Archive for June, 2010

Capitol Confidential

States Illogically Looking to Cigarette Taxes as Deficit Panacea

by Capitol Confidential

Across the country, states big and small are facing significant budget gaps.  In California, the worst case by far, candidates for state office are debating how to close a $19 billion budget deficit.  In Florida, meanwhile, another multi-billion dollar budget hole is on the cards, and looks set to grow with oil drilling off the Florida coast now off the table.  Still other states are facing similar situations, if on a less disastrous scale.  While many serving in statehouses nationwide will advocate for spending cuts, as opposed to tax increases, in some states, tax hikes are already being put on the table, with so-called “sin taxes” demonstrating renewed appeal.

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Washington State recently increased taxes on beer and cigarettes in an effort to stop its own fiscal bleeding (though left-leaning figures in the state have also been arguing for a state income tax).

In Illinois, a proposal to increase cigarette taxes that went nowhere last year has now been resuscitated.

In Florida, where ongoing budget woes are anticipated, concern exists that legislators could jack up cigarette taxes again.  Last year, the State Senate—including its Republican members, led by Senate President Jeff Atwater and budget committee chief J.D. Alexander—unanimously voted to increase cigarette taxes by $1 a pack.  The House ultimately played ball, too, and Gov. Charlie Crist gave a thumbs up to the tax hike, which was expected to bring in anything from $700 million to $1 billion.

In New York, where cigarettes are already extensively taxed and can sell for as much as $9 per pack, further increases could be on the agenda, too.

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Anita MonCrief

Organizing for America and the DNC: ACORN 2.0

by Anita MonCrief

If elections were like football games, this would be your two minute warning.  All of the passion, energy and renewed interest in politics that propelled the tea party movement of 2009 opens the door to a new level of involvement. As patriot groups around the country prepare for the November 2010 elections, a quiet force has been building behind the scenes.

Investigative reporter Carol Greenberg’s work inside Obama’s Organizing for America has already helped expose the OFA’s connection to ACORN and its network of top Democrat party insiders. Greenberg’s latest article explains the OFA plan to deploy rapid response teams to Ohio ahead of the elections.

Any liberal discussion of Ohio includes the sentiment that “Ohio is ground zero for the left.” Long a playground for groups like ACORN, they conducted voter experiments, filed lawsuits against the state and their voter fraud shenanigans led to a civil RICO suit brought by the Buckeye Institute. ACORN’s settlement of the case required that it surrender its business license in the state.

Unfortunately for conservatives, the awareness of ACORN’s network of organizations and mob like behavior come at a time when he same political workeasily be done by Obama’s permanent campaign. A campaign that was absorbed into the Democratic National Committee after it ceased being Obama for America.

Obama’s ACORN cronies designed a system that could be substantial from any number of leftist organizations, including the DNC:

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Thomas Del Beccaro

Obama’s Stunning Achievement

by Thomas Del Beccaro

The United States’ economic troubles are mounting and already prodigious.  While it’s true that Obama inherited a mess – created by government – he has made our economic problems progressively (pun intended) worse.  Amidst that failure, however, Obama has accomplished something that is simply hard to believe.

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Before I get to that stunning achievement, it worthy to consider just how bad the employment picture really is.  Since the Great Depression, unemployment has reached this neighborhood of 10%, i.e. nearly double the historic average, only one other time.  That was during the early 1980’s.  That unemployment was brought on by the combined bad economic (read: “political”) decisions of Presidents Johnson, Nixon, Ford and Carter.  All combined, they produced high unemployment and high inflation in addition to new terminology – stagflation.  In order to wring inflation out of the system, President Reagan’s economic remedy eventually produced a record 92 months of growth but started with unemployment above 10%.  In fact, unemployment was above 9% for 18 months before steadily dropping to 5.3% at the end of Reagan’s two terms.

When Obama got his so-called stimulus package (read: record pork-barrel bill) passed, he promised that unemployment would not rise above 8%.  It has now been above 8% for 15 months – it has been above 9% for 12 months.  Obama openly admits that unemployment will be a problem for a long time to come.  He could not be more right considering that he is proposing a series of huge tax hikes, i.e. the expiration of the Bush tax cuts along with his cap and trade energy plan which is more rightly named “cap and tax.” Beyond that, Obama’s health care legislation has imposed huge regulatory costs on American business – costs which come at the expense of American jobs.  Those are some of the reasons there is so much talk of the possibility of a double-dip recession. Quite frankly, an unemployment rate above 8%, if not 9%, for another 24 months is a real possibility.

Unemployment that is nearly double the national average, and at a 30 year high with no end in sight, is incredibly bad and of deep concern to many Americans.

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Capitol Confidential

British Petroleum and Walmart Want You to Pay their Bills

by Capitol Confidential

When Washington opened the doors to taxpayer bailouts of Wall Street firms they set off a modern day gold rush for lobbyists, corporations and unions looking to get their piece of the pie. The car companies lined up for their handout. Big labor and their failed underfunded pensions are angling for bailouts. And now major retailers like Walmart and oil companies like British Petroleum are lobbying for their government created wealth transfer payment. Welcome to the world of the Durbin Amendment to the Financial Reform bill — a new bailout attached to a giant bailout bill.

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A coalition of lobbyists for oil and gas companies, convenience stores, giant retailers and petroleum marketers have conned Senators into supporting a provision that is tantamount to a bailout for perfectly profitable multi-billion corporations.

There was a time when a business was looking to cut costs, they would tighten their belt and make changes within their company to ensure profitability. No longer. Now companies hire Washington lobbyists who push schemes to shift costs from the company to other companies, or worse yet, the consumer. That is exactly what the Durbin amendment to the Financial Reform bill is all about.

When giant corporations like BP and Walmart accept payment via credit cards, they pay a fee for processing services. The Durbin amendment empowers the Fed to cap the cost of those services to these industry giants. Proponents of the so-called “swipe fee” amendment have cynically argued that this amendment would somehow benefit consumers. But in reality, the Durbin amendment is a lobbyist-written, government imposed price control program that will shift the cost of accepting credit cards from mega corporations to consumers.

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Of Thee I Sing  1776

The Oil Leak and the Blame Game: Déjà vu All Over Again

by Of Thee I Sing 1776

We are almost seven weeks and counting into the massive oil spill wreaking havoc in the Gulf of Mexico and causing an unprecedented ecological disaster along the Louisiana coast.  Neither the owners of the well, BP America, or their contractual partners, rig owner, Transocean LTD or oil servicer, Halliburton Co., have yet been able to stop the flow, and so the duration and total damages, measured either in economic or environmental terms are yet to be known.

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It should be obvious by now that getting control of the leak and, even after six weeks, limiting the disaster should be the only short-term objective of the President of the United States, federal regulators and Congress.  Finding the root cause to prevent a reoccurrence, assigning blame and allocating liability for damages can wait until all the facts are in.  As might be expected, however, all of the responsible parties have a different focus.

As far as the oil company executives are concerned, they feed us a daily dose of technological drivel, public relations statements and finger pointing.  At Congressional hearings each of the three companies blamed one another.  The truth is, since the accident occurred at a depth of almost one mile below the ocean’s surface, none of them know for sure what went wrong.  And how could they?  In an aviation disaster weeks and months go by before there is something akin to a conclusive finding, even though investigators from the airline involved and air traffic regulators are usually aided by either one or more of a black box (which offers a treasure trove of information), survivor accounts, witnesses, or air traffic recordings.  Moreover, with the nation’s contingency fee trial lawyers on the sidelines taking in every word of testimony for the soon to come class-action lawsuits and with the president publicly demanding, ex post facto, to raise the legal liability limit for the well’s owners and operators, it is a wonder they “voluntarily” testified at all.

With regard to the gulf oil spill we have no physical proof yet of what caused a cascade of problems, so why are almost all our elected officials focused on allocating blame.  Clearly, it is not for the purpose of learning from this disaster to prevent a reoccurrence.  Instead, as is almost invariably the case in Washington, a huge and important fact finding investigation is hijacked to score political points.

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Publius

Monday Open Thread: Midway Edition

by Publius

Today, in 1942, the Battle of Midway ended. It was one of the most daring–and desperate–naval engagements in history. The US victory there marked the beginning of the end for the Japanese Empire.

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Jim Hoft

Barack Obama Ignores D-Day Anniversary – Goes to Theatre Party

by Jim Hoft

On June 6, 1944, the D-Day invasion of Europe took place during World War II as Allied forces stormed the beaches of Normandy, France. America lost 2,499 of its finest men that day.

(Enterprise News)

It’s too bad Barack Obama missed the anniversary today.

The White House website has nothing posted today on the 66th Anniversary of the D-Day landing.

The president had other things on his mind.

He was attending his second party this week, tonight at the Ford Theatre.

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Christopher C. Horner

Census Reminder: Most Obama Jobs are Temporary Jobs

by Christopher C. Horner

The item by Publius, “Census Workers Blow Whistle on Hiring Fraud“, actually reminds us of one of the Obama administration’s related scams, the “green jobs” industry. That is something that sounds a little weedy but is really quite simple, a failure to homogenize the data. This practice is employed in order to make soaring claims of jobs “created” from taking taxpayer money and mandating something politically desired. The truth is that the jobs (briefly) created are a fraction of the number claimed.

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Consider what we have uncovered in the latter, which I detail in Power Grab: How Obama’s Green Policies Will Steal Your Freedom and Bankrupt America in a discussion that reminds us as well how “green jobs” even more closely resemble census (and of course “stimulus”) jobs in that they are temporary jobs, “bubble” jobs existing only so long as the government (taxpayer) transfer of wealth continues:

“But the most glaring similarity [between 'green jobs' and 'stimulus jobs'], and indeed feature of ‘green jobs’ is that they are temporary. Before you find comfort in this, recall that the unions don’t stand for such notions, and the enactment of green jobs schemes ensures further infusions of taxpayer money into the bubble to make the make-work permanent.

We saw how some jobs supposedly created under the ’stimulus’ actually reflected funding of a position that lasted, in some cases, only a week. The reason you hear of enormous numbers of projected jobs is because those pushing them do not ‘homogenize the data.’ Homogenizing, or harmonizing, the claimed green jobs figures annualizes them, translating the thousands of days-, weeks- or months-long gigs (i.e., ‘jobs created’) into the equivalent of fulltime jobs. So a sexy claim of half a million jobs, which are sixty-day installation contracts, is homogenized at around 75,000 ‘jobs created.’

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Lawrence Meyers

Book Review: Broke U.S.A.

by Lawrence Meyers

Gary Rivlin’s new book Broke U.S.A. does a rather thorough job of chronicling the rise of the subprime lending industry in this country.  The positive attributes of his tome include excellent detail and insight into how subprime lending operates in this country, very concise and descriptive prose, and some intriguing profiles of the lenders and activists involved.  To the book’s credit, Mr. Rivlin describes blatantly deceptive and corrupt lending practices in the early days of consumer finance.  He rightly singles out both employees and management of Household Finance and Fleet Financial for such behavior, as well as Associates Bank and NationsBank.

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On the down side, however, Mr. Rivlin’s bias against subprime lenders is apparent.  His profiles of activists are more comprehensive than the lenders, and they are portrayed as crusaders against an industry designed to “make money off the poor”.  He fails to mention the more unflattering angles on certain activists.  Further, while his research delves deeper than just about any other media story, he either deliberately omits damaging truths about the activist community, or failed to research thoroughly enough.  Nor does he ever once mention the litany of non-industry-funded studies that support the cash advance industry.

There are several glaring omissions or distortions in Mr. Rivlin’s book that speak to his unfortunate bias.  The first, and most significant, is lionizing the founder of the Center for Responsible Lending, Martin Eakes.  Mr. Rivlin came up short in his research about Mr. Eakes.  In addition, he largely gives Mr. Eakes a pass for his role in the subprime mortgage meltdown.  Mr. Eakes pioneered the product and created a secondary market for these mortgages.  There’s no getting around that, try as Mr. Rivlin will.

Second, Mr. Rivlin gives borrowers a complete pass on their responsibility in every transaction.  While some of the people who were cheated admit to their own mistakes, nowhere in the book does Mr. Rivlin ever lay out a very simple argument: that borrowers constitute half the transaction, and are therefore half of any problems that exist within the industry.  To that end, Mr. Rivlin plays the typical card of a mainstream media journalist — harping on the sob stories of subprime borrowers, but not providing any compelling stories of how borrowers were helped by subprime lenders.  Anyone reading his book would come away believing that every lender mentioned was only out to cheat customers.

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Kerry J. Byrne

D-Day: When Dems and the N.Y. Times Prayed for America

by Kerry J. Byrne

I was in Normandy in June 2004 for the 60th anniversary of D-Day when I picked up a souvenir front page of the New York Times from June 7, 1944, which reported on the invasion of the day before.

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I keep a copy of it in my office (and the PDF on my website) because it’s a fascinating and illuminating piece of American history.

One, it provides a clear window into the role that Christianity and Judeo-Christian values played in American culture on that “Day of Days.” Two, it proves, in no uncertain terms, how radically the New York Times, the Democrats and their kindred political spirits have shifted to the left in the 66 years since our nation’s finest hour.

The Times’ lead story in the left column of the June 7, 1944 edition was headlined “Country in Prayer.” Reporter Lawrence Resner wrote: “Led by President Roosevelt, the entire country joined in solemn prayer yesterday for the success of the United Nations armies of liberation.”

We learn in the piece that church bells rang across the land, including in Boston’s Old North Church, and that Americans flooded their houses of worship. New York governor Thomas Dewey attended services at St. Peter’s Episcopal Church in Albany, while in Manhattan, some 50,000 people jammed Madison Square for a prayer led by Mayor Fiorello La Guardia.

It pays to remember that D-Day was a Tuesday.

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Chriss W. Street

America’s Deficit Spending Addiction

by Chriss W. Street

Like a junkie that keeps increasing his fix to get the same high, the U.S. Government deficit spending addiction has expanded by an all-time record 9.66% compound annual rate of the growth over the last thirty years.  Even during the tumultuous three decades that included the Great Depression, World War II and the Cold War, the U.S. deficit only expanded at an 8.51% compounded growth rate.  Fortunately, the American people are increasingly convinced that feeding this addiction not only does not work; it might be dangerous.

Decade

Debt (billions)

% of GDP

Compound % Increase

1930

16.2

Base Year

Base Year

1940

50.6

52.4

12%

1950

256.8

94.0

17%

1960

290.5

56.0

2%

1970

380.9

37.6

3%

1980

909.0

33.4

9%

1990

3,206.3

55.9

13%

2000

5,628.7

58.0

16%

2010 (est.)

14,456.3

98.1

19%

U.S. Federal Reserve Chairman, Ben Bernanke, earned the title “Helicopter Ben” from critics who latched onto his quote; “The U.S. government has a technology, called a printing press that allows it to produce as many U.S. dollars as it wishes at no cost.”  Mr. Bernanke went on to state that the Federal Government could always rent helicopters and fly over cities dumping out cash to get the economy moving.  This is the equivalent of the “pusher man” who gives out free samples of narcotics expecting that the users get hooked.

From the outset of the financial crisis, the U.S. Federal Government has been flying its helicopters over America and sprinkling huge amounts of money on programs such as, “Making Homes Affordable”, “Cash for Clunkers”, unemployment benefit extensions, infrastructure boondoggles and various Wall Street crony bailouts.  This spending and guarantee orgy during 2009 resulted in a U.S. budget deficit of $2.5 trillion and only generated an incremental increase in GDP of $200 million.  Only government can avoid going to prison for involuntarily taking a dollar from a person, squandering 92 cents and giving a nickel and three pennies back.

Passage of the $787 billion American Recovery and Reinvestment Act (ARRA) was trumpeted as the silver bullet to save the economy and create 3.5 million jobs.  The Administration estimated that although each job would cost taxpayers $92,136, the resulting increase in gross domestic product of $105,000 would more than pay for the cost.  But a referral to “Recovery.Com”, the official U.S. government web site regarding ARRA “funded jobs”, states that only 681,825 jobs have been funded so far and at a cost of $117,933 each.  Consequently the US Government actually spent $25,797 in overhead cost for a make work job.  Further more, given that the average American working in the private sector makes only $36,400 per year, it would take the equivalent of 3.24 full-time workers taxed at 100% of their annual income to pay for one make work job.

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Publius

Sunday Open Thread: D-Day Edition

by Publius

Today, in 1944, the Allies stormed the beaches in Normandy. It was a very near-run affair. Enough said. Please pause for a moment today to remember.

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Steven Greenhut

Unions Battle Reform in GOP Stronghold

by Steven Greenhut

“Greed is a bottomless pit which exhausts the person in an endless effort to satisfy the need without ever reaching satisfaction,” said German psychologist Erich Fromm. Whatever greed does to one’s psyche, it does even worse things to public budgets. California, sinking amidst a structural $19 billion deficit and facing as much as one-half-trillion-dollars in pension debt, is paying the price for years of legislators giving away the store to public employee unions.

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Yet even as unlikely sources (former Assembly Speaker Willie Brown, Treasurer Bill Lockyer and California Public Employees’ Retirement System chief actuary Ron Seeling) recognize the grave threat outrageous pension deals pose to the state’s long-term fiscal health, the state’s unions and Democratic leaders continue to operate as if there is no problem. The public seems increasingly agitated by the injustice of a situation that requires private sector workers to work late into life to pay the higher taxes needed so that public sector workers can retire in their early 50s with six-figure, cost-of-living-adjusted deals. But to the politicians, the unions still rule.

In my old haunts of Orange County, Calif., a particularly nasty race for the Board of Supervisors has been unfolding in the past month. On June 8, voters in that heavily Republican and generally anti-union county will fill the slot of a supervisor who has since been elected to the state Assembly.

Back in January, party leader Scott Baugh threw down the gauntlet after watching one Republican after another sell out to the state’s unions. In what has been referred to as the Baugh Manifesto, Baugh slammed Republicans for their role in expanding debt. He promised to use the party to hold Republicans accountable. He called for the party to do more than just endorse those with an “R” after their name. He made two specific demarcations: No Republican will get party support without backing a now-dead Paycheck Protection Initiative, which limits the ability of unions to use dues for political purposes. And no Republican will get party support “who receives contributions from public employee unions.”

It was tough stuff and the party has stuck to these demands.

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Andrew J. Coulson

The U.S. Economy Needs Fewer Public School Jobs, Not More

by Andrew J. Coulson

UPDATE: Cost figures for the period 1970 through 1980 in the original version of chart 2, below, were inaccurate, and have been corrected in the revised version of the chart that appears below. This change does not affect the text of the article.

***

Teachers unions, the Obama administration, and most Democrats in Congress want to spend another $23 billion that we don’t have to shore up public school employment. If we don’t go along, they tell us, it’ll be a “catastrophe” for American education. With fewer teachers our kids will supposedly learn less, further crippling our already wounded economy.

They couldn’t be more wrong.

Over the past forty years, public school employment has risen 10 times faster than enrollment (see chart). There are only 9 percent more students today, but nearly twice as many public school employees. To prove that rolling back this relentless hiring spree by a few years would hurt student achievement, you’d have to show that all those new employees raised achievement in the first place. That would be hard to do… because it never happened.

Coulson Cato PS Enroll Employ 2010 s2

Student achievement at the end of high school has been flat for as long as we’ve been keeping track—all the way back to 1970. But we did get something in return for all that hiring: a great, big, fat, BILL.

If you graduated from high school in 1980, your entire k-12 education cost your fellow taxpayers about $75,000, in 2009 dollars. But the graduating class of 2009 had roughly twice that amount lavished on their public school careers. The extra $75,000 we’re now spending has done wonders for public school employee union membership, dues revenue, and political clout. It’s done a whole lotta nothin’ for student learning (see chart).

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Bob McCarty

Congressman Phil Hare Fails With Vets and Threats

by Bob McCarty

Earlier this week, I reported here and here about an incident that took place between Ken Moffett and U.S. Rep. Phil Hare, a two-term Democrat from Rock Island, Ill., who is running for re-election in Illinois’ 17th Congressional District.

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It seems Congressman Hare has been selling himself on the campaign trail as a tried-and-true military veteran when, in fact, he does not meet the qualifications for “veteran status” (i.e., he is not a person who served in the active military, naval, or air service who was discharged or released therefrom under conditions other than dishonorable).

When Moffett, a veteran from Moline, Ill., asked Hare if he was going to stop telling people that he was a veteran, a heated discussion ensued. It was toward the end of that discussion, Moffett contends, that he heard Hare instruct one of his aides to follow Moffett to his car and get his license plate number so he could find out who he was.

While complete details of the exchange are outlined in a June 2 letter Moffett sent to Blake Chisam, chief counsel and staff director of the House Committee on Standards of Official Conduct, curiosity got the best of me, and I decided to launch an inquiry into what the law says about Congressman Hare’s alleged actions.

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Rep. Michele Bachmann (R-MN)

Helen Needs To Go!

by Rep. Michele Bachmann (R-MN)

Once again the liberal media has shown its true colors! The White House media dinosaur, also known as Helen Thomas has called on Jews to leave Israel and move back to Poland and Germany. This anti-Semitic sentiment has no place in our public discourse. I call upon her employer, Heart Corporation to dismiss her at once! The White House needs to revoke her press credentials immediately.

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Gregg Opelka

Runaway Census Cost Is Frightening Preview of True Obamacare Price Tag

by Gregg Opelka

Friday’s May jobs figure is vastly skewed because of the hundreds of thousands of temporary census employees—approximately 411,000—hired to perform the decennial enumeration of the U.S. population and gather concomitant vital information. In the coming days, economists will be assessing the distorting effect the addition of these temporary public sector workers has on the restoration or creation of employment and the overall strength or weakness of the economic recovery.

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A few non-economists like myself, however, will be asking a very different question.

Namely—what can the history of the cost of performing the once-a-decade head count reveal about how government-run health care costs will behave? Will Obamacare be the exception to the runaway cost rule? Let’s use the census as a yardstick.

To keep this analysis at its most simple, let us compare the rate at which the population increased with the rate at which the cost of counting it (the decennial census) increased. That sounds sensical enough.

According to Appendix A-1 of Jason Gauthier’s 2002 study entitled Measuring America: The Decennial Censuses from 1790 to 2000, the cost to perform the census has risen over the decades at a rate staggeringly higher than the rate of the growth of the population itself. What does this mean? Simply put, that bureaucracy is obese. Morbidly obese.

Whatever the opposite of efficiency is, the cost of taking the census epitomizes it.

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Publius

Saturday Open Thread: Tank Man Edition

by Publius

Today, in 1989, a lone dissident temporarily stopped a line of tanks at Beijing’s Tiananmen Square. We do not know his fate. And, as far as we know, few ‘human rights’ organizations or Western Media ever inquired. Still, it is an image that will linger as long humans long to be free.

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Christopher C. Horner

Obama’s Gulf of Energy Tax Illogic

by Christopher C. Horner

For those of you who watched “Hannity” on Fox News last night and wondered why an “eco-entrepreneur” was left to address President Obama’s claim that the Gulf spill just means we need his cap-n-trade scheme, with no other guest, it was because a storm here in Central Virginia had me all made up pretty and sitting in the chair with the satellite connections fried out.

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That was global warming, of course. Or George Bush.

But here is essentially the rejoinder that you would have heard:

Obama’s argument made in Pittsburgh goes that, with BP having been reckless and the administration incompetent…if you carry the 1 and tally it up it means a massive new tax increase on all of us to make energy more expensive.

This just makes sense in the land of never letting a crisis go to waste.

Which should remind us how to know there’s no good reason for an agenda: when the reason for the agenda, or rather the excuse, keeps changing. Now the global warming tax, which was then a climate change tax, then somehow a job-creation energy tax is now an energy tax to show how engaged and angry President Obama is at BP’s oil spill.

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The New Ledger

The Politics of Unemployment

by The New Ledger

In this week’s edition of of Coffee and Markets, featuring The New Ledger’s Francis Cianfrocca, we’re talking about the latest unemployment numbers, the coming political conflict across class and generation, and why the iPad won’t save old media. We’re brought to you as always by Andrew Breitbart’s BigGovernment.com and LibertyPundits.com.

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You can subscribe to the podcast by following the links above, and if you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Yousefzadeh: A Disconnect on Unemployment Numbers
Tracinski: The European Welfare State
Chris Christie: Best Governor in America?
London Times: Generational Warfare
Paul Krugman: About That Conventional Wisdom
TNL: Why the iPad Won’t Save Newspapers