Sep
23
It is possible for government to do to much. Government measures on the environment and Cash for Clunkers may well have negative stimulative outcomes.
The impact of “cash-for-clunkers” was very short-lived. The auto website Edmunds.com is predicting an annualised rate of car sales in September of just 8.8 million units. Not only is that a long way down from the 14 millions plus recorded in August, when the clunkers scheme was in full swing, it was well below the 12.5 million rate recorded in September last year, when the financial system was going to hell in a handcart. The industry got used to an annual sales rate of 16 million.
So all the program did was provide a limited temporary boost to car sales, whilst taking cheap cars off the road and therefore damaging the parts industry.
That bill contains 397 new regulations. One of them would affect almost everyone who buys or sells a home. If Waxman-Markey becomes law, homes for sale that qualify as “federally related transactions” — which is almost all of them — would be required to undergo an environmental inspection. …
Inspections are not free. Nor is fixing the inevitable violations. Compliance with new energy-efficiency standards would make homes, especially older ones, more expensive. Selling one’s home would become even harder than it already is in this down market if Waxman-Markey-style cap and trade becomes law. …
Suppose you have a window that isn’t quite airtight or your appliances are a little too old. Maybe they’re not Energy Star certified. You’d have to replace them before you would be allowed to sell your home.
The result could be the end of fixer-upper homes; surely, this is not what Congress has in mind. Some families prefer to buy a home in less-than-stellar condition on the cheap and make repairs and upgrades themselves.
For people who don’t have a lot of money, or who enjoy working with their hands, or who want to customize their home, this can be a very fulfilling path to homeownership. Waxman-Markey would take that away.
I don’t see why, in the midst of a serious recession, any government would try to increase regulation that adversely affects the freer flow of supply and demand. Cash for clunkers was a well intentioned bid to boost car sales, but it was poorly thought out and did nothing to boost sales in the long term. At best it provided some cash flow benefits to car dealers. But to impose expensive regulations on home-sellers, and therefore buyers, when home sales and values are in the pits makes no sense.
Government can help, as in the bank bailouts, but just because there is a crisis does not mean that government can always supply the answer. Sometimes, less is more.
Aug
12
Discussion Thread
Filed Under American Politics | Leave a Comment
I won’t be able to blog today I’m afraid. There were a lot of posts yesterday which hopefully will be something you can get your teeth into.
However, I’m going to try something new, a discussion thread (there will also be an open thread to follow as well).
The discussion thread will be a suggested topic for discussion by myself, but with no commentary on my part in the post. Let’s see how it goes.
Topic – It appears that Cap and Trade has stalled in the senate, perhaps permanently. Falling polls suggest that Obamacare may be in trouble. and Obama has now announced that he plans to try immigration reform in 2010. Judging by the health Care bust ups, immigration Reform could get very fractious. Assuming that Obama loses Cap and Trade, Healthcare reform and possibly even Immigration reform*, would a) his Presidency be considered a failure and b) give him any chance of being re-elected in 2012? Discuss.
* I’m not making any prediction that it will fail, but considering the strength of opinion over health care, immigration reform is hardly likely to cause a cooling off. So it will be a tough one to win.
I would just like to say one thing. I think credit should be given to Obama for at least trying the difficult. Cap and Trade, healthcare and Immigration were or are going to be difficult to get through Congress at the best of times. I may not agree with his views, but I can acknowledge that he hasn’t tried to take the easy route to a 2012 re-election bid.
Aug
4
A Perfect Storm
Filed Under American Politics | 7 Comments
Obama was swept into office on the back of a perfect storm. Circumstances were so favourable to his candidacy, that, on hindsight, any other outcome of the 2008 election was unthinkable:
- An unpopular war in Iraq
- A very unpopular incumbent President
- An economic downturn
- that included an economic implosion just a month before the election
I don’t want to take anything away from Obama’s candidacy, it was extremely well organised, eloquent and struck exactly the right note to get him elected at a particular moment in time. However, the fact that the stars were so aligned in his favour can’t really be denied.
But now it seems that a perfect storm is conspiring against him. Obama’s agenda requires an expansion of the governments role in daily life an an expansion of government spending. But he economic circumstances are becoming increasingly prohibitive to such an agenda. Increasing unemployment and increasing deficits have now been matched by a sharp decrease of tax revenues, on pace for their largest single year decline since the Depression:
The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation’s plate and struggling to find money to pay the tab.
The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.
Other figures in an Associated Press analysis underscore the recession’s impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.
Obama has a transformative agenda in mind, backed by a liberal grass-roots movement whose support in the primaries won him the election. Their support is not going to unconditional. They will be expecting to see movement on issues like gays in the military, Guantanamo, climate change and healthcare. But all these issues will either be costly or distracting, and now is not the moment for taking one’s eye of the economy. Obama is trying to combine the two, making economic arguments on both healthcare and Cap and Trade. The public aren’t buying it as his plummeting poll numbers prove.
There is one final element that will create the perfect storm. Taxing of the middle classes. Increasing deficits and falling tax revenues either mean a dramatic reduction in expenditures (and those probably aren’t there right now) or an increase in taxes for everyone. Obama made a promise not to raise taxes on Americans earning less than $250,ooo and has been demagoguing on taxing the wealthy. But America already has the third most progressive tax system in the world, the richest 30% are already paying 65% of tax revenues. There isn’t the flexibility available to impose an increased tax burden on the wealthy. Obama is going to have to break his promise, and raise taxes on all Americans. And broken promises on taxation did not go well for George Bush Snr.
Barack Obama faces damnation which ever way he turns. Promote a transformative liberal agenda as he and his liberal minions would like and he faces virtually bankrupting America. Target a path of economic sensibility and recovery and he likely loses the support of the very base who put him where he is. A perfect storm and a catch-22. Ouch!
And all this despite relying on a Speaker of The House, who makes Sarah Palin look as popular as water salesman in the desert, for his legislative agenda.
Jul
17
A Health Care Con Job
Filed Under American Politics | 20 Comments
Of the approximate one trillion dollar Health Care proposal moving through the House, Half of the costs will be raised through new taxes on the rich. Leaving aside the immorality, and stupidity, of increasing taxes on the wealth creators ata a time of recession, it should be noted that the other 500 billion will be raised by cutting the costs in Medicare and Medicaid.
Except it won’t. The Congressional Budget Office, which has been an unwelcome thorn in the side of the Spendocrats, has revealed that the plan will actually raise the costs of these services, not cut them:
The health care overhauls released to date would increase, not reduce, the burgeoning long-term health costs facing the government, Congressional Budget Office Director Douglas Elmendorf said Thursday.
“In the legislation that has been reported, we do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount and, on the contrary, the legislation significantly expands the federal responsibility for health care costs,” he said.
With the bill still needing support from Blue Dog Democrats in the House and with the Max Baucus led committee in the Senate balking at this proposal, this bill is far from a done deal, and probably unlikely to pass before the August deadline set by Obama without substantial change:
The chairman of the Senate Finance Committee, Democrat Max Baucus of Montana, who has not yet released a bill, said his panel is acutely aware of the long-term cost concern. “Clearly our committee will do what it can,” he said. “We are very seriously concerned about that issue. We very much want to come up with a bill that bends the cost curve.”
But Baucus suggested the White House is making the task difficult with opposition to one cost-cutting approach Elmendorf cited — limiting or even ending the tax exclusion for employer-provided health benefits.
Like other key Spendocrat legislation, sleight of hand is masking a bureaucratic power grab that penalises the wealthy for the sake of pandering to liberal pressure groups and shibboleths.
The Stimulus, advertised as a jobs program, was in fact not that at all. Now that it has demonstratively been seen as a failure as a jobs program, it is being spun by the White House as a mere “stabilisation program“:
Turns out the $787 billion “American Recovery and Reinvestment Act” (AARA) was not designed for full economic recovery, but rather to “stabilize” the downturn. That’s the word from White House officials today, who held off-camera briefings with reporters on how the AARA is working so far.
“This legislation was designed to cushion the downturn,” said White House Press Secretary Robert Gibbs. “That’s why we have always talked about this as one function of economic recovery.”
Cue increased chatter about a second stimulus plan, this one really really about jobs, they promise this time.
And the Cap and Trade Bill? A brave new world of reduced carbon and renewable energy. A bargain for the biggest tax rise in American History, No? Slight drawback according to the EPA:
Inhofe produced an EPA chart generated last year during the Senate’s debate of the Lieberman-Warner cap-and-trade legislation. The chart showed that the carbon reductions under that bill would not materially effect global carbon concentrations in the atmosphere. Inhofe then asked Jackson if she agreed with the chart’s conclusions. Jackson replied: “I believe that essential parts of the chart are that the U.S. action alone will not impact CO2 levels.”
And:
The policy, under certain scenarios, for example, “can cause domestic production … to shift abroad,” reads the EPA analysis, and result in greater greenhouse gas emissions in countries that do not have similar cap-and-trade rules.
And yet more:
(Under Cap and Trade) By 2025, for example, fossil fuels will supply 64 percent of Americans’ electricity, 21 percent will come from nuclear power, and renewables will provide only 9 percent. In fact, of all the new electricity-generating capacity built between now and 2025, only 35 percent of it will come from renewables, according to EPA.
Three signature programs from the Obama led Democrats and not one of them achieves what they are supposedly set out too. They still massively increase the deficit and taxes though. Funny that!
Sounds about the right time for some Joe Biden cognitive dissonance:
Vice President Joe Biden told people attending an AARP town hall meeting that unless the Democrat-supported health care plan becomes law the nation will go bankrupt and that the only way to avoid that fate is for the government to spend more money.
“And folks look, AARP knows and the people with me here today know, the president knows, and I know, that the status quo is simply not acceptable,” Biden said at the event on Thursday in Alexandria, Va. “It’s totally unacceptable. And it’s completely unsustainable. Even if we wanted to keep it the way we have it now. It can’t do it financially.”
“We’re going to go bankrupt as a nation,” Biden said.
“Now, people when I say that look at me and say, ‘What are you talking about, Joe? You’re telling me we have to go spend money to keep from going bankrupt?’” Biden said. “The answer is yes, that’s what I’m telling you.”
Has it never occurred to these people that if the country is going bankrupt, that it might be a good idea to rein in spending? This is philosophy driven slash and burn politics at it’s worse, create a liberal utopian society in a four to eight year window and ignore the consequences for the future. Who cares what happens to America, the socialistic change will have already been effected.
The problem is, a more measured approach by the Democrats had the support of the voters and the political capital to succeed. America is in an economic crisis, there is a need for energy security and health care reform is a popular notion. Taking sensible, effective and fiscally measured actions to ameliorate the problems would have been met with widespread support and would have blunted any blow hard Republican opposition. But sensible and measured is not a legitimate course for an administration hell bent on effecting social change. A wasted opportunity.
Jul
16
This is not meant as a leading question requiring a negative answer, it is a question I found myself asking after looking at a recent Gallup poll.
The poll looks into the reasons why people either approve or disapprove of Obama. For approval and disapproval, one reason for each stands out significantly.
Approval:
54% of those who approve of Obama’s performance so far do so because of the leadership that he has shown in handling America’s problems whereas only 17% are approving mainly because of his policies.
Thirty-one percent of Obama’s approvers say they approve because he is doing a good job or “the best he can under difficult circumstances”; 15% say he is trying new things; and 8% credit him for taking on numerous issues. Thus, a combined 54% cite some aspect of the president’s leadership in solving the nation’s problems.
Disapproval
For those that disapprove of Obama, his policies are way out in front as the reason driving their disapproval:
Members of the smaller group of Americans who disapprove of Obama’s job performance are most likely to attribute their views to the president’s policies. Just over half of the combined 65% mentions in this category involve government spending: 24% say they disapprove because Obama is spending too much government money, 10% say it’s because the economic stimulus plan is not working or wasteful and 4% say it’s because Obama is borrowing too much.
I think it’s interesting to get some confirmation as to what is driving the American voter. The partisan in me sees his approval being soft, leadership is in the eye of the beholder and subject to the vagaries of the economy, and more likely foreign affairs. It was noticeable that in the week following the dramatic events in Iran, Obama’s approval dropped suddenly in the Gallup poll just as questions about his handling of the issue were being asked. He rebounded after Iran dropped off the news, but a similarly perceived hesitance in response to a more serious global event would likely affect negatively the perception of him as a good leader.
On the other hand, policy differences are likely to be much more permanent as a complaint about Obama. If you don’t like his spending, potential tax increases or foreign policy approach now, there is little that Obama will be able to do to address that (although an improving economy might de-prioritise those differences).
But what really interested me about the poll is this:
Only six months into the job, it is natural that the president has little in the way of specific accomplishments driving his approval rating.
Yes it has only been six months, but it is hard to think of a signature achievement that Obama can call his own.The passing of the stimulus would have filled that role, but, even as his most partisan supporters must admit, the success of it is far from certain. There are tonal differences that his supporters will consider a success: the promise to close Guantanamo within a year, the Egypt address and his engagement with foreign leaders. But there are no tangible successes from any of these. At the G20, Obama failed to get agreement on a global stimulus or on getting extra troops for Afghanistan. He is no closer on getting a decision on what happens to the Guantanamo inmates and any benefits accruing from an improved relationship with the Middle East are a long way off, particularly following the kerfuffle in Iran.
There are some things that Obama and his supporters can confidently place on the achievement side of the ledger: the signing of the Lily Leadbetter Fair Pay act, the progress of the Matthew Shepard hate-crime legislation, the saving of GM and the selling off of Chrysler. But these are either controversial (GM) or not earth shatteringly significant (Lily Leadbetter, Matthew Shepard).
This is not really meant as a criticism (yet). There are some significant potential successes in the pipeline, Sotomayors confirmation for example, or the passing of Obamacare. And I’m well aware that much of Obama’s plans are long-term, especially in foreign affairs, but I still think it striking that Obama is not really in a position to stand before the American people and say “This is what I have achieved”.
And all this is a very long-winded way of getting you to discuss Obama’s achievements or failures to date.
Jul
9
Cap and Trade: No Help From The Environmental Protection Agency
Filed Under American Politics | 2 Comments
As the Waxman-Markey Cap and Trade bill winds it’s way through Congress, the Environmental Protection Agency don’t seem to be all that keen.
Via Heritage Foundation:
EPA Administrator Jackson confirmed an EPA analysis showing that unilateral U.S. action to reduce greenhouse gas emissions would have no effect on climate…
“I believe the central parts of the [EPA] chart are that U.S. action alone will not impact world CO2 levels,” Administrator Jackson said.
So if this bill is acknowledged by the experts to have no effect on climate change, why on earth are the Democrats and President Obama so keen to force this law through? After all, it will lead to trillions in new taxes for Americans over the coming years.
For any serious effort to be made on reducing emissions worldwide, China, India and developing economies have to be playing their part. And this is one argument that I have seen made to justify this Cap and Trade bill. The argument states that China, India et al will not work to cut omissions until there is evidence that the west are serious about it too. Hence the unilateral actions in Europe and now by the U.S.A.
But this seems like a big risk to me. Cap and Trade is bound to have a negative effect on the economy, at least in the short-term. Higher taxes and costs for the everyday items like food that are dependent on newly taxed energy dependent supply chains are unlikely to make this bill popular for average Americans. And this sacrifice is made in the hope that the developing economies will play ball. It seems more likely that China and India will ride their unregulated and dynamic economies to positions of global dominance as Europe’ s and America’s flounder under the added weight of unilateral carbon control self-handicapping.
If Waxman-Markey passes the senate and is signed into law, it will most likely prove to be a gigantic and very expensive folly.
Jul
9
Shockwaver kindly sent me the graph below which demonstates the fallacy of linkage between global temperatures and CO2 emissions. Although the graph does not say, I’m assuming that the green line represents CO2 emissions, the blue, global temperatures.
So the question is, how can these two lines be so disconnected and yet we are expected to believe in AGW and tax businesses and individuals because of it. How can politicians justify that?
Jul
5
Cap And Trades Divisiveness And It’s Fortunes In The Senate
Filed Under American Politics | 6 Comments
The Hill has an interesting analysis of the progress of the Waxman-Markey Cap and Trade Bill. The part that interested me, was the degree to which middle America opposed the bill, whilst it was the more elite northeastern and pacific coast states that supported it, by and large the states least affected by its financial impact:
Representatives from the Northeast and Pacific provided 110 of 219 yea votes for the legislation. Those states have 28 senators. The remainder of the nation voted against the legislation, 109-181. These states have 72 senators. While there are multiple complicating factors, the regional nature of the vote may be and may remain important.
Geographic middle America overwhelmingly rejected Cap and Trade.
However, the environmental lobby are targeting Republicans in the senate:
Republican Sens. Mel Martinez of Florida and Susan Collins and Olympia Snowe of Maine voted for cloture. Sen. John McCain of Arizona was an original author of a similar climate bill although he was absent during the vote in June.
Climate bill backers are also targeting Republicans Lisa Murkowski of Alaska, Judd Gregg of New Hampshire, Lindsey Graham of South Carolina, and Lamar Alexander and Bob Corker of Tennessee in hopes of winning their support.
However, even if all those Republicans supported the bill, unlikely, there will still be a struggle to pass it with great swathes of the country opposed.
Jul
3
By shockwaver
“Employers cut larger-than expected 467,000 jobs in June”, “Data suggest the recession may be nearing a bottom”, “Surprise Drop in Consumer Confidence” declare the headlines. Who is it that is surprised? Neither me nor the millions of other rational observers of the present shambles that is supposed to pass for an economic revival plan.
Which Americans would make a major investment in a car or appliance or home improvement when 30% of their wealth has disappeared and they are worried about whether they will have a job next year?
Middle America is watching a congress that wants to tax their health care and pass an energy bill that will increase the cost of essentially everything they must buy in the coming years. Are these the optimistic ones?
Who would invest in companies when the government can abrogate legitimate contracts and give Unions undeserved control of an auto company?
Who would plan to sell or buy a house when pending Cap & Trade legislation promises Federal Inspectors who stipulate expensive upgrades necessary before you can sell your own property?
Who would start a small business when it is impossible to write a sensible business plan for fear of unionization, new government regulations, mandatory healthcare mandates and an unknown tax burden in the future?
Not the people I know. Those that are spending are stashing away money for a rainy day and restricting their major purchases to guns, food stocks and gold.
We have been barraged daily with news stories about how the recession may have hit bottom and will recover next quarter (it’s always next quarter). “Green shoots” are the latest buzzwords. They say that Cap & Trade is a jobs bill and that is a bizarre claim since post – C&T energy will be much more expensive than what we have today with many jobs lost.
And so it goes, with the MSM consistently fawning over a preening President who makes proposals that will hurt the economy while claiming the opposite.
I believe it is wishful thinking on the part of the MSM who desperately want Obama to succeed. They are being driven by emotion.
Obama has surrounded himself with Keynesians who believe this stuff. Fed Chair Bernanke has figuratively quipped that the cure for recession is to fly over cities in helicopters and throw Government money out the door to the people below.
I don’t know what path Obama believes will lead to economic growth. I do think he likes Keynes trickle-up approach because it uses massive government spending and that spending is the tool Obama needs to gain control of the entire U.S. economy (i.e., banking, auto, healthcare, energy, housing, etc, etc., etc.) so that he can attain his primary objective. “Spread the wealth” and “return it to its rightful owners.”
So I surmise that a bad or weakened economy is just collateral damage for O that can be fixed after he has laid the foundation for his Utopian future in place.
Harsh words you say? What else could it be? Save money by adding 45 million people to a pre-paid, on demand healthcare system? Save money and create jobs by switching to very expensive renewable energy sources? Only the most dimwitted ideologues believe these to be the true reasons for these initiatives. Thinking people know these marketing ploys are B.S. Obama is no dimwit. He just prioritizes social justice above individual freedom.
And the MSM are complicit in this whole affair. They refused to describe him accurately before the election and now will not lay out a clear picture of the path we are on; they encourage their readership to view all this hope and change through their red-tinted glasses.
Jun
27
Cap And Trade Passed!
Filed Under American Politics | 7 Comments
The Waxman-Markey Cap & Trade Bill passed in the House last night by a slim 219-212 margin. 44 Democrats voted against the bill, but 8 Republican Representatives put the bill over the top, no doubt putting them at risk of earning similar treatment from the right wing blogosphere that Specter, Snowe and Collins received after they were the casting votes that helped pass the stimulus package. From it’s conception, this bill looked like a tough one to pass; rural Democrats didn’t like it but were, to a degree, satiated by a serious post 2020 back loading of the financial pain that this bill will represent. However, certainty over whether it would pass was still elusive until the last minute. As much as it pains me to say it, kudos will have to go to Rahm Emanuel and Barack Obama who I’m sure were hitting the phones yesterday and trying to persuade waverers.
Nate Silver has had a look at how the Cap & Trade bill will affect consumers on a state by state basis. His methodology is fairly complex and I won’t go into it in detail here (check the linked post if you want to understand it), but basically he takes the domestic consumption of carbon in the home and transport and then uses the recent CBO projection that predicted that each household face an extra $175 fuel charge. Silver also allows for different income levels per the CBO report. Here’s the map:
As you can see, the Atlantic and Pacific coastal states do fairly well out of the bill whilst the “flyover” red states fare much worse. It would be a simplistic determination that blue states are being rewarded whilst redder states are being penalised, the truth is that transportation accounts for a lot of the carbon emissions referenced in this data and redder states are much more spread out. Hence the higher the amount of transportation, the higher the fuel costs.
The data that this map represents may be important for the long term fortunes of the bill. Now that it has passed the House, it’s next stop is the Senate sometime later this summer. It is here that the bill could well face defeat, in fact a number of the political commentary blogs are predicting that it will go down to defeat. Four states in which the cost to the consumer are the highest may prove to be the deciding factors in this bill, Alaska, Louisiana, Maine and North Dakota.
To defeat Cap and Trade in the Senate, 41 votes will be needed. The Stimulus vote in the senate secured 36 nay votes and it isn’t too much of a stretch to think that they will be nay votes on Cap & Trade too. That means five more need to be found. Democrat Mary Landrrieu in Louisiana is a very possible no vote. Not only is Louisiana the fourth hardest hit of all the states, it also has a significant oil based economy and her electoral margin in 2008, 52%-46% isn’t completely immune from a concerted attack should she vote yes. Mark Begich in Alaska is also a potential no vote. Alaska is the hardest hit of all the states and it’s oil industry goes without saying. With only a 4,000 vote margin, trying to justify a vote for an effective $1,600 tax increase would be difficult electorally despite him having five years to live it down. North Dakota, the fifth hardest hit state has two Democratic Senators in Kent Conrad and Byron Dorgan. Both are friendly to Obama and Kent Conrad is the Senator with the highest approval rating, so they aren’t certain no votes. However if one of them votes no, that leaves two more to find. And that means Maine and the two Republican turncoats Olympia Snowe and Susan Collins. They may have been able to vote in favour of the stimulus, they could rationalise that it was going to help the people of Maine cope with the recession, but trying to persuade those people that their fuel bills will go up significantly because Maine happens to be very cold will be a tough needle to thread. So Landrieu, Begich, Dorgan or Conrad and Snowe and Collins gets 41 no votes and a defeat of Cap and Trade; and this doesn’t take into account other Democratic senators from ‘coal states’ like Sherrod Brown (Ohio) and Robert Byrd (W.Virginia).
Naturally there will be a lot of horse trading between now and then, but this bill looks like a hard one to pass and the American economy will be able to breath a huge sigh of relief.