Archive for March, 2012

I Think We’re All Bozos on this Bus

Wednesday, March 14th, 2012

For those of you too young to remember, that’s the title of Firesign Theater‘s fourth album released in 1971. One of the founders of Firesign Theater, Peter Bergman, passed on recently.

While the album ponders man’s place in a world dominated by technology, I think it is also an appropriate description of the political theater surrounding gas prices.

First the facts, the price of gas has gone up $.26 over the past year. That’s around 7%. We’ve seen those sorts of price spikes before, but this time the rise was more rapid than it has been in recent past.

The Republicans, who have been frustrated with the improving economic picture, have seized on this issue to support their claim that the current administration’s policies are really hurting the economy rather than helping it.

The general theme that all of the Republican presidential candidates have used is that more domestic drilling will bring down the price of gas. Gingrich has gone so far as to promise to bring the price down to $2.50.

The truth is that this President HAS increased domestic oil production dramatically. The last time we produced this much domestic oil was 2003. As a result we are reducing our dependence on foreign oil, but the cost of crude on the open market has still gone up.

The other reality is that oil is a globally traded commodity. As a result, there is precious little any President can do to affect the price over the short term.  In fact the current run up in price has little to do with supply and everything to do with speculation.

From Politifact.com

“What can you do to change the market in the short term? The answer is not much,” said James Bartis of the RAND Corporation, a nonprofit research group that provides independent policy analysis. “It takes many years to open up a new oil field, to prepare and get production from a new oilfield. Generally, I would say a decade is the minimum.”

So why are gas prices going up so quickly?

  1.  Speculators are concerned about the rising tensions between Iran, Israel, and the United States. In particular, the most recent jump in prices started more or less the same time as Republican candidates began talking about how they wouldn’t hesitate to attack Iran if Iran continued to enrich uranium.
  2. The growth of the economies in India and China are driving up demand for cars and gas. Oil companies are expanding their production capabilities in these countries because they see the opportunity for growth. They are REDUCING their refining capacities in this country because demand for gas in this country is going down – 7% in the northeast since 2005. When demand goes down, refineries lose money. When refineries lose money, they close, as two did last year in Pennsylvania, another did last month in the USVI, and a huge Philadelphia refinery will in July if a buyer doesn’t step up. If this last refinery does close, gas will go up in the Northeast because it will have be transported from the Gulf or overseas. Huge new refineries in India are already delivering 40,000 gallons of gas a day to customers in the Northeast.
  3. It is increasingly expensive to extract crude oil because all of the “easy” oil has already been pumped. That means more risk, more spills, and more expense. Domestic or international doesn’t matter. There is no “cheap” oil left in the ground.

While it may not be convenient for the Republicans to accept, the reality is that our best long-term options are not going to come from drilling another hole in the ground. They are going to come from more efficient use of our current resources and development of alternative energy sources and transportation options to replace fossil fuels.

That is best done by everyone getting on the same page regarding the components of a thoughtful energy policy.

Unfortunately, the clowns that populate the current political landscape seem incapable of having that sort of conversation.

 

Through the Looking Glass

Saturday, March 3rd, 2012

Alice laughed. “There’s no use trying,” she said: “one can’t believe impossible things.”

“I daresay you haven’t had much practice,” said the Queen. “When I was your age, I always did it for half-an-hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”

Olympia Snowe just announced that she isn’t going to run for office again this year.  She is one of the few Republican moderates left in the Senate.  Her decision is based on what she described as, “an overall process that lends itself to dysfunction and political paralysis that doesn’t allow problems to be solved.”

This was after yet another example of political theater in the Senate.  The Republicans had attached an amendment to a popular transportation spending bill.  The amendment would have allowed employers to opt out, based on religious objections, of a new federal health-care mandate to provide contraceptive coverage for their employees.  The amendment had nothing to do with transportation.  Both the Republicans and Democrats knew that the amendment would not pass.  So why was the amendment proposed at all?

Its sole purpose was political.  Both the Republicans and Democrats feel that this issue works to their advantage.  Democrats wanted to force Republican Senator Scott Brown from Massachusetts to vote for the amendment in order to provide his Democratic challenger, Elizabeth Warren another opportunity to criticize Republicans for their votes against women’s health issuesThe Republicans wanted the vote so that they could continue to suggest that the Democrats in general and President Obama in particular have overstepped their constitutional authority and are waging a war against religion.  In the meantime, the transportation bill which provides sorely needed funds for highway and bridge repair is stalled.  This bill could create or save as much as 2M jobs.

That leads us to the real issue.

The Republicans have a big problem and passing the transportation bill only makes the problem worse.

The economy is getting better and unemployment is going down.  The stock market just broke through the 13,000 point psychological barrier.  Auto manufacturing is booming and the hiring associated with that growth is driving recovery in the rust belt states that were already in recession toward the end of the Bush administration.  Unemployment in Ohio is now lower than it was when Obama took office.

Obama’s message in manufacturing states is easy.  He and the Democrats saved the domestic auto industry over the objections of the Republicans.  That industry is now leading the economic recovery that is driving down the unemployment rate and driving up the stock market.

This blows a big hole in the Republican strategy that the nation needs a successful business man in the White House.  Supposedly this business man knows something that Obama doesn’t, but he also opposed the auto bailout and supported the Wall Street bailout.  With the economy recovering, auto manufacturing booming, and unemployment going down – all Romney is left with is the weak argument that it would have been even better his way.  Obama on the other hand is able to make a simple direct statement that frames the choice for voters when he says, “I placed my bet on the American worker.”  

The bottom line is that the economy IS getting better and the Republicans are losing their biggest issue.

Unfortunately in the sort of political climate that we have today, facts on the ground have very little to do with political arguments.

Here’s just a small sample from non-partisan fact checking sites to illustrate the point.

From Factcheck.org

The exaggerated Republican claim that the new health care law “kills jobs” was high on our list of the “Whoppers of 2011.” But the facts haven’t stopped Republicans and their allies from making the “job-killing” claim a major theme of their campaign 2012 TV ads.

Does insurance coverage for contraception save money? We find lots of evidence. But it’s conflicting, and inconclusive.

A conservative group exaggerates the number of “Wall Street executives” in the Obama White House. In a major TV ad buy, the American Future Fund lists 27 people it claims are part of “Obama’s Wall Street Inner Circle.” But the ad is either flat wrong or greatly exaggerated in more than half of those cases.

Rick Santorum is off base when he criticizes college as a place where young people lose their “faith commitment.” In fact, the percentage of those with weakened religious affiliations is higher for those who don’t go to college.

Rick Santorum misrepresented what John F. Kennedy said in 1960 about church-state separation. According to Santorum, Kennedy said that religious people could “have no role in the public square” and “should not be permitted . . . to influence public policy.” But Kennedy didn’t say those things. He said he wouldn’t take orders from the Vatican if elected president.

From Politifact.com

The U.S. military is at risk of losing its “military superiority” because “our Navy is smaller than it’s been since 1917. Our Air Force is smaller and older than any time since 1947.” Mitt Romney

This is a great example of a politician using more or less accurate statistics to make a meaningless claim. Judging by the numbers alone, Romney was close to accurate. In recent years, the number of Navy and Air Force assets has sunk to levels not seen in decades, although the number of ships has risen slightly under Obama.

However, a wide range of experts told us it’s wrong to assume that a decline in the number of ships or aircraft automatically means a weaker military. Quite the contrary: The United States is the world’s unquestioned military leader today, not just because of the number of ships and aircraft in its arsenal but also because each is stocked with top-of-the-line technology and highly trained personnel.

 

The Obama campaign said, “Mitt Romney, Rick Perry, and Newt Gingrich all say they would cut foreign aid to Israel — and every other country — to zero.” We find that a ridiculous distortion of their positions on this extremely sensitive issue.

 

Mitt Romney continues to repeat the talking point that the United States is “only inches away from no longer being a free economy.”

It’s true that the government’s footprint on spending has grown over the past few years, due in large part to the recession. But while the statistics show that the government continues to have a large influence on the economy, there is little indication that the government’s role has risen dramatically enough over the past few years to threaten the kind of free market that the U.S. has operated under in recent decades. And international comparisons show that the U.S. ranks low in both total tax burden and high in economic freedom — at least as measured by a prominent conservative think tank.

And so it goes.

The basic question that each campaign should be asking the country is what is the role of government?

Do we want a government that bails out the auto and financial industries or do we want a government that depends on the free market to sort out economic winners and losers?

We should be asking the voters to choose which we should do first, create jobs or reduce debt?

If it is jobs, voters should choose between direct action by the government through investment in things like infrastructure (which is the single most effective job creating thing government can do) versus reducing taxes and regulation on employers and investors.

If it is debt, voters should choose between reducing spending and increasing taxes.

Unfortunately none of these issues will be framed in this simple a manner.

Instead the Republicans will continue to paint the Democrats as untrustworthy immoral big spenders.

The Democrats will continue to portray the Republicans as the heartless party of the special interests – out of touch with the working man.

The campaign will turn on misrepresentations, gaffes, distortions, and narratives unsupported by the facts.

Ultimately the candidate who spends the most money and is most effective in getting their message out will win.

Not a good way to run a country.