When You Are Good To Daddy

When he entered politics to run for the Illinois Senate, Barack Obama explained to the local Chicago Reader newspaper during a class he was teaching to ACORN that he viewed politics as an extension of his community organizing. A large part of Obama’s community organizing was sitting on the boards of foundations with fellow radicals and shoveling hundreds of thousands of dollars raised from the guilty rich to local socialist and communist organizations. In turn, those organizations provided money and ground troops for Obama’s elections campaigns which took him to the White House.

Now President Obama is still taking care of his old pals – this time with slush funds tucked away inside the enormous Obamacare legislation which Congress did not read before enacting. In the first distribution from a $4 billion dollar fund to set up Obamacare co-ops across the country, Obama has “loaned” $700 million to old cronies like Sarah Horowitz, whose Freelancers Insurance Company is considered the worst run insurer in New York, and Wisconsin’ Common Ground Healthcare Cooperative, a creation of Saul Alinsky’s old socialist organizing group Industrial Areas Foundation.

The entire story is too lengthy for this post. Reading the linked articles above would be well worth your time.

As Queen Latifah explains in song during the film musical Chicago, when you are good to daddy, daddy will be good to you.

Tumbling An EPA Potempkin Village

Legend has it that Russian minister Grigory Potempkin erected fake villages along the route Empress Catharine was taking to the Crimea in 1787 to convince her highness that the area was actually developed. Since then, critics of government have used the term Potempkin villages to refer to government orders to create imaginary utopias.

One element of Barack Obama’s socialist “clean energy economy” program that I describe in my book Never Allow A Crisis To Go To Waste was the Environmental Protection Agency’s decree that gasoline refiners must use “cellulosic biofuels” made out of materials like grass under pain of paying hefty fines.

One not so small problem with the EPA order – cellulosic biofuels do not exist in commercial quantities nor are they likely to in the near future. This did not prevent EPA from levying the fines for failure to follow its decree, however.

This was too much even for the normally regulation friendly D.C. Circuit Court of Appeals. In American Petroleum Institute v. EPA, the court held that EPA cannot punish gasoline refiners for failing to buy government ordered products which are unavailable for purchase. Unfortunately, the court had no problem with EPA ordering refiners to sell exotic biofuels made from sugar cane and the like without any actual science that these fuels benefit air quality.

One step forward toward freedom, one step back.

Elections Have Consequences: The Oil Shale Edition

The United States possesses the greatest oil and gas reserves in the world. Our oil shale in Colorado, Utah and Wyoming alone has three to five times the oil of Saudi Arabia.

In his second debate with GOP challenger Mitt Romney, President Barack Obama denied the fact that he had reduced oil and gas permits on federal lands by 15% and claimed instead that he had increased oil and gas production in the United States. “Now, I want to build on that,” Obama said. “And that means, yes, we still continue to open up new areas for drilling.”

Barack Obama lied to the American people.

Just days after the President was safely reelected and no longer had to answer to the voters, the Obama Interior Department decreed a rule closing off commercial development of our oil shale reserves on 1.6 million acres of federal land.

Elections have consequences.

Freedom To Succeed

Fleeing socialist Hungary during the 1956 uprising against the Soviet occupation, Thomas Peterffy immigrated to the United States and went on to help develop the electronic trading of securities and found Interactive Brokers, an online discount brokerage firm. After spending the last four years watching Barack Obama’s policies lead to economic stagnation, Peterffy spent his own money on a self-narrated television ad warning the United States to stop following the path of socialism and return to its historical freedom to succeed:

Battery Socialism

Part of Barack Obama’s socialist “clean energy economy” program was to have government planners in his Auto Team and Department of Energy design and build an entirely new industry making battery cars. Channelling JFK’s call to land a man on the moon, President Obama promised: “With more research and incentives, we can break our dependence on oil with biofuels, and become the first country to have a million electric vehicles on the road by 2015.”

To achieve his dream, Obama borrowed and spent $2.4 billion to build factories just to produce the batteries for his new vehicles of the future. For some perspective on how much of our money was spent on battery factories, Chrylser’s estimated total market value is $7.5 billion.

The problem with socialism is that government industrial planners produce what they desire and not what the citizenry is willing to buy. Obama’s battery cars are so unpopular with Americans that our nationalized automakers almost have to give them away at substantial losses because these underperforming cars make no economic sense to buy.

Because “Government Motors” cannot sell it’s battery cars, the government’s subsidized battery manufacturing plants are increasingly going idle and the taxpayers stand to lose the $2.4 billion President Obama “invested” on their behalf.

The best laid plans of socialist governments…

You Will Buy This

In my book Never Allow A Crisis To Go To Waste, I discuss how German industrialist, Walther Rathenau, attempted to create a third way socialism called Zwangswirtshaft (controlled economy) where the government did not own the means of production, but rather used its regulatory, taxing and spending power to achieve the socialist goals of directing the economy to redistribute wealth. Under Zwangswirtshaft, the state would tell industry what to make and then eliminate competing goods to compel the citizens of Germany to buy the government directed goods and services.

Barack Obama’s “clean energy economy” and Obamacare policies are implementations of German Zwangswirtshaft socialism.

Obamacare directs the health insurance industry to issue policies designed by the Department of Health and Human Services and then requires you and I to buy these policies or pay a fine.

One of the elements of Obama’s “clean energy economy” is to promote the use of “renewable” ethanol based fuels. The promotion started with the government compelling the oil industry to produce the E10 blend of 10% ethanol and 90% gasoline, which the government subsidizes to make it cheaper than straight regular gasoline.

When American consumers in a free market declined to buy enough E10 to suit the Obama administration, the EPA compelled oil refineries to produce an E15 blend with 15% ethanol in it. When the bureaucracy realized that a 15% ethanol blend was so corrosive that only certain more expensive cars and trucks made after 2001 could run on the stuff and almost no other vehicles and appliances, the EPA like true commissars then decided to correct their mistake by imposing a regulation requiring you to buy a minimum of four gallons if you made a purchase of E15 fuel.

It is doubtful that American consumers will take too kindly to being ordered to buy more of a product they do not want. Sometimes the dogs just do not like the dog food.

Then next step will be for the Obama EPA to command us all to buy ethanol blends of gasoline like we are being commanded to buy Obamacare insurance policies. Unless we run the commissars out of Washington first, that is.

We Are Practically Giving Them Away!

Barack Obama’s nationalized automaker, General Motors, has been bragging of late that it is now selling thousands of the battery car the president directed them to produce – the Chevy Volt.

What “Government Motors” studiously avoids discussing is the massive $30,000 a vehicle loss it takes with the sale of each Volt in order to get this green Edsel off the lots. The Washington Times reports:

It costs $60,000 to $75,000 to build a Volt, including development, manufacturing and raw materials, estimates Sandy Munro, president of Munro & Associates, a Troy, Mich., a company that analyzes vehicle production expenses for automakers. Much of the cost comes from an expensive combination of two power systems — electric and gasoline. With a sticker price of $40,000, minus the $10,000 the company pays in incentives, GM gets roughly $30,000 for every Volt. So it could be losing at least $30,000 per car.

2/3 of the Volts reported as sold by “Government Motors” are actually rented out for a couple years under cut-rate leases subsidized by our tax money. Forbes magazine reports:

With additional subsidies from GM (that would be you and me), Chevrolet dealers in August were offering two-year Volt leases for as little as $250 down and $199/month…

The giveaway lease cars are initially bought by dealerships at cost, which Bob Lutz says is $37,000. Then they pocket an additional $7,500—the Volt subsidy that Obama proposes raising to $10,000—paid by you and me.

Two years later they get the car back. Given the ridiculous lease terms, there’s probably a pretty low limit on the free mileage, say, around 20,000. Now there’s a low-mileage used Volt out there that they can probably sell for $34,000 (a price lower than the average new one minus the subsidy) So each dealer makes a hefty $5,000 in lease fees, $7,500 in our money, and an unknown (lowball: $3,000) “incentive” from GM for the giveaway lease that’s matched by the lower price for the resale car. That’s $12,500 per car. Not a bad margin, and with good PR to boot.

Hell, they are practically giving cars away!

Of course, “Government Motor’s” current losses on the Volt do not even begin to account for the billions of dollars of our tax money the Obama administration has spent to develop battery cars in order to save gas and the planet. By one estimate, we taxpayers have paid between $3 and $7 per gallon saved by the president’s battery cars.

This is what happens when a socialist government operates an auto manufacturer using your tax money.

Rationing Socialism – Part II

Socialized health insurance always ends up imposing care rationing because offering care for below cost or “free” creates an artificially high demand the government cannot afford. In my book Never Allow A Crisis To Go To Waste, is discuss how Obamacare rations care to the elderly by imposing a cap on Medicare expenditures and then tasking an unelected board – the IPAB – to decide what the government will and will not pay for. After insurance premium inflation spiked from 2.5% in 2010 to 9% in 2011, the same folks that brought us Obamacare proposed to ration all health care in the United States:

Under the proposal, the major public and private players in each state would negotiate payment rates with service providers such as hospitals. The idea is to get away from paying for each individual test and procedure. Negotiated rates could be based on an entire course of treatment. Payments would have to fit within an overall budget that could grow no faster than the average rise in wages.

The spending limits would be enforced by an independent council, but crucial details need to be spelled out. In Massachusetts, for example, budget-busting providers will be required to file plans with the state laying out how they’ll amend their spendthrift ways.

The plan here is to have the government direct American health care like a giant HMO – paying providers a flat rate per patient and then depending on the providers to ration care to keep their own expenses under control. The difference between this proposed government HMO and a private HMO is that you could buy additional insurance in a free market, but cannot under a government global spending cap.

The Wages Of Socialism

One of the arguments for socialism and progressivism is that expanding government direction of the economy will lead to increased compensation for the working class. However, as the San Francisco Chronicle reports, Barack Obama’s experiment in socialism has led to an across the board loss of income:

American incomes declined more in the three-year expansion that started in June 2009 than during the longest recession since the Great Depression, according an analysis of U.S. Census Bureau data by Sentier Research LLC.

Median household income fell 4.8 percent on an inflation- adjusted basis since the recession ended in June 2009, more than the 2.6 percent drop during the 18-month contraction, the research firm’s Gordon Green and John Coder wrote in a report today. Household income is 7.2 percent below the December 2007 level, the former Census Bureau economic statisticians wrote.

“Almost every group is worse off than it was three years ago, and some groups had very large declines in income,” Green, who previously directed work on the Census Bureau’s income and poverty statistics program, said in a phone interview today. “We’re in an unprecedented period of economic stagnation.”

Not stagnation, which suggests treading water, but rather an unprecedented national decline.

Government Motors Slides Towards Bankruptcy

After plowing well over $60 billion in borrowed money into nationalizing General Motors and Chrysler, it appears that General Motors is failing under government management. In a recent Forbes article, Louis Woodhill started sounding the alarm:

> In order for “T. Boone” Obama to break even in his investment of our money, General Motors shares should be trading at $53 per share. Since the government sold part of its stake in GM at a substantial loss for $33 per share in 2010, the share price has fallen to just above $20.

> General Motors share of the United States auto market has fallen from 20% to 18% under Obama administration stewardship. The “Government Motors” flagship vehicle – the Chevy Volt – made no economic sense and was a complete market failure.

> Obama’s hand picked CEO for General Motors was one Dan Akerson, whose background was in finance and who did not have a single day experience in the auto industry. Ackerson has spent most of his time at GM firing and hiring executives and lecturing the workforce on the need for integrity.

The Obama nationalization of General Motors and Chrysler was an almost identical replay of the British Labour government nationalization of British Leyland in 1975. Like General Motors. British Leyland failed under government direction and conservative Prime Minister Margaret Thatcher ended up disbanding British Leyland to stop its drain on the treasury. Is a similar fate awaiting “Government Motors?”