Energy Pipedreams

By Robert Samuelson

“For decades, we’ve talked and talked about the need to end America’s century-long addiction to fossil fuels. … Time and time again, the path forward has been blocked — not only by oil industry lobbyists, but also by a lack of political courage and candor.”

— Barack Obama, June 15 address on the BP oil spill

WASHINGTON — Just once, it would be nice if a president would level with Americans on energy. Barack Obama isn’t that president. His speech the other night was about political damage control — his own. It was full of misinformation and mythology. Obama held out a gleaming vision of an America that would convert to the “clean” energy of, presumably, wind, solar and biomass. It isn’t going to happen for many, many decades, if ever.

For starters, we won’t soon end our “addiction to fossil fuels.” Oil, coal and natural gas now supply about 85 percent of America’s energy needs. The U.S. Energy Information Administration expects energy consumption to grow only an average of 0.5 percent annually from 2008 to 2035, but that’s still a 14 percent cumulative increase. Fossil fuel usage would increase slightly in 2035 and its share would still account for 78 percent of the total.

Unless we shut down the economy, we need fossil fuels. More efficient light bulbs, energy-saving appliances, cars with higher gas mileage may all dampen energy use. But offsetting these savings are more people (391 million vs. 305 million), more households (147 million vs. 113 million), more vehicles (297 million vs. 231 million) and a bigger economy (almost double in size). Although wind, solar and biomass are assumed to grow up to 10 times faster than overall energy use, they provide only 11 percent of supply in 2035, up from 5 percent in 2008.

There are physical limits on new energy sources, as Robert Bryce shows in his book “Power Hungry: The Myths of ‘Green’ Energy and the Real Fuels of the Future.” Suppose an inventor “found a way to convert soybeans into jet fuel,” Bryce writes. “Even with that invention, the conversion of all of America’s yearly soybean production into jet fuel would only provide about 20 percent of U.S. jet fuel demand.” Jet fuel, in turn, is about 8 percent of U.S. oil use. Similarly, wind turbines have limited potential; they must be supported by backup generating capacity when there’s no breeze.

The consequences of the BP oil spill come in two parts. The first is familiar: the fire; the deaths; coated birds; polluted wetlands; closed beaches; anxious fishermen. The second is less appreciated: a more muddled energy debate.

Obama has made vilification of oil and the oil industry a rhetorical mainstay. This is intellectually shallow, if politically understandable. “Clean energy” won’t displace oil or achieve huge reductions in greenhouse gas emissions — for example, the 83 percent cut by 2050 from 2005 levels included in last year’s House climate change legislation. Barring major technological advances (say, low-cost “carbon capture” to pump CO 2 into the ground) or an implausibly massive shift to nuclear power, this simply won’t happen. It’s a pipedream. In the EIA’s “reference case” projection, CO 2 emissions in 2035 are 8.7 percent higher than in 2008.

Rather than admit the obvious, Obama implies that other countries are disproving it. “Countries like China are investing in clean energy jobs and industries that should be right here in America,” he said in his address. If China can do it, so can we! Well, whatever China’s accomplishing on wind and solar, it’s a sideshow. In 2008, fossil fuels met 87 percent of its energy needs, reports the International Energy Agency. Coal alone accounted for 66 percent. China represents about half the world’s hard coal consumption. Usage grew 10.7 percent annually from 2000 to 2008.

The outlines of a pragmatic energy policy are clear. A gradually increasing tax on oil or carbon would nudge people toward more energy-efficient products, including cars. Any tax should be part of a budget program that includes major spending cuts. This is a better approach than the confusing cap-and-trade proposals — embraced by the House and the administration — that would inevitably be riddled with exceptions and preferences. Finally, research and development should search for cheaper, cleaner energy sources.

Meanwhile, it’s imperative to tap domestic oil and natural gas. This creates jobs and limits our dependence on insecure imports. Drilling advances have opened vast reserves of natural gas trapped in shale (“shale gas”). Human error and corner-cutting by BP seem the main causes of the spill. Given the industry’s previously strong safety record, Obama’s six-month moratorium on deepwater drilling isn’t justified and should be shortened. It’s not industry lobbyists that sustain fossil fuels but the reality that they’re economically and socially necessary. A candid president would have said so.

Obama Cracks Down….On Arizona

By W. James Antle, III

The sweet nothings Hillary Clinton whispered into the ears of foreign television audiences went stateside on Friday, as America media outlets began confirming what the secretary of state first told an Ecuadoran news channel: the Obama administration is planning a lawsuit against Arizona’s new immigration law.

Publicly, Obama administration lawyers will only admit that a thorough “review” of SB 1070 is ongoing. But the toothpaste is out of the tube. Officials in Eric Holder’s Justice Department are quietly giving word that it is a matter of when, not if, they will seek to subvert Arizona’s attempt to protect its people from porous borders.

On cue, Arizona Attorney General Terry Goddard — the Democratic gubernatorial candidate — dropped his promised “vigorous legal defense” of the law. Goddard opposed the statute and had been sparring with Gov. Jan Brewer, his likely Republican opponent in the general election, about how it will be defended.

According to a recent ABC News/Washington Post poll, Americans side with Arizona by a 58 percent to 41 percent margin. In late May, Quinnipiac put the numbers at 51 percent to 31 percent. CBS found that 52 percent think the Arizona law is “about right” while only 28 percent believe it “goes too far.” Another 17 percent said it doesn’t go far enough. The breakdown among Democrats was 46 percent “just right,” 40 percent “too far,” and 10 percent “not far enough.”

These numbers come in spite of a very public campaign to boycott Arizona and label the new law a tool of racists, Nazis, and Communists. “While opinions on immigration are complex,” Atlantic blogger Chris Good notes cautiously, “it’s reasonable to wonder if the administration’s decision to sue Arizona will turn out to be an unpopular move.”

So reasonable, in fact, that the administration went all the way to Ecuador to find a suitable launch pad for its Arizona trial balloon — and these are people who are as adept at fencing themselves off from public opinion as they are incompetent at fencing off the border. Let us hope that the Justice Department’s legal case is based on something more substantial than the secretary of state’s disinformation.

“President Obama has spoken out against the law because he thinks that the federal government should be determining immigration policy,” said Mrs. Clinton. But Arizona did not create new immigration violations out of thin air. It took what were already federal crimes and made them state ones too, while giving local police a reasonable opportunity to enforce them. In other words, Arizona followed the federal government’s immigration policy.

Even the state’s enforcement role is limited. Arizona can’t deport anyone. It can only refer the people it believes are illegal immigrants to the Immigration and Customs Enforcement agency. The federal government remains the ultimate arbiter of who is in the country illegally and still sets immigration policy.

The federal government’s bipartisan dereliction of duty on this front is precisely what prompted Arizona to act in the first place. Washington has failed to effectively enforce its own immigration laws, either at the border or in the workplace. It has allowed Arizona’s illegal population to explode from 300,000 to 560,000 in less than a decade. The feds only partially completed a security fence, actually diverting inflows into Arizona and making it the entry point for more than half the country’s illegal immigrants.

When Arizonans tried to do something about it, John Morton, Obama’s head of Immigration and Customs Enforcement (which is under the jurisdiction of Homeland Security), said his agency might not process suspected illegal immigrants referred to it under SB 1070. Now, after the president made some obligatory pro-enforcement noises in a White House meeting with Governor Brewer, the Obama Justice Department seeks to have liberal judges overturn the whole thing.

Arizona had already revised the law to address concerns that Hispanic Americans might be racially profiled. It has already passed a series of other tough enforcement measures which may have helped reduce its illegal population by 18 percent between 2008 and 2009, compared to 7 percent nationally. But the Obama administration will not give the latest Arizona law a chance to work or even show that it can be implemented fairly.

Up until now, the political class’s biggest contribution to controlling illegal immigration has been wrecking the American economy to the point that many illegal immigrants have decided they are better off at home. No word on where Arizonans are supposed to go now that the Obama administration has decided they cannot protect themselves from a constitutionally indifferent federal government’s manifest immigration failures.

Nebraska City to Vote on Illegal Immigration Crackdown

Activist Kristin Olstrom hands out material in opposition to a proposed law in Fremont, Neb., that would impose new restrictions on illegal immigrants. (AP Photo

FREMONT, Neb. — Angered by a recent influx of Hispanic workers attracted by jobs at local meatpacking plants, voters in the eastern Nebraska city of Fremont will decide Monday whether to ban hiring or renting property to illegal immigrants.

The vote will be the culmination of a two-year fight that saw proponents collect enough signatures to put the question to a public vote. If the ordinance is approved, the community of 25,000 people could face a long and costly court battle. Either way, the emotions stirred up won’t settle quickly.

“Even if we say ‘no’ … we still need to say, ‘How do we get along with each other now?”‘ said Kristin Ostrom, who helps oversee a campaign against the measure.

Across the nation, people have been outraged by — and demanded action against — the poor enforcement of federal laws to prevent illegal immigration. A law recently introduced in Arizona requires police to question people on their immigration status if there’s a “reasonable suspicion” they are illegal.

A man who helped write the Arizona law is helping to fight for the ordinance in Fremont, which has seen its Hispanic population surge in the past two decades. That increase is largely because they were recruited to work for the Fremont Beef and Hormel plants, and the city maintains an enviably low unemployment rate.

Nonetheless, residents worry that jobs are going to illegal immigrants who they fear could drain community resources.

Clint Walraven, who has lived in Fremont all his 51 years, said the jobs should go to legal residents who are unemployed — something he believes the ordinance would help fix. Discussions on the issue can get heated, he said, particularly if racism is mentioned.

“It has nothing to do with being racist,” he said. “We all have to play by the same rules. … If you want to stay here, get legal.”

When he worked at the Hormel plant in the 1980s, Walraven said, he had one Hispanic co-worker.

From about 165 Hispanics — both legal and illegal — living in Fremont in 1990, the total surged to 1,085 in 2000, according to census expert David Drozd at the University of Nebraska at Omaha. He said an estimated 2,060 Hispanics lived there last year. In May, Fremont recorded just 4.9 percent unemployment, in line with the statewide rate and significantly lower than the national average of 9.7 percent.

If approved, the measure will require potential renters to apply for a license to rent. The application process will force Fremont officials to check if the renters are in the country legally. If they are found to be illegal, they will not be issued a license allowing them to rent.

The ordinance also requires businesses to use the federal E-Verify database to ensure employees are allowed to work.

Supporters of the proposal say it’s needed to make up for what they see as lax federal law enforcement. Opponents say it could fuel discrimination.

Results are expected Monday night.

Ron Tillery, executive director of the Fremont Chamber of Commerce, which opposes the measure, said businesses are concerned the E-Verify system isn’t reliable and that they would be subject to fines if forced to rely on it. He pointed out that the main targets of the ordinance — the Fremont Beef and Hormel plants — would not be covered by it anyway because they are located outside the city.

Walraven said the measure is necessary because workers send their salaries to family in Mexico instead of spending it in the city.

“I understand supporting your family,” he said, “But it’s very much at our expense. We’re footing the bill.”

Those costs include spending on education and medical care, said Jerry Hart, a Fremont resident who petitioned for the vote. He said the ordinance would help curb that spending and protect jobs.

He said it would also end the divisiveness that’s taken over.

“The division is because the illegal aliens are here and nobody’s taken care of it,” he said. “If it does not pass, it’s going to get worse.”

The Fremont Tribune has reported several instances of legal Hispanic residents being told to return to Mexico, including a woman who was shoved and yelled at by an elderly white man in a grocery store.

Hart said he’s been called a Nazi.

“Fear is kind of guiding,” said Ostrom, adding that frustration about immigration issues nationwide ignites a misconception that all Hispanic immigrants in Fremont are illegal.

Sandra Leffler, 69, who owns a downtown antique store with her husband, Marv, said she knows not all Hispanics are illegal immigrants, but that it’s hard not to think that way. She said she scrutinizes her Hispanic customers.

“I have to admit, when I see them come into the store … I can’t help wondering if I’m profiling someone who’s completely honest,” she said.

The Fremont City Council narrowly rejected a policy similar to the proposed ordinance in 2008, but proponents got it to a public vote and the state Supreme Court refused to block it.

The Nebraska chapter of the American Civil Liberties Union has threatened a lawsuit, and the city worries about the cost of defending the policy. The city has estimated the legal action would cost $1 million per year to fight — costs that would have to be covered by property tax raises and city job cuts.

Kansas City, Mo.-based attorney Kris Kobach, who worked on the Arizona law and has been in legal battles over local ordinances elsewhere, said Valley Park, Mo. paid between $250,000 and $300,000 in legal fees in a similar case. Valley Park, like Fremont, is covered by the 8th Circuit.

State Sen. Charlie Janssen of Fremont, who has said he may introduce an Arizona-style bill in the Legislature next session, said it’s unfortunate residents have to decide how to vote amid threats of a lawsuit. He has declined to give his position on the ordinance, saying residents need to decide on their own.

“A vote for or against the ordinance does not make you more or less patriotic,” he said in a posting on his legislative blog. “Just as a vote for or against the ordinance does not make you racist or not.”

Spending will kill, not save, our recovery

Voters are right to think our addiction to federal deficit spending is killing our economy. A thorough new study from Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard University takes a look at the relationships among rising debt, inflation and economic growth for 44 developed and developing countries. The findings bode poorly for a spending-crazy Washington.

From 1946 through 2009, growth of developed countries (including the United States) stood at an annual rate of just shy of 4 percent when debt was no greater than 30 percent of gross domestic product. The picture gets bleaker for those countries holding debt above 30 but below 90 percent — economic growth slowed down but still hovered around 3 percent to 3.5 percent per year. When debt rose to over 90 percent of GDP, average growth went negative. Reinhart and Rogoff found that when this worst-case scenario occurs in the U.S., economic growth rates go negative and the inflation rate goes to above 5.5 percent. According to the Heritage Foundation’s Bill Beach, the International Monetary Fund and the Congressional Budget Office both predict U.S. sovereign debt is fast approaching 100 percent of GDP.

There’s never been a better time for President Obama to put an end to the idea that he may be the next President Carter. He can head off inflation by taming federal spending and working with Congress to cut programs. And once that’s done, he can cut taxes to stimulate the economy. Sadly, he won’t. Obama sent a letter last week to leaders of the G-20, airing concerns over the decision of European leaders to start imposing austerity measures: “We should reaffirm our unity of purpose to provide the policy support necessary to keep economic growth strong.”

Unity of purpose is the problem. For Greece and Spain to face financial disaster, politicians first had to give monopolistic unions lavish pensions and a hearty social welfare state. Austerity measures were the hard-bought, politically unpopular solution, so much so that protests against the measures turned to riots.

Congress passed rules earlier this year to prevent itself from spending money it doesn’t have. But the same majority Democrats who voted for Pay-Go simply override those rules whenever they have to pass an actual spending bill. And on Saturday, Obama ripped opponents of his second stimulus, saying that they are endangering the jobs and unemployment benefits of millions of Americans. It’s time to face reality and start cutting spending.

Is Obama’s BP Shakedown an Impeachable Offense?

By Raymond Richman

As former counsel and trainer in political tactics for ACORN, President Obama used a well-known ACORN tactic, the shakedown, in getting BP to create the $20 billion escrow (slush!) fund without any law, legal controls, or binding rules to guide it on how, to whom, and how much those injured materially by the oil spill will be paid. Attorney Kenneth Feinberg, well-respected and well-known for heading the September 11th Victim Compensation Fund, was appointed by the President to administer the escrow fund. BP will pay $5 billion into the fund for four years, starting in 2010.

BP announced early after the spill that it would pay all justifiable claims resulting from the disastrous oil spill. It opened 25 claims offices. As of June 15, BP approved initial payments that amounted to $63 million, expected to rise to $85 million by the end of the week, to businesses claiming $5,000 or more in damages. Why did the President insist that his own personal organization take over the job of paying claims? After all, supervising reparations is a judicial function, not an executive function. BP created its own fund and appointed its administrator and determined how it will be staffed with a view to ensuring only qualified persons, businesses, and governments would be reimbursed for its losses. Now those decisions will be made politically.

It is obvious that BP’s CEO agreed to create this fund and allow the President to administer it to prevent President Obama from bankrupting their company. After all, the President was on record that he would “kick BP’s ass” and a cabinet members declared he would “put his boot on BP’s neck.” The President when announcing the creation of the fund stated the terms of the fund would keep BP viable. He cannot know this. BP’s liability is not affected by the fund except to the extent claims are voluntarily settled. Those refusing to settle and their lawyers are not bound by it nor are juries that will hear their lawsuits.

The President has no legal authority to create the escrow fund and no authority to compel BP to contribute to the fund. Forcing BP to agree to the terms of the escrow is ultra vires (i.e., illegal), beyond the powers of his office. Rep. Barton (R, Texas) accurately described the slush fund as a “shakedown” (i.e., blackmail), a felony. If so, Pres. Obama has committed an impeachable offense. Congress itself does not have the authority to create the escrow fund retroactively. Congress will have no voice at all except to vilify any Republican who raises questions about it. All the ACORN employees who lost their jobs when the banks stopped paying “blackmail” to ACORN may be getting better-paying new jobs processing claims.

No doubt the media, which show pictures of the spill and pelicans covered with oil 24 hours a day, seven days a week, will hail the President’s tough dealing with BP. But BP’s oil spill deserved the strongest action under the law, not above the law. A few miles away, there are pelicans flying “free as a bird” with no oil on them. Not a single photo of them. And more than 10,000 barrels of the spilled oil are being recovered by BP daily with no photos at all; vessels are skimming oil near the spill and no photos. And the federal government has yet to grant exception to the Jones Act that is preventing foreign vessels ready to skim oil from getting closer to shore to prevent more serious damage which would, incidentally help save a lot of pelicans. No wonder BP believed it had to surrender to the President.

You don’t have to be paranoid to suspect the President (and many in the media) of ulterior motives, a hidden agenda. If you can get enough people to hate the oil companies, you might get the cap and trade bill passed. By the time they regret such hasty action, it will be too late to undo the damage. Cap and trade was given no chance for passage before the spill. The President pacified the environmental extremists by banning drilling in the Gulf for six months, adding to the rolls of the unemployed and increasing our dependence on foreign oil. To make the hidden agenda more believable, the President overreached by getting BP to agree to pay the lost wages incurred by workers who lost their jobs as the result of the President’s six month moratorium on drilling in the Gulf. The hidden agenda obviously includes getting cap and trade passed. It looks like “cap and trade, cap and trade, cap and trade” has displaced “jobs, jobs, jobs”.

The President employed a similar tactic when he nationalized GM, violating the bankruptcy laws by denying bondholders their rightful control of the future of those enterprises and gave the bondholders’ interest in GM to the unions instead, literally. He gave Chrysler to Fiat, The bondholders of both gave their consent, being afraid of having their asses kicked or having a boot on their necks.

When an executive uses threats to secure the “cooperation” of private businesses, we have a name for it, fascism. It is the kind of act we expect from Venezuela’s Chavez not from a President who swore to uphold the U.S. Constitution and its separation of powers. I believe the President’s behavior is ultra vires and that he has committed an impeachable offense.

Raymond L. Richman, JD, PhD, is a member of the Illinois Bar and has a PhD in economics from the University of Chicago. He and his son and grandson maintain a blog at, and co-authored the 2008 book, Trading Away Our Future: How to Fix Our Government-Driven Trade Deficits and Faulty Tax System Before it’s Too Late, published by Ideal Taxes Association.


The Congressional Budget Office released its latest analysis of federal tax rates. These figures come from 2007, the latest year available for analysis. Here are a few goodies they found:

* On average, in 2007 households paid federal taxes, either directly or indirectly, totaling about 20 percent of their income. (That percentage includes corporate income taxes and employers’ share of payroll taxes, which are passed on to households in various ways.) Individual income taxes, the largest component, were 9.3 percent of household income. Payroll taxes for social insurance programs were the next largest source, with an average tax rate of 7.4 percent. Corporate income taxes and excise taxes were smaller, with average tax rates of 3.0 percent and 0.6 percent.

* The overall federal tax system is progressive–that is, average tax rates generally rise with income. Households in the bottom quintile (fifth) of the income distribution paid 4 percent of their income in federal taxes, while the middle quintile paid 14 percent, and the highest quintile paid 25 percent. Average rates continued to rise within the top quintile, with the top 1 percent facing an average rate of close to 30 percent.

* Higher-income groups earn a disproportionate share of pretax income and pay a disproportionate share of federal taxes. In 2007, the highest quintile earned 56 percent of pretax income and paid 69 percent of federal taxes, while the top 1 percent of households earned 19 percent of income and paid 28 percent of taxes. In all other quintiles, the share of federal taxes was less than the income share. The bottom quintile earned 4 percent of income and paid less than 1 percent of taxes, while the middle quintile earned 13 percent of income and paid 9 percent of taxes.

Yeah .. those damned rich people. They just won’t pay “their fair share.”

Rahm Emanuel expected to quit White House

Rahm Emanuel expected to quit White House Photo: GETTY

By Alex Spillius in Washington

Washington insiders say he will quit within six to eight months in frustration at their unwillingness to “bang heads together” to get policy pushed through.

Mr Emanuel, 50, enjoys a good working relationship with Mr Obama but they are understood to have reached an understanding that differences over style mean he will serve only half the full four-year term.

Friends say he is also worried about burnout and losing touch with his young family due to the pressure of one of most high profile jobs in US politics.

“I would bet he will go after the midterms,” said a leading Democratic consultant in Washington. “Nobody thinks it’s working but they can’t get rid of him – that would look awful. He needs the right sort of job to go to but the consensus is he’ll go.”

An official from the Bill Clinton era said that “no one will be surprised” if Mr Emanuel left after the midterm elections in November, when the Democratic party will battle to save its majorities in the house of representatives and the senate.

It is well known in Washington that arguments have developed between pragmatic Mr Emanuel, a veteran in Congress where he was known for driving through compromises, and the idealistic inner circle who followed Mr Obama to the White House.

His abrasive style has rubbed some people the wrong way, while there has been frustration among Mr Obama’s closest advisers that he failed to deliver a smooth ride for the president’s legislative programme that his background promised.

“It might not be his fault, but the perception is there,” said the consultant, who asked not to be named. “Every vote has been tough, from health care to energy to financial reform.

“Democrats have not stood behind the president in the way Republicans did for George W Bush, and that was meant to be Rahm’s job.”

There were sharp differences over health care reform, with Mr Emanuel arguing that public hostility about cost should have forced them into producing a scaled down package. Mr Obama and advisers including David Axelrod, the chief strategist, and Valerie Jarrett, a businesswoman and mentor from Chicago, decided to push through with grander legislation anyway.

Mr Emanuel has reportedly told friends that his role as White House chief of staff was “only an eighteen month job” because of its intensity.

Regarded as the most demanding after president, it involves controlling the president’s agenda, enforcing White House message discipline as well as liaising with Congress.

His departure would regarded as another sign of how Mr Obama’s presidency has been far more troubled than expected.

Mr Emanuel has privately expressed a readiness to run for mayor of Chicago, which is also his home town though he was never part of the Obama set and did not endorse the then senator in the Democratic primary in 2008.

That would however depend on Mayor Richard Daley stepping down when he is up for re-election in 2011.

The chief obstacle to taking the White House job originally was doubts about moving his three children from Chicago. According to another former Clinton official, he has let friends know that he is “very sensitive to the idea that he is not a good father for having done this”.

One of Washington’s more colourful characters, Mr Emanuel is the son of Jewish immigrants and was an accomplished ballet dancer at school. He served as a civilian volunteer with the Israeli Defence Force in the 1991 Gulf War.

The White House did not respond to a request for comment.

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