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Where the U.S. Economy Is Going, and Why

January 20, 2014, 8:13 AM

The U.S. employment news on January 10 sharply contradicted the oft-repeated refrain that economic growth was beginning to accelerate. Employers added only 74,000 jobs in December, the smallest job increase in three years and far below the 200,000 expected. The new number was well below the 182,000 average for all of 2012 and 2013 through November and less than the approximately 150,000 needed for population growth and replacing retirees.

The dismal number of new jobs was blamed in part on severe weather and increased retirements from an aging population, but too much importance should not be assigned to these factors. The really severe, record-breaking weather so far this winter occurred in early January so would not be reflected in the December figures. And the loss of jobs among prime-age workers was far larger than for older ones. Among workers ages 45 to 54, the labor participation rate dropped 0.4% to 79.2%, the lowest since 1988. For workers 55 and older, the rate was only down 0.1 percent.

The jobless rate fell to 6.7% from 7%, but most of the people responsible for the decline simply dropped out of the labor force. Less than one-third of them found a job; the rest just quit looking for one, perhaps too discouraged to continue. In December, 2.6 million workers were looking for a job for more than a year. The most significant job gains (55,000) were in low paying jobs, and 40,000 others were for temporary help. Those aren’t signs of a healthy economy.

Total employment is still about 2 million less than when the recession started. That is a shocking figure, but perhaps the most shocking statistic of all is that the labor participation rate is the lowest in 35 years, going all the way back to 1978.

The graph shows that the poor performance during Obama’s presidency essentially took place after the end of the recession. He took office on January 20, 2009, and the Great Recession officially ended in June 2009, according to the National Bureau of Economic Research. (The graph ends with a slight uptick as of Q3 2013, but the 1.8% gain was lost in the fourth quarter of 2013.)

Scarcely three weeks after Obama’s inauguration, Congress on February 14 passed his $787 billion stimulus bill (later adjusted to $812 billion.) When Obama took office, the unemployment rate was 7.4%. The Obama administration promised that if the stimulus bill was passed, the rate would not exceed 8%, and Obama himself stated it would decline to 5.6% by July 2012.  Instead the rate rose to 10% and remained above 9% for more than forty months.

The argument that Obama inherited a severe recession that requires a longer recovery time is without merit, says John B. Taylor, an economics professor at Stanford University. He cites the research of Michael Bordo and Joseph Haubrich of the Cleveland Federal Reserve Bank as having “blown holes in that argument.” He writes:

Recoveries from deep recessions with financial crises have been stronger, not weaker, than recoveries following shallower recessions. These strong recoveries average about 6% real GDP growth per year, compared to only 2% per year in this recovery.

With holes blown in this possible defense of Obama’s record, it is clear that the blame for the poor economy from 2009 to today in 2014 rests entirely on the misguided policies of Obama.

The administration said the stimulus spending would create three to four million new jobs. Of course, the unemployment figures alone tell you that never happened. And the jobs that were created were incredibly costly and wasteful. According to the Congressional Budget Office, every job created by the stimulus program cost the taxpayers between $500,000 and $4 million.

The idea that government spending would stimulate the economy can be traced to John Maynard Keynes. He claimed government spending produced a multiplier effect through a chain reaction of additional spending in the economy. The gigantic spending of the stimulus program was sold to Congress on the basis of a Keynesian multiplier of 1.5, meaning the GDP will increase by $1.50 for every dollar of government spending.

But in my new book, The Impending Monetary Revolution, the Dollar and Gold, I point out that extensive research has shown the Keynesian multiplier is always less than 1.0. That means the money that is spent over and over again in the private sector from the government spending is always less than the cost of the programs. If it weren’t, the U.S., Greece, and other spendthrift countries wouldn’t be going broke—they’d be getting richer the more they spent!

My book quotes Brian Westbury, former chief economist for the Joint Economic Committee of the U.S. Congress, who wrote “the larger the government share of GDP, the higher the unemployment rate. In other words, when it comes to jobs, government spending has a multiplier of less than one—government spending destroys jobs.” Also, Harvard Professor Robert Barro, who has studied Keynesian multipliers as thoroughly as anyone, concludes, “There is no meaningful theoretical or empirical support for the Keynesian position.”

Franklin Roosevelt adopted Keynes’ economic ideas to try to pull the country out of the Great Depression of the 1930s, but extensive research has shown the opposite effect: they prolonged the depression. It should not be a surprise that similar policies by Obama produced similar effects regardless of promises of “hope and change” and exclamations of “Yes we can!”

The futility of the Keynesian approach was explained to the House Ways and Means committee late in FDR’s second term by his treasury secretary and good friend Henry Morgenthau Jr. On May 9, 1939, he testified: “We have tried spending money. We are spending more than we have ever spent before and it does not work….After eight years of this Administration we have just as much unemployment as when we started….And an enormous debt to boot.” In May 1939 the unemployment rate edged above 20%.

Hunter Lewis, author of the book Where Keynes Went Wrong, says, “There is no evidence” that spending ever cured a recession, and Keynes “wasn’t particularly interested in evidence.” Keynes believed spending—for anything—was the driver of the economy. He even endorsed printing money with expiration dates so people would be forced to spend it. That, of course, would destroy savings, leaving the people unable to provide for their future (and dependent on the government), and eliminate investments needed for economic growth. Lewis says 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. (Emphasis added.)

Of course, if that is the case then it is unimportant that every new job from the stimulus program costs $500,000 to $4 million. That investment is as good as any other. If that doesn’t work, print more money. The important thing is the spending. In an article in Redbook magazine in 1934, in answer to the question “Can America spend its way into recovery,” Keynes answered, “Why, obviously, the very behavior that would make a man poor, could make a nation wealthy.”

Keynes intent was “positive social improvements,” namely, the redistribution of wealth. In his 1940 book, How to Pay for the War, Keynes wrote, “I have endeavored to snatch from the exigency of war positive social improvements. The complete scheme now proposed…embodies an advance toward economic equality greater than any which we have made.” (Emphasis added.)

You can see why Keynes’ ideas are so appealing to Obama, who in December 2013 declared economic inequality is the “Defining challenge of our time. . . . That’s why I ran for president. . . . It drives everything I do in this office.”

On the floor of the Constitutional Convention on June 26, 1787, Alexander Hamilton declared, “Inequality will exist as long as liberty exists. It unavoidably results from that very liberty itself.” Our Founding Fathers chose liberty; Obama has chosen economic equality—necessarily at the expense of liberty. When he told “Joe the Plumber” during the presidential campaign in 2008 , “I think when you spread the wealth around, it’s good for everybody,” he was advocating the redistribution of wealth at the expense of not only Joe’s liberty and property but of his inalienable right to use his own money for the pursuit of his own happiness. The Founders expected property rights to be the principal means for exercising that right. The distribution of wealth was to be determined not by force but by freedom, not by government but left to the people to determine for themselves by exercising their rights. It would be whatever distribution results from the labor of free men and their free (voluntary) exchanges with each other. A free-market economy is the only one appropriate for a free people.

The word “liberty” is mentioned in both the Declaration of Independence and the Constitution. The former says it is an “unalienable right” in the famous phrase that links it to the rights to life and the pursuit of happiness. The Premable of the Constitution gives “to secure the blessings of liberty to ourselves and our posterity” as a reason to “establish this Constitution.” Nowhere do either of these two founding documents of our government mention economic equality or redistribution of wealth. The “defining challenge” of our time is not economic inequality. It is preventing people such as Obama from perverting his office and our Constitution and making the U.S. more representative of Karl Marx’s class warfare and his dictum “From each according to his ability; to each according to his need” than to the ideas of our Founding Fathers.

The “transformational change” Obama promised has been very expensive. Regulations have proliferated. On August 1, 2013, Sam Batkins, director of regulatory policy at the American Action Forum, testified before a congressional subcommittee that “major” regulations (those costing $100 million or more) and the amount of federal paperwork “have increased significantly over the last five years.” He also said that delays are often the result of “hundreds of new requirements from Dodd-Frank and the Affordable Care Act [Obamacare].” He noted, too, that there are more than 9,100 different collections of information for managing the regulatory programs.

In 2010 Congress passed 129 private-sector mandates, the highest ever recorded. In addition to recording the sheer number of mandates, the Congressional Budget Office records whether mandates exceed the statutory threshold (currently $150 million) under the Unfunded Mandate Reform Act. In 2010, Congress passed 25 mandates that would likely exceed the statutory threshold, easily the highest figure on record and more than triple the yearly average from 2002 to 2008. In 2011 more than 340 regulations (“major” as well as lesser ones) were proposed, and the Federal Register noted that more than 4,200 others were in the pipeline.

The CBO also tracks the unfunded mandates on states and local entities. In 2009 and 2010 there were 116 of these unfunded mandates.

Batkins noted, “It is clear that current regulatory burdens have legislative roots of historic proportions. These figures on mandates are important because they eventually become federal regulations and translate into real costs for private entities and states.”

In addition to tracking mandates and rulemakings, the American Action Forum tracks the paperwork burden imposed by federal agencies. “Based on our current data for 2013, the federal government has imposed 85 million paperwork burden hours…[and] Americans spend more than 10.34 billion hours annually completing federal paperwork. The supposed cost for this paperwork is $72.8 billion, or $7.04 per hour, less than the federal minimum wage. There are two other measures to monetize the nation’s 10.34 billion hour burden: the median wage of a ‘compliance officer’ ($31.23) or the real Gross Domestic Product per hour worked ($60.59). Using these two figures, the monetized burden of federal paperwork ranges from $322 to $626 billion annually. These figures include only the paperwork costs of regulation, not deadweight losses or other capital costs.

“It is undeniable that federal red tape is growing, and will likely continue to trend upwards with the implementation of the Affordable Care Act and Dodd-Frank. Based on the most recent Information Collection Budget of the U.S., the federal government added 355 million hours in the last fiscal year. To put this figure in perspective, assuming a 2,000-hour work year, it would take 177,500 employees to comply with the new paperwork. Added regulatory burdens, however, should not be thought of as a jobs program.”

The Office of Information and Regulatory Affairs reported that 2012 was the costliest year on record, at $29.5 billion (in 2001 dollars) and surpassed the second highest total by 57%.

Duplication resulted in huge costs. Based on 17 areas of duplication, the AAF “found 642 million paperwork hours, $46 billion in costs, and 990 forms of federal overlap. For example, ten different agencies are involved in renewable energy programs and produce 96 related forms.” There were more than 600 different forms relating to veterans’ claims, “imposing millions of paperwork burden hours.”

All of these regulatory measures cost a great deal of money. They impose enormous costs on the private sector, making it increasing difficult for the economy to grow. But the largest and most dangerous cost is the one that will be paid by everyone for the destruction of the dollar through Keynesian spending by the government and Keynesian printing of money by the Federal Reserve. In his first term of office, Obama added as much to the national debt as all the presidents from George Washington through George W. Bush combined. In the 15 months following collapse of the housing/mortgage bubble in 2008, the Fed created more money than in all the years combined since 1913 when it was founded.

The recent 19-day partial shutdown of the federal government over raising the national debt ceiling shows it is politically impossible to avert the coming disaster. The fight over the debt ceiling was not about actually cutting government spending—making government live within its means—but about raising the debt ceiling so spending could be increased.

Obama had previously appointed a bipartisan National Commission on Fiscal Responsibility and Reform, headed by Erskine Bowles and Allan Simpson, both highly respected. This sounded good. It allowed the president to pretend he was serious about the problem. He even promised, “Once The Bipartisan Fiscal Commission Finishes its work, I will spend the next year making the tough choices necessary to further reduce our deficit and lower our debt.”

That promise was worth as much as his promise that people could keep their health insurance. That he was insincere about promising to reduce the debt was evident when it came time for dealing with the budget deficit and the national debt ceiling. He totally ignored his NCFRR commission’s calls for immediate and steep cuts and instead insisted on further increases in spending. Finally, the Republicans, anxious to avoid another government shutdown, agreed to a $1.1 trillion spending bill that would pile another $45 billion onto the $17 trillion national debt. The agreed compromise does nothing to reduce government spending, merely kicks the can a little further down the road.

Continuing to increase federal spending is far more serious than might appear. More is at stake here than simply passing a huge cost onto our children and grandchildren—which would be bad enough in itself, and immoral as well—but the problem is worldwide. Every central bank in the world is following the same Keynesian policies, which aren’t working, but they keep doing them anyway. The Fed, the European Central Bank, and the central banks of Japan, Switzerland and China have printed an astounding $10 trillion since 2007, tripling the size of their combined balance sheets. To expect governments to repair the economy is to expect the cause to be the cure.

The U.S. has not—yet—suffered the same results for its extravagant spending as, for example, Greece because of the dollar’s status as the world’s reserve currency dating from the Bretton Woods Agreement in 1944. The dollar became the basis of international trade, but that status is being threatened by a loss of confidence because of our debt. Countries are starting to abandon the dollar as an intermediary in foreign trade, turning instead to other currencies and gold. China and Japan, the world’s second and third largest economies, have agreed to bilateral trade in their own currencies, the yuan and the yen, instead of using the dollar as an intermediary. Russia and China trade is in rubles and yuan. India no longer buys Iranian oil in dollars but in rupees. India and Japan have signed a new $15 billion currency swap. Brazil became the first South American country to sign a currency swap agreement with China. Reuters has reported, “France intends to set up a currency swap line with China to make Paris a major offshore yuan trading hub in Europe, competing against London.” South Africa, Venezuela, Germany, Cuba, Pakistan, Argentina and others are said to be set to join currency arrangements for trading without the dollar.

The BRICs (the large developing nations Brazil, Russia, India and China) are said to have agreed to trade in other currencies and periodically settle differences in gold. You can hear this and other interesting comments by Karen Hughes at “Karen Hudes Predicts “Permanent Gold Backwardation’.” She is a woman with 20 years experience at the World Bank, where she was general counsel. She is no longer at the bank, having departed after being a whistleblower on corruption at the bank.

In my book I noted that the argument put forth that 85% of foreign exchange transactions being denominated in dollars means the dollar won’t be displaced for a very long time. But that 85% figure developed from the dollar’s relative stability and safety over many decades. I wrote that the 85% would erode as people lost confidence in the dollar and that people will likely be surprised by the suddenness of its ultimate collapse. Now the movement away from the dollar is already underway and proceeding faster than I expected.

I shall close with mentioning an article on the problems facing the Federal Reserve, by Phil Gramm and Thomas R. Saving. Gramm, a Ph.D. and former U.S. senator, was a university professor of economics before turning to politics. Thomas Saving, Ph.D., is a professor of economics at Texas A&M university. Their article is quite technical so I won’t discuss it here. If interested, you may find it at the Wall Street Journal. I shall only quote their ending:

The full bill for this failed policy has yet to arrive. No such explosion of debt has ever escaped a day of reckoning and no such monetary surge has ever had a happy ending.

[First published at American Liberty.]

Categories: On the Blog

Truth and Trust Essential Before Electing Legislators

January 18, 2014, 4:24 AM

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasury. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy — which is always followed by a dictatorship.

How close is America to the tipping point in which we lose our republic? Our country certainly has declined morally and financially in the last few decades. Some are saying we are financially and morally bankrupt and even when the rule of law is applied, it is not always fair or honest.

Trust as defined by the dictionary means:

Reliance on the integrity, strength, ability, surety, etc., of a person or thing; confidence.

Yes, that sums it up well! The very word — trust — evokes strong emotions within us, as it is an essential ingredient in all our relationships: our marriages, our children and friends. It is also essential in our businesses relationships, our doctors, and even in the very products we buy. When that trust is broken, it is often devastating and exceedingly difficult to regain. It can cause irreparable damage.

Why then do we so easily overlook an elected official who deceives and lies to be elected?  When they are elected and vote for laws we reject, and thus betray our trust, where is the public outrage? And most puzzling of all, why are they reelected?

Might it be that too many Americans are low information voters? Have we become a nation whose knowledge is largely limited to media sound-bites and newspaper headlines? Not knowing much about the candidates and their voting records or reputations, they often use their local newspaper’s recommendations for their ballot. How could they possibly know what the editors stand for, let alone the candidates or ballot propositions. It must be every citizen’s responsibility to discover if a candidates kept his/her promises and background.

Insight into this disconnect between voters and their legislators has a direct tie to Congressional approval statistics. For 2012 it was 15% and in 2013 it was 14%, the lowest in Gallup history. Apparently everyone blames the poor performance of congress on representatives from all the other states, falsely thinking their official performed according to his campaign promises. Until we hold our own representatives accountable, this trend will continue.

A case might be made that it is difficult to keep track of every public official’s political track record. Fair enough, but how about using the President of the United States as an example? Has he kept his promises; has he told the truth? While running for reelection in 2011 and speaking at fundraising events, President Barack Obama took credit for enacting a majority of his agenda during his then nearly three years in office. He claimed to have fulfilled 60 percent of them. But even by the most lenient standards, his percent of fulfilling promises was at best just 30 percent. Even more important, the promises he did not keep were the ones he emphasized most and which helped elect him.

Candidate Obama promised transparency and a new culture of cooperation in Washington D.C., one in which he would reach across the aisle to Republicans. He called it a climate of cooperation.  But once the dust had settled from the election, and seeing that his party had gained a majority in both houses, Obama no longer needed to consider the opinions of Republicans. He not only ignored Republicans, he ignored the majority of citizens as he worked with a select group of his party members to craft the Stimulus Bill, which did not go for the purposes he promised, and the controversial Affordable Care Act, which is proving disastrous. The negotiations for both laws were conducted in a manner far from Obama’s campaign promises. Republicans were ignored in the crafting of the Affordable Care Act; it did not receive a single Republican vote.

Obama quickly broke his campaign promise of transparency. He promised to post all bills online 5 days before he would sign them. That did not happen! Thus, Nancy Pelosi’s famous comment, “We have to pass the healthcare bill to know what is in it,” was painfully accurate.

President Obama is now half way through his second term. At one time Obama indicated that the separation of powers are the key to our republic. Yet several days ago Obama announced that he would assume lawmaking powers via a pen to executive orders and a phone to call supporters for help. That brazen, authoritarian, and dangerous threat was an insult to his oath to uphold our constitution. The very reason for a republic and separation of powers is so that one person or one of the ruling bodies cannot dominate. It is a safeguard. We should be concerned when a president misuses and abuses his “executive order” privilege.

What is taking place in the oval office by this president is disturbing. When a president begins to overreach his authority, Congress should be front and center condemning it. To date nobody in his party has spoken out against this threat. The media has not clamored to their computers to expose this dangerous threat. Partisan politics is unhealthy when it reaches this point. It is times like this that the public must speak up and demand action.

Another issue of concern at present is the unprecedented removal of those in command of the military and their replacements by the Obama administration. Military careers have been abruptly ended with forced retirements. The obvious question we all should be asking is, why? Some have suggested It would be frightening if done to silence critics of the administration or to purge those who refuse to carry out what they consider illegal and/or immoral acts somewhere down the road. Others are just concerned it compromises our safety to reduce experienced, dedicated military personnel when we live in an uncertain and violent world.

Admittedly there are some honest, hardworking elected officials, but evidence indicates there are many who deceive voters to win elections and then govern in a manner far from what they promised. That will continue as long as the public remains uninterested and/or too busy to pay attention and hold them accountable. We all need to remember their campaign promises and closely examine their actions. Encourage those who do keep promises and support their reelection, but work to remove and replace those who disappoint.

Together we can make a positive difference if we make voting decisions based on what legislators do, not what they say they will do. Hope for our future will not be found in one person, even if he or she is the President. America’s fate will be determined by “we the people” at the grassroots level. That is a privilege that has made America the envy of the World.

We are the masters of our own destiny. We hold the fate of this nation in our hands. Will you take the challenge given by Benjamin Franklin centuries ago? Will you help protect our republic by voting wisely?

Bonnie O’Neil is the co-author of this post.

[AUTHORS' NOTE: This is but a prelude to a series of articles written by Nancy Thorner and Bonnie O'Neil in an effort to alert voters as to the importance of knowing the candidates and what they stand for. For only in doing so will this nation survive the assault that has been leveled upon it since our Founding Fathers gave us what is a remarkable document in our Constitution to serve as a signpost for this nation, a nation that grew and prospered under that amazing document. However, we should also remember the words of Benjamin Franklin as he left the hall after negotiating the Constitution in Philadelphia. Asked by a member of the gathered crowd what the authors had decided, Franklin replied "We have given you a republic, if you can keep it". What prompted that remark? The authors and signers of the Constitution knew the potential danger of a Republic is the people. Our Country's success or failure lies in the hands of voters, whose responsibility is to investigate and elect representatives who are patriots; men and women who are willing to jealously guard the constitution, and who will continually put country over personal gain.]
Categories: On the Blog

Heartland Daily Podcast: Verizon vs. FCC and the Future of Net Neutrality

January 18, 2014, 2:24 AM

The D.C. Circuit Court this week struck down the Federal Communication Commission’s 2010 “net neutrality” rule requiring Internet service providers to treat all traffic across their networks the same – discriminating against none and favoring none. The court also, however, ruled the FCC may impose its net neutrality rule if it reclassifies broadband as a “common carrier” as it does telephone service.

On this edition of the Heartland Daily Podcast, Jim Lakely, co-director of Heartland’s Center on the Digital Economy, and Ryan Radia of the Competitive Enterprise Institute discuss the ramifications of this decision. It’s the second time in three years the D.C. Circuit has declared illegal the FCC’s attempts to impose binding net neutrality regulations.

As Lakely said in Heartland’s group press release about the decision:

It is fortunate the Circuit Court did not endorse the FCC’s imposition of net neutrality rules under its ‘general authority.’ That is an improper FCC power grab not delegated to it by Congress via the Communications Act. However, the ruling all but urges the FCC to reclassify broadband under ‘Title II’ as a telecommunications common carrier. Such a designation does not fit the character and purpose of broadband services and would distort the digital marketplace in a way that would discourage innovation and arbitrarily pick winners and losers in the digital economy.

Government-dictated net neutrality is a heavy-handed solution to a non-existent market failure. Supporters of a vibrant and innovative digital economy dodged a bullet today, but one gets the feeling it won’t be for long.

Listen to Lakely and Radia talk about this monumental decision in the player above. And to keep tabs on the latest smart takes on the news from a free-market perspective, be sure to …

[Subscribe to the Heartland Daily Podcast for free at this link.]

Categories: On the Blog

Dismantling the Regulatory State is a Good Place to Start

January 18, 2014, 1:21 AM

Every presidential administration issues rules and regulations, but President Obama and his administration head the pack of presidential peers in the use of regulations to legislate directly, skipping the legislative process by stretching the rules and regulations issued beyond the letter of the law upon which they were meant to be founded.

According to the annual analysis by the Competitive Enterprise Institute, in 2013 the Obama administration issued 3,659 rules and regulations through its various agencies when only 65 Public Laws were passed by Congress and signed by President Obama. That averages out to 56 rules and regulations for every law passed by Congress. 

But consider the absurdity of a Los Angeles Times article which lamented that Congress was ineffective because it only passed a few laws in 2013, 65 to be exact. Were laws ever meant to be easy to pass? The 65 pubic laws passed in 2013 can be viewed here.

According to an article written by Sterling Burnett for the Daily Caller, we have an “imperial president” who rules through regulations. This concept dovetails with a stated commitment made more than once by President Obama in which he spoke of his  unwillingness to wait for Congress to act.

The 3,659 rules and regulations issued in 2013 offer irrefutable credence to President Obama’s determination to disallow the people’s representatives to have their say on climate climate change, illegal immigration, etc., as Obama dwells on his legacy while ignoring the Constitutional separation of powers.

It is because Congress abdicated its assigned role of legislating, preferring instead to delegate that task to executive agencies, that Obama is now the recipient of what Congress has allowed to happen since the beginning of the Progressive era in the late 19th and early 20th Century.  In the interim, Congress has not had the fortitude to hold Obama or any other president accountable for his power grabs, which have greatly increased in numbers over the years to the amazing figure of 3,659 rules and regulations issued last year by Obama and his administrative agencies.  The Courts have likewise been participating in the power grab.

One Executive Order issued in 2013 by President Obama, the Dream Act, has resulted in a new wave of illegal immigrants who subsequently have been allowed to jump the immigration queue to please the open borders lobby.   24,668 unaccompanied minors from Honduras, Guatemala, El Savador, and Mexico crossed the southern border in 2013.  In this nation illegally, they were placed in the care of a federal de facto baby-sitting service because no parents were around to care for them.  Parents have no qualms about sending their young people to the U.S. if it’s easier to residency illegally than legally.

Today, Monday, January 13, the boundaries of executive power will be tested when the Supreme Court considers whether President Obama violated the Constitution during his first term through his use of executive power. According to an article by Kevin Bogardus an Ben Goad on Sunday, January 12, oral argument will center on a trio of recess appointments to the National Labor Relations Board that were deemed unconstitutional by lower courts.

To opponents of Obama’s run away regulatory power, the fight against the labor board (NLRB) is seen as a broader effort to stymie the Obama administration’s rules and regulations.

[First posted at Illinois Review.]

Categories: On the Blog

Colorado Bill Would Roll Back Renewable Mandates As Prices Soar

January 17, 2014, 10:37 PM

A Colorado Senate committee is in the process of discussing and debating a bill to roll back renewable power mandates enacted just last year. Because Democrats hold a narrow majority in the Colorado Senate, it will be a surprise if the bill makes its way through the state legislature’s upper chamber.

Nevertheless, the bill highlights rapidly rising electricity prices in the Centennial State and illustrates how voters and legislators are growing increasingly weary of paying these higher prices for renewable power.

Late last decade, momentum favored those who support mandatory quotas for expensive renewable power. Currently, 30 states have renewable power mandates, with most of the mandates enacted between 2004 and 2008. Colorado was an early player in the renewable mandates game, with a 2004 voter referendum first implementing the state’s mandates, and the state legislature toughening the mandates in 2007, 2010 and 2013.

The mandates are taking a painful toll on Colorado’s economy and consumers’ pocketbooks. Since first imposing renewable power mandates in 2004, Colorado electricity prices have risen much faster than the national average. Prices have risen 20 percent faster than the national average since 2004, and have risen more than double the national average since the legislature began ratcheting up the mandates in 2007.

Had Colorado electricity prices risen at merely the national average since 2007, Colorado electricity consumers would have saved $4.2 billion in electricity costs. Averaged out over Colorado’s nearly 2 million households, the average Colorado household has already paid an extra $2,100 in electricity costs (more than $350 per household per year) beyond what each household would have paid if the state’s electricity prices rose merely at the same pace as the national average since 2007.

Colorado Republican legislators are rightfully asking voters, “What would you do with an extra $2,100 this year?” Very few are answering, “Why, I’d joyfully hand it over to the renewable power industry, of course!”

With electricity prices rising dramatically in states with renewable power mandates, momentum has shifted in Colorado and throughout the nation. Only two states have enacted renewable power mandates since 2008, and none have done so since 2009. Several states considered bills last year to roll back their renewable power mandates, with states like Kansas, North Carolina and Ohio coming close to approving such rollbacks.

Now it is Colorado’s turn. Just last spring, with Senate Democrats holding a 20-15 advantage and Senate and House leadership assigning a high priority to ratcheting up the state’s renewable power mandates, the legislature passed SB 252, forcing rural Coloradans to purchase still more of their power from renewable sources. Coloradans took their revenge in the November elections, recalling Senate President and SB 252 sponsor John Morse, along with Sen. Angela Giron, who made the renewable power mandates one of her signature issues.

Colorado affordable energy proponents are feeling emboldened, and supporters of renewable power quotas are suddenly playing defense. Coming less than a year after Democrats pounded tougher mandates down Republicans’ throats, this is quite a development.

Renewable mandate supporters claim consumers are protected by language saying the renewable power mandates cannot add more than 2 percent to the cost of consumers’ electricity bills; up from a 1-percent cap prior to 2013. However, the asserted cap’s many loopholes and questionable definitions make Swiss cheese look like impenetrable sheet rock by comparison. Here are a few of the reasons why:

Does the legislation provide an objective formula for determining what portion of electricity price hikes are due to the renewable power mandates? – No.

Does the legislation designate an objective panel of nonpartisan economists to determine what portion of electricity price hikes are due to the renewable power mandates? – No.

By what means are price hikes traced back, or not traced back, to the renewable price mandates? – Political appointees of Gov. John Hickenlooper, an ardent supporter of renewable power mandates, make a subjective determination.

How well was the 1-percent cap enforced? – Since 2007 Colorado electricity prices have risen 27 percent, while U.S. prices have risen just 10 percent.

How well is the recently expanded 2-percent cap being enforced? – Colorado electricity prices rose 5 percent during the first 10 months of 2013 (October is the latest month for which the U.S. Energy Information Administration has published price data), while U.S. prices rose just 2 percent during that same span.

These price increases are predictable, indeed inevitable, when government forces consumers to purchase ever-increasing amounts of expensive renewable power.

I suspect that after this November’s elections, legislative rollback of the onerous renewable power mandates will be just as predictable, and just as inevitable, as the mandates’ painful toll on Colorado electricity customers.

[First published at Forbes.]

Categories: On the Blog

Jimmy Kimmel Ridicules Obamacare

January 17, 2014, 10:01 PM

ABC’s Jimmy Kimmel slammed Obamacare on Tuesday night, ridiculing the Obama administrations expectation that young people would buy health insurance.

The whole segment, including Kimmel’s commentary, is worth watching in the player above. I particularly liked the Obamacare “commercials” which start at the 1:12 mark.

Categories: On the Blog

Bean Bag Justice?

January 17, 2014, 2:10 AM

Like the Chicago Tribune, we too were surprised to see Ty “Beanie Baby” Warner, who pleaded guilty last fall to evading taxes on part of his income, receive from U. S. District Court Judge Charles Kocoras a sentence of only two years probation and 500 hours of community service. Unlike the Tribune, we are merely surprised, but not outraged.

In brief, the facts are that Warner, who created the phenomenally successful “Beanie Baby” collectible toy craze in the 1990s, sought to avoid sharing with the federal government some of his resulting phenomenal income by stashing some of his money in overseas accounts with UBS, which once stood for “Union Bank of Switzerland.” (Today the company’s successor is a Swiss global financial services company that provides investment banking, asset management, and wealth management services and has a large U.S. presence, including its own modern office tower on Chicago’s Wacker Drive, across the street from The Heartland Institute’s office building.) In this, he was like most income-earning Americans, who would prefer to keep as much as possible of their hard-earned income for themselves and their families.

Tax evasion is of course illegal, but tax avoidance is not. Indeed, the Internal Revenue Code encourages many Americans to reduce the share of income they fork over to the feds by allowing deductions for mortgage interest and charitable contributions, credits for raising and adopting children, and — under Obamacare — even avoiding a tax penalty by buying health insurance if they don’t already have it.

After striking it rich with “Beanie Babies,” Ty Warner, unmarried and childless, did many of these things of his own accord, giving millions to charity and even paying medical expenses for other people as part of his contribution to the community, all in addition to paying over one billion dollars in personal income taxes over the past twenty years.

Never mind that at its current rate of speed, the federal government would blow through a billion dollars in four to six hours. That’s still a helluva contribution to the general welfare, not to mention all the joy that Warner’s “Beanie Babies” — despite their sometimes fawning simplicity and overbearing cuteness (they were not my cup of tea) — brought to millions of children and grandmothers worldwide during Warner’s twenty-year reign as the undisputed king of kitsch.

In contrast, the huge financial tax avoidance industry that the Internal Revenue Code’s length, breadth, and complexity have spawned imposes a huge deadweight loss on the economy. (Former Chairman of Council of Economic Advisers Martin Feldstein, for example, calculated in 1995 that eliminating just the 1993 rate increase for high income earners would have reduced this deadweight loss by $24 billion while actually increasing tax revenue.)

Unfortunately, the government, like the Tribune, doesn’t see things this way. So Warner, a 69-year old bachelor with a troubled childhood and apparent emotional issues, found himself on the wrong end of a criminal prosecution for tax evasion. After unsuccessfully trying to join a tax amnesty program in 2009, Warner entered a guilty plea in September 2013 and sought to give his mea culpas at that time. Judge Charles Kocoras told an obviously remorseful Warner to save it for the sentencing hearing, and Warner did so with spectacular success: instead of a possible five-year prison term, he was sentenced to two years’ probation plus 500 hours of community service. (In the meantime, Warner had agreed to pay a $53.6 million civil penalty and $16 million in back taxes.)

Among President Obama’s more revealing off-the-cuff comments of the past few years is his expressed view that “I do think, at a certain point, you’ve made enough money.” Agree or disagree with the sentence that Judge Charles Kocoras handed down to Ty Warner, it is perhaps one small sign that sooner or later, you may also have paid enough in taxes.

Just don’t forget to file and pay yours come April 15!

Categories: On the Blog

LBJ’s ‘Great Society’ Programs Are at the Core of America’s Poverty Crisis

January 17, 2014, 12:13 AM

January 8, 1964 marked a half century since President Lyndon B. Johnson presented his State of the Union Annual Message to Congress in which he outlined his “Great Society” program (a $20 trillion taxpayer-funded war on poverty) with its astounding number of proposals to enrich the life of man for the purpose of creating a world that is meant for all men to ultimately have.

Listed under “Opportunity for All” in Johnson’s annual message to Congress was the following statement:

… we must open opportunity to all our people. Most Americans enjoy a good life. But far too many are still trapped in poverty and idleness and fear. Let a just nation throw open to them the city of promise:

… to the poor and the unfortunate, through doubling the war against poverty this year.

A year later Daniel Patrick Moynihan, as Assistant Secretary of Labor during the first part of the Johnson administration, devoted all his time trying to formulate national policy for what would become the “War on Poverty” —  the unofficial name for Johnson’s Great Society program.

During Moynihan’s  address at the Urban Institute in 1966 — in his report titled, “The Negro Family:  The Case for National Action” — Moynihan reeled off the dire statistics about the plight of the African American families. Among the concerns Moynihan touted in 1966:

About a quarter of Negro families are headed by women. The divorce rate is about two-and-a-half times what it is [compared with whites], the number of fatherless children keeps growing. And all these things keep getting worse, not better, over recent years. 

By the 1990′s much reflection was being done over Johnson’s Great Society programs of the 1960s. What had happened? It is not surprising that different conclusions were reached at the time about how effective Johnson’s War on Poverty had been.

Michael Fumento expressed this concern in his June 19, 1992 article in Investor’s Business Daily titled “Is the Great Society to Blame? If Not, Why Have Problems Worsened Since the ’60s.” Fumento expressed then a concern that has become even more troubling in today’s atmosphere in the Obama administration.

Some may say, ‘Who cares?’ Let’s stop laying blame and start implementing solutions.” Yet, if government is to be part of the solution, some wonder if it isn’t necessary to first ask if it hasn’t been part of the problem.

On the blame side, George H. W. Bush administration spokesman Marlin Fitzwater blamed the Great Society programs for ignoring “the relationship between people’s pride in their community and having a job.”

President George H. W. Bush noted how what was intended to be a “compassionate safety net” not only consumed $3 trillion in 25 years, but also trapped many in an endless cycle of poverty that didn’t reward individual initiative. The other side predictably argued that the programs were never given a chance to work — though, in fact, they never worked in the first place.

Fumento’s 1992 article has statistics that are in keeping with Moynihan’s expressed reason for the poverty he observed in 1966 in relation to the single-parent family:

In 1980, there were 6.2 million families headed by single women, making up 19.4% of all families with children. By 1990, that number had risen to 84 million families, or 24.2% of the total. Blacks were hit especially hard. . . .

At the beginning of World War II, the illegitimate birth rate among black Americans was slightly less than 19%. Beginning in the late 1960s the trend rapidly accelerated, reaching 49% in 1975 and 65% in 1989.

Empirical studies back in the ’90s, as they do today, have borne out the theory that welfare checks are behind much of the disintegration of the family. Statistics from the ’90s:

  • The University of Washington showed that an increase of roughly $200 a month in welfare benefits per family correlated with a 150% increase in the illegitimate birth rate among teens.
  • David Elwood of Harvard University found that of the 3.8 million families currently on AFDC (Aid to Families with Dependent Children), well over half will remain dependent or more than 10 years, many others for 15 years or longer.

Now it is 2014, fifty years after President Johnson’s 1964, State of the Union address at which he announced an ambitious government undertaking to eradicate poverty, and is this nation any closer to winning the War on Poverty?

This concern remained important enough for President Obama to highlight it in his February 19, 2013, State of the Union Address.

We got single moms out here. They’re heroic what they’re doing. We’re so proud of them. But at the same time, I wish I’d had a father who was around and involved.

According to Robert Rector, a specialist on welfare and poverty at The Heritage Foundation, the war on poverty has been a failure when measured by the overall amount of money spent ($20.7 trillion) and how poverty rates haven’t changed significantly since Johnson gave his address back in 1964. Not withstanding, during the Obama administration the poverty level has reached a 50-year high. Rector went on the say that President Obama’s anti-poverty effort “are basically to give more people more free stuff.” That’s exactly the opposite of Johnson’s goal which was “to make people prosperous and self-sufficient.”

According to Rector, too many government anti-poverty programs still discourage marriage. Statistics show how more than four in 10 children are born to unmarried parents. When the war on poverty started, about 6 percent of children were born outside of marriage.

As benefits swelled, welfare came to serve as a substitute for a breadwinner husband at home through the marginalization of the men who had heretofore headed those families. It is inconceivable today that a record 47 million Americans receive food stamps. That is about 13 million more than when Obama took office.

In commemoration of the 50 years and the $20 trillion spent since President Johnson used his State of the Union address in 1964, to declare his unconditional War on Poverty in America, the Wall Street Journal on January 7 published an opinion piece by Robert Rector: “How the War on Poverty Was Lost.”

What an unmitigated disaster. We never learn, no matter how bad the outcome. What do we do?  We double down and believe more welfare will be better.

About all we have accomplished in the last 50 years of this lost cause is to spend $20 trillion (that is with a t, and a very large sum of money); destroy the nuclear family idea (most tragically, blacks suffered most); moved out-of-wedlock birth from around 6% to over 41% (again mostly imposed on the African American community); destroyed any semblance of work ethic among those in poverty; and created a welfare society no economy can afford or sustain.

Imagine if just half of the $20 trillion was devoted to investment in infrastructure, or left in the hands of the private sector. How robust our economy would be? Imagine how strong this country would be if we had a public education system that functioned as it should — to actually educate our children — how strong this country and economy would be.

Based on the weight of many Americans — and in particular, those classified at the poverty levels — we have at least ended hunger.

Categories: On the Blog

Why Economic Growth Is Exponentially More Important Than Income Inequality

January 16, 2014, 6:36 AM

In 1900, we had no airplanes, no computers, no cellphones, no internet. We had only rudimentary versions of cars, trucks, telephones, even cameras.

But in the last century, 1900 to 2000, as Stephen Moore and Julian L. Simon report in their underappreciated work, It’s Getting Better All the Time: 100 Greatest Trends of the Last 100 Years, real per capita GDP in the U.S. grew by nearly 7 times, meaning the American standard of living grew by that much as well. The authors explain:

It is hard for us to imagine, for example, that in 1900 less than one in five homes had running water, flush toilets, a vacuum cleaner, or gas or electric heat. As of 1950 fewer than 20 percent of homes had air conditioning, a dishwasher, or a microwave oven. Today between 80 and 100 percent of American homes have all of these modern conveniences.

Indeed, in 1900 only 2% of homes enjoyed electricity.

Michael W. Cox and Richard Alm add in their insightful Myths of Rich and Poor that as a result of all that economic growth today:

Homes aren’t just larger. They’re also much more likely to be equipped with central air conditioning, decks and patios, swimming pools, hot tubs, ceiling fans, and built in kitchen appliances. Fewer than half of the homes built in 1970 had two or more bathrooms; by 1997, 9 out of 10 did.

Such economic growth has produced dramatic improvements in personal health as well. Throughout most of human history, a typical lifespan was 25 to 30 years, as Moore and Simon report. But “from the mid-18th century to today, life spans in the advanced countries jumped from less than 30 years to about 75 years.” Average life expectancy in the U.S. has grown by more than 50% since 1900. Infant mortality declined from 1 in 10 back then to 1 in 150 today. Children under 15 are at least 10 times less likely to die, as one in four did during the 19th century, with their death rate reduced by 95%. The maternal death rate from pregnancy and childbirth was also 100 times greater back then than today.

Moore and Simon further recount, “Just three infectious diseases – tuberculosis, pneumonia, and diarrhea – accounted for almost half of all deaths in 1900.” Today, we have virtually eliminated or drastically reduced these and other scourges of infectious disease that have killed or crippled billions throughout human history, such as typhoid fever, cholera, typhus, plague, smallpox, diphtheria, polio, influenza, bronchitis, whooping cough, malaria, and others. Besides the advances in the development and application of modern health sciences, this has resulted from the drastic reduction in filthy and unsanitary living conditions that economic growth has made possible as well. More recently, great progress is being made against heart disease and cancer.

Also greatly contributing to the well-being of working people, the middle class, and the poor in America has been the dramatically declining cost of food resulting from economic growth and soaring productivity in agriculture. As Moore and Simon report, “Americans devoted almost 50 percent of their incomes to putting food on the table in the early 1900s compared with 10 percent in the late 1900s.”

While most of human history has involved a struggle against starvation, today in America the battle is against obesity, even more so among the poor. Moore and Simon quote Robert Rector of the Heritage Foundation, “The average consumption of protein, minerals, and vitamins is virtually the same for poor and middle income children, and in most cases is well above recommended norms for all children. Most poor children today are in fact overnourished.” That cited data comes from the U.S. Census Bureau. As a result, poor children in America today “grow up to be about 1 inch taller and 10 pounds heavier than the GIs who stormed the beaches of Normandy in World War II.”

That has resulted from a U.S. agricultural sector that required 75% of all American workers in 1800, 40% in 1900, and just 2.5% today, to “grow more than enough food for the entire nation and then enough to make the United States the world’s breadbasket.” Indeed, today, “The United States feeds three times as many people with one-third as many total farmers on one-third less farmland than in 1900,” in the process producing “almost 25 percent of the world’s food.”

Moreover, it is economic growth that has provided the resources enabling us to dramatically reduce pollution and improve the environment, without trashing our standard of living. Moore and Simon write that at the beginning of the last century,

“Industrial cities typically were enveloped in clouds of black soot and smoke. At this stage of the industrial revolution, factories belched poisons into the air—and this was proudly regarded as a sign of prosperity and progress. Streets were smelly and garbage-filled before the era of modern sewage systems and plumbing.”

Not any of these truly dramatic advances for the poor, working people and the middle class could have been achieved by redistribution from “the rich.” Only economic growth could achieve these results.

Nor would it have been worth sacrificing any of these world shattering gains for greater economic “equality.” And Barack Obama’s leftist protestations to the contrary notwithstanding, economists have long recognized the conflict between economic equality and maximizing economic growth. Put most simply, penalizing investors, successful entrepreneurs, and job creators with higher taxes, to reward the less productive with government handouts, to make everyone more equal, is a sure fire way to get less productivity, fewer jobs, lower wages, and reduced economic growth.

The above history, and the future prospects below, are why to most benefit the poor, working people, and the middle class, our nation’s overriding goal must be to maximize economic growth. Consider, if total real compensation, wages and benefits, grow at just 1% a year, after 20 years the real incomes of working people would be only 22% greater. After 40 years, a generation, real incomes would be 50% more. But with sustained real compensation growth of 2%, after just 20 years the real incomes and living standards of working people would be nearly 50% greater, and after 40 years they would be 120% greater, more than doubled. At sustained 3% growth in wages and benefits, after 20 years the living standards of working people will have almost doubled, and after 40 years they will have more than tripled.

The U.S. economy sustained a real rate of economic growth of 3.3% from 1945 to 1973, and achieved the same 3.3% sustained real growth from 1982 to 2007. (Note that this 3.3% growth rate for the entire economy includes population growth. Real wages and benefits discussed above is a per worker concept). It was only during the stagflation decade of 1973 to 1982, reflecting the same Keynesian economics that President Obama is pursuing today, that real growth fell to only half long term trends. If we could revive and sustain that same 3.3% real growth for 20 years, our total economic production (GDP) would double in that time. After 30 years, our economic output would grow by 2 and two-thirds. After 40 years, our prosperity bounty would grow by 3 and two-thirds.

If we are truly following growth maximizing policies, we could conceivably do even better than we have in the past. At sustained real growth of 4% per year, our economic production would more than double after 20 years. After 30 years, GDP would more than triple. After 40 years, a generation, total U.S. economic output would nearly quadruple. America would by then have leapfrogged another generation ahead of the rest of the world.

Achieving and sustaining such economic growth should be the central focus of national economic policy, for it would solve every problem that plagues and threatens us today. Such booming economic growth would produce surging revenues that would make balancing the budget so much more feasible. Surging GDP would reduce the national debt as a percent of GDP relatively quickly, particularly with balanced budgets not adding any further to the debt. Sustained, rapid economic growth is also the ultimate solution to poverty, as after a couple of decades or so of such growth, the poor would climb to the same living standards as the middle class of today.

With sustained, robust, economic growth, maintaining the most powerful military in the world, and thereby ensuring our nation’s security and national defense, will require a smaller and smaller percentage of GDP over time. That security itself will promote capital investment and economic growth in America. The booming economy will produce new technological marvels that will make our defenses all the more advanced. With the economy rapidly advancing, there will be more than enough funds for education. There will also be more than enough to clean up and maintain a healthy environment.

With such booming growth, imagine where our exploding, rapidly advancing science will take us from 2000 to 2100. In a March, 2012 interview in the Wall Street Journal, pathbreaking, pioneering, futurist physicist Michio Kaku explained, “Every 18 months, computer power doubles, so in eight years, a microchip will cost only a penny. Instead of one chip inside a desk top, we’ll have millions of chips in all of our possessions: furniture, cars, appliances, clothes. Chips will be so ubiquitious that we won’t say the word ‘computer.’” Kaku further projected, “In this ‘augmented reality,’…the Internet will be in your contact lens. You will blink, and you will go online. That will change everything.”

Kaku continued:

To comprehend the world we’re entering, consider another word that will disappear soon: ‘tumor.’ We will have DNA chips inside our toilet, which will sample some of our blood and urine and tell us if we have cancer maybe 10 years before a tumor forms. . . . When you need to see a doctor, you’ll talk to a wall in your home, and an animated artificially intelligent doctor will appear. You’ll scan your body with a hand-held MRI machine, the ‘Robodoc’ will analyze the results, and you’ll receive a diagnosis that is 99% accurate.

On the distant horizon beckons the personalized medicine made possible by the mapping of the human genome, so contrary to the central planning of Obamacare. Modern genetics is rapidly advancing to a redesign of plants and agriculture, the leftist European cant over “frankenfood” to the contrary notwithstanding. While Star Trek style teleporting eludes our science, high definition and 3D video conferencing will provide a similar feel. While Barack Obama thinks modern technology causes unemployment, 3D printing offers new vistas in manufacturing. Robotics has already produced driverless, automated cars, “lights out” factories, and robotic surgery. And that is mostly without advances in artificial intelligence that can expand the effectiveness of the human race to vast new realms.

George Gilder’s transformative book, Power and Knowledge, unrecognized in the current generation’s temporary Dark Age of the West, explains how breakthroughs in information theory are opening new vistas for previously sidetracked frontiers of physics, chemistry, and biology. That is opening the way for currently frustrated visionaries to achieve their dreams: “Peter Thiel wants supersonic flight and real genetic medicine, robotic vehicles, and new libertarian city-states at sea. Ray Kurzweil pushes for a prosthetic life, an upgraded bionic body with veins vamped with nanobots, chasing down viruses and cancers, repairing outworn tissue and extended by virtual worlds of glass and light.”

Kaku concludes, “If you could meet your grandkids as elderly citizens in the year 2100, you would view them as being, basically, Greek gods.”

This is the future that today’s so-called “progressives,” fixated on their literally dumb, static analysis concepts of economic “equality” and “redistribution,” would be denying tomorrow’s otherwise poor, working people, and middle class. Today’s so-called “progressivism” is just the late 19th century reactionary response to the rise of the industrial revolution. It is the surviving nostalgic project to stop history at Karl Marx, and return to the imagined, more bucolic world of the 18th century. This is all best reflected in the environmentalist extremist fraud of global warming/climate change, with Barack Obama’s EPA serving as the spear carriers even now still openly trying to reverse the industrial revolution (even if that is not what they themselves imagine they are doing).

But the future will overwhelm the present, and reject the past. Just as the technological breakthrough of fracking, and the resulting oil and gas boom, is overwhelming today’s EPA. The American people, pursuing the same vision of freedom and prosperity that inspired the first, original, American Revolution, will not be denied the bounty of the future. And ultimately leading that fight for the infinitely prosperous future will ironically be the very same young immigrants that today’s “progressives” think will put them over the top in their reactionary war to restore pre-capitalism.

[First published at Forbes.]

Categories: On the Blog

Chicago Bans Indoor Use of E-Cigarettes, Heartland Institute Responds

January 15, 2014, 10:56 PM

The Chicago City Council today banned the use of electronic cigarettes indoors – treating e-cigarettes, which emit harmless water vapor, exactly like tobacco cigarettes, which emit smoke.

The following statements from tobacco policy experts at The Heartland Institute – a Chicago-based free-market think tank – may be used for attribution. For more comments, refer to the contact information below. To book a Heartland guest on your program, please contact Director of Communications Jim Lakely at

“By choosing to lump e-cigarettes into its smoking ban ordinance, Chicago has taken a lazy and shortsighted approach toward regulating what is a very different product than cigarettes. Although most e-cigarettes have nicotine derived from tobacco, they are very different from other tobacco products, and they should not be regulated the same way.

“E-cigarettes have far fewer consequences for personal and public health, and several studies have found e-cigarettes to be an effective and viable option for smokers seeking a nicotine replacement therapy. Adding e-cigarettes to the smoking ban only disrupts an increasingly popular and successful method of helping Chicagoans reduce smoking or quit altogether.”

Matthew Glans
Senior Policy Analyst
The Heartland Institute


“The goal of bans on smoking in public places has always been to reduce exposure to second-hand smoke and to allow people fewer places to smoke, with the hope that it would cause them to quit smoking. Chicago’s proposed ban on e-cigarettes will do no good on either front.

“There’s no smoke from e-cigarettes, so the ban won’t reduce second-hand exposure. If anything it’ll increase it by causing more people to keep smoking cigarettes, rather than quit by switching to e-cigarettes. And by treating the dramatically less-harmful e-cigarettes like cigarettes, fewer people will be likely to make the switch.”

Jeff Stier
Senior Fellow, National Center for Public Policy Research
Policy Advisor, The Heartland Institute


The Heartland Institute is a 30-year-old national nonprofit organization headquartered in Chicago, Illinois. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site or call 312/377-4000.

Categories: On the Blog

A Bridge Too Far: Chris Christie and the Abuse of Power

January 15, 2014, 8:41 PM

Without regard to whether it’s as bad as Benghazi or more on the order of Obama closing the National Mall in a fit of pique over not reaching a budget deal with Republicans, New Jersey Governor Chris Christie’s recent embarrassment over his staff fouling up traffic on the George Washington Bridge for four days in September in apparent retaliation against a political opponent is well-deserved.

Whether or not Christie authorized the mischief in question, the action of his aides provides further proof, if any were needed, of the truth of Lord Acton’s famous admonition: Power tends to corrupt, and absolute power corrupts absolutely. In fact, as is often the case, the smaller the stakes, the more petty the politics. Taking their cue from their brusque and combative boss, Christie’s aides obviously let their limited power overwhelm their good judgment, assuming they ever had any.

The arrogant actions of Christie’s aides cost the governor’s constituents unneeded frustration and energy and caused otherwise productive human beings to waste hours of their lives sitting in already stressful traffic conditions. This demonstration of what the late U. S. Senator J. William Fulbright once called “the arrogance of power” tells all we need to know about why more government is bad for us and less government is good: bureaucrats tend to put their own interests ahead of those they are supposed to serve.

To paraphrase Mark Steyn speaking to Hugh Hewitt, if government is good for anything, then it’s supposed to be for stuff like building bridges across rivers to facilitate traffic between states. But shutting down traffic to annoy your political opponents is the stuff of petty tyrants, not a self-governing people.

It was amusing, perhaps, in the late 1970’s to hear Arnold Schwarzenegger as “Conan the Barbarian” recite what is best in life:  “To crush your enemies, [to] see them driven before you, and to hear the lamentation of their women.”  But there’s a reason he’s called a barbarian.

In the modern world, the only legitimate roles for government are to lead, to follow, or to get out of the way of the people.  For four days in September, on the George Washington Bridge, the government of New Jersey showed no apparent interest in any of these things.

Categories: On the Blog

Heartland Institute Experts React to Net Neutrality Ruling by DC Circuit Court

January 14, 2014, 5:21 PM

The D.C. Circuit Court today struck down the Federal Communication Commission’s 2010 “net neutrality” rule requiring Internet service providers to treat all traffic across their networks the same – discriminating against none and favoring none. The court also, however, ruled the FCC may impose its net neutrality rule if it reclassifies broadband as a “common carrier” as it does telephone service. (Read the ruling here.)

The following statements from technology policy experts at The Heartland Institute – a free-market think tank – may be used for attribution. For more comments, refer to the contact information below. To book a Heartland guest on your program, please contact Director of Communications Jim Lakely at


“It is fortunate the Circuit Court did not endorse the FCC’s imposition of net neutrality rules under its ‘general authority.’ That is an improper FCC power grab not delegated to it by Congress via the Communications Act. However, the ruling all but urges the FCC to reclassify broadband under ‘Title II’ as a telecommunications common carrier. Such a designation does not fit the character and purpose of broadband services and would distort the digital marketplace in a way that would discourage innovation and arbitrarily pick winners and losers in the digital economy.

“Government-dictated net neutrality is a heavy-handed solution to a non-existent market failure. Supporters of a vibrant and innovative digital economy dodged a bullet today, but one gets the feeling it won’t be for long.”

Jim Lakely
Co-Director, Center on the Digital Economy
The Heartland Institute


“While this decision may appear to throw a monkey wrench in the net neutrality regime, in reality it leaves the door open for even more harmful changes. Supporters of a free and open Internet now need to be wary of any proposal that would reclassify the Internet as a public utility and therefore subject to Title II regulation, the burdensome regulatory system that has hindered the growth of the telephone market for decades.”

Matthew Glans
Senior Policy Analyst
The Heartland Institute


“This court delivered an unusual win-win outcome in Verizon v. FCC that enabled each party to win on their respective and different must-win issues: the FCC had its core ‘general authority to regulate’ broadband affirmed, and Verizon avoided ‘common carrier regulation of broadband.’

“Specifically, the Appeals Court handed the FCC a big win in ruling that the FCC does have the ‘general authority to regulate’ broadband and ‘promulgate rules governing broadband providers’ treatment of Internet traffic,’ in order to ‘preserve and facilitate’ the ‘virtuous circle’ of innovation that has driven the explosive growth of the Internet. Specifically, the court also handed Verizon and the broadband industry a big win on its top concern in ruling that the FCC does not have the authority to ‘impose common-carrier-like regulation on broadband providers.’

“If the parties do not appeal – and the FCC also works on new broadband information service traffic-rules-of-the-road that comport with this decision – this effectively could settle into a de facto net neutrality peace given that the FCC’s ‘general authority to regulate’ broadband would be unchallenged and the broadband industry’s biggest fear, common carrier regulation of broadband, would be off the table.

“Finally, this decision also underscores the need to modernize the obsolescent 1934 Communications Aaw for the twenty-first century.”

Scott Cleland
Chairman, NetCompetition
Policy Advisor, Telecommunications
The Heartland Institute


“It’s been a long five years for the Constitution, the rule of law, and the American people. President Obama has time and again imposed his radical agenda via regulatory fiat. The People’s Congress has been with increasing frequency cut entirely out of the governing process.

“Chaos has reigned. The president’s rule-by-whim has created endless uncertainty – which has bred economic stagnation. In the midst of this mess comes a moment of Zen: The D.C. Circuit Court has struck down the administration’s unilateral net neutrality imposition, which was an enormous, uncertainty-inducing, investment-dampening power grab ‘solution’ running around vainly in search of a non-existent problem.

“Let’s hope the administration takes this for the lesson it is – that it cannot create jurisdiction and law out of whole cloth, and that it needs to leave the legislating to the Legislative Branch.”

Seton Motley
President, Less Government
Policy Advisor, Telecom
The Heartland Institute


“It should come as no surprise and much celebration that the D.C. Circuit Court smacked down the Federal Communications Commission’s network neutrality regulations this morning. The agency lacks any authority to draft such overweening rules in the first place – as noted when the FCC’s previous attempt also was shot down by the same court in 2010.

“Continuing to grate, however, is the process former FCC Chairman Julius Genachowski and his fellow Democrats Mignon Clyburn and Michael Copps employed to pass their net neutrality rules – in late December when Washington was a virtual media desert. Several heroic legislative attempts to overturn the rules subsequently failed even as the legal battle ground on. The enormous amount of time and money wasted on trashing this completely unnecessary boondoggle is yet another example of the out-of-control nature of government regulators all too eager to flaunt the rule of law.”

Bruce Edward Walker
Policy Advisor, Telecom
The Heartland Institute

Categories: On the Blog

Why Are the Media’s ‘Consumer Interest Groups’ So Leftist and Anti-Consumer?

January 14, 2014, 3:52 PM

The Media’s double standard when describing political advocacy organizations is as obvious as it is unsurprising.

The Media rarely if ever identify Leftist entities as Leftist – instead assigning them non-ideological descriptives.  Often, it is the ridiculous “consumer interest group” – as if the anti-free market side of the equation is pro-consumer, and the defenders of freedom are against the purchasing public.

Never mind that no one is more pro-consumer than a private company – after all, they are the ones trying to please as many consumers as possible.  It would then stand to reason that the organizations defending private companies from government overreach are also pro-consumer.

Because these “consumer interest groups” are in fact “government interest groups” - every “solution” they push results in larger, more interfering government.  Which is about as anti-consumer as you can get.

How’s ObamaCare treating consumers?  The Veterans Administration?  The Department of Motor Vehicles?  Would you rather head there – or to or your neighborhood deli?

Meanwhile, the Media almost always identify Conservative groups as conservative – that is, when they mention them at all.  Often, marketplace political stories only quote Leftist groups and company representatives.

Which is itself biased.  It depicts the debate as a struggle between the plucky little “consumer interest” groups (who actually often have very large [George Soros] money behind them) – and the evil Industry Titans.

There are perhaps dozens of conservative/free market groups out there – yet the Media often can’t seem to find room for any of them in their stories.

The latest bit of wireless phone news is a fabulous case study.

 AT&T Dials Up Toll-Free ‘Sponsored Data’

The company on Monday introduced “Sponsored Data,” or data that is paid is for by a business that wouldn’t count against a subscriber’s capped plan. Think a toll free 1-800 number or free shipping for the delivery of data.

Here in Reality, this should be a non-news story – other than the good news for consumers.  They will be getting more data for the same money – which will in a great many instances allow them to actually purchase less data, saving them coin.

This model exists…well, everywhere.  As stated above, companies via 800 numbers pick up the tab for your call.  Many then after you call to place an order pick up the tab to ship it to you.  The examples of this free market paradigm are nearly endless.

AT&T and Verizon Wireless in particular have been aggressive in getting their customers to switch to tiered plans that require people to pay more to get more data.

Again, here in Reality when we use more – we pay more.  You pay more for ten steaks than you do for two.  It costs more to gas up an Escalade than it does an Escort.

So if the companies providing the biggest data-chewing content were to pay for it – it would in fact be a tremendous consumer boon.  Imagine car makers paying for your gasoline – oh wait, some do.  Isn’t Reality great?

But this is the Media and the Left – they don’t reside in Reality.

Consumer advocate group Free Press has already criticized the plan.

There are those magic Media words – “consumer advocate group.”  Never mind that Free Press was co-founded by a self-avowed Marxist - they are “consumer advocates.”  This story quotes Free Press and AT&T only – not a conservative group to be found.

Then there’s this:

AT&T Sponsored Data Plan Threatens Open Internet, Consumer Groups Argue

In which Free Press and their fellow Media Marxist joint Public Knowledge are quoted.  As is AT&T.  And that’s it.

FCC Ready To Step In On AT&T’s Sponsored Data Plan

Like a toddler with a pet dog, AT&T (NYSE:T) has a history of poking the Federal Communications Commission (FCC) until it turns around and barks. And thats just what its done now.

That’s an objective opening paragraph.  Keep in mind that the last time AT&T “poked” the FCC, it was when they wanted to buy T-Mobile.  The Media Marxist chorus screeched their opposition, and the FCC blocked the deal - issuing an error-riddled report in defense of its decision.

But this “news” story ignores all of this.  Instead it portrays AT&T as a serial government instigator.  And pretends the government’s bark is worse than its bite – when it’s chomping huge chunks out of the private sector.

A few months ago, ESPN was also discussing possibly paying for delivery of its digital content.  

Why We’re Praying That ESPN Does Not Begin Subsidizing Wireless Plans

Handout recipients having their cell phones and plans (ObamaPhones) entirely paid for by a fraud-riddled government?  With money the government gets by taxing consumers’ phones?  Outstanding.

Consumers having their cell phone plans “subsidized” – incentivized – by private companies?  Awful.

This “news” story appeared (with apparently unintentional irony) at

The Media aren’t reporting on these choice-and-wallet-expanding possibilities – they are choosing the anti-free market side against them.  And providing cover for the government interest “consumer interest” groups lining up likewise.

The Media and the Left together pretend to look out for the Little Guy – all the while making it ever more excruciating for him. 

Seton Motley is the founder and president of Less Government.  Please feel free to follow him on Twitter (@SetonMotley) and Facebook. It’s his kind of stalking.

Categories: On the Blog

Christie’s Crisis

January 14, 2014, 3:14 PM

I watched the 107 minute press conference by New Jersey Governor Chris Christie on Thursday, but I must admit that I almost fell asleep towards the end. What struck me at the time was that I had not seen anything comparable from President Obama regarding the many scandals such as Fast and Furious, the IRS targeting of Tea Party and comparable groups, Benghazi, and the Obamacare debacle.

Gov. Christie didn’t just offer a prepared statement, take a few questions, and leave. He stayed on. He took full responsibility for the closing of lanes to the George Washington Bridge by over-zealous staff, announced the firing of two top aides, and promised a further investigation of what occurred and why. Then he answered a barrage of questions.

The focus on the event is the result of countless predictions that he would face Hillary Clinton in the 2016 presidential election.  The Governor has become a celebrity politician as the result of his personality and dramatic reelection in a state that is heavily Democratic. He gained a lot of attention for facing down the powerful teacher’s union and addressing the state’s fiscal problems.

He also gained attention for his “style” of governance. A former U.S. District Attorney for New Jersey, he had put a lot of politicians in jail and, as Governor, often challenged those who questioned those who challenged him and showed his toughness on the issues. “I am not a bully,” he said in the press conference, but his assertive nature was, for many New Jerseyans, part of their support.

Did his staff and appointees absorb some of that “attitude”? Brigid Harrison, a professor of political science and law at Montclair State University (NJ), said, “It is not too much of a logical leap to connect the rhetoric that the governor has used with the tone of public servants in his administration, and I don’t think it’s a stretch to say that the disdain that is evident in these documents comes from the top down.”

Those thousands of documents, however, reveal no connection to the Governor.

Born in New Jersey, grown to maturity, and a resident here, my interest in the Governor stems in part from watching him over the many years he has been a public servant. This is the first time he has faced such a crisis and he took full responsibility. That is quite a contrast with Obama who has never taken responsibility for anything and often stated he was unaware of them until he read about it in the newspaper, something that occurred to Christie when a New Jersey daily revealed the content of emails regarding the lane closures subpoenaed by the state legislature.

I voted for Christie twice, am a registered Republican, and am politically conservative. I never voted for Obama. That doesn’t mean I have been happy with his politics that includes an antipathy toward gun ownership, an inclination to believe the environmental nonsense about global warming or some energy-related issues.

What is occurring, however, is a huge effort by the liberal mainstream press to discredit and eliminate him from being a potential Republican presidential candidate to oppose Hillary Clinton. It is the same press that has done its best to ignore the many Obama scandals and those that compose the history of Hillary, the most recent of which was her failure to respond to the Benghazi scandal when she was Obama’s Secretary of State.  She signed onto the huge lie that the attack was the result of a video nobody ever saw.

The same press thought his close relationship with Obama following the devastation of superstorm Sandy on the New Jersey shore was wonderful. He was trying to get the federal government to respond swiftly to the needs of citizens who had lost their homes or had their businesses ruined. That’s what a Governor is supposed to do. Christie also campaigned for Mitt Romney when he was running for President.

Christie’s politics make a lot of conservatives wary. He appointed a Muslim to the judiciary in New Jersey and he did a John Kerry on same-sex marriage, having been against it until he was for it. During his second campaign his campaign coffers were enriched by more donations from Democrats than Republicans! He failed to assist Ken Cuccinelli when he ran for Governor of Virginia. Et cetera.

Until the lane closing scandal, the mainstream press was touting him heavily. Now they see an opportunity to remove him from those who might challenge Hillary in 2016, assuming she will run. Hillary has so many scandals that political pundits might pause in their predictions. What she represents is four more years of the Obama agenda.

At this writing, there is no way of knowing if Gov. Christie will come out of the bridge lanes closing relatively unscathed or whether it will end his position as a Republican front-runner. The fact is that the GOP has a number of politicians who can replace him in 2016 if that occurs. The Democrats never mention anyone other than Hillary, nor is the impact of Obamacare on the November midterms and the outcome in 2016 ever mentioned. Right now the President is desperately trying to focus attention on the utterly bogus “income inequality” nonsense.

For now, Gov. Christie, a gifted politician, has three more years of overseeing 65,000 state employees and his legislative agenda in New Jersey. For now, the mainstream press will have a field day covering him.


Categories: On the Blog

It’s the Consumer, Stupid! – Part II

January 14, 2014, 5:20 AM

In thinking about the brouhaha over AT&T’s proposed “sponsored data” plan for its wireless service, I was reminded of a blog I wrote shortly after the oral argument in Verizon’s appeal of the FCC’s net neutrality regulations. With a nod to James Carville, it was titled, “It’s the Consumer, Stupid!”

I explained there that, amidst all the back-and-forth about net neutrality, it is easy to be seduced into focusing on the wrong questions – for example, whether “edge providers” or broadband providers are more adversely impacted by a particular business practice. The most important questions should involve the impact of the business practice on consumers, not the providers.

Well, welcome to “It’s the Consumer, Stupid – Part II” – courtesy of some of the reactions to AT&T’s sponsored data proposal. As you know by now, under AT&T’s proposal, data charges on AT&T wireless service resulting from eligible uses will be billed directly to the sponsoring company, rather than to the AT&T subscriber. Thus, as AT&T claims, the sponsored data plan operates in a fashion similar to the long-familiar 1-800 numbers that allow telephone customers to call toll-free, with the sponsor of the 800 number paying for the call.

First, let me make clear that I understand, and almost no one seriously contends otherwise, that the FCC’s net neutrality regulations, by their terms, do not apply to AT&T’s plan because the prohibitions don’t apply to wireless services. Nevertheless, this fact doesn’t stop some, who almost always reflexively oppose any business practice that can be made to “sound” in net neutrality from suggesting that, in any event, the practice ought not be allowed.

Second, I understand that sometimes it doesn’t matter one whit whether the FCC ‘s existing regulations actually do or do not prohibit a proposed business practice, or whether the FCC actually does or does not possess authority to prohibit the practice. By this I mean that often the objectors’ goal is simply to create enough of a stir – a brouhaha, as we say – so that the company proposing the new service will withdraw the proposal to “reconsider,” “reevaluate,” “recalibrate,” or whatever. It may take only a raised eyebrow or two from FCC officials or members of Congress to lead to such a strategic back-off.

I have seen such back-offs under fire many times in the past, and I’m sure I’ll see more. I often wince when they occur, but I understand the pressures that may be brought to bear.

In this instance, I hope AT&T holds fast for one main reason: Consumers, on the whole, are likely to benefit if AT&T’s plan goes forward. Whether or not the plan benefits AT&T is not my concern, although I assume AT&T anticipates its business will benefit or it wouldn’t propose the new offering. Too often “consumer advocates” adopt the posture that anything that benefits the service provider’s business must be detrimental to the provider’s consumers. In other words, they view the provider-customer relationship through a “zero-sum game” lens. This, of course, is completely wrong.

Let me now address the two principal objections raised in one form or another to AT&T’s proposal.

AT&T’s plan puts it in the business of picking winners and losers on the Internet.

AT&T says its plan is voluntary and non-exclusive, so it is difficult to understand how AT&T is picking any winners and losers. What some of the objectors seem to mean, instead, is that the very existence of the plan means, ipso facto, there will be winners and losers in the sense that some companies may not be able to afford to establish a sponsored data plan. Perhaps they are even the proverbial start-up still in the garage.

Depending on the business model employed by the content or apps provider, the sponsored data plan will be more or less attractive. Some companies certainly may benefit from such a business model more than others. This is the way markets operate. Most importantly, though, consumers benefit from the marketplace competition as companies innovate and invest in new content and applications while seeking a competitive edge.

Even assuming for the sake of argument that AT&T’s plan were exclusive rather than non-exclusive, it still would be wrong to assume AT&T would be in the position of picking winners and losers. This is because the wireless marketplace is competitive, and, therefore, it is in the interest of AT&T and its competitors to carry all the content and applications that consumers find attractive. In other words, AT&T and its competitors all want more usage of their network facilities. If a new start-up content or application provider has a good business plan that includes sponsored data – a proposal for a service likely to attract consumers – it will be able to attract capital to fund participation in AT&T’s plan.

AT&T’s plan could ultimately harm consumers.

This claim has been made by several of the objectors, but, for illustrative purposes, I’ll take the statement issued by Rep. Anna Eshoo, the ranking member of the House Subcommittee on Communications and Technology, whom I respect. According to a report in the Hillicon Valley blog, Rep. Eshoo said:

 On its face, the ability for consumers to access ‘toll-free’ content seems like long-awaited relief from frustrating data caps. But embedded in programs of this type are serious implications for fairness and competition in the mobile marketplace. …And we must ask just how beneficial a program like this is to consumers who could ultimately foot the bill for the added cost of doing business.

I wouldn’t characterize data usage plans (most providers no longer have actual caps on usage, but rather tiered usage pricing plans) as frustrating as opposed to economically sound. But, in any event, a plan that allows consumers to enjoy certain content and applications free from usage caps appears consumer-friendly, and not just “on its face.” Just ask real-world consumers whether or not they prefer having this usage-free option available for some of their favorite heavy-trafficked sites, say, Netflix or ESPN. We know the answer.

But Rep. Eshoo’s suggestion is that, whatever the data-free plan’s acknowledged short-term benefit to consumers, they “could ultimately foot the bill for the added cost of doing business.” Presumably she means to suggest that the content and apps providers, ultimately, might pass on to consumers the fees they pay AT&T to participate in the sponsored data program. Depending on the business model devised by the content and apps providers, they may or may not charge consumers to access their products and services.

But here’s the most fundamental point: There simply is no free lunch. Assuming that the government is not going to take over the private wireless networks, and pay the costs of maintaining and operating them – and I don’t take Rep. Eshoo to be proposing this – it is just an economic fact that, ultimately, private networks, such as AT&T’s, must be paid for one way or another by those who use them, whether by AT&T’s subscribers, or by the content and apps providers who rely on AT&T’s network for reaching their own users, or some combination of these segments.

Under AT&T’s proposal, participating content and apps providers will share some of the costs of operating and expanding AT&T’s wireless network. There is no reason for the government to dictate that the costs for network operation and facilities upgrades shouldn’t be paid for, at least in part, by the content and applications providers that are reliant on the network to reach their customers. It is at least possible, if not likely, that this cost-sharing mechanism will turn out to be, at least for some business models, a more economically efficient way to recover the costs of operating and expanding the service provider’s networks, while expanding customer usage. And, in this context, economically efficient means less costly, on an overall basis, ultimately to the benefit of all consumers that use the network.

Put slightly differently, given the competition in the wireless broadband market – indeed, in the broadband marketplace at large – the costs of the FCC interfering with proposals like AT&T’s are likely to outweigh the benefits. This is because the costs entail curtailing market experimentation that drives innovation in new products and investment in new facilities. And when that happens, especially in a dynamic marketplace, we’re talking real consumer harm.

So, remember, in thinking about these issues: “It’s the Consumer, Stupid!”

[First published at the Free State Foundation blog.]

Categories: On the Blog

Annoying Greenies on the Defense

January 13, 2014, 12:41 PM

After decades of controlling America’s energy narrative, on January 5, CBS’s 60 Minutes fired a shot that has put the green lobby on the defensive. The next day, two very different media outlets lobbed blows that could represent a new trend; a change of tone in Washington.

The 60 Minutes piece, featuring correspondent Lesley Stahl, aired, perhaps intentionally, at a time when it may have had the lowest possible viewership, as it aired opposite the NFL playoff game between the Green Bay Packers and the San Francisco 49ers. You may have missed it. But environmental/renewable-energy believers took the hit—and they are pushing back.

Stahl opened “The cleantech crash” with:

About a decade ago, the smart people who funded the Internet turned their attention to the energy sector, rallying tech engineers to invent ways to get us off fossil fuels, devise powerful solar panels, clean cars, and futuristic batteries. The idea got a catchy name: ‘Cleantech.’ Silicon Valley got Washington excited about it. President Bush was an early supporter, but the federal purse strings truly loosened under President Obama. Hoping to create innovation and jobs, he committed north of a $100 billion in loans, grants and tax breaks to Cleantech. But instead of breakthroughs, the sector suffered a string of expensive tax-funded flops. Suddenly Cleantech was a dirty word.

Midway through the segment, Stahl states: “Well, Solyndra went through over half a billion dollars before it failed. Then I’m gonna give you a list of other failures: Abound Energy, Beacon Power, Fisker, V.P.G., Range Fuels, Ener1, A123, ECOtality. I’m exhausted.”

Regarding Stahl’s list, Bruce Barcott, “who writes frequently about the outdoors and the environment,” in a rant for OnEarth Magazine about the 60 Minutes segment, asks: “Where was the evidence of cleantech’s crash in the ‘60 Minutes’ report?” He continues: “It seemed to boil down to the fact that Solyndra, Fisker, LG Chem, and five other clean tech companies went bankrupt. All true.”

Perhaps, to Barcott, eight bankrupt companies do not offer enough “evidence” to write green energy’s obit. How much would he need?

If Stahl had read the entire list of Obama-backed taxpayer-funded green-energy projects that have gone bust—let alone those that are circling the drain, she would have truly been fatigued. Together with researcher Christine Lakatos, I’ve been following the foibles for the past eighteen months. Our bankrupt list (updated May 2013) includes 25—17 more than Stahl cited (and there have been new failures since then).

Calling the “cleantech crash” segment a “hit piece,” Barcott claims: “the evidence of success is overwhelming.”

In the National Journal’s daily energy newsletter, “Energy Edge,” Amy Harder agrees with Barcott: “The story did not give much credence to successful renewable-energy ventures or to a major impetus for clean energy, which is global warming (as opposed to just job creation).” She adds: “Nonetheless, the report reminds green-energy advocates that Solyndra’s shadow is not nearly gone.”

For, Scott Sklar, a DC lobbyist for clean, distributed-energy users and companies using renewable energy, claims: “In reality, clean energy has never looked better.” He called the 60 Minutes segment a “bash fest” and suggested: it “seemed like it was co-written by the Koch Brothers.”

For the National Journal, Ben Geman wrote: “Green-Energy Battle Flares Over ‘60 Minutes’ Report.” He concludes: “The report and the response are the latest thrust and parry over White House backing for green-energy projects that have faced heavy GOP criticism. The Energy Department—which Stahl said declined to grant her an interview—hit back on Sunday night. The department has for years noted that failed or badly struggling companies represent only a very small portion of the overall green-energy loan portfolio. ‘Simply put, 60 Minutes is flat wrong on the facts. The clean-energy economy in America is real, and we are more competitive than ever in this rapidly expanding global industry. This is a race we can, must, and will win,’ spokesman William Gibbons said in a statement.”

Ironically, while the believers busily “hit back,” the news tells a different story.

One of the projects featured by 60 minutes is KiOR—a Columbus, Mississippi, plant that turns wood products into gasoline, diesel, and fuel oil funded in part by venture capitalist Vinod Khosla—has shut down in a “cost-cutting move.” A January 9 report states: “the debate in Washington in changing alternative fuel standards drove down prices so low that the company couldn’t afford to continue production for now until it can get efficiencies to the point where it is producing at least 80 gallons of fuel for every ton of wood.” Even if Khosla’s KiOR is able to improve efficiencies to “80 gallons of fuel for every ton of wood”—which would be about four times the current production—that is still a terrible return. (Incidentally, Khosla started the bankrupt Range Fuels that was mentioned by Lesley Stahl in her brief list of failed “cleantech” programs.)

Robert Rapier, also featured in the 60 Minutes segment—which focused primarily on biofuels—reported on the Department of Energy’s follow up audit for Financial Assistance for Integrated Biorefinery Projects. Among his “results,” Rapier states: “40 percent of the demonstration-scale and commercial-scale projects selected from the FOAs [Funding Opportunity Announcements] were mutually terminated by the DOE and the recipients after expending more than $75 million in taxpayer dollars.” He cites the audit: “Program officials acknowledged the projects selected were not fully ready for commercial-scale operations and that the projects were high-risk. However, they indicated that the EPAct required them to move forward with commercial-scale projects…” Rapier concludes: “I think the lesson here is that political wishes continue to trump scientific realities, and taxpayers are left to pay the bills. … If only our political leaders understood that you can’t mandate technical breakthroughs, even if you require money to be spent trying to do so.”

Hardly the “overwhelming success” 60 Minutes’ detractors proclaim.

Barcott defends use of taxpayer money to support “emerging technologies” and acknowledges that “asking hard questions about if and when we should cut off that support” is, well, “hard.”

All of this “thrust and parry” is taking place during the time Congress is considering retroactively extending various tax breaks for cleantech projects—such as the Production Tax Credit for wind energy that expired on December 31, 2013. Amid the blows fired upon the renewable energy industry this past week, the Chicago Tribune (hardly a defender of right-wing policies) piled on with a January 5 op-ed encouraging “Congress and the White House to stop manipulating the tax code as America’s de facto energy policy: Thorough federal tax reform should sunset this arbitrary favoritism for wind energy and other politically favored industries.”

The other lobs, from CNBC and Fox News, landed on January 6.

CNBC’s Kudlow Report featured a “what happened to global warming” segment in which Larry Kudlow scoffs at the “all wrong” predictions that have now “come unglued.” His guest, Steve Hayward—a visiting professor at the University of Colorado, Boulder—stated: “Global warming is going away” like so many other scares before it. Hayward claimed that environmental crises follow a pattern: “Find a problem and blow it up into a world-ending crisis and demand endless political solutions.” Yucking it up, they laughed at the “sheer comedy of the ship getting stuck in the ice in Antarctica,” calling it “an eco-tourism stunt that backfired badly.”

On Fox Business, Stuart Varney’s “Stuart Says” feature was: “Annoying greenies influence policy that hurts U.S.” In his 2-minute-18-second monologue, Varney suggests that we “respond to this climate change demagoguery with ridicule. Frankly, the global warming crowd now looks ridiculous. People are laughing at them.”

Yes, the “annoying greenies” are on the defense—and, as the Green Bay players on that cold January 5 in Wisconsin knew, you can’t win on the defense.

Categories: On the Blog

Compassionate Conservatives Are Confusing A Slogan With An Agenda

January 13, 2014, 12:23 PM

In the year since President Barack Obama’s re-election, a handful of advocates for compassionate conservatism have re-emerged to push back against limited government conservatives with the same agenda they’ve been peddling for nearly 15 years. Built around a message of governance in favor of the public good, they have chided the Tea Party and its limited government allies for ignoring the plight of the poor, heartlessly pursuing libertarian ends, and adopting a view of government’s proper role which is unrealistic and ahistorical.

The problem is that their own views are based on assumptions undermined by the failings of the George W. Bush presidency and by the organic growth in distrust in government among all Americans – and they fail to recognize the inherent weakness of their message, which confuses a political slogan with a coherent philosophy of governance and would allow for sweeping expansions of the state.

Former Bush speechwriters Michael Gerson and Pete Wehner have a long essay in National Affairs about conservative governance which has been getting some attention over the past few weeks. If it’s too much for you to read, you can read a shorter summary in Gerson’s Washington Post column here, which critiques “the identification of constitutionalism with an anti-government ideology” as “not only politically toxic; it is historically and philosophically mistaken.” Gerson continued on that theme in his subsequent column:

“One of the main problems with an unremittingly hostile view of government — held by many associated with the tea party, libertarianism and “constitutionalism” — is that it obscures and undermines the social contributions of a truly conservative vision of government. Politics requires a guiding principle of public action.”

“For popular liberalism, it is often the rule of good intentions: If it sounds good, do it. Social problems can be solved by compassionate, efficient regulation and bureaucratic management — which is seldom efficient and invites unintended consequences in complex, unmanageable systems (say, the one-sixth of the U.S. economy devoted to health care). The signal light for government intervention is stuck on green. For libertarians and their ideological relatives, the guiding principle is the maximization of individual liberty. It is a theory of government consisting mainly of limits and boundaries. The light is almost always red.”

“Conservatism (as Peter Wehner and I explain in our recent National Affairs essay, “A Conservative Vision of Government”) offers a different principle of public action — though one a bit more difficult to explain than “go” or “stop.” In the traditional conservative view, individual liberty is ennobled and ordered within social institutions — families, religious communities, neighborhoods, voluntary associations, local governments and nations. The success of individuals is tied to the health of these institutions, which prepare people for the responsible exercise of freedom and the duties of citizenship. This is a limiting principle: Higher levels of government should show deference to private associations and local institutions. But this is also a guide to appropriate governmental action — needed when local and private institutions are enervated or insufficient in scale to achieve the public good.”

The problem with Gerson’s framing here is obvious: in what way is appropriate governmental action to achieve a public good determined? If we are in an era when social institutions are in decline – partially due to government, but due as much to culture – what limits if any should expansionists recognize on the size and scope of government? This is the equivalent of the general welfare clause: If there is any limit to what can be defined as a public good, which of Michael Bloomberg’s policies would Gerson describe as unconservative? Isn’t it good for people to be healthier, even if the state is being a bit of a nanny? Were local and private institutions really dealing with those problems of too much soda and salt?

Philip Klein has more:

Throughout the piece, Gerson and Wehner make arguments that are very difficult to distinguish philosophically from liberalism. “The founders, then, provided us with a strong governing system – strong precisely because it could adapt to changing circumstances,” they write, echoing the liberal idea of a “living Constitution.” The authors also argue for a federal government “strong enough to shape global events and to guarantee a minimal provision for the poor, ill, and elderly.” Though Gerson and Wehner insist they believe in limited government, it’s hard to see what limiting principle they have in mind, as the definition of “minimal provision” could vary widely. Evidently, what philosophically separates them from liberals is a belief that the welfare state should be less centralized and technocratic.

Gerson and Wehner are not politicians, of course. But there are those who appear to be adopting their brand of reform. Senator Marco Rubio’s proposal this week for an anti-poverty reform agenda is a useful example of the problem these compassionate conservative assumptions run into when you attempt to put them into practice. While consolidation and block-granting are all well and good, Rubio doesn’t stop there:

“Mr. Rubio will also propose Wednesday to replace the Earned Income Tax Credit, which was used by 28 million tax payers in 2011, with a new “wage enhancement” system that directs federal money towards supplementing the income of people who work in “qualifying low-income jobs.”

Rubio’s motivations here are noble, and almost certainly pass Gerson’s “public good” test: wage stagnation is indeed a problem, and the EITC is a warped system which has racked up a roughly 25% fraud percentage over the past decade. But think for a moment about what he’s proposing here: a future of long fights over what a “qualifying low-income job” is, a definition ripe for unions to exploit under future Democratic administrations. And let’s not even get started on the audits and oversight. I thought that limited government advocates would want to get government out of businesses, not further integrating them. Conn Carroll explains:

All conservatives should ask themselves: Do I want to empower President Obama to decide which are the “qualifying low-wage jobs” and which are not? Is there any doubt Obama, or future liberal presidents, would use this new government program to play favorites in the market place? Would Obama or President Hillary Clinton every give wage subsidies to coal miners? Or Americans working at an oil refinery? Of course not. How would the federal government prevent fraud and abuse without making the new program a burden on participating employers? Instead of creating a brand new government program to subsidize low paying jobs, why not just cut the payroll tax for everyone? No favoritism. No fraud. No abuse. Just make it easier for employers to hire and let Americans take home more of their money every paycheck. Why not keep it simple?

Robert Rector has some criticism of Rubio’s plan here. But the bigger issue is that Rubio’s focusing on the wrong problem, as Scott Winship indicates here in a piece on another topic. Wage subsidies accept the left’s proposition that the problem here is a monetary one, where just giving poor people more money to be more comfortable in their poverty is the solution. That’s the opposite of a safety net, which – if properly designed – offers peace of mind to the most vulnerable in the event of total disaster. And Rubio’s answer ignores the fact that the real problem faced by the working and middle class isn’t wage stagnation so much as the actions of government have caused things like health care, education, gas and groceries to eat up a larger portion of their pocketbooks… an approach which would be far more consistent with a limited view of government’s role.

The best critique of Gerson and Wehner’s views may be this 2008 review of the former’s book, Heroic Conservatism, by John Podhoretz. In an eloquent passage, Podhoretz reveals the real failing ignored by the compassionate conservative advocates: they’re trying to turn a limited marketing slogan into a comprehensive governing philosophy.

But it is precisely the gap between the lofty principles expressed in speeches and the often compromised policies enacted by officialdom that has helped create public skepticism about the efficacy of government action to cure social ills. This skepticism vexes Gerson, but he does not offer a reasoned argument against it. He simply cautions conservatives not to be excessively fearful of the so-called “law of unintended consequences”—i.e., the possibility that government action intended to do good can have the opposite result…

“Like all true conservatives,” Gerson writes, “I believe in limited government.” But there is very little in this book about limiting government’s reach and a great deal about expanding it. Gerson’s call to idealism is inspiring, especially in his chapters dealing with Bush’s campaign to combat AIDS in Africa—surely the most underappreciated initiative of this presidency and perhaps of any presidency in modern times. And his account of the thinking behind the magisterial series of addresses through which George W. Bush transformed the foreign policy of the United States after September 11 is essential reading for any student of American politics.

But it seems Gerson never really grasped the truth about compassionate conservatism. This is that it was not a party program, let alone a developed political philosophy, but a marketing gimmick. It is thus little wonder that eight years of exploring the depths and reaches of this topic have led to a very singular brand of politics. Michael Gerson’s party of heroic conservatism is, I fear, a party of one.

The challenge of conservative governance in this era of the right’s muddled grappling with their ongoing philosophical disagreement will continue to create tensions between a faction that believes conservatism means doing the business of compassion more efficiently in pursuit of a vaguely defined public good, and one which believes it’s more important to restrain the warping effects of government and return the government to the role it occupied for most of American history, before LBJ set us on the path toward an unsustainable entitlement state… which was, if you think about it, entirely justified at the time if you adopted Gerson’s approach.

Here’s a hint: If your approach to conservative governance would justify the Great Society, it’s usually a sign you took a wrong turn somewhere. Maybe because the lights were all green.

[First published at The Federalist.]

Categories: On the Blog

Is Net Neutrality Trying to Mutate into an Economic Entitlement?

January 13, 2014, 11:16 AM

Net neutrality activist opposition to AT&T’s new Sponsored Data offering exposes that the purpose of “net neutrality/open Internet” is not just about protecting consumers and free speech, or preventing anti-competitive behavior.

Those calling for an FCC investigation of AT&T’s Sponsored Data are trying to mutate the “net neutrality/open Internet” debate to also be about whether or not there should be permanent economic entitlements, i.e. downstream “zero-price” subsidies, for edge websites and applications – to “subsidize creativity” and start-up innovation via an explicit FCC ban on network termination charges.

Translation:  all websites and applications should be entitled, by “open Internet” network design, to no cost Internet distribution/access to consumers forever, regardless of the costs that their services cause everyone else to pay for.

That previously-rejected Title II broadband approach effectively would have the FCC mandate that consumers must permanently subsidize the video streaming of over-the-top (OTT) video streamers, like Netflix and Google-YouTube, which together consume half of the Internet’s downstream bandwidth per Sandvine.

[For more on the thinking behind this mutating view of net neutrality, see Professor Tim Wu’s 2009 paper: “Subsidizing Creativity through Network Design: Zero-Pricing and Net Neutrality.”]

The mutation of the debate is evident in the over-the-top criticism of AT&T’s Sponsored Data offering — which obviously is not an actual violation of mainstream freedom-defined net neutrality or the FCC’s open Internet rules – but only a perceived violation of hoped-for Title II reclassified common-carrier-defined net neutrality.

Concerning AT&T’s voluntary Sponsored Data offering, a content seller now has an additional option to market their content to consumers by paying for the downstream bandwidth that their content consumes. In other words, “sponsored data” means the consumer is not “billed” for the sponsored bandwidth usage, the sponsor is “billed” for it.

Picking up part of a consumer’s tab to entice a consumer to try or use their product of service is marketing 101. It’s like free breakfast with a hotel room, or free financing with a new car. This consumer freebie practice is among the most normal, prevalent and effective marketing techniques in the economy today.

Importantly, AT&T’s Sponsored Data does not affect the speed of anyone’s delivery. It does not slow down, degrade, or impair anyone’s service and it does not block a consumer from accessing any legal content, application or device a consumer chooses. It isn’t discriminatory, because it’s totally voluntary. And it limits no one’s free speech.

AT&T’s Sponsored Data only lowers the cost of delivery of sponsored content to the consumer. Consumers benefit. They are hurt in no way.

Moreover, this is not a “double dip.” It is a simple cost transfer from the buyer (the consumer’s bandwidth bill) to the seller (the sponsor’s bandwidth bill). Thus the bandwidth in question is not paid twice; it is just paid by someone else than the consumer.

This is a two-sided market like a traditional newspaper, where both a consumer and a seller can pay for part of the cost of delivery of the content to the consumer. It is one of the great benefits, efficiencies, synergies and innovations of a market economy over a regulated one, because it enables and incentivizes more people to cover the cost of the broadband infrastructure from which they all benefit.

Now consider the highly-successful, effective pilot of “sponsored data” in the marketplace used by tens of millions of Americans for the last six-years without activists objecting it was a violation of net neutrality or an open Internet.

To promote its business, Amazon offers free delivery for physical goods ordered over Amazon, and equivalently offers free downstream delivery of its digital content to Kindle readers. Amazon has proved over the last six years that offering free downstream bandwidth delivery to Kindles stimulated more sales of both Kindle devices and e-book digital content.

Why has it been perfectly OK for Amazon to do this for six years, but now that AT&T is offering this exact same sponsored data opportunity to other businesses, it somehow isn’t?

So what is really going on here? Their response makes no sense unless there is another agenda.

Net neutrality activists are actively trying to move the goalposts – again – this time to Title II common-carrier-defined net neutrality. The net neutrality debate will no longer be just about free speech or no anti-competitive discrimination, blocking, degrading or impairing of bandwidth. They are now trying to make it about Professor Wu’s utopian “subsidizing creativity through network design,” i.e. formally requiring everyone to economically subsidize “edge creators” by imposing a common carrier price ban on termination fees.

Simply, what they want is that edge entities — which send their content downstream to the consumer — should NEVER have to pay for that downstream bandwidth. To achieve their utopian ideal of perfect creative egalitarianism on the Internet, activists want the FCC to have Title II common-carrier pricing authority so it can mandate an absolute ban on anybody paying specifically for downstream traffic.

Why activists are freaking out about AT&T’s Sponsored Data is that it defiles their utopian ideal of perfect Internet egalitarianism of universal, unlimited, free, downstream-bandwidth for edge creators.

In advancing their utopian ideal, if anyone is allowed to pay anything for downstream bandwidth, (even if it is the same speed and quality of everyone else’s bandwidth; is voluntary, it benefits the consumer; and is pro-competitive), it violates the egalitarian principle of “subsidizing creativity” via “zero-pricing.”

Free downstream bandwidth is necessary for “edge creators” to enjoy the exact same economics as broadband companies that have invested hundreds of billions of dollars to provide the very high-speed downstream bandwidth everyone uses. Simply net neutrality economic entitlements are about trying to eliminate any economic advantage of vertical integration of content distribution and ownership. That’s what activists mean when they say they don’t want the Internet model to be like cable model.

Activists covet duplicating the monopoly common carrier model for telephone, because it long enabled economic entitlements and wealth transfers outside of the normal legislative tax or appropriations processes. Historically, the monopoly common-carrier, telephone model ofstrict price regulation was quite effective in having urban consumers subsidize rural consumers and businesses subsidize consumers.

Free culture Net neutrality activists (Lessig, Wu, Crawford, et al) covet monopoly common carrier price regulation of broadband in order to mandate free downstream bandwidth, and to economically-destroy the capitalist media/cable companies that they loathe.

The monster political problem with the activists’ desired economic entitlement scheme is who subsidizes whom. For telephone service there was strong political consensus for implicit telephone subsidies where businesses and then more affluent urban consumers subsidized less fortunate rural consumers.

Perversely, net neutrality economic entitlements of zero pricing are upside-down, where activists expect consumers to subsidize corporate welfare for Netflix, Google-YouTube, and Amazon, all very profitable companies that obviously do not need subsidies.

In sum, activists are trying to mutate the “net neutrality/open Internet” debate towards implicit economic entitlements. Their ultimate purpose is to destroy the offline media/cable model and replace with a utopian, Internet commons model.

The fatal flaw with their concept is that any such inherently uneconomic pricing scheme will naturally be gamed and manipulated by arbitrageurs. And by far the biggest arbitrageurs and beneficiaries of free downstream bandwidth are Netflix and Google-YouTube.

While there remains strong consensus for freedom-defined net neutrality where Internet users should be able to access the legal content and applications of their choice, there is little appetite for official corporate welfare for Netflix and Google-YouTube – which together devour half of all Internet downstream bandwidth in the U.S.

[First published at the Precursor Blog.]

Categories: On the Blog

U.S. Wireless Economics Beat EU’s Wireless Uneconomics

January 12, 2014, 3:17 AM

A new European study from Britain’s Office of Communications tries to argue that the EU’s wireless regulation approach is better than America’s. The New York Times’ clever headline on the report sees right through it: “Europeans pay less for mobile use, but at a cost.”

In Europe, regulators regularly lower prices and roaming rates for political purposes, ignoring the market economics or economic sustainability of their regulatory approach. The EU’s politics-of-the-moment interest in lower prices, based more on operating costs than total costs that fund long-term investments in infrastructure, ultimately harms consumer value.

The EU’s wireless approach is the equivalent of pushing farmers to sell almost all their current corn harvest to maximize corn supply to maximally lower prices in the short-term, which ignores the obvious need to save enough seed-corn to plant for a successful next harvest. Without market economic thinking and pricing that plans ahead and continually funds infrastructure investment, the EU will continue to fall further behind other countries around the world.

It should be no surprise that that is exactly what’s happening.

Europeans have slower data speeds than America and they know it. EU Vice President, Neelie Kroes, recently said:

Japan, South Korea, and the USA have around the same population, but … about 15 times more 4G. Europe needs to catch up.

France Telecom’s Deputy CEO recently echoed that sentiment:

It’s humiliating – we’re behind. . . . The web was mainly invented by a European, but . . . the fastest networks are in the U.S. and Asia.

The White House knows it too:

In 2012, North America’s average mobile data connection speed was 2.6 Mbps, the fastest in the world, nearly twice that available in Western Europe.

And Europeans should know that their lower-priced wireless services underfund network capacity, so consequently they get less value and productivity from the Internet — in average usage by consumers. Overall Americans use 50.2 gigabytes per month to Europeans’ 23.6 gigabytes per month according to USTelecom 2012 data.

The old adage is true here; you get what you pay for.

Finally, those activists in America who advocate for a more government-driven broadband marketplace, in hopes of the government mandating: common-carrier net-neutrality, bans on usage pricing/caps, and government-owned networks, need to realize that the EU uneconomics model — that they historically have held up as the shining example that America should follow — is badly falling behind and under-performing America’s market economics model.

Categories: On the Blog

Chris Christie’s Finest Hour

January 12, 2014, 1:37 AM

In his Thursday morning press conference regarding “Bridgegate,” New Jersey Governor Chris Christie demonstrated the sort of leadership and responsibility-taking that has allowed him to be a popular Republican governor in a very blue state and the current front-runner for the Republican nomination for president (to the dismay of many conservatives).

In short, the scandal revolves around Christie’s deputy chief of staff, Bridget Anne Kelly, contacting a Christie-appointed Port Authority official named David Wildstein and telling him to cause traffic problems for the town of Fort Lee, NJ. It is believed, though not proven in the e-mails uncovered by the Bergen Record, that the purpose was retaliation against the Mayor of Fort Lee, Mark Sokolich, for not endorsing Christie in his most recent election.

Wildstein resigned last month and Kelly has been fired, and in today’s press conference Christie also reported that he has told his former campaign manager, Bill Stepien, who had knowledge of the events, to withdraw his name from consideration for state party chairman and to end his consulting for the Republican Governors Association. In a hearing before a state House committee on Thursday about the events, Wildstein asserted his Fifth Amendment right not to testify, perhaps wise given that some are blaming the death of an elderly woman on an ambulance delay caused by Wildstein and Kelly’s actions; the committee voted to “place him in contempt of this committee, which is a misdemeanor.”

Christie, for his part, was aggressively contrite. He said he felt “embarrassed and humiliated” but also said that what happened in his office is his responsibility and he would deal with it in every possible way, including going to Fort Lee today to meet with the mayor and apologize to the town’s people while in their town. Mayor Sokolich initially suggested that Christie stay away, saying that an apology is “premature” with investigations and more press conferences still to come, but Sokolich soon changed his mind.

As part of his explanation of why he had denied the story two weeks ago, Christie said that the story didn’t make sense to him from the beginning because Mayor Sokolich was never on his radar, that the Christie campaign was not looking for the mayor’s endorsement, and therefore that he didn’t believe early reports that someone in his campaign had retaliated against someone whom Christie didn’t think was important in his reelection. Christie said of Sokolich, “Until I saw his picture last night on television, I couldn’t have picked him out of a lineup.”

He also said that the sort of behavior represented by Bridgegate is the exception, not the rule, within his administration and reemphasized the bipartisan nature of his campaign and the way he has operated the New Jersey government, getting things done with Democrats.

I don’t write this as particularly a Christie fan: I think he has great strengths and important weaknesses.

But what struck me the most listening to this man speak was the couldn’t-be-greater contrast between him and Barack Obama. And not just his ability to work in a bipartisan fashion.

Chris Christie expressed credible contrition and a “buck stops here” attitude for a few days of traffic issues caused by someone else who kept him in the dark and then lied to him about it.

Barack Obama has never expressed believable remorse or taken responsibility, nor held anyone else responsible, for any of his scandals and disasters. Not for the IRS targeting conservatives. Not for the DOJ targeting reporters. Not for the death of four Americans in Benghazi. Not for the deaths of more Americans due to Fast and Furious. None of these things is directly his fault, but contrast the president’s non-reaction to Governor Christie’s words on Thursday:

I didn’t know about it but it’s my responsibility because I’m the governor. So I’m taking that responsibility and taking actions appropriate with executing that responsibility in accord with what the information is today.

Seriously, can you imagine a president who has not fired anybody for any of his administration’s many scandals doing anything like what Christie did today?

Nor has Obama apologized for causing millions to lose health insurance policies (and we’ve just seen the tip of the iceberg), triggering huge increases in health insurance premiums, raising deductibles, and limiting the choices of doctors and hospitals. Obamacare, the single most damaging piece of legislation in modern American history, is named for him and only passed because of him; it has his signature on it. If he didn’t know the law would do exactly what it is doing, he is a truly incompetent president. If he did know (which I believe he did) he should be profoundly apologetic, but that is impossible for the malignant narcissist who occupies the White House.

Additionally, the presumably liberal reporters at the press conference asked Chris Christie very aggressive questions such as that posed by CNN’s John King:

What kind of questions are you asking of yourself? . . . These are people you trusted. . . . they either thought ‘this is what the boss wanted’ or as a group they were willing to go rogue and then lie to you about it.

Christie’s answer:

I’m heartbroken about it and I’m incredibly disappointed. I don’t think I’ve gotten to the angry stage yet but I’m sure I’ll get there. But I’m just stunned. And what does it make me ask about me? It makes me ask ‘What did I do wrong to have these folks think it was OK to lie to me?’ There’s a lot of soul-searching that goes around with this.

Again, can you imagine Barack Obama having even a fraction of that introspection or public humility?

And, while they’ve been slightly braver lately, can you imagine the Washington press corps asking such tough questions of our Teflon (though it’s wearing thin) president? Can you imagine him giving an answer that takes less than 10 minutes and which actually answers a reporter who questions his character or competency or leadership? And can you imagine the fear in the reporter as to whether he would ever be called on again to ask another question?

Christie’s entire press conference was as good a response as he could have offered to the mess dropped on his head by a stupid, unscrupulous staffer, and an even better contrast to Barack Obama’s petty tyranny, his disconnectedness from the truth and from the public, and the timidity of most of those whom the nation relies on to ask him the hard questions and get the important answers.

Contrary to the hopes of liberals and the half-worried, half-hopeful reaction of staunch conservatives who simultaneously don’t entirely trust Christie but want very much to elect a Republican president in 2016, it is just as likely that Christie’s handling of this mini-scandal will help him politically as hurt him.

[First published at American Spectator.]

Categories: On the Blog