I've spent enough time driving in congested DC, Chicago, Silicon Valley, and Houston highways to know what the reaction would be if, because of a fatal car accident, Obama decided to shut down the highway system until we figured out the precise reason why the car accident occurred, the highway in question remains suspect. The fact of the matter is that the vast majority of car owners and passengers travel the same highways without ever being in a catastrophic accident. Obama's 6-month moratorium on offshore drilling is political, arbitrary, and counterproductive given a fragile economy; he admitted tonight none of his domestic and international experts can ascertain why it happened... What makes him think he will have an answer in 6 months? Why not 6 days or 6 years?
It would be one thing if the Deepwater Horizon was the first such project, but (just to throw out a possible hypothesis) what's to say that the issues experienced by the rig weren't situation-specific, e.g., drilling in the wrong place at the wrong time? For instance, consider New Orleans' levees: they survived a number of storms over the years, but Hurricane Katrina overwhelmed them. Sure, the Democrats are going to scapegoat the cronyism of regulators, but it is highly unlikely a robust regulatory authority would have been able to anticipate the Deepwater Horizon. It's the same thing they did, insisting that Bush underestimated a vague threat weeks before 9/11. The very same intelligence agencies which sincerely believed Saddam Hussein had weapons of mass destruction.
If I hear Obama blast the allegedly corrupt MMS under the Interior Department one more time, I'm going to lose my patience with him. He is the king of cronyism, meeting with special-interest groups (providers, pharmaceuticals, etc.) during health care deformation, showering lucrative subsidies at pet alternative energy vendors, pursuing lower-standing union interests over bondholders during the auto bankruptcies, etc. He's got lots of excuses for Salazar, the Interior Secretary, not having enough time to reform the department and mischaracterizing the Bush years as deregulators run amuck; this is a smear, presented as usual by a disingenuous President whom essentially begs the question on a systematic basis.
I am sick and tired for his constantly raising his team of experts, his Nobel Prize-winning Secretary of Energy, etc; yes, indeed--look at his cabinet. Including the President and his professional politician Vice President he has fewer business or economic leaders in his cabinet than almost any other recent administration--and this was going into the job after the economic tsunami. He knew going into the job that the weak economy was job #1; and how does he prioritize that? His top priority has not been the economy but trying to run up the score with almost unprecedented majorities in both Houses of Congress, realizing his hand will be weakened in the next session of Congress.
Obama called for essentially taking over BP's claims processing. If I was BP, I would say, no way. Trust the same administration that was cutting stimulus checks for dead people to spend BP's money? Yeah, right. An "independent" authority. Are you kidding me? BP may end up giving in to Obama's outrageous demands because it is in a precarious position, but BP has already streamlined claims processing. Obama is simply trying to exploit the situation politically, so he can tell voters, "Look, BP wasn't getting checks out in time, and I took charge of the problem" or some other similarly ludicrous, self-serving nonsense. He's also implying raising the statutory limit on damages--but this is unconstitutional. You cannot pass a law targeted essentially at BP after the fact of the spill. Now I think simply from a public relations standpoint, BP will not limit its payments to the statutory cap, but all the insufficient statutory cap shows to me, once again, is yet another failure of Big Government.
But in fact, Obama as usual lets his audience assume that oil companies are essentially operating in the Wild West, like all they have to do is send an application for drilling on a postcard. When I was making a living as a computer programmer/analyst in Houston, my employers' clients were principally energy companies, so I know something about the industry. More than 50 days after the tragedy, oil is still leaking--despite the input of Obama's Nobel Prize winning Energy Secretary and the best and brightest scientists and engineers. The fact is--we have a convoluted federal government, filled with redundancies and turf battles, inefficient business processes, excessive staffing, obsolete and irrelevant (not anticipating advances in science and technology) and headed by bureaucrats in over their heads.
Obama named yet another commission to study restoration of the Gulf--at BP's expense, of course. And as for progressives arguing about BP's unfunded liabilities? Are you kidding me? Exactly what is this Democratic Ponzi scheme of social security and Medicare all about? (Glenn Beck cites a figure of over $100T.) You know, Obama, why don't you figure out how to cut $1.5T out of your budget and shore up social security and Medicare instead of being distracted by health care for the uninsured and climate change--not exactly intuitively obvious first priorities on anyone else's agenda?
This speech really didn't break any new ground; we knew he would try to use the spill to hype his green energy special interests and dubious tax-and-trade climate change legislation. What we did NOT hear in Obama's speech was an explanation for his administration's analysis paralysis, belatedly responding to Jindal's repeated requests for sand barrier island (that's right: a Republican governor is more concerned about wetlands than Obama, the darling of the environmentalist movement)--how this is NOT a Katrina-like moment. What we did NOT hear was an explanation for the rebuffing of offers from other (European) countries' offers of help the first week of the process. What we did not hear was how long it took Obama to anticipate claims processing issues weeks after the accident in a challenging economic environment. Obama did his usual Bush and BP bashing, but he himself once again failed to take real responsibility for his administration's inadequate response to the incident. There is more to leadership than to be seen in White House
The Democrats' Idea of Recycling: Repackaging Bad Ideas Like Price Controls: Thumbs Down
In a more recent gig in Alexandria, I worked with an Indian Oracle DBA whom liked to go to a small convenience store immediately adjacent to our building across from the King Road train station. He liked to take work breaks to grab a cup of coffee at the store. Frequently he would find himself without cash, but the owner would refuse to take his credit or debit card, insisting a minimum $5 purchase for using the credit card. So we often would take turns paying for each other's coffee, and he would also grab an unplanned pastry or other snack to meet the owner's transaction minimum. I would remind him that the store owner was violating card issuer policies, but he didn't want to pursue the issue.
Dick Durbin (D-IL), one of the Senate leaders, has decided debit card fees, typically 1 to 2%, are excessive and wants to give the Fed authority to cap the fees. (There are additional miscellaneous policy changes Durbin's amendment makes, including minimum purchase limits, and allowing merchants the ability to post a cash discount price as the normal price (i.e., if you are using a card, a fee would be added to the purchase price). ) The problem is--these fees are established by the banks, not Visa/MasterCard, and there are costs for that service (including the card issuer fee for using their electronic payment system). The markups on these costs may be used to subsidize other incentives, such as free checking and card reward programs.
But the obvious point is--price controls don't work. You would think Durbin learned something from, for example, the 1970's. It's like trying to squeeze a balloon. Customers have other choices, and current fees represent an equilibrium. If you cap fees below the market price, the banks have to look at cutting costs. For example, certain customers would no longer be profitable, and subsidized services might be cut. In addition, new policy changes may discourage transactions (particularly more discretionary purchases, versus, say, groceries), affecting coverage of bank overhead (i.e., costs are spread over a smaller number of transactions or customers).
This is yet another case of progressives trying to fix something that's not broken and making things worse.
Political Cartoon
Glenn McCoy is mentioning something I criticized in yesterday's post: the idea that the reason we're resorting to offshore drilling is because on-shore (e.g., oil shale) oil exploration is largely tied up in environmentalist red tape. I've discussed in multiple posts the "lost quarter" skit, i.e., you need to drill for oil where the oil is: there's a reason why China, Brazil, and other countries are drilling offshore. We are not talking about the first or the only deepwater rig--and McCoy's cartoon tacitly suggests there aren't challenges to land-based drilling as well. The point is, we need BOTH land-based and offshore oil drilling; we are having to import about three-quarters of the oil we consume. Obama and others are correct to note that the dependency on foreign-produced oil is a natural/economic security risk; however, Obama sets unrealistic expectations regarding how fast we can cut dependence on oil within the near-term future, given the fact of suburbia and long commutes, and roughly a quarter billion cars, most of them running at or below target miles per gallon and many gas-guzzlers owned by lower-income people whom can't find an affordable hybrid solution, Obama needs to face reality, and he has done little other than heavily promote expensive green technology. One thing is indisputable: our cumulative trade deficit is unsustainable. We can't afford to starve our economy of the energy it needs to sustain growth. We may not be able to quadruple our oil production, but what we conserve may be more than made up by drop-offs in domestic production. Obama needs to lead for today, not for some utopia years off. Is Obama ready to assume the price of telling ordinary Americans they can no longer live in their own house in suburbia or drive the car they drive? Who's going to buy the house?
Quote of the Day
I like a person who knows his own mind and sticks to it; who sees at once what, in given circumstances, is to be done, and does it.
William Hazlitt
Musical Interlude: Chart Hits of 1965 The Stones and the British Invasion, the Righteous Brothers, the Beach Boys, Bob Dylan, and more...
Petula Clark, "Downtown" one of my personal all-time favorites, great song, vocals, video, and I love the brass arrangement
The Righteous Brothers, "You've Lost That Loving Feeling"
The Temptations, "My Girl"
The Rolling Stones, "(Can't Get No) Satisfaction"
