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With Tens of Millions of Phone Records Grabbed – It's the Government, Stupid
The National Security Administration (NSA) has been forcing Verizon to turn over phone record data on millions of Americans.
Will the federal government use this unbelievably massive data grab against the American people they are supposed to serve – but instead increasingly lord over?
Let's check the recent record.
Obama DOJ to Federal Judge: Let's Keep This James Rosen Warrant Between Us, OK?
Gov't Obtains Wide AP Phone Records in Probe
The Internal Revenue Service (IRS) forces hundreds of millions of Americans to turn over just about the entirety of their financial data – and then uses it against those who oppose Leviathan government.
IRS: We Targeted Conservative, Tea Party Groups With Extra Scrutiny
IRS Accused of Leaking Confidential Tax Documents During Election
IRS Targeted Conservatives as Early as 2010
IRS Asked Leadership Institute About Former Interns' Current Employers
IRS: 'Please Detail the Content of Your Members' Prayers.'
The Federal Election Commission (FEC) forces millions of Americans to reveal whom they support in elections – and then uses it against those who oppose Leviathan government.
Romney Donor VanderSloot: I Was Audited Twice by IRS, Once by DOL & Investigated by Senate Staffer
Megyn Kelly Examines Obama Team's Targeting Romney Donors: Obama May 'Name You And Shame You'
Multiple Romney Supporters Were Targeted by the IRS
Is Obama Closing GOP-Leaning Car Dealers?
Big Government advocates want the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATFE) to collect as much data as possible on lawful gun owners. Will that be used against us? Ask the residents of New York state. The government handed over our gun data to the media – who then made interactive online maps of who owned guns.
We've been discussing all of this for a while. And the Internet – the last free speech-free market Xanadu on the planet – has of course not escaped Sauron's eye.
The Future of Government Power Grabs? Our Digital Data
Because Congress in many areas hasn't yet addressed the gaping hole of protecting our data from Big Government, we are left exposed and subject to hay-yuge, illegal power grabs.
Like President Barack Obama's illegal Network Neutrality order. Which gives the government access to the Internet's spine – and with it every website there is and all the data contained therein….
Like President Barack Obama's illegal Cyber Security Executive Order. The amount of data compiled in Cyber Security execution is massive – and Big Government wants at it:
Part of the reason lawmakers have not passed even voluntary cyber reforms is that businesses and many Republicans fear optional measures eventually could become mandatory.
The executive order did not allay those fears… (T)he Republican head of the House Homeland Security Committee expressed misgivings about the policy's potential for mission creep.
Another "good start" towards ever growing Big Government grabs.
A privacy section in the documents outlines steps agencies must take to protect personal information while carrying out these activities. When private sector information is collected and shared with the government, concerns often arise that customer information will be exposed or abused.
Like the Obama Administration shutting down bailed out car company dealerships based upon campaign contribution data. Like local governments in New York turning over for publication gun registration data. Like then-President and First Lady Bill and Hillary Clinton's illegally obtained 900 FBI files getting him out of an impeachment conviction.
Despite this massive amount of evidence – and this is but a tiny bit of it – we have a political Party and an ideological movement demanding that we continue our ever growing capitulation to ever Big(ger) Government.
For them, these Leviathan lessons are apparently never learned.
[First published at Red State]
ObamaCare and the Young and Healthy
For about five years, I bought my health insurance through the individual insurance market. I had worked at the White House, HHS, and then the U.S. Senate, so I had spent years on the federal health plans deemed the gold standard of them all. But eventually I found myself uninsured, and working in a job that didn't offer a health plan. I used eHealthInsurance to shop for a plan – high deductible with a Health Savings Account attached – and found several competitive premium rates. After I went through the application process, the plan cost only slightly more than the amount quoted on the website, despite the fact that I was honest about my penchant for cigars and a pre-existing injury. I was on it for several years, and when the premiums increased slightly, I shopped around and found an even cheaper plan with thinner benefits. The only thing having a HDHP really altered about my behavior in approximately five years was that I declined an ambulance and drove myself to the hospital when I needed surgery. At no point during this time would I have qualified for a significant subsidy under Obamacare, and had premiums increased significantly, I probably would have dropped coverage, having been uninsured before and not suffering any negative consequences.
Anecdote isn't the singular of data. But it's not an exaggeration to say the political success or failure of Obamacare's model hinges on whether or not young and healthy people behave the same way as I did. The hedge against premium shock requires the Obama administration and their allies to convince young adults to sign up to ensure the risk pool has enough young and healthy people buying more insurance than they may need. And why is this a concern? Because most young adults don't think they need a lot of insurance, and most aren't willing to pay a significant amount for it … and because when you step back and consider what the law is doing to individual health insurance premiums in the broad sense, there's no question that it's going to make insurance coverage more expensive for those who are young and healthy.
Here's where things get frustrating. Over the past week there's been an increasingly angry back and forth among health care policy writers online regarding the lessons to take from the rate shifts in California under Obamacare, climaxing with this piece from Jonathan Cohn, who essentially accuses Avik Roy of being an irresponsible partisan hack. What is frustrating about these attacks on the validity of Roy's argument is that they make real conversation about the effects of Obamacare difficult if not impossible. And it's a conversation we ought to be having – and having fairly, if we take policy seriously – because this is a law that is already not living up to its promises… promises that most honest liberals concede ought to never have been made in the first place.
We all know the litany of promises by heart, because they were repeated so often and with such vigor: if you like your plan you can keep it. If you like your doctor you can keep them. If you already have health insurance, the only thing that will change for you is the amount of money you will spend on premiums, which will be less – $2500 less for the average family. President Obama made these promises again and again and again. And he made them about premium costs because that, according to most polling, was the issue people cared about the most. The vast majority of Americans liked their health care and their insurance plan: they just thought it was getting too expensive. Obamacare was supposed to solve this problem. It hasn't, and it won't… but now the law's supporters are arguing that was never the point.
The true moral case for Obamacare was about universal coverage; but instead, it was sold to the American people as a solution for higher premiums. The conversation shifted from "everyone's premiums will be lower" to "well, you can't expect lower premiums when you're getting better coverage – whether you wanted or needed it or not." As the WSJ editorializes today: "The Affordable Care Act was sold as a tool to lower health costs. In case you missed it, the claim is right there in the law's title. The new Democratic position is that the entitlement will do the opposite but never mind, which is at least more honest. But we wonder how long this new candor will last. If the public reacts badly to these higher premiums, the authors of ObamaCare will soon be back to blaming insurance companies and Republicans."
Except I'm not sure this candor is lasting at all. Consider the reaction from Steve Benen, a longtime liberal blogger who now works for Rachel Maddow, who attacks Roy with a callback to the "reality based" epithets of the Bush years: "I believe this is yet another data point that highlights the wonk gap… Credible policy debates are rendered impossible, not because of the chasm between the two sides, but because only one side places a value on facts, evidence, and reason." For the sake of comparison, their bio pages inform me that Roy studied molecular biology at MIT and then the Yale University School of Medicine, while Benen was a communications director for an unsuccessful Democratic congressional campaign in Pennsylvania, but your miles may vary when it comes to how much they value facts, evidence, and reason.
All Obamacare has to do to survive any and all policy assaults is work the way it was promised. If it does, the American people will respond, and the poll numbers will shift. In the meantime, it does the left no good to write off serious people like Roy or to pretend that these premium increases broadly are not a problem, or that the American people simply misunderstood what they were promised in the process of passing the legislation. Or Congress, for that matter – see Table 1. There are going to be ramifications for this broken promise, and there will be proposed policy solutions in future Congresses and under future presidents. Obamacare is not the last health policy reform, and its failure to match up with how it was sold will impact whatever comes next.
[First posted at Real Clear Politics]
How the IRS Monitors Tax Credits
It's not looking good for the essential enforcement mechanism of ObamaCare. It turns out that not only is the IRS prone to apply a political litmus test to applicants for tax-exempt status, but it isn't even very good at issuing legally required tax credits.
One of the lesser-known provisions of the Affordable Care Act was an expanded tax credit for families that adopt children. According to a report from the National Taxpayer Advocate, domestic adoptions can cost up to $15,000 for fees and legal expense, so in 1996 Congress adopted a tax credit of up to $5,000 to help families offset some of those costs. The amount of the credit grew over time and was up to $11,650 by 2008. This was a credit against existing taxes, so only families that actually paid taxes would benefit, even though other families also were on the hook for the costs of adoption.
As part of the Affordable Care Act, Congress increased the amount of the credit to $13,170 per child and made it refundable for the tax years 2010 and 2011, so any family that adopted a child would be eligible even if they did not otherwise pay taxes. It put the IRS in charge of issuing these credits.
It seems this was an almost insurmountable challenge for the IRS. It wasn't sure what documentation would verify the claim and it was terrified of fraud. It ended up flagging 90% of all the returns that claimed a credit, usually for lack of documentation or income information, and it actually audited 69% of the returns. Rather than simply calling the taxpayer to request better documents, it kicked these returns over to its correspondence audit department, which took on average 126 days to complete.
In spite of the massive scrutiny, out of $668.1 million in tax credits claimed in tax year 2011, the Service disallowed only $11 million, and failed to find a single case of fraud. It also had to pay out $2.1 million in interest on claims that were held up for over 45 days.
The Tax Advocate's report sums it up thusly –
The IRS's Compliance Strategy for the Expanded Adoption Credit Has Significantly and Unnecessarily Harmed Vulnerable Taxpayers, Has Increased Costs for the IRS, and Does Not Bode Well for Future Credit Administration.
Now to be fair, this isn't just the IRS's fault, Congress bears some blame here, too.
The provision was inserted into the ObamaCare law even though it has nothing to do with health care. It was a very generous benefit, but it was written to last only two years, presumably to keep ObamaCare looking less expensive than it actually is and get a better score from CBO. And the tax credit expired completely except for special needs children at the start of 2013, and even that will be phased out for taxpayers with incomes over $186,000, making administration even more complicated. A footnote to the report says –
The refundability of the credit expired on Dec. 31, 2011, and the credit has reverted to a nonrefundable credit of up to $12,650 for tax year 2012. Rev. Proc. 2011-52. For 2013 and beyond, the credit will be available only for special needs adoptions and may only be claimed for qualified expenses incurred up to a maximum of $6,000. Economic Growth and Tax Reconciliation Act of 2001, Pub. L. No. 107-16, raised the limit of the original credit to $10,000 and does not apply to taxable years beginning after Dec. 31, 2012.
This whipsawing of tax law has become characteristic of the Democrats in Congress. Last year before the "fiscal cliff" agreement no one could predict in December of 2012 what their tax rates would be the following month. How can anyone plan for even the near future under these circumstances?
And importantly, how can the IRS develop information systems, explanatory brochures, the necessary forms, and train staff when they don't know from month to month what is expected of them?
Still, if there was all this chaos for the tiny handful of families who adopted children in 2010 and 2011, the prospects for effective management of the many millions of people who are expected to claim a health insurance tax credit are not bright.
One of the problems for the adoption tax credit was that, being refundable it reached lower-income families who are not accustomed to filing taxes or providing documentary proof of expenses. Many of these people are barely literate and have a hard time understanding bureaucratic paperwork. Imagine how they will respond to the maze of forms and paperwork required under the Affordable Care Act.
The report is very concerned about the prospects. Its conclusion is stark –
By design, the adoption tax credit plays a critical role in helping taxpayers — particularly low and middle income taxpayers — meet the financial burden that may be involved in adopting a child. The IRS, facing a sizeable refundable credit, reacted with an enforcement strategy that was focused on stopping nearly all returns claiming the credit and subjecting a large percentage of them to an audit, instead of reaching out to stakeholders (including states) to understand the impacted taxpayer population. When problems emerged, the IRS simply continued selecting returns for audit. This approach forced taxpayers to withstand lengthy delays and the IRS to expend valuable resources with very little to show for them. As the IRS faces a new refundable credit in the form of the Premium Tax Credit, it should study and learn from its mistakes to avoid repeating them again, when there will be even more at stake.
The response to this report from the Service is not encouraging. It is defensive and arrogant. It explains that it did everything that could be reasonably expected. Too bad some people don't understand. The tone is very similar to the tone is has been taking with Congress ― we've done nothing wrong and only stupid people would think otherwise.
What a ride we are in for.
[First Published at John Goodman's Health Policy Blog]
Remembering D-Day the Right Way, and Decrying Remembrances Through Today's MSM Prism
Along with July 4, 1776, December 7, 1941 — and perhaps, someday, Barack Obama's Birthday — June 6, 1944, will long be remembered as one of the most important and perilous days in the history of Western civilization. For it was on that date that, sitting off the coast of France, the largest armada in naval history began to discharge reluctant passengers on to the beaches of Normandy, France, and the liberation of Europe from Nazi tyranny had begun.
On invasion beaches code-named Gold, Sword, Juno, and Utah, largely British, Canadian, and American troops surged ashore, but it was on and around the beach code-named Omaha — bloody Omaha — that thousands of American soldiers gave their lives so that the enslaved peoples of Europe could once again breathe free.
At the end of the day their bodies lay stacked on barges like cordwood, with many more wounded and traumatized. But the tenuous toehold the survivors of that awful day gave the forces of freedom would lead, in time, to crushing the mighty German Wehrmacht and to helping pro-Western style democratic government live to see another generation.
But those who refuse to learn from the mistakes of the past are condemned to repeat them, and the collective memory is short. Most combat survivors will tell you they are not heroes, merely men who somehow successfully kept themselves alive while fighting less for King and country than for the guys on either side of them. But how we choose to remember such men (and they were mostly men — the American Cemetery above Omaha Beach contains 9,383 servicemen's graves and only four women's) says more about our society and our values than it does about the men themselves.
Do we choose to remember as noble the often unwilling sacrifice of young men plucked from their homes, their high schools, and the families and friends only to be trained as killers in support of a greater cause? Do we choose to remember the cause of freedom itself, which history teaches each generation must fight for anew lest it perish from the earth? Or do we choose simply to remember the atrocities of warfare and to denigrate the sacrifice of those who served?
Sadly, in the case of the CBS television network, it is the last. For on Sunday, June 2, 2013 — the nearest Sunday preceding the 69th anniversary of the Normandy invasion — the CBS show "Sunday Morning" chose not to focus on the valor and sacrifice of the Allied troops but instead on the inevitable atrocities of armed warfare against the civilian population, as perpetrated by Americans.
Ignoring entirely the Third Reich's trampling of every human right known to humankind – starting with the most basic rights to life and liberty – CBS mentioned not a single concentration camp; not a single gypsy, Jew, or homosexual who was gassed, burned alive, or turned into a human lampshade; not a single SS officer who stripped a mother of her children and her clothes and sent her off to Buchenwald.
No, the network chose instead to begin by stating that an estimated 19,000 French civilians perished in the Allies' pre-D-Day bombing of strategic German positions in France. Never mind that — unlike today's commander-in-chief and his generals — FDR and General Eisenhower had no global positioning satellites and no precision-guided drones, only daring B-17 and B-24 flight crews relying on electromechanical Norton bomb-sights. And never mind that, unlike the Nazi regime that the Allies fought to overturn, American bombers were not deliberately targeting civilians in France, only German defenses.
But just like the Allies' pre-invasion strategic bombing, CBS's highlighting of regrettable civilian casualties was simply the warm-up to its real rhetorical mission: decrying the evils of American soldiers having sex with French women while liberating their towns. This may seem strange in a society that celebrates sex so much that abortion has become a secular sacrament and the President of the United States publicly congratulates a Georgetown law student for demanding free birth control, but it's apparently all about choice and according to CBS some French women didn't have much choice.
No doubt some American soldiers who had been shot at for months, seen their buddies' faces and limbs blown off in front of them, scooped up their entrails, and not seen their wives or girlfriends in over a year took what could at best call "liberties" with young (and even not-so-young) French women. And also, perhaps, even some forcible rapes went unreported, undetected, and unprosecuted. But that neither was nor is the official practice or policy of American armed forces. Rape in any form should be neither condoned nor tolerated, and the United States Military does not tolerate it.
Civilians may find it hard to believe, but under the Uniform Code of Military Justice even consensual adultery can be prosecuted as a crime and a forcible rape conviction can mean a death sentence. During World War II in Europe a primary purpose of the Military Police was to mark "off limits" — especially to enlisted men — many if not most bars and bordellos in the towns the men had just liberated, much to their disgruntlement. What boys and girls did on their own time and of their own volition was harder to police, but the MP's did what they could.
But back to CBS and "Sunday Morning": The focus of its D-Day segment is of a piece with the current administration's espoused military priorities. Having declared unilateral surrender in the war against Islamic fascist terrorism, the White House has decided that the purpose of the military is to lead the charge for gender and gender-preference equality in American culture instead.
After encouraging gay and lesbian troops to serve openly and having welcomed women into front-line combat positions, the administration is shocked — shocked! — to discover that the biggest threat to military discipline and combat readiness is now unwanted sexual advances, otherwise known as sexual "assault." But unlike World War II-era MP's, the current administration doesn't even try to keep the boys and those who love them apart.
And so, sadly, it has come to pass: The commander-in-chief chastises the graduating class at the U.S. Naval Academy for sexual misconduct, the secretary of defense does the same for the graduating class at West Point, and the president announces in his most recent "national security" speech that the lesson of history is that, in lieu of victory, "all wars must come to an end."
The real lessons of history are that war is a dirty, nasty, and chaotic business — both for those who fight and those caught up in it — but that war is sometimes necessary, if not inevitable, and that those who will not fight for freedom are destined to lose it. Those are lessons worth remembering on the 69th anniversary of D-Day.
Gold Prices, Monetary Policies, and Outlook
The World Gold Council on May 16 issued it summary report for the first quarter of 2013. Central banks added 109.2 metric tons of gold to their reserves, the ninth consecutive quarter of net purchases. Note that these purchases occurred before the big drop in the gold price in mid April. I would expect the second quarter report will show much larger purchases by the central banks, due to bargain prices that became available.
First quarter investments in gold ETFs were down 177 tons—but bar and coin demand increased by 378 tons. (Three-fourths of the ETF losses occurred in the U.S.) Jewelry demand accounted for 551 tons, an increase of 12 percent. Supply was flat: mine production increased 4%, but recycling decreased by the same amount.
India and China both showed big increases in buying during the quarter. India bought 256t, for a 27% increase; jewelry was up 15%, and investment was up 52%. In China, overall gold demand was up 20% with jewelry up 19%, and investment up 22%.
The precipitous $200 drop in the gold price in April was triggered by a single very large sell order in the futures market on the Comex exchange. Despite claims by some that this signaled the end of the bull market in gold, price action said otherwise. Physical buyers turned out in droves. The US Mint sold a record 63,500 ounces—a whopping 2 tonnes—of gold on April 17 alone. It's total for the month was more than the two previous months combined.
Reuters reported: "on Tuesday [following the big price drop], buyers outnumbered sellers by a wide margin. At Ginza Tanaka, the headquarters shop of Tanaka Holdings, gold buyers waited for as long as three hours for a chance to complete a transaction."
Bullion traders reported trading volumes doubled and the buy/sell ratio was 95 to 1. Two precious metals refiners—who deal only in large trades—said they had no sell orders; a third said they had one sell order out of 100 transactions. The World Gold Council reports central bank buying shows no signs of abating.
Demand for gold in India, the biggest consumer, was double the level for this time of year, said Rajesh Mehta, chairman of Bangalore-based Rajesh Exports Ltd (RJEX)., the nation's largest exporter of gold jewelry and a retailer. UBS AG said on April 23 that physical-gold flows to India approached the highest since 2008. India's Ministry of Commerce and Industry reported gold bullion imports rose 138% in April from March.
Japanese individual investors doubled gold purchases yesterday [April 17] at Tokuriki Honten, the country's second-largest retailer of the precious metal. In Australia, "the volume of business… is way in excess of double what we did last week,… there's been people running through the gate," said Nigel Moffatt, treasurer of Australia's Perth Mint.
A jewelry salesman in Mumbai's Zavery Bazar was quoted in the Wall Street Journal: "We have not seen such strong demand in many years. Our order books are already 30%-40% more than last year's festival day… We don't have enough staff to keep up with this kind of mad demand."
In the weeks since the April drop, there has been strong demand for jewelry and investment in China, India, and the Middle East. Coin purchases have increased in Western markets, and some refineries are reporting 2-week waiting periods for delivery of their products.
In a previous posting we pointed out "quantitative easing"—printing money—has been employed by the Fed, the European Central Bank, the Bank of England and the central bank of Japan in efforts to stimulate national economies. The economy of Japan has stagnated for two decades—because of Keynesian policies—and has reached the point where deflation is now more feared than inflation. Japan's monetary policy had been aimed at creating inflation of one percent. The recently elected government in Japan has stated it aims to improve the economy with 2 percent inflation by doubling the money supply. It said it will engage in "unlimited" or "open ended" printing of money to achieve that goal. Thus Japan has now reached its "Havenstein moment," a moment already reached by the other three central banks just mentioned. It is a moment when the person in charge of the money supply decides that massive printing of money is better than the alternative. Rudolf Havenstein was the head of German Central Bank (Reichsbank) from 1908 to 1923 and presided over the great hyperinflation in Germany.
Obviously fearing the alternative would be worse, the Fed is currently printing $85 billion per month—that's over a $1 trillion per year—to try to improve the economy. And it has more than trebled its balance sheet from $924 billion on Sept. 10, 2008 to $3.32 trillion now. After 4 and 1/2 years of quantitative easing, the U.S. economy is still weak, unemployment high and labor-force participation actually down.
European Central Bank president Mario Draghi has provided euros amounting to $1.3 trillion to European banks and says he will do "whatever it takes" in the way of future printing of money to save the euro. But the euro-zone economy is still in trouble. The Bank of England has engaged in quantitative easing amounting to $593 billion, with disappointing results. Is it likely that larger doses of the Keynesianism that failed to produce economic growth in Japan for two decades will now produce a different result?
Hunter Lewis, author of Where Keynes Went Wrong, said in a 2011 interview:
Back in 2009 when we were coming out of the crash, in the first interview I had about the book with the BBC, they said, "Are you proposing to take the patient off life support?"' And I said, "That's the wrong way to look at it. It's not life support, it's just more alcohol for the alcoholic, or it's more heroin for the drug addict. Then of course, you need more and more of that to keep an addict from being in withdrawal, but it doesn't help the problem, it just makes it worse, and that's essentially what has been going on."…Not only has our government not changed, but every government in the world is continuing to follow the same Keynesian policies, and of course, they haven't worked, they aren't working, but we just keep doing more of the same….
None of the Keynesian economists who were propounding, "Let's have more stimulus," are providing any justification for it, on a theoretical basis, or an evidence basis….because the truth is, there is no logic and there is no evidence for it.
When you have high unemployment, that tells you that there is something wrong with the price system, that there are prices that are not in the right relationship to each other, and yet, the government keeps messing up the biggest, most important prices of all, one of which is interest rates. The system really can't function if the information that the market is providing in the form of the interest rate, is not available.
And of course, it makes no sense at all, as Keynes advocated, to keep driving interest rates down to zero and hold them there.
Lewis stated Keynes' policies were "ideologically driven," or, as interviewer David McAlvany put it, "Keynesian economic theories were simply a justification for his own personal choices and ethical leanings." One of these was his advocacy of progressive taxation, taking more money from the wealthy and redistributing it. Lacking economic justification for this, Keynes invented an uneconomic one. Lewis explained that Keynes:
suggested that the government could print new money. That money would flow into the economy in the form of debt, and that would take the place of savings, but there is just no evidence for that at all, there is no logic behind that. In fact, if you want a good economy, what you need is savings, and you need then to invest those savings, and you need to invest those savings in a wise way…Of course, Keynes completely ignores the issue of how you are investing. For him, not only is any investment equivalent to any other investment, but spending is equivalent to investment. It just doesn't make any sense at all.
Keynes believed progressive taxation would promote increased spending, which he favored. He even endorsed printing money with expiration dates so people would be forced to spend it. Of course, that would eliminate not only saving but the essential function of money as a store of value. But for Keynes, spending was what really mattered to the economy. Naturally that idea was very appealing to politicians anxious to spend for causes they favored, including their own elections.
In the U.S. the recent modest upturn in housing construction and home prices and new highs in the stock market have been trumpeted as signs of economic recovery. But improvements in those areas are exactly what one would expect from the Fed's policies.
Of the $85 billion the Fed prints every month, $40 billion is for mortgage securities, which favors the housing industry. Throw in the Fed policy of maintaining ultra-low interest rates—meaning low-cost mortgages—and it is not surprising to see a plus effect on this market despite a still large oversupply of homes. Furthermore, despite recent increases in home prices, more than 14 million homeowners nationwide—one in four people with a mortgage—are still making payments on debts that exceed the value of their homes by more than $1 trillion. "Negative equity will remain a major factor in the market for the foreseeable future," says Zillow's chief economist, Stan Humphries.
As for the highs in the stock market, the Fed policy of depressing interest rates has led to a loss of income from CDs and other safe investments. This has resulted in people trying to obtain higher yields by switching to riskier investments, such as the stock market. The inflow of funds to the stock market has led to stock valuations outrunning the performance of the companies. A future rise in interest rates will be a further risk to the stock market as money will flow out of it and back into safer investments with higher yields.
U.S. unemployment is now officially at 7.5%, compared to 7.2 % in December 2007, before Obama's stimulus program. The real current rate is actually twice as high as the official rate if involuntary temporary and part-time employment and those who have stopped looking for work are included. Most people who obtain new jobs are taking significant pay cuts, and 11.7 million are still unemployed.
European economic problems are no longer much in the news, but the crisis is not over. In fact, it has worsened. The euro-zone economy shrank in the first quarter 2013, for a record six consecutive quarters. The Organization for Economic Cooperation and Development this week predicted the euro-zone will contract 0.6% in 2013, compared to its November estimate of 0.1% contraction. On May 31, the euro-zone unemployed rate reached 12.2%, a new record.
Unemployment in Spain rose to 27.2% from 26%, and 240,000 jobs were lost in the first quarter. Unemployment in Greece was also 27.2%. On May 28 the Greek central bank said the recession will likely get worse this year, with the economy likely to contract 4.6% and unemployment reaching 28%, both numbers worse than previously predicted. The Organization for Economic Cooperation and Development predicts Greece will remain in recession in 2014, unemployment will remain at 28.4%—and the country may require another bailout.
While other European countries were cutting minimum wage rates and raising retirement ages to improve employment numbers and slash government costs, France's socialist President Hollande did just the opposite. He increased the minimum wage and lowered the minimum retirement age from 62 to 60, reversing the raise by former president Nicolas Sarkozy. France fell into recession in the first quarter, and unemployment, now above 10%, increased for the 23rd month in a row. France's debt to GDP ratio, now over 90, is the highest of any European country not receiving a bailout.
As the economies in various euro-zone countries have worsened, it became obvious that they could not meet their fiscal targets. On May 30 the European Commission, the executive arm of the European Union, agreed to allow more time for seven countries to bring their budget deficits in line. France, Spain, Poland and Slovenia were given an extra two years to limit their budget deficits to the EU standard of 3% of GDP. The Netherlands and Portugal were given one year extensions.
This was the third extension for Spain. Given the difficulties of Spain and other countries in meeting current fiscal targets, as well as previous ones, will they also need further extensions when the ones just issued expire? This becomes an interesting question because, as I explain in my new book, the ECB loaned almost a half trillion euros to 523(!) European banks in December 2011 and an even larger amount to 800(!) banks in February 2012. Together, these two loan programs amounted to over $1.3 trillion. The loans were made for three years, three times longer than any loans ever made by the ECB. They will start coming due about the time the newly announced budget extensions for the troubled countries expire. In addition, Spain and Italy have almost a trillion dollars worth of government securities coming due in the next two years. Now, if those loans cannot be repaid or government securities cannot be rolled over, can anyone believe that there will not be a colossal creation of new money and credit to prevent the collapse of the whole system? Just as with Havenstein, creating more money will seem better than the alternative.
But even before that would occur, the entire monetary structure is already so fragile it could be toppled by a major adverse economic event. This might be a crash in the U.S. stock market, fallout over raising the U.S. debt ceiling, a continued worsening in certain euro-zone economies, including perhaps more bailouts—maybe even the collapse of the euro. It might also be a far more widespread flight to gold than we have just seen, which would indicate massive distrust of the monetary system that in itself would cause the price of gold to skyrocket and accelerate the collapse of the monetary system even before the unlimited printing of money would bring about its end.
Bernanke said he believes when the time is appropriate he can manipulate the Fed policies to avoid runaway inflation. Good luck with that. It's never been done before. The great economist Henry Hazlitt said, "If a government resorts to inflation, that is, creates money in order to cover its budget deficits or expands credit in order to stimulate business, then no power on earth, no gimmick, device, trick or even indexation can prevent its economic consequences." I think Hazlitt is far more likely to prove right than Bernanke.
There is a final issue that will accelerate monetary revolution and the restoration of gold in the monetary system: changing the rules of the game. International banking rules, known as the Basel Accords, are produced by the Basel Committee on Banking Supervision, which is part of the Bank for International Settlements. The committee is composed of regulators from 27 nations, including the U.S., U.K., and China. The Bank for International Settlements includes 58 major central banks.
As I pointed out in my book, the new Basel III Accords will henceforth classify gold as a Tier 1 capital asset instead of its present Tier 3 classification. The significance of this is that a Tier 3 asset has a risk weight of 50 percent while a Tier 1 asset is 100 percent, the same as cash or U.S. treasuries. Currently, if a bank has an ounce of gold valued at $1,700, it can only include $850 as part of the bank's Tier 1 capital; if the bank sells that ounce of gold, it can count the $1,700 it receives. Obviously a bank is more likely to hold gold as part of it capital if it can be counted the same as cash. And the current Tier 1 requirement of banks for 4.5% capital will be raised to 5.5% in 2014 and 6% in 2015. Gold is likely to be more attractive as a Tier 1 asset to banks at all levels, not just the central banks—which are already loading up on gold—as quantitative easing takes it toll on the value of U.S. dollars and the Tier 1 requirement is raised.
In April 2013, the Bank for International Settlements issued a report stating:
Basel Committee members agreed to begin implementation of Basel III's capital standards from 1 January 2013, requiring that they translate the Basel III standards into national laws and regulations before this date. Since the Basel Committee's October 2012 report, eight more member jurisdictions have issued final Basel III-based capital regulations, bringing the total to 14. Eleven Basel Committee member jurisdictions now have final Basel III capital rules in force: Australia, Canada, China, Hong Kong SAR, India, Japan, Mexico, Saudi Arabia, Singapore, South Africa and Switzerland…. Argentina, Brazil and Russia have issued final rules and will bring them into force by end 2013. The other 13 member countries that missed the 1 January 2013 deadline for issuing final regulations have published their draft regulations [The report names the U.S. as one of them]….The Basel Committee is urging those jurisdictions to issue final versions of their regulations as soon as possible and to align their implementation with the internationally agreed transition period deadlines.
Not surprisingly, the U.S. is not among those nations that have already put the new Basel rules into force, but it is clearly on a track to do so. It is a member of the Basel Committee that formulated the new rules and has agreed to them. The U.S. cannot backtrack now and fail to adopt those rules. The value of the dollar would plummet, as would U.S. exports and world trade generally. No, that won't happen. The U.S. will comply with the new rules, and that will be the end of the global financial bubble the U.S. has been inflating since it severed the last link of the dollar to gold in 1971.
[First published at American Liberty.]
Heartland Daily Podcast: Obstacles in Repealing Renewable Power Mandates
Heartland's James Taylor and Former Kansas Rep. Charlotte O'Hara discuss the obstacles slowing efforts to repeal costly renewable power mandates.
[Subscribe to the Heartland Daily Podcast free at this link.]
Cooling Looms as Earth's True Climate Calamity
Although we have been enmeshed in a long debate over global warming and climate change, this controversy has been politically motivated, not a response to actual global warming, as there has been no warming for 16 years.
In fact, it is likely we will soon need to take a long, hard look at adjustments in behavior based not on warmth, which, by and large, results in good things, but, rather, on cold, which creates endless problems for both individuals and society.
Scientists from Pulkovo Observatory in St. Petersburg, Russia, stated in the Voice of Russia on April 22, that solar activity is waning to such an extent that the global average yearly temperature will soon begin to decline.
Now, there is no reason to believe there will be any warming during the remainder of this century, says Vladimir Kotlyakov, head of the Institute of Geography at the Russian Academy of Science, speaking with Vladimir Radyuhin for the Hindu newspaper on April 22, 2013. In the same article, Dr. Yuri Nagovitsyn, academic secretary of the Pulkovo Observatory, is quoted as saying coming generations will have to grapple with temperatures several degrees lower than those today.
On Jan. 8, on NASA's Science News website, Tony Phillips cited Matt Penn and William Livingston of the National Solar Observatory as noting we are now in the final stages of Solar Cycle 24, which has been "the weakest in more than 50 years." By the time Solar Cycle 25 arrives shortly, they predict, "magnetic fields on the sun will be so weak that few if any sunspots will be formed," Phillips wrote.
The effects of this weak solar activity have been notable. The United Kingdom just suffered through a winter with temperatures 5 to 10 degrees Celsius below normal, and German meteorologists report 2013 has been the coldest year in 208 years. Writing April 27 in England's Sunday Telegraph, Christopher Booker noted 3,318 places in the United States that had recorded their lowest temperatures for that time of year since records began. Similar records were set in every province of Canada, and the Russian winter has seen its deepest snowfall in 134 years.
Anthony Watts, at his Watts Up With That blog, shows that, in this century, average U.S. winter temperatures have dropped by 1.45 degrees C, more than twice as much as their rise from 1850-1999 and twice as much as the net rise in the 20th century.
This cooling has come as a big surprise to many. All of mankind's new carbon dioxide emissions were supposed to make things too warm, with climate models indicating the world would heat up by 0.3 degrees C every decade.
Armed with an understanding of the solar cycles, however, Vladimir Bashkin and Rauf Galiulin from the Institute of Fundamental Problems of Biology of the Russian Academy of Sciences state the warming in the past century was simply what should be expected when coming out of a mini ice age, rather than any changes caused by man's activities.
Cold causes more disruptions for people than warming, and mankind always has been more prosperous during warmer periods. However, with modern technology, we have the ability to plan accordingly and manage the slow change toward cooling that is likely upon us. But unless the governments of the world turn off the spigots that have fed tens of billions of dollars annually to support only research on man-caused warming, and begin to fund serious science intent on determining what the real global temperature trends are, it will be a decade or more before the truth is told.
The suggestion that the Earth may actually be cooling, not warming, is based not on science-fiction computer projections but, instead, on centuries of real data of how our planetary system actually works. It is time to turn away from supposing and direct our attention to reality.
[First published in the Orange County Register.]
Sen. Whitehouse, Tornado Opportunists Wrong on All Counts
Democratic Senators Barbara Boxer, D-Calif., and Sheldon Whitehouse, D-R.I., took advantage of last week's tornados in the Midwest to boost their climate change plans. More "green" energy from wind and solar power is needed if we are to avoid dangerous global warming and increasing extreme weather events, they say. But their advocacy makes no sense, no matter what you believe about the causes of climate change.
Studies show that strong to intense tornados have actually decreased markedly over the past 50 years, despite a warming climate. When the period from 1954 to 2003 was analyzed in a 2008 paper published by the American Geophysical Union, it was found that the most damaging tornados were about twice as frequent in the first half of the record than in the second half.
This is not surprising. Contrary to Boxer and Whitehouse's assertions, the frequency and intensity of extreme weather events decrease as the planet warms. It is during cooler periods, not warmer ones, that such phenomena increase. Strong to violent tornadoes actually peaked during the 1970s when concerns about global cooling dominated.
Boxer and Whitehouse have things backwards for another reason as well. If strong tornados and other extreme weather events were actually on the rise, then they should be boosting America's most affordable and reliable energy sources to prepare for and cope with these hazards. After all, more electricity would be needed to handle greater demands for air conditioning and heating. More power would be required to irrigate lands, build dikes, strengthen public infrastructure and relocate populations living on flood plains or at risk from tornadoes and hurricanes.
Yet in discussing their solutions to these dangers, Boxer and Whitehouse promote wind and solar power, the least reliable and most expensive options available. They don't support an expansion of the most reliable and cheapest energy source, coal, from which comes 11 percent of Massachusetts's electricity, and about half of America's.
Extreme weather events aside, modern industrialized societies need massive quantities of reliable, high quality power to run steel mills, Internet servers and transportation systems, even when the wind drops or a cloud passes in front of the sun. So it would be foolish to rely on electricity from these intermittent sources.
And although wind and solar power have had decades to mature, they still cost between three and 10 times the price of electricity from coal, oil, natural gas and nuclear. The Energy Information Administration shows that even though non-hydroelectric renewable electricity generation received 53.5% of all federal financial support for the electric power sector in 2010, it produced only 3.6 percent of all generation.
Moving away from the inexpensive, steady power that coal provides America because of tornados and other weather extremes is analogous to a ship captain ordering his crew into lifeboats when a severe storm is approaching. It would be suicide to abandon ship exactly when the protection of a sturdy vessel was most needed.
Even if there were a human-caused climate crisis happening, and increasing numbers of experts doubt that there is, the energy policies promoted by Boxer and Whitehouse would have little climatic impact. China, which derives 80% of its electricity from coal, is planning to build 500 coal-fired plants over the next ten years, easily swamping the impact of changes in America's energy sources.
The only result of a move away from coal and other highly effective hydrocarbon energy sources in the U.S. would be one of mass unemployment and millions of Americans joining the billions of people throughout the world already mired in energy poverty. And severe tornados and other extreme weather will continue to occur as they always have, with the climatic effect of America's sacrifice immeasurable in the real world.
[First published at The Herald News]
To read The Heartland Institute's response to Senator Whitehouse's comments, please click here.
Illinois Legislature Passes Hydraulic Fracturing Regulations by Large Margins
The Illinois Legislature overwhelmingly passed a bill placing strict regulations on hydraulic fracturing last week, and now heads to Gov. Quinn's desk where he has promised to sign it.
SB 1715, passed the House on Thursday 108-9 and passed the Senate 52-3 the following Friday night.
Signing the regulations into law effectively lifts the "de facto" moratorium on frac'ing. Since companies can't invest in any planning or drilling operations until they know what the rules are going to be.
While the bill isn't perfect, legislative support for shale development in Illinois is nonetheless a welcome sight, especially given the Democratic supermajorities in both the House and the Senate, who failed to decide on virtually any other hot button issue, most notably the state's severely unfunded pension liability, which is causing the state to rack up millions in debt daily.
According to the Daily Journal, the bill had the support of…
[Governor] Quinn, business groups, downstate mayors, Attorney General Lisa Madigan, the business community, energy companies, transportation groups and labor unions. Ironically, the Sierra Club, Natural Resources Defense Council, Illinois Environmental Protection Agency and Department of Natural Resources also are listed among the bill's supporters.Of the nine House members and three Senate members who voted against the measure, all of them were Democrats from the Chicago-area, which as you can see from the picture above, there won't be any frac'ing.
Hydraulic fracturing has occurred in Illinois before. With the first well estimated to have been completed sometime in the 1950s. Approximately 30,000 to 50,000 wells have been frac'ed since then, without a single case of groundwater contamination. Opponents usually respond to that fact by pointing out the hydraulic fracturing is now done at high-volume and is combined with horizontal drilling. But ironically, they're using an argument for hydraulic fracturing, not against it.
As I stated in the State Journal-Register, it's from those advancements that frac'ing is now able to produce the same amount of energy from fewer wells, minimizing its impact on the environment while revolutionizing the United States' energy outlook. That doesn't even count all the pollution it's reduced by making natural gas more economical to develop and therefore cheaper and more abundant to supply, thereby displacing other fuels such as coal for electricity generation which emits far more pollutants than natural gas during combustion.
Anyone doubtful of the safety of high-volume hydraulic fracturing just needs to review the list of regulatory statements on high-volume hydraulic fracturing submitted by the states, with the overall theme being there hasn't been a single case of groundwater contamination due to high-volume hydraulic fracturing.
An interdisciplinary report from the Massachusetts Institute of Technology explains why this is so:
[T]here is substantial vertical separation between the freshwater aquifers and the fracture zones in the major shale plays. The shallow layers are protected from injected fluid by a number of layers of casing and cement—and as a practical matter fracturing operations cannot proceed if these layers of protection are not fully functional.Substantial vertical separation, indeed. It would take five of Chicago's Willis Tower (tallest building in the United States after One World Trade Center) stacked vertically to equal the approximate depth between freshwater aquifers and the fracture zones.
As for water use, Ohio Department of Natural Resources says the amount of water required to fracture a horizontally drilled well is comparable to what the average golf course consumes weekly. Considering the economic value we get in return, the water frac'ing does consume is put to extraordinary good use. One analysis of Marcellus shale wells in Pennsylvania found one well requires 0.16 gallons of water to generate the energy equivalent of one gallon of gasoline. By contrast, corn ethanol requires 2,259 gallons of water to produce the energy equivalent of one gallon of gasoline. That means developing natural gas from shale is 14,000 times more water-efficient in producing energy than corn ethanol.
With a just recently-risen 9.3% unemployment rate, the second-highest in the United States, residents are predictably moving out of the state. One study found allowing frac'ing in Illinois could create up to 47,000 jobs for Illinois, mostly in the struggling southern Illinois region.
With the Illinois Legislature coming closer to making the pension problem even worse (see pension holiday), rather than fixing it (despite that issue receiving by far the most pressure and scrutiny from rating agencies and the media alike to do something) overwhelming support for the exploration and development of the New Albany shale could certainly be considered the session's biggest success.
More Legal Trouble for FCC's Open Internet Order & Net Neutrality
The D.C. Circuit Court of Appeals 3-0 decision to overturn the FCC in Comcast v. FCC/Tennis Channel spells more trouble for the ultimate legality of the FCC's Open Internet Order. That decision spotlights that three additional D.C. Circuit Appeals Court's judges do not agree with the FCC's reading of the law and the facts concerning lawful network discrimination.
On the margin, this new decision should make Verizon more confident and the FCC less confident in the outcome of Verizon v. FCC.
Overall, I believe Verizon remains more likely than not to prevail in its challenge of the FCC net neutrality regulations in the FCC's Open Internet Order, because Verizon only needs to prevail with one of its many strong arguments while the FCC must win on all of them.
How is this latest D.C. Circuit decision relevant to the FCC Open Internet order case?
First, there are now six of the fourteen D.C. Circuit judges that so far are known to disagree with the FCC's interpretation of the law concerning regulation to prevent "discrimination" by ISPs. In the seminal 2010 Comcast v. FCC decision, three D.C. Circuit judges (Tatel, Sentelle, and Randolph) ruled the FCC did not have the authority to regulate ISP network management practices to prevent discrimination. In this 2013 Comcast v. FCC & Tennis Channel decision, three additional D.C. Circuit judges (Williams, Kavanaugh, and Edwards) ruled that the FCC did not present substantial evidence that Comcast had in fact discriminated against the Tennis Channel as the FCC had concluded.
Second, this latest case is relevant because all three cases, (Comcast v. FCC; Comcast v. FCC/Tennis Channel; and Verizon v. FCC) implicate the same core issue: the legal limits of the FCC prohibiting discrimination in the marketplace of today.
Third, the D.C. Circuit Court ruled in this latest case that the FCC "has failed to identify adequate evidence of unlawful discrimination" and called some of the FCC's discussion "mere handwaving."
This latest case is relevant because the FCC's evidence of a discrimination problem in the Open Internet Order is arguably as thin as the FCC's evidence was in defending its finding of discrimination in its Tennis Channel decision. The FCC's evidence of an Open Internet problem, which the FCC defines as "Broadband providers have acted to limit openness," is very thin. The FCC offers only three paragraphs of examples (paras 35-37) with no discussion or evidence that these alleged incidents are in fact unlawful discrimination or unreasonable, or have caused any consumer harm.
If the Court approaches Verizon v. FCC like the Court approached Comcast v. FCC & Tennis Channel, i.e. expecting the FCC to be able to prove there is a problem requiring rectification, the FCC is in trouble because it does not have any substantial proof of ISPs limiting "openness."
The D.C. Circuit's logical focus on the evidence of a problem inevitably opens a Pandora's Box of additional problems for the FCC's Open Internet Order.
When the Court probes for the FCC's method of collecting evidence of the problem, it will become clear that it is largely anecdotal and not substantial. Potentially more problematic for the FCC is that the FCC did no formal competition analysis, no market power analysis, and no cost benefit analysis to substantially prove that an actual "limiting openness" problem exists.
Furthermore, when the Court focuses on the problem that the FCC has specifically identified in its order, that broadband providers are limiting "openness," it is logical for the Court to then inquire where the FCC's statutory authority is to promote or preserve Internet "openness," a term which the FCC referred to more than 100 times in its order.
"Openness," the term and goal that is foundational to the FCC's case is not found in the law, or the FCC would have pointed to it and they have not. If the Court requires the FCC to lawfully and reasonably interpret existing legal terms in the law, how much patience will the Court have for the FCC interpreting a term and purpose that the FCC essentially has made up and that is not found in law or in the legislative colloquy?
Fourth, Judge Kavanaugh's concurring opinion in the Comcast v. FCC/Tennis Channel case indicates there is also a big legal minefield that the FCC does not want to enter, in broadly applying a new "unreasonable discrimination" standard that is naturally dependent on established precedent and law.
Judge Kavanaugh argued that applying a non-discrimination statute to a company "that lacks market power not only contravenes the term terms of the statute, but also violates the First Amendment as interpreted by the Supreme Court."
This line of legal analysis is highly relevant to the FCC Open Internet order because the FCC's Open Internet order spotlights the specific term "unreasonable discrimination" thirty-three times as a core problem the FCC is regulating.
Judge Kavanaugh's analysis that the term "unreasonable restrain" in Comcast v. FCC/Tennis Channel "incorporates traditional antitrust principles" suggests that the FCC's analogous "unreasonable" discrimination/restraint standard in the FCC Open Internet order could expect to get the same "traditional antitrust principles" analysis from the D.C. Circuit Court.
If it does, it is more trouble for the FCC. As the FCC has previously ruled, ISPs offer an "information service," which through an antitrust law lens is essentially a vertically-integrated service of transport, processing, storing and receiving, among other services. Judge Kavanaugh stated "beginning in the 1970's… the Supreme Court has recognized the legitimacy of vertical integration and vertical contract by firms without market power."
If the panel that hears Verizon v. FCC goes down Judge Kananaugh's path, the FCC Open Internet order is particularly vulnerable because the FCC did no market power or competitive analysis to justify the Open Internet order. Moreover, obvious known competitive facts indicate that ISPs do not have market power as the FCC assumes.
Judge Kavanaugh's Comcast v. FCC/Tennis Channel reminds us that the D.C. Circuit court is keenly aware of how competitive communications markets have become since existing law was originally written. That's even more trouble for the FCC's case.
A much under-appreciated Achilles heel of the FCC's assumed sweeping power to regulate ISPs is its reliance on law that was written when telecom and cable companies were actually monopolies, compared to now when the competitive facts are obvious that they are no longer monopolies. (Telcos have lost two thirds of their voice market share and cablecos have lost 40% of their video market share.)
Simply, for the FCC to prevail in Verizon v. FCC, they have to convince the court to ignore the competitive facts of today (that they are well aware of), and to ignore that the FCC did not do a necessary competitive and market power analyses to justify such a new sweeping regulatory scheme.
Net neutrality activists and the FCC assume ISPs have market power, but they fear they cannot prove it in a court of law under longstanding antitrust precedent, because the facts and precedent don't support their assumption.
Fifth, Judge Kavanaugh argued that it was his opinion that claiming a company unlawfully discriminated when it did not have market power, "also violates the First Amendment as it has been interpreted by the Supreme Court."
This is relevant to the FCC Open Internet Order, because proponents of net neutrality immediately found Judge Kavanaugh's analysis threatening to net neutrality and the FCC Open Internet order. Tellingly, Professor Susan Crawford wrote a Bloomberg op-ed the next day that "the court should resist this [Kavanaugh] reasoning, or risk trivializing the freedom of speech that the First Amendment truly protects."
Obviously the net neutrality movement is very threatened by an Appeals Court Judge spotlighting this seminal Supreme Court one-sentence-quote on the First Amendment: "the concept that government may restrict the speech of some elements of our society in order to enhance the relative voice of others is wholly foreign to the First Amendment." Buckley v. Valeo (1976)
Why net neutrality activists freak out about any possibility of ISPs being found by a court to have First Amendment rights is that they know their real purpose behind promoting net neutrality is all about "restrict[ing] the speech of some elements" (companies) "to enhance the relative voice of others" (theirs). Net neutrality activists have long tried to transmogrify the perception of the First Amendment to mean equality of speech ("all bits are created equal"), not constitutionally-protected freedom of speech.
These activists also are well aware than newspapers, broadcasters and cable companies all enjoy First Amendment protection under established constitutional precedents. They are terrified that ISPs will be ruled by the court to enjoy First Amendment protection as well.
Since net neutrality activists have long branded net neutrality as all about freedom of speech and as the "first amendment of the Internet," they know that an official First Amendment court precedent for an ISP would be among the most devastating legal and political setbacks their movement could suffer. It would expose their whole manufactured, free-speech-justification for net neutrality as a grand messaging scam.
Now I don't believe the court will need to reach constitutional issues like the First Amendment to overturn the FCC in Verizon v. FCC, because the order is so vulnerable on the facts and on exceeding the bounds of its statutory authority.
However, if the court somehow reaches the First Amendment argument, I believe the court would be likely find that Verizon and ISPs enjoy some level of First Amendment protection because they share clear characteristics of other companies and functions that have already been afforded some First Amendment protection, and because importantly, ISPs do not have market power.
In addition, if the Court reaches the First Amendment issue, this outcome is also more likely than not to favor Verizon because of the May 7th D.C. Circuit Court of Appeals decision in NAM v. NLRB where that court ruled that the NLRB unconstitutionally infringed on companies First Amendment right to free speech by compelling speech.
Lastly, Judge Edwards' concurring opinion in Comcast v. FCC/Tennis Channel has a discussion of Chevron deference that has relevance to Verizon v. FCC since it: comes out just after the Supreme Court's reaffirmation of Chevron Deference in Arlington v. FCC; the FCC touted the SCOTUS ruling on Arlington v. FCC to the D.C. Circuit in defense of its Open Internet order; and Judge Edwards Chevron analysis has applicability to the circumstances surrounding the FCC Open Internet order.
Since the FCC is widely believed to need generous Chevron deference in order to prevail in Verizon v. FCC, it is very relevant to hear the views of one of the most senior judges on the D.C. Circuit Court of Appeals about how Chevron deference does not apply to a case where the FCC is seeking to regulate ISPs to prohibit "unreasonable discrimination."
Interestingly Judge Edwards cites three cases (p.10 of his concurrence) and instances where the FCC is not due Chevron deference. Tellingly, all three instances could apply to the facts of the FCC Open Internet order as well.
- In the first instance he said the FCC is due no deference if it has "under the guise of interpreting a regulation [created] de facto a new regulation." (The FCC is now implementing its broadband policy statement on net neutrality principles in the FCC Open Internet order).
- In a second instance, no deference is warranted if the FCC "subjected a party to 'unfair surprise.'" (The FCC had previously and repeatedly unanimously ruled that broadband service was an unregulated "information service," and based on that foundational regulatory consensus, ISPs invested many tens of billions of dollars in long-term infrastructure capital investment. Now the FCC is conveniently saying oops! — a majority of the new FCC commissioners think it is a new regulated "Broadband Information Access Service").
- And in a third instance, no deference is due when an agency "flip-flops." (The FCC is engaged in a full "flip-flop" here by first saying Section 706 does not confer direct statutory authority several years ago, and now conveniently claiming the opposite that it does).
Verizon v. FCC is widely appreciated to be the single most important pending court decision for the FCC and the communications/Internet sector.
Given its import, it is important to study any potential analogous cases to Verizon v. FCC for any insights on how the D.C. Circuit is likely to rule on Verizon v. FCC. As this particular analysis has shown, the Comcast v. FCC/Tennis Channel discrimination case has substantial relevance to the Verizon v. FCC no unreasonable discrimination case.
How would I summarize what we know at this point?
- The FCC is likely wrong that Chevron deference is carte blanche.
- The FCC is likely wrong on the facts that there is a demonstrable problem of broadband providers limiting Internet openness.
- The FCC is likely wrong in not adequately investigating the facts of ISP competition and potential market power, prior to preemptively price regulating ISPs.
- The FCC is likely wrong on the facts that ISPs actually have the market power to unlawfully discriminate.
- The FCC is likely wrong that the FCC has statutory authority to regulate ISPs to prohibit unreasonable discrimination.
- The FCC is likely wrong that ISPs with no market power, have no First Amendment rights.
At bottom, Verizon must win just one of its arguments in Verizon v. FCC to win, whereas the FCC must prevail on all.
My overall view is that Verizon is more likely than not to win at least one of the above arguments and has a very good shot at winning on multiple arguments, if the court decides to reach them.
Advantage Verizon.
[First published at The Precursor Blog, as part 29 of the FCC Open Internet Order Series]
EPA Climatism: Dictating Our Lives, Living Standards, and Life Spans
Numerous articles document how European climate policies have been disastrous for affordable energy, economic growth, entire industries, people's jobs and welfare, wildlife habitats and human lives. Even the IPCC, BBC and Economist have finally recognized that average global temperatures have not budged since 1997. The EU economy is teetering at the precipice, people are outraged at the duplicity and the price they have been made to pay, the Euro Parliament has voted to end subsidies for its Emissions Trading Scheme, and the global warming and renewable energy false façade is slowly crumbling.
Ignoring this, alarmist scientists, eco activists and government bureaucrats are meeting yet again – first in Bonn, Germany June 3-14 for the 38th meeting of UN climate treaty promoters and wordsmiths, then in Warsaw, Poland November 11-22 for 19th Conference of the Parties to the UN Framework Convention on Climate Change. They are determined to hammer out a new treaty, demanding more restrictions on fossil fuel use and CO2 emissions, before the tide turns even more inexorably against them.
Meanwhile, in the United States, the Environmental Protection Agency is issuing more anti-hydrocarbon regulations and more statements detailing the coming horrors of "dangerous manmade climate change."
Two points must be kept uppermost: the global warming "disasters" exist only in computer models, Hollywood movies and alarmist assertions; and the "preventative measures" are worse than the disasters.
The issue is not whether greenhouse gases "contribute to" climate change. Scientists acknowledge that. The only relevant issues are: How big a contribution? Do these gases now dominate planetary climate variation, supplanting the solar, atmospheric, oceanic and other forces that have warmed and cooled our Earth throughout its history? And will human GHG/CO2 emissions cause dangerous climate changes that are unprecedented, worse than we have confronted since time immemorial and impossible for modern, technologically advanced societies to deal with?
No evidence supports EPA or Intergovernmental Panel on Climate Change positions on these issues.
Average planetary temperatures have not budged in 16 years, even as atmospheric levels of plant-fertilizing CO2 have climbed steadily. For many areas, the past winter was among the coldest in decades, and the US and UK just recorded one their coldest springs on record. The frequency and severity of hurricanes, tornadoes, floods and droughts are no different from observed trends and cycles over the last century. 2012 set records for the fewest strong tornadoes since 1954 and the number of years with no category 3 or higher hurricane making US landfall. Arctic climate and sea ice are within a few percentage points of their "normal" levels for the past fifty years. The rate of sea level rise is not accelerating.
These facts, and many others, completely contradict computer model predictions and alarmist claims. Moreover, as Climategate and numerous studies have shown, the "science" behind EPA's ruling that carbon dioxide "endangers" human health and welfare is conjectural, manufactured, manipulated, comical and even fraudulent. Here are just a few of numerous examples of dangerous "climatism" at work.
The EPA and IPCC insist they rely entirely on scholarly peer-reviewed source material. However, fully 30% of the papers and other references cited in the IPCC's Fourth Assessment Report (AR4) were not peer reviewed; many IPCC "lead authors" were graduate students or environmental activists; and many sources were actually master's degree theses or even anecdotal statements by hikers and mountain guides.
The IPCC claimed Himalayan glaciers would "disappear by the year 2035," depriving communities in the region of water. This assertion was based on a World Wildlife Fund press release, which was based on a non-peer-reviewed article in a popular science magazine – which was based on an email from a single glaciologist, who later admitted his prediction was pure "speculation." The IPCC lead author in charge of this section subsequently said he had included the Himalayan glacier meltdown in AR4 – despite knowing of its false pedigree – because he thought highlighting it would "encourage" policy makers and politicians "to take concrete action" on global warming.
Almost 90% of National Weather Service climate-monitoring stations relied on by the IPCC and EPA to prove "unprecedented" warming were placed too close to air conditioning exhaust vents, blacktop and other heat sources. The heat contamination caused the stations to report higher than actual temperatures.
EPA is using this junk science to justify actions that will be devastating for Americans. The agency is supposed to protect our environment, health and welfare. Instead, it "safeguards" us from exaggerated or illusory risks, and issues regulations that endanger our health, wellbeing and wildlife far more than any reasonably foreseeable effects from climate change.
As anti-fossil fuel mandates put EPA in control of nearly everything Americans make, ship, eat and do – fuel and regulatory compliance costs will soar. Companies will be forced to outsource work to other countries, reduce work forces, shift people to part-time status, or close their doors. Poor and minority families will be unable to heat and cool their homes properly, pay their rent or mortgage, buy clothing and medicine, take vacations, pay their bills, give to charity, or save for college and retirement.
Reduced nutrition and medical checkups, along with the stress of being unemployed or involuntarily holding two or more low-paying part-time jobs, also lead to greater risk of strokes and heart attacks, and higher incidences of depression, alcohol, spousal and child abuse, and suicide. New 54.5 mpg fuel efficiency standards will force more people into smaller, lighter, less safe cars – causing thousands of needless additional serious injuries and deaths every year.
Regulators and environmentalist groups have given heavily subsidized wind turbine operators a free pass, allowing them to slaughter millions of birds and bats every year – including bald and golden eagles, hawks, condors and whooping cranes. Rainforests and other wildlife habitats are being cut down, so that "innovators" can produce $50-per-gallon biofuels, to replace oil and natural gas that the world still has in abundance and could easily produce with conventional, enhanced and fracking technologies.
US forests are also being chopped down – to fuel electricity generation in Europe, where regulations prohibit both fossil fuels and tree cutting, but promote subsidized "renewable" energy. So American trees and wetland/forest habitats are being turned into wood pellets for shipment to Britain and other EU countries: 1.9 million tons of pellets in 2012, to burn in power plants that consumed over 7 million tons of wood last year – and expect to double that by 2020. It's insane. It's not sustainable or ecological.
Would the IPCC, US Global Change Research Program or EPA "ever produce a report saying their issue is of diminishing importance – so that EPA regulations of greenhouse gases are not needed?" climatologist Patrick Michaels wonders. "Not unless they are tired of first class travel and the praise of their universities, which are hopelessly addicted to the 50 percent 'overhead' they charge on science grants."
EPA finds, punishes and even targets anyone who violates any of its ten thousand commandments, even inadvertently. EPA's climate change actions, however, are not inadvertent. They are deliberate, and their effects are far reaching and often harmful. For better or worse, they affect all of us, 100% of our economy.
And yet, these increasingly powerful bureaucrats – who seek and acquire ever more control over our lives – remain faceless, nameless, unelected and unaccountable. They operate largely behind closed doors, issuing regulations and arranging sweetheart "sue and settle" legal actions with radical environmentalist groups, to advance ideological agendas, without regard for the impacts on our lives, jobs, health, welfare and environment. They know that, for them, there is rarely ever any real transparency, accountability or consequences – even for gross stupidity, major screw-ups, flagrant abuses or deliberate harm.
We need to save our environment from environmentalists and EPA – and safeguard our liberties, living standards and lives against the arrogance of too-powerful politicians and bureaucrats. How we achieve this, while protecting our lives and environment from real risks, is one of the greatest challenges we face.
Alec Baldwin Accepts Invitation to Have Heartland Scientist Debate Fracking
On Twitter Monday night, Alec Baldwin informed The Heartland Institute that he would like us to provide a scientist to debate the "pro-fracking" position at the Hamptons International Film Festival.
This surprising-but-welcome invitation came a couple of days after a bit of Twitter back and forth between Alec and Phelim McAleer over the weekend. That correspondence was spirited at times, but Heartland jumped in to make peace: Let's have a debate! When it comes to the environment, Heartland is always game, and we have the science and experts to back it up.
Our kindly entreaties to Mr. Baldwin seem to have paid off. The following tweet is from Alec Baldwin to @HeartlandInst in the 8 o'clock hour on Monday:
This is the rest of Heartland's and Alec's correspondence:
So the debate is set, pending a response to our tweet from the Hamptons International Film Festival. No response so far, but it's early yet and the festival is If the Hampton film folks would like to get a hold of Heartland to make this happen, they can address the email to Jim Lakely at firstname.lastname@example.com. (That's me, Director of Communications at Heartland.)
As we said, Heartland will provide one of the most knowledgable persons on the planet on this subject — a man who earned the first-ever Ph.D in groundwater hydrology. That man, Jay Lehr, frequently mentions in our weekly conference call with Heartland Seinor Fellows that he's willing to drink fracking water — and do it on stage for all to see. That's high drama worthy of a film festival!
Heartland awaits confirmation of our booking to the event, and will keep readers of Somewhat Reasonable informed.
Gelbspan Files: Documenting the Lie of Global Warming Skepticism Funded by 'Big Oil'
There's a new climate skeptic blog to keep an eye on — one that is dedicated to exposing the lie that those who question global warming alarmism are part of a cynical, organized campaign lavishly funded by "Big Oil." The lineage of that libel traces back to one man: Ross Gelbspan.
Behold: GelbspanFiles.com. The website is an exhaustive and on-going effort by Russell Cook to expose the "secret memos" climate alarmists consider Holy Writ for what it is — a false gospel etched into shabby sandstone tablets by one man. From the first "Welcome!" post:
Skeptic climate scientists and the organizations they are associated with stand accused of receiving fossil fuel industry money in exchange for lying about the issue. It has been said that there is a parallel between global warming skeptics and the "expert shills" who once worked for "big tobacco" and lied to the public about the risks of smoking.
Does the accusation have proof to back it up? When I asked this in late 2009 of a Society of Environmental Journalists (SEJ) board member, he said numerous journalists had documented the accusation. But the only journalist he could name was Ross Gelbspan, and indeed, virtually every instance of the accusation appearing in print or online seems, one way or another, to be traceable to this man. The more I studied the matter, the more problems and contradictions I found:
- Although he is often referred to as a Pulitzer Prize-winning journalist, the Pulitzer organization does not recognize Gelbspan as a Pulitzer winner.
- The "secret memos" that Gelbspan began citing in 1995 are not a "smoking gun" at all, but merely interoffice guidelines for conducting a pilot ad campaign. There is no evidence that a particular subsection in the campaign memos which Gelbspan often refers to was ever implemented into the campaign or that this subsection was any kind of central industry directive given to skeptic climate scientists."
- Al Gore wrote about the "secret memos" some four years before Ross Gelbspan first mentioned them, but later said Gelbspan had discovered them, which suggests a critical need to nail down the real source of the memos and the motivations for the subsequent spin about it.
- Gelbspan is cited thousands of times by reporters, activists, politicians, sociologists, and others as proof that skeptic climate scientists are basically stooges of the fossil fuel industry … but none of them has tried to confirm or independently corroborate Gelbspan's claims.
- There is simply no evidence that skeptical scientists were ever paid by any industry to lie about the causes or consequences of global warming.
These points and more are made in numerous of articles I've written on the subject since 2009. I've got enough material on hand that I could probably write another 500 blog pieces here. In no particular order, I will examine as many aspects of this controversy as I can.
Cook is already well underway in the task of sharing his research. His archive page has some 60 articles exposing the Gelbspan fraud from outlets such as the American Thinker, Bretibart, and Red State. Peruse Cook's extensive coverage, as well as his frequent updates at the main Gelbspan Files page (newest posts at the bottom).
Full disclosure: as Cook explains in "A Note About Funding":
The Heartland Institute, a prominent supporter of skeptical climate scientists (and consequently a major target of global warming advocates as well) generously offered me a $12,000 strings-free grant to enable me to continue devoting time to this subject. I have carte blanche to write whatever I wish to write, whenever I wish to write it, without any direction from Heartland, its donors, or anyone else.
And if you are interested in a scientifically rigorous examination of climate science — a pursuit driven by the scientific method instead of a political agenda — you can find it here at Heartland's archive of its eight international conferences on climate change. They are not nearly as lavish as a typical taxpayer-funded IRS staffer conference, but what we lack in line-dancing expositions and Gilligan's Island parody videos, we compensate with a dogged pursuit of climate truth.
Economically, Could Obama Be America's Worst President?
The recession ended four years ago, according to the National Bureau of Economic Research. So Obamanomics has had plenty of time to produce a solid recovery. In fact, since the American historical record is the worse the recession, the stronger the recovery, Obama should have had an easy time producing a booming recovery by now.
Obama likes to tout that we are doing better now than at the worst of the recession. But every recovery is better than the recession, by definition. So that doesn't mean much.
The right measure and comparison for Obama's record is not to compare the recovery to the recession, but to compare Obama's recovery with other recoveries from other recessions since the Great Depression. By that measure, what is clear is that Obamanomics has produced the worst recovery from a recession since the Great Depression, worse than what every other President who has faced a recession has achieved since the Great Depression.
In the 10 previous recessions since the Great Depression, prior to this last recession, the economy recovered all jobs lost during the recession after an average of 25 months after the prior jobs peak (when the recession began), according to the records kept by the Federal Reserve Bank of Minneapolis. So the job effects of prior post Depression recessions have lasted an average of about 2 years. But under President Obama, by April, 2013, 64 months after the prior jobs peak,almost 5½ years, we still have not recovered all of the recession's job losses. In April, 2013, there were an estimated 135.474 million American workers employed, still down about 2.6 million jobs from the prior peak of 138.056 million in January, 2008.
Ronald Reagan suffered a severe recession starting in 1981, which resulted from the monetary policy that broke the back of the roaring 1970s inflation. But all the job losses of that recession were recovered after 28 months, with the recovery fueled by traditional pro-growth policies. By this point in the Reagan recovery, 64 months after the recession started, jobs had grown 9.5% higher than where they were when the recession started, representing an increase of about 10 million more jobs. By contrast, in April, 2013, jobs in the Obama recovery were still about 2% below where they were when the recession started, about 2 ½ million less, or a shortfall of about 10 million jobs if you count population growth since the recession started, as discussed below.
Obama's so-called recovery included the longest period since the Great Depression with unemployment above 8%, 43 months, from February, 2009, when Obama's so-called stimulus costing nearly $1 trillion was passed, until August, 2012. It also included the longest period since the Great Depression with unemployment at 9.0% or above, 30 months, from April, 2009, until September, 2011. In fact, during the entire 65 years from January, 1948 to January, 2013, there were no months with unemployment over 8%, except for 26 months during the bitter 1981 – 1982 recession, which slayed the historic inflation of the 1970s. That is how inconsistent with the prior history of the American economy President Obama's extended unemployment has been. That is some fundamental transformation of America.
Moreover, that U3 unemployment rate does not count the millions who have dropped out of the labor force during the recession and President Obama's worst recovery since the Great Depression, who are not counted as unemployed because they are not considered in the work force. Even though the employment age population has increased by 12 million since the recession began, only 1 million more Americans are counted as in the labor force. With normal labor force participation rates, that implies another 7.3 million missing U.S. jobs, on top of the 2 ½ million missing jobs we are still short from when the recession began, for a total of about 10 million missing jobs.
If America enjoyed the same labor force participation rate as in 2008, the unemployment rate in December, 2012 would have been about 11%, compared to the monthly low of 4.4% in December, 2007, under President George Bush and his "failed" economic policies of the past. We will not see 4.4% unemployment again, without another fundamental transformation of America's economic policies.
The number of unemployed in January, 2013, at the end of President Obama's first term, was 7.7 million. Another 7.9 million were "employed part time for economic reasons." The Bureau of Labor Statistics (BLS) reports, "These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job."
Another 2.3 million were "marginally attached to the work force." The BLS reports, "These individuals…wanted and were available for work, and had looked for a job sometime in the prior 12 months. [But] [t]hey were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey."
That puts the total army of the unemployed or underemployed at nearly 18 million Americans in January, 2013. They are all counted in the BLS calculation of the U6 unemployment rate, which still totaled 13.9% that month.
But the Shadow Government Statistics website also includes in its "SGS Alternative Unemployment Rate" long term discouraged workers, those who wanted and were available for work for more than a year, and had looked for a job, but not in the prior 4 weeks. That is how the BLS U6 unemployment rate was calculated prior to the changes made in the early 1990s under the Clinton Administration. Including these workers as well raises the SGS unemployment rate for April, 2013 to 23%. That seems more consistent with how the economy still feels for the majority of Americans, despite Democrat Party controlled media cheerleading.
This utterly failed jobs record of Obamanomics reflects the more basic reality that the economy has not been growing under President Obama. In the 10 post depression recessions before President Obama, the economy recovered the lost GDP during the recession within an average of 4.5 quarters after the recession started. But it took Obama's recovery 16 quarters, or 4 years, to reach that point. Today, 21 quarters, or 5 plus years, after the recession started, the economy (real GDP) has grown just 3.2% above where it was when the recession started. By sharp contrast, at this point in the Reagan recovery, the economy had boomed by 18.6%, almost one fifth.
Obama's economic performance has even been much worse than Bush's. Jeffrey H. Anderson, a senior fellow at the Pacific Research Institute, writes inInvestors Business Daily on January 13, "Prior to Obama, the second term of President Bush featured the weakest gains in the gross domestic product in some time, with average annual (inflation-adjusted) GDP growth of just 1.9%, [according to the official stats at the Bureau of Economic Analysis (BEA)]" But average annual real GDP growth during Obama's entire first term was less than half as much at a pitiful 0.8%, according to the same official source.
Even Jimmy Carter produced 4 times as much economic growth during his one term as Obama did during his entire first term. In fact, as Anderson notes, real GDP growth under Obama has been the worst of any President in the last 60 years!
But it's even worse than that. Obama's real GDP growth has actually been less than half as much as the worst of any President in the last 60 years. In other words, even if you doubled actual GDP growth under President Obama, it would still be the worst record of any President in the last 60 years!
Anderson adds, "In fact, the real GDP in 2009 was lower than it had been three years earlier (in 2006)." That has happened only twice before in the last 100 years at least, maybe in American history. One was in 1933 and 1934, at the height of the Great Depression. The other was in 1946 – 1948, when the World War II economy was powering down.
And what happened in the years after those two experiences? From 1935 – 1937, real GDP growth reached a peak of 13.1% in one year (1936). From 1949 – 1951, real GDP growth reached a peak of 8.7% (in 1950). That reflects once again the basic principle for the American economy that the worse the recession, the stronger the recovery. That is what Obama should have produced for America. But under Obama, real GDP growth in the following years, 2010 – 2012, peaked at only 2.4% (in 2010). "[A]nd never again hit even that meager mark in the two years following ObamaCare's passage," Anderson adds. Yes, Obama and his sycophants really are transforming America, into a banana republic.
Even if the economy finally breaks out into some real growth during this year, that is only because of the long overdue real recovery that is still straining to break out inside this economy, as indicated by the data above for 1936, in the depths of the depression, and the postwar boom that started in 1950. That and the startling Reagan recovery from the 1970s are the standard for Obamanomics. Don't be fooled by some way overdue short term growth spurt this year that just reflects the basic cycles of the economy. Unless the fundamentals of Obamanomics are changed, the result will be long term stagnation compared to the historic, world leading, booming economic growth of the American Dream.
In his 2013 State of the Union Address, President Obama said, "A growing economy that creates good, middle class jobs, that must be the North Star that guides our efforts." But the slow growth, and negligible job creation under Obama, in turn have caused steeply declining middle class incomes. The latest numbers compiled from the Census Bureau's Current Population Survey show that real median household income declined by more than $4,500 during Obama's first term, about 8%, meaning effectively that the middle class has lost annually the equivalent of one month's pay under Obama. Even President Bush again did better during his disastrous second term, when real median household income at least rose by 1.7%, not enough, but still positive rather than negative.
Even if you start from when the recession ended in June, 2009, the decline in median real household income since then has been greater than it was during the recession. Four years into the supposed Obama recovery, real median household income has declined nearly 6% as compared to June, 2009. That is more than twice the decline of 2.6% that occurred during the recession from December, 2007 until June, 2009. As the Wall Street Journal summarized in its August 25-26, 2012 weekend edition, "For household income, in other words, the Obama recovery has been worse than the Bush recession."
Despite his rhetoric, Obama has failed to deliver for the poor as well. But we know Obama loves the poor, because he has created so many of them. Indeed, the only thing booming under Obamanomics has been poverty. Poverty has soared under Obama, with the number of Americans in poverty increasing to the highest level in the more than 50 years that the Census Bureau has been tracking poverty. Over the last 5 years, the number in poverty has increased by nearly 31%, to 49.7 million, with the poverty rate climbing by over 30% to 16.1%. This is another natural result of negligible economic growth, paltry job creation, declining real wages, and the worst economic recovery since the Great Depression.
These dismal results of Obamanomics have been produced because all of Obama's economic policies are thoroughly anti-growth, indeed, the opposite of what is needed for long term booming growth. Instead of cutting tax rates, which provides incentives for increased production, Obama has been focused on raising rates. Instead of deregulation, which increases the cost of doing business, and results in barriers to productive activity (see, e.g., Keystone Pipeline), Obama has been all about increasing regulation. Instead of cutting spending, Obama entered office exploding spending during his first two years, and was only restrained when the people elected Republicans to control the House.
And instead of adopting monetary policies that would produce a stable dollar, Obama's monetary polices have mimicked the devaluationist ones previously embraced by George W. Bush on the way to sagging investment, and with the latter, slow growth. President Obama derided Mitt Romney during the 2012 campaign as proposing to bring back the same economic policies that led to the financial crisis in the first place. But it is Obama who is bringing back precisely those policies, overregulating banks to make loans on the basis of supposed fairness. Moreover, Obama's Fed has thrown oil on the bonfire with its zero interest rate, and runaway quantitative easing policies. With those policies having been in place for years now, they are the foundation of the current economy, which is just another bubble that will pop when the Fed tries to implement any exit strategy.
Next week I will discuss why and how these misguided, Keynesian monetary policies will only lead to another, even worse financial crisis, probably during Obama's second term, and why only fundamental monetary reform can restore America to its traditional booming, economic growth.
[First Published by Forbes.com]
Renewable Energy's Reversal of Fortune
"They told us the wind turbines were going to be good for the city; that our electric rates would go down. But that hasn't happened. They keep putting up more and more of them and they are getting closer to the neighborhoods where you hear the noise all night while you are trying to sleep. Plus," Monica told me last week during my Palm Springs vacation, "they look horrible; like a junk yard. It totally ruins our mountain views!"
I met Monica in a store where she works. When she found out that I write on energy issues, she told me her story. Her electric bills run as high as $7-800 a month in the summer for a 1600-square-foot home. "I work for the electric company," she said. "Everything I have goes to pay my bill." With her bills so high, Monica got behind. She's been on a payment plan for three years and doesn't see any hope of ever getting caught up. Instead of using air conditioning, she uses the swamp cooler whenever possible—but with temperatures above 100 most of the summer, the AC is essential. She's cut back use of the pool pump. "The pool's not crystal clear," she told me, "but my bill is a little less
No one could have predicted the reversal of fortunes the renewable energy industry is facing
Nearly a decade ago, in the mid-2000s, states were busy passing legislation that mandated the use of renewable energy—generally called a Renewable Portfolio Standard (RPS). Today, more than half the states have renewable requirements that range from modest to aggressive with California's being the most stringent at 33% by 2020
Legislators eagerly embraced the renewable mandates based on three specific myths:
· Climate change is a manmade crisis caused by the use of hydrocarbons,
· Hydrocarbons are finite and are about to run out and, therefore, are expensive. And
· Renewable energy, specifically the wind and the sun, is unlimited and free.
Since then, each of the key selling points has been wiped out.
Environmentalists have been crying "wolf" for so long that the public has become immune to their scare tactics—the disasters predicted at the first Earth Day haven't happened and despite increasing CO2, the climate hasn't warmed for 17 years.
The combination of new technology and new applications of old technology have unleashed a new abundance of natural gas and oil—dropping the prices and displacing the market for renewables. Last month, Atlantic Magazine's cover announced "we will never run out of oil."
Increasing utility bills have convinced people that, even though wind and sunshine are free, converting them to electricity is not—as Monica found out. Europe, the global leader in renewable energy, is backing away from the policies that are making energy more expensive and Europe less competitive.
Combined with the hard-hitting economic collapse and ongoing sagas of taxpayer-funded green energy failures, the public's appetite for renewable energy has waned—producing headlines, such as "Cheap natural gas prompts states to sour on renewables" and "U.S. states turn against renewable energy as gas plunges." Compared to last year, investment in renewable energy has dropped: 54% in the US and 25% in Europe—with the sharpest decline, 96%, in Spain. But, as long as the mandates exist, so does the rationale for subsidies, grants, and tax credits.
No wonder the 2013 legislative season was filled with renewable mandate policy action—including calls for repeals, reforms, and expansions. Wind Power Monthly reports: "there have been at least 35 bills to weaken renewable portfolio standards proposed in 16 of the 29 states that have them on the books."
Six states introduced bills for a full repeal of the mandates: Texas, Minnesota, West Virginia, Wisconsin, North Carolina, and Kansas. While none passed, Kansas and North Carolina had bills with strong support.
Eleven states—Montana, Ohio, Virginia, Connecticut, Maryland, Maine, Missouri, Oregon, Pennsylvania, Vermont, and Washington—had bills aimed at reforming the mandates—several of which would have qualified hydroelectricity as "renewable energy." Montana passed a bill to include the expansion of existing hydroelectricity as a part of eligible renewable resources. Virginia repealed incentives for electric utilities to pursue renewable energy investments. Vermont passed a zoning bill that would make it more difficult to site a wind farm.
Ten states—Arkansas, Colorado, Maryland, Michigan, Minnesota, Nevada, Oklahoma, Pennsylvania, Texas, and West Virginia—had bills to expand the current mandates. Two have passed: Minnesota and Colorado. The Colorado bill increases the mandate for rural electric cooperatives. The Minnesota bill establishes a 1.5% solar energy mandate, to be met by 2020 for investor-owned utilities. Electricity co-ops and municipal utilities are exempt. Nevada's legislative session ends on June 3. A bill, SB123, which would force the use of more renewable electricity, is still being debated. The Las Vegas Review Journal's Editorial Board called SB123 "a tax hike on everyone" and says it "is a feel-good political initiative, not an economic one."
While this flurry of activity doesn't declare a definitive winner or loser, renewable energy advocates are clearly unhappy about fighting a battle they thought they'd already won. Addressing the situation they find themselves in, Wind Power Monthly, offers the following insight from Jeff Deyette, assistant energy research director at the Union of Concerned Scientists: "These opponents have yet to make much progress in their efforts, but they have forced renewable energy advocates to expend valuable resources defending their positions. If you measure success by outright repeal of these standards, they may be successful with one or two. I don't think they are going to get much more than that. But if you measure success in a different way, in that they are slowing our ability to do what we should be doing, which is going out and expanding these policies and creating larger markets for renewable energy, then I think they have been successful."
Roger Freeman, a Denver-based environmental attorney, who believes that the RPS needs to be protected, acknowledges: "the national trend is in the opposite direction." Lyndon Rive, SolarCity CEO, says: "We expect in the next year or two that state-based incentives will disappear."
Arizona's Corporation Commission, which regulates utilities in the state, has "pulled back on incentives for rooftop solar installations," as Tucson Electric Power Co. and Arizona Public Service Co. "have reached incremental goals for such installations under the state's renewable-energy standard."
Without the "marching orders" from the statehouses to the electric utilities, Rhone Resch, head of the Solar Energy Industries Association, says: "Without some carrot or stick, there's little reason to pick [renewables] up."
With the "national trend" heading away from state-supported renewable energy mandates, some hope that Congress will set a national renewable standard. But, Karin Wadsack, director of a Northern Arizona University-based project to monitor these legislative battles, concedes: "I wouldn't see it happening in our current set of national priorities."
Monica thought the wind turbines would be good, that they'd lower her utility bills. Instead, she's scared to open her bill. Advertisements featuring a glistening white wind turbine in a green field don't match the reality that residents of Palm Springs—and other locales—are living with. "They look horrible; like a junkyard."
As the reality of policies that promote renewable energy sets in, fewer people want it. You can be sure that the 2014 legislative sessions will be filled with additional attempts to repeal or reform existing Renewable Portfolio Standards that could bring about renewable energy's reversal of fortune—and add to yours, as cost-effective coal-fueled power allows you to pay less, and your tax dollars won't be going to green energy schemes that line the pockets of political cronies.
[First Published by Townhall.com]
Why Does Apple Want Lisa Jackson and Her Ethical Cloud?
Apple's hiring of former EPA Administrator Lisa Jackson last week gives her a soft landing place, after she fled her cabinet role spurred by a flurry of evasions and deceits over alias email accounts she and her underlings used to hide correspondence from the public. Her would-be successor, Gina McCarthy, seeks to be confirmed under the same cloud.
It's unclear why Apple would want or need Jackson, as its (faux) environmentalist credibility is already well established, and the Mac maker already boasts the top figurehead of eco-figureheads on its board of directors, Al Gore.
That's not to say the evasive, deceptive Jackson isn't a fit for Apple, a company with a reputation for falsely claiming "green"-friendly policies when the truth shows otherwise. Also like Jackson, the Cupertino, Calif. clan isn't shy about piling on sky-high costs for the massive amounts of electricity it needs for services like iCloud and iTunes, which rather than being incorporated into the costs of its offerings, instead are shifted onto other unsuspecting power customers. That's a concept that Jackson, who never met a punish-the-fossil-fuels scheme she didn't absolutely love, can easily embrace.
The Competitive Enterprise Institute's Chris Horner caught the departing EPA administrator using an email address with an alternative identity, "Richard Windsor," to cloak correspondence she wanted shielded from public scrutiny. Horner discovered the concealed account in November last year, and within a month and a half Jackson had announced her resignation. Despite a number of Freedom of Information Act requests that sought "Windsor's" messages and those of other top EPA officials with alternative identities, the agency has delayed responses and the delivery of records repeatedly, prompting CEI to file appeals and lawsuits.
Once Horner pried loose documents – said to total 12,000 pages, according to the Department of Justice (much less was actually produced) – they were heavily redacted, despite a court order that permitted only "legitimate withholdings." Also blacked out were messages CEI sought that had to do with McCarthy's role in the Obama administration's "War on Coal," which was largely under her authority as Jackson's Assistant Administrator for Air.
"You would think after having one administrator resign in disgrace over a false identity email account, the administration that claims to the most transparent ever would move quickly to demonstrate something resembling openness on her appointed successor's records," Horner said in March. "But the administration has decided to do exactly the opposite, and go even further to keep from the public what its top environmental officials are doing."
Republicans on at least two House committees, as well as GOP members of the Senate Environment and Public Works Committee (including ranking minority member David Vitter of Louisiana) have questioned Jackson and EPA over its lack of transparency, with no better response than CEI received. Republicans on the Senate committee staged a walkout of a hearing to delay McCarthy's confirmation, but she was ultimately approved on a 10-8 party line vote. The obfuscation practices appear to be an EPA-wide team effort.
"(McCarthy) has persisted in EPA's stonewalling of my request for information about taxpayer funds wasted on an unnecessary reconsideration of the ozone standard — a request I have waited almost two years to be answered," said Alabama Republican Sen. Jeff Sessions, another member of the EPW Committee. "In addition, she did not answer my questions about EPA's sue and settle tactics, and she has refused to provide EPA's analysis concerning the president's faulty assertion that global temperatures are increasing more than was predicted a decade ago."
With Gore on its team and groups like Greenpeace on its back, Apple has employed similarly costly and misleading tactics that they justify with the same unsupported conclusions about global warming. But bottom-line concerns and stock price don't comport with environmental pressure groups' demands that giant tech companies reject coal and nuclear power in favor of "renewables" such as wind and solar. Various scorecards by eco-graders, some which give Apple plaudits (Climate Counts) while others say they're terrible (Greenpeace), don't make the appeasement business any easier.
That's why Apple finds itself in contortions trying to keep its energy costs low (good for profits) while pretending it uses high-cost renewable electricity. As NLPC has reported extensively, for example, one of the company's most important data facilities for cloud computing was established in western North Carolina, where Duke Energy has the coaland nuke generation resources to deliver cheap power.
The additional benefit in working with the nation's largest investor-owned utility is that Apple had a willing partner that would play the renewables-PR charade. Apple clear-cut (and burned) hundreds of acres of land in order to build two massive solar farms, and also added 10 megawatts of extremely expensive Bloom Energy fuel cells, which enviros like to claim are renewable. The company now boasts that it generates 100 percent of its electricity for its data centers from renewable sources.
But Apple would not ever have located its computer servers in Maiden, N.C., if it had to pay what renewable energy sources truly cost, nor would sporadically sunny (and non-sunny at night) foothills of the Tar Heel state have come close to meeting the insatiable needs of cloud-computing iTunes users. So how does the Apple-Duke three-step work? The computing giant sells the pricey power for Duke to feed its grid, while Apple enjoys a generous discount for the enormous amounts of electricity it takes from the grid. Meanwhile the rest of Duke's customers pay foroverall higher-priced electricity that is built into its rates.
It's a sleight-of-hand scheme befitting the likes of a master distracter like Lisa Jackson, and Greenpeace approved the move.
"Jackson can make Apple the top environmental leader in the tech sector by helping the company use its influence to push electric utilities and governments to provide the clean energy that both Apple and America need right now," said Gary Cook, a Greenpeace IT analyst.
Still Apple, Al Gore and conspirators like Duke Energy did just fine without her, and they certainly don't need her ethical cloud.
"Tim Cook should think twice," said Amy Ridenour, president of the National Center for Public Policy Research, a conservative think tank that also owns stock in Apple. "President Obama's cabinet officers may get away with all kinds of things (or they may not, in the end), but the Responsible Corporate Officer Doctrine makes CEOs potentially criminally liable for any misdeeds of subordinates, even if they don't know about them.
"So if firstname.lastname@example.com ever gets up to no good, Tim Cook might have to explain why he didn't see it coming, and it would be a good question, because anyone who tries to cover up what she is doing as an officer of the government could very well try some sort of shenanigans in the private sector."
[First published by National Legal and Policy Center]
Latest Big Government Data Grab: Justice Sues to Get It Without Warrant
The Big Government Barack Obama Administration is nothing if not thorough.
Justice Department Tries to Force Google to Hand Over User Data
Secret lawsuit in Manhattan filed last month asks judge to force Google to cough up user data without a search warrant. A different court has already ruled that the process is unconstitutional.
When the Obama Administration wants information on We the Peasants, they keep kicking down doors until they get it.
(Justice's Eric) Holder Went Judge Shopping to Obtain Fox News Subpoena
The New Yorker's Ryan Lizza, a bulldog on the DOJ/Fox News secret subpoena story, reports that the effort by the Justice Department to obtain the controversial court order was arduous, contentious and unsuccessful until finally a third judge acquiesced.
The Obama Administration applies the By-Any-Means-Necessary approach.
Do You Want the Government Buying Your Data From Corporations?
Our government collects a lot of information about us. Tax records, legal records, license records, records of government services received– it's all in databases that are increasingly linked and correlated.
Still, there's a lot of personal information the government can't collect. Either they're prohibited by law from asking without probable cause and a judicial order, or they simply have no cost-effective way to collect it. But the government has figured out how to get around the laws, and collect personal data that has been historically denied to them: ask corporate America for it….
Sometimes they simply purchase it, just as any other company might. Sometimes they can get it for free, from corporations that want to stay on the government's good side.
And there are companies aplenty that are willing to outright give it up to the Obama Administration.
Obama, Facebook and the Power of Friendship: The 2012 Data Election
Barack Obama's re-election team are building a vast digital data operation that for the first time combines a unified database on millions of Americans with the power of Facebook to target individual voters to a degree never achieved before….
The centralized nature of the database may raise privacy issues as the election cycle progresses. Jeff Chester of the digital advertising watchdog Center for Digital Democracy, which has been calling for regulators to review the growth of digital marketing in politics, said that "this is beyond J. Edgar Hoover's dream.
"In its rush to exploit the power of digital data to win re-election, the Obama campaign appears to be ignoring the ethical and moral implications."
How Chris Hughes Helped Launch Facebook and the Barack Obama Campaign
Obama 2012 and Facebook: Your Privacy, Diminished
Obama and Facebook in Warm Embrace
And before we give Google too much credit for resisting the aforementioned Obama Administration warrantless power grab:
White House Deputy CTO Andrew McLaughlin Slapped for Gmailing with Googlers
(Former Google Director of Global Public Policy cum White House official) McLaughlin was cited for two kinds of actions: using a personal email account for some professional email exchanges and for violating restrictions on contacts with Google, his former employer.
Most notable among the latter were a pair of conversations with the Director of U.S. Public Policy for Google about mobilizing Google's resources to respond to negative press mentions.
Those breaches, according to a memo by OSTP Director John Holdren, "implicated" the Federal Records Act….
In other words, McLaughlin was using Google resources – Search manipulations? Your data? – to help the Administration spin away their negative-ness.
Obama 2012 and Google: Your Privacy, Diminished
Some Perspective on Obama's Bromance with Eric Schmidt
Google Chairman Eric Schmidt Doubles Down On His Support Of President Obama
And Schmidt's just getting warmed up.
Google Exec To Help Democrats…and Only Democrats
Everyone knows Google Executive Chairman, Eric Schmidt, is a big Obama backer. Now he has assembled a team of "former" (Obama campaign outfit) Organizing For Action data geeks to use Big Data to help Democrats.
Oh, sure, they're pretending it is some grand effort to help companies and non-profits but this is how the left operates. It's the Soros model. Pretend your investing in social welfare projects that just so happen to push only leftist agendas. This new company, Civis Analytics, will be no different.
Wait – the Left says that the IRS scandal shows that only Conservative groups abuse this project model.
What "Social Welfare" Work Do Tea Party Groups Perform?
Obviously not. Schmidt is taking the Obama Administration Abuse-of-Data model – and setting it up so that every Democrat can replicate and have at it.
We the Peasants have never been less alone. Big Brother is more and more in our computers, our homes, our heads – and will now thanks to this "social welfare" project be able to invite in his entire oversized Family.
Just what the Founding Fathers intended (here endeth the sarcasm).
[First published by RedState]
The Importance of the Limited Government Brand
Conor Friedersdorf responds to my points regarding the importance of limited government as the core to conservative reform. "But George W. Bush, the last Republican to win the presidency since 1988, and the last one to be reelected since 1984, was not a limited-government type on spending, civil liberties, or foreign policy. Nor were the winning Congresses of those years limited-government Congresses. They backed away from limited government under pressure, and won for a long time doing it. Where, then, does Domenech get the idea that the key to electoral success for Republicans is to "deliver on their limited government promises"?"
Simple: I don't believe that the 2004 election, the only one where W. won the popular vote was a replicable event. It was a national security election more than anything else, and one could actually argue that Kerry overperformed given that. In the nine years since that election, the Republican brand has gone through a period of enormous upheaval, and has destroyed its standing as a part of competence and fiscal restraint. What led to the Republican Party getting destroyed in 2006 and 2008? I would argue it was: 1) too much government intervention overseas, 2) too much spending, 3) too much governmental incompetency, 4) too much governmental corruption, 5) All four, or some combination of them, or 6) none of the above. All four points go to the importance of limited government; you have to argue 6 in order to avoid an argument which rejects that view.
As Sean Trende has noted on numerous occasions, the Republican Party wins when it has an inherently populist message, as was clearly the case in 1994 and 2010. I'd argue Bush wrapping himself in the flag in 2004 amounted to this and was far more important than the vestiges of compassionate conservatism to his victory. But the inherent problem for the Republican Party over the past two decades has been the gap between those populist promises on the stump and their performance in office. Their promises on American security and traditional values have been largely met or at least defended; but on the third leg of the stool, the normal route is: 1) Promise to limit government, 2) Get elected, 3) Ignore promises and grow government, 4) Get thrown out of office, 5) What did you learn?
I view an important goal of conservative reform, for both electoral reasons and policy ones, as breaking that destructive cycle. The Republican coalition has survived and adapted as it faced one massive revolt over limited government issues. But parties can and do die, historically – and I am unsure the GOP can survive another Tea Party. Friedersdorf doesn't think so: "If the GOP nominee in 2016 is a statist whose commitment to limited government is dubious and goes no farther than rhetoric, I expect Republican voters will support him or her overwhelmingly." Of course this will likely happen, given that we just saw President Romney overwhelmingly supported by those white voters in Ohio in 2012. Perhaps he can help us with that.
[First published at Real Clear Politics]
Alec Baldwin Challenges Phelim McAleer to a Fracking Debate, But Will Alec Chicken Out?
On the evening of March 31, Phelim McAleer was doing what he should be doing on Twitter: promoting his excellent movie Frack Nation, which serves as truth-detector to the lies in the eco-left agit-prop films Gasland and Gasland 2.
But Phelim's Twitter activity was something Alec Baldwin just could not abide. Yes. That Alec Baldwin. The Real One.
Alec took to Twitter last night and challenged Phelim to debate so he could smite him in public. Alec suggested Phelim was a coward, and worse. In fairness, I should just let Alec's tweets speak for themselves:
Seeing this, I jumped in on behalf of The Heartland Institute, which The Economist magazine — a publication the erudite Mr. Baldwin should admire — called "the world's most prominent think tank promoting skepticism about man-made climate change"
A debate? Between Alec Baldwin and Phelim McAleer? We'd love it, and we're experts at it, having done the climate debate thing from opposing sides before.
Mr. Baldwin, it's to you: Any time, any place, and any rules. Heartland will cover all expenses. If you're not comfortable with Heartland covering your expenses, you're welcome to pay your own way to the debate. Just post. Phelim certainly seems game.
So, either Alec Baldwin really wants to debate Phelim McAleer … or he is full of it. In all honesty, we should all hope Alec Baldwin is more than just bluster when it comes to his beliefs — in himself, and his philosophy.
We'll see.
Heartland Daily Podcast: How to Grow the Charter School Movement
As charter schools expand rapidly around the country, several states are still charter holdouts, including the Bluegrass State. Lisa Grover, senior director of state advocacy at the National Alliance for Public Charter Schools joins Joy Pullmann on the Heartland Daily Podcast to talk about getting charter schools into Kentucky and the other charter-less states. She explains why, despite widespread bipartisan support for charter schools, lawmakers on both sides of the aisle in some states still oppose them. She also discusses why charter school supporters don't just want any old charter school law to pass.
[Subscribe to the Heartland Daily Podcast free at this link.]