Somewhat Reasonable

“Ineptocracy” is a new Internet-popularized word in wide circulation, which came to my inbox with the following definition:

“A system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed, are rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers.”

Clearly the word’s creation was inspired by the current presidential administration, where the ineptocrats abound. And as NLPC has documented for 4+ years, nowhere has that been more evident than in President Obama’s Department of Energy, under the management of soon-departing Secretary Steven Chu.

Most of those stories have documented the foolishness, misjudgment and cronyism surrounding the distribution of stimulus funds. But another area of mismanagement and incompetence has been revealed at DOE, and this time it has security implications.

Inspector General Gregory Friedman, the internal affairs watchdog for DOE, reported last week that dysfunction infects the department’s Office of Special Operations, which is tasked with the protection of the Secretary and other top officials within the branch. They are supposed to develop and implement policies and procedures for security both at headquarters and when officers are traveling, but the IG determined that simply getting along is a challenge within the division.

“During the course of our review, it became clear that morale among many members of the Special Operations staff was low and that there appeared to be a lack of trust between the agents and management,” the IG wrote in his report. “Agents told us that there was an apparent unwillingness to work together to resolve differences of professional opinion. On these and other related issues, we were also provided information by the respective parties that was inconsistent and, at times, contradictory. Positions were often irreconcilable.”

Friedman described the Executive Protection Program as a small group due to the limited number of officials in need of security. He cited numerous examples of agents who registered complaints about each other, many which he could not substantiate. But rather than appear like there’s much ado about nothing, instead the picture is one of deep animosity of employees towards one another.

The antagonism is clearly getting in the way of everyone doing their jobs, despite recent attempts by DOE’s Office of Health, Safety and Security – which oversees the security team – to address the morale and discord problems. Friedman outlined several examples in which agents: did not receive individual or collaborative training; did not know correct procedures; and were informed about performance tests on operations and procedures ahead of time when they were not supposed to be.

“The HSS evaluator administering the tests also reported to senior Special Operations officials that the agents had demonstrated competency in the tested areas, when in fact the agents had either not completed portions of the test or lacked the requisite knowledge,” the Inspector General reported.

Friedman also documented several examples in which agents did not understand policies. Out of the 16-person Executive Protection team, on vital operations that included “active shooter response,” “fire evacuation,” “direct threats,” and “medical emergencies,” only one or two agents were familiar with policies. On “security room operations,” “duress system response,” “bomb threats,” and “motorcade operations,” no more than 6 or 7 of the 16 agents had an understanding of any of the policies.

Besides the lack of information and training, the security team apparently was ill equipped as well. According to Friedman, body armor was not acquired for agents between 2007 and 2012, until an anonymous complaint was filed with the Office of Safety and Health Administration in February 2012. In response Special Operations management purchased eight non custom-fitted vests in various sizes for 13 agents, rather than custom-fitted vests that optimize “comfort and ballistic stoppage capability.” Management informed the inspector that the non-custom vests were purchased “due to the high attrition rates of agents and replacement costs for the vests.”

Incompetence in dispensing taxpayer funds is one thing, but the compromising of security due to unprofessional conduct is disturbing. Secretary Chu certainly has allowed DOE to fall into a moribund condition.

As mentioned above, the administration of DOE’s allocation of stimulus funds has been careless and wasteful. NLPC has documented billions of dollars blown on Recovery Act grants and loans, many of which the Inspector General has reported. He testified in November 2011 before a House regulatory affairs subcommittee that “the Loan Guarantee Program had not properly documented, and as such could not always readily demonstrate, how it resolved or mitigated relevant risks prior to granting loan guarantees.”

Friedman also painted a picture of a cabinet agency entirely unprepared for the flood of stimulus money it was suddenly given to distribute, and incapable of tracking it both administratively and ethically.

“To date, our Recovery Act-related investigations have resulted in over $2.3 million in monetary recoveries as well as five criminal prosecutions,” he testified at the time. “This includes a series of cases involving fictitious claims for travel per diem resulting in the recovery of $1 million alone in Recovery Act funds.”

In a hearing back in March before another House investigative committee, Friedman also told of “fraudulent claims for rebates,” “weatherization fraud to include mischarging,” and “the directing of contracts and grants to friends and family.”

Friedman has investigated numerous other DOE stimulus recipients, including electric vehicle battery maker LG Chem, which received a $151 million grant but had little for its employees to do. Reports last year told of workers on the clock playing Texas Hold ‘Em and video games, doing Sudoku and crossword puzzles, and volunteering at nonprofits like Habitat for Humanity – all of which Friedman confirmed. He reported that DOE “did not always take sufficient action to ensure adequate oversight of project progress” and said monitoring was so poor that – despite the obvious evidence in early 2012 of employee furloughs, construction delays and cost overruns – no red flags were raised.

And in January 2012 Friedman discovered the rush to distribute stimulus money also may have compromised national security. In an audit report of the department’s management of the Smart Grid Investment Grant Program, which received $3.5 billion to modernize and improve the reliability of the U.S. power grid, the IG found that grant recipients’ plans to prevent “malicious cyber attacks” were often inadequate.

Steven Chu has been in way over his head for years, and the Obama administration should have relieved him of his duties long ago. But that doesn’t happen when you blithely run an ineptocracy.

[First Published at National Legal and Policy Center]

Every year, April 15 is tax day. The morning’s news shows featured last minute tax tips and other tax-related information. A new poll was discussed. When asked: “Thinking about paying taxes, which one of the following bothers you the most?” Surprisingly, “What you pay” received the lowest response, while the “Way the government spends taxes” was the highest. “Feeling that some don’t pay fair share” was near the top and “Complexity of system and forms” was near the bottom.” So people understand that it takes money to run the government and generally don’t object to paying their taxes. It is what the government does with that money that frustrates us.

When asked about the way government spends taxes, responders were likely thinking of the green-energy crony-corruption spending on flawed ventures like Solyndra and the, now, fifty-plus other green-energy embarrassments that received taxpayer dollars as a result of President Obama’s 2009 Stimulus Bill (as well as other green-energy funds) that poured nearly $100 billion into the pet projects of his donors.

Solyndra filed for bankruptcy in September 2011. It was just the bellwether; the first of many to come.

A year later Christine Lakatos and I profiled nearly 20 green-energy stimulus-funded companies that had gone bankrupt. The next week, we highlighted the other bookend: “companies/projects that received funding from various loan guarantee programs (LGP), grants, and tax incentives. These are projects that are still functioning, but are facing difficulties.” One of those troubled companies was A123 Systems. One week after our report, A123 filed for bankruptcy. Nearly two months later, A123 was purchased by a large Chinese auto parts maker that has renamed the lithium-ion battery company B456. (Note: A123/B456’s biggest customer is another company on our troubled list: Fisker Automotive—manufacturer of the $100,000+ electric sports car made in Finland—is now facing bankruptcy itself after efforts to find a Chinese investor “stalled.”)

Wait. In his 2008 campaign, didn’t Obama promise to “create five million new energy jobs over the next decade––jobs that pay well and can’t be outsourced”? But our tax-payer dollars created jobs in Finland and have benefitted a Chinese company—Obamanomics outsourced. No wonder the “way the government spends taxes” tops the list. And most have no idea that the Obama administration is responsible for steering billions of our tax dollars from the stimulus and other clean energy programs to foreign-owned entities, of which big chunk was doled out in the form of free cash via the 1603 stimulus grant program.

But there’s more—new news the poll respondents probably didn’t even know about.

One day after the poll was taken, CNN Money reports: “China’s Suntech Power has put its largest subsidiary into bankruptcy.” What they don’t mention is that China’s Suntech Power benefitted from Obama’s 2009 Stimulus Bill—receiving a $2.1 million credit from the Energy Department’s stimulus-funded Advanced Energy Manufacturing (48C) Tax Credit. (Suntech was included in our 2012 “troubled” list.) In her blog, The Green Corruption Files, Lakatos states: “according to the Heritage Foundation, in November 2012, Suntech shed some employees, claiming that it was the ‘U.S. International Trade Commission’s 35.95% tariff on Chinese solar panels that was partially responsible for the 50 impending layoffs at its Arizona production facilities.’” Suntech was even blamed for the Solyndra debacle. In December 2011, The Pittsburgh Tribune-Review reported: “China’s major solar panel companies—whose low-cost products led some American factories to close, helped create the Solyndra controversy, and spawned talk of a trade war—were bankrolled in the United States by the world’s largest investment banks.” Those “investment banks” include some the same ones we have profiled in our previous reports that have deep ties to the Obama campaign and administration, and many green-energy projects that received loans, grants, and special tax breaks representing billions in stimulus money.

Suntech has more interconnections. Arizona’s Mesquite Solar Project, which received $337 million in taxpayer money despite its non-investment grade rating by Fitch, was to be built with Suntech’s solar panels and the power was to be sold to Pacific Gas & Electric—which has strong political presence in Washington, DC, and connections to billions in stimulus funds. California’s PG&E, a company with “an extensive network of former high-ranking employees holding influential positions in government agencies at the federal and state level, has benefitted handsomely from government financing of green energy projects.” The most controversial former PG&E employee to hold an influential government post is Cathy Zoi, a former energy analyst for the company, who we profiled in our report on George Soros.

There is much more that can be found in Lakato’s Suntech report.

Another sparsely reported solar-power embarrassment was covered by Fox News on the same day the aforementioned poll was taken. “SoloPower, which makes thin-film solar panels at a new plant in Portland, OR, opened September 27 with an upbeat ribbon-cutting ceremony. Local and state politicians gushed about the company eventually operating four production lines and creating 450 well-paid green jobs.” After its grand opening just months ago, SoloPower’s power is waning: “The first production line was never completed,” and “in January, the company had a round of layoffs.”

This is not a surprise to those of us who watch the green-energy crony-corruption scandal. SoloPower was one of the worst-rated loans. One month before it received a $197 million loan guarantee to “support the retrofit of an existing building to operate a thin-film solar panel manufacturing facility in Portland, OR,” Standard and Poors (S&P) gave SoloPower a credit rating of CCC+.

On March 29, 2012, U.S. House of Representatives Committee on Oversight and Government Reform released a report titled “The Department of Energy’s Disastrous Management of Loan Guarantee Programs” which states: “S&P predicted that SoloPower will fail to meet its debt obligations.” DOE emails, released on October 31, 2012, reveal that James McCrea, Senior Credit Advisor Loan Programs, called SoloPower “a completely uninspiring project.”

Yet, in addition to the $197 million of US taxpayer money SoloPower was given from the DOE through the 1705 LGP, this European firm also received $40 million from Oregon taxpayers. Then in December 2012, “despite unfulfilled job and production promises and signs the Portland solar panel factory was sliding even further behind,” Oregon officials tripled the “taxpayer’s stake,” said the Oregonian. Business Oregon approved a $20 million tax credit for SoloPower—which SoloPower then exchanged for $13.5 million in cash. After a management shake-up, Fox News reports, SoloPower is “trying to raise money by selling some of its equipment through a third party and is attempting to restructure its $197 million federal loan guarantee.”

With the bad credit rating, the “uninspiring” label, and poor performance, why did SoloPower receive federal, state, and city funding—ultimately paid by the taxpayers? Because as the Oversight Committee report states: “What SoloPower lacked in economic value, it made up for in political connections.”

Suntech and SoloPower are just two recent stories, part of a long list of bankrupt and/or “troubled” politically connected green-energy projects.

When President Obama released his FY2014 budget, it included new spending of nearly $1 billion “to support deployment and long-term development in the clean energy industries.” Renewable Energy World appears gleeful. “It’s been said before and it bears repeating that Obama has done more for solar than any previous US President.” And: “The support of the federal government has led to an explosion in the amount of solar across America.” Do you think?

In contrast, Tom Pyle, President of the American Energy Alliance, pointed out that the budget “represents the administration’s desire to double down on bad energy policy.” And, “calls for fast-track permitting for renewables” while never mentioning the Keystone pipeline. Pyle concludes his comments by saying: the President “hopes that the American people will forget the failures of the past four years, higher gasoline prices, skyrocketing electricity rates, bankrupt renewable firms, and billions in wasted taxpayer money on politically connected industries.”

No wonder the “way the government spends taxes” tops the list of taxpayer’s frustrations. Perhaps if “government’s inability to learn from its mistakes” had been on the list, it would have been the number one choice.

One definition of “gangrene” offered by Webster’s Dictionary, “pervasive decay or corruption,” appropriately characterizes the work of the EPA, given its continued push to the edges of the Constitution in implementing costly regulatory requirements that thwart our national economic growth. Thus, the agency has assumed greater powers over the last several years while increasingly demonstrating a willingness to act outside the law in pursuit of its ends.

Furthermore, its unnecessary interventions in our national economy have yielded pernicious consequences. Today, the EPA punch list is long, and there is legitimate concern that the president could circumvent Congress to enact tough environmental regulations. In fact, should a presidential approval of the Keystone XL pipeline antagonize the environmental lobby, we could see more aggressive executive support for the green agenda as a quid pro quo.

With his most recent nomination of EPA activist and climate-change alarmist Gina McCarthy, Barack Obama has pledged to fulfill his State of the Union promise for aggressive policies addressing purported climate change. A brief review of McCarthy’s work while heading the EPA’s Air Board suggests a disconcerting willingness to provide misleading testimony in order to achieve her policy goals (“EPA Nominee Gina McCarthy Has a History of Misleading Congress,” Lewis & Ward, Forbes, 3/12/13).

She is also known for having deliberately circumvented existing rules to promulgate the draconian New Source Performance Standards limiting emissions from new power plants (“Carbon Power Politics,” WSJ, 3/5/13). In short, there is good reason to be concerned that McCarthy will implement unwieldy regulations that increase businesses’ operating costs, resulting in employee layoffs and/or cost pass-through to the consumer.

A second area where the EPA would like to exert greater regulatory oversight is hydraulic fracturing. By all accounts, states legally responsible for enforcing fracking regulations have capably performed their duty. Nonetheless, movies such as “Gasland” and “Promised Land” have generated a plethora of myths regarding the fracking process and its impact on groundwater supplies via methane gas and chemical infiltration. Moreover, groundwater contamination claims by the EPA for gas producing basins in Pavillion, Wyo., and Dimock, Pa., have proven to be without merit.

Constructive voices such as Phelim McAleer have, meanwhile, been helpful in providing more grounded documentation (FrackNation) of industry practices. So while economically vibrant areas such as Texas, North Dakota and southwestern Pennsylvania generate ongoing robust economic growth, we should realize that efforts by the EPA to impose unnecessary regulations on hydraulic fracturing would have a deleterious impact on our economy. Such regulations would likely discourage further domestic exploration and production, result in higher gas prices for the consumer and jeopardize our chances of domestic energy security.

One last EPA-generated boondoggle that may soon result in higher prices for gasoline is the agency’s requirement for ethanol blending. The EPA sets quotas for gasoline pool blending by domestic refiners every year. Unfortunately, if the quota is too high and above the 10 percent “blend wall” beyond which refiners are reluctant to add ethanol to their gasoline pool (for fear of lawsuits due to engine damage from ethanol blending greater than 10 percent), they are required to buy credits, or in industry parlance, RINs (renewable identification numbers).

These credits allow them to satisfy their blending quota, but due to the illiquid nature of the RINs market, their price per gallon has recently spiked from 10 cents to more than $1. This is likely to lead to fuel price increases of 5 cents a gallon or more for consumers. Other secondary effects of this EPA requirement will be increased gasoline exports by domestic refiners and declining oil product imports from Europe, both of which will exert more upward pressure on gasoline prices.

All these areas of EPA involvement are likely to continue to threaten the vibrancy of the U.S. economy should it be allowed to continue on its green crusade. We are fighting a battle against scientific ignorance and environmental nihilism that we cannot afford to lose. And as is the case in dealing with gangrene, the only solution here may be a partial “amputation” of the powers of an increasingly toxic EPA that have grown well beyond those its creators originally intended.

[First Published at PhillyBurbs.com]

This piece in the Heartlander, “Google Goes Shopping at a Dollar Store” by Randolph May of the Free State Foundation makes for some infuriating reading.

It is probably the best example I’ve ever seen as to why municipal broadband systems are a bad deal for citizens of cities with the hubris to think they can compete in the digital economy by offering “free” and “cheap” Internet service.

May’s report on what’s happening in Provo, Utah, would be very hard to top — though we should expect to see it repeated again and again. He cites this Associated Press story from April 18:

Google Inc. will pay $1 for a municipal fiber-optic system that cost $39 million to build, according to terms of the Internet company’s agreement with Provo. … Even as Google takes ownership of the municipal network, Provo will have to pay off loans for its construction for another dozen years, according to agreements released Thursday by city officials.

So … one of the most heavily capitalized companies in the history of civilization swoops in and purchases a $39 million state-of-the art fiber-optic “muni broadband” system in Provo for one dusty sawbuck. Google will maintain that network (and maybe improve it) via access fees they will charge the good citizens of Provo, while offering a “free” service that is so slow, no one would likely use it. (My now-dinosaur 3G iPhone 4 probably downloads stuff faster than the “free” network every Provo resident pays to keep afloat).

And, here’s the kicker [emphasis mine]:

Even as Google takes ownership of the municipal network, Provo will have to pay off loans for its construction for another dozen years, according to agreements released Thursday by city officials.

For nearly as many years, households have been paying $5.35 a month on their utility bills for a system that provides Internet, television and phone service — whether they use it or not.

But Provo officials say Google’s deal is a good one for the city and its residents because the system hasn’t been able to support itself. Google Fiber will offer residents something in return for the utility fee — basic Internet service at no charge if they pay a $30 hookup fee.

Got that? Provo’s taxpayers will be paying off the loans and interest on the $39 million network they hardly used — because it offered such poor service and was incompetently run by the city — until 2025. Hell, I’ll bet Google’s $1 that by 2025 the whole system will be obsolete, and another $5.35 Google will have bailed out on the whole project by then. The time between now and 2025 is an eternity in the digital economy. To put that 12-year time frame in perspective, Google was still run out of a garage just 15 years ago. Now it earns $3 billion every quarter.

“But, Jim,” you say. “Google will give the good folks of Provo free Internet after they pay a $30 hook-up fee.” Whoop-dee-doo. The “free” Internet will be just as unused as the network run for “free” by the city because those speeds are already obsolete. From the story:

In Kansas City, Google charges $70 a month for a gigabit connection, which is 1,000 megabits per second. Google’s free Internet service will run at 5 megabits a second.

For another $50, Kansas City customers can sign up for Google Fiber TV, which features 200 channels, many in high-definition and featuring mainstays such as ESPN, Nickelodeon, FOX News and MTV, as well as recent newcomers HBO and Cinemax.

Wow! 5 megabits a second! Is that a joke? Like I said. If you like the speed of 3G phone for your entire home Internet experience, this is the deal for you. If you don’t, and you shouldn’t, it’ll cost you — in this case it’ll probably cost residents of Provo $70 to $120 a month on top of the taxes and fees they’ll pay to settle that $39 million “free Internet for everyone” investment by the city.

And it’s not like Provo is some underserved backwater that the city had to drag into the digital age. A metropolitan area of more than 500,000 people is a great market for broadband, and Provo is already being served by every high-speed broadband competitor in the business. Now Google gets to enter the market for free — and on the backs of taxpayers who did the hard part: building the infrastructure.

Let’s sum this up:

• Colossal investment in “free broadband” by a municipality? Check

• Poor management of the network due to lack of expertise? Check

• Few customers for the “paid” service, and few piggy backers on the crappy “free” service? Check

• Ultimate failure of the project, but taxpayers still be forking out money to pay it off for decades? Check

How lucky is Google?! They don’t have to invest a single dime into building the infrastructure, but get to own it for $1, and then turn around and charge the public that paid to build it a fee to get on its network at market speeds. That’s like taxpayers forking over the money to build me a restaurant and stock it with food and a great staff. Then I buy the place for a buck and start running the joint and collecting all the profits.

That’s not exactly “crony capitalism,” but … what … “sucker capitalism”? “Dummy capitalism”? As I was expressing my outrage about this via email with various Heartlanders, Sam Karnick emailed me to call it “last-ditch capitalism.” Any of those monikers will do. Where do I sign up to get some of that?

One last quote from the story; one last kick to the taxpayers of Provo:

“Clearly, we think there’s a good business opportunity here,” Google Fiber spokeswoman Jenna Wandres said Thursday.

No kidding.

Check out some of Heartland’s extensive, years-long work fighting back at these muni broadband schemes at PolicyBot. Can’t say we haven’t tried to warn folks, including people in Utah.

Sometimes I wonder if our work does any good. Then we receive letters like this one, from a reader in Independence, Mo., and I know we are touching people’s lives.

I was going to send my response only to our correspondent. Then I decided to send it only to a few people inside The Heartland Institute. Now I’ve decided to share it with you all.

This letter comes in response to an article quoting someone here at The Heartland Institute who opposes the Internet taxation bill, now moving through Congress:

You guys suck on your position on the Market Fairness Act [sic]. The article I read calls your group “conservative.” I say bullshit to that.

I say you guys are “on the take” from the online merchants. How much money does Amazon, Ebay, etc give you guys? There is no other possible reason you would oppose this legislation unless it is just not tough enough.

You guys sound like crooks to me.

Thanks.

S . . . . . H . . . . . . .
Independence MO

Here is my response:

Dear Mr. H . . . . . . :

Thank you for your thoughtful letter.

May I ask . . . if we were in favor of this bill, would you accuse us of being “on the take” for Wal-Mart, Target and other big-box retailers?

 Also, you apparently are under the mistaken impression that online merchants such as Amazon oppose the bill. Amazon in fact supports it. See here, for instance:

The biggest online retailer backs the bill because the company has the resources to crush small competitors who will struggle to comply with the bill if it becomes law. Does it make sense that we’d be “on the take” for Amazon when we oppose Amazon’s position?

Life is not always as cut and dried as we like to think, a lesson you no doubt will learn with age and experience.

Best regards,

Steve

As cardiovascular surgeon John Natale, M.D., sits in federal prison, the Seventh Circuit Court of Appeals in Chicago heard his appeal on April 18.

After a seven-year investigation, Dr. Natale was indicted for Medicare fraud. Unlike the majority of federal defendants, who feel compelled to cave in by signing a plea bargain even when innocent, Dr. Natale courageously exercised his constitutional right to have a public trial. That is in itself considered an “obstruction of justice” by our government. The conviction rate is more than 95 percent, and sentences may be much longer than those meted out to “cooperative” defendants.

The jury found Dr. Natale not guilty on all of the fraud charges. But he was convicted on two counts of making “false statements” in his operative reports. Over his objection, prejudicial diagrams were sent to the jury room, supposedly representing the operation described in the operative report as well as the operation that was actually done. As anyone can see, a Y-shaped graft (mentioned in the operative report) is different from a tube-shaped graft (placed in the patient, by the doctor’s own admission). The government had thereby emphasized a false statement by Defendant.

The term “false statement” suggests a deliberate lie, but it could be, as Dr. Natale said, a simple mistake, made while a tired and overworked surgeon dictated a pile of reports weeks after the surgery. The jury was not instructed that a false statement is a crime only if made in a deliberate attempt to commit fraud—and, as the jury determined, there was no fraud.

The fraud charges concerned whether Dr. Natale had billed for an operation more complex than the one he did, and were related to the upper end of the graft, not the lower end. All the patients had an abdominal aortic aneurysm that involved the renal arteries, so that the aorta had to be clamped above the branches supplying the kidneys. Dr. Natale did a reconstructive procedure to strengthen the aorta, so he did not have to cut the renal arteries off the aorta and sew them into the graft. There is no precise AMA-copyrighted code for this, so Dr. Natale used the closest one, which is not for a more complex procedure and which did not increase his payment.

After seven years of searching, the government was able to come up with only five cases to include in the indictment, all of them frail, elderly patients who would have died of rupture of their weakened abdominal aorta without surgery, or of kidney failure from inadequate surgery. All the patients survived and did well after surgery. The key patient survived for nearly a year after Dr. Natale’s operation. Later, after two very aggressive, likely unnecessary re-operations done by Dr. Natale’s main accuser, she died.

At the appeal, the main argument was not about justice, but rather about what the defense attorney did or did not say during the trial. Did he “waive” or “forfeit” grounds for appeal by not objecting to the jury instructions?

One judge referred to the need to apply the law that was in effect in 2002-2004. Under more recent law, the government’s burden of proof has been lightened. The mens rea or criminal intent requirement is virtually gone. The prosecutor does not need to prove that a doctor “knowingly and willfully” lied in order to pad his fee, only to show that an incorrect AMA code was used and the doctor intended to get paid for his work.

The implications of the case are profound, the judge noted: Any error in any medical record related to a health program could be a federal crime.

But if the rules change about defense attorneys’ waiving their client’s rights by being insufficiently assertive, the floodgates for appeals might be opened.

Let us hope that justice is done for Dr. Natale. But to this observer who attended the appellate proceeding, it looks as though the laws are increasingly designed to deter expensive care of the elderly, and that the judicial system focuses more on procedural rules than on substantive justice.

Doctors need to know that anything in the medical record can be used against them—as can errors by their own million-dollar attorney.

President Obama tells us in the Overview to his Fiscal Year 2014 Budget just released last week that his budget proposes, “more than $2 in spending cuts for every $1 of new revenue from closing tax loopholes and reducing tax benefits for the wealthiest.”

But President Obama’s budget does not propose any spending cuts at all on net, not even reductions from expected increases in spending.  Instead, his budget proposes to add $160 billion in increased spending just next year to the projected growth in spending, even increasing spending for the current 2013 fiscal year by another $61 billion as well.  Over the next 10 years, President Obama’s budget proposes to add nearly $1 trillion to the projected growth in spending, proposing to increase annual spending by 2023 by $2.1 trillion as compared to 2012.

President Obama’s budget even proposes to cancel the sequester cuts, because he can’t bear to cut even 1% of federal spending from the growth in spending.  His budget proposes to spend $46.5 trillion overall over the next 10 years, even more than the Senate Democrat budget, the highest government spending in world history.

Indeed, President Obama’s talk of “spending cuts’ in his budget Overview is followed by pages of proposals for increased spending.  That reflects Obama’s basic thinking that what drives economic recovery and growth is increased government spending.  But Obama’s economic record is a thorough rebuttal to that thinking.  Not one of those increased spending proposals in his 2014 budget would contribute to increased economic growth and prosperity on net.

Still More Tax Increases

Besides these runaway spending increases, Obama’s budget also proposes $1.1 trillion in additional tax increases, on top of the $1 trillion in tax increases already going into effect this year under Obamacare, and the $600 billion in tax increases on the nation’s job creators, investors, and successful small businesses from the expiration of the Bush tax cuts for them in January.

Those new proposed tax increases include a doubling of the federal tax on cigarettes, in direct violation of the President’s campaign pledge not to increase taxes on singles making less than $200,000, and couples making less than $250,000, “in any form.”  It includes the so-called “Buffett Rule” doubling the top capital gains tax rate from when Obama entered office.  That would impose on America the fourth highest capital gains tax rate in the world, to go with effectively the world’s highest marginal corporate income tax rate.

Throughout his first term, and in this budget, President Obama has repeatedly claimed his policies have involved pro-growth tax cuts as well.  But all of his supposed tax cut proposals (with the exception of limited, increased, investment write-offs for small businesses) have involved tax credits rather than reductions in tax rates (which he has repeatedly increased).  But it is reductions in marginal tax rates that provide incentives for increased productive activity and growth, because it is the marginal tax rate, or the rate on the last dollar earned, that determines how much of the increased income resulting from increased productive activity the taxpayer is allowed to keep.

Tax credits do nothing to improve incentives for increased production.  They increase government control over the public by providing an effective government payment for some activity the government wants to direct the recipients to do.  But after the credit payment, taxpayers face the same economic incentives and tax rates as before.  Tax credits are consequently true tax expenditures, the equivalent of additional government spending rather than a tax cut.

Deficit Doubletalk

Despite all the tax increases, President Obama’s budget proposal would never balance the budget, by Obama’s own admission.  His own budget admits that after 10 years, the deficit would still be $439 billion, still about the highest in history before President Obama.  Congressman Paul Ryan’s House Republican budget, in sharp contrast, would balance the federal budget within 10 years, with no tax increases, as scored by CBO.

President Obama’s budget claims to reduce federal deficits by $1.8 trillion over the next 10 years.   But that only results from calculating the effect on deficits from an “adjusted baseline” used by the Obama budget, and not the CBO baseline.  That adjusted baseline assumes that the war in Afghanistan would never end without Obama’s proposed budget, and that we would otherwise be spending as much by 2023 fighting that war as during the recent War on Terror.  That adjusted baseline also does not include the sequester cuts under current law that the Obama budget would reverse, so the $1 trillion in increased spending resulting from reversing the sequester cuts as in Obama’s budget is not counted in the effect of Obama’s budget on the deficits.

If the impact on deficits under Obama’s budget is calculated from the projected deficits under current law or policies, then the net reduction in deficits proposed by President Obama’s budget is only a comparatively negligible $119 billion over 10 years.  That compares to deficit reductions of $5.7 trillion under Ryan’s budget as scored by CBO, almost 50 times as much.

President Obama’s own budget confesses to $5.3 trillion in additional deficits over the next 10 years, almost 5 times the deficits in Ryan’s proposed budget, which zeroes out the deficit entirely after 10 years.  Obama’s budget proposes to increase federal debt held by the public by $8.2 trillion over the next 10 years, 6 times what would result under Ryan’s budget.  Obama’s budget proposes to increase Gross Federal Debt to $25.3 trillion after 10 years, which would require increasing the national debt limit to that amount.  That Gross Debt would cross 100% of GDP, equal to our entire economy, in 2020.

Moreover, these results assume federal revenues more than double over the next 10 years.  That does not account for the likely result that Obama’s tax increases would not increase federal revenues as projected.  For example, in the last 45 years, every time the capital gains tax rate has been increased, capital gains revenues have declined rather than increased.  But Obama’s budget assumes that doubling the capital gains tax rate from when Obama entered office would nearly double capital gains revenues.

In addition, Obama’s budget assumes a suddenly booming economy to result from these policies, with real GDP growth in 2016, the end of his second term, at 3.6%, more than four times the average of his first term.  That is highly unlikely, given that all of his policies are decidedly anti-growth, such as rocketing tax rates, explosive government spending, exploding regulatory burdens, costs, and restrictions, and cheerleading political cover for the Fed’s unanchored, ultimately destabilizing monetary policies.

At the same time, Obama’s budget inconsistently assumes sustained negligible interest rates (1.2% in 2016).  That is further incompatibly assumed with sustained minimal inflation (2.2% in 2016), leaving real interest rates woefully negative at -1%.  Given the Fed’s current policies, a rapidly growing economy would likely mean surging inflation and soaring interest rates.  Both would raise spending, deficits and debt sharply as well, as federal interest expense is already projected in Obama’s budget, with the lowest interest rates in history, to be $763 billion (more than three quarter trillion) in 2023 alone.

Obama’s budget consequently assumes that there will not be another recession within the next 10 years, though some predict that Obama’s anti-growth policies will cause another recession as early as this year.  That would cause revenues to collapse, spending to soar further, and deficits and debt to further explode.  The second great vulnerability of the Obama, and Senate Democrat, budgets is the potential for soaring interest rates, as market rates spike out of the Fed’s control, after the longest period of near zero rates in U.S. history.  With national debt approaching $20 trillion or more, sharply increasing interest rates would be extremely costly.

With these assumptions, the deficit and debt projections in Obama’s budget cannot be taken seriously, and most likely will turn out to be grossly underestimated.

Entitlement Reform Charade

President Obama has his propagandist flacks out there touting his supposed entitlement reforms in this budget as a grand gesture of compromise with Republicans.  But there is no real entitlement reform of any significance in Obama’s budget at all.

Obama has gone back to proposing to cut promised benefits for seniors again, by arbitrarily changing the cost of living adjustment formula to reduce Social Security benefits by $130 billion over the next decade from what they would be otherwise.  The argument that the new formula more accurately measures inflation is fallacious.  The most accurate inflation formula depends on what you are trying to calculate.  If you are trying to calculate how what consumers must pay for a fixed basket of goods and services changes over time, arguably even the currently used inflation index understates inflation.

Ten years ago, when President Bush was giving at least rhetorical support to the idea of personal accounts for Social Security, I argued against those who were still arguing for cuts in Social Security benefits by noting that no such cuts would ever be allowed by liberals without tax increases as well.  President Obama is now proving me right about that all along.

Obama’s proposed change to the Social Security inflation index would produce tiny, negligible reductions in runaway Social Security spending increases, especially as compared to personal accounts.  Over a generation, depending on how big the personal account option was and how many workers exercised it, such accounts would shift Social Security benefits entirely off of the federal budget, to private savings, investment and insurance instead, resulting in higher rather than lower benefits for those seniors who individually did choose the accounts.  That would ultimately mean the biggest reduction in government spending in world history, equal to about 10 percentage points of GDP, if the option was ultimately expanded to all Social Security and Medicare payroll taxes, given ultimate projections of currently payroll tax financed benefits.

Obama’s proposal, by sharp contrast, would only reduce Social Security spending increases by one-fourth of one percent.  Even with Obama’s “reform,” his own budget projects Social Security spending to soar over the next decade by 85%, from $768 billion last year to $1.427 trillion in 2023.

But Obama’s change in the Social Security inflation index would also apply to the index adjusting income tax brackets for inflation.  That would mean still another tax increase of $100 billion over the next 10 years, which would also apply to the middle class and working people as well, again in direction violation of Obama’s campaign promise not to raise taxes on such taxpayers “in any form.”

The only real entitlement reform solving all the problems of Social Security is to shift to a fully funded system based on real savings and investment, with zero unfunded liabilities.  That is what personal accounts do.

Obama’s other big, supposed compromise, entitlement “reform” is to again cut Medicare payments to doctors and hospitals serving seniors by another $250 billion over the next 10 years, in addition to the Obamacare cut of three quarters of a trillion in such Medicare cuts, making a nice round trillion in such Medicare cuts altogether.  While Democrats talk such a good game of Republicans wanting to slash and burn Medicare, it is Obama and the Democrats who have already done it.  And now they are celebrating doing it again.

Imagine what would happen to our national defense if the government refused to pay the builders of the Navy’s ships, the manufacturers of the Air Force’s planes, and the makers of the Army’s tanks.  That is what is going to happen to health care for seniors under Medicare, given Obama’s so-called “reforms.”

Real Medicare entitlement reform would involve expanding the more modern and successful Medicare Parts C and D to the old-fashioned Medicare Parts A and B, which is all that House Budget Committee Chairman Paul Ryan has proposed.  Seniors would get better benefits than under Obamacare’s Medicare with those real reforms, at major savings to taxpayers due to market competition and incentives, as we have already experienced under Medicare Parts C and D.  Those reforms would “end Medicare as we know it” only to the extent that C and D are not part of the alphabet.

The last successful, cost-saving, entitlement reform was the bipartisan 1996 welfare reforms of the old, New Deal, AFDC program.  Under the incentives of those reforms, two thirds of those dependent on the program left the rolls, with their incomes documented to increase by 25% as a result.  Yet, taxpayers saved 50% of the costs of the program after 10 years, compared to where it would be otherwise under prior trends.

Real entitlement reform would involve expanding those President Clinton compromising reforms to the rest of the nearly 200, federal, means tested welfare programs, projected to cost $10 trillion over the next 10 years.  CBO has scored such reform applied to just one program, Medicaid, as saving nearly $1 trillion over 10 years, while possibly vastly expanding access to health care for the poor, to their great benefit.  But there is exactly zero compromising leadership from President Obama on such reform.

Real entitlement reform would involve providing health care for all unlike Obamacare (still scored by CBO as leaving 30 million uninsured after 10 years – a gross underestimate) with the reforms proposed by John Goodman and myself in , “Health Care for All Without the Affordable Care Act [Obamacare],” NCPA Issue Brief No. 116 (October 17, 2012).  Those reforms would assure universal health care with no individual mandate and no employer mandate, at a savings to taxpayers of at least $2 trillion over the next 10 years alone.  But there is exactly zero compromising leadership from President Obama on such reform.

What’s It All About

Federal law requires President Obama to propose a budget for the next fiscal year by February 4 of each year, before the House and the Senate adopt their own budget resolutions.  But President Obama released his budget for next year just last week, after the House and the Senate had already adopted their budget resolutions.  So what is the point of the President issuing a budget proposal now?

The point is to simply posture for all those low information, Twitter voters in the 2014 elections, who will hear only from all the Democrat Party propagandists at the New York Times, the Washington Post, and MSNBC and brethren.  They will hear only about President Obama’s “spending cuts,” his grand, compromising, entitlement reforms, and how he is fighting for the middle class, with declining median incomes throughout his Administration, for the poor, with record, soaring poverty, and for “equality,” even as inequality has actually risen throughout his Administration.  Is this generation of Americans in the process of proving America’s more than 200 year experiment with democracy a failure?

[First Published at Forbes]

At the start of this year makers of medical devices became subject to a federal excise tax on their products. It’s an especially bad way to fund Obamacare, says the Tax Foundation’s Kyle Pomerleau, because it could reduce innovation, raise costs of medical care, and cause conflict within the medical industry over who should ultimately bear the burden of the tax.

Listen to Heartland’s Steve Stanek interview Kyle Pomerleau, an Economist for the Tax Foundation’s Center for Federal Tax Policy.

The Big Government, Never-Enough-of-Your-Coin-Coalition – Internet Division – is at it yet again.

The Barack Obama Administration has since it’s inception been very active in over-regulating the Web – for instance, Network Neutrality and Socialist-esque wireless price caps, to name but two huge power grabs.

Net Neutrality is in legal jeopardy – there are lawsuits pending to overturn it.  So President Obama’s Federal Communications Commission (FCC) has kept open the possibility of – again, without any authority to do so – over-regulating the Web further still:

President Obama will move the Internet from Title I to Title II.  Title II is how the FCC over-regulates landline telephone lines – you know, that bastion of innovation lo these last seventy-plus years. Title II opens up the Pandora’s Box of uber-regulation of the Internet. 

But wait – there’s more.  By so doing, the federal government is also looking to open yet another vein.

Under Title II, President Obama can also begin to tax the Internet – just as the Feds tax landlines.

Of course they are already uber-taxing your Internet use – on your wireless phones:

Checked your cell phone bill lately? (The Universal Service Fund tax) is 17.4% – an $8 billion total take in 2010 – and hurtling ever upward. 

And now they are looking to let the states pile on.

Senate Edges Closer to Vote on Internet Sales Tax

Legislation giving states the power to compel retailers outside their borders to collect online sales taxes, a touchy subject for Internet merchants, is likely to move forward in the Senate next week.

I wonder why this would be “a touchy subject for Internet merchants?”

Current law dictates that a state can only require a business to collect its sales tax if it is physically present within its boundaries….

S.743 (the Marketplace Fairness Act [MFA]) would countenance an enormous expansion in state tax collection authority by wiping away the “physical presence standard,” a baseline protection that shields taxpayers from harassment by out of state collectors….

Dismantling this protection for remote retail sales would create a very slippery slope for states to attempt collection of business or even income taxes from out of state entities.

Why would anyone object to being taxed by forty-nine states with which they have no relationship?  Taxation without representation on stilts, perhaps?

And of course it doesn’t at all complicate compliance matters.

(The MFA will) forc(e) online retailers to calculate and remit to more than 9,600 distinct taxing jurisdictions.

Nothing like in these interminably tough times making things for businesses infinitely more difficult and expensive.

No problem – they can begin figuring out compliance to the Marketplace Fairness Act right after they finish doing so with ObamaCare.  And Dodd-Frank.  And the President’s all-encompassing, on-all-fronts regulatory overrun.  And….

After they pay all those new taxes, and plow through those thousands-of-pages-of-new-law and hundreds-of-thousands-of-pages-of-new-regulation, I’m sure they’ll have plenty of money, time, and energy left to, you know, actually concentrate on their businesses.

Though that last part really isn’t at all important important to the Big Government Coalition.  For them, ‘tis far better that you be paid up on their taxes and in compliance with their red tape.

No matter how much red ink ensues.

P.S.: You can contact Congress and let them know how incredibly foolish – i.e. D.C.-like – they’re being with this new Internet tax here.

[First Published at Red State]

My new policy brief urges the Federal Communications Commission to get on with the business of allocating the necessary spectrum to meet the burgeoning demand for wireless services.

The paper was finished before Chairman Julius Genachowski announced his resignation last month. At the risk of sounding harsh, that might be addition by subtraction. One of the big disappointments of Genachowski’s tenure was the lack of significant movement to get spectrum freed up and auctioned. In fairness, there were the interests a number of powerful constituencies to be balanced: the wireless companies, the broadcasters, and the federal government itself, which is sitting on chunks of prime spectrum and refuses to budge.

But that’s the job Congress specifically delegated to the FCC. We’d be closer to a resolution–and the public would have been better served–had the FCC put its energies into crafting a viable plan for spectrum trading and re-assignment instead of hand-wringing over how to handicap bidders with neutrality conditions and giving regulatory favors to developers of unproven technologies such as Super WiFi. Instead of managing the spectrum process, the FCC got sidetracked trying to to pick winners and losers.

A new chairman brings an opportunity for a new direction. Spectrum relief should go to the top of the agenda. And as I say in the policy brief, just do it.

[First published at Tech Liberation Front]

EPA puts out press releases like this one at least weekly. If you examine activities, you notice most activity is spent on advocacy. Much of this advocacy is peddling the notion that carbon dioxide is a pollutant that must be curtailed.

Carbon dioxide is an airbourne fertilizer essential for survival of life on this planet. Oxygen supports combustion and was responsible for the explosion in Texas last week that killed at least 14. Why doesn’t EPA declare oxygen a pollutant because numerous examples exist where oxygen’s support of combustion killed millions.

The federal budget will be in debt $1.1 trillion for Fiscal Year 2014. This is the same level of debt the preceding 4 years–for a five-year total exceeding $5 trillion. Can the United States really afford this frivolous waste of tax dollars expended by the EPA.

Has anyone heard of EPA threatening to pull back on their activities due to the budget sequestration? In Atlanta, Georgia, home of the world’s busiest airport, air traffic controlers are going to be furloughed starting this May due to sequestration. This is reported to cause flight delays at the world’s busiest airport.

I was honored that several Arkansas legislators invited me to testify earlier this month on a bill that would impose renewable power mandates in Arkansas. Renewable power mandates impose punishing costs on the economy and the environment. The Arkansas bill’s feed-in tariffs requiring renewable power production from small-scale facilities were particularly costly and troubling.

The good news for Arkansans is the renewable power mandates died in the Joint Energy Committee. Before the committee met, legislative analysts predicted a very close vote on the bill. After I presented my testimony documenting the high costs of renewable power, no Committee member seconded a motion to vote on the bill, so it failed without a vote.

Watch it below:

Two scientist-activists at the University of Wisconsin-Madison published an article in Science last week calling for more “Climate Change Conversations,” as the article was titled. Speaking on behalf of people skeptical of an asserted global warming crisis, I accept the invitation.

Bassam Shakhashiri, a professor at the ultra-liberal University of Wisconsin-Madison and Distinguished Chair of the “progressive” group the Wisconsin Idea, along with his University of Wisconsin-Madison colleague Jerry Bell, write, “Communicating the science of climate change provides one example where the scientific community must do more. Climate change affects everyone, so everyone should understand why the climate is changing and what it means for them, their children, and generations to follow.”

Let us begin this important conversation now.

In their article, Shakhashiri and Bell claim “the average temperature of the Earth is increasing.” Well, not during the past decade the temperature hasn’t. NASA and NOAA satellite data show the Earth’s temperature has not risen at all for more than a decade. This has occurred even though global carbon dioxide emissions rose by a third during the past 10 years.  If carbon dioxide is truly the primary driver of global temperature change, why has there been no warming during the past decade?

Global warming activists will often reply that we should look at the past century rather than the past decade when assessing global temperatures. Fair enough. At least half of the global warming of the 20th century occurred prior to the post-World War II economic boom. Global carbon dioxide emissions were minimal during the pre-World War II era. Again, this argues against carbon dioxide emissions being the primary driver of global temperature, and argues against economically ruinous “progressive” programs to restrict carbon dioxide emissions.

More importantly, we should look at the past several thousand years, rather than merely the past century, when assessing the context of current temperatures. The Earth’s current temperature, when assessed in proper context, is relatively cool right now. Today’s temperatures are cooler than those that prevailed during most of the past 10,000 years, when human civilization first developed and thrived. Temperatures during the past century only seem warm when compared with the Little Ice Age, which brought about the coldest temperatures of the past 10,000 years and ended just over a century ago.

Shakhashir and Bell claim “ice is melting.” If global temperatures finally warm from the extreme cold of the Little Ice Age, we can certainly expect some of the unusually prevalent ice to melt. But is ice melting at an alarming rate? Not according to NASA and NOAA satellite data. In fact, NASA and NOAA satellite instruments show polar sea ice has remained relatively steady since the satellite instruments were launched in 1979, and polar sea ice is currently more extensive than the long-term average.

Shakhashir and Bell claim “oceans are acidifying.” The oceans are alkaline, not acidic. The oceans have a pH of 8.1, which is far above the neutral pH of 7.0. To the extent ocean alkalinity may have declined from 8.2 to 8.1 during the past century, the oceans are becoming less alkaline, not more acidic.

More importantly, marine life – like terrestrial plant life – is benefiting from higher carbon levels. Several peer-reviewed studies document plankton, sea stars, crustaceans and other marine life thrive and grow more rapidly in ocean water with higher carbon content and less alkalinity.

Shakhashir and Bell claim “extreme weather events are more frequent.” If Shakhashir and Bell define “extreme weather events” as a remarkable decline in drought, a remarkable increase in soil moisture, a remarkable decline in strong tornadoes and a remarkable decline in hurricane strikes, they are correct. However, if they define “extreme weather events” the way most other people in the world define the term, they are irrefutably wrong.  As temperatures continue to recover from the depths of the Little Ice Age, droughts are less frequent and severe, global soil moisture is improving, strong tornadoes are in long-term decline, and hurricane strikes are becoming less frequent.

Shakhashiri and Bell assert we should have more climate change conversations. I agree, especially considering the scientific evidence debunks global warming alarmism. Messieurs Shakhashiri and Bell, you name the time, place and venue, and I will be happy to oblige you in considering this climate change conversation.

[First Published at Forbes]

The biggest fallacy regarding Social Security is that it would be easier politically to cut Social Security benefits rather than to fundamentally reform the way the program works, so as to empower workers with the freedom to choose personal savings, investment, and insurance accounts.

Through such personal accounts, all families at all income levels would receive higher rather than lower benefits, much more than Social Security even promises, let alone what it can pay. That is because a lifetime of savings and investment would always pay more in benefits than a lifetime of no savings and investment, which is Social Security.

Social Security is entirely a tax and redistribution system, with no savings and investment at all. Even if the Social Security trust fund involved any real investment, the surpluses going into the fund in the past never amounted to more than about 10% of payroll tax revenues each year. The great majority of Social Security taxes were always immediately paid out to finance current benefits. Moreover, the Social Security surpluses are over now. The trust fund is entering a phase of long-term liquidation, with Social Security deficits each year drawing on the trust fund.

But real investment involves funding of productive activities and resources. The Social Security trust fund is and was always 100% federal debt immediately used to finance increased government spending. That is why it is officially accounted for in federal bookkeeping as part of the gross federal debt, subject to the national debt limit. Even the interest paid on that debt is financed 100% out of redistribution taken from the productive, not increased production, as in real investment.

Consequently, Social Security payroll taxes do not earn for working people the investment returns and ultimate benefits that are produced by real savings and investment. That is why personal accounts would pay seniors so much more than Social Security.

Moreover, with personal accounts, instead of the government imposing one retirement age on everyone, each worker can choose his or her own retirement age, with market incentives to delay retirement as long as possible. That is because to the extent workers delay retirement, their accounts accumulate to higher and higher amounts, which would pay higher and higher ultimate benefits.

So those engaged in manual labor can retire in their early 60s if they want, maybe with extra contributions to their accounts over the years from their employers to provide more for that. But millions engaged in intellectual work would choose to continue to work well into their 70s, and prefer that, a result that could never be imposed politically.

The only ultimate solution for Social Security is to scrap its no savings, no investment, tax and redistribution system for a fully funded system based on real savings and investment, with zero unfunded liabilities. That is what personal accounts do. That would require financing the increased savings and investment over a generation. It wouldn’t involve transition “costs,” or paying twice for retirement, which has confused even some conservative economists, who should have known better.

When you save $1,000 in an investment account, you don’t say that it cost me $1,000. That is because you still have it, in your account. Similarly, saving and investing over a generation in personal accounts does not involve transition “costs.” It involves replacing the payroll tax, the largest tax working people pay, with a personal family wealth engine that can grow to half a million, even a million or more, over a lifetime of working, saving, and investing.

Moreover, those savings and investment immediately go to work in the economy today, creating jobs, and increasing wages and incomes for working people. Some transition “cost.” Instead, personal accounts would result in the greatest reduction in government spending in world history, as the benefits financed by taxes and government spending today would be replaced by higher benefits financed by savings, investment, and insurance in the private sector.

Such personal accounts do not involve pie in the sky theorizing. They are a proven reform that has already worked in the real world. From the South American nation of Chile starting more than 30 years ago, to Great Britain starting under Thatcher, to local government workers in and around Galveston, Texas, who opted out of Social Security more than 30 years ago as well, and elsewhere, personal accounts are a proven success for working people. That same success is shown as well by the savings and investment accounts for federal workers under the federal Thrift Savings retirement plan.

In 2004 and 2005, Congressman Paul Ryan (R-WI), now chairman of the House Budget Committee, introduced model legislation providing for such personal accounts. That model was incorporated in the Ryan Roadmap, which provided full financing for the personal accounts through other necessary entitlement reforms. All of it was scored by the Chief Actuary of Social Security and CBO, validating every one of of the above arguments.

Obama’s Benefit Cuts and Tax Increases Instead

Almost a decade ago, when President Bush was giving at least rhetorical support to the idea of personal accounts for Social Security, I argued against those who were still arguing for cuts in Social Security benefits by noting that liberals would never allow such cuts without corresponding tax increases as well. Even many conservatives who should have known better, and recognized the obvious, openly doubted that claim.

But Obama is proving me right about that again. What Obama has proposed — and what his own hired propagandists (Jay Carney) and media sycophants (New York Times, Washington Post) tout as entitlement reform — involves changing the Social Security indexing formula that accounts for inflation. This would provide tiny, negligible, Social Security spending reductions from the increases in spending, especially as compared to personal accounts. As Charles Krauthammer reported last week, it would only reduce the dramatic increase in Social Security spending by one quarter of one percent. Even under Obama’s proposal, his own budget projects Social Security spending to soar over the next decade by 85% compared to last year, from $768 billion to $1.43 trillion.

But here is the kicker. Obama’s proposal would also increase taxes by another $100 billion, on top of the $1 trillion in Obamacare tax increases over the next decade, and the $600 billion in tax increases focused on the nation’s job creators, investors, and successful small businesses (“the rich”). That is because the same indexing change applies to the indexing of the tax brackets for inflation. That will mean a tax increase on the middle class and working people as well. That $100 billion in tax increases over the next decade compares to $130 billion spending savings, out of the roaring increase in such spending.

The proposed change is not even a more accurate assessment of inflation, also contrary to the propaganda. It changes the inflation measurement from calculating the change in prices of a fixed basket of goods and services over time, to a measurement of the price changes in a changing basket of goods and services, reflecting the declining standard of living of the American people (for example, substituting the lower price of hamburger for the price of steak as the American people increasingly no longer buy steak they can no longer afford).

Still More Medicare Cuts

The second great entitlement “reform” is further reducing Medicare payments to doctors and hospitals for health care provided to seniors, by $250 billion over the next 10 years. Obamacare already slashes such medical fee payments by three quarters of a trillion over the next 10 years. The Obama budget would make that a rough trillion in such Medicare cuts over 10 years. While Democrats have so aggressively accused Republicans of proposing draconian Medicare cuts, it is Obama and the Democrats who have actually done it. And now they are celebrating doing it again.

That would intractably leave Medicare paying less for health care for seniors than Medicaid pays for health care for the poor, which is demonstrably woefully inadequate. Seniors would consequently be unable to obtain timely, quality, health care. Medicare’s own Chief Actuary projects that one out of seven hospitals will leave Medicare over the next seven years as a result of the cuts already enacted by Obama and the Democrats. NCPA President John Goodman adds on his health policy blog, “[B]eyond that things just get worse and worse. Access to care will become a huge issue as waiting times [for seniors] to see doctors and enter hospitals grow…. From a financial point of view, seniors will be less attractive to doctors than welfare mothers.”

Such entitlement “reform” would work as well as trying to reduce defense spending by refusing to pay the builders of the Navy’s ships, the manufacturers of the Air Forces planes, and the makers of the Army’s tanks.

Real Medicare entitlement reform would involve not refusing to pay the doctors and hospitals providing medical care to seniors, but expanding the proven successful, more modern, Medicare Parts C and D to Medicare Parts A and B. That is all that Paul Ryan’s much maligned Medicare reforms would do. As with personal accounts, seniors would be far better off with such Medicare reforms.

Medicare Part C is Medicare Advantage, which provides “premium support” seniors can use to choose private insurers to provide their Medicare coverage. More than one-fourth of seniors have already chosen these private plans because they believe these plans provide better benefits than Medicare. Medicare Part D is the Medicare drug program, which provides “premium support” seniors use to choose among private insurers to provide their Medicare drug benefits. Original projected costs for Medicare Part D have been reduced by 40% because of the market competition among these private insurers.

Simple common sense would compel expanding what has been proven to work (Medicare Parts C and D) to what has been proven not to work (Medicare Parts A and B). But President Obama always chooses the exact opposite of common sense, while invoking common sense, to mislead the gullible. (See, e.g., Obamanomics, which involves doing the exact opposite on the economy of everything Reagan did, with the exact opposite results).

Such reform would be further enhanced for seniors by expanding personal accounts to the Medicare payroll tax as well. In retirement, those accumulated funds over the years would finance further benefits to be used to choose among competing private insurers for Medicare coverage. All these reforms would provide enormous gains for seniors as compared to Obamacare, because private insurers have to pay enough to doctors and hospitals to enable their customers to get timely and effective health care when they need it, providing an escape hatch from the Obamacare Medicare cuts.

More Real Entitlement Reform Still more real entitlement reform would involve replacing Obamacare with a comprehensive health care safety net that would assure essential health care for all at just a fraction of the cost of Obamacare, with no individual mandate and no employer mandate. That contrasts with Obamacare, which CBO projects would still leave 30 million uninsured after 10 full years of implementation. Indeed, it will leave far more uninsured than that, as tens of millions will lose their employer provided health insurance once Obamacare is implemented next year. (So much for “If you like your health plan, you can keep it.”).

Indeed, that can be accomplished while reducing federal spending over the next 10 years by close to $2 trillion, at least, as explained in full detail in John Goodman and Peter Ferrara, “Health Care for All Without the Affordable Care Act [Obamacare],” NCPA Issue Brief No. 116 (October 17, 2012).

More real entitlement reform would further involve expanding the last successful, cost-saving entitlement reform, the 1996 welfare reforms of the New Deal, AFDC program in 1996, to every means tested federal welfare program. Those 1996 reforms led to two-thirds leaving the AFDC rolls for work, increasing the incomes of the poor formerly dependent on the program by 25%, while reducing costs to taxpayers by 50% from where they would be otherwise.

Close to 200 federal means-tested welfare programs remain, projected to cost more than $10 trillion over the next 10 years. Sending all of those programs back to the states with block grants, as under the 1996 AFDC reforms, could effectively eliminate poverty in America entirely. Yet, the savings to taxpayers would run into the trillions over the years, based on the results of the 1996 reforms, another reform proven to work in the real world.

That would include Medicaid, which would be sent entirely back to the states with the feds providing the federal share of spending only through fixed, finite block grants, again as in 1996. The states could then each provide the poor with premium support they could use to purchase private health coverage of their choice. That would benefit the poor enormously, again because private insurers have to pay doctors and hospitals enough to ensure that their customers can get timely and effective health care when needed.

Such real entitlement reform would require real leadership out of Washington, which is why it is nowhere in sight. President Obama’s lauded entitlement reforms are just meant to provide talking points for the 2014 elections regarding supposed statesman-like compromise, when it is actually just more posturing sham not worthy of the name of entitlement reform.

[First Published at the American Spectator]

Energy Expert John Droz reports on North Carolina legislation that would roll back the state’s renewable power mandates.

Listen to Heartland’s James M. Taylor interview John Droz, a North Carolina-based wind power expert central to the effort to remove the state’s renewable power mandates.  Droz is the author of  “Wind Power Facts” and a Senior Fellow at American Tradition Institute.

In the race to the financial bottom the State of Illinois vies nicely with several other states, including (depending on the precise year involved) California, New York, and Ohio, with a projected 2012 deficit exceeding 43.8 Billion.  (The actual deficit, incorporating more realistic assumed internal investment returns, may be closer to $100 billion.)  Like that of its close competitors, much of the Illinois deficit stems from unfunded liability for defined benefit pensions promised to people who used to, but no longer, work for the State.

In terms of political corruption, too, the list may vary from year to year but Illinois is a solid competitor.  Four of the past eight Illinois governors have gone to federal prison, including one (Republican George Ryan) recently released to probation following the death of his elderly wife and one (Democrat Rod Blagojevich) behind bars in Colorado (barring an unlikely end-of-term pardon from President Barack Obama) for years to come.

The list of Chicago aldermen and Illinois Congressmen who have been criminally convicted or imprisoned is too lengthy to detail here, but includes former House Ways and Means Committee Chairman Dan Rostenkowski, the recently resigned Jesse Jackson, Jr., recently convicted Chicago Alderman William Beavers (a self-described “hog with big nuts”), and even popular former Congressman and Chicago Mayor Harold Washington himself, who once spent thirty days in jail for not filing his income tax returns.

In terms of sheer political incoherence, however, Illinois may stand unchallenged at the bottom; indeed, that sometimes seems to be its intent.   As Seventh Circuit Judge Richard Posner pointed out in the Illinois gun control case of Moore v. Madigan, “Remarkably, Illinois is the only state that maintains a flat ban on carrying ready-to-use guns outside the home [emphasis in original], … . If the Illinois approach were demonstrably superior, one would expect at least one or two other states to have emulated it.”

Further proof, if any were needed, of Illinois’ unchallenged position in incoherence comes from two closely (if unintentionally) related bills out of the State capitol of Springfield.

One bill, introduced by House Majority Leader Barbara Flynn Currie (D-Chicago) and passed by the Illinois House of Representatives on Tuesday, April 16, would automatically charge 17-year-old defendants as juveniles for crimes considered “lesser” felonies and would send the convicted defendants to juvenile correctional centers rather than to prison.  Under the second bill, which State Representative Carol Sente (D-Vernon Hills) proposed last week as an amendment to House Bill 226, Illinois would nonetheless lower the voting age in primary elections to – you guessed it – 17 for those who will turn 18 in time for the general election.

In justifying the first bill, Majority Leader Currie, a fixture in the legislature since the late 1970’s, was quoted in the Chicago Tribune as saying that “I think it’s time for us to treat young people as young people because, as we know, they really are young, and their minds are not fully formed and their judgment is not always as mature as we would like it to be.”

Yet the idea behind the second bill, which passed the House Executive Committee unanimously on Monday, April 15, 2013, is exactly the opposite.  According to Rep. Sente, as quoted in the April 16, 2013, Chicago Daily Law Bulletin, “if you’re ready to vote at 18 in the general election, that as a 17-year-old during the primary, where we select the primary candidates in the general, that age group could also vote.”  What makes this proposed change in voting law even more shocking than it may first appear is that Illinois, as a practical matter, is a one-party state:  As Oak Park-based election lawyer Richard K. Means put it in the same Law Bulletin article, “Because of gerrymandering and because of the way our districts are clearly safe districts for one party … the real contest is in the primary election.”

So there you have it – seventeen-year olds not old enough or mature enough to know right from wrong (see “Other People’s Children,” April 16, 2103) are nonetheless responsible enough to vote.

Perhaps that’s what President Obama meant in his 2013 State of the Union address when he talked about “improving the voting experience.”

Or perhaps that helps explain why Illinois is at the bottom of the heap in both political corruption and financial disarray and is likely destined to stay there.

It’s like they say – you can’t make this stuff up.

The  last check and balance on President Obama is the Republican majority in the  House of Representatives.  He has made clear that he intends to remove that  check on his power in the 2014 elections.

Our  Founding Fathers wisely provided for a free and independent press as an  additional check on government power.  But the New York Times, the  Washington Post, NBC, CBS and ABC decided they had a better idea.   They concluded that it is more important to behave voluntarily like the old  Soviet press did under government compulsion, when the socialist party is in  power.

Of  course, we do still have the freedom in America for now for the alternative  media — talk radio, Fox News, the Wall Street Journal editorial page,  conservative websites, blogs and a few other media outlets – to air criticism of  the reigning socialist regime.  But 50% of the country is ensconced in urban enclaves where listening to or reading views that are not friendly to socialist rule is considered socially unacceptable behavior.  So, no alternative views, or checks on the reigning regime, ever break through there.  That explains why our once grand, world-leading democracy  has now been rendered dysfunctional.

An  independent judiciary is also supposed to be a check and balance on the abuse of  government power.  But as his second term drags on, President Obama will have appointed more and more, and eventually a majority of, all federal judges.

Moreover,  these won’t just be any judges but liberal judges chosen with a liberal judicial philosophy that their job is not to follow the law, but to do what they think is right, regardless of the law.  What is “right” is going to be Obama’s  liberal/left agenda.

Holding the line even right now are only five rapidly aging old men on the Supreme  Court.  Replacing even one of them with a liberal appointee will mean the end of the Reagan majority on the Court.  Everything in our society will  then change.  Gun rights and the Second Amendment, gone in a  heartbeat.  Property rights and the rule of law, forget about it.   Religious freedom?  Only for the socialist religion.

These will be replaced by a constitutional right to welfare, and to your money.   By gay marriage.  And by a right to free contraceptives for everyone, so  America can party on right through its decline, just like in Europe.

The  Second Mid-Term Hex HeHexz

The  second mid-term election of a two term incumbent President, as in 2014, has historically been a disaster for the party of the incumbent President.  It was so even for Franklin Roosevelt in 1938.  It was so for the war hero  Dwight Eisenhower in 1958.  Counting Kennedy/Johnson as one Administration,  it was true for them as well in 1966.  And it was so even for Ronald  Reagan, even in the midst of an historic recovery, when the Republicans lost control of the Senate, and even more ground in the Democrat majority House, in  1986.

As  University of Virginia political scientist Larry Sabato and Kyle Kondik write in the March 19 Wall Street Journal,

“Since  the start of the modern two-party system in the mid-19th century, the party of an incumbent president has never captured control of the House from the other party in a mid-term election.  While many presidents have held the  House for their party, in 35 of 38 midterms since the Civil War the incumbent’s  party has lost ground.”

And  that is in any mid-term, not just in the more onerous second mid-terms.

But  President Obama has decided to defy that history.  He has decided not to try to govern with the Republican House majority, but to devote the next 18  months to political posturing and framing the issues so negatively against the  Republicans that America would rally to give Obama total control of the  government in November 2014, with a restored Democrat majority in the House as well, leaving no check on Obama’s power at all.

That  is because President Obama’s goal is the radical transformation of America from  the world’s leading capitalist state, the freest, most prosperous, and mightiest  in history, into just another socialist third world country.  But he knows  he can’t do that with the Republican House majority elected in 2010 precisely to stop his socialist agenda.  For that radical, socialist transformation,  reflecting what the Democratic Party and their party controlled media lapdogs are really all about, he needs total control of Congress.  For that he  needs, effectively, a socialist, one-party state, which is actually what he is after in defying history, and seeking a restored Democrat House majority.

Organizing  for Action

This  is what Obama’s new 501(c)(4) organization, Organizing for Action, is all  about.  He has transformed his campaign into that organization, giving it the advanced social media technology, contact lists, and grassroots  infrastructure of the campaign.  Jason Stverak, President of the Franklin Center for Government and Public Integrity, writes in the March 15  Washington Times, “Organizing for Action is flooding the airwaves with  advertisements praising the Obama Administration’s policies, and viewers at home are being inundated with just as many talking points and political attacks as they were during the 2012 campaign.”

Through  that organization, Obama has begun an unprecedented fundraising crusade to raise  $50 million to be spent in Republican districts to discredit Congressional  Republican incumbents.  But as a 501(c)(4) social activist organization,  Organizing for Action is not subject to campaign financing limits.  For  half a million in contributions, donors get private meetings with Obama where they can lobby for their personal agendas, crony capitalist favoritism, and  other special interest pleading.

This  is going to be the ugliest smear campaign in American political history, similar to what we saw in 2012, where the President’s campaign made up Romney’s  positions and then campaigned against their own strawmen.  Such as the charges that Romney was proposing middle class tax increases, or that he wanted to ban  contraceptives.  When the real Romney showed up during the first debate to say that those were not his positions, Obama partisans responded that he must be lying.

It  is up to conservative activists to respond to this with truth squads to counter and reveal the propaganda.  This is not going to be primarily about  Republicans, but about preserving the credibility of the conservative philosophy, which is actually what is going to be under attack.  Witness  the current liberal/left Democrat campaign for gun control and gay marriage.  We need to preserve, protect and defend the Reagan economic  record, for example.  We need to explain the root government causes of the  financial crisis, and advocate reforms so it will never happen again.  In  addition to tax reform, spending control, and entitlement reforms, that would  involve monetary reform, so America can once again enjoy a dollar as good as gold.

We  also need to promote and defend the national defense doctrine of peace through strength.  And we need to more than redouble a positive vision of religious freedom and pro-family values.

The High Stakes Gamble

In  defying the long term political trends, President Obama is engaged in a high stakes political gamble, putting his own political credibility on the  line.  If Obama breaks the historical pattern, and the Democrats take the  House, then Obama will be the new Hugo Chavez, in effective authoritarian  control of America.

But  if the historical patterns hold, and instead of the Democrats taking back the  House, the Republicans take back the Senate, then President Obama will be a politically discredited lame duck, facing an entirely Republican controlled  Congress.  His socialist transformation of America will be over and exposed.

Prospects  are actually quite good for the Republicans to take over Senate control.   Besides the historical trends, Sabato and Kondik further  explain,

“Democrats  are defending seats in seven states that Mitt Romney won in last year’s  Presidential race: Alaska, Arkansas, Louisiana, Montana, North Carolina, South  Dakota, and West Virginia.  Mr. Obama won an average of just 40.5% of the  vote in these states.  In addition, the retirements of longtime Sens. Tom  Harkin (D. Iowa) and Carl Levin (D., Mich.) make those previously safe seats  much more competitive.  Factor in some freshman Democratic Senators elected  from swing states in Obama’s 2008 wave (the last time this batch of seats was  contested), and Republicans could run competitive challenges in 10 or more Democrat-held seats.  Incompetent GOP nominees could change the picture,  but almost all of the seats that Republicans are defending are in solid-red states.”

The  Bible says, “By their fruits ye shall know them.”  Adding to GOP prospects  for next year are Obama chickens coming home to roost.  Obamacare will be creating chaos in health care next year, with tens of millions losing their  employer provided health insurance.  Health insurance premiums will be  soaring, to double or more for many, particularly young adults.  The  negative market reaction to those increases will be causing health insurers to  collapse and go out of business, resulting in still more government takeover of  health care.

Millions  will lose their jobs as employers seek to downsize and break up to avoid the  economically fatal costs of Obamacare.  Millions of others will be reduced  to part time workers for the same reason.  That will mean further declining  real wages and incomes for working people and the middle class, with poverty  soaring still higher.

If  the Obama economy falls back into recession in the second term, as Obama deserves, it will be the Democratic Party that will be on the verge of  extinction.  Unemployment would explode into double digits, and deficits would soar to over $2 trillion.

And  then there will be a new front regarding chaos in foreign policy.  Iran is likely to break out as a nuclear power before the mid-terms, which may mean  nuclear war in the Middle  East.  At best, it would mean nuclear  proliferation efforts spreading to Saudi  Arabia, Turkey, Egypt and other Middle Eastern nations.  North Korea’s nuclear breakout would extend that to  Japan, South Korea, and maybe Australia (especially as the American nuclear  umbrella fades under Obama policies).  The formerly progressive citadels of  San Francisco, Portland, and Seattle will have new reasons to begin to question  Obama’s foolish national defense policies.

In  my opinion, Obama is primarily motivated by ideology and power, and not by the  trappings of office.  I predict that if we aggressively advance the  conservative philosophy over the next two years, do our job in the midterms  (electing not just Republicans, but true Tea Party Republicans), and make the  historical patterns stick, Obama won’t want to be a time server for the last two  years, battling Republicans with no ability to advance his socialist  agenda.

I  predict in that case, Obama will resign, ending the Marxist assault on America as a failure.  He will let Biden run for reelection as an incumbent, with Hillary on the ticket.  Then it will be time for the rest of us to clean house, everywhere Marxists have already infiltrated American society and  culture, from the Democrat Party controlled media, to Hollywood, to “academic”  cloisters of taxpayer financed Marxism.

If  this generation of Americans cannot rise to defend traditional American freedom and prosperity, we will lose both.  And deserve to.

[First Published at American Thinker]

In a nation that officially – officially, mind you, at the highest levels of government – can no longer distinguish between an act of terror and an act of workplace violence (the Fort Hood shootings) or a spontaneous celebration and a terrorist plot on the eleventh anniversary of the September 11 attacks (Benghazi), it is important to distinguish between the words “terrorism” and “tragedy” in the context of the Boston Marathon Massacre.

A hurricane, a plague, a tornado, or a famine is a tragedy – even if, like the Dust Bowl of the 1930’s, it is ultimately the predictable result of human conduct.  An earthquake that takes human lives is a tragedy, as likewise a tsunami that does the same.

A pressure cooker stuffed with explosives, nails, and ball bearings set to explode as thousands of lightly clad runners finishing a twenty-six mile road race in front of friends and family is an act of terrorism.  This is especially true of such an attack that takes place on Patriot’s Day in Boston, a home of the American revolution, on the day that U. S. federal and state personal income tax returns are due.

In contrast to the Benghazi and Ft. Hood attacks, this time the administration relatively quickly acknowledged the attack for what it is.  Although the word “terror” first came from a White House spokesperson, the President himself was soon on board.

Presumably no one outside the administration – and plausibly no one within it – yet knows who may be behind the attack.  This may lead cynics to suspect that early intelligence does not suggest that the attack came from al Qaeda, Iranian, or Taliban-trained Islamic extremists, or official sources might be either blaming a YouTube video or exclaiming in defiance “at this point, what difference can it possibly make?”

At this point the fairest answer, which the media should acknowledge, is that we simply don’t know.

But whether the miscreants behind this mayhem are members of al Qaeda or Sinn Fein, Hamas or Hezbollah, the Weathermen or the Aryan Nation, the administration has, to its credit, already labeled this a terrorist act and not just a “tragedy.”

The attack remains, of course, a tragedy for the runners, the race, and the City of Boston, and most especially for those who were wounded or killed and their family and friends.

But the first step, as they say, in solving a problem is to call it by its right name.

Last week, Bob Goodlatte (R-Va.) and other lawmakers introduced legislation in the House of Representatives calling for major changes in the Renewable Fuel Standard (RFS). The RFS is the reason why most US automobile fuel contains ten percent ethanol. The bill would eliminate the current mandate to blend 15 billion gallons of corn ethanol into fuel by 2022 and ban ethanol fuel content over ten percent. But are ethanol mandates good public policy?

For decades, ethanol vehicle fuel was touted first as a solution to reduce oil imports and second as a solution for global warming. The Energy Tax Act of 1978 established the US “gasohol” industry, providing a subsidy of 40 cents per gallon for ethanol blended with gasoline. President George W. Bush promoted biofuels to reduce dependence on foreign oil, stating, “I set a goal to replace oil from around the world. The best way and the fastest way to do so is to expand the use of ethanol.” Last year the Environmental Protection Agency promoted E15, a fifteen percent ethanol blend for cars and trucks, announcing, “Increased use of renewable fuels in the United States can reduce dependence upon foreign sources of crude oil and foster development of domestic energy sources, while at the same time providing important reductions in greenhouse gas emissions that contribute to climate change.” But it appears that these two reasons for promoting ethanol vehicle fuel have disappeared.

First, US dependence on oil imports is greatly reduced. Net imports of crude oil peaked in 2005, providing 60 percent of US consumption. In 2012, just six years later, oil imports dropped to 40 percent of consumption and continue to fall. Imports from the Organization of Petroleum Exporting Countries declined from half of US imports in 1993 to 40 percent of imports 2012. Canada is now the largest single-nation supplier of crude to the US, rising from 14 percent in 1993 to 28 percent today. Construction of the Keystone pipeline would switch additional imports from OPEC to Canada.

At the same time, US oil production is ramping due to the hydrofracturing revolution. Oil production from shale fields in North Dakota and Texas led to a boost in US oil production by 30 percent since 2006. Industry experts predict almost all US petroleum will come from domestic and Canadian sources by 2030. There’s no longer a need to force ethanol use to reduce oil imports.

Second, recent studies show that the use of ethanol and biodiesel does not reduce greenhouse gas emissions. For many years, proponents of decarbonization assumed that the burning of biofuels would be “carbon neutral.” The carbon neutral concept assumes that as plants grow they absorb carbon dioxide equal to the amount released when burned. If true, the substitution of ethanol for gasoline would reduce emissions.

But a 2011 opinion from the Science Committee of the European Environment Agency pointed out what it called a “serious accounting error.” The carbon neutral concept does not consider vegetation that would naturally grow on land used for biofuel production. Since biofuels are less efficient than gasoline or diesel fuel, they actually emit more CO2 per mile driven than hydrocarbon fuels, when proper accounting is used for carbon sequestered in natural vegetation. Further, a 2011 study for the National Academy of Sciences found that, “…production of ethanol as fuel to displace gasoline is likely to increase such air pollutants as particulate matter, ozone, and sulfur oxides.”

Ethanol fuel is no bargain. For example, when gasoline is priced at $3.40 per gallon, the 85 percent ethanol blend (E85) is priced at about $3.00 per gallon. But since the energy content of ethanol is only 66 percent that of gasoline, a tank of E85 gets only about 71 percent of the mileage of a tank of pure gasoline. E85 fuel should be priced at $2.41 per gallon for the driver to break even. According to the US Department of Agriculture, ethanol fuel remains about 25 percent more expensive than gasoline.

World biofuel production has increased by a factor of seven over the last ten years. Corn and soybean prices have doubled over the same period.  (US Dept. of Energy, Food and Policy Research Institute, 2011)

Mandates for ethanol vehicle fuel are also boosting food prices. Forty percent of the US corn crop is diverted to produce about ten percent of US vehicle fuel. Global corn and soybean prices have doubled over the last ten years in concert with the growth in ethanol and biodiesel production. Anyone who drives a car or eats food is paying higher prices due to ethanol mandates.

But isn’t ethanol fuel sustainable? Not in terms of water consumption. Studies by the Argonne National Laboratory and the Netherlands University of Twente found that ethanol production consumes twice to dozens of times more water than gasoline produced from petroleum, even from Canadian oil sands.

 Gallons of water consumed per gallon of fuel produced for gasoline, ethanol, and biodiesel from various sources, including irrigation and fuel production, but not including precipitation. Variations in water consumption for three US regions and global averages for ethanol and biodiesel are primarily due to amount of irrigation used and agricultural yield.  (Argonne National Laboratory, 2009; University of Twente, 2009)

 Suppose we return to using corn for food and gasoline to power our vehicles?

[Originally published in The Washington Times]

The Tax Foundation’s annual Tax Freedom Day report is out, and it shows federal tax increases that took effect this year will move the date back five days from last year. But that’s an average, as some states won’t see tax freedom until well into May, while others already have tax freedom.

Listen to Heartland’s Steve Stanek interview Will McBride, chief economist at the Tax Foundation, about this year’s report (PDF) at the Heartland Daily Podcast in the player above.