adjust very well to the competitive circumstances in the United States." Economists Kristin Butcher and Anne Morrison Piehl argue that the very process of migration tends to select for people with a low potential for criminality.
Despite the high profile of polemicists such as Lou Dobbs and Michael Savage, America has been mostly welcoming to this latest immigration wave. You don't see "Latinos Need Not Apply" or "No Mexicans" signs posted on public buildings the way you did with the Italians and the Irish, two groups who actually were disproportionately likely to turn to crime. The implication makes sense: An immigrant group's propensity for criminality may be partly determined by how they're received in their new country.
"Look at Arab-Americans in the Midwest, especially in the Detroit area," Levin says. "The U.S. and Canada have traditionally been very willing to welcome and integrate them. They're a success story, with high average incomes and very little crime. That's not the case in Europe. Countries like France and Germany are openly hostile to Arabs. They marginalize them. And they've seen waves of crime and rioting."
El Paso may be a concentrated affirmation of that theory. In 2007 the Washington Post reported on city leaders' wariness of anti-immigration policies coming out of Washington. The city went to court (and lost) in an effort to prevent construction of the border fence within its boundaries, and local officials have resisted federal efforts to enlist local police for immigration enforcement, arguing that it would make illegals less likely to cooperate with police. "Most people in Washington really don't understand life on the border," El Paso Mayor John Cook told the Post. "They don't understand our philosophy here that the border joins us together, it doesn't separate us."Other mayors could learn something from Cook. El Paso's embrace of its immigrants might be a big reason why the low-income border town has remained one of the safest places in the country.
Radley Balko is a senior editor of Reason magazine.
How can a comparatively poor, high-immigration town that sits across the border from super-violent Ciudad Juarez be one of the safest big cities in America?
Reason, July 6, 2009
By conventional wisdom, El Paso, Texas should be one of the scariest cities in America. In 2007, the city's poverty rate was a shade over 27 percent, more than twice the national average. Median household income was $35,600, well below the national average of $48,000. El Paso is three-quarters Hispanic, and more than a quarter of its residents are foreign-born. Given that it's nearly impossible for low-skilled immigrants to work in the United States legitimately, it's safe to say that a significant percentage of El Paso's foreign-born population is living here illegally.
El Paso also has some of the laxer gun control policies of any non-Texan big city in the country, mostly due to gun-friendly state law. And famously, El Paso sits just over the Rio Grande from one of the most violent cities in the western hemisphere, Ciudad Juarez, Mexico, home to a staggering 2,500 homicides in the last 18 months alone. A city of illegal immigrants with easy access to guns, just across the river from a metropolis ripped apart by brutal drug war violence. Should be a bloodbath, right?
Here's the surprise: There were just 18 murders in El Paso last year, in a city of 736,000 people. To compare, Baltimore, with 637,000 residents, had 234 killings. In fact, since the beginning of 2008, there were nearly as many El Pasoans murdered while visiting Juarez (20) than there were murdered in their home town (23).El Paso is among the safest big cities in America. For the better part of the last decade, only Honolulu has had a lower violent crime rate (El Paso slipped to third last year, behind New York). Men's Health magazine recently ranked El Paso the second "happiest" city in America, right after Laredo, Texas—another border town, where the Hispanic population is approaching 95 percent.
So how has this city of poor immigrants become such an anomaly? Actually, it may not be an anomaly at all. Many criminologists say El Paso isn't safe despite its high proportion of immigrants, it's safe because of them."If you want to find a safe city, first determine the size of the immigrant population," says Jack Levin, a criminologist at Northeastern University in Massachusetts. "
If the immigrant community represents a large proportion of the population, you're likely in one of the country's safer cities. San Diego, Laredo, El Paso—these cities are teeming with immigrants, and they're some of the safest places in the country."
If you regularly listen to talk radio, or get your crime news from anti-immigration pundits, all of this may come as a surprise. But it's not to many of those who study crime for a living. As the national immigration debate heated up in 2007, dozens of academics who specialize in the issue sent a letter (pdf) to then President George W. Bush and congressional leaders with the following point:
Numerous studies by independent researchers and government commissions over the past 100 years repeatedly and consistently have found that, in fact, immigrants are less likely to commit crimes or to be behind bars than are the native-born. This is true for the nation as a whole, as well as for cities with large immigrant populations such as Los Angeles, New York, Chicago, and Miami, and cities along the U.S.-Mexico border such as San Diego and El Paso.
One of the signatories was Rubén G. Rumbaut, a sociologist who studies immigration at the University of California, Irvine. Rumbaut recently presented a paper on immigration and crime to a Washington, D.C. conference sponsored by the Police Foundation. Rumbaut writes via email, "The evidence points overwhelmingly to the same conclusion: Rates of crime and conviction for undocumented immigrants are far below those for the native born, and that is especially the case for violent crimes, including murder."
Opponents of illegal immigration usually do little more than cite andecdotes attempting to link illegal immigration to violent crime. When they do try to use statistics, they come up short. Rep. Steve King (R-Iowa), for example, has perpetuated the popular myth that illegal immigrants murder 12 Americans per day, and kill another 13 by driving drunk. King says his figures come from a Government Accountability Office study he requested, which found that about 27 percent of inmates in the federal prison system are non-citizens. Colorado Media Matters looked into King's claim, and found his methodology lacking. King appears to have conjured his talking point by simply multiplying the annual number of murders and DWI fatalities in America by 27 percent. Of course, the GAO report only looked at federal prisons, not the state prisons and local jails where most convicted murderers and DWI offenders are kept. The Bureau of Justice Statistics puts the number of non-citizens (including legal immigrants) in state, local, and federal prisons and jails at about 6.4 percent (pdf). Of course, even that doesn't mean that non-citizens account for 6.4 percent of murders and DWI fatalities, only 6.4 percent of the overall inmate population.
What's happening with Latinos is true of most immigrant groups throughout U.S. history. "Overall, immigrants have a stake in this country, and they recognize it," Northeastern University's Levin says. "They're really an exceptional sort of American. They come here having left their family and friends back home. They come at some cost to themselves in terms of security and social relationships. They are extremely success-oriented, and adjust very well to the competitive circumstances in the United States." Economists Kristin Butcher and Anne Morrison Piehl argue that the very process of migration tends to select for people with a low potential for criminality.
Despite the high profile of polemicists such as Lou Dobbs and Michael Savage, America has been mostly welcoming to this latest immigration wave. You don't see "Latinos Need Not Apply" or "No Mexicans" signs posted on public buildings the way you did with the Italians and the Irish, two groups who actually were disproportionately likely to turn to crime. The implication makes sense: An immigrant group's propensity for criminality may be partly determined by how they're received in their new country.
"Look at Arab-Americans in the Midwest, especially in the Detroit area," Levin says. "The U.S. and Canada have traditionally been very willing to welcome and integrate them. They're a success story, with high average incomes and very little crime. That's not the case in Europe. Countries like France and Germany are openly hostile to Arabs. They marginalize them. And they've seen waves of crime and rioting."
El Paso may be a concentrated affirmation of that theory. In 2007 the Washington Post reported on city leaders' wariness of anti-immigration policies coming out of Washington. The city went to court (and lost) in an effort to prevent construction of the border fence within its boundaries, and local officials have resisted federal efforts to enlist local police for immigration enforcement, arguing that it would make illegals less likely to cooperate with police. "Most people in Washington really don't understand life on the border," El Paso Mayor John Cook told the Post. "They don't understand our philosophy here that the border joins us together, it doesn't separate us."Other mayors could learn something from Cook. El Paso's embrace of its immigrants might be a big reason why the low-income border town has remained one of the safest places in the country.
Radley Balko is a senior editor of Reason magazine.
Obama v. the Tort Lawyers - The president's Auto Task Force worked hard to shield the new GM from jackpot justice
Obama v. the Tort Lawyers. WSJ Editorial
The president's Auto Task Force worked hard to shield the new GM from jackpot justice.
WSJ, Jul 09, 2009
Ask a CEO or small business owner to list his biggest economic problems, and near the top is always the depredations of the tort bar. Would you believe Uncle Sam feels the same way when he's the owner?
Apparently so, if we can judge from the sensible behavior of the Obama Administration's Auto Task Force. General Motors could emerge from bankruptcy as soon as today, leaving the federal government with a majority stake in the car maker. And it turns out the task force worked hard to shield the new GM from jackpot justice.
In its original reorganization plan, the Administration even proposed to leave behind in the old GM all tort claims arising from cars manufactured before bankruptcy. That would have meant that all past, present and future claims related to cars GM produced before June would have had next to no chance of meaningful recovery, as they would have had to stand in line with every other unsecured creditor of the bankrupt firm.
This was the arrangement approved by the courts in Chrysler's bankruptcy, and the task force sought to repeat the feat with GM. But 11 state Attorneys General and a group of tort lawyers cried foul and filed an objection to the bankruptcy plan with the court. In the end the Administration agreed to leave liability for future claims with the new company, while leaving behind current suits.
That's at least something. And the task force's attempt to shed these lawsuit liabilities shows that the feds recognize how expensive it can be to get caught in the sights of the tort lawyers. If only the Administration could see the issue with the same clarity when the targets of its trial-bar supporters are privately owned companies.
The president's Auto Task Force worked hard to shield the new GM from jackpot justice.
WSJ, Jul 09, 2009
Ask a CEO or small business owner to list his biggest economic problems, and near the top is always the depredations of the tort bar. Would you believe Uncle Sam feels the same way when he's the owner?
Apparently so, if we can judge from the sensible behavior of the Obama Administration's Auto Task Force. General Motors could emerge from bankruptcy as soon as today, leaving the federal government with a majority stake in the car maker. And it turns out the task force worked hard to shield the new GM from jackpot justice.
In its original reorganization plan, the Administration even proposed to leave behind in the old GM all tort claims arising from cars manufactured before bankruptcy. That would have meant that all past, present and future claims related to cars GM produced before June would have had next to no chance of meaningful recovery, as they would have had to stand in line with every other unsecured creditor of the bankrupt firm.
This was the arrangement approved by the courts in Chrysler's bankruptcy, and the task force sought to repeat the feat with GM. But 11 state Attorneys General and a group of tort lawyers cried foul and filed an objection to the bankruptcy plan with the court. In the end the Administration agreed to leave liability for future claims with the new company, while leaving behind current suits.
That's at least something. And the task force's attempt to shed these lawsuit liabilities shows that the feds recognize how expensive it can be to get caught in the sights of the tort lawyers. If only the Administration could see the issue with the same clarity when the targets of its trial-bar supporters are privately owned companies.
The Public Option Two-Step
The Public Option Two-Step. WSJ Editorial
Why Obama won't acknowledge the 'Trojan Horse' in the room.
WSJ, Jul 09, 2009
Americans unschooled in liberal health-care politics may have trouble deciphering the White House's conflicting proclamations this week about a new government insurance program for the middle class. Allow us to translate: President Obama loves this so-called public option, but he needs to sell it in a shroud of euphemism and the appearance of "compromise."
On Monday, chief of staff Rahm Emanuel told the Journal's Laura Meckler that the Administration would accept a health bill without a public option, as long as there is "a mechanism to keep the private insurers honest . . . The goal is non-negotiable; the path is." Progressives went bonkers, so on Tuesday Mr. Obama took a break from his Moscow trip to come out strongly in favor (again) of the new trillion-dollar entitlement. Meanwhile, New York's Chuck Schumer has been loudly suggesting that compromise is unnecessary given 60 Senate Democrats -- even as the likes of Ben Nelson, Evan Bayh, Joe Lieberman and Mary Landrieu back away.
The reason left-flank Democrats are so adamant about a public option is because they know it is an opening wedge for the government to dominate U.S. health care. That's also why the health-care industry, business groups, some moderates and most Republicans are opposed. Team Obama likes the policies of the first group but wants the political support of the second. And they're trying to solve this Newtonian problem -- irresistible forces, immovable objects -- by becoming less and less candid about the changes they really favor.
Mr. Emanuel echoes his boss and says a government health plan is needed to keep the private sector "honest," but then why don't we also need a state-run oil company, or nationalized grocery store chain? (Or auto maker? Never mind.) The real goal is to create a program backstopped by taxpayers that can exert political leverage over the market.
In its strongest version, the federal plan would receive direct cash subsidies, allowing it to undercut private insurers on consumer prices. This would quickly lead to "crowd out," the tendency of supposedly "free" public programs to displace private insurance. As a general rule, Congress has to spend $2 of taxpayer money to provide $1 in new benefits. More precise academic studies of expansions in Medicaid and the children's insurance program put the crowd-out effect somewhere between 25% and 60%.
Because this is so expensive, the public version Mr. Schumer favors would supposedly receive no special advantages. But this is meaningless when Democrats are planning to mandate the benefits that private insurers must provide, the patients they must accept, and how much they can charge. Oh, and a government plan would still have an implicit taxpayer guarantee a la Fannie Mae, giving it an inherent cost-of-capital advantage.
A few swing votes such as Maine's Olympia Snowe might accept a "trigger," in which a government-run plan would only come on line if certain targets aren't met, such as reducing costs. But that only delays the day of reckoning. Another pseudocompromise is North Dakota Democrat Kent Conrad's idea to give the states seed money to set up health insurance co-ops. These plans would still be run under a federal charter and managed by a federal board, so they merely split the public option into 50 pieces.
The other goal of a new public plan is to force doctors and hospitals to accept below-cost fees. This is how Medicare tries to control costs today, but it's like squeezing a balloon: Lower reimbursements mean that providers -- especially hospitals -- must recoup their costs elsewhere, either by shifting costs onto private payers or with more billable tests and procedures. The only way costs can conceivably be managed via price controls is if government is running the whole show, which naturally leads to severe restrictions on care while medical innovation withers.
A rhetorical gong Mr. Obama has been banging a lot lately is the idea that the people pointing all this out are liars. "When you hear the naysayers claim that I'm trying to bring about government-run health care," he said in one speech, "know this: They're not telling the truth." He adds that opposition to a public option isn't "based on any evidence" and that it is "illegitimate" to argue that his program is "is somehow a Trojan horse for a single-payer system."
So much for changing the political tone. Perhaps the President should check in with his more honest liberal allies. Jacob Hacker, now a professor of political science at Berkeley, came up with the intellectual architecture for the public option when he was a graduate student in the 1990s. "Someone once said to me, 'This is a Trojan horse for single payer,' and I said, 'Well, it's not a Trojan horse, right? It's just right there,'" Mr. Hacker explained in a speech last year. "I'm telling you, we're going to get there, over time, slowly."
The real question the political class is debating now is how slowly, or quickly, it takes to get there. And how they're best able to disguise this goal -- ideally as a "compromise."
Why Obama won't acknowledge the 'Trojan Horse' in the room.
WSJ, Jul 09, 2009
Americans unschooled in liberal health-care politics may have trouble deciphering the White House's conflicting proclamations this week about a new government insurance program for the middle class. Allow us to translate: President Obama loves this so-called public option, but he needs to sell it in a shroud of euphemism and the appearance of "compromise."
On Monday, chief of staff Rahm Emanuel told the Journal's Laura Meckler that the Administration would accept a health bill without a public option, as long as there is "a mechanism to keep the private insurers honest . . . The goal is non-negotiable; the path is." Progressives went bonkers, so on Tuesday Mr. Obama took a break from his Moscow trip to come out strongly in favor (again) of the new trillion-dollar entitlement. Meanwhile, New York's Chuck Schumer has been loudly suggesting that compromise is unnecessary given 60 Senate Democrats -- even as the likes of Ben Nelson, Evan Bayh, Joe Lieberman and Mary Landrieu back away.
The reason left-flank Democrats are so adamant about a public option is because they know it is an opening wedge for the government to dominate U.S. health care. That's also why the health-care industry, business groups, some moderates and most Republicans are opposed. Team Obama likes the policies of the first group but wants the political support of the second. And they're trying to solve this Newtonian problem -- irresistible forces, immovable objects -- by becoming less and less candid about the changes they really favor.
Mr. Emanuel echoes his boss and says a government health plan is needed to keep the private sector "honest," but then why don't we also need a state-run oil company, or nationalized grocery store chain? (Or auto maker? Never mind.) The real goal is to create a program backstopped by taxpayers that can exert political leverage over the market.
In its strongest version, the federal plan would receive direct cash subsidies, allowing it to undercut private insurers on consumer prices. This would quickly lead to "crowd out," the tendency of supposedly "free" public programs to displace private insurance. As a general rule, Congress has to spend $2 of taxpayer money to provide $1 in new benefits. More precise academic studies of expansions in Medicaid and the children's insurance program put the crowd-out effect somewhere between 25% and 60%.
Because this is so expensive, the public version Mr. Schumer favors would supposedly receive no special advantages. But this is meaningless when Democrats are planning to mandate the benefits that private insurers must provide, the patients they must accept, and how much they can charge. Oh, and a government plan would still have an implicit taxpayer guarantee a la Fannie Mae, giving it an inherent cost-of-capital advantage.
A few swing votes such as Maine's Olympia Snowe might accept a "trigger," in which a government-run plan would only come on line if certain targets aren't met, such as reducing costs. But that only delays the day of reckoning. Another pseudocompromise is North Dakota Democrat Kent Conrad's idea to give the states seed money to set up health insurance co-ops. These plans would still be run under a federal charter and managed by a federal board, so they merely split the public option into 50 pieces.
The other goal of a new public plan is to force doctors and hospitals to accept below-cost fees. This is how Medicare tries to control costs today, but it's like squeezing a balloon: Lower reimbursements mean that providers -- especially hospitals -- must recoup their costs elsewhere, either by shifting costs onto private payers or with more billable tests and procedures. The only way costs can conceivably be managed via price controls is if government is running the whole show, which naturally leads to severe restrictions on care while medical innovation withers.
A rhetorical gong Mr. Obama has been banging a lot lately is the idea that the people pointing all this out are liars. "When you hear the naysayers claim that I'm trying to bring about government-run health care," he said in one speech, "know this: They're not telling the truth." He adds that opposition to a public option isn't "based on any evidence" and that it is "illegitimate" to argue that his program is "is somehow a Trojan horse for a single-payer system."
So much for changing the political tone. Perhaps the President should check in with his more honest liberal allies. Jacob Hacker, now a professor of political science at Berkeley, came up with the intellectual architecture for the public option when he was a graduate student in the 1990s. "Someone once said to me, 'This is a Trojan horse for single payer,' and I said, 'Well, it's not a Trojan horse, right? It's just right there,'" Mr. Hacker explained in a speech last year. "I'm telling you, we're going to get there, over time, slowly."
The real question the political class is debating now is how slowly, or quickly, it takes to get there. And how they're best able to disguise this goal -- ideally as a "compromise."
Wednesday, July 8, 2009
Supply, Not Speculation, Responsible For Volatile Energy Prices
Supply, Not Speculation, Responsible For Volatile Energy Prices
Latest CFTC Action a Diversion from the Real Cause, Supply and Demand
Institute for Energy Research, Jul 08, 2009
WASHINGTON – This week, the Commodities Futures Trading Commission (CFTC) unveiled a new plan for government takeover of how energy commodities are traded, valued and sold. In response to these proposed actions, Thomas J. Pyle, president of the Institute for Energy Research (IER), issued the following statement:
“For politicians who consistently oppose responsible energy development here at home, the demonization of so-called speculators remains a popular tool for absolving themselves of responsibility for the historically high prices they helped create. But for those with a genuine interest in punishing speculators who make money when oil prices are high, no single action would hurt them more than flooding the market with new supply.
“The CFTC, at least as an institution, understands this fact, and has published dozens of studies over the past several years debunking the myth that market trading activity artificially inflates the price of energy. Unfortunately, it appears that the current head of the commission has not read much of its previous work, joining a long list of policymakers either unwilling or unable to understand the difference between cause and effect.
“Washington has kept billions of barrels of oil shale in the Inter-mountain West under lock-and-key. Billions of barrels of oil remain effectively off-limit in our deep oceans, especially in Alaska. And at the same time, Washington is working to halt American energy production even further through massive tax hikes, mandates, and job-killing regulations. Interested in understanding the real causes of high energy prices? Speculate no more.”
READ MORE:
- IER: Speculators Fixing Oil Prices? Don’t Bet On It
- IER: Question: How Many Times Has the FTC Found Evidence of Price Gouging by Energy Companies?
- Paul Krugman: “Speculative nonsense, once again … The mysticism over how speculation is supposed to drive prices drives me crazy, professionally … A futures contract is a bet about the future price. It has no, zero, nada direct effect on the spot price … As I’ve tried to point out, there just isn’t any evidence from the inventory data that this is happening.” (New York Times, 6/23/08)
- Krugman: “Hyperventilation over oil-market speculation is distracting us from the real issues.” (New York Times, 6/27/08)
- T. Boone Pickens: “A U.S. probe into whether speculators manipulated oil prices up to more than $135 a barrel is a ‘waste of time,‘ … ‘There’s nothing to it to start with,’ Pickens said.” (Bloomberg, 6/3/08)
- Pickens: “Speculation has become a ‘scapegoat’ for what is largely a supply and demand problem.” (Houston Chronicle, 7/10/08)
- Warren Buffett: “But it’s not speculation, it is supply and demand …” (CNBC’s Power Lunch, 6/25/08)
- Federal Reserve Chairman Ben Bernanke: “The most important cause [of high gas prices] is the global supply-and-demand balance.” (Congressional testimony, 7/16/08)
- Bernanke: “If financial speculation were pushing oil prices above the levels consistent with the fundamentals of supply and demand, we would expect inventories of crude oil and petroleum products to increase as supply rose and demand fell. But in fact, available data on oil inventories show notable declines over the past year.” (Congressional testimony, 7/15/09)
The economic reality of climate-change policy is sinking in at last in Europe
European Hot Air. WSJ Editorial
The economic reality of climate-change policy is sinking in at last.
WSJ, Jul 08, 2009
Climate change is set to figure prominently in this week's Group of Eight summit in Italy, but take any pronouncements about greenhouse-gas emissions targets with a grain of salt. While leaders may still think it's good politics to sing from the green hymnal, other realities are finally starting to sink in, especially in Old Europe. To wit: Restrictions on greenhouse-gas emissions involve huge costs for uncertain gains and are just what economies in recession don't need.
Concerns about high costs and lost jobs have already threatened carbon-emissions control plans in Australia and New Zealand, and to make sure cap-and-trade would pass in the U.S. House of Representatives, supporters had to push through the legislation before anyone could read it. The fraying of the anti-carbon consensus in Western Europe is especially striking. Polls consistently show that voters in most Western European countries support attempts to ameliorate climate change, at least in the abstract. The EU implemented a cap-and-trade Emissions Trading Scheme in 2005.
But that enthusiasm may be reaching its limit. Governments in industry-heavy countries are now less willing to sacrifice jobs for cooler temperatures. Germany's generally environmentalist Chancellor Angela Merkel insisted on exemptions for her country's industry from December's EU climate package, which pledged to reduce carbon emissions by 20% below 1990 levels by 2020. Germany also plans to build several dozen coal-fired power plants in the next few years.
Italy insisted on a clause in the December climate deal that requires the EU to renegotiate its climate policy after the United Nations summit in Copenhagen later this year. That amounts to a veto since China and India aren't expected to sign up for aggressive emissions targets; any renegotiated EU deal is likely to contain even more loopholes and exemptions to keep from denting European competitiveness.
Just as telling, Europe has been at best half-hearted in meeting its emissions-reduction targets under the 1997 Kyoto Protocol. To the extent Europe appears on track to meet its targets, it's largely because warmer weather and higher market prices for energy have driven consumption down.
Credit a deteriorating economy for this about-face. Businesses and unions finally are starting to speak out against intrusive and expensive emissions regulations. In December, Phillipe Varin, chief executive of Corus, Europe's second-largest steel producer, told the London Independent that the cost of carbon credits and new technologies needed to reduce emissions would destroy European steel production, forcing manufacturing overseas.
Jaroslaw Grzesik, deputy head of energy at Poland's Solidarity trade union said last month that the union estimated the EU's climate policy would cost 800,000 European jobs. Before the December negotiations, the London-based think tank Open Europe estimated the EU climate package would cost governments, businesses and householders in the EU-25 more than €73 billion ($102 billion) a year until 2020. No wonder leaders decided to water it down.
Meanwhile, the supposed economic benefits of climate-change amelioration are evaporating. In Germany, government subsidies for installing solar panels -- and, it was presumed, thereby creating domestic manufacturing jobs -- backfired when it turned out that it was cheaper to make solar panels in China. A recent paper by Gabriel Calzada Álvarez, an economics professor at Universidad Rey Juan Carlos, said that since Spain starting investing in "green jobs" policies in 2000, the country has lost 110,500 jobs in other parts of the economy. That amounts to 2.2 jobs lost for every new "green job" created.
This has politicians worried. They might have been willing to sacrifice a few jobs when they signed Kyoto in 1997. But economic times were flush then. Now a global slowdown is forcing a rethink on whether emissions control is worth the cost. With the scientific debate about the causes, effects and solutions of climate change growing more vigorous, that's a question worth asking.
Despite all the backtracking in practice, climate rhetoric is still alive and well. Sweden, which assumed the EU presidency last week, promises more action on emissions control. Gordon Brown, Nicolas Sarkozy and other leaders continue to talk a good game. Mr. Brown has even proposed a $100 billion-a-year fund to help countries like China and India clean up their emissions acts. Good luck getting that passed in the current fiscal and economic environment.
In other words, Western European leaders are the latest to discover that climate-change talk is cheap, but carbon-emissions regulation is expensive. That might be bad news for green activists, but it's very good news for Europeans worried about their jobs and their economy.
The economic reality of climate-change policy is sinking in at last.
WSJ, Jul 08, 2009
Climate change is set to figure prominently in this week's Group of Eight summit in Italy, but take any pronouncements about greenhouse-gas emissions targets with a grain of salt. While leaders may still think it's good politics to sing from the green hymnal, other realities are finally starting to sink in, especially in Old Europe. To wit: Restrictions on greenhouse-gas emissions involve huge costs for uncertain gains and are just what economies in recession don't need.
Concerns about high costs and lost jobs have already threatened carbon-emissions control plans in Australia and New Zealand, and to make sure cap-and-trade would pass in the U.S. House of Representatives, supporters had to push through the legislation before anyone could read it. The fraying of the anti-carbon consensus in Western Europe is especially striking. Polls consistently show that voters in most Western European countries support attempts to ameliorate climate change, at least in the abstract. The EU implemented a cap-and-trade Emissions Trading Scheme in 2005.
But that enthusiasm may be reaching its limit. Governments in industry-heavy countries are now less willing to sacrifice jobs for cooler temperatures. Germany's generally environmentalist Chancellor Angela Merkel insisted on exemptions for her country's industry from December's EU climate package, which pledged to reduce carbon emissions by 20% below 1990 levels by 2020. Germany also plans to build several dozen coal-fired power plants in the next few years.
Italy insisted on a clause in the December climate deal that requires the EU to renegotiate its climate policy after the United Nations summit in Copenhagen later this year. That amounts to a veto since China and India aren't expected to sign up for aggressive emissions targets; any renegotiated EU deal is likely to contain even more loopholes and exemptions to keep from denting European competitiveness.
Just as telling, Europe has been at best half-hearted in meeting its emissions-reduction targets under the 1997 Kyoto Protocol. To the extent Europe appears on track to meet its targets, it's largely because warmer weather and higher market prices for energy have driven consumption down.
Credit a deteriorating economy for this about-face. Businesses and unions finally are starting to speak out against intrusive and expensive emissions regulations. In December, Phillipe Varin, chief executive of Corus, Europe's second-largest steel producer, told the London Independent that the cost of carbon credits and new technologies needed to reduce emissions would destroy European steel production, forcing manufacturing overseas.
Jaroslaw Grzesik, deputy head of energy at Poland's Solidarity trade union said last month that the union estimated the EU's climate policy would cost 800,000 European jobs. Before the December negotiations, the London-based think tank Open Europe estimated the EU climate package would cost governments, businesses and householders in the EU-25 more than €73 billion ($102 billion) a year until 2020. No wonder leaders decided to water it down.
Meanwhile, the supposed economic benefits of climate-change amelioration are evaporating. In Germany, government subsidies for installing solar panels -- and, it was presumed, thereby creating domestic manufacturing jobs -- backfired when it turned out that it was cheaper to make solar panels in China. A recent paper by Gabriel Calzada Álvarez, an economics professor at Universidad Rey Juan Carlos, said that since Spain starting investing in "green jobs" policies in 2000, the country has lost 110,500 jobs in other parts of the economy. That amounts to 2.2 jobs lost for every new "green job" created.
This has politicians worried. They might have been willing to sacrifice a few jobs when they signed Kyoto in 1997. But economic times were flush then. Now a global slowdown is forcing a rethink on whether emissions control is worth the cost. With the scientific debate about the causes, effects and solutions of climate change growing more vigorous, that's a question worth asking.
Despite all the backtracking in practice, climate rhetoric is still alive and well. Sweden, which assumed the EU presidency last week, promises more action on emissions control. Gordon Brown, Nicolas Sarkozy and other leaders continue to talk a good game. Mr. Brown has even proposed a $100 billion-a-year fund to help countries like China and India clean up their emissions acts. Good luck getting that passed in the current fiscal and economic environment.
In other words, Western European leaders are the latest to discover that climate-change talk is cheap, but carbon-emissions regulation is expensive. That might be bad news for green activists, but it's very good news for Europeans worried about their jobs and their economy.
Tuesday, July 7, 2009
We Must Address Oil-Market Volatility
We Must Address Oil-Market Volatility. By GORDON BROWN and NICOLAS SARKOZY
Erratic price movements in such an important commodity are cause for alarm.
WSJ, Jul 08, 2009
For two years the price of oil has been dangerously volatile, seemingly defying the accepted rules of economics. First it rose by more than $80 a barrel, then fell rapidly by more than $100, before doubling to its current level of around $70. In that time, however, there has been no serious interruption of supply. Despite ongoing conflict in the Middle East, oil has continued to flow. And although the recession and price rises have had some effect on consumption, medium-term forecasts for demand are robust.
The oil market is complex, but such erratic price movement in one of the world's most crucial commodities is a growing cause for alarm. The surge in prices last year gravely damaged the global economy and contributed to the downturn. The risk now is that a new period of instability could undermine confidence just as we are pushing for recovery.
Governments can no longer stand idle. Volatility damages both consumers and producers. Those who rely on oil and have no substitutes readily available have been the victims of extreme price fluctuations beyond their control -- and apparently beyond reason. Importing countries, especially in the developing world, find themselves committed to big subsidies to shield domestic consumers from potentially devastating price shifts.
In Britain and France we also know how the price of crude dictates the price of petrol at filling stations and the effect on families and businesses. For countries heavily reliant on income from oil exports, the windfalls from brief price surges are offset by the consequent difficulties of planning national budgets and investment strategies.
Extreme fluctuations in price are encouraging energy users to reconsider their reliance on oil. The International Energy Agency, for instance, has cut its long-term forecast of oil consumption by almost a quarter. Producers are in danger of finding that their key national resource loses both its market and its long-term value.
More immediately, we as consumers must recognize that abnormally low oil prices, while giving short-term benefits, do long-term damage. They diminish incentives to invest, not only in oil production but also, in our own countries, in energy savings and carbon-free alternatives. As such, future problems are stored up in the form of shortages, greater dependence and an acceleration of global warming. Upstream investment worldwide is already down by 20% over the past year. And with some sources of supply in decline, such as Alaska and the North Sea, the resource we will all need as the economy recovers is being developed in neither an adequate nor a timely way.
There are no easy solutions and any progress must be made with the full co-operation of the world community and the oil industry. On Monday we used the U.K.-France summit in Evian to explore a way forward. We hope our ideas inform meetings both today, at the Group of Eight Summit in Italy, and in future talks between world leaders.
We are committed to intensifying the ongoing dialogue between producers and consumers through the International Energy Forum. Saudi Arabia and OPEC have expressed interest in this and we believe producers and consumers are closer now than at any time in the past 30 years to recognizing the huge common interest in giving clear and stable perspectives to long-term investment.
At the London Energy Meeting last December, all participants agreed that still closer co-ordination between the IEA, OPEC and the IEF was necessary to develop a shared analysis of future demand and supply trends. The Expert Group of the IEF should use this work to arrive at a common long-term view on what price range would be consistent with the fundamentals.
The experts should also consider any measures that could be put in place to reduce volatility. Discussions should look again into the question of whether trading activity is amplifying erratic price movements.
We therefore call upon the International Organization of Securities Regulators to consider improving transparency and supervision of the oil futures markets to reduce damaging speculation and to take forward the recommendations already made by its taskforce in March. This would serve the interests of orderly and adequate investment in future supplies. Volatility and opacity are the enemies of growth. In the absence of transparency, consumers and importing nations are losing confidence in oil. Climate change is also altering government attitudes to energy.
The world's economy is still reliant on secure supplies at prices that are not so high as to destroy the prospects of economic growth but not so low as to lead to a slump in investment, as happened in the 1990s.
It is a thorny issue, but complex markets need not be volatile or damaging to the wider global economy. We are convinced that producers and consumers alike would benefit from greater transparency, greater stability and greater consensus on the market fundamentals. After two years of destructive volatility the time has come for both sides to work together to build on this common interest.
Mr. Brown is prime minister of the United Kingdom. Mr. Sarkozy is president of France.
Erratic price movements in such an important commodity are cause for alarm.
WSJ, Jul 08, 2009
For two years the price of oil has been dangerously volatile, seemingly defying the accepted rules of economics. First it rose by more than $80 a barrel, then fell rapidly by more than $100, before doubling to its current level of around $70. In that time, however, there has been no serious interruption of supply. Despite ongoing conflict in the Middle East, oil has continued to flow. And although the recession and price rises have had some effect on consumption, medium-term forecasts for demand are robust.
The oil market is complex, but such erratic price movement in one of the world's most crucial commodities is a growing cause for alarm. The surge in prices last year gravely damaged the global economy and contributed to the downturn. The risk now is that a new period of instability could undermine confidence just as we are pushing for recovery.
Governments can no longer stand idle. Volatility damages both consumers and producers. Those who rely on oil and have no substitutes readily available have been the victims of extreme price fluctuations beyond their control -- and apparently beyond reason. Importing countries, especially in the developing world, find themselves committed to big subsidies to shield domestic consumers from potentially devastating price shifts.
In Britain and France we also know how the price of crude dictates the price of petrol at filling stations and the effect on families and businesses. For countries heavily reliant on income from oil exports, the windfalls from brief price surges are offset by the consequent difficulties of planning national budgets and investment strategies.
Extreme fluctuations in price are encouraging energy users to reconsider their reliance on oil. The International Energy Agency, for instance, has cut its long-term forecast of oil consumption by almost a quarter. Producers are in danger of finding that their key national resource loses both its market and its long-term value.
More immediately, we as consumers must recognize that abnormally low oil prices, while giving short-term benefits, do long-term damage. They diminish incentives to invest, not only in oil production but also, in our own countries, in energy savings and carbon-free alternatives. As such, future problems are stored up in the form of shortages, greater dependence and an acceleration of global warming. Upstream investment worldwide is already down by 20% over the past year. And with some sources of supply in decline, such as Alaska and the North Sea, the resource we will all need as the economy recovers is being developed in neither an adequate nor a timely way.
There are no easy solutions and any progress must be made with the full co-operation of the world community and the oil industry. On Monday we used the U.K.-France summit in Evian to explore a way forward. We hope our ideas inform meetings both today, at the Group of Eight Summit in Italy, and in future talks between world leaders.
We are committed to intensifying the ongoing dialogue between producers and consumers through the International Energy Forum. Saudi Arabia and OPEC have expressed interest in this and we believe producers and consumers are closer now than at any time in the past 30 years to recognizing the huge common interest in giving clear and stable perspectives to long-term investment.
At the London Energy Meeting last December, all participants agreed that still closer co-ordination between the IEA, OPEC and the IEF was necessary to develop a shared analysis of future demand and supply trends. The Expert Group of the IEF should use this work to arrive at a common long-term view on what price range would be consistent with the fundamentals.
The experts should also consider any measures that could be put in place to reduce volatility. Discussions should look again into the question of whether trading activity is amplifying erratic price movements.
We therefore call upon the International Organization of Securities Regulators to consider improving transparency and supervision of the oil futures markets to reduce damaging speculation and to take forward the recommendations already made by its taskforce in March. This would serve the interests of orderly and adequate investment in future supplies. Volatility and opacity are the enemies of growth. In the absence of transparency, consumers and importing nations are losing confidence in oil. Climate change is also altering government attitudes to energy.
The world's economy is still reliant on secure supplies at prices that are not so high as to destroy the prospects of economic growth but not so low as to lead to a slump in investment, as happened in the 1990s.
It is a thorny issue, but complex markets need not be volatile or damaging to the wider global economy. We are convinced that producers and consumers alike would benefit from greater transparency, greater stability and greater consensus on the market fundamentals. After two years of destructive volatility the time has come for both sides to work together to build on this common interest.
Mr. Brown is prime minister of the United Kingdom. Mr. Sarkozy is president of France.
"New START": The Chinese and Iranians must like what they see; not so Japan
A Troubling START. WSJ Editorial
The Chinese and Iranians must like what they see; not so Japan.
WSJ, Jul 08, 2009
President Obama leaves Moscow today happy to tout a breakthrough on arms control. The "joint understanding" with Russia pledges to replace the 1991 Strategic Arms Reduction Treaty with a new agreement -- the niftily named "New START" -- by year's end. This "moral" example, we are supposed to believe, will eventually lead to the nuclear-free world the President first promised this spring in Prague.
Before Nirvana renders the American nuclear umbrella obsolete, however, the Administration could clarify some details for us mere mortals. For starters, at what point do the reductions in the nuclear arsenal make the U.S. and our allies less safe? Why make such deep cuts in the number of strategic bombers and submarines that we're likely to need in any future conventional conflict? And, as long as we're talking details, shouldn't the Senate get a long look at a deal being rushed together to meet the artificial deadline of START's expiration in December?
The Administration's soaring rhetoric about denuclearization seems intended to blind everyone to these questions. In his comments in Moscow, Mr. Obama emphasized that Russia and the U.S. will set an example that the rest of world will follow.
"It's naïve for us to think . . . that we can grow our nuclear stockpiles," he said, "and that in that environment we're going to be able to pressure countries like Iran and North Korea not to pursue nuclear weapons themselves." Call us realists or even cynics, but we doubt Mr. Obama's performance in Moscow will matter at all to Iranian and North Korean nuclear ambitions. These and other rogues want the bomb to project their own power, not to defend against ours.
Some argue that this deal-making is nothing much because both sides will retain huge arsenals. Neither country actually has any desire, or in the Russian case ability, to grow its stockpile, so the new START treaty is said to be mostly for diplomatic show. But the Russians, though greatly diminished in global status, remain savvy negotiators, and Vladimir Putin has tried for most of this decade to cut the U.S. down to his size. "New START" could help him do it.
Monday's understanding gives negotiators the mandate to reduce the number of strategic warheads to between 1,500-1,675, down from the maximum allowable today of 2,200. More important are the strategic delivery vehicles, which will fall to a range of 500-1100. The current START treaty, which the Obama Administration chose to replace rather than simply extend, puts the ceiling at 1,600.
The Russians are already phasing out some of their delivery hardware, such as missiles and bombers, and they wouldn't mind getting double credit for it in a new treaty. The wide range noted in the "understanding" was inserted after Russia demanded steeper cuts than initially envisioned by Washington. Russian officials cite worries the U.S. could more easily retrofit missiles with new warheads, if necessary. As of January, America said it had about 1,200 delivery systems and Russia reported about 800.
Mr. Obama's negotiators would be wise to be wary. The odds that America will take part in a nuclear war are low. But the long-range bombers, submarines and missiles under discussion are an important part of the far superior American conventional arsenal. No wonder the Russians are so eager to have America reduce those numbers.
China, too, must be rooting for a lower floor. As delivery vehicle and warhead numbers go down, the U.S. will at some point approach strategic parity with rising powers such as China, which have a smaller nuclear arsenal and weaker army. A reduced U.S. posture may also give our allies -- Japan and South Korea in Asia, or Turkey in NATO -- cause to doubt America's commitment to a large and credible enough nuclear arsenal able to protect them. They will then seek to develop their own atomic bombs, however quietly. The Obama Administration's flagging commitment to missile defense, which is being cut in the 2010 budget, further undermines America's ability to defend itself and its allies from nuclear attack.
It is especially strange that the Administration has taken these steps before completing the review of nuclear strategy mandated by Congress. But then, the Administration may also do a run around the Senate (and the Constitution) with the new START treaty -- naturally, for the higher cause of peace in our time. The White House Coordinator for Weapons of Mass Destruction, Security and Arms Control, Gary Samore, said on Sunday that the Administration may have to enact certain provisions of the treaty by executive order and on "a provisional basis" to meet the December deadline.
Considering all of the other unanswered questions about the Administration's nuclear posture, an agreement with Russia that would lock the U.S. into steep cuts in its defenses needs far more public and Senate scrutiny than it is receiving.
The Chinese and Iranians must like what they see; not so Japan.
WSJ, Jul 08, 2009
President Obama leaves Moscow today happy to tout a breakthrough on arms control. The "joint understanding" with Russia pledges to replace the 1991 Strategic Arms Reduction Treaty with a new agreement -- the niftily named "New START" -- by year's end. This "moral" example, we are supposed to believe, will eventually lead to the nuclear-free world the President first promised this spring in Prague.
Before Nirvana renders the American nuclear umbrella obsolete, however, the Administration could clarify some details for us mere mortals. For starters, at what point do the reductions in the nuclear arsenal make the U.S. and our allies less safe? Why make such deep cuts in the number of strategic bombers and submarines that we're likely to need in any future conventional conflict? And, as long as we're talking details, shouldn't the Senate get a long look at a deal being rushed together to meet the artificial deadline of START's expiration in December?
The Administration's soaring rhetoric about denuclearization seems intended to blind everyone to these questions. In his comments in Moscow, Mr. Obama emphasized that Russia and the U.S. will set an example that the rest of world will follow.
"It's naïve for us to think . . . that we can grow our nuclear stockpiles," he said, "and that in that environment we're going to be able to pressure countries like Iran and North Korea not to pursue nuclear weapons themselves." Call us realists or even cynics, but we doubt Mr. Obama's performance in Moscow will matter at all to Iranian and North Korean nuclear ambitions. These and other rogues want the bomb to project their own power, not to defend against ours.
Some argue that this deal-making is nothing much because both sides will retain huge arsenals. Neither country actually has any desire, or in the Russian case ability, to grow its stockpile, so the new START treaty is said to be mostly for diplomatic show. But the Russians, though greatly diminished in global status, remain savvy negotiators, and Vladimir Putin has tried for most of this decade to cut the U.S. down to his size. "New START" could help him do it.
Monday's understanding gives negotiators the mandate to reduce the number of strategic warheads to between 1,500-1,675, down from the maximum allowable today of 2,200. More important are the strategic delivery vehicles, which will fall to a range of 500-1100. The current START treaty, which the Obama Administration chose to replace rather than simply extend, puts the ceiling at 1,600.
The Russians are already phasing out some of their delivery hardware, such as missiles and bombers, and they wouldn't mind getting double credit for it in a new treaty. The wide range noted in the "understanding" was inserted after Russia demanded steeper cuts than initially envisioned by Washington. Russian officials cite worries the U.S. could more easily retrofit missiles with new warheads, if necessary. As of January, America said it had about 1,200 delivery systems and Russia reported about 800.
Mr. Obama's negotiators would be wise to be wary. The odds that America will take part in a nuclear war are low. But the long-range bombers, submarines and missiles under discussion are an important part of the far superior American conventional arsenal. No wonder the Russians are so eager to have America reduce those numbers.
China, too, must be rooting for a lower floor. As delivery vehicle and warhead numbers go down, the U.S. will at some point approach strategic parity with rising powers such as China, which have a smaller nuclear arsenal and weaker army. A reduced U.S. posture may also give our allies -- Japan and South Korea in Asia, or Turkey in NATO -- cause to doubt America's commitment to a large and credible enough nuclear arsenal able to protect them. They will then seek to develop their own atomic bombs, however quietly. The Obama Administration's flagging commitment to missile defense, which is being cut in the 2010 budget, further undermines America's ability to defend itself and its allies from nuclear attack.
It is especially strange that the Administration has taken these steps before completing the review of nuclear strategy mandated by Congress. But then, the Administration may also do a run around the Senate (and the Constitution) with the new START treaty -- naturally, for the higher cause of peace in our time. The White House Coordinator for Weapons of Mass Destruction, Security and Arms Control, Gary Samore, said on Sunday that the Administration may have to enact certain provisions of the treaty by executive order and on "a provisional basis" to meet the December deadline.
Considering all of the other unanswered questions about the Administration's nuclear posture, an agreement with Russia that would lock the U.S. into steep cuts in its defenses needs far more public and Senate scrutiny than it is receiving.
McNamara and the Liberals' War
McNamara and the Liberals' War. WSJ Editorial
He deserves better from his liberal critics, since his real misfortune was to be the architect of their failed visions.
WSJ, Jul 08, 2009
Robert McNamara died on Monday at age 93 like he lived most of the latter half of his life, scorned and derided by his former liberal allies for refusing to turn against the Vietnam War as early as they did. As the New York Times put it in a page-one obituary headline, McNamara was the "Architect of Futile War."
In historical fact, Vietnam was the liberals' war, begun by JFK, escalated by LBJ, and cheered on for years by giants of the American left before they turned against it. In his 1995 memoir, McNamara apologized for the war. But he probably sealed his reputation on the left by also quoting the New York Times and liberal antiwar reporter David Halberstam for having opposed U.S. withdrawal as late as 1965. "To be fair to Halberstam," McNamara wrote dryly, "the hawkish views he was expressing reflected the opinion of the majority of journalists at the time."
Like JFK and Averell Harriman, Halberstam also supported the 1963 coup against South Vietnamese President Ngo Dinh Diem, a misguided foray into Vietnamese politics that led to deeper U.S. involvement. Only later as the war dragged on did these liberals lose their nerve, and they never forgave McNamara for fighting on -- even years later after he finally agreed they were right.
As with Vietnam, American liberals also turned against the Iraq war after first supporting it. The crucial difference is that President Bush never lost his nerve. Despite the difficulties after the 2003 invasion and the terrible setbacks of 2006, he replaced his generals, sent more troops and embraced a new counterinsurgency strategy. The insurgency was defeated, and Mr. Bush left office with Iraq as a united, self-governing ally.
Despite the fall of Saigon in 1975, Vietnam was not a "futile" conflict. The U.S. effort bought time for Thailand and other nations in East and Southeast Asia to develop in relative peace. Their prosperity, in turn, showed the world the difference between the fruits of capitalism and the poverty of socialism. Like the Korean War, Vietnam needs to be understood as an honorable battle fought to a draw in America's longer and victorious Cold War.
McNamara was a patriot whose faith in rationalism and bureaucratic planning led him to overconfidence both in the war on poverty during his years at the World Bank and at the Pentagon during Vietnam. But he deserves better from his liberal critics, since his real misfortune was to be the architect of their failed visions.
He deserves better from his liberal critics, since his real misfortune was to be the architect of their failed visions.
WSJ, Jul 08, 2009
Robert McNamara died on Monday at age 93 like he lived most of the latter half of his life, scorned and derided by his former liberal allies for refusing to turn against the Vietnam War as early as they did. As the New York Times put it in a page-one obituary headline, McNamara was the "Architect of Futile War."
In historical fact, Vietnam was the liberals' war, begun by JFK, escalated by LBJ, and cheered on for years by giants of the American left before they turned against it. In his 1995 memoir, McNamara apologized for the war. But he probably sealed his reputation on the left by also quoting the New York Times and liberal antiwar reporter David Halberstam for having opposed U.S. withdrawal as late as 1965. "To be fair to Halberstam," McNamara wrote dryly, "the hawkish views he was expressing reflected the opinion of the majority of journalists at the time."
Like JFK and Averell Harriman, Halberstam also supported the 1963 coup against South Vietnamese President Ngo Dinh Diem, a misguided foray into Vietnamese politics that led to deeper U.S. involvement. Only later as the war dragged on did these liberals lose their nerve, and they never forgave McNamara for fighting on -- even years later after he finally agreed they were right.
As with Vietnam, American liberals also turned against the Iraq war after first supporting it. The crucial difference is that President Bush never lost his nerve. Despite the difficulties after the 2003 invasion and the terrible setbacks of 2006, he replaced his generals, sent more troops and embraced a new counterinsurgency strategy. The insurgency was defeated, and Mr. Bush left office with Iraq as a united, self-governing ally.
Despite the fall of Saigon in 1975, Vietnam was not a "futile" conflict. The U.S. effort bought time for Thailand and other nations in East and Southeast Asia to develop in relative peace. Their prosperity, in turn, showed the world the difference between the fruits of capitalism and the poverty of socialism. Like the Korean War, Vietnam needs to be understood as an honorable battle fought to a draw in America's longer and victorious Cold War.
McNamara was a patriot whose faith in rationalism and bureaucratic planning led him to overconfidence both in the war on poverty during his years at the World Bank and at the Pentagon during Vietnam. But he deserves better from his liberal critics, since his real misfortune was to be the architect of their failed visions.
Ethanol and biofuels get 190 times as much subsidies as natural gas and petroleum liquids
So Much for 'Energy Independence.' By ROBERT BRYCE
The Wall Street Journal, Jul 07, 2009, p A15
Whenever you read about ethanol, remember these numbers: 98 and 190.
They offer an essential insight into U.S. energy politics and the debate over cap-and-trade legislation that recently passed the House. Here is what the numbers mean: The U.S. gets about 98 times as much energy from natural gas and oil as it does from ethanol and biofuels. And measured on a per-unit-of-energy basis, Congress lavishes ethanol and biofuels with subsidies that are 190 times as large as those given to oil and gas.
Those numbers come from an April 2008 report by the Energy Information Administration: "Federal Financial Interventions and Subsidies in Energy Markets 2007." Table ES6 lists domestic energy sources that get subsidies. In 2007, the U.S. consumed nearly 55.8 quadrillion British Thermal Units (BTUs), or about 9.6 billion barrels of oil equivalent, in natural gas and oil. That's about 98 times as much energy as the U.S. consumed in ethanol and biofuels, which totaled 98 million barrels of oil equivalent.
Meanwhile, ethanol and biofuels are getting subsidies of $5.72 per million BTU. That's 190 times as much as natural gas and petroleum liquids, which get subsidies of $0.03 per million BTU.
The report also shows that the ethanol and biofuels industry are more heavily subsidized -- in total dollar terms -- than the oil and gas industry. In 2007, the ethanol and biofuels industries got $3.25 billion in subsidies. The oil and gas industry got $1.92 billion.
Despite these subsidies, the ethanol lobby is queuing up for more favors. And they are doing so at the very same time that the Obama administration and Congress are pushing to eliminate the relatively modest subsidies for domestic oil and gas producers. Democrats want to cut drilling subsidies while simultaneously trumpeting their desire for "energy independence."
The cap-and-trade bill passed by the House aims to "create energy jobs" and "achieve energy independence." Meanwhile, Democrats are calling to eliminate drilling subsidies that have encouraged advances in technology that have opened up vast new U.S. energy sources. These advances have made it profitable to extract natural gas from the Barnett Shale deposit in Texas and the Marcellus in Pennsylvania -- deposits once thought too expensive to tap.
President Barack Obama's 2010 budget calls for the elimination of two tax breaks: the expensing of "intangible drilling costs" (such as wages, fuel and pipe), which allows energy companies to deduct the bulk of their expenses for drilling new wells; and the allowance for percentage depletion, which allows well owners to deduct a portion of the value of the production from their wells. Those breaks provide the bulk of the $1.92 billion in oil and gas subsidies.
In May, Mr. Obama called the tax breaks for the oil and gas industry "unjustifiable loopholes" that do "little to incentivize production or reduce energy prices."
That's flat not true. The deduction for intangible drilling costs encourages energy companies to plow huge amounts of capital into more drilling. And that drilling has resulted in unprecedented increases in natural gas production and potential.
An April Department of Energy report estimated that the newly available shale resources total 649 trillion cubic feet of gas. That's the energy equivalent of 118.3 billion barrels of oil, or slightly more than the proven oil reserves of Iraq.
Eliminating the tax breaks for drilling will make natural gas more expensive. Tudor, Pickering, Holt & Co., a Houston-based investment-banking firm, estimates that eliminating the intangible drilling cost provision could increase U.S. natural gas prices by 50 cents per thousand cubic feet. Why? Because without the tax break, fewer wells will be drilled and less gas will be produced. The U.S. consumes about 23 trillion cubic feet of gas per year. Simple arithmetic shows that eliminating the drilling subsidies that cost taxpayers less than $2 billion per year could result in an increased cost to consumers of $11.5 billion per year in the form of higher natural gas prices.
Amid all this, Growth Energy, an ethanol industry front-group, is pushing the Environmental Protection Agency to adopt a proposal that would increase the amount of ethanol blended into gasoline from the current maximum of 10% to as much as 15%.
That increase would be a gift to corn ethanol producers who have never been able to make a go of it despite decades of federal subsidies and mandates. Growth Energy is also pushing the change even though only about seven million of the 250 million motor vehicles now on U.S. roads are designed to run on fuel containing more than 10% ethanol.
There is plenty of evidence to suggest that gasoline with 10% ethanol is already doing real harm. In January, Toyota announced that it was recalling 214,570 Lexus vehicles. The reason: The company found that "ethanol fuels with a low moisture content will corrode the internal surface of the fuel rails." (The rails carry fuel to the engine injectors.) Furthermore, there have been numerous media reports that ethanol-blended gasoline is fouling engines in lawn mowers, weed whackers and boats.
Lawyers in Florida have already sued a group of oil companies for damage allegedly done to boat fuel tanks and engines from ethanol fuel. They are claiming that consumers should be warned about the risk of using the fuel in their boats.
There is also corn ethanol's effect on food prices. Over the past two years at least a dozen studies have linked subsidies that have increased the production of corn ethanol with higher food prices.
Mr. Obama has been pro-ethanol and anti-oil for years. But he and his allies on Capitol Hill should understand that removing drilling incentives will mean less drilling, which will mean less domestic production and more imports of both oil and natural gas.
That's hardly a recipe for "energy independence."
Mr. Bryce is the managing editor of Energy Tribune. His latest book is "Gusher of Lies: The Dangerous Delusions of 'Energy Independence'" (PublicAffairs, 2008).
The Wall Street Journal, Jul 07, 2009, p A15
Whenever you read about ethanol, remember these numbers: 98 and 190.
They offer an essential insight into U.S. energy politics and the debate over cap-and-trade legislation that recently passed the House. Here is what the numbers mean: The U.S. gets about 98 times as much energy from natural gas and oil as it does from ethanol and biofuels. And measured on a per-unit-of-energy basis, Congress lavishes ethanol and biofuels with subsidies that are 190 times as large as those given to oil and gas.
Those numbers come from an April 2008 report by the Energy Information Administration: "Federal Financial Interventions and Subsidies in Energy Markets 2007." Table ES6 lists domestic energy sources that get subsidies. In 2007, the U.S. consumed nearly 55.8 quadrillion British Thermal Units (BTUs), or about 9.6 billion barrels of oil equivalent, in natural gas and oil. That's about 98 times as much energy as the U.S. consumed in ethanol and biofuels, which totaled 98 million barrels of oil equivalent.
Meanwhile, ethanol and biofuels are getting subsidies of $5.72 per million BTU. That's 190 times as much as natural gas and petroleum liquids, which get subsidies of $0.03 per million BTU.
The report also shows that the ethanol and biofuels industry are more heavily subsidized -- in total dollar terms -- than the oil and gas industry. In 2007, the ethanol and biofuels industries got $3.25 billion in subsidies. The oil and gas industry got $1.92 billion.
Despite these subsidies, the ethanol lobby is queuing up for more favors. And they are doing so at the very same time that the Obama administration and Congress are pushing to eliminate the relatively modest subsidies for domestic oil and gas producers. Democrats want to cut drilling subsidies while simultaneously trumpeting their desire for "energy independence."
The cap-and-trade bill passed by the House aims to "create energy jobs" and "achieve energy independence." Meanwhile, Democrats are calling to eliminate drilling subsidies that have encouraged advances in technology that have opened up vast new U.S. energy sources. These advances have made it profitable to extract natural gas from the Barnett Shale deposit in Texas and the Marcellus in Pennsylvania -- deposits once thought too expensive to tap.
President Barack Obama's 2010 budget calls for the elimination of two tax breaks: the expensing of "intangible drilling costs" (such as wages, fuel and pipe), which allows energy companies to deduct the bulk of their expenses for drilling new wells; and the allowance for percentage depletion, which allows well owners to deduct a portion of the value of the production from their wells. Those breaks provide the bulk of the $1.92 billion in oil and gas subsidies.
In May, Mr. Obama called the tax breaks for the oil and gas industry "unjustifiable loopholes" that do "little to incentivize production or reduce energy prices."
That's flat not true. The deduction for intangible drilling costs encourages energy companies to plow huge amounts of capital into more drilling. And that drilling has resulted in unprecedented increases in natural gas production and potential.
An April Department of Energy report estimated that the newly available shale resources total 649 trillion cubic feet of gas. That's the energy equivalent of 118.3 billion barrels of oil, or slightly more than the proven oil reserves of Iraq.
Eliminating the tax breaks for drilling will make natural gas more expensive. Tudor, Pickering, Holt & Co., a Houston-based investment-banking firm, estimates that eliminating the intangible drilling cost provision could increase U.S. natural gas prices by 50 cents per thousand cubic feet. Why? Because without the tax break, fewer wells will be drilled and less gas will be produced. The U.S. consumes about 23 trillion cubic feet of gas per year. Simple arithmetic shows that eliminating the drilling subsidies that cost taxpayers less than $2 billion per year could result in an increased cost to consumers of $11.5 billion per year in the form of higher natural gas prices.
Amid all this, Growth Energy, an ethanol industry front-group, is pushing the Environmental Protection Agency to adopt a proposal that would increase the amount of ethanol blended into gasoline from the current maximum of 10% to as much as 15%.
That increase would be a gift to corn ethanol producers who have never been able to make a go of it despite decades of federal subsidies and mandates. Growth Energy is also pushing the change even though only about seven million of the 250 million motor vehicles now on U.S. roads are designed to run on fuel containing more than 10% ethanol.
There is plenty of evidence to suggest that gasoline with 10% ethanol is already doing real harm. In January, Toyota announced that it was recalling 214,570 Lexus vehicles. The reason: The company found that "ethanol fuels with a low moisture content will corrode the internal surface of the fuel rails." (The rails carry fuel to the engine injectors.) Furthermore, there have been numerous media reports that ethanol-blended gasoline is fouling engines in lawn mowers, weed whackers and boats.
Lawyers in Florida have already sued a group of oil companies for damage allegedly done to boat fuel tanks and engines from ethanol fuel. They are claiming that consumers should be warned about the risk of using the fuel in their boats.
There is also corn ethanol's effect on food prices. Over the past two years at least a dozen studies have linked subsidies that have increased the production of corn ethanol with higher food prices.
Mr. Obama has been pro-ethanol and anti-oil for years. But he and his allies on Capitol Hill should understand that removing drilling incentives will mean less drilling, which will mean less domestic production and more imports of both oil and natural gas.
That's hardly a recipe for "energy independence."
Mr. Bryce is the managing editor of Energy Tribune. His latest book is "Gusher of Lies: The Dangerous Delusions of 'Energy Independence'" (PublicAffairs, 2008).
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