Housing Risk Watch: Homeownership and the State of the Union

The homeownership rate, as reported by the US Census Bureau, stands today at 65.3 percent. When adjusted for the millions of homeowners who are seriously delinquent, the rate drops to 62.7 percent. This is virtually unchanged from the rate of 61.9 percent in 1960, notwithstanding a dramatic loosening of lending standards over the last 50-plus years. Once again, the National Association of Realtors and community advocacy groups call for a loosening of what they term “tight credit” conditions. Yet, in December, nearly one-half of all home purchase loans had down payments of 5 percent or less, and nearly one-quarter had debt-to-income ratios exceeding 43 percent, high by anyone’s standards.

As was the case in the 1920s, loose lending standards have again made foreclosures commonplace. It does not have to be this way. Nearly 80 years ago, Stewart McDonald, the Federal Housing Administration’s (FHA’s) first administrator, observed: “‘Mortgage’ was just another word for trouble—an epitaph on the tombstone of their aspirations for home ownership.”

In 1935, the FHA launched an effort to end loose and dangerous lending practices that had made foreclosures commonplace. In their place were sound practices based on sizable down payments (a minimum of 20 percent), solid borrower credit histories, solid appraisals, proper income documentation, and sufficient income to make regular payments (the included a comprehensive review of a borrower’s monthly expenses). Add a maximum 20-year loan term and a ban on second mortgages, and the result was what the FHA called “a straight, broad highway to debt-free ownership.”

This highway to debt-free ownership led to an explosion in the homeownership rate—from 43.6 percent in 1940 to 61.9 percent in 1960. These policies also led to the virtual elimination of foreclosures—over its first 20 years, the FHA paid only 5,712 claims out of 2.9 million insured mortgages, for a cumulative claims rate of 0.2 percent. At the same time, claim loss severity was only 9 percent of the original insured mortgage balance, or a total of $3 million on 5,712 claims.

As figure 1 demonstrates, once high-leverage lending replaced sound practices, the homeownership rate stagnated. And, as was the case in the 1920s, foreclosures again became commonplace. The FHA alone has been responsible for 3.4 million foreclosures since 1977. Its average foreclosure rate for this same period was 12.8 percent, more than 60 times the level from 1935 to 1954. “Mortgage” has once again become just another word for trouble.

Read the full column by clicking here.

Supreme Court Brief filed Supporting Hobby Lobby and Conestoga and Religious Liberty

Claiming “an unprecedented attack on religious liberty,” the Thomas More Law Center (TMLC) yesterday filed an amicus brief in support of the plaintiffs in two separate cases, Hobby Lobby Stores, Inc, and Conestoga Wood Specialties Corp., pending in the U.S. Supreme Court. In both cases, the plaintiffs are devout Christians who built their businesses from the ground up.  They object on religious grounds to providing certain contraceptives which are mandated by the Department of Health and Human Services headed by Secretary Kathleen Sebelius.  Both cases are scheduled for oral arguments on March 25, 2014 and the Court’s decision is expected sometime before the end of June.

TMLC’s brief focuses on religious liberty, “This case is not about competing rights; there is only one right at issue here − the right to religious freedom.”  The brief goes on to explain that there is no constitutional right to “free” contraception or abortion.  Moreover, that “The employers are not objecting to their employees’ private decision to use these drugs, they are objecting to being forced by the government to pay for insurance plans that facilitate or contribute to these decisions. The employers object to being used to further a government objective that violates their sincerely held religious beliefs.”

TMLC’s brief appealed to the foundations upon which our country was built:

“The United States was founded upon a set of noble and workable principles that formed the basis for the Bill of Rights. Paramount was the recognition that for a citizenry to be truly free, they must be allowed to think, to speak, and to worship God without government interference or unjustified restriction.”

The brief referred to our Founding Fathers:

“They risked their fortunes and their lives to create a country where people could be free to live and to worship consistent with their own conscience, and to provide for their families without unnecessary and crippling burdens created by an all-powerful government. The citizens currently before the Court challenging the Mandate can appreciate the struggles those early patriots faced. They too cannot allow injustice to prosper and are risking their fortunes and their livelihoods to defend the constitutional freedoms that define this country.”

Click here to read the TMLC’s entire 16-page brief

The Thomas More Law Center (TMLC) is a national public interest law firm located in Ann Arbor, Michigan.  It has filed 11 federal cases involving 33 different plaintiffs challenging the HHS Mandate.  One of those cases, Eden Foods v. Sebelius et al, is currently in the U.S. Supreme Court, but not scheduled for argument.  The Government has suggested to the Court that the Eden Foods case be held in abeyance pending the decision in the Hobby Lobby and Conestoga cases.

Richard Thompson, the President and Chief Counsel for the Law Center, commented, “The religious liberty of every American is at stake.  If we lose these cases, the guarantee of religious liberty under our constitution and laws becomes a farce.”

The 10th Circuit U.S. Court of Appeals ruled in favor of Hobby Lobby represented by the Becket Fund in June 2013, arguing that the Religious Freedom Restoration Act applies to corporate entities, thereby shielding Hobby Lobby founder David Green from providing insurance plans that abide by the Obama Administration’s contraception mandate.

However, in August 2013, the 3rd Circuit U.S. Court of Appeals rejected the same arguments, forcing the Mennonite owners of Conestoga Wood Specialties, represented by the Alliance Defending Freedom, to offer health insurance to their employees in a grave violation of their religious beliefs.

How does Your State Tax Computer Software?

Joseph Henchman and Richard Borean from the Tax Foundation a hard look at how states tax computer software.
Get 45 public finance experts in a room and most will agree that a sales tax should apply to all final sales but not to business purchases, so each product is taxed once and only once. The 45 states with sales taxes do the opposite, exempting many final sales and taxing many business purchases.”

Sales tax treatment of software is the subject of this week’s Tax Foundation map. Ideally, all software purchases should be taxable to final users and exempt for business users. Instead, states tax some kinds of software and exempt others, based on whether it is customized or off-the-shelf and whether it is on CD or downloaded, all silly distinctions for tax purposes. States like Hawaii, New Mexico, South Dakota, Tennessee, and Texas are at least consistent in taxing it all. No state exempts it all, although Florida and Maryland come close. As for why Arkansas, Ohio, and South Carolina tax custom software when you buy it on a CD but exempt it when you download it, your guess is as good as ours.

We present state tax treatment of five different kinds of software: (1: triangle) pre-made “canned” software purchased in the form of tangible property like a disk or CD; (2: square) canned software downloaded directly onto a computer; (3: circle) custom software purchased on a disk or CD; (4: starburst) custom software downloaded; and (5: star) custom software customized by the user for their use.

(Click on the map to enlarge it. View previous maps here.)

State Budget Solutions’ Releases “Fourth Annual State Debt Report”

State Budget Solutions’ (SBS) fourth annual State Debt Study reveals that state governments face a combined $5.1 trillion in debt. This total equals roughly $16,178 per capita, or 33 percent of annual gross state product. Another telling way to view the problem – state debt is equal to 469% of all fiscal year state general and other fund expenditures.

Since 2010, SBS has conducted a comprehensive examination of debt facing the 50 state governments. These reports have repeatedly found trillions in combined debt that stand in stark contrast to officials’ proclamations of balanced budgets and belt-tightening. This year’s update, and those in the past, show unfunded public pension liabilities’ incredible contribution to state debt. In fact, these liabilities make up 79 percent of all state debt.

SBS’ unique and comprehensive approach to calculating state debt includes four separate components. The components are market-valued unfunded public pension liabilities, outstanding government debt, unfunded other post employment benefit (OPEB) liabilities, and outstanding unemployment trust fund loans. Together, these four factors present an all-inclusive view of state obligations not conventionally presented but that both lawmakers and taxpayers nonetheless must confront.

The table below shows each state’s total debt, along with details breaking down that debt into its four contributing components. Per capita details and state rankings can be found in tabs along the bottom. Click here to view the spreadsheet in a separate page.

California leads the pack with $778 billion in state debt, mostly as a result of the state’s $584 billion unfunded public pension liability.  New York ($388 billion), Texas ($341 billion), Illinois ($321 billion), and Ohio ($321 billion) round out the top 5 states with the largest amounts of state debt. While each figure is staggering in its own right, this perspective does seem to highlight those states with the largest populations.

A more alarming fiscal situation is revealed when state debt totals are broken down according to a series of factors that reflect the toll that eventually reducing that debt may take on citizens, the local economy, and state budgets.

The first way to break down the data is by look at the debt on a per capita basis. Using the United States Census Bureau’s 2012 population estimates, the study reveals that combined, state debt is equal to $16,178 for every resident of a U.S. state. That figure does not adequately portray the dire situation in some states, though.

In terms of per capita, Alaska’s state debt is equal to $40,714 per person, followed by Hawaii ($33,111), Connecticut ($31,298), Ohio ($27,836), and Illinois ($24,959).

 

Top 5 State Debt Per Capita Bottom 5 State Debt Per Capita
Alaska $40,714 Tennessee $6,358
Hawaii $33,111 Indiana $7,094
Connecticut $31,298 Wisconsin $7,863
Ohio $27,836 South Dakota $9,249
Illinois $24,959 Arizona $9,321

 

State debt as a percentage of gross state product is another possible measure. Across the spectrum of states, this figure varies widely. Hawaii (64 percent), Ohio (63 percent), New Mexico (62 percent), Alaska (57 percent), and Mississippi (54 percent) all face a state debt that totals more than 50 percent of their entire 2012 gross state product.

 

Top 5 State Debt as a Percentage of Gross State Product Bottom 5 State Debt as a Percentage of Gross State Product
Hawaii 64% Nebraska 13%
Ohio 63% Tennessee 15%
New Mexico 62% Indiana 16%
Alaska 57% Wisconsin 17%
Mississippi 54% South Dakota 18%

 

Over time, state debt will exact a toll on state budgets. Money once expected to fund vital services like education and healthcare will have to be redirected to debt service, increased contributions to public pension systems, and more. Based on this, it is illustrative to examine state debt as it relates to state expenditures.

The National Association of State Budget Officers’ annual State Expenditure Report compiles total state expenditures. Excluding bonds and federal funds from fiscal year 2012 expenditures in order to focus on state resources, total state debt is equal to 469 percent of state spending.

Nevada stands out with a state debt equal to 1,048 percent of its own spending. It is followed, albeit not too closely, by Ohio (742 percent), Illinois (727 percent), California (647 percent), and Georgia (633 percent).

 

Top 5 State Debt as a Percentage of FY2012 Spending Bottom 5 State Debt as a Percentage of FY2012 Spending
Nevada 1,048% West Virginia 141%
Ohio 742% Wisconsin 146%
Illinois 727% Nebraska 191%
California 647% Wyoming 222%
Georgia 633% North Dakota 224%

 

Components of Debt

SBS calculates state debt by combining four separate components. This approach marks a slight adjustment from previous years’ reports, which also included projected fiscal year budget gaps. Due to a lack of surveyed data, this figure was not factored into the current report.

State Debt Pie Chart 2013

 

Components of State Debt (thousands)
Unfunded Public Pension Liabilities $3,900,823,389
Outstanding Debt $618,832,092
Unfunded OPEB Liabilities $528,787,000
Unemployment Trust Fund Loans $19,921,682
Total $5,068,364,163

 

Unfunded public pension liabilities

The largest single amount of the states’ combined $5.07 trillion in debt comes from unfunded public pension liabilities. These total over $3.9 trillion. The following table shows the 5 states with the largest total and per capita public pension unfunded liabilities.

 

Top 5 Unfunded Pension Liability (thousands) Top 5 Unfunded Pension Liability Per Capita
California $583,627,395 Alaska $32,454
Ohio $287,373,800 Ohio $24,893
New York $260,075,662 Connecticut $20,726
Illinois $254,872,560 New Mexico $20,517
Texas $244,164,239 Illinois $19,796

 

SBS’ calculation of over $3.9 trillion in unfunded public pension liabilities is based on data originally published in September 2013 in the report “Promises Made, Promises Broken – The Betrayal of Pensioners and Taxpayers,” which relied on the most recent actuarial data available from over 250 state-administered defined benefit pension plans. That report took a market-valued approach to calculate plan funded levels by discounting liabilities according to a risk free rate. This approach reflects the nearly risk-free nature of public pension benefits. That is, once promised, the risk that they will not have to be paid is quite low.

The State Debt Report’s examination of unfunded public pension liabilities includes over $2.46 trillion in plan assets. Based on state-reported liabilities, the total funded ratio of these plans was 73 percent. However, discounting plan liabilities according to a risk-free rate of 3.225 percent, based on the 15 year Treasury yield reveals a funded ratio of just 39 percent and $3.9 trillion in unfunded obligations.

SBS has slightly modified the list of included pension plans in the State Debt Report to ensure that the plans are at least partially attributable to state government. To that end, included plans were based on Loop Capital Markets’ “Eleventh Annual Public Pension Funding Review.”

Outstanding Debt

This component is made up of bonds, leases, and other traditional aspects of government debt as listed in each states’ comprehensive annual financial report. This year’s report, which used figures from the latest available CAFR, shows a combined $620 billion in debt. That represents an increase of roughly $13 billion over the previous year’s report. The following table shows the 5 states with the largest total and per capita outstanding debt.

 

Top 5 Outstanding Debt (thousands) Top 5 Outstanding Debt Per Capita
California $199,680,625 Connecticut $5,246
New York $58,060,000 Hawaii $5,346
New Jersey $41,433,010 New Jersey $4,674
Texas $41,344,000 Massachusetts $3,816
Illinois $33,186,555 Washington $3,150

 

Unfunded Other Post Employment Benefit Liabilities

Like unfunded pension liabilities, unfunded OPEB liabilities (mainly retiree healthcare benefits) are a threat to state finances driven by a combination of promises made to an aging public employee workforce and the states’ failure to properly fund those promises. The State Debt Report includes $529 billion in unfunded OPEB liabilities as reported by Standard & Poor’s Ratings Services (S&P) in a 2013 report “U.S. State OPEB Liabilities Decline Slightly, But Vary Widely.” The following table shows the 5 states with the largest total and per capita OPEB unfunded liabilities.

 

Top 5 Unfunded OPEB Liability (thousands) Top 5 Unfunded OPEB Liability Per Capita
New York $66,479,000 Hawaii $8,408
California $65,210,000 New Jersey $7,206
New Jersey $63,881,000 Delaware $6,152
Texas $55,436,000 Alaska $5,533
Illinois $33,295,000 Connecticut $4,987

 

While S&P’s report did find a 2 percent decrease in unfunded liabilities, it remains both revealing and distressing that, according to their research, only Indiana, Utah, and Rhode Island made their full actuarially determined OPEB contributions in fiscal year 2012. Further, only seven states currently have an OPEB trust funded beyond 20 percent of liabilities.

Outstanding Unemployment Trust Fund Loans

According to the National Conference of State Legislatures (NCSL), “The Federal Unemployment Account (FUA) provides for a loan fund for state unemployment programs to ensure a continued flow of benefits during times of economic downturn.” This fund was tapped frequently and by many states during the recent economic crisis. NCSL’s reporting, based on Department of Labor data, showed that 14 states had outstanding unemployment trust fund loans as of December 3, 2013.

 

Top 5 Outstanding Unemployment Trust Fund Loans (thousands) Top 5 Outstanding Unemployment Trust Fund Loans Per Capita
California $9,400,383 California $247
New York $2,851,005 Indiana $206
North Carolina $1,894,163 North Carolina $194
Ohio $1,552,419 Connecticut $160
Indiana $1,343,674 New York $146

 

State Budget Solutions’ Fourth Annual State Debt report shows staggering and growing levels of state debt. These figures should serve as a wake up call for citizens and policymakers alike.

Sources

Outstanding unemployment trust fund loans were obtained from the National of Conference of State Legislatures as of December 3, 2013. Outstanding debt figures were compiled based on figures from each state’s respective fiscal year 2012 comprehensive annual financial report. Unfunded other post employment benefit liabilities are based on figures from Standard & Poor’s 2013 report “U.S. State OPEB Liabilities Decline Slightly, But Vary Widely.” Unfunded public pension liabilities are based on data originally reported in State Budget Solutions’ “Promises Made, Promises Broken – The Betrayal of Pensioners and Taxpayers,” although modified to include those pension plans listed in Loop Capital Markets’ “Eleventh Annual Public Pension Funding Review.” Total population figures were obtained from the United States Census Bureau’s 2012 Population Estimates, and Gross State Product figures are from the Bureau of Economic Analysis’ regional economic index for the year 2012. State expenditure figures are based on those listed in National Association of State Budget Officers’ “State Expenditure Report,” and include actual expenditures from state general and other funds for fiscal year 2012.

Read more by clicking here.

RELATED COLUMN: The New Debt Ceiling Deadline Is Going To Be Earlier Than We Thought

Should We Raise the Minimum Wage?

Kelsey Harris and Amy Payne from the Heritage Foundation asked themselves this question. They created a revealing infographic to answer this important political issue. The minimum wage has little to do with helping people earn more, rather it is a progressive tool to create a conflict between classes in the lead up to the 2014 elections. It is political pandering to those who believe the government is here to help them.

It is income redistribution at best and economically destructive at the worst. The progressive ideal is “income equality” for all, except the ruling class, of course.

“In last year’s State of the Union address, President Obama called for an increase in the minimum wage. Since then, Democrats in Congress have argued that the President didn’t go far enough, proposing even more of an increase. The question is: Would this actually help the entry-level workers it is supposed to help?” ask Harris and Payne.

Check out and share our infographic.

minwage_v4

RELATED COLUMN: The New Debt Ceiling Deadline Is Going To Be Earlier Than We Thought

High Energy Prices Has Europe Rethinking Energy Strategy

Europe is realizing that reliable, affordable energy is critical to economic competitiveness, and policies that pick energy winners and losers can have unintended consequences. This stems from a New York Times story on how the European Union (EU) is rethinking how it deals with greenhouse gas emissions:

On Wednesday, the European Union proposed an end to binding national targets for renewable energy production after 2020. Instead, it substituted an overall European goal that is likely to be much harder to enforce.

It also decided against proposing laws on environmental damage and safety during the extraction of shale gas by a controversial drilling process known as fracking. It opted instead for a series of minimum principles it said it would monitor.

Europe pressed ahead on other fronts, aiming for a cut of 40 percent in Europe’s carbon emissions by 2030, double the current target of 20 percent by 2020. Officials said the new proposals were not evidence of diminished commitment to environmental discipline but reflected the complicated reality of bringing the 28 countries of the European Union together behind a policy.

The “complication” being that high energy prices is one factor that’s holding back Europe’s economic competitiveness.

Take Germany, which is undergoing a energiewende or “energy revolution,” an attempt to drop both nuclear and fossil-fuel energy use from its economy and rely primarily on renewable energy. The Economist explains this audacious goal:

Germany’s last nuclear plant is to be switched off in 2022. The share of renewable energy from sun, wind and biomass is meant to rise to 80% of electricity production, and 60% of overall energy use, by 2050. And emissions of greenhouse gases are supposed to fall, relative to those in 1990, by 70% in 2040 and 80-95% by 2050.

In order to ramp up electricity production, renewable energy is heavily subsidized. So much so that Germany has the highest electricity prices in Europe. As the London Telegraph reports, the result is that  German companies are becoming less competitive:

Energy prices are 40% more expensive than in France and the Netherlands, and the bills are 15% higher than the EU average. Even though Germany’s energy-intensive manufacturing sector is given a break with reduced levies, industries such as chemicals and steel are among the hardest hit, with energiewende costs of up to €740m a year.

Ironically, since Germany is giving up nuclear energy, it must turn to new coal-fired power plants for baseload electricity when the wind isn’t blowing and the sun isn’t shining.

These kinds of unintended consequences happen when government stacks the deck for one type of energy source, especially one that’s not yet market competitive.

While Europe wades through its self-inflicted morass, this is also a lesson for environmental groups demanding that the Obama administration stop pushing an “all of the above” energy strategy (which has been lip service) and go solely down the renewable energy path.

Renewable energy has a role in a country’s economy. However, renewable energy that’s more reliable and competitive doesn’t come out of thin air; it needs innovation and investment, and both require a growing economy; and a growing economy needs dependable and affordable energy.

A sound energy policy is one that embraces America’s energy abundance and diversity. America’s energy security needs nuclear, coal, natural gas, and renewables, and a robust energy mix means more certainty for businesses to invest and grow.

Visit Energy Works for US to learn more about the Institute for 21st Century Energy’s proposals on making renewable energy more competitive and making America more energy secure.

The EPA’s Agenda: Undermine Capitalism and America

The Environmental Protection Agency has been in a full assault on the U.S. economy since the 1980s when the global warming hoax was initiated. It has been assisted by the National Oceanic and Atmospheric Administration and NASA.

To put it in other terms, our own government has engaged in lying to Americans and the result has been the expenditure of billions of taxpayer dollars on something that was not happening and is not happening.

On January 22, the House Oversight and Government Reform Committee released the deposition transcript of former senior EPA official John Beale. After defrauding the agency of nearly $900,000 and spending weeks and months away from his office by claiming he was on assignment for the CIA, the transcript contained a bombshell.

Discussing his job, at the time as a close associate of Gina McCarthy, the new EPA administrator, Beale revealed that he was there to come up with “specific proposals that could have been proposed either legislatively or things which could have been done administratively to kind of modify the capitalist system…”

EPA - BustedDan Kish, senior vice president of the Institute for Energy Research, responded to the revelation saying “In his testimony under oath, Beale, perhaps unwittingly, has laid bare the administration’s end goal. The President’s policies are not about carbon, they are not about coal, and they are not even about energy and the environment. They are about fundamentally altering the DNA of the capitalist system. These policies are not about energy, but power.”

When the new EPA administrator, Gina McCarthy, in testimony before a congressional committee in mid-January was asked by Sen. Jeff Sessions (AL-R) to confirm a statement made by President Obama last year that global temperatures were increasing faster in the last five or ten years than climate scientists had predicted.

She said, “I can’t answer that question.”

“You’re asking us to impose billions of dollars of cost on this economy and you won’t answer the simple question of whether (temperature around the world is increasing faster than predicted) is accurate or not?” Sessions responded.

“I just look at what the climate scientists tell me,” said McCarthy.

The Earth is in a cooling cycle that has lasted seventeen years at this point, but the EPA administrator was not inclined to accept this fact, nor question the climate scientists who provided the data based on computer models that have been consistently wrong now for decades.

We owe the Heartland Institute, a free market think tank a debt of gratitude for the eight international conferences it has held to debunk global warming. Joseph Bast, its president and CEO, has said, “The toll our EPA is taking on the country is staggering, putting hundreds of thousands of Americans out of work at a time when millions of people are unemployed and our reliance on foreign sources of energy threatens to compromise our nation’s security.” Heartland’s science director points out that “EPA’s budget could safely be cut by 80 percent or more without endangering the environment or human health, Most of what EPA does today could be done better by state government agencies…” I serve as an advisor to Heartland.

This is the same EPA that proposed restrictions for new wood stoves in early January. The reason given was to reduce the maximum amount of fine particulate emissions (soot) allowed for new stoves sold in 2015 and 2019. The soot is made up of solid particles and liquid droplets that measure 2.5 micrometers or less. The EPA claims, as it does for virtually all its regulations, that it is linked to heart attacks, decreased lung function, and premature death in people with heart and lung disease. This is worse than junk science. It represents no science whatever, being an invention of EPA employees who specialize in such nonsense. The Earth produces soot every day and circulates it globally.

The only way Americans will be protected against the EPA’s attack on our economy will be a Congress controlled by the Republican Party and a Republican President that will support the oversight that is needed and the reversal of its vast output of regulations. It will have to do this as well for NOAA, NASA, and other governmental departments and agencies that, until recently, spewed forth all manner of “data” supporting the global warming hoax.

At the heart of the global warming hoax, now called climate change, is the assertion that carbon dioxide (CO2) and other “greenhouse gases” have been dangerously warming the Earth by trapping heat, but you don’t have to be a scientist to know that the current cold spell, comparable to the 1500-1850 mini-ice age, is the result of lower solar emissions by a sun. CO2 is a minor (0.038) element of the Earth’s atmosphere, but the second most vital gas for all life on Earth because it is the “food” that maintains all vegetation.

Little wonder, during the government shutdown, more than 93% of EPA employees were furloughed when designated as “non-essential.” That was more than nine out of every ten employees!

In September 2013, the Republican members of the Senate Environmental and Public Works Committee issued a report that EPA officials had, from the beginning of President Obama’s tenure had “pursued a path of obfuscation, operating in the shadows, and out of the sunlight.” It detailed violations of the Freedom of Information Act and other federal laws and regulations intended to encourage transparency and accountability in the government.

In mid-January, the Energy and Environmental Legal Institute revealed that emails obtained through the Freedom of Information Act revealed that the EPA used official events to help environmental groups gather signatures for petitions on agency rulemaking. “The level of coordination in these documents is shocking” said an EELI spokesman. The EPA has a long history of this, including a policy of “sue and settle” working with environmental groups to bring a suit to advance regulations and settling the suit to enable it to implement those regulations.

In an April 2013 article in Investor’s Business Daily, John Merline reported that “Overall air pollution levels dropped 62% from 1990 to 2012, while GDP grew 69% and population climbed 26%.” The pollution the EPA keeps claiming is rising includes carbon monoxide, soot, sulfur dioxide, ozone, and others, all well below the EPA’s safety threshold. Water quality, too, has also improved over several decades.

In May 2013, Paul Driessen, a senior policy advisor for the Committee for a Constructive Tomorrow (CFACT) noted that the EPA, since Obama’s inauguration in 2009, had generated 1,920 new regulations. “The EPA’s actions are forcing us to expend vast financial, human and technological resources to achieve minimal or even zero health benefits.”

This is the same EPA leading the effort to shut down coal-fired plants that produce electricity. It is the same EPA seeking to stop the Pebble Mine, described as “a natural resource project in Alaska that could yield more copper than has ever been found in one place anywhere in the world.”

The EPA is the instrument of those who want to undermine capitalism in any way it can. Only that can explain why entire books have been written about its impact on the economy of the nation and the deceptive way it has imposed regulations responsible for it.

President Obama called for “hope and change” when he first ran for office. We can only hope that a new Congress and President will bring about the change we need to shut down the EPA and return control over the nation’s environment to its 50 sovereign states.

© Alan Caruba, 2014

Minimum Wage Hike: What you need to know

As Democrats seek to turn attention away from the rollout of ObamaCare and dedicate 2014 to the theme of income inequality, discussions on raising the minimum wage from $7.25 an hour to $10.10 an hour have been gaining ground. The following is what you need to know about raising the minimum wage, adapted from the testimony in front of the Health, Education, Labor and Pensions Committee on June 25, 2013 by James Sherk, a Senior Policy Analyst in Labor Economics at the Heritage Foundation. The testimony transcript can be read in its entirety by clicking here. Other sources will be noted as they are used:

  • Didn’t we just raise the minimum wage? The last federal minimum wage hike was voted on in 2007, and phased in throughout 2009. It raised the minimum wage from $5.15 an hour to $7.25 an hour. To raise the minimum wage from $7.25 an hour to $10.10 an hour, as some are suggesting, would be a 40% raise. Talk in Washington of raising the minimum wage began last year when President Obama set it as a policy goal in his State of the Union address:

State of the Union 2013: Obama Wants Minimum Wage: ‘A Wage You Can Live On’

  • When was the minimum wage first instituted? Congress instituted a minimum wage in 1938, and since then the inflation-adjusted buying power of the minimum wage has averaged at $6.16 in 2013 dollars. At some points the minimum wage has harnessed less or more buying power than that average, the low being $3.09 an hour in 1948 and $8.67 an hour in 1968. As Sherk noted in his congressional testimony, “Today’s minimum wage buys more somewhat more than the minimum wage has historically, although it remains over a dollar an hour below its historical high.”
  • When does Congress raise the minimum wage? Historically, Congress has voted to raise the minimum wage in relatively good economic times. Congress has never voted to raise the minimum wage with unemployment over 7.5% since the Great Depression.
  • Who works for the minimum wage? The two groups of people who typically work for the minimum wage are teenagers or young adults who are also in school, and disadvantaged adults over the age of 25. Using U.S. Census Bureau data, Sherk calculated that three-fifths of the teenagers and young adults working minimum wage jobs are enrolled in school and only 22% live at or below the poverty line since they are usually not the breadwinners in their households; three-fourths of older workers earning minimum wage live above the poverty line, because often those workers are married or choose to work part-time.
  • How many minimum wage workers are single moms or dads? Only 4% of minimum wage, full-time workers are single parents.
  • The minimum wage is a learning wage: Over half of Americans started their careers making within $1 of the minimum wage. Two-thirds of those making the minimum wage receive a raise within a year.
  • States have the power to raise their minimum wage if they wish to: James Beattie at CNSNews.com reported two weeks ago that 13 states increased their minimum wage last year, and 14 states and the District of Columbia have bills in their legislatures this year to raise the minimum wage.
  • How many Americans only earn $7.25 an hour?Ed Feulner, former President of the Heritage Foundation, wrote last month that only 3% of American workers earn just $7.25 an hour.
  • What are the effects of raising the minimum wage? Sherk noted, “The minimum wage especially hurts disadvantaged workers’ job prospects. Higher minimum wages encourage employers to replace less-skilled workers with more productive employees. Given the choice between hiring an unskilled worker for $10.10 an hour and a worker with more experience for the same rate, companies will always choose the more experienced and productive employee.” If the minimum wage is raised, more experience and educated workers will settle for minimum wage jobs, because “Higher minimum wages…make working in such jobs more attractive, drawing greater numbers of workers with outside sources of income into the labor market….[and] they crowd out urban teenagers and disadvantaged adults who would have sought the jobs at the previous wages.”

Bill Gates thinks raising the minimum wage will not help disadvantaged workers:

ACTION ALERT: Time to help Ethanol bite the dust

After years of dramatically increasing the amount of ethanol required in gasoline, EPA is finally beginning to reserve course. But EPA needs to hear from you. If you think that EPA shouldn’t force people to use ethanol, let them know today.

For the first time since 2007, the EPA has proposed a slight cut to the amount of ethanol that must blended into the nation’s fuel supply this year. But this may not happen unless the EPA hears from you.

Ethanol can be harmful to engines, especially at the levels EPA has proposed in the past. And worse, the current law forces farmers to turn food into fuel because the law requires Americans to consume billions of gallons of ethanol a year, even if they don’t want to.

Although progress has been made, there’s still more work to do. The Renewable Fuel Standards Program (RFS) is fundamentally flawed because it is based on the belief that government bureaucrats can accurately predict gasoline demand years in advance, as well as ethanol production and demand.

Tell the EPA that reducing the ethanol mandate is not enough. Congress must repeal the RFS to let the free market flourish and support a healthy energy future.

David W. Kreutzer, Ph.D. writes, “The ethanol mandate in the federal Renewable Fuel Standard increases corn prices and food prices. This harms consumers and distorts the domestic and international commodity market. While waiving the mandate would be an improvement, eliminating it is the best choice.”

Using food for fuel is immoral. According to  UNICEF and the World Health Organization every year six million children die from malnutrition before their fifth birthday. This equates to 16,438 children a day. The World Health Organization estimates that one-third of the world is well-fed, one-third is under-fed one-third is starving. Since you’ve entered this site at least 200 people have died of starvation. Every 3.6 seconds someone dies of hunger.

Private property: An extinct species in Florida?

Dan Peterson, Executive Director of  Coalition For Property Rights (CPR) in an email states, “It seems all but official…last week the announcement was made that a sufficient number of signatures has been obtained to place an amendment proposal to Florida’s Constitution on the November 2014 ballot.”

What is it?

The ballot is entitled “Water and Land Conservation” (see the full text below). The Ballot “dedicates funds to acquire and restore Florida conservation and recreation lands.”

The amendment will require 33 percent of net revenues from the existing excise tax on documents (the state documentary stamps on real estate transactions) for 20 years be placed in the “Land Acquisition Trust Fund.” That adds up to a potential of $10 Billion available to be spent. The monies will be designated to acquire land, manage lands, improve lands, and service debt on bond issues among other things.

Who is behind this initiative?

The campaign is called, ‘Florida’s Water and Land Legacy.” It is being promoted by The Florida Conservation Coalition headed by Bob Graham, Lee Constantine, and Nathaniel Reed. It has the endorsement of many extreme environmentalist groups. And, it has been advised and funded by “The Conservation Campaign,” a Washington, DC organization that has generated more than $35 Billion in new public money (tax money) for land conservation.

“The American dream was founded upon the principle of private citizens owning property as a protection against the potential tyranny of the state. This principle, emphasizing owners with the freedom to prosper (through the achievement of an economic expectation) by using their land, is the reason our country has become the most exceptional in history. Large amounts of government owned lands threaten that dream for many reasons,” warns Peterson.

Government already owns and controls more than 30% of Florida. More than 27% of Florida is already held in conservation. With additional government ownership of land, comes added government bureaucracy. For years, government has struggled to produce an accurate inventory of the lands it owns and controls. And, the funding to manage or maintain these lands has been less than adequate.

Peterson states, “Government is not the desired manager of money nor is it the best steward of property. Private citizens are much better at accounting for and managing money and property. In fact, Randall Holcombe, in a 2009 article written for the James Madison Institute, documented how private land management firms could manage acreage at a much lower cost than the state. The plans described in his study were never attempted because government bureaucracy got it the way.”

What happens when government owns and controls land?

  1. Florida tax dollars are spent to purchase the land. Since 2001, nearly $3 Billion of your tax dollars have been spent to buy land for conservation.
  2. Additional tax dollars must now be spent to maintain those lands including the hiring of more state employees (increasing the size of government) and the purchase of more equipment and facilities.
  3. When property goes unmaintained, it can become a safety hazard to other people and their property (as illustrated by Florida’s brush fires).
  4. Once government controls land, it often becomes “off-limits” to Floridians and visitors even though taxpayers theoretically own them. No trespassing signs often dominate the fences forming the boundaries of “state owned” lands.
  5. When government owns and controls property, the natural resources of those properties become untouchable.
  6. Land placed in conservation usually sits fallow and makes little to no contribution to Florida’s economy.
  7. Parcels owned and controlled by the state are taken off the tax rolls.This places an additional burden on local government and citizens to fund their own local needs of things like education, local fire & safety, local infrastructure improvements, etc.

CPR is urging Floridians to oppose this amendment for the following reasons:

  1. Eroding the amount of privately owned property erodes the American dream.Our Founding Fathers understood an important principle: the right to property that ensures the other rights we enjoy and is a defense against tyranny.
  2. Private property ownership leads to maintenance and wiser use.Before entrusting government with more money to buy land, it should be held accountable and demonstrate its ability as a wise steward to maintain what is currently owned.
  3. This amendment creates and funds additional government bureaucracy that will be neither accountable nor efficient.
  4. Florida currently has action plans and agencies (such as the Department of Environmental Protection) which are positioned to balance the purchase and management of land while coordinating those plans with protecting Florida’s water quantity and quality.
  5. Funding allocated to fulfilling those plans (already approved and in action) would be a much better use than putting billions into the hands of narrow, special interest groups, many of which have an extreme environmentalist philosophy.

CPR asks Floridians to consider two opposing philosophies of those who wish to direct Florida’s future.

The special interest, extreme environmentalist/sustainable development philosophy is expressed in this preamble quote from the United Nations (UN) Habitat 1 Conference, held in Vancouver, Canada in 1976:

“Land…cannot be treated as an ordinary asset, controlled by individuals and subject to the pressures and inefficiencies of the market. Private land ownership is also a principal instrument of accumulation and concentration of wealth and therefore contributes to social injustice; if unchecked, it may become a major obstacle in the planning and implementation of development schemes…Public control of land use is therefore indispensable to its protection…”

Alternatively, the principle and value which made America the land of the free and the home of the brave is expressed in this quote by Virginia Colonist and Founding Father Arthur Lee in 1775:

“The right of property is the guardian of every other right, and to deprive people of this, is in fact to deprive them of their liberty.”

Peterson concludes with, “Perhaps, rather than increasing land purchase, it would enhance liberty and be more beneficial to the potential property owners in Florida to consider lowering the high cost of current doc stamp tax taxes by a third.”

FULL TEXT:

BE IT ENACTED BY THE PEOPLE OF FLORIDA THAT:

Article X, Section 28, Florida Constitution, is created to read:

SECTION 28. Land Acquisition Trust Fund.–

a) Effective on July 1 of the year following passage of this amendment by the voters, and for a period of 20 years after that effective date, the Land Acquisition Trust Fund shall receive no less than 33 percent of net revenues derived from the existing excise tax on documents, as defined in the statutes in effect on January 1, 2012, as amended from time to time, or any successor or replacement tax, after the Department of Revenue first deducts a service charge to pay the costs of the collection and enforcement of the excise tax on documents.

b) Funds in the Land Acquisition Trust Fund shall be expended only for the following purposes:

1) As provided by law, to finance or refinance: the acquisition and improvement of land, water areas, and related property interests, including conservation easements, and resources for conservation lands including wetlands, forests, and fish and wildlife habitat; wildlife management areas; lands that protect water resources and drinking water sources, including lands protecting the water quality and quantity of rivers, lakes, streams, springsheds, and lands providing recharge for groundwater and aquifer systems; lands in the Everglades Agricultural Area and the Everglades Protection Area, as defined in Article II, Section 7(b); beaches and shores; outdoor recreation lands, including recreational trails, parks, and urban open space; rural landscapes; working farms and ranches; historic or geologic sites; together with management, restoration of natural systems, and the enhancement of public access or recreational enjoyment of conservation lands.

2) To pay the debt service on bonds issued pursuant to Article VII, Section 11(e).

c) The moneys deposited into the Land Acquisition Trust Fund, as defined by the statutes in effect on January 1, 2012, shall not be or become commingled with the General Revenue Fund of the state.

Panama Canal widening troubles may Impact World Trade

For several weeks now, the local Panama newspapers have been carrying the story of how the winner of the canal widening bidding has been reneguing on the contract. They are claiming that the preliminary study by the Panama Canal Authority (ACP) was not accurate and that if they had been more diligent, the contracting consortium Grupo Unidos por el Canal, S.A. (GUPC) would have bid higher.

Dredging Today reports, “The Panama Canal Authority (ACP) has warned that the suspension announced for today [January 20, 2014] by Grupo Unidos por el Canal, S.A. (GUPC) is not valid, lacks merit and goes against what is established in the Contract for the Design and Construction of the Third Set of Locks. Currently, the production levels are low in the new locks project without any justification.”

But two of the other consortiums, one including the American company Bechtel Corporation and two Japanese companies, warned shortly after the award was made that the offer by GUPC was not safe (with regard to the seismic safety features, which, they maintained would not withstand a major earthquake) and were based on what seemed to be fictitious figures for the costs, which could not have been as low in reality as offered.

The consortium that won the bid was constituted of three companies, all European.

Shortly after the award, a free trade agreement was signed with the EU and food prices soared in some sectors here in Panama. Now GUPC is running to Daddy EU for refinancing with still more German money thrown down still another hole.

GUPC has suspended 70% of its operations in the middle lock. The problem is compounded by the fact that most of the work should have been completed in the dry season, which lasts only about 2-3 more months.

Of course, the widening will be done eventually, but there is something further to this story:

Nicaragua is planning to build a competing canal with Chinese assistance and financing. That project is due to start in 2014.

Panama is way over its head in debt thanks to what the hostile media call “pharaonic” construction projects, and if this canal project fails to tilt the fiscal balance sheet in its favor, a tsunami of debt could take it into dangerous territory.

The current President Martinelli of Panama belongs to a party called Democratic Change (Cambio Democrático).

Obama promise kept: “Your Electricity Rates Would Necessarily Skyrocket”

There is no reason for the U.S. to be in such a slow recovery from the financial crisis of 2008. If President Obama would get out of the way, our national debt could be dramatically reduced and hundreds of thousands of jobs would be created in the nation’s energy sector, leading to the expansion of its manufacturing sector and still more jobs.

As Daniel Simmons, the Director of Regulatory and State Affairs for the Institute of Energy Research told the House Oversight and Government Reform Subcommittee on Energy Policy, Health Care and Entitlements in February 2013:

“The federal estate contains vast energy resources, but the federal government allows energy production on a very small percentage of taxpayer-owned federal lands. The Interior Department has leased just two percent (2%) of federal offshore areas and less than six percent (6%) of federal onshore lands for oil and gas development.”

“These technically recoverable resources total 1,194 billion barrels of oil and 2,150 trillion cubic feet of natural gas that is owned by the federal taxpayer…the value of the estimated oil resources is $119.4 trillion and the value of the estimated natural gas resources is $8.6 trillion for a grand total of $128 trillion.”

As 2014 began, Mark D. Green, editor and lead contributor to Energy Tomorrow, a project of the American Petroleum Institute, noted that “Oil and natural gas are the energies of our lives.” They heat and cool our homes and apartment dwellings. They fuel our vehicles and aircraft. They are components of products we use every day. “Every day 143 U.S. refineries convert an average of 15 million barrels of crude oil for these uses and more.”

Green also noted the important role the energy industries play in our economy, citing the “5.6 percent (5.6%) of total U.S. employment. “With the right policies in place—pro-development policies that increase access to domestic reserves—the industry could add another 1.4 million jobs by 2030.”

Jobs for younger workers would increase because 50 percent (50%) of the oil and natural gas industry’s skilled workers could be retiring within a decade. Pro-development policies would fuel a renaissance in manufacturing as lower energy prices would reduce outsourcing and attract manufacturers to build and expand facilities in the U.S.

One factor stands in the way of this brighter economic future and that is President Obama and those who direct the work of the Environmental Protection Agency—an enemy of the coal industry—and the Department of the Interior which has slowed the provision of leases to energy companies to expand the discovery and extraction of energy resources.

Instead, Obama has delayed the construction of Canada’s Keystone XL pipeline, a project that would generate jobs to build it and jobs resulting from it. Green says that “As unimaginable as it might have been just five years ago, the right policy decisions could see the U.S. meet 100 percent (100%) of its liquid fuel needs domestically or from Canada by 2014.”

Energy industries already send $85 million a day to the U.S. Treasury in income taxes, royalty payments, and other fees. Obama, though, wants to raise the nation’s borrowing limits after having added six trillion dollars in debt in his first term.

It was Obama who wasted a trillion dollars on a failed “stimulus”, discovering belatedly that there were few “shovel-ready” jobs while at the same time wasting billions in loans to wind and solar companies that went into bankruptcy shortly after receiving them.

As Simmons points out, “In 2011, wind power produced 1.2 percent (1.2%) of the energy used in the United States, solar power produce 0.1 percent (0.1%) and hydroelectric power contributed 3.3 percent (3.3%) of the total energy used. Solar and wind energy is unpredictable and require back-up from traditional electrical energy plants. “Today, there are 104 nuclear reactors in the United States and construction began for all of these reactors prior to 1974.”

Thanks to the EPA 153 coal-fired plants have been shut down!

What the public is not told is that the coal-fueled electric sector has invested $110 billion in a variety of clean coal technologies that reduced emissions by 90% and intends, over the next decade, to spend $100 billion more. Even so, the EPA continues to issue rules—New Source Performance Standard—that make operating coal-fired plants too costly to operate.

The Obama administration’s justification for its policies is the bogus claim that carbon dioxide (CO2) is responsible for “global warming” or “climate change” when it plays NO role whatever regarding the Earth’s climate.

The same lies the Obama and Democrats in Congress, as well as the Health and Human Services department told Americans about the Affordable Health Act are reflected in their lies about the nation’s energy sector.

Obama has been waging a war on America’s energy needs and the benefits that would result from its expansion.

Until Obama leaves office and voters remove the opponents of the nation’s energy sector, the enormous benefits to Americans in jobs and debt reduction will not occur.

© Alan Caruba, 2014

RELATED COLUMN AND VIDEO: Under Obama, Electricity Rates Are ‘Necessarily’ Skyrocketing

How did the FL Congressional Delegation vote on the $1.1 Trillion Omnibus Spending Bill?

It seems Congress just can’t cut spending or the debt these days. Of course, it is an election year and you would think with all the Florida Congressional delegation members up for reelection in 2014 they would be just a little bit fiscally conservative. If you believe that I have a bridge from Miami to Cuba to sell to you.

The Consolidated Appropriations Act of 2014 (H.R.3547), better known as the omnibus appropriations package, increases base discretionary spending by $24 billion in FY 2014. Heritage Action states, “The omnibus takes the country in the wrong direction, both in terms of policy and overall spending levels.”

This omnibus bill funds a Tamiami Trail Project (subject to availability of funds) and acquiring lands for Everglades restoration. The word “abortion” appears twenty-seven times in the bill. The word “sterilization” appears six times and the words “subsidy and “healthcare” eleven times each.

Sorry no tax refunds are in the bill for us Floridians.

“On top of increasing overall spending the $1.1 trillion omnibus spending bill irresponsibly increases funding for failing programs like Head Start, funds flood insurance subsidies, and pays for ineffective green energy projects. Additionally, an Obamacare funding loophole could provide subsidies to health plans that cover abortion,” notes Heritage Action.

Heritage Action reports, “Lawmakers and their constituents had less than 48 hours to read the 1,582-page bill before the House voted. On Wednesday, the House passed the $1.1 trillion spending bill, 359 to 67 (with three liberals voting no). Now the spending bill moves to the Senate, where a vote is expected this week. The omnibus takes the country in the wrong direction, both in terms of policy and overall spending levels.”

So how did the Florida Congressional delegation vote? Here are who voted YES, NO and DNV:

Voted YES on Omnibus Spending Bill:

FL 19 REP. TREY RADEL (R)
FL 1 REP. JEFF MILLER (R)
FL 15 REP. DENNIS ROSS (R)
FL 7 REP. JOHN MICA (R)
FL 3 REP. TED YOHO (R)
FL 12 REP. GUS BILIRAKIS (R)
FL 2 REP. STEVE SOUTHERLAND (R)
FL 17 REP. TOM ROONEY (R)
FL 10 REP. DANIEL WEBSTER (R)
FL 4 REP. ANDER CRENSHAW (R)
FL 25 REP. MARIO DIAZ-BALART (R)
FL 27 REP. ILEANA ROS-LEHTINEN (R)
FL 9 REP. ALAN GRAYSON (D)
FL 5 REP. CORRINE BROWN (D)
FL 14 REP. KATHY CASTOR (D)
FL 22 REP. LOIS FRANKEL (D)
FL 23 REP. DEBBIE WASSERMAN SCHULTZ (D)
FL 21 REP. TED DEUTCH (D)
FL 18 REP. PATRICK MURPHY (D)
FL 24 REP. FREDERICA WILSON (D)
FL 20 REP. ALCEE HASTINGS (D)
FL 26 REP. JOE GARCIA (D)

Voted NO on Omnibus Spending Bill:

FL 6 REP. RON DESANTIS (R)
FL 11 REP. RICHARD NUGENT (R)
FL 8 REP. BILL POSEY (R)

Did not vote (DNV) on Omnibus Spending Bill:

FL 16 REP. VERN BUCHANAN (R)

RELATED COLUMNS: 

Who Read 1,582-Page $1.1T Spending Bill? Congressman: ‘Nobody Did’

Fed Owns 64% More U.S. Government Debt Than China (+video)

China Now Owns a Record $1.317T of U.S. Government Debt

Obama is Denying Energy Independence to America

Watching the events unfold in the Middle East, it occurred to me that, if we had a president who had even the slightest grasp of energy facts, we could be living in a nation that is not dependent in part on Middle East oil.

Instead, we have a president who will not allow the Keystone XL pipeline to be extended from Canada at no cost to American taxpayers while providing thousands of jobs, short and long-term and whose administration denies access to the nation’s vast energy reserves.

Why? Some observers say President Obama is trying to maintain his bona fides among environmentalists and it’s important to keep in mind that virtually every major environmental organization opposes any and all forms of energy development. I suspect the President simply sees the pipeline as symbolic of his overall attack on America’s ability to have sufficient energy to meet its needs and provide for growth. It is an attack on our economy.

Billions of gallons of crude oil is used daily in America and the nation has an extensive network of pipelines to transport it; approximately 55,000 miles. In addition there is also an estimated 30,000 to 40,000 miles of small gathering lines, located primarily in Texas, Oklahoma, Louisiana, and Wyoming with small systems in a number of other oil producing states. Right now, hundreds of miles of Keystone XL pipe sit idle on 83 acres of leased land outside Gascoyne, North Dakota.

Testifying in April before the House Natural Resources Subcommittee on Energy and Mineral Resources, Dan Simmons of the Institute for Energy Research, said that both America and our neighbor Mexico are energy rich countries with total recoverable oil reserves that exceed 1.7 trillion barrels. At our current rate of use, that is enough for the next 242 years.

In terms of natural gas, North America has approximately 4.2 quadrillion cubic feet, enough for 176 years at the current rate of use. U.S. recoverable coal reserves are estimated at more than 497 billion short tons; enough for nearly 500 years at our current rate of use.

As events in Egypt are reported, commentators note the importance of the Suez Canal through which much of the oil the West uses must pass, but given the U.S. oil reserves our nation could function independent of that imported oil.

Ironically, we will have to build more pipelines to transport it internally and we need to build more liquid gas facilities to export our huge reserves of natural gas. This is not likely to occur over the remaining years of the Obama administration, nor will the shutdowns of coal-fired plants in a nation that is the Saudi Arabia of coal cease. Coal in federally controlled land is estimated to be worth $22.5 trillion to the U.S. economy, but it remains barred from mining.

Not only could the U.S. be energy independent, but could be a major exporter to other nations because oil, natural gas, and coal will comprise almost eighty percent of the global energy supply in 2040. Energy demand is expected to grow by fifty-six percent between now and 2040, mostly due to the economic growth of nations such as China and India.

The nation remains mired in an economy that is barely growing at two percent annually and part of that is due to the energy policies of the Obama administration. As this is being written, the Obama Environmental Protection Agency, Energy Department, and other agencies have quietly raised their estimated “social cost” of carbon emissions from $21 per ton to $35 per ton. The increase was not debated in Congress, nor available for public review. Instead, its announcement was buried in an unrelated Energy Department regulation on microwave ovens!

Having been defeated in its efforts to impose a tax on carbon emissions, the Obama administration is engaging in the outright fraud of claiming that carbon emissions are causing global warming/climate change. As part of its war on energy provision the Obama administrated wasted billions on wind power, solar power, and electric car company failures throughout its first term. Without mandates and subsidies, none of these enterprises could remain in business or be competitive.

The U.S. economy should be booming given the huge reserves of natural gas and oil that exist nationwide, but instead it remains hostage to nations such as Saudi Arabia. At the same time a major oil exporter, Iraq, has seen its exports reduced due to the turmoil that has escalated since the U.S. military was withdrawn. Sanctions on Iran affect its oil exports. Expect the cost of oil to remain high for years to come.

The U.S. is suffering from the attacks on its energy sector by the major environmental organizations such as the Sierra Club and Friends of the Earth at the same time the Obama administration continues its regulatory attacks to reduce the coal mining industry and restrict access to oil reserves. In states and on privately owned lands, there is a boom in natural gas extraction.

Every American who fills up his auto’s gas tank, air conditions or heats their home or apartment, and whose livelihood is directly affected by the cost and availability of energy is being held hostage by the Obama administration, forced to pay higher costs and forced to suffer the loss of opportunity in a nation whose access to its own vast energy reserves is being denied.

© Alan Caruba, 2014

Overstock.com now accepts payment in Bitcoin

I wrote a column questioning if 2014 would be the breakout year for the Bitcoin. It appears that it very well may be! John Stossel from Fox Business News reports:

The big online retailer Overstock.com now accepts payment in Bitcoin. That’s good news for lovers of liberty because Bitcoins give us an alternative to government-controlled money. Bitcoins are a currency created by anonymous, private tech nerds, not by government.

Governments don’t like competition, and our government sometimes bans competing currencies. But as more of us use Bitcoins, and more businesses accept payment in Bitcoin, it becomes harder for government to dismiss the currency as illegitimate, or ban it.

There are two advantages to Bitcoin.

First, it’s harder to trace transactions back to people who make trades. I don’t particularly care about that, because at the moment, I don’t hide anything from my government. But I do fear government destroying the value of my dollars by printing more of them, the way governments in Germany before World War II and in Zimbabwe in recent decades did, forcing people to make trades using wheelbarrows of nearly worthless bills.

“Bitcoins are not controlled by anybody,” states Mercatus Center senior research fellow Jerry Brito.

Bitcoins have become a concern for central banks and governments around the world. They are beginning to fear it and with that will come efforts to control it. Bitcoins, much like the TEA Party movement, are hard to control. But that does not mean the powers to be won’t try.

Stossel notes, “The biggest risk to private currencies may be that governments will become jealous of how well these upstart forms of money work. If people all over the world decide to trade in digital currencies, it will become more obvious than ever that government isn’t what makes economic activity happen. It will also be harder to trace — and tax — people’s economic activity. Government doesn’t like to get sidelined. To its credit, the German government announced that it recognizes Bitcoin as a legal alternate currency.” Read more.

Bitcoins will truly breakout when businesses small and large not only accept them but can use them to pay their utility bill, purchase raw materials and pay their employees. If you want to see the future of Bitcoins then watch the new FOX TV series “Almost Human“.

Fasten your seat belts this will be a wild ride.