Repeat after me, kids: "It's the tree-huggers' fault"

Sadie and Pyper, only 9 and 7 years old, are protesting high gas prices that made their parents cut out cable TV. Welcome to the real world, girls. Welcome to the lower quality of life that's inevitable when people let themselves be ruled by environmentalists. Those are the people you should be blaming, girls, not oil companies! Oil companies would love nothing better than to supply us with more oil and gas, and at lower prices: when you do the math, lower prices mean higher sales, so they earn more profit while we consumers still benefit from cheap, plentiful carbon fuels.

Instead of blaming the oil companies, Sadie and Pyper need to learn who's really at fault. Their parents are paying more for gasoline because the federal and state and local governments for 32 years have prevented new gasoline refineries from being built, because EPA regulations have forced the number of refineries to drop from 254 in 1985 to a mere 142 in 2007, because the EPA requires an area to use one of 42 different gasoline blends depending on local "air quality," because the federal government would rather keep Colorado shale as useless wilderness most Americans would never bother visiting (instead of letting oil companies turn it into useful energy), because California and Florida elitists want to preserve "pristine" shorelines that they don't like to share, because both Democrats and Republicans always block efforts to drill in ANWR (a place as barren as the moon), and because of the insanity to "protect" plentiful polar bears the girls will likely never see in their lives (and probably wouldn't want to anyway, since their "cuteness" disappears suddenly once you see the violent predators munching a seal).

Polar bears are cute, aren't they? Let's take a look at one in action. (image borrowed from Supanet)



My best friend doesn't send me polar bear stuff as often as she used to, but she's sent a lot over the years, from coasters to stuffed animals. Those are cute. Real polar bears are not cute. Knut was a cute little cub until you saw him eat his natural diet of meat, at which point a rational person realizes, "This is a predator."

I suppose the girls could be considered "spoiled," when countless millions of other children around the world would be grateful for just a few bits of food. God knows I've personally seen many Filipino children who may never know a full stomach. However, on further reflection, I'm more sympathetic than some of the comments in reply to the article. The Vance family isn't necessarily among the many idiotic people who think they should live like kings on one 40-hour per week income; there's nothing in the article to indicate either way. Also, the girls are misguided in their protests, but they're young and have yet to learn economics. Economics is the science of human choices and its consequences, or more specifically, the study of how we deal with scarcity. "You can't have everything."

If the girls like cable TV so much, their family can cut back on going to restaurants (including fast food) and the movies. Each month, two fewer trips for fast food, or one fewer outing to the movies, would probably cover their cable bill. Cutting back on cell phone plans, and settling for "freebie" phones when renewing contracts, is also a way to reduce expenses that many people overlook. Alternatively, the family can try to increase its income. One of the parents could get a part-time job, just two Saturdays a month to pay for cable. The girls could also try a paper route or babysitting. I don't expect them at their age to understand more advanced economic concepts, but they're not too young to understand that in the real world, you should work honestly and trade voluntarily for what you want.

But we shouldn't blame the family, because they shouldn't have to cut back or try to earn more money to compensate for what government hath wrought. If it weren't for government, oil and gasoline would be cheaper. The family still couldn't have everything, but they wouldn't have to cut this or that out of the family budget to afford to drive around. Putting aside any questions of whether the parents derive income from others without consent (i.e. "the redistribution of wealth" and "subsidies"), the parents have the income and possessions they have, and who has the right to tell them not to use it, or use less? That's what government is doing: it wants us to use less oil, so it's forcing changes in our behavior. I don't use "force" lightly, because in the end, it comes down to government doling out fines and prison time, enforced at the point of a gun.

The Orange County Register had an editorial last week with a great title: "You can't ride a polar bear to work." Contrary to Agent Smith's derision in the first "Matrix" movie, it's one of mankind's greatest strengths that we can adapt the environment to ourselves, whereas most other lifeforms adapt to their environment. We're not living in some state of nature, like buzzards or decomposer bacteria waiting for something to die, or lions waiting for an antelope to pass by, or squirrels that try to scavenge enough to survive the winter. We get out there and fight Mother Nature for what we have. My friend Billy Beck recently said something similar, I think, but for the life of me I can't find it right now. (The closest I can find are this and this but neither are it.)

Our fight for the last two centuries has involved a remarkable increase in how we use our surroundings, at a rate never seen before in human civilization. It's come at the price of altering our environment, and I for one see it as worthwhile. I, for one, am willing to make trades and use our available technology so that I do not have to live like an animal. And once humans don't have to live like animals, which means no less than "to struggle against nature," we don't have to worry about following a herd of prey, or living adjacent to water sources. We don't have to accept that it's "natural" for someone to die because we ran out of resources. We can actually worry about how to improve our already comfortable lives! If Drew Barrymore thinks it's "cool" to "poo in the woods," that's her choice. Same goes for that idiot Frenchman who wants to live alone on an island. If we all lived in such "natural conditions," we'd require far more land per person to feed ourselves. It's modern technology that allows us to plant and harvest more and more in the same land area. But I suspect he doesn't mind that, that he shares the same mindset as that bastard Jacques Cousteau, who envisioned an Earth with a controlled human population of only 100,000.

Many on the planet still struggle, but even they have supplanted "other species" like the more fortunate of us. And is that so wrong? What parent can rationally wake up without worrying about starting work at dawn, in dwellings at a comfortable temperature with non-dirt floors, with sanitary ways to excrete and bathe and cook, then worry that their children will never see dodo birds wandering up to them on the beach, or flocks of passenger pigeons? Besides the fact that Mother Nature killed far more species than man ever did, I see pigeons of all kinds every day. One extinct kind frankly doesn't make any difference to me. Huge flocks that darkened the sky, and entire trees filled? That only means that much more bird droppings.

Or as Billy said about the comparative worth of polar bears:

Take a good long look at your kids.

Tell me they're not worth more than a polar bear.

That's the fight that will now take place in all kinds of courts for years on end every time someone wants to deliver unto your dainty hands a single new gallon of fuel.

And elsewhere about the caribou-protectors,

I hope they freeze in the dark, listening to the cries of their children. The real sin in all this is how they take sensible people along with them on the ride.

Unfortunately it's Sadie and Pyper who are paying the price. It isn't oil companies' "gouging" that's preventing them from watching Hannah Montana. It's entirely the fault of government and the damn tree huggers, who are making oil and gas artificially more expensive. I can only wish that Sadie and Pyper's parents can pull them aside, show them pictures of polar bears at dinner, and say, "These cute things are why you can't watch Hannah Montana."

Then you have morons like this who actually say that $8 per gallon gasoline will be good for us. Why? Because it promotes behavior that he likes, never mind what you or I like. He talks about the "antiquated technology" that's driving automobile engines. Did he ever consider the "antiquated technology" called electricity that continues to power most of our modern comforts? And if higher prices are an economic "stimulus," why not hike all prices? Let's set tomatoes' price at $1 million per pound -- by his logic, that would spread prosperity throughout the economy as people have more money to spend! But in reality, it would wreck everything. The simple lesson is to let prices fluctuate on their own, similar to what Bastiat warned us in his Sophisms: "Has not M. Bugeaud uttered these words: 'Let bread be dear, and the farmer will be rich'? Now, bread can be dear only because it is scarce. Thus, M. Bugeaud was extolling scarcity." It follows, then, that it's a fallacy to think that because government makes something artificially more expensive, and an industry thereby becomes artificially more prosperous, that the prosperity will spread throughout. It simply won't happen: all prices will go up accordingly, and because of government's interference in setting prices, buyers and sellers will not be able to determine the correct prices for anything else.

Then the fool goes on about how oil producing nations have so much power over us, when in fact we should be worrying more about the federal government having power over us. It's the federal government who has greater control over our supply of oil, not Saudi Arabia or Hugo Chavez. And for all his talk about how wonderful public transportation is, how we'll eliminate urban sprawl, it comes down to him and other collectivists telling the rest of us how to live our lives. They like paying more for gasoline, they think it's a good thing, they value unused natural resources more than modern comforts, and therefore we all must follow them on the road to hell.

Sadie and Pyper, welcome to the 1970s.

Chuck Schumer: biggest Congressional hypocrite of all time?

Schumer is such a goddamn putz. As reported today in the New York Post:

SCHUMER: REFINERIES CAN'T COPE

May 7, 2007 -- Sen. Charles Schumer yesterday called for a federal investigation into why large oil companies have been unable to keep pace with consumer demand for gasoline.

Schumer (D-N.Y.) said he was specifically concerned because problems at aging refineries have been instrumental in hiking gas prices, which may be on the verge of setting records.

The senator said he would be asking the Government Accountability Office to look into whether oil companies are purposely underinvesting to keep the market tight.

Hypocrite? Moron? Or as one of my friends suggested, "satanic rectal spawn"?

If Schumer wants to know the fundamental problem with American refineries, he need not look anywhere but a mirror. The New York Times reported two years ago that "Over the last quarter-century, the number of refineries in the United States dropped to 149, less than half the number in 1981." Worse, the United States hasn't seen a new refinery built since 1976. Every time a company would like to build one, they can't get past the hurdles that Congress, and state and local governments too, made to satisfy the tree-huggers. The blame falls mainly on Democrats, but also on "environmentally minded" Republicans who'll court any vote to win elections.

Schumer has never run a business, although one shouldn't need to in order to comprehend common sense, free market principles. Suppliers are perfectly capable of determining the natural balance of reinvesting profits and output on their own, without any need for government to "encourage" them with subsidies or state-funded studies, and certainly without government hindering them. The U.S. could import far more crude than it presently can, but refineries' capacity is a bottleneck. Well, if only oil companies could build more refineries, it's true that they'd resultingly make even higher profits, but don't forget that they'd supplying more gasoline at lower prices.

Schumer can't see any of this, whether willfully or because of ideological blindness. Under capitalism, everybody wins -- except schmucks like Schumer, whose political livelihood is based on blaming these "evil capitalists" that in fact make our lives better. He could push for legislation to allow oil companies to build more refineries, or drill in ANWR, which would cause prices to start falling now merely on the promise of increased future supplies. Most people don't see the big picture that if gas prices fell to perhaps half of current levels, their lives would be improved far more than taxing some oil CEO of, what, $10 million, then redistributing it among 300 million people? I personally don't care how much the Big Oil executives are paid. They earn every penny, as far as I'm concerned, by leading these companies that provide a critical resource that people are willing to buy via peaceful commerce.

However, when it comes to getting people to vote for you, truth just doesn't compete with creating fear, including the fear that somebody just might have more than you. So Schumer will continue to harp on "income inequality" and oil companies' supposedly obscene profits, notwithstanding that, as my friend Josh Hendrickson pointed out a while back, oil companies' profits are hardly the highest compared to other industries, when you look at the percentages.

And if Schumer is correct that oil companies are purposely "underinvesting" in refineries, then why are there entrepreneurs trying to build new ones? Or is that a lie, just like one of my friends claims that Canadians coming here for medical procedures is just a right-wing lie?

Congressional morons that keep the price of oil high

I've talked before about Congressional Democrats perennially successful attempts to block drilling in the barren ANWR, and Democrats' purely partisan calls for energy independence (which would only make oil more expensive), and Democrat-supporting environmentalists whose lobbying has prevented the construction of any new domestic oil refineries in the last 30 years. But don't get me wrong: some Republicans are just as much to blame.

House Votes to Keep Offshore Oil Drilling Ban

WASHINGTON — The House of Representatives is not lifting a quarter-century congressional ban on offshore oil drilling in coastal waters outside the western Gulf of Mexico amid arguments that new supplies are needed to lower energy prices.

A proposal to end the long-standing moratorium as it applies only to pumping natural gas was expected to be voted on later Thursday as lawmakers moved toward late-night approval of a $25.9 billion Interior Department spending bill.

The proposal to allow oil drilling in waters off both coasts and in the eastern Gulf of Mexico — areas off limits to energy companies since 1981 — was rejected by a 279-141 vote. It had been offered by Rep. Ted Poe, a Texas Republican, who called the drilling ban "an outdated policy" when the country needs to reduce its dependence on energy imports.

Separately, the House passed by a 252-165 vote a measure that would bar oil companies who fail to renegotiate contacts that allow for federal royalty relief no matter how much oil costs in the marketplace from future oil or gas leases.

The measure was aimed at correcting a mistake made by the Interior Department in the 1990s that failed to put an oil price cutoff for royalty relief. The mistake could cost the Interior Department as much as $7 billion in lost royalty revenues. While the measure does not order these contracts renegotiated, it would put pressure on companies to do so, its supporters said.

"Energy companies have been taking oil and gas from the American people for free and then selling it back to them at record prices," said Rep. Maurice Hinchey, a Democrat who sponsored the amendment.

Supporters of the drilling ban, renewed by Congress each year since 1981, scrambled to try to restore the natural gas drilling ban which had been stripped from the Interior spending bill in committee.

Republican Rep. John Peterson argued that developing the offshore gas resources would pose none of the environmental risks — mainly the prospects of a spill — associated with oil drilling. Supporters of the ban argued that natural gas and oil drilling were too closely linked.

Lifting the moratorium for the first time in 25 years would allow energy development within three miles of shore along coastal areas "where tens of millions of our citizens have made it clear that they don't want any more drilling," said Rep. Lois Capps of California, which has extensive offshore deposits but strict bans on exploitation.

Capps planned to offer an amendment to continue the natural gas drilling prohibition.

Florida lawmakers — both Democrats and Republicans — said energy development off the state would threaten a multibillion dollar tourist industry. Florida depends on tourism "and we're going to protect it," vowed Rep. Alcee Hastings, a Florida Democrat.

Opponents of the drilling prohibition argued that access to offshore oil — and especially natural gas — would drive down energy prices and help reduce the country's dependence on foreign sources of energy.

"We have lost millions of jobs already because of high energy costs, and we're going to lose millions more," said Peterson, who has tried unsuccessfully for two years to lift the offshore moratorium as it applies to developing natural gas.

Soaring natural gas prices, which have quadrupled since 1999, have forced companies — especially in the chemical and fertilizer industries — to consider moving overseas where fuel prices are much cheaper, he said.

Peterson's measure would lift the congressional ban which prohibits the Interior Department from offering gas leases in waters along both coasts and in the eastern Gulf of Mexico. It would not affect a presidential ban on drilling, issued by executive order, that is in effect until 2012.

Drilling proponents also faced an uphill struggle to get the moratorium lifted in the Senate, where senators from coastal states probably could block any such action.

President George W. Bush has said he has no plans to remove the drilling ban.

But Capps said if Congress lifts its moratorium and declares that coastal waters should be opened to drilling, she fears the president "is going to revoke his moratoria" as well.

The offshore drilling issue has divided Congress largely along geographic lines.

Lawmakers from coastal states —both Republicans and Democrats — worried that drilling offshore could threaten their tourist and fishing industries and bring risks of environmental damage.

"People don't go to visit the coasts of Florida or the coast of California to watch oil wells," said Rep. Sam Farr, another California Democrat.

Don't you just love Congressional politics? Nothing is ever passed anymore as a separate bill. And the most pernicious measures inserted into massive bills tend to be simple, yet so effective in damning the American people.

Whether in ANWR or off-shore fields, merely allowing drilling will help drive down oil prices immediately. Capps needs to take a microeconomics class or two. Prices are not just a reflection of the present, but of expectations of future supplies too. When buyers on the global petroleum market are uncertain of Iranian and Nigerian output, and when they expect China and India's appetite for oil to grow, they're willing to pay more. When they know that the supply, especially domestic supply under stable U.S. control, will be higher for years to come, they won't be as willing to pay. As I've explained before, we won't see $40 per barrel crude right away, but buyers will have greater confidence in reliable supplies.

Back into the limelight steps Maurice Hinchey, the conspiracy theory nutcase who claimed on Sean Hannity's radio show that Karl Rove leaked the "Bush memos" to CBS. (After a year and some months, he has yet to offer one shred of proof.) In accusing the oil companies of making too much profit, Hinchey ignores the reality that our friend Josh Hendrickson pointed out last month: other industries normally have far higher profit margins. And I ask, who was crying for the oil companies during the 1990s when oil and gasoline prices were quite cheap?

Hinchey's crime is even worse: is he really as stupid as he sounds, that he laments the federal government losing $7 billion in royalties, when the oil companies would invariably pass that cost on to consumers? He also omits the fact that states and the federal government collect far more in gasoline taxes than oil companies make in profit. I wish I could remember now who recently noted that with all the taxes collected over the years, the federal government could buy every American today a brand-new Prius. How's that for putting things in perspective? And don't forget the double-taxation, because governments also get a cut of oil companies' profits.

Certain lawmakers are so concerned about tourism, but higher oil prices (at the pump and also the rippling effect) cost Americans far more than the tourism industry would gain. "Protect" is the proper word, all right, because Hastings and Farr are engaging in nothing short of protectionism. "To hell with you, and to hell with the idea that I should have to compete. I'm going to use the power of government to benefit my livelihood and make you bear the cost."

Did they ever consider who can still visit Florida or coastal California when high gasoline prices force families to cut back on leisure? What of families taking vacations closer to home, because it now costs considerably more to drive somewhere, or because airline tickets have gone up from higher fuel costs? And what of the working poor, who Democrats supposedly champion? Instead of actually doing something to bring down the price of gasoline, all the Democrats are doing is protecting the vistas, which are enjoyed more by the well-to-do. Just who are liberals really fighting for?

And three miles is really quite a distance. To put something else in perspective, I work about a mile north of the Empire State Building. At triple that distance, even the largest oil rig will hardly mar the sea's horizon. I personally would prefer the oil rigs out there, knowing that someone's helping to keep my fuel costs down (and strictly for his own self-interest).

Humberto Fontova recently noted in Human Events that there tends to be more aquatic life, especially fish, around the artificial reefs of oil rigs. His excellent piece addresses the issue of oil rigs' environmental impact. "The environmental dangers of oil exploration and extraction rank right up with the marvels of Cuba's healthcare as modern man's most zealously cherished fables." In 50 years, we've never had a major spill from rigs, only tankers, and "More birds get fried by landing on power lines and smashed to pulp against picture windows in one week than perished from three decades of oil spills." It's well worth reading the whole thing.

What to do about the price of gasoline?

Leave it to one of the greats to tell us like it is. Larry Kudlow wrote on Tuesday that President Bush undid a few things by which government is making oil and gasoline more expensive. He added:

One action President Bush should have taken (and could still take) is to end the 54-cent-a-gallon tariff on imported ethanol (which basically means Brazilian ethanol.) Why the U.S. government should protect the already heavily subsidized ethanol industry at the expense of American consumers is hard to fathom.

Energy Secretary Sam Bodman actually defended the tariff earlier this month saying it was necessary so that foreign producers "can have no advantage over American companies." Holy smokes, this is the energy version of steel tariffs and it's just as bad an idea.

But all this talk of price gouging is nothing more than the usual political pabulum.

Update: one thing Larry didn't mention is that President Bush directed the EPA to wave "clean air" rules, by which the EPA requires certain states to use only specific blends of gasoline. Believe it or not, there are 42 different blends (maybe even more now!), so if gasoline supplies run low in a state that is heavily restricted by the EPA, it often can't just buy gasoline from an adjacent state. Sometimes it must come from two or more states away, which makes the gasoline unnecessarily expensive. Bush said "Every little bit helps" regarding the effect on gasoline prices, and even this good start had a little downward pressure.

However, Bush called for increasing tax breaks for hybrids cars, which I have exposed as "The bad way to cut taxes." As I explained, cutting taxes must be uniform, not just for specific industries or products. Otherwise, like in the case of hybrids or anything else we can get "tax credits" for, it's merely favoritism -- a subsidy. By nature, a subsidy is how the government skews the market in favor of special interests.

Larry had previously assailed the ridiculous ethanol subsidies here, concluding, "The administration is being hoisted on its own ethanol petard." And he is correct. The blame for gasoline prices is not just from the price of oil, but the pile of crap known as the 2005 energy bill. In a couple of decades, economists might just look back on the energy bill and its effects like we today look back on the 1970s wage and price controls: "Who were the schmucks that didn't think about ethanol's scarcity, or even that its price would go up from demand, yet mandated a sudden spike in its use?"

But in our midst are interventionists in the guise of free-marketers, who have a form of laissez-faire but deny the power thereof. As I explained several ways in that link, there is no, NO justification whatsoever for ethanol subsidies. Any subsidy takes money from some to give to others, and though the latter can then sell their goods for less, at best it's all the same for the consumer. If an item would normally sell for $2, but a $1 subsidy allows it to sell for $1, then the taxpayer still pays $2 total, for who else pays the subsidy? Then it gets worse, because an equivalent item that might sell for $1.50 will never come to market. The uncompetitive sellers stay in business, at the expense of the consumer and his lost 50 cents.

Now, I also oppose subsidies for oil companies. I'm the first to support the elimination of all subsidies for everyone, believing that that is the level playing field on which they compete for the consumer's business. But to be fair, "Big Oil" hardly receives the boost that ethanol producers and corn growers are. The energy bill boosted their subsidies, and the mandate to phase out MTBE was the hidden windfall for them. When I tried to tell rufus a dozen times that ethanol will rise in price as it becomes more popular, he didn't believe me, but I turned out to be right.

Sadly, President Bush, though I believe he knows better, has bowed to politics and has come out against price gouging, though such a thing is completely mythical. If he didn't, Democrats would score too many points with voters. Republicans have to display some populism, lest anger over gas prices (fueled by mainstream media) give them the same fate as George H.W. Bush. As this Detroit News op-ed says so well, "One thing you can always count on, as soon as the price of a gallon of gasoline nears $3, Democrats will start demagoguing." Link courtesy of our friend Josh Hendrickson. Josh has also noted the interesting correlation between gas prices and Bush's approval ratings, and that if the Republicans finally get smart, they'll bring up ANWR. Drilling in ANWR would immediately cause crude oil prices to drop (because current prices also reflect future supply), but Democrats consistently block all legislation. Especially now, I cannot fathom why Republicans don't drive this point home.

At the present time, our only option is for the lesser of two evils. I, for one, would rather have Republicans half-heartedly screwing up the economy than Democrats completely wrecking things with "windfall profits" taxes. That reminds me: when will Democrats start calling for "windfall profits" taxes on ethanol producers, who are now earning larger and larger margins? Or do they not want to risk that the American people will finally realize that it's absurd for government to support business, and that it's this absurdity that makes things more expensive than they ought to be? Unlike liberals' use of "ought," my use there means "if the blasted government didn't stick its nose in, whether it's trying to 'help' or simply redistribute money to supporters."

People want government to "do something" about gasoline prices, when in fact the federal government shoulders a good part of the blame. People also wanted government to "do something" about the Great Depression, too, though the Federal Reserve triggered it, and the federal government prolonged it. Why look for solutions from the people who created the problem in the first place?

Saving us from foreign oil "dependence"?

In his latest follow-up to a State of the Union Address that extolled the fallacial virtues of big government, President Bush struck again:

Bush: U.S. on Verge of Energy Breakthrough

MILWAUKEE Feb 20, 2006 (AP)— Saying the nation is on the verge of technological breakthroughs that would "startle" most Americans, President Bush on Monday outlined his energy proposals to help wean the country off foreign oil.

Less than half the crude oil used by refineries is produced in the United States, while 60 percent comes from foreign nations, Bush said during the first stop on a two-day trip to talk about energy.

Some of these foreign suppliers have "unstable" governments that have fundamental differences with America, he said.

"It creates a national security issue and we're held hostage for energy by foreign nations that may not like us," Bush said.

Bush is focusing on energy at a time when Americans are paying high power bills to heat their homes this winter and have only recently seen a decrease in gasoline prices.

One of Bush's proposals would expand research into smaller, longer-lasting batteries for electric-gas hybrid cars, including plug-ins. He highlighted that initiative with a visit Monday to the battery center at Milwaukee-based auto-parts supplier Johnson Controls Inc.

During his trip, Bush is also focusing on a proposal to increase investment in development of clean electric power sources, and proposals to speed the development of biofuels such as "cellulosic" ethanol made from wood chips or sawgrass.

Energy conservation groups and environmentalists say they're pleased that the president, a former oil man in Texas, is stressing alternative sources of energy, but they contend his proposals don't go far enough. They say the administration must consider greater fuel-efficiency standards for cars, and some economists believe it's best to increase the gas tax to force consumers to change their driving habits.

During his visit to Johnson Controls' new hybrid battery laboratory, Bush checked out two Ford Escapes one with a nickel-metal-hybrid battery, the kind that powers most hybrid-electric vehicles, and one with a lithium-ion battery, which Johnson Controls believes are the wave of the future. The lithium-ion battery was about half the size of the older-model battery. In 2004, Johnson Controls received a government contract to develop the lithium-ion batteries.

On Tuesday, Bush plans to visit the Energy Department's National Renewable Energy Laboratory in Golden, Colo., to talk about speeding the development of biofuels.

The lab, with a looming $28 million budget shortfall, had announced it was cutting its staff by 32 people, including eight researchers. But in advance of Bush's visit, Energy Secretary Samuel Bodman over the weekend directed the transfer of $5 million to the private contractor that runs the lab, so the jobs can be saved.

And it gets worse from there. The article was supposed to have been written this Monday, but from something it said, I would have thought it was from November or so. It mentioned Americans have only recently seen a decrease in gasoline prices. Strange, because in my area (and gasoline down the road is quite expensive compared to elsewhere), pump prices started decreasing significantly about four months ago.

Isn't it so easy to "invest" in new ventures when it's not your money, especially when the money comes from people who have no control over how it's invested, and when it's all but impossible for them to hold you accountable for mismanagement and outright fraud? Isn't it so easy to "save jobs" when it's not your money? Isn't it equally stupid when it's just for the sake of jobs, a basic Keynesian principle? When it's not your money, though, you need not give a damn whether the company can operate profitably, or whether its scientific goals are at all feasible. Since the money government spends is never its own, it's no problem for government to award another lucrative contract, or give another tax break, so a company can develop a new battery that, subtracting whatgovernment poured in, actually loses money on net.

The best and only way the federal government (and any level of government) should promote a "breakthrough" in new energy sources is to not promote any source whatsoever. Governments at all levels must stop their interference in market processes, and let the competitors battle it out. Cease all subsidies, like those given to ethanol manufacturers. Cease special tax breaks for oil industries, too. Cease the subsidies for alternative fuel sources like wind and solar energy, which are extremely inefficient. Cease the unfair hindrances on nuclear energy. People use the phrase "level playing field" all the time, and many don't realize a true "level playing field" is when government neither assists nor hinders anyone.

That some of our Middle East oil-buying dollars go to terrorists is a very valid concern about free trade. I'll get to that later, but right now let me say that President Bush has to emphasize it because the Democrats have been. Neither side is doing it out of genuine concern, though. The Democrats certainly didn't care about "energy independence" until recently, but they've created the myth because they don't have much else to make an issue of. Bush has no choice but to follow suit, and sadly, a serious economic matter gets reduced into more partisanship.

Congress is deeply concerned about dependency on Middle East oil. So deeply that, in a vote this last December, it again rejected allowing drilling in ANWR (most of the blame we can put on Democrats), let alone other rich oil fields in Alaska. More than any subsidies or tax breaks, more than any promotion of "democracy" abroad, drilling in ANWR would have the greatest effect on reducing our "dependence on foreign oil." It would also immediately reduce oil prices on the global market. Effects on price would occur once appropriate legislation passed (or even rumors it would pass), before any drilling commenced, because prices do not just reflect current supply, but future expectations of supply.

Critics say it's only enough oil to supply the U.S. for two years, but that is a lot. Imagine that you and your family suddenly found a two-year supply of food in your back yard, and that you are your grocer's biggest customer. Wouldn't he suddenly be very conciliatory if before he demanded high prices? Perhaps he has a lot of savings to carry him through two years, until you consume all of your finite supply. But what if you look a little more and find an even greater supply, or you find a way to make the food yourself for a cheaper cost than your grocer's prices? Worse, what if in that time, you find a grocer who will sell for really cheap prices? (Here I refer to tar-sand oil deposits in Alberta, Canada, which are a promising source once the technology gets going.)

I recently had a discussion with a close friend about Middle East oil and Sino-U.S. trade. Is it wise that we send so much money to potential enemies in actual warfare? No, but we trade with Saudi Arabia, Iran and China because the benefits outweigh the costs. Benefits and costs aren't always monetary, remember. So by measuring trade flows, we can actually approximate how much Americans, collectively, are willing to save by accepting the risk that Middle East terrorists eventually will harm us and our interests, using some of the dollars we paid for Middle East oil. The same goes for China using some of our money to modernize and expand its military, with the single goal of conquering Taiwan.

Admittedly it is not an absolute that free trade promotes peaceful relations. After all, we certainly cannot trust Iran, at least not with its current leadership. Peaceful relations can still be very cold, after all, and free trade isn't a guarantee of permanent peace, but it does maintain peace in the present. The trade will continue until one side decides, or both sides decide, that it prefers the destruction of war, and the risk of losing, instead of peaceful trade.

If Iran really wanted nuclear weapons, couldn't it just buy technology from renegade Soviets? Perhaps, but I would think not. It's far more noticeable than Iran's nuclear projects, which they claim are covert, but we know about them, and the Iranians know that we know, and we know that the Iranians know that we know... Besides, once Western intelligence learned of Iran's acquisition of a nuclear weapon, it would play into the United States' hands: such a discovery would invite UN Security Council action (severe sanctions). Moreover, Israel would undoubtedly begin military strikes against all possible nuclear sites in Iran. Madman Mahmoud, therefore, will continue playing the stall game.

I would suspect India is doing everything to ensure that none of its nuclear technology, at least that which could be used to develop weapons, reaches Iranian hands. It's benefiting far more from peaceful trade with the United States than it could ever get by selling nuclear technology to Iran. Similarly, for all the anti-West violence, Pakistan as a nation likes warm relations with the United States. China and North Korea are a different matter, especially North Korea, because Kim Jong-il, aka He of the Supposedly Infallible Memory, is a madman.

If we right now cut off all trade with Iran, that may force its hand before we can deal with it. Iran might then seek out the nearest available nuclear warheads and lob a few toward Israel, and its missiles could potentially carry warheads to southern Italy. I do believe we will eventually have to assault Iran with our military might, which will be much easier until Iran has a working nuclear weapon. Right now Mahmoud & Co. think they have time to develop nuclear weapons on their own.

China is also stalling. I think its leaders look far into the future and are willing to exercise the requisite patience. As I wrote last March in my "How libertarian are you?" entry:

Someone best described as a neo-con once told me that China is merely a paper tiger and nothing to worry about. Perhaps so. Vietnam, however, taught our enemies that we can be beaten if they make it too costly for us to win. I worry that China will become a serious threat in a couple of decades, as it continues to strengthen its military and modernize its society. At some point, China may be able to capture Taiwan because they'll make the blood price too high, and if anti-war sentiment sufficiently ferments over the years.

It's important to remember that not every dollar in China's trade surplus is a dollar it can spend. China needs some of those dollars to buy petroleum, and because it must import many different types of raw materials, it doesn't have much of an overall trade surplus compared to that with the United States. Also, it returns many of the dollars to the U.S. Treasury and receives U.S. Treasury bonds, which are not just an investment, but collateral for China's insolvent banking system.

There's still a lot of money that China can allocate for its military expansion, though, but even in a couple of decades, it could not hope to approach, let alone defeat, the United States. But again, those fellows in Beijing aren't looking to win: they just want to make the fight over Taiwan so decreasingly worthwhile that we'll give up.

Meanwhile, we continue to trade with China. Free trade means that neither side is more dependent on the trade than the other is: free trade is symbiosis, not parasitism. China's communist leaders have embraced some market reforms as the key to prosperity, with the clear goal of modernizing China into a formidable superpower. Are they really selling us a rope to hang ourselves with, a twist on what Lenin mockingly said of capitalists? Or are they embracing a snowball (the free market) they formed themselves and will never hope to stop?

I don't think free trade, and the market reforms it encourages, are the answer to ending tyranny in China. I think that, like in the United States, it will take an armed revolt by the people. My own ideas on how to accomplish that, however, cannot be publicly shared.

A windfall for whom?

(Title corrected. Charlie pointed out what I had wondered when I wrote the title, whether to use "who" or "whom." I checked the fast-access alt.english.usage FAQ, which says that "whom" is the usage when following a preposition.)

I'm surprised none of the major blogs, at least that I've seen, have mentioned how the New York Times outdid itself two days ago. As I picked up a copy of the more enjoyable New York Post, I noticed the article title "U.S. Has Royalty Plan to Give Windfall to Oil Companies" in the upper left hand corner of the Times' front page. Like anything else you read in the Times, you can expect it will promote its usual socialist agenda with half-truths, misleading statistics and figures, and outright lies. Here are some excerpts and my commentary:

WASHINGTON, Feb. 13 — The federal government is on the verge of one of the biggest giveaways of oil and gas in American history, worth an estimated $7 billion over five years.

That $7 billion is over five years, and that's for the entire industry, so it's really not as big a windfall as the Times would have you think. It's not even comparable to the huge windfall that the federal government gets in gasoline taxes.

Second, that's $7 billion returned to the private sector, where it can be spent far more efficiently than the federal government throwing it into another unconstitutional program. It doesn't matter that the oil companies will get it, because as I've said before, that money will find its way back to the rest of the economy. It could be a single oil executive who gets every penny, and because he won't just sit on piles of cash, because he must save or spend it, the money flows back to the rest of us.

In fact, it's likely that the oil companies will use part of the alleged "windfall" to develop new oil sources, which will eventually help bring crude prices down. Contrast this with the Democrats' fiscal insanity of "investing" in alternate fuels: if you had $1 billion to invest in increased production, you'd do so much better to put it in oil, not alternative fuels that are far more expensive.

New projections, buried in the Interior Department's just-published budget plan, anticipate that the government will let companies pump about $65 billion worth of oil and natural gas from federal territory over the next five years without paying any royalties to the government.

Based on the administration figures, the government will give up more than $7 billion in payments between now and 2011. The companies are expected to get the largess, known as royalty relief, even though the administration assumes that oil prices will remain above $50 a barrel throughout that period.

Notice that insinuation? The figures were "buried," implying the DOI was trying to conceal the "windfall." We should be eternally grateful, then, that the Times is poring over all these government reports, telling us, effectively, that government is going to return money to us.

Oil companies would have paid $7 billion in royalties, so one might at first think they're getting a deal by not having to pay 10.77% royalties. But the $65 billion is the sale value of the oil and natural gas, not profit, so it's not as if the oil industry will be swimming in more profits. And again, see above for my explanation why you shouldn't fear a company earning more money.

"We need to remember the primary reason that incentives are given," said Johnnie M. Burton, director of the federal Minerals Management Service. "It's not to make more money, necessarily. It's to make more oil, more gas, because production of fuel for our nation is essential to our economy and essential to our people."

I personally disagree with these particular incentives. I agree with Doug Bandow that we should simply sell the public lands to the private sector. Let companies bid against each other to determine what is a "fair price," and ultimately it won't matter if the top bid is $1 or $1 billion. If the federal government "earns" $7 billion, $1 billion or $1 in royalties, we consumers pay it, in the form of higher prices. Besides, the less money that goes to government, the better; that's money that stays with us.

Indeed, Mr. Bush and House Republicans are trying to kill a one-year, $5 billion windfall profits tax for oil companies that the Senate passed last fall.

I discussed the "windfall profits tax," and the economic ignorance of Byron Dorgan and other Democrats, here. The bottom line is that the $5 billion will eventually be passed onto consumers. There is no such thing as a business that pays taxes. Consumers pay taxes for the business.

Moreover, the projected largess could be just the start. Last week, Kerr-McGee Exploration and Development, a major industry player, began a brash but utterly serious court challenge that could, if it succeeds, cost the government another $28 billion in royalties over the next five years.

Yin and yang. It will cost the federal government $28 billion over five years, but that's $28 billion remitted to the private sector, and all automatically, because all involved sellers will adjust their prices transparently. Dorgan's plan to "rebate" the "windfall profits tax" could never hope to work so well.

In what administration officials and industry executives alike view as a major test case, Kerr-McGee told the Interior Department last week that it planned to challenge one of the government's biggest limitations on royalty relief if it could not work out an acceptable deal in its favor. If Kerr-McGee is successful, administration projections indicate that about 80 percent of all oil and gas from federal waters in the Gulf of Mexico would be royalty-free.

The more I hear about oil companies not having to pay royalties, the more I like it.

"It's one of the greatest train robberies in the history of the world," said Representative George Miller, a California Democrat who has fought royalty concessions on oil and gas for more than a decade. "It's the gift that keeps on giving."

But giving to whom? Not you, and certainly not me, but to the federal purse whose strings Miller and others control.

If Miller wants to talk about greatest train robberies Congress is committing, he'll stand by President Bush's side and warn about Social Security's looming insolvency, or Medicare/Medicaid, or the prescription drug bill, or all the pork spending by both political parties.

Republican lawmakers are also concerned about how the royalty relief program is working out.

"I don't think there is a single member of Congress who thinks you should get royalty relief at $70 a barrel" for oil, said Representative Richard W. Pombo, Republican of California and chairman of the House Resources Committee.

"It was Congress's intent," Mr. Pombo said in an interview on Friday, "that if oil was at $10 a barrel, there should be royalty relief so companies could have some kind of incentive to invest capital. But at $70 a barrel, don't expect royalty relief."

It's unfortunate Pombo doesn't understand basic business economics and practices, like how oil companies and OPEC nations continually invest profits to develop new crude reserves, and how higher prices encourage that greater production. Nor does he seem to understand that when the oil industry does well, it's cyclical (crude was at extremely low prices just several years ago), and its higher profits simply reflect its greater competitiveness vis-à-vis the rest of the economy. Oil and gasoline become more valuable, so people are willing to trade more money for it.

As it happens, oil and gas royalties to the government have climbed much more slowly than market prices over the last five years.

The New York Times reported last month that one major reason for the lag appeared to be a widening gap between the average sales prices that companies are reporting to the government when paying royalties and average spot market prices on the open market.

Industry executives and administration officials contend that the disparity mainly reflects different rules for defining sales prices. Administration officials also contend that the disparity is illusory, because the government's annual statistics are muddled up with big corrections from previous years.

In other words, the Times wants to insinuate some sort of corporate tax evasion, but it doesn't offer a single statistic or measurement -- not even to back its claim of "much more slowly." This is an old tactic of the Times: round things in whichever direction you need, and don't supply figures so people can more easily fact-check you. Look at Don Luskin's attempt to get the Times to admit that Krugman's error about average weekly earnings, which were up 0.5% for the last five years, not "flat" like Krugman had written.

...But the Bush administration did not put up a big fight [opposing royalty relief for shallow-water deep drilling]. It strongly supported the overall energy bill, and merely noted its opposition to additional royalty relief in its official statement on the bill.

How hypocritical of the Times to ignore that many Democrats also supported the "overall energy bill," because it wasn't so much about energy as it was about pork. Biden. Boxer. Clinton. Dorgan. Durbin. Feinstein. Kennedy. Kerry. Leahy. Obama. Reid. All those Democrats voted "yea" on the energy bill, but we'll be driving water-powered cars before the Times will ever admit the strong Democratic support for a bill it criticized Bush for signing. John Corzine and Frank Lautenberg actually voted "nay," but you know, New Jersey politics is known for bribery and other sorts of corruption, so it doesn't need pork barrel spending.

By contrast, the White House bluntly promised to veto the Senate's $60 billion tax cut bill because it contained a one-year tax of $5 billion on profits of major oil companies.

Just in case you missed it above, here again is my debunking of the Democrats' "windfall profits tax" malarky.

The big issue going forward is whether companies should be exempted from paying royalties even when energy prices are at historic highs.

In general, the Interior Department has always insisted that companies would not be entitled to royalty relief if market prices for oil and gas climbed above certain trigger points.

Those trigger points — currently about $35 a barrel for oil and $4 per thousand cubic feet of natural gas — have been exceeded for the last several years and are likely to stay that way for the rest of the decade.

At any price, because, I'll say again, that's more money the private sector keeps, and more money kept out of government's grubby hands.

Yet another reason to sell off the lands and waters once and for all, avoiding any entanglements with price triggers, is the very fact of inflation. By the end of this decade, $35 will not be the same as $35 today, or $35 in 2000.

The biggest reason is that the Clinton administration, apparently worried about the continued lack of interest in new drilling, waived the price triggers for all leases awarded in 1998 and 1999.

This is an early contender for the biggest news "DUH!" statement of 2006. Look at this inflation-adjusted chart, which shows that in 1998, crude oil prices had severely bottomed out. There was a "lack of interest in new drilling" because crude prices were so low that investing in new oil fields yielded very little; there was better profit to make elsewhere.

Last week, the fight broke out into the open. The Interior Department announced that 41 oil companies had improperly claimed more than $500 million in royalty relief for 2004.

Naturally. Like Eliot Spitzer strong-arming UPS about untaxed cigarettes, big government can't stand to see one tax dollar get away. One more time: businesses do not pay taxes. They only pass taxes onto us consumers.

If that view prevails, the government said it would lose a total of nearly $35 billion in royalties to taxpayers by 2011 — about the same amount that Mr. Bush is proposing to cut from Medicare, Medicaid and child support enforcement programs over the same period.

The Times concludes by announcing its agenda: the more money that stays in the private sector, the less there is for government to spend on all its redistributive social programs. Never mind that the "cuts" are actually only decreases in spending increases, but who's counting when it's all paid for by someone else?

Caught between Scylla and Charybdis

(Oops! I changed the time but forgot to change it to PM, and I didn't change the date either. Writing about the SOTU at 2 p.m. on Tuesday? Call me psychic.)

Transcript: President Bush's 2006 State of the Union Address

Transcript: Gov. Tom Kaine delivering the Democratic response

President Bush said some good things tonight in his State of the Union speech, but some bad things too. And as I fully expected, the Democratic response, instead of challenging President Bush on the actual Constitutional limits on the federal government, relied on partisan politics and new myths like "energy independence" and that the federal government should "serve us."

As I'm writing this up from my quickly typed notes, Fox News showed a clip that I didn't notice before. John Kerry turned to his left and said something to Dianne Feinstein. The side of his face was toward the camera, but Feinstein was facing it, and it wasn't hard to read her lips. She replied, "I know." Maybe he said something like, "That should be I up there!"

The President began well with a good indirect jab at the Democrats, criticizing the partisanship in Washington. The Democrats' behavior throughout Justice Alito's confirmation hearings was so disgusting that even Robert Byrd said, "The people of West Viriginia in no uncertain terms were, frankly, appalled by the Alito hearings." Byrd could have been stronger and said he was pointing fingers at unnamed members, but what would you expect from a partisan Democrat? Byrd could have a very tough campaign this time, so he needs to sound less extreme and more centrist. He's probably taking lessons from Hillary.

"We will choose to build our prosperity by leading the world economy or shut ourselves off from trade and opportunity. In a complex and challenging time, the road of isolationism and protectionism may seem broad and inviting, yet it ends in danger and decline." Take that, John Kerry. Wide and straight is the road of protectionist economics, and it leads only to impoverished economies.

"There is no peace in retreat, and there is no honor in retreat.... But our enemies and our friends can be certain: The United States will not retreat from the world, and we will never surrender to evil." As one who supported invading Iraq to topple Saddam and turn the most willing Iraqi people into friends, I'm naturally biased, but I rather liked that. Contrast Bush's refusal to surrender with the anti-war left who want to cut and run, come what may to Iraqis, and not because they have a sincere desire, but because it's to take the opposite position.

I was watching the speech on Fox News, which then cut to Charlie Rangel. He looked like he didn't particularly give a damn. Cut to John Kerry, whose countenance screamed, "Damn it, I should have been giving the speech tonight!"

"In less than three years, the nation has gone from dictatorship, to liberation, to sovereignty, to a constitution, to national elections." As I wrote last March, even the United States, after declaring independence in 1776 and formally gaining it in 1783, had much civil unrest (to the extent that George Washington thought a civil war was imminent) and an ineffective federal government until 1788. With our help, Iraqis have accomplished so much and so fast that it borders on miraculous.

"Fellow citizens, we are in this fight to win, and we are winning. The road of victory is the road that will take our troops home. As we make progress on the ground and Iraqi forces increasingly take the lead, we should be able to further decrease our troop levels. But those decisions will be made by our military commanders, not by politicians in Washington, D.C." Very good: peace through victory.

"...there is a difference between responsible criticism that aims for success and defeatism that refuses to acknowledge anything but failure. Hindsight alone is not wisdom. And second-guessing is not a strategy." Another good jab at the anti-war Democrats. God knows we've made tactical errors in Iraq, but that is the nature of war. My father reminded me more than once how we bombed our own troops in Italy during World War II. It's one thing to examine mistakes and try to improve our military -- it's another to say that because we made mistakes and will inevitably make mistakes, we should never go to war and simply surrender.

"...the leaders of Hamas must recognize Israel, disarm, reject terrorism and work for lasting peace." I fear that's just a pipe dream. Hamas is all about working toward the destruction of Israel, using terrorism against innocent civilians.

"Liberty is the right and hope of all humanity." A bit of a platitude, but good to inject.

"...Iran, a nation now held hostage by a small clerical elite that is isolating and repressing its people. The regime in that country sponsors terrorists in the Palestinian territories and in Lebanon, and that must come to an end." With all the focus on Iran's attempt to develop nuclear weapons, I'm glad Bush reminded us that Iran's very government has long since been a major sponsor of global terrorism.

"I urge members of Congress to serve the interests of America by showing the compassion of America." I sighed here, because this compassion is the false notion of government charity, which of course is paid for by other people.

"So to prevent another attack -- based on authority given to me by the Constitution and by statute -- I have authorized a terrorist surveillance program to aggressively pursue the international communications of suspected Al Qaida operatives and affiliates to and from America." I more than sighed here, because not only does the Constitution of the United States not give such powers to the executive branch, the Fourth Amendment requires warrants. In these days of instant digital communications, obtaining a warrant within minutes should not be difficult.

Gathering intelligence on terrorists is certainly essential. I and other libertarians (currently derided by many conservatives as "civil liberties Chicken Littles") do not oppose the intelligence gathering, but the methods. As someone recently asked me rhetorically, why won't the administration submit requests to FISA? Are there so many terrorist-connected calls coming out of America that it would overwhelm the system? Is the administration is trying to save taxpayer dollars by cutting down on paper usage? Or are they not wiretapping who they say they are, so no court (even FISA) would actually grant such warrants? I'll also add, in all fairness, the possibility of an overzealous and misguided attempt to protect Americans.

The camera cut to Hillary Clinton, the queen of state-worshippers, who was smiling insincerely and slightly shaking her head.

"Our own generation is in a long war against a determined enemy, a war that will be fought by presidents of both parties who will need steady bipartisan support from the Congress. And tonight I ask for yours. Together, let us protect our country, support the men and women who defend us, and lead this world toward freedom." The camera cut to Hillary again, who was no longer smiling and clapping just halfheartedly.

"In the last two-and-a-half years, America has created 4.6 million new jobs -- more than Japan and the European Union combined." That was a sobering statistic illustrating Japan's travails (and not from a lack of effort) and the EU's stagnation (which is from a lack of real effort in reforming their tax policies and welfare states).

"In a dynamic world economy, we are seeing new competitors like China and India. And this creates uncertainty, which makes it easier to feed people's fears. So we're seeing some old temptations return. Protectionists want to escape competition, pretending that we can keep our high standard of living while walling off our economy." I very much liked this. Bush can talk like a real free-trader when he wants, but he's disappointed me a few times with things like steel tariffs.

"We hear claims that immigrants are somehow bad for the economy, even though this economy could not function without them." Though our welfare state attracts many immigrants who want a free ride, that is all too true. Many illegal immigrants really do do the jobs that Americans won't, and they're people who simply want to come to this country peacefully and work hard.

"All these are forms of economic retreat, and they lead in the same direction: toward a stagnant and second-rate economy." The road goes in only two directions, and the other way is toward prosperity.

Bush touted his tax cuts, as he should have. "In the last five years, the tax relief you passed has left $880 billion in the hands of American workers, investors, small businesses and families. And they have used it to help produce more than four years of uninterrupted economic growth." That's $880 billion spent by people on what they judged was necessary and efficient, not politicians' latest projects.

I still maintain that the timing of Bush's tax cuts was a stroke of luck, otherwise our very mild recession (unemployment not even at 7%, when "normal" unemployment in a stagnant but "happy" economy like France's is 10%!) would have been much worse. Bush added, "I urge the Congress to act responsibly and make the tax cuts permanent."

I would like to add that I urge Congress and the President "to act responsibly" and cut federal spending -- by a lot. When Bush spoke of "another $14 billion next year," I could only laugh bitterly and say, "Big deal!" That drop in the bucket will make no difference in the deficit, let alone halving it by 2009.

Once Bush mentioned the word "earmarks," McCain vigorously applauded. Bush then called upon Congress to give him the line-item veto, which Clinton briefly had. I fear that, even with a Republican Congress, President Bush expressed the same hopeless desire that his father did.

Bush then turned to massive growth in "entitlements" (how I hate that term, because it implies obligation on government's part). By 2030, nearly 60% of the federal budget will be on Social Security, Medicare and Medicaid. To put it in perspective, our current entitlement spending is about $1 trillion out of a $2.5 trillion federal budget, and at 60% it would be an even more staggering $1.5 trillion. If you follow that link, one error I'd like to note in the newspaper article is that the $2.2 trillion figure is budgeted federal spending, but actual federal spending in 2005 was $2.47 trillion.

"Congress did not act last year on my proposal to save Social Security, yet the rising cost of entitlements is a problem that is not going away. And with every year we fail to act, the situation gets worse." Good, very good. Emphasize that the longer we delay, the more wealth we lose and the more painful we make reform.

Then Bush said, "So tonight I ask you to join me in creating a commission to examine the full impact of baby boom retirements on Social Security, Medicare and Medicaid." Oh, for the love of heaven, we already know the full impact! Numerous thinktanks of all political persuasions have all done projections and arrived at more or less the same figures about how many elderly will be retiring and how many workers will be supporting them. Where they differ is how to deal with it.

"One out of every five factory jobs in America is related to global trade, and we want people everywhere to buy American." It's a good statistic to show the regular American how free trade may send some of our jobs overseas, but we create new jobs to make things for our new trading partners.

But it really scares me Bush talks about "a level playing field." Is that a sly reference to China's alleged currency manipulation, which GM and Ford have recently used as an excuse for their failures?

Bush then got to the meat of his "compassionate conservatism": "Keeping America competitive requires affordable health care," and "Government has the responsibility to provide health care for the poor and the elderly." I again was reminded that he might sound Reagan-like in promoting tax cuts, but Bush is still a big government conservative.

"We will make wider use of health information technology to help control costs and reduce dangerous medical errors." If private companies could already use the technology to control costs, though, they already would have. Companies would jump at the chance because they could continue to charge the same prices, increasing their profits...at least until one company charged less to get more customers, and others followed suit.

He promoted "health savings accounts" as he did during the 2004 campaign, and that they should be "portable." But such accounts wouldn't be necessary if we didn't tax savings -- if we had a more sensible tax system that didn't discourage savings (which fuel investment), people could simply save that money without the need for more government regulations.

Medical liability reform is a must, but I have no confidence in this being passed anytime soon. It's been proposed for years, and nobody does anything significant.

What is significant is Bush's attempt to brag that, "Since 2001, we have spent nearly $10 billion to develop cleaner, cheaper and more reliable alternative energy sources." In other words, we've spent $10 billion so that we can use more expensive forms of energy, like wind, solar and water. If these were more efficient and cheaper than fossil fuels, then we'd already have been using them. The President sadly does not understand this aspect of the free market, because he continued in proposing his "Advanced Energy Initiative -- a 22 percent increase in clean-energy research at the Department of Energy to push for breakthroughs in two vital areas."

How much more of our money can the federal government spend so that we can use more expensive, less efficient ethanol? How much must we spend so we can use hybrid, electic and hydrogen-fueled automobiles, which, as our friend TKC pointed out, don't really save money overall?

Federal subsidies for ethanol are something I've criticized several times. When President Bush proposed federal funding for "additional research in cutting-edge methods of producing ethanol, not just from corn but from wood chips and stalks or switch grass," to "make this new kind of ethanol practical and competitive within six years," I wanted to tear my hair out.

What he said next sounds like a good idea, "to replace more than 75 percent of our oil imports from the Middle East by 2025," but as I pointed out here, it's not a bad thing to import something for cheaper than you can make it yourself. We could ban all imports of Middle East oil, but at what price? "By applying the talent and technology of America, this country can dramatically improve our environment, move beyond a petroleum-based economy and make our dependence on Middle Eastern oil a thing of the past." Again, at what price? When we've made oil so expensive with bad supply-limiting policies that we stifle our economy?

Next, the proposal of the "American Competitiveness Initiative," i.e. another big government program to skew the labor markets. "I propose to double the federal commitment to the most critical basic research programs in the physical sciences over the next 10 years." In other words, double the spending, but what exactly are the "most critical" programs? Who will determine them, business investors who carefully weigh what they're pouring their money into, or government bureaucrats who dole out other people's money while under the influence of industry lobbyists?

The "research and development tax credit" is a good start toward real tax reform, because it sounds general enough. Specific tax incentives are bad policy, simply because they skew markets by favoring one industry (or company) over another. What I want to see is a full repeal of all taxes on businesses, because they do not pay taxes. I explained toward the end of this entry that businesses merely pass taxes onto consumers, which requires overhead, so it's actually better to have individuals bear the full tax burden.

"We made a good start in the early grades with the No Child Left Behind Act, which is raising standards and lifting test scores across our country." Even conservatives like Michelle Malkin are more than dismayed at the huge mess and boondoggle of NCLB. With all those billions wasted, and schools in fact rarely left better off, how can we trust the federal government, as Bush called for tonight, "to train 70,000 high school teachers to lead advanced placement courses in math and science, bring 30,000 math and science professionals to teach in classrooms, and give early help to students who struggle with math so they have a better chance at good, high-wage jobs"? As I discussed here, schools cannot attract professionals who can make much more in the private sector, and many school districts are like NYC's, unable to pay those salaries because they're too busy paying so many bad teachers.

"I ask Congress to reform and reauthorize the Ryan White Act and provide new funding to states so we end the waiting lists for AIDS medicines in America." This is fundamentally redistribution of wealth, and it is self-defeating. Giving more money to states will encourage greater supply of the medicines, it is true, but it will divert pharmaceutical companies' efforts from other ventures that they'd have undertaken. They will make less medicine for influenza, less insulin, etc., so this is another example of government skewing the free market's determination of what is most important to people.

"Each of us has made a pledge to be worthy of public responsibility, and that is a pledge we must never forget, never dismiss and never betray." Actually, I thought he and Congress made pledges "to preserve and protect the Constitution of the United States."

And now for the Democratic response:

I was immediately suspicious when Tom Kaine began by mentioning his missionary experience. It's just like liberals to blur the important distinction between individual charity and government powers. Indeed, he wasted no time: "Our faith and values teach us that there's no higher calling than serving others. Our federal government should serve the American people."

Could there be any bigger poppycock in the world than liberals' belief in the nanny state?

"As Americans, we do great things when we work together." Perhaps he should ask, oh, Ted Kennedy, Chuck Schumer and most of the Democrats on the Senate Judiciary Committe, who disgraced themselves at Justice Alito's confirmation hearings.

"When there is a natural disaster, you expect a well managed response." A nice generality, but the federal government has no Constitutional authority to do what it has for Louisiana and Missippippi in Katrina's aftermath.

"...you have a right to expect government to be fiscally responsible, pay the bills and live within its means. Tonight we heard the president again call to make his tax policies permanent, despite his administration's failure to manage our staggering national debt...huge surpluses to huge deficits..." Again I ask, where was the Democrats' "fiscal austerity" were in the 1980s when they were refusing to go along with Reagan and cut non-military spending, when Democrats controlled Congress and produced several budget deficits higher than today (as a percentage of the economy)? Moreover, not only were Clinton's two "surplus" years achieved in teamwork with a Republican Congress, the surpluses were not that large as a percentage of the budget or the economy.

In fact, federal debt has increased but is not as bad many think. Forget the absolute numbers and look at Steve Conover's January calculations. U.S. federal debt as a percentage of GDP is quite favorable compared to other nations, especially those in our range but whose economies are performing dismally. I'll post more on this another time, but federal debt is actually quite manageable right now. How many people do you know have a high debt ratio, but also get consistent pay raises of nearly 4% a year, pay between just 4% and 5% interest on their loans, and can borrow all the money they want because there are so many who are offering to lend money?

Kaine's nonsense about the United States' "credit rating" reflects either his ignorance or his partisanship: a country's credit rating is reflected in the interest rates it pays on its government bonds. The still-low interest rates on Treasury bonds are why paying interest on the national debt no longer consumes a quarter of the federal budget, unlike in the early 1990s. Foreigners have become so eager to save their money by buying our bonds, and they earned the dollars by selling goods and services to us.

"Congressional Democrats have a plan to educate 100,000 new engineers, scientists and mathematicians in the next four years." Ah, Bush proposed 30,000, so the Dems will more than triple that to prove that they're still the premier party of big government!

"The White House has made efforts to cut Medicaid funds for our most vulnerable citizens. Our seniors were promised that the new federal Medicare drug plan would make it easier and cheaper to obtain their medication." The Medicare prescription drug plan was bad, but Democrats don't see why it really is. To them, it's bad because they were beaten to it by a Republican President and Republican-controlled Congress. In reality, it's bad because the drug plan, and in fact Medicare/Medicaid, are not part of the federal government's constitutional powers.

"In Virginia, we've worked to provide health insurance coverage for nearly 140,000 children who weren't covered four years ago." But the age-old question: at what cost? Who's paying for it, and what are the taxed people not buying (meaning jobs are destroyed all over, little by little) because they are paying for others' health care?

"...Republicans and Democrats alike have come together to fight the administration's efforts to slash Medicaid and push more costs onto the states." And that is why both parties can be so wrong. The federal government under the real U.S. Constitution, not Robert Byrd's revised edition that allows spending on whatever they damn well please, is one of specific, limited powers. The Tenth Amendment clearly states that everything else is reserved to the states or to the people.

Kaine drudged up the old "inaccurate information" accusation, a nicer way than some Democrats' claim that the President deliberately misled the American people, when Democrats (among whom were Bill Clinton, Al Gore, John Kerry and Ted Kennedy) since the late 1990s warned that Saddam was still pursuing WMD programs and couldn't be trusted. I look at the War on Terror this way: the Taliban are gone, a regime that harbored al Qaeda. Saddam has been toppled, a dictator who permitted al Qaeda and other terrorists to operate training camps in Iraq. Saddam also harbored Abu Nidal and gave money to Palestinian suicide bombers' families. Instead of two countries whose governments call for our destruction, Afghanistan and Iraq's governments are now friendly to the U.S., with about 50 million people now able to determine their own destiny. That sounds like pretty good success to me within four years.

What will be curious in the next while is the verifying of an Iraqi general's claims that Saddam sent chemical weapons to Syria on stripped-down civilian planes.

"Working together, we have to give our troops the tools they need to win the war on terror." Is that why John Kerry voted for the $87 billion before he voted against it?

"Last summer, I joined Democrats in Washington and in other states and called on oil companies to share in our sacrifice and return some of their record-breaking excess profits." The Democrats ignore the fact that if oil prices hadn't gone so high, oil companies and oil-producing nations wouldn't be working so furiously to develop new oil fields so that we don't run out of oil. For more on the Democrats' myth of energy independence, click here. For the reason that Hillary and other Dems' desire to tax oil companies to hell will backfire by causing even higher prices for consumers, click here.

Beware: the Democrats' plan for energy independence will only make everything more expensive for us all by reducing our access to less expensive fossil fuels, by increasing our use of expensive alternative fuels.

"But at the same time, we have to ensure that our homeland defense efforts begin with consistent federal action to protect our borders." After how many years, Democrats are starting to talk like Republicans on immigration.

"The administration is falling behind in other critical areas: preserving the environment, keeping our workplaces safe, protecting family farms, keeping jobs in America." The environment is doing quite well. Because of technological advancement that allows us to do more with less land, as well as conservation spurred by the free market, we don't need to cut down as many trees, and we thus have more forest today than at any time since the 1940s. How are workplaces not safe, other than post offices that seem to produce a lot of lunatics? "Family farms" tend to be old-fashioned and inefficient, and they should be allowed to go under or be bought out. And "keeping jobs in America" is the tired old Kerry line from the debates, which is ignorant economics.

When Kaine talked about "rights endowed by our creator," is he talking about what liberals claim as rights? The right to health care, i.e. getting medical care at others' coerced expense? The right to work, i.e. the right to force a business to continue your employment no matter how unfit you are? What liberals' "rights" come down to is using the government to help yourself to others' pockets.

If Kaine and other Democrats really do want to "replace the division that's been gripping our nation's capital," then absolutely "we need a change." But in no way, after watching their shameless antics since President Bush nominated Miguel Estrada, are "Democrats are leading that reform effort" like Kaine claimed. If Democrats are serious about eliminating the partisanship, then their leadership can start by obtaining Congressional resignations from, in no special order, Harry Reid, Nancy Pelosi, Hillary Clinton, Ted Kennedy, John Kerry, Barbara Boxer, Dianne Feinstein, Dick Durbin and Byron Dorgan (I include Dorgan for his belief in taxing oil company profits above $40 a barrel).

"...working to restore honesty and openness to our government, working to replace a culture of partisanship and cronyism with an ethic of service and results."

Before telling others to take the specks out of their eyes, Democrats would do well to remember names like Henry Cisneros, Ron Brown, Susan McDougal and Marc Rich.

The queen of state-worshippers, part II

Previous: The queen of state-worshippers

Do those worshippers of government believe that free persons will cease to act? Does it follow that if we receive no energy from the law, we shall receive no energy at all? Does it follow that if the law is restricted to the function of protecting the free use of our faculties, we will be unable to use our faculties? Suppose that the law does not force us to follow certain forms of religion, or systems of association, or methods of education, or regulations of labor, or regulations of trade, or plans for charity; does it then follow that we shall eagerly plunge into atheism, hermitary, ignorance, misery, and greed? If we are free, does it follow that we shall no longer recognize the power and goodness of God? Does it follow that we shall then cease to associate with each other, to help each other, to love and succor our unfortunate brothers, to study the secrets of nature, and to strive to improve ourselves to the best of our abilities?

- Frédéric Bastiat, The Law

The word "energy" is ironic, considering the topic of this entry. Hillary Clinton is a true worshipper of government, and chief among those of whom Bastiat warned. This New York Post article listed her latest political maneuvering, which you can be assured is strictly to position herself as the populist candidate in the 2008 presidential race:

LET'S $OCK IT TO BIG OIL: HILL

October 26, 2005 -- WASHINGTON — Sen. Hillary Rodham Clinton yesterday called for fees on oil-industry profits to fund clean-energy research and ease the fuel "crisis on our hands."

"The country that put a man on the moon can be the country to find new lower-cost and cleaner forms of energy," Clinton told a group of alternative-energy backers.

Clinton proposed a "Strategic Energy Fund" that she said could bring in as much as $20 billion a year in oil-company fees to fund development and give rebates to folks struggling to pay rising heating bills and transportation costs.

She said oil companies should post signs at gas stations reminding motorists to check their tire pressure.

Could Bastiat have been any more right to ask why "worshippers of government believe that free persons will cease to act" when there is no law to compel them? Don't people already have the free exercise of common sense, that they already know to check their tire pressure without being prompted by signs? A vegetarian group has called for laws requiring labels on milk, warnings for those who are lactose intolerant. As the saying goes, you cannot make this stuff up. What will be next, requiring chocolate stores to post warning signs about obesity and diabetes?

But no, no, the federal government never engages in mission creep, right?

I debunked the Democrats' claim of an energy crisis, and the claim that we should cut back on oil imports in favor of domestic sources of alternative entry, in my previous entry "The Democrats' myth of "energy independence'." Note that in no wise do I advocating importing all our oil: I'm merely saying we should import oil when it's cheaper than producing the equivalent energy ourselves.

Why would a rational person spend $2 on an item when a substitute can be had for $1, and just as readily? With all factors like equivalence and ease of obtainability being equal, a rational person would not, but that's precisely what Hillary is asking us to do. By relying more on wind, solar and other "clean" sources of energy, people will spend more money to get the same amount of (or less) energy. Meanwhile, she wants oil companies to be taxed more heavily. When will state-worshippers like Hillary and Paul Krugman, those who believe that businesses don't pay enough taxes, realize that businesses do not pay any taxes? Business' customers pay the taxes, because as anyone who has managed a business can tell you, a business passes its taxes on to its customers.

Hillary is again advocating the redistribution of wealth, just in a different form: taking from those who produce things of great value and giving to those who do not produce as much. If oil companies' "excessive profits" are taxed heavily, that in itself will likely not produce higher prices at the pump. It indirectly may not even cause higher prices, but it will hurt consumers in two ways by preventing their energy costs from going down. The taxes will subsidize scientists' inefficient programs and studies on wind, solar and hydroelectric energy; there's a plain and simple reason we don't already use those sources, and it is because, through the free market, we know they're too expensive compared to oil. And the oil companies will lose billions of dollars that they could have invested in new oil fields, new equipment, and other things that would increase supply and reduce demand. Who can rationally argue that it's good to increase our supply of more expensive energy and reduce our supply of cheaper energy?

Also, oil company employees (at all levels) will not be paid as much as they could have been, and their shareholders will receive dividends less than what they could have been. Whether these people are working class and trying to build up an IRA, or "big oil" executives whose spending habits sustain dozens of jobs, that money is lost to them. The government supposedly will have that money to spend, but there are two problems: taxes are a disincentive to produce, and government spending by nature is inefficient. The latter itself is proved by Hillary's plans to spend it on alternate energy research.

Hillary claims that if we can put a man on the moon, we should spend money on "new lower-cost and cleaner forms of energy." I won't debate the worthiness of space travel, as I have mixed feelings on its scientific value (especially today, when it is nil) versus its cost, but when it comes to federal spending money on alternate sources of energy, Hillary's essentially asking American taxpayers to burn money -- literally. The Department of Energy will spend $380 million in 2005 on "energy efficiency and renewable energy"; it seeks "only" $353 million for 2006. Add to that a few billion dollars annually to subsidize ethanol that's not worth the price, and I prefer more than ever that I keep all my money, so that I can buy what I believe is my best energy value for my money. Unfortunately Hillary, most of Congress, and even President Bush don't feel the same way: one way or another, like the bad energy bill passed earlier this year, they facilitate the federal government doling out our money to energy pork projects.

Now look at this from New York Newsday:

Clinton takes on Cheney

WASHINGTON -- Sen. Hillary Rodham Clinton yesterday blamed Vice President Dick Cheney for bungling U.S. energy policy - and proposed a $20 billion-per-year tax on oil profits to subsidize clean-fuels development.

Tapping growing anger over skyrocketing fuel costs, Clinton (D-N.Y.) criticized oil companies for reaping billions in profits from hurricane-driven price spikes.

She also laid partial responsibility for rising prices on Cheney, the former head of industry giant Halliburton, who chaired a secretive White House energy task force in 2001. "The vice president basically sets energy policy in America," Clinton told a meeting of alternative energy development investors. "And it's not been to the benefit, I think, of our long-term or short-term interests, and I hope that can change."

"Senator Clinton should go ask her husband and his administration why they never passed a comprehensive energy bill," responded Brian Nick, spokesman for the National Republican Senatorial Committee.

Still, Clinton's comments came on a day jittery House Republicans huddled to discuss ways to address growing anger on the issue.

The oil and gas industry - which gave four times as much to Republicans as Democrats in 2004 - is expected to post a record $28-billion profit for the third quarter, analysts have said.

The temporary oil profits fee proposed by Clinton would be collected on "unanticipated" windfalls, like the profits resulting from price hikes following the hurricanes, Clinton said.

The money would be used to develop wind turbines, solar power and hybrid cars, and to increase funding for programs to assist low-income Americans with winter heating costs, she said.

So, according to Hillary, our energy crisis is all Cheney's fault. Strange, however, that it was President Bush who signed the 2005 energy bill that Congress sent him -- the energy bill for which Senator Hillary voted "yea." So just who is setting energy policy?

Update: I forgot to add that Cheney's supposedly secret task force was meaningless. Regardless of what secret policies and agreements the moonbats think came from it, it didn't and could never free oil companies from market forces. However, most Americans seem to believe the reverse, and completely erroneously: that oil companies should set "fair" prices, regardless of market conditions. On the contrary, the globally high demand for petroleum and gasoline (I separate them because they have their own supply shocks) means that their producers and arbitrageurs are especially subject to market forces.

And the oil industry gave four times as much to Republicans as it did to Democrats. Big deal -- what's the ratio with lawyers? According to opensecrets.org, for the 2004 campaigns the entire energy industry donated over $39 million to Republicans, and just under $13 million to Democrats (so a 3:1 ratio for the entire industry). But, again for the 2004 campaigns, lawyers and law firms donated three times as much to Democrats as they did Republicans, and in much larger numbers: $135 million to $45 million. In fact, this "New York Times on the Web" article from March 2000 talks about law firms donating money in the hope of preventing then-Gov. George W. Bush from being elected, because he was a direct threat to their bread-and-butter.

Let's be fair: both parties get donations from different industries and lobbying groups, so it's hypocritical for a liberal rag to point fingers at just Republicans. However, I'll say again that the problem is not with the special interests. It's that our federal government has assumed so much unconstitutional power that it sustains the special interest groups -- the plunderers perverting the law.