We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are

Life, Liberty and the pursuit of Happiness.

That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,

Friday, April 28, 2006

Eek! Profits

From IBD:
Posted 4/27/2006

Oil: Exxon Mobil has just reported first-quarter net income of $8.4 billion. OK, call it a windfall. But do you really want the government to tax it away?

In saner times that question would not even have to be asked. But the planets of politics and economics have aligned in such a way as to produce an outbreak of dubious ideas. Among these are a revival of the "windfall profits" tax and a threat, heard this week from Republican Sen. Charles Grassley, of opening the income-tax records of Big Oil firms to "make sure the oil companies aren't taking a speed pass by the tax man."

Time for some plain talk about profit — what it means and what it does. You won't hear it in Congress these days, so we'll try to offer some here.

First, it's easy to answer Grassley's suggestion that oil companies may have been avoiding their fair share of taxes: The firms' tax payments are on the record and they're ample. Exxon Mobil paid $7 billion in the first quarter of this year, almost as much as the $8.4 billion left over for the shareholders. So score one for profit: The public gets a nice, fat share of it.

Second, profit is not the same as executive compensation. Confusion on this point has helped stoke the anger against Exxon Mobil in particular.

The retirement package received last year by the company's retiring CEO Lee Raymond was certainly generous, though nowhere near as outrageous as slapdash news reports made it seem. But pay and benefits, as corporate expenses, work to reduce profits. If a CEO is overpaid, the real victims are the shareholders, not the buyers of the company's products.

Third, profit today is product tomorrow. Or to put it in the form of a question: Where do you think the money to make gasoline comes from? It comes mostly from the corporations, with a minor boost from depletion allowances and other tax breaks that mainly help independent drillers rather than the big, integrated companies such as Exxon Mobil, Chevron, Shell, BP and ConocoPhillips.

Think about the process of getting crude from deep out of the ground or the sea floor and converting it to fuel that even now is cheaper per gallon than bottled water. It's always something of a gamble, and never cheap. Exxon Mobil spent $4.8 billion on capital and exploration costs in the first quarter alone.

The price at the pump includes these costs, plus a profit to reward investors for risking their wealth in a company. Some of that profit is paid out in dividends, but most of it is added to the company's capital, which in turn funds more exploration, production and, in the end, more gasoline. This is how free enterprise works. And in most industries outside the oil business, profit is not only accepted but applauded.

Is there any alternative to this business model? Of course there is, just as there's an alternative to private enterprise in general. It's state ownership, exemplified in Mexico's PEMEX, which sits on vast reserves that it cannot tap because it lacks the capital to explore and exploit them.

The industrialized world knows better than to go that route, and politicians in this country should know better than to weaken a productive, efficient industry by attacking the profits that make it run.

This Is No Cold War

From IBD:
Posted 4/27/2006

Axis Of Evil: Israeli intelligence is reporting that Iran has missiles that can reach well into Europe. This unsettling revelation came Thursday, the day before Tehran is supposed to halt uranium enrichment.
The United Nations Security Council has ordered Iran to suspend its enrichment program— certainly a precursor to nuclear weapon development — as of Friday or face the possibility of sanctions.

As Secretary of State Condoleezza Rice said Thursday from a foreign ministers meeting in Bulgaria, to remain credible the Security Council has to act if Iran ignores the deadline, which the mullahs and President Mahmoud Ahmadinejad have already rejected.

"The Security Council is the primary and most important institution for the maintenance of peace and stability and security, and it cannot have its will and its word simply ignored by a member state," Rice said.

Rice likely knows that the Security Council's credibility is about to be crushed because Tehran has no fear of sanctions. Ahmadinejad and the clerics might be crazy by Western — and human — standards. But they are rational enough to know that the feckless U.N. will merely wring its hands if they refuse to cooperate.

Meanwhile, Iran has taken receipt of its first shipment of missiles from North Korea. The Soviet-made BM-25s have a range of roughly 1,500 miles, putting such European cities as Warsaw, Budapest and Vienna within striking distance. Vienna is the home of the U.N.'s International Atomic Energy Agency, which is allegedly watchdogging Iran's nuclear program.

In other words, Israel — which Ahmadinejad has infamously pledged to wipe off the map — isn't the only potential target of a nuclear-armed Iran.

Europe can't continue merely to wish away the bad men in Tehran before finally settling on a moral- and cultural-relativist acceptance of a nuclear-armed Iran. Is anyone listening?

Europe stakes out "sophisticated" and "nuanced" positions at its own risk. Iran, recall, has warned it will loose 40,000 suicide bombers against U.S. targets and "British sensitive points," should anyone try to thwart Tehran's nuclear ambitions outside of diplomatic channels — which, we should add, have failed and will continue to fail because Iran clearly cannot be trusted. Can there be any doubt that Iran would use nuclear weapons if it had them?

Europe has had nuclear weapons pointed at it before and survived. But this isn't a cold war between two superpowers and their allies. It's a deadly tangle that's been escalated by fanatics who are not swayed by delicate matters such as mutually assured destruction. When a nation's leader is looking forward to scorching the earth so he can usher the return of the 12th imam, the Shiite messiah, then nothing that has gone before counts.

The U.S. and Great Britain have little choice but to get more aggressive toward Tehran. This shouldn't be treated like trade talks, which can go on forever with no resolution; no, this is a grave struggle where real lives hang in the balance and signs of weakness will be exploited by Tehran. For the sake of the West, this crossroads must be traveled with strength.

Thursday, April 27, 2006

Don't Let the Immigration Issue Die

Think that there is nothing nefarious about the immigration issue? Think again:

Did you see this quote from Augustin Cebada of the Brown Berets -- a left-wing group supporting Amnesty for over 12 million illegal aliens?
"Go back to Boston! Go back to Plymouth Rock, Pilgrims! Get out! We are the future. You are old and tired. Go on. We have beaten you. Leave like beaten rats. You old white people. It is your duty to die... Through love of having children, we are going to take over." [Emphasis Mine]

And just in case you think Cebada is just one raging radical -- consider some of these statements from public officials and so-called "respected academicians" in the United States:
"They're afraid we're going to take over the governmental institutions and other institutions. They're right. We will take them over... We are here to stay."
-- Richard Alatorre, member of the Los Angeles City Council --

"California is going to be a Hispanic state. Anyone who doesn't like it should leave ."
-- Mario Obledo of the California Coalition of Hispanic Organizations, the California State Secretary of Health, Education and Welfare under Governor Jerry Brown and a Medal of Freedom winner during the Clinton administration --

"We have an aging white America . They are not making babies. They are dying. The explosion is in our population... I love it. They are [profanity deleted] in their pants with fear. I love it."
-- Professor Jose Angel Gutierrez of the University of Texas --

Over the past several weeks, hundreds-of-thousands of illegal aliens and amnesty supporters marched in cities across the nation.

Protesters in Denver waved Mexican flags, and brandished signs saying, "Uncle Sam Stole Our Land!"
One banner blared out: "If you think I'm illegal because I'm a Mexican, learn the true history because I'm in my homeland."

Now obviously, everyone who supports amnesty for illegal aliens is not a rabid leftist out to destroy America, but these quotes and demonstrations do indicate that a growing number of left-wing America-hating radicals are using the amnesty issue to drive a hate-filled agenda that is detrimental to our country and our traditions.
And that's just one more reason why we need to see this fight for secure borders through to the end.

Our elected leaders are back in town and -- yes -- there is already talk of going back to the drawing board and passing another so-called compromise, that will give amnesty to 12 million illegal aliens.

You see, there are some folks in Washington D.C. who falsely believe that the two week Easter recess gave the American people time to "cool-off" and that it is now safe to proceed as planned with amnesty legislation.

We've been down this road before.

In 1986, Ted Kennedy and other politicians pushed the U.S. Immigration and Reform Act on the American people -- promising us that they would tighten border security.

But it NEVER happened! As Mark Kirkorian of the Center for Immigration Studies said, "This bill is a hoax we've seen before."

Here's what FrontPage Magazine wrote on the issue.

"The McCain-Kennedy bill is similar to the 1986 U.S. Immigration and Reform Act..."As history showed in the 1980s, granting amnesty to illegal aliens led to three results:
  1. "About three million persons who previously illegally entered the country were not prosecuted or deported, but instead rewarded with legal resident status.
  2. "A flood of forged documents were generated to 'prove' illegals had been in the country the necessary three years.
  3. "Millions more aliens were encouraged to illegally enter the country on the expectation that prosecution and deportation were unlikely, and some day another amnesty might be offered.

"The promise of another amnesty in the McCain-Kennedy bill is that very anticipated reward for the millions who have flooded into the U.S. since 1986."

Amazingly, Kennedy and some of our other elected officials are trying to sell us the same old failed bill of goods they sold us 20 years ago.

Amnesty without border security didn't work then and it won't now. And if the previous amnesty encouraged millions of illegal aliens to flood into the U.S., just imagine what will happen this time around if the Senate passes amnesty again.

Let's not let Kennedy get away with it this time.

And when you hear how Americans are cruel and inhumane about the way they treat illegal immigrants, remember this:

It's not bigoted for rational people to demand secure borders and common-sense immigration policy.
After all, most countries -- even Mexico -- have no problem with tough immigration policy.

Actually, Mexico's immigration policy is tough!

Here's what Rush Limbaugh said during his April 6, 2006 show -- read it all the way to the end -- you should find it interesting.

"All right, immigration proposals under discussion. Let me add mine to the mix. I want to call this proposal the Limbaugh Laws. Here they are.

"First, if you immigrate to the United States of America, you must speak the native language.

You have to be a professional or an investor. We are not going to take unskilled workers. You will not be allowed.

"There will be no special bilingual programs in the schools, no special ballots for elections, no government business will be conducted in your native language.

Foreigners will not have the right to vote, I don't care how long they are here, nor will they ever be allowed to hold political office.

"According to the Limbaugh Laws, if you're in our country, you cannot be a burden to taxpayers. You are not entitled, ever, to welfare, to food stamps, or other government goodies.

You can come if you invest here, but it must be an amount equal to 40,000 times the daily minimum wage. If you don't have that amount of money, you can't come and invest. You have to stay home.

If you do come and you want to buy land, okay, but we're going to restrict your options. You will not be allowed to buy waterfront property in the United States. That will be reserved for citizens naturally born in this country. In fact, as a foreigner, you must relinquish individual rights to property...

" These are the Limbaugh Laws. Another thing. You don't have the right to protest when you come here. You're allowed no demonstrations, you cannot wave a foreign flag, no political organizing, no bad-mouthing our president or his policies, or you get sent home.

You're a foreigner. You shut your mouth or you get out, and if you come here illegally, you go straight to jail and we're going to hunt you down 'til we find you.

"I can imagine many of you think that the Limbaugh Laws are pretty harsh. I imagine today some of you probably are going, 'Yeah! Yeah!' Well, let me tell you this, folks. Every one of the laws I just mentioned are actual laws of Mexico, today.

I just read you Mexican immigration law. That's how the Mexican government handles immigrants to their country. [Emphasis Mine]

"This is more than a double standard. It is an indication of just how gutless people in charge in this country are to protect the identity of this country."

The Liberals back amnesty because they need to maintain a "dependent class" that will keep them in power out of fear that they may lose their government "lifeline" if someone else takes office. As more blacks realize that self-reliance is the only true way to escape a life of crime and poverty, the libs seek to back fill the "plantation". This is not what the American dream is about and it's time to tell this government that we're sick and tired of their sick desire for power.

Call your Senators and Congressmen, if these rules are good enough for Mexico, they're good enough for us.

Oil 101

Arlen Spector, an embarrassment to the Republican party and Chuckie Schumer, a former ambulance chaser who never saw a private business he didn't want to destroy have once again started the usual saber rattling about gas prices and how we need to punish Big Oil by taxing the crap out of them and breaking them up to create more competition.

HUH? Can anyone explain to me how adding a special tax is going to bring gas prices down? Can anyone explain to me how breaking up Big Oil creates more competition when Federal Law has made it virtually impossible to add refining capacity which would increase supply?

Can anyone explain how either of those measures lower gas prices when federal laws mandate that we use only ethanol made from corn as an additive while ethanol made from sugar is barred from import into this country by the likes of Spector and Schumer?

Can anyone explain how these measures will bring down the price of gas when Federal law mandates that Big Oil purchase their supplies from foreign countries who hate us and can sell to China at elevated prices while Billions of gallons of oil sit beneath the surface of our own country and off our coast (of course Cuba is drilling some of this now?

Politicians make me sick, they are the #1 cause of high gas prices in this country and instead of fixing years of liberal-pandering roadblocks to cheaper energy, they play the blame game creating a new enemy of the people. They are the only real enemy of the people, the concept of public servant has died and been replaced by the public being servants to the government.

From IBD:
Posted 4/25/2006

Pump Prices: Politicians can poke around all they want for gouging, collusion and other shady stuff. Fact is, the cost of your gasoline is set by supply and demand, mainly in the world market for crude.

That was how President Bush explained things in his Tuesday speech to the Renewable Fuels Association. He's telling federal agencies to check for illegal activity. But as an oilman himself, he knows the real reason for pain at the pump: There's only so much oil being pumped out of the ground, and a booming worldwide economy can't get enough of it.

This doesn't mean governments are powerless to affect oil and gas prices. Far from it. Even the modest step of suspending clean-air gasoline rules, announced by Bush in his speech, had a noticeable impact: Gasoline futures dropped about 4%. More dramatic and permanent action, like lifting drilling bans in offshore oil fields and the Arctic National Wildlife Refuge, might do much more.

But the constructive things that Washington can do tend to be tough politically. And politicians who know better will pander to the public's agony by floating dumb old ideas that get no smarter with time: a windfall profits tax (that would just discourage more oil drilling) and a breakup of the oil companies (that would just add overhead to an efficient industry and raise pump prices further).

The refining side of the oil industry has become a particular target for misplaced outrage. Sen. Chuck Schumer, D-N.Y., has been charging that refiners are manipulating prices by operating at less than full capacity and thereby keeping gasoline off the market.

So what about those nefarious refiners? Truth is, refining is a competitive, low-profit business. No one's making a bundle manipulating supplies or anything else. That's one reason no refineries are being built. They just don't return the investment. The big oil money is made in the exploration and production of crude. If anyone has raw power in this market, it's OPEC, not the oil companies. And it's the price of crude, not refining and other costs, that accounts for almost all the price hike over the past year.

Taking the latest one-year span for which Energy Department figures were available on Tuesday, West Texas intermediate crude rose from $50.52 a barrel on April 18, 2005, to $70.30 on April 17, 2006. That $19.78 hike comes to 47 cents a gallon. In the same time, the average retail gasoline price rose from $2.23 to $2.78 a gallon — 55 cents. The refining cut may have added a few pennies at most.

The good news here is that crude oil prices are highly sensitive to small shifts in supply and demand. That's one reason even modest efforts to lower demand — through alternative fuels and more efficient cars — can pay off over time.

Oil prices react to present events, but also expectations, hopes, fears and rumors about the future.
On that score, Bush shouldn't be shy about using the Strategic Petroleum Reserve. He has just said he will stop adding oil to the reserve for now. It wouldn't hurt to send a more aggressive message and let it be known that he's ready to put significant oil onto the market if prices rise sharply on speculation or fear of a break in supplies.

The SPR is the only oil weapon in America's arsenal that can work quickly. As with other weapons, it should be used sparingly, or maybe just brandished. But it should never be ruled out.

Taking The Sting Out Of Gas Prices

What would a real conservative government do?

From IBD:
Posted 4/26/2006

Energy: Most Americans would be happy with any relief they could get from today's painful gasoline prices. Will the only people who can actually help respond?

We're talking, of course, about lawmakers, including the 535 members of Congress and all state legislators. But we're not talking about these officials' abusing their authority and setting price caps. That's a sure way to create shortages. No, what we're suggesting is drop — at least during the rough summer stretch of which we've been warned — the taxes that are applied to gasoline at the pump.

If just the federal gas tax was suspended, drivers would see pump prices drop 18.4 cents a gallon, not-insignificant relief at a time when $50 fill-ups are becoming routine.

Eliminating the federal tax would save a family that fills up a 15-gallon tank twice every seven days $5.52 a week — or $287 per annum. Working families that have little flexibility in their budgets — and there are many — wouldn't turn down such savings.

Where to begin? Maybe the light will come on in the insular world of Republican leadership. Those in Congress, who for too long have been unconscionably loose with taxpayers' dollars, have a high-octane opportunity to redeem themselves.

It's unlikely that they'll get much resistance from the other side of the aisle. Democrats like taxes in general and most congressional Democrats have voted for higher gas taxes at least a dozen times since 1993. But they won't want to put themselves in the awkward position of having to explain why they stood for higher pump prices with elections coming in the fall.

Oh, they'll keep screeching about price-gouging and the undue power of Big Oil. But that crutch will be yanked away after the latest round of federal probes finds, as they always have, that nothing is amiss. That is, if the mainstream media report as they should.

Already New Jersey's two Democratic U.S. senators are supporting a temporary suspension of the federal gasoline tax.

The real savings from suspending gas taxes, though, is to be found at the state level. New York, for one particularly nasty example, adds nearly 46 cents to a gallon of gasoline through various levies. Add the federal burden and about 64 cents of the price of a gallon of gas in New York is added by government.
Other states sporting high taxes include Hawaii, California, Illinois and Connecticut. If lawmakers in these states made only modest cuts in fuel taxes, drivers would feel the impact.

Even many of the states that are near the bottom of the tax scale could save motorists a lot of cash. Fuel taxes are higher than the federal fuel tax in all but seven states. If states acted reasonably, the aforementioned $287 in savings becomes $300, $400 — even $500.

Opponents of such relief will yip and yap about the effects on the federal deficit and state budgets. Others will argue that lower taxes will create shortages just as price caps would.

The first concern shouldn't be a concern at all. Responsible people should be able to deal with less revenue by spending less, and the pork that has piled up in both federal and state transportation budgets is particularly high.

The second concern is more legitimate, yet still unnecessary. Cutting taxes is not the same as setting prices. Prices can still rise and fall in response to the market even when taxes are cut, and motorists will adjust their driving and buying accordingly.

But if there were a government-imposed cap, the market's mechanism for preventing shortages — price increases — would be unable to work.

On Tuesday, President Bush noted that higher fuel prices act as "a hidden tax" on working people, farmers and small business. Well, yes. But the taxes that really sting are the double-secret hidden levies that are added at the state and federal level and that dig deeper into Americans' pockets than oil industry CEOs.

Spending Control

From IBD:
Posted 4/26/2006

Budget: President Bush has issued a veto threat over the Senate's bloated Iraq-Katrina bill. He's taking on spendthrifts of both parties, and it's about time.

For a man so disinclined to back down before anyone or anything, the president's deferential way with Congress has always seemed out of character. But this week we sense some steel in his message to the Senate over a supplemental spending bill that has gotten out of hand.

The measure in question is an emergency funding bill originally requested by the president to cover costs of the war in Iraq and Gulf Coast hurricane relief. The White House asked for $92.2 billion and, in March, got $91.9 billion from the House. No problem there.

The Senate has been a different story. In the hands of its Appropriations Committee, chaired by Mississippi Republican Thad Cochran, the bill ballooned to $106 billion. Much of the $14 billion in new spending is unrelated to hurricanes or the war.

The biggest add-on is $4 billion to help farms affected by drought, floods or energy costs anywhere in the country — as far away as Hawaii. Other items are geographically related to hurricane recovery and are unnecessary giveaways to states or private enterprise.

Then on Wednesday, the Senate chipped away at President Bush's request for funding for the Iraq effort and diverted $1.9 billion of the $106 billion into border security.

In the latter category there's $700 million, detailed last week on this page, to relocate a freight railroad line on Mississippi's Gulf Coast for the benefit of gambling casino developers. If ever a bill could be called veto bait, it's this one.

It's also a direct challenge to the president's political authority from certain senators of his own party. A few may think they have Bush over a barrel. Indeed, if he vetoes a bill needed to keep the Iraq mission and hurricane relief on track, he risks being blamed for putting the welfare of soldiers and storm victims in jeopardy.

But to judge from a White House statement released Tuesday, it seems that the president is willing to take the risk. The message said Bush would veto any bill that did not meet his original $92.2 billion target with one exception, an added $2.3 billion to prevent an outbreak of bird flu. The White House also said it "strongly objects" to the $700 million rail relocation.

This isn't Bush's first veto threat. According to The New York Times, he has issued 27, and Congress has grown used to ignoring them. What's different this time is that the threat is unusually blunt.

It also reflects the thinking of many, if not most, of the people in the president's own party. Fiscally conservative Republicans correctly figure that the GOP can only lose votes by imitating the Democrats. So Bush has lots of allies who could make a veto stick.

As for the political risks of confronting Senate grandees like Cochran, Bush can rest assured that, as low as his popularity is, the public's job rating of Congress is even lower. And Bush will have the better means of making his case, since Congress has nothing like the presidential bully pulpit.

So we say to the president: Keep your word. Show Congress you're serious. And don't worry that you don't have a line-item veto. The veto power handed down from the Founders and used by all strong presidents is quite enough. In political and fiscal terms, it's time to show just who is in charge.

Friday, April 21, 2006

The Real Cost of a Gallon of Gas

From Newsmax:

Today's Washington Post breaks down the real cost of a gallon of gas.

Before politicians grumble about big oil profits - which continue to grow - they may also want to admit that government taxes make up almost 20% of the amount consumers pay for a gallon of gasoline.

Also, with federal government restrictions on oil refineries (there hasn't been a new one built in the U.S. in over 30 years), the cost of actually making gasoline has grown as well.

Plus, the government's 2005 Energy Policy Act calls for the use of more ethanol in gasoline - and that is costing oil companies billions as they revamp storage and handling facilities.

Thanks to refinery and distribution woes related to Hurricane Katrina, gasoline production in the U.S. has dipped from 8.5 million barrels in April 2005 to 8 million in April 2006.

Here is the Post's breakdown on the price of gasoline:
  • 54.8% can be attributed to the cost of crude oil
  • 21.7% is the cost of refining
  • 4.5% goes for marketing, distribution and storage
  • 18.9% is for taxes

So, the next time you're complaining about Big Oil as you pay $3 at the pump, you may want to call your congressman.

From the Minutemen

To the President and Government of Mexico:

I'm about to plan a little trip with my family, and I would like to ask you to assist me. I'm going to walk across the border from the U.S. into Mexico, and I need to make a few arrangements. I know you can help with this. I plan to skip all the legal stuff like visas, passports, immigration quotas and laws. I'm sure they handle those things the same way you do here. So, I will be expecting the following:
  1. Free medical care for my entire family.
  2. English-speaking government bureaucrats for all services I might need.
  3. All government forms need to be printed in English.
  4. I want my kids to be taught by English-speaking teachers.
  5. Schools need to include classes on American culture and history.
  6. I want my kids to see the American flag flying over the Mexican flag at their school.
  7. Please plan to feed my kids at school for both breakfast and lunch.
  8. I will need a local Mexican driver's license so I can get easy access to government services.
  9. I do not plan to have any car insurance, and I won't make any effort to learn local traffic laws.
  10. In case one of the Mexican police officers does not get the memo from Pres. Fox to leave me alone, please be sure that all police officers speak English.
  11. I would also like to have a nice job without paying any taxes
  12. Please tell all the people in the country to be extremely nice and never say a critical word about me, or about the strain I might place on the economy.

I know this is an easy request because you are good neighbors to the U.S.

Thank you so much for your kind help.

Advice Unneeded

This needs no introduction, the intellectual elitists in this country believe that only they can steer the US into a workers utopia and it's clear where they get their ideas from. Never mind that the EU is crumbling under the weight of socialist policies that the lib's would love to implement here, it's all about the theory, not the result.

From IBD:

Competitiveness: The International Monetary Fund is lecturing the U.S. about getting its economic house in order. A drunk addressing a temperance society would have more credibility.

At the release of its World Economic Outlook this week, the IMF's chief economist, Raghuram Rajan, called on the U.S. to enact universal health care — among other things.

"It is very, very hard, in this competitive economy, for 40 million-plus Americans to be uninsured, of which 8 million are children," Rajan said. "So you need universal health care, you need strong educational systems, so the challenge of improving education in the U.S., especially in poorer areas, is extremely important."

While he was at it, Rajan said the U.S. should balance its budget a year earlier than the White House's "unambitious" 2010 target.

Timothy Adams, treasury undersecretary for international affairs, was quick to say "no thanks" to the gratuitous advice. Adams accused the 184-member international organization of raising "questionable topics" it has no business to be looking at.

Of course, no one will be holding his breath to hear similarly strong IMF criticism of, say, China and the artificially cheap yuan. As always, the IMF seems to have a bias against rich, free nations.

As Adams pointed out, the IMF was not chartered for purposes of critiquing the economic policies of wealthy nations — let alone the world's economic leader, the U.S.

It's supposed to be involved in less-than-glamorous tasks like working on potential international monetary problems and fostering trade growth. It's also supposed to "promote exchange stability." But the IMF somehow translates that as: weaken the dollar.

This coming weekend at the annual IMF/World Bank meeting, the U.S. will call for basic reform of the IMF.
But fixing a lemon can be pointless. Economist Anna Schwartz of the National Bureau of Economic Research has pointed out that the IMF, in its role as the "international lender of last resort," has a history of bailing out bankrupt governments rather than protecting sound ones that run into liquidity problems.

Like Schwartz, Lawrence McQuillan of the Pacific Research Institute thinks the IMF has outlived its usefulness.

"It is time to scrap the IMF and strengthen market-based alternatives that would promote an orderly and efficient international monetary system," said McQuillan. "Key reforms include floating exchange rates, internationally accepted accounting and disclosure practices, unfettered private financial markets, and fundamental legal, political and constitutional rules that would allow free markets to emerge and countries to achieve self-sustaining economic growth and development."

In other words, most of those 183 other IMF member countries should be getting their economic act together — not the most successful economy in the world.

Under Which Flag?

From IBD:
Posted 4/20/2006

Immigration: The reform debate isn't just about security and the labor market. It's also about assimilation and national loyalty — touchy issues that politicians cannot afford to ignore.

Congress returns next week to take another crack at crafting legislation to beef up the border and decide the status of the 11 million to 12 million illegal immigrants living in the U.S. That's a challenging but achievable task. We see the makings of a sound policy in proposals that different factions of the GOP have already endorsed.

One element is the tough enforcement approach endorsed by the House, without red flags such as the felony status for illegals.

Hundreds of miles of new border barriers may also do more harm than good by boosting anti-American politicians in Mexico. But Americans need to see serious action — quickly — on workplace and border enforcement.

Congress must authorize a serious buildup of Border Patrol manpower and surveillance technology, and it must fund it. Any reform bill passed by Congress needs to put enforcement first on its timetable.

The other element is a concession to reality. Most of the millions of illegals working in this country are more or less here to stay, because there's no practical way for the government to deport them and, with the U.S. near full employment, large parts of the economy depend on their labor. Republicans (and Americans in general) need to accept the idea of some provisional legal status for illegal immigrants.

The public also has a right to demand certain things in return. At this point the politicians might start to squirm, but they need to face all immigration issues honestly.

That brings us to the flags, specifically the Mexican flags that were so prominent in the first wave of immigrant-rights marches this year. Organizers could see that the sight of so much red, white and green screens was touching a nerve. So they've made sure since then that the marchers flash plenty of red, white and blue.

Even now, though, they may not understand why this particular foreign flag stirred up so much anger. Unlike, say, the waving of Irish flags in a St. Patrick's Day parade, the display of the Mexican flag at immigrant marches isn't a mere sentimental ritual performed by fully assimilated Americans.

It drops a sharply political hint, suggesting that immigrants are essentially retaking land that they think was seized unjustly by the U.S. more than 150 years ago. And while only a few wacky college professors may think an actual redrawing of borders is in the cards, the social and cultural data are still disturbing.

Millions of nonassimilated immigrants, mostly from Mexico, live in a society that is parallel to, but mostly cut off from, mainstream America. It's Spanish-speaking, economically tied to Mexico through billions of dollars in annual remittances, and resistant to assimilation. The flag symbolizes that separation.

As we said, the public has the right to make some demands. One is that those employed here learn English as a condition of staying here legally. Another is that the schools put assimilation first in dealing with language, history and culture.

They need to reaffirm the principle, so successful in the past, that the point of public schooling is to form American citizens, not to promote cultural separatism.

Everyone with cultural or political influence should learn from the mistakes made by other nations, particularly in Europe, that welcomed immigrants for their labor but failed to integrate them fully into their societies. America hasn't made that mistake yet, but there's always a first time.

Thursday, April 20, 2006

The New Oil Sheiks

From Andrew Snyder
Executive Editor, BreakAway Investor

“Oil jumped to $74 today after yesterday’s gas inventories showed a greater than expected drop ahead of summer driving season and growing anxiety over what’ll happen to Iranian oil imports and Nigeria.

The new oil sheiks

“It’s no surprise that the current Iranian and Nigerian situations drove oil to $74. But it couldn’t have come at a worse time for Americans already struggling to keep up with $3 pump prices. We’re just weeks ahead of peak summer driving season that could eventually send crude to about $80, and send prices at the pump well above current levels.

“The crude run is showing no near-term signs of letting up. All it’ll take is further disruption to supplies (Iran, hurricanes, for example), and crude will make a pass at $80 and continue trekking higher. And if you really believe Iran won’t use its oil supplies as a weapon in the event of war, I’ve got some swampland I can sell you in Florida.

“The worst part – OPEC says there’s nothing more it can do to bring prices back down. Already most of the 11 members of OPEC are pumping at full capacity. And then it doesn’t help that we, or even Israel are close to shoving Iran's nuclear program down its throat. Nigeria is a mess. And Iraqi oil exports aren't likely to return to 2 million barrels a day any time soon.

“But it gets worse. According to the Energy Information Administration, the average price of a gallon of regular will average about $2.62 this summer. It's already up to $2.89 where I pump gas. That translates into an outlay of about $45 a week in cash for gas. If gas stays that high throughout the summer, $45 turns into $900. And high gas prices for a year...that's $2,340. I'm sure you feel the pinch too.

“But does that mean you have to ride your bike to work? Gas prices may not come down anytime soon, but there is a way to turn this situation into some extra profits ­­maybe enough to cover your weekly gas expense simply tagging along with the world’s newest oil sheiks – ethanol producers.

Ethanol is the play to own in today's market

“There are a select few companies that are benefiting significantly from the raging bull market in oil. Ethanol producers, for one, are seeing interest as refiners try to cut out the MTBEs, an additive mixed into gas to cut back on pollution, before the peak summer driving months. Unfortunately, studies have found that MTBE is a carcinogen if it gets to a water source. Because of that fear, states are beginning to ban MTBE and are instead opting for ethanol as an additive replacement. Better yet, demand for the ethanol additive is likely to outpace supply.

“The traditional infrastructure of the oil industry is fraying at the seams. Saudi Arabia has announced that it may not be able to satisfy the West's demand for oil as early as 2015, despite running at full capacity. Iraq hasn't begun to recover to its pre-war output levels, and isn't likely to for some time. And Iran remains a wild card in the geopolitical arena that could drive oil to $80 a barrel or higher as soon as next month.

“And it's not just a Middle Eastern problem. Nigerian rebels have attacked oil platforms and kidnapped foreign workers, cutting the country's oil production by 10% in recent months. The situation is so bad that Goldman Sachs, the world's largest trader of energy derivatives, has predicted that oil could "super-spike" to $105 a barrel!

Brazil about to kiss arab oil goodbye

“In an age of soaring energy costs, unstable oil producers, and geopolitical unrest, Brazil is on the verge of declaring itself "energy independent." That's no small feat when you consider that Brazil is the fifth-largest country in the world. The country has based its fuel needs "almost entirely" on ethanol, which is made in Brazil from sugar cane.

“Brazilians have spent more than 30 years working to kick the oil habit, and while they haven't gone ‘cold turkey’ yet, they already enjoy big savings at the pump. They've slashed an estimated $120 billion in oil costs since it started aggressive research and development of alternative fuels.

Translate that reduction to a U.S.-sized economy, and you've got a savings of almost $2 trillion.
“That's nearly one-fourth of our national debt! In those 30 years, Brazil's gas stations offer pure ethanol, a mix of gasoline and 20% ethanol, or gasohol. And it's widely expected that Brazil will finally achieve its energy independence - something the United States has attempted to do since 1973.

“The ethanol industry in Brazil is so hot that producers are investing about $9 billion in new sugar mills to increase ethanol production. Brazil's road to energy independence had a rocky start. The country was importing about 80% of its oil when The Arab Oil Embargo of 1973 quadrupled the price of crude.

“Suddenly nearly 40% of all foreign-exchange income was going down the oil drain, and the country quickly plunged into recession.

“For Brazil, the crisis was clear: find a replacement for oil or risk national bankruptcy.

“In 1973 Brazil was ruled by a military dictatorship that could coerce its people into using petroleum alternatives before all the bugs were worked out. So General Ernesto Geisel decided to kill two economic problems-rising oil prices and a floundering sugar industry-with one stone.

“Soon much of the country's plentiful sugar cane was being fermented into a new high-octane fuel: ethyl alcohol, better known as ethanol. It was initially used only as an additive to make gasoline supplies last longer. Over time, however, new automobiles were introduced that could run with less and less gasoline, and eventually on 100% ethanol.

“The scheme still wasn't profitable by the time democracy returned to Brazil in 1985. Heavy government subsidies had been necessary to keep ethanol cheaper than gasoline, especially during years of lower oil prices. Still, the groundwork for energy independence was in place, and it's finally starting to pay off.

“In 2003, major automobile manufacturers introduced flexible-fuel or "flex-fuel" cars capable of running on any mixture of gasoline and ethanol...including pure ethanol. A new tax break for driving alcohol-powered cars was introduced the same year.

“Best of all, rising oil costs and more efficient fermentation methods have finally made ethanol cheaper at Brazilian pumps without government subsidies. This year alone ethanol sales are expected to hit nearly 5 billion gallons, eliminating the need for 323,500 barrels of gasoline a day.

“And these pioneering efforts are just the tip of the iceberg. A full-scale energy revolution is about to begin, and investors who get in on the ground floor are going to be sitting on some "sweet" profits.

“But will ethanol really catch on in the United States? The answer may surprise you...it's already here… powering some 4.5 million U.S. vehicles.

“There are currently 4.5 million flex-fuel cars already on U.S. highways, many of them in government service at places like MacDill Air Force base and the Kennedy Space Center. These aren't experimental concept cars or crackerbox-size rice-burners. They're models you already know made by companies like Chrysler, Dodge, Ford, Chevrolet, General Motors, Mercedes and others.

“So why haven't most Americans heard about them? There are only 600 places in the United States where you can get engine fuel that's more than 10% ethanol. And many of those are fleet car fueling stations that aren't open to the public. Compare that with Brazil, where 29,000 of the country's 31,000 stations sell pure ethanol alongside regular gas.

“So it's only a matter of time before the rest of the world catches on to what Brazil already knows about ethanol:

“It's one of the cheapest fuels around-the energy cost to produce ethanol is as low as 8 cents per gallon, significantly lower than gasoline. In 2004 alone, ethanol use cut the U.S. trade deficit by $5.1 billion, eliminating the need to import 143 million barrels of oil.

“What's more, we'll never run out. Ethanol can be fermented from rice hulls, rice straw, sugar cane bagasse, corn fiber, municipal solid waste, switch grass and other stuff we might otherwise throw away. And while petroleum takes hundreds of thousands of years to form, ethanol can be produced in as little as 13 hours.

“And of course, the big one, we don't have to buy it from Middle Eastern fanatics!

While we Trade With China....

Brazil is calling on the US to end its $0.50 a gallon tariff on ethanol. That tariff keeps ethanol exports to the US from being economically viable for Brazil. Given the perception that an ethanol shortage is partly to blame for rising gasoline prices, lifting that tariff sounds like a good idea.

Personally, I'd rather be addicted to Brazilian ethanol than Middle East oil. Speaking of Brazil, the country is essentially energy independent due to its use of ethanol. That means it isn't shipping its currency out of the country. Plus it means energy prices should be much less of a drag on economic growth.

Call your favorites Senator and ask them why they won't let us do what those silly Brazilians are doing.

Working versus Whining

By Dan Ferris
April 20, 2006

The man who sells more cars than anyone in the world says the gasoline tax ought to be $1 per gallon higher.
I’m not kidding.

The man’s name is Michael Jackson, CEO of AutoNation. AutoNation sold 5 million cars last year. That’s about 30% of the entire U.S. auto market. Jackson made his comments in an interview that appeared in Monday’s Wall Street Journal.

Jackson justified his suggestion to destroy more wealth at the gas pump by espousing the viewpoint held by the last five U.S. Presidents, that, “America’s dependence on foreign oil is an issue of national security.” Says Jackson, “People say let the market forces do it, but the market forces haven’t done it.”

It’s not clear what Jackson thinks market forces should have done by now. Market forces tend to keep markets open, not close them down. Keeping markets open tends to keep the peace, not engender hostility or create “national security issues.” Jackson never mentioned that our “dependence” on foreign oil imports creates an even bigger dependence for foreigners on our wealth. That interdependence is what markets are about. It’s why they’re the best way for any two countries to get along.

Jackson reminds me of the comedian who said, “I bought an ant farm, and those little guys didn’t grow a thing.”

Jackson’s view may be as stupid as he is wealthy. But his idea is not, in this democracy of ours, unpopular. Jackson asserts that “our research shows, and this has been confirmed by independent research, that the majority of American consumers would support” his $1-per-gallon gasoline tax hike.

Okay, so the biggest car salesman in the country is trying to get noticed by saying the gas tax ought to be $1 per gallon higher, and every Capital One cardholder in America agrees with him. It’s as if an ugly kid at a homecoming dance yelled, “FIRE” to the top of his lungs, and instead of kicking the crap out of him, they pair him up with the head cheerleader and put a crown on him.

When you’re done vomiting, turn from the Jackson interview to the letter to the editor at the top right corner of page A17 of Monday’s Wall Street Journal. Jim Owens, CEO of Caterpillar, wrote the letter. Caterpillar makes mining and construction equipment, and exports billions worth of the stuff every year. Unlike the bankrupt U.S. auto industry, the commodities bull market has been very, very good to this particular mining equipment manufacturer. Caterpillar’s stock has tripled in five years.

If AutoNation’s CEO seems to be bucking for the 44th U.S. Presidency (on the Democratic ticket), Caterpillar’s CEO must be trying to overthrow the government. “Protectionism is for losers,” says the Caterpillar CEO. Owens thinks U.S. manufacturing companies should innovate, emphasize quality, embrace lean manufacturing principles, invest in their workforce and believe they can compete globally. Rather than whining to the government, Owens favors working harder.

Of protectionism’s possible effects on the global economy, Owens says, “Personally, I can think of no faster path to world wide recession than for multiple engines of the global economy to turn against one another.” Owens calls trade liberalization a “win-win-win” proposition. Sounds like he’s been reading up on the Great Depression.

This is no mere academic rant. At bottom, Michael Jackson of AutoNation thinks politics trumps markets, and Jim Owens of Caterpillar knows everybody has to work for a living. Which one would you want running your business? A worker or a whiner?

A big part of the job up at the top is capital allocation. One of the primary traits in a good manager and capital allocator is a strong character. I leave it to you to decide which CEO discussed above has more character and which one you’d entrust with the allocation of $100,000 or so of your nest egg…

Lower Oil May Not Mean Lower Gas prices

From the AIA Website:

Guest Commentary: Lower Crude Prices Do Not Translate To Lower Gas Prices
Steven J. Cook, CFAManaging General PartnerStrategic Stock Investments, LLC

Last week, the Commerce Department reported the February trade deficit at $65.7 billion versus expectations of $67.5 billion and January's report of $68.0 billion. This better- than-expected performance was the result of:

Lower crude oil prices. Remember back in February when unseasonably warm weather was holding down the demand for heating oil and one of the results was lower crude oil prices? Inasmuch as the U.S. imports large quantities of both crude oil and refined products, it shouldn't be a surprise that lower petroleum product prices would have a positive impact on our balance of payments. However, it is important to note that, with oil prices having been on the increase in the last 3-4 weeks, these rising prices will have a negative impact on our balance of payments in March and April.

Lower quantities of petroleum product imports. Again recall that in the wake of Katrina, the U.S. had to increase the import levels of both crude oil and refined products. By late January, warm weather plus the restart of oil production and refinery capacity lessened the need for these additional imports. So like the decline in prices, the lower quantities of imported petroleum products positively influenced February's trade balance.

That said, the volume of imported products are about to go up again as the U.S. goes into its summer driving season. To explain why requires a little background. As you may know, there is a federally mandated switch in gasoline additives from MTBE to ethanol, scheduled to take place in July. As a result, refiners are starting to sell their stock of MTBE-enhanced gasoline down to zero. But ethanol production has not ramped up sufficiently to allow ethanol treated inventories to match the MTBE inventory draw down.

Unfortunately, it appears that the shortage in ethanol-enhanced gasoline will persist because (1) ethanol production may not reach the level necessary to meet normal summer demand anytime soon and (2) the ethanol producers and refiners have yet to complete the build-out of a delivery system—by which we mean, the infrastructure has not been completed for the storage and transportation of ethanol from the ethanol producer to the refiner; therefore, even if the production of ethanol achieves a level sufficient to supply the quantities needed to meet peak summer gasoline demand, the infrastructure may not be able to deliver it to the refiners on a timely basis.

Therefore it seems likely that the shortfall in gasoline supplies will be met by increased imports—and that will not help our balance of payments.

A decline in the net trade deficit with China. That was a pleasant surprise; and our trade imbalance with China could improve even more. For instance, in a recent meeting, American and Chinese trade officials, among other things, negotiated lower Chinese barriers to the import of American goods. Unfortunately, progress remains slower than it need to be because of {i} protectionist forces in Congress that are constantly threatening China with tariffs and {ii} the Chinese recalcitrance in attacking the piracy of intellectual property.

The punch line is that we believe we will see further progress in lowering the U.S. trade deficit with China but it will not be as rapid as it could be due to politics.

Steven J. Cook, chartered as a Financial Analyst, is Managing General Partner of Strategic Stock Investments.

Wednesday, April 19, 2006

Same Old Stuff

Marxism, by any other name is still Marxism. The single reason why the American standard of living is so high and American innovation is so far advanced is that we don't really on the Federal Government for innovation and progress. Once again, the left is unhappy with that. Their only vision is an American public that is totally dependent on a "God of Government". With a dependent class comes absolute power, they believe that they are the annointed ruling class and can't understand why so many of us won't just accept it.

From IBD:
Posted 4/18/2006

Economic Policy: With great fanfare, former Treasury Secretary Robert Rubin unveiled "The Hamilton Project." But its "innovative policy ideas" are just big-government nostrums dressed up with new phraseology.
The Brookings Institution and Rubin have joined forces to issue a vague "economic strategy" manifesto invoking the name of our first Treasury secretary. For the record, Alexander Hamilton bemoaned "an unequal distribution of the taxes" as an evil to be avoided — an indictment against the soak-the-rich principles that define the Democratic Party today.

"The two greatest economic risks our nation faces today," the latter-day namesake says, "are our country's large fiscal imbalance and inadequate investment in key growth-enhancing areas — such as education, health care, energy independence, scientific research and infrastructure, among many others."

That's patently false: The greatest economic threat we face is the growth in entitlement spending. But when President Bush tried to reform one of those ever-expanding programs last year — Social Security — congressional Democrats refused to play ball.

Rubin calls for "increased public investment in key growth-enhancing areas" — the notion being that well-targeted government initiatives can spur economic growth.

"Markets are the cornerstone of economic growth," the document notes, "but government must invest in critical needs that market forces will not adequately meet . . . significant new intellectual work is needed to identify and devise innovative approaches to investing in key growth-enhancing areas."

Translation: Economic growth depends on the government spending more of your money in ways you've never thought of.

Here's more Hamilton Project double talk: "The lack of adequate investment . . . impairs the economic growth that could help to narrow the fiscal imbalance."

Now, in English: Let's spend our way out of the budget deficit.

Few specifics on the "investment" are provided, but here's a giveaway: The project's answer to high energy prices is for Washington to find alternatives to oil and gas by starting "a new federal research agency" similar to the Defense Advanced Research Projects Agency — which was set up after the Sputnik launch to keep U.S. military technology ahead of the Soviet Union's.

So for all the hoopla about exciting new ideas, the Hamilton Project is all about the same tired, discredited approach to problems we've come to expect from the liberal Washington establishment: new federal agencies.

Rubin's current successor, Secretary of the Treasury John Snow, came out swinging against the Hamilton Project last week, pointing out that "growing the public sector — that is, making government bigger — and achieving fiscal discipline, can only lead to one thing: higher taxes." Snow said it "sounds to me like nothing more than the same old 'class warfare.' "

But it also shows that out-of-power Democrats holed up in a room to think up policies seem able only to dress up expanded government in new clothes — instead of staving off the train wreck coming for the American people if we don't rein in uncontrolled government spending on Medicare, Medicaid and Social Security.

The so-called Hamilton Project is nothing but an exercise in deceptive semantics. "The Burr Project" — as in Hamilton's disreputable adversary and killer, Aaron Burr — would be a better name.

A Self-Inflicted Energy Mess

From IBD:
Posted 4/18/2006

Energy: As gasoline prices creep beyond $3 a gallon, everyone wonders who deserves the blame. OPEC? Sure. The unstable Mideast? Absolutely. Here's one you might not have considered: the U.S. government.

It's always tempting to blame soaring energy costs on some nefarious foreign plot and be done with it. And no question, troubles in the Mideast and OPEC's inability (or unwillingness) to get a grip on prices play a big role. The showdown with Iran over its burgeoning nuclear program affects prices too.

But, as we've written before, those aren't the only things to blame. The federal government, with its balkanized gasoline requirements, its taxes and its myriad regulations, deserves a large measure of responsibility for the soaring cost of gasoline.

Every year at this time the same thing happens: Gasoline prices spike in anticipation of the dreaded summer "driving season."

In recent years, prices have risen faster, and remained higher, than before. And this year, the jump has been downright scary, with prices up about 30% since the end of 2005 .

Barring a major breakthrough on Iran, don't expect lower prices soon. Why? The U.S. hasn't built a gasoline refinery from scratch since the 1970s. Instead, we've squeezed greater efficiencies from existing plants, which now operate pretty much full out. Any disruption — an unexpected maintenance shutdown, for instance, or last year's Gulf Coast hurricanes — and prices instantly soar.

That's not to say the price of oil itself doesn't matter. It does. According to the Energy Information Administration, 59% of the price of gasoline is determined by the price of crude. When crude rises, gas goes up. When it falls, gas goes down. Simple.

Yet a big chunk of our current gasoline price pain is in fact self-inflicted. The reason, say energy economists, is simple: Regulations of all kinds have reduced the available supply of energy to U.S. markets. That's especially true for gasoline.

Just last August, Congress passed an energy bill that requires oil companies to remove the additive MBTE starting this spring. Sounds innocent enough, but it's requiring a major, costly retrofit and cleanup that's taking money off the table for other badly needed investments.

Worse, U.S. rules have made it prohibitive even for low-cost foreign companies to come here and supply our market. As oil economist Philip Verleger recently noted, "the U.S. and the European Union have erected the equivalent of trade barriers by imposing increasingly tight specifications on petroleum products."

There is, for instance, the U.S. effort to cut sulfur content in gasoline, a move that began in January 2004. The EU adopted similar rules on diesel. As a result, foreign producers can't make money selling finished petroleum products here. It costs too much to comply with our byzantine rules.

Without big changes, this problem won't go away. Gasoline prices might go up and down, but as the chart shows, the trend seems to be up. What can we do?

For one, the U.S. sits on an awful lot of oil that it chooses not to exploit. The Alaska National Wildlife Refuge is but one example. Over the past two decades, Congress has taken some 740 million acres of oil-rich federal land off the table for oil exploration and production.

In addition, we now make 18 "boutique blends" of gasoline, each of which must be crafted especially for a specific market, just to meet our tough environmental standards. Why not just one?

Everyone wants more energy, but no one wants to do what's necessary to get it. Environmentalists talk of slashing world economic growth to curb global warming. Many people are sympathetic to that. Yet they hunger for more energy, not less, and the higher standard of living it implies.

Worldwide, the International Energy Agency estimates that by 2025 $16 trillion — an amount larger than the GDP of the world's two biggest economies, the U.S. and China — will have to be spent to meet global energy demands. Given the stringent rules now in place around the world, it looks doubtful that goal can be met.

It's possible that higher prices will push consumers to cut back and encourage companies to find new kinds of energy. Already, oil companies are looking to the billions of barrels of oil locked in Canada's oil sands — an amount roughly equal to all the oil in Saudi Arabia. Other new technologies, such as hydrogen fuel cells, also hold promise for cutting our oil bills.

But at some point, we'll have to make tough decisions. More energy or more rules — and then we'll find out where people stand.

Free The Market

From IBD:
Posted 4/18/2006

Health Plans: States have come up with all sorts of schemes for expanding coverage. But they could do a lot of good simply by getting out of the way.

Massachusetts has been getting the headlines lately with its new law requiring every resident to have medical insurance — on their own dime if they can afford it, at taxpayers' expense if they can't.

But the Bay State is just one venue out of 50 for a very complex story.

The debate over how best to reduce the ranks of the uninsured is going on in state capitals just about everywhere. Legislators and interest groups are pushing plans for wider and cheaper coverage through employer mandates, state-paid systems, small-business pools, tax reform and everything in between.

All this activity does have a common theme:

It's state, not federal. That's a significant story in itself. By long-established practice and explicit federal law (the McCarran-Ferguson Act of 1945), most insurance regulation is left to state governments. That includes health insurance, which states oversee with widely varying results for the consumer.

State-to-state differences in premiums can be dramatic, especially in the market for individual coverage. A survey last year by the online insurance marketplace eHealthInsurance compared the price for similar policies in 50 cities and found a roughly sixfold difference between the cheapest and most expensive. A policy for a single 30-year-old, nonsmoker that cost $54 a month in Long Beach, Calif., went for $334.09 in New York City.

Meanwhile, Boston, with a monthly premium of $267.50, was second only to New York. That will be a problem for Massachusetts' new mandatory coverage plan unless premiums fall to more affordable levels.

Regulation is only one of many factors that determine the cost of insurance. Premiums are also set by local medical costs, claims records, the risk profile of a given insured population and the financial condition of insurers, among other things.

But states certainly do their part. They add to insurers' costs by adding mandated coverage for specified services, illnesses or types of practitioners, such as acupuncturists and chiropractors.

Some, such as New York, keep premiums extra high for the healthy with guaranteed-issue and community-rating laws.

These are meant to spread the cost of insuring the sickest patients, but they've have had the unintended consequence of pricing young people with modest incomes out of the market.

We're not holding our breath for over-regulated states to change their policies, at least not without a competitive jolt. And as long as Washington leaves health insurance in the hands of state legislatures and commissioners, there will be no effective national insurance market and no effective competition.

So it's time to treat the marketing of health coverage as interstate commerce — which it truly is, in the Internet Age — and allow policy sales across state lines. Rep. John Shadegg, R-Ariz., has introduced a bill to that effect (the "Health Care Choice Act," H.R. 2355), and passing it should be a priority for Congress this year.

As for the states, their priority should be to get the best deal for consumers. Stepping aside and letting the insurance market work is one way to do this.

Prize Poseurs

From IBD:
Posted 4/18/2006

Media: Corks are popping in newsrooms across America. It's the Pulitzer Prize fest, when journalists praise themselves for "speaking truth to power." But do they really understand their First Amendment freedom?
It's not a trifling question. A Pulitzer, after all, is journalism's most prestigious award, and if we won one our shirts, too, would be stained with champagne.

So let's praise the most deserving winners by far: the two Gulf newspapers — The New Orleans Times-Picayune and The Biloxi Sun Herald — that shared the public service prize for their coverage of Hurricane Katrina. At the T-P, staffers worked outside their devastated offices for six weeks, for days publishing only online.

So, journalistic heroism lives. There's even more reason to applaud these papers' coverage of the nation's greatest disaster. They refrained from the stealth partisanship that sought to blame the Bush administration, instead detailing government failure at every level.

But apart from those exceptions, the Pulitzer Committee once again seemed to take pride in poking thumbs in President Bush's eye. Top prizes went to The Washington Post and The New York Times for investigative pieces the commander in chief personally appealed to the editors to spike.

In the Times' case, writers James Risen and Eric Lichtblau revealed what has come to be known as the government's "domestic eavesdropping" program. That's a misnomer. The program listens only to suspected terrorists who call the U.S. from abroad.

The government would be shirking its duty if it didn't gather that intelligence. Bush, fearing compromised security, asked Times executive editor Bill Keller to hold the story. He did. For a year. Then, he released it, timed to the publication of a Risen-Lichtblau book.

At The Post, writer Dana Priest raised eyebrows by revealing secret CIA prisons overseas where suspected terrorists were harshly interrogated. Again Bush appealed to the editor, Leonard Downie Jr., who ran the story anyway, arguably compromising security and handing Islamo-fascists a propaganda victory.

Now, in a free society it's wonderful that editors can defy presidents. But just who are the enemies of freedom? The U.S. security apparatus? Or the terrorists? Messrs. Keller and Downie, now sending congratulations to each other for acting out their "watchdog" scripts, seem to have leapt through the looking glass.

Neither newspaper, the Pulitzer Committee notwithstanding, has covered itself in glory during the war on terrorism. In wars prior to Vietnam, their editorial decisions would have been deemed treasonous.

Something deeply troubling has gripped our media since our troops left Indochina.

Why not a prize for free-lancer Claudia Rosett, who single-handedly unraveled Saddam Hussein's multi-billion-dollar corruption of the United Nations? Or for The Weekly Standard's Stephen Hayes, who painstakingly connected the Iraqi dictator to al-Qaida?

To ask is to understand just how far the mainstream media — and those who hand out prizes for their work — have drifted.

Hispanics Say They'll Vote Based On How Immigration Is Handled

This mess was created from the lack of enforcement of laws, now it has become so political with Senators and Representatives running scared, the chance of sound, enforceable policy coming out of this body is slim to none. Now you know.....

From IBD:Posted 4/18/2006
Republicans who take the Hispanic vote seriously are right to worry about how they're handling the immigration issue, results of the latest IBD/TIPP Poll suggest.

The survey of 969 Hispanic adults taken last week found that 70% say their votes in November hinge on the immigration issue, that four times as many think Democrats can deal with the issue better than Republicans and that 73% are likely to vote for the party that offers amnesty for illegal immigrants now in the U.S. — a concept anathema to the GOP.

Of the 27 million Hispanics ages 18 years or over, only 9 million (33%) are registered to vote. And only 7.6 million (28%) voted in the 2004 presidential elections. The poll respondents cannot be considered "likely voters," and heavy turnout among Hispanic Republicans may explain why President Bush is believed to have garnered more than 40% of the Hispanic vote in 2004.

Still, the Hispanics surveyed by IBD/TIPP were remarkably monolithic in how they felt on immigration. Responses varied little based on age, gender, income, party affiliation, length of time in the U.S., whether they view themselves mostly Hispanic or mostly American, and whether mostly English or mostly Spanish is spoken in the home.

Among the poll's major findings:

• A steady migration from independent to Democrat. More than 57% of Hispanics new to the U.S. (one to five years) identify themselves as independents. But that percentage steadily erodes to the point where only 33% of those here 21 years or more still list themselves as independent.

Republicans pick up some of the defections — with 13% identifying with the GOP after 21 years compared with just 2% of those here one to five years.

But Democrats are the main beneficiary, with their percentage swelling from 15% to 43%. (See chart.)
Overall, 43% of Hispanics count themselves independent, 31% Democrat and 9% Republican. Republicans outnumber Democrats only among Hispanics with incomes of more than $50,000. They represent only 12% of the total.

Among Republican Hispanics, households with incomes under $40,000 account for 43% and over $40,000 represent 39%, as compared with the Democrats' 63% under $40,000 and 23% over $40,000.

• Immigration's the big issue. The percentages of Hispanics who say immigration will "largely determine" how they vote in November were lowest among those who consider themselves "mostly American" and who speak mostly English in the home. But even among these subgroups, 67% and 61% say immigration will be key.

• A "guest worker" program is desirable and "amnesty" is even more so. Of the respondents, 64% said they are "more likely to vote for the party that supports a guest-worker program" as part of any immigration reform. Here, too, support was across the board.

Interestingly, guest-worker support was strongest among those making less than $30,000 a year (71%) and those making more than $75,000 (71%). Among age brackets, the strongest support was from those 65 and up (70%).

And significantly, 63% of Hispanic Republicans want a guest-worker program (vs. 71% of Democrats and 67% of independents).

Of the 73% who agreed they are "more likely to back the party offering amnesty to illegals," 63% said they did so "strongly." The biggest supporters of amnesty were Hispanics who've been here 11 to 15 years (88%). Most lukewarm were those who consider themselves "mostly American" (50%).

Strongest supporters of amnesty were those making less than $30,000 and ages 18 to 24. Hispanic Democrats backed amnesty 82%, independents 78% and Republicans 61%.

The sharpest breaks by party came when respondents were asked which party would do a better job dealing with immigration. Democrats think they're the most competent by 6-to-1 over Republicans. Hispanic Republicans backed their team 16-to-1.

• Assimilation may be a slow boat. Overall, 58% of Hispanics surveyed spoke only Spanish or mostly Spanish in their homes. Another 22% spoke both Spanish and English equally. Mostly English, but some Spanish, was spoken by 13% and English only by 6%.

Even after 21 years in this country, 37% still speak only Spanish and mostly Spanish, and the English-only percentage climbs to just 13%.

The poll was taken April 3 to 14 by TechnoMetrica Market Intelligence.

Monday, April 17, 2006

On Tax Day

From Andrew Snyder
Executive Editor, BreakAway Investor

Sometimes sitting in bumper-to-bumper traffic pays off. Not only do I get to study my fellow commuters for the latest trends, I also get to read some of the finest literature of our time…bumper stickers.

Today’s winner: “The Lord provideth, the government taketh away.”

On tax day, truer words could not be spoken. Hundreds of thousands of procrastinating Americans will be forking over some change to Uncle Sam today.

With all of the odd taxes imposed across the country, it is easy to see why some people dread tax season and put it off to the very last minute.

For instance, did you know?

If you buy a deck of cards with less than 54 cards in Alabama, you will automatically be taxed 10 cents.

In Chicago, you will receive a 0.5% tax on all carryout food. It is called the “anti-litter” tax. But I’m sure it only entices the throwing of Whopper wrappers on the mayor’s front lawn.

Chicago is also the home of the “fountain soda tax”. If you buy a soda that is not in a can or bottle, you will be charged a nine percent tax.

Every state with a major league sports team charges a hefty “jock tax”. While it encompasses all “entertainers”, the tax hits professional athletes the hardest. The rule in the books states that any money earned by an out-of-state player can be taxed by the state the money was earned in. In other words, if the Yankees are playing a three-game series in Boston, the players will have three days worth of their salaries taxed and given to Massachusetts. Ironically, California enacted the first “jock tax” right after the Chicago Bulls beat the Lakers in the 1991 NBA championship series.

Finally, we get to the stupidest tax of them all…the illegal drug tax. Our elected officials thoughtlessly designed a tax that collects fees on illegal drug transactions.

And don’t think it is some forgotten rule left over from a bygone era. Over a dozen states have enacted moronic taxes that target the sales of illegal drugs. Many of them have enacted the rule within the last two decades.

North Carolina is a state with an illegal drug tax on its books. It requires purchasers of narcotics to purchase tax stamps within 48 hours of buying them. To get the stamps, a person must go to a government office, purchase the stamps and affix them to the drug.

The process is anonymous, and people caught without the tax stamp will be charged with the appropriate crimes and forced to pay the tax, much of which flows back to law enforcement agencies.

North Carolina must not have many drug users because only a few dozen people have purchased the stamp since it was enacted in 1990, and most of them were memorabilia collectors.

The United States is not the only country with volumes of odd taxes. Countries and cities across the globe are doing anything they can to keep their coffers in the black.

One town in Germany recently enacted a tax aimed at customers of the town’s brothels, exotic dance halls and massage parlors. The Cologne’s “pleasure tax” brings in nearly four million dollars each year.

In India, the government is constantly battling money laundering and tax evasion. So to stack the cards in its favor, the federal government is working on a cash withdrawal tax of 0.1% on large withdrawals. In India, Uncle Samir always gets his cut.

Sunday, April 16, 2006

The European Tri-fecta!

In France, the young people are still rioting. It’s not March Madness. It’s just everyday insanity. They are protesting a new law that would make it easier for employers to hire and fire people below 26 during a two-year trial period. You’d think this would be welcome news to the slackers: youth unemployment in France is over 20%.

In the States, however, where almost everyone can be hired and fired (unless you’re a member of the New York teachers’ union), the 2006 crop of US college graduates is facing the best job market since 2001.

“Business, computer, engineering, education and health care grads in highest demand,” writes a Reuters correspondent. Here in Baltimore, there are help wanted notices in shop windows, on business signs, on billboards, even jingles on the radio.

“We are approaching full employment ,” said the chief executive of Challenger, Gray & Christmas.
In fact, competition for young workers is heating up. Employers have to compete on salaries, perks and benefits.

Writes the blogmeister of moonbattery.com:
“You don’t have to be Adam Smith to notice that there is an inverse relationship between the health of an economy and the degree of government interference. A demented state of affairs in which private businesses are not allowed to fire employees goes a long way toward explaining why the jobless rate of French youth is 23% nationwide, and 50% among the poor.”

“Anglo-Saxon” Adam Smith, however, may have a difficult stand against the institutionalized statism bred by generations of Marxists and neo-socialists who have used the past half century to turn large layers of French and European society into passive dependents on state largesse.

It reminds me of some fellow students I met at the University of Aberdeen in Scotland back in the 1980’s, who were planning to “go on the dole” for a few years after their graduation. This way, the young Scots would be getting paid by the state for doing nothing, could do anything they wanted - and still feel like victims of “the system,” the English AND Maggy Thatcher.

That’s called the European Trifecta!

J. Christoph Amberger
Executive Publisher and The Taipan Group’s 247profits e-Dispatch Team

An Easter Message

As I have said before, I'm an OK Christian and not a very good Catholic. My view of organized religion is about the same as organized government - a good concept screwed up by it's practitioners.

Regardless, we attended Easter Service this morning and I was moved by the Homily delivered by the priest. Here it is:

By Father Bill Dietzler:

After the Sabbath, as the first day of the week was dawning, Mary Magdalene and the other Mary came to see the tomb. - Matthew 28:1

What were they looking for? The dead Jesus.

What did they find? The living, where they expected to find the dead!

Shock and disbelief were their first reactions. When it became clear to these two holy women that there is life, even where they expected to find death, both women experienced awe, wonder and joy as they had never experienced before.

Often, we linger with "death" - the loss of our job, the death of family or friends, the end of relationships, an onset of illness that robs us of our dreams and so many other "deaths". If we look closely with the women at the tomb, we begin to realize the meaning of the "deaths" we experience and what the angel is saying to us, "be not afraid" Matthew 28:5. What are we afraid of? Afraid to look for life in the midst of all that draws us to death.

The Easter message is that Jesus is Risen and lives among us. Seek him, find him and grab on to life as it is and rejoice! We need to be told, as the women were, quit seeking him among the dead - look for him where there is life!

Friday, April 14, 2006

Will Cooler Heads Prevail?

More on the Junk Science of "Man-Made Global Warming"

From IBD:

Climate Change: As experts predict a milder hurricane season unrelated to global warming, 60 top scientists tell Canada's new leader that the Kyoto treaty is pointless. And where's that ice age we were promised?

A study by William Gray and Philip Klotzbach of Colorado State University forecasts that this hurricane season, which begins June 1, will produce a total of 17 tropical storms, nine of them becoming full-blown hurricanes and five of those reaching Category 3 or above. This is well short of last season's 26 storms, 14 hurricanes and seven Category 3s or above.

According to evidence we have reported before, hurricanes follow a historically cyclical pattern in both frequency and intensity, and Gray and Klotzbach confirm this.

"It is statistically unlikely," they conclude, "that the upcoming 2006 and 2007 hurricane seasons that follow will have the number of major hurricane U.S. landfalls as we have seen in 2004-2005."

As for the relationship between global warming and hurricane activity, the study says: "No credible observational evidence is available or likely will be available in the next few decades which will directly associate global surface temperature change to changes in global frequency and intensity."

Meanwhile, some 60 leading scientists have written an open letter asking new Canadian Prime Minister Stephen Harper to keep his pledge to review Canada's commitment to the Kyoto Protocol, the treaty on greenhouse gases that 84 countries have signed. "Global climate changes all the time due to natural causes, and the human impact still remains impossible to distinguish from this natural 'noise,' " the letter asserts.

It also says: "If, back in the mid-1990s, we knew what we know today about climate, Kyoto would almost certainly not exist, because we would have concluded it was not necessary." Activists, it adds, try "to convince the public that a climate catastrophe is looming and humanity is the cause. Neither of these fears is justified."

In fact, how the media assess climate change depends on which decade we're in. The April 28, 1975, issue of Newsweek, for example, had as its science story, "The Cooling World." Meteorologists were "almost unanimous," it said, that catastrophic famines would result from — gasp! — global cooling. Global cooling?

The article said we were about "a sixth of the way toward the Ice Age average" and cited not melting glaciers, but "a sudden, large increase in Northern Hemisphere snow cover in the winter of 1971-72."

On Sept. 14, 1975, The New York Times opined that global cooling "may mark the return to another ice age," that "a major cooling of the climate is widely considered inevitable" and that it was "well established" that the Northern Hemisphere's climate "has been getting cooler since about 1950." Huh?

The earth warms. The earth cools. Al Gore and his media friends should just chill.

Dirty Secret

Junk Science - the manipulation of data for the purpose of forwarding one's own agenda

From IBD:
Posted 4/13/2006

Environment: With Earth Day (April 22) still a week off, there's still time for alarmists to scare the pants off the public with stories of impending doom. But the truth is, the planet keeps getting cleaner.

Noxious emissions from carbon monoxide to sulfur dioxide are down, water quality continues to improve and toxic chemicals — while still out there — aren't doing the damage that their critics claim they are.

But don't look for this sort of information in the mainstream media. With few exceptions, they follow the line of environmentalists who are both emotionally and financially invested in a campaign against capitalism and modern living.

And this is their week, their time to sit back and listen as a sympathetic press reminds us how much greedy corporations, monster SUVs, greedy oil companies and even common household cleaners are wrecking our fragile environment.

But don't be fooled; be informed.

A valuable source of information is the latest "Index of Leading Environmental Indicator," which Stephen Hayward has been compiling since the early 1990s. Among the findings in the 2006 edition:

Emissions of carbon monoxide fell by 14.8% in just the four years ended in 2004. Nitrogen oxides were down 15.7%, sulfur dioxide down 6.7% and volatile organic compounds down 11.2%. Only particulate matter, such as smoke, dust and other floating particles, which plunged 80% from 1970 to 2004, increased from 2000 to 2004, and then by only 8.7%. There was also a large decline — a 98.6% drop — in lead emissions between 2000 and 2004.

One reason for the gains is that vehicles are burning cleaner than ever — and that includes the class of cars that has been demonized by environmental groups. "The frequently heard claim that large SUVs 'pollute more,' " writes Hayward, "is a myth."

Cancer rates continue their decline after peaking in the early '90s. This is significant because cancer incidents are often blamed on toxic chemicals.

Levels of chemicals found in the human body are also falling, according to the Centers for Disease Control and Prevention.

Releases of toxic chemicals plunged 42% from 1998 to 2003, according to the EPA, even though more chemicals are being counted and more sources are being required to report.

The earth will never be spotless, but neither is it a stinking, smoldering, overflowing trash bin, as the green lobby would have us believe. Earth Day should be marked by celebrations of our progress, not the ominous tones of doom that usually dominate the coverage.

Proliferation Scare

Is it time to just pull back and focus on defending ourselves from nuclear terror attack? If so, we better become energy independent real quick because once Iran had nukes, they will take over the Middle East and OPEC will be no more.

From IBD:
Posted 4/13/2006

Nuclear Terror: And so, the countdown begins. Media savants insist that Iran is "years away" from building a nuclear bomb. But at least one government official thinks there's a lot less sand left in the hourglass.

Many are perplexed by Iran's refusal to contemplate compromise in its nuclear program. They shouldn't be. Iran's leaders are buying time, plain and simple. And they might need a lot less of that than thought.

As Iran's armed forces chief, Gen. Hassan Firouzabadi, darkly warned Thursday: "When a people master nuclear technology and nuclear fuel, nothing can be done against them."

Message received. But, of course, we're assured that Iran's nuclear push is for only "peaceful purposes." Or that the threat is overblown by warmongering neoconservatives in the White House.

Also on Thursday, The New York Times, quoting several "nuclear analysts," suggested Iran might be able to build a bomb in "5 to 10 years, and some analysts have said it could come as late as 2020."

How about a bit more than two weeks? In fact, Iran's drive to become a nuclear power seems to be accelerating.

Currently, Iran has just 164 centrifuges up and running. Centrifuges are used to enrich uranium for use in a nuclear reaction, like those in bombs. But it plans to have 3,000 working soon. After that, at some unspecified time, it wants 54,000.

"Using those 50,000 centrifuges, they could produce enough highly enriched uranium for a nuclear weapon in 16 days," according to Stephen Rademaker, U.S. assistant secretary of state for international security and nonproliferation.

No, we're not saying the Iranians will have a working bomb in two weeks. We are saying, however, that no one really knows for sure how far along they are. We don't know, for instance, how many centrifuges they have.

Nor do we know what nuclear know-how they've already gotten from other rogue states — like North Korea or the nuclear network of A.Q. Khan, the father of Pakistan's nuclear weapons program.

A Khan connection would be particularly worrisome. Iran was aided by Khan and the Pakistani government in a nuclear quest that started in 1988 and lasted at least until 1996, according to the International Atomic Energy Agency. That means Iran might be closer to becoming a nuclear power than people think. And the world might have a lot less time to react than it wants.

This is a real and present danger. If Iran arms itself with nuclear weapons, it's clear other Mideast countries will want them too.

We know that the Khan ring sold or offered nuclear technology to Libya, Syria, Iran and Iraq. The respected Defense and Foreign Affairs Daily reported in 2003 that Saudi Arabia also was in talks with Pakistan to place nuclear-tipped Chinese-built missiles with a range of more than 3,000 miles in the Saudi Kingdom.

Once Iran gets a nuclear weapon, the proliferation genie will be out of the bottle. A region full of hateful, unstable regimes that cheers openly for our bloody demise is unpleasant enough. Add nuclear weapons, and it becomes a real nightmare.

Those who don't see the danger in this seem have forgotten the lesson of 1939, when it was thought Hitler would be happy just taking a bite out of Czechoslovakia. Those who failed to act were horribly wrong then; their intellectual heirs are horribly wrong now.

Governance Test

From IBD:
Posted 4/13/2006

Immigration: Can the Republicans get anything done? That's a fair question, and the party's performance on border security may be the make-or-break answer.

At this point, the GOP is exactly where the Democrats want it to be: divided and, to all appearances, paralyzed. For a party that holds the majority in both houses of Congress, this is a dangerous state to be in as elections approach.

The public has a right to expect that the governing party, in fact, govern. There are pressing national issues on which Congress needs to act. The breakdown in immigration law is certainly one of these. If the Republicans can't even agree on a policy, much less enact a law, they're not doing their job.

If they expect Democrats to help them out, they can forget it. They went that route in the Senate, and the Democratic leadership blocked a widely supported compromise after the AFL-CIO signaled disapproval of its guest-worker provision.
Last year in the House, Republicans realized they had made a mistake by including a provision branding all illegal aliens as felons, but the Democrats — seeking maximum political damage — refused to vote for an amendment removing that language. Bottom line: Whatever Republicans do, they'll have to do on their own.

That prospect isn't as grim as it sounds. Democrats and the media harp on GOP conflicts — between pro-immigrant business groups and hard-core restrictionists, open-border libertarians and the Minutemen, Sen. John McCain and Rep. Tom Tancredo. Yet the party's differences seem less irreconcilable when looked at closely.

It doesn't violate logic, for instance, to want tough border and work force enforcement while agreeing that it's not practical to deport the 11 million or so illegal immigrants now in the U.S. That's simply to say the laws should be realistic and respected. Most Americans seem to hold this view, and it makes perfect sense.

They clearly want the country to regain control over its borders. In one recent Fox News/Opinion Dynamics poll, 60% rate illegal immigration a "very serious" problem and 30% say it's "somewhat serious." At the same time, they accept the idea of letting most illegals stay here, if under terms short of amnesty.

In the same Fox News poll, 69% say they favor "allowing illegal immigrant workers who have jobs in the United States to apply for legal, temporary-worker status." Other surveys come up with similar results. A new Los Angeles Times poll shows 63% in favor of "tougher enforcement and a guest-worker plan."

Put another way, two-thirds of the public supports positions identified with Republicans. Even the House bill can be more asset than liability if GOP leaders ditch its red flags (they showed good sense in pledging to drop the felony status for illegals). In a glass-half-full view, Republicans have the makings of a policy that addresses a national need and is more credible, on basic matters of enforcement, than anything the Democrats are likely to support.

But you could say the glass is half empty, too. As long as the GOP doesn't unite behind a policy, no amount of good ideas will help. Republicans need to find common ground among themselves, not with the opposition. If they don't, they risk failing their governance test and suffering the consequences in November.