Saturday, October 10, 2009

A Political Pick

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Honoraria: The world seems stunned that President Obama was chosen as this year's recipient of the Nobel Peace Prize. But given the worldview of the selection committee, this really should come as no surprise at all.

A rundown of recent winners indicates a trend. In 1990, Communist Mikhail Gorbachev was given the prize though Ronald Reagan had far more to do with the liberation of Eastern Europe and the collapse of the Soviet Union.

Two years later, the honor went to Rigoberta Menchu, a Guatemalan author whose writings turned out to be a fraud. That didn't faze the committee, however. What mattered was she was a leftist.

In 1994, Yasser Arafat, darling of global leftists, took the prize, though his idea of peace was Israel prostrate before radical Islam.

Jimmy Carter, who failed his country as president, won in 2002.

How a man who spent his career as a toady to tyrants won a "peace" prize befuddled us. It only made sense later when Gunnar Berge, the Norwegian committee chairman, admitted the choice of the left-leaning Carter was meant to tweak President Bush.

In 2004, Wangari Maathai, a Kenyan tree-planter, beat out Pope John Paul II, who was nominated for his lifelong opposition to communism. Bush and British Prime Minister Tony Blair were nominated that year as well.

In 2005, the prize went to U.N. head weapons inspector Mohamed ElBaradei. London Times editor Bronwen Maddox called it "a slap in the face for the United States," noting ElBaradei's International Atomic Energy Agency had "failed to detect covert nuclear programs in at least three countries — and failed to get diplomatic purchase on the problems when others have finally brought them to light. That does not amount to a contribution to world peace."

Al Gore didn't invent the Nobel Peace Prize, but he did share it in 2007 with the U.N.'s Intergovernmental Panel on Climate Change.

Neither has done anything to further peace. But both are accomplished at scaring a lot of people with their man-made global warming scam, a swindle that the political left is heavily invested in.

Rather than insult the U.S., the Nobel selection panel this time chose to manipulate American politics with its choice. In picking the U.S. president, it has made a preemptive strike on the 2012 presidential election. After all, how could American voters toss a Nobel Laureate from the White House after only one term?

We think the preening, leftist Nobel panel did a disservice to our president by giving him an award he knows he didn't deserve. But this isn't the first time they've gone off the rails. It's a sad thing to see a once-proud peace prize sullied by petty left-wing politics.

Tuesday, October 06, 2009

The Coming Reset in State Government: My fellow governors and I are likely facing a permanent reduction in tax revenues. By Mitch Daniels



State government finances are a wreck. The drop in tax receipts is the worst in a half century. Fewer than 10 states ended the last fiscal year with significant reserves, and three-fourths have deficits exceeding 10% of their budgets. Only an emergency infusion of printed federal funny money is keeping most state boats afloat right now.

Most governors I've talked to are so busy bailing that they haven't checked the long-range forecast. What the radar tells me is that we ain't seen nothin' yet. What we are being hit by isn't a tropical storm that will come and go, with sunshine soon to follow. It's much more likely that we're facing a near permanent reduction in state tax revenues that will require us to reduce the size and scope of our state governments. And the time to prepare for this new reality is already at hand.

The coming state government reset will be particularly wrenching after the happy binge that preceded this recession. During the last decade, states increased their spending by an average of 6% per year, gusting to 8% during 2007-08. Much of the government institutions built up in those years will now have to be dismantled.

For now, my state's situation is far better than most, but it won't stay that way if we fail to act in Indiana. At present, we are meeting our obligations, without raising taxes, and still have over $1 billion in reserve. But the dominant reality is that even assuming the official revenue projections are accurate (and they have been consistently too rosy for the past two years), the state of Indiana will have fewer dollars to work with in 2011 than it did in 2007. Most other states face similar or worse prospects.

And, unlike the aftermath of past recessions, odds are that revenues will take a long time to catch back up to their previous trend lines—if they ever do. Tax payments have fallen so far that it would require a rousing economic rally to restore them. This at a time when the Obama administration's policies on taxes, spending and more seem designed to produce the opposite result. From 1930 to 2008, our national average annual real GDP growth rate was 3.49%. After crunching the numbers, my team has estimated that it would take GDP growth of at least twice the historical average to return state tax revenues to their previous long-term trend line by 2012.

I doubt even that would suffice to rescue most states. Instead, historical forecasting models need to be revised. One-third of state revenues (over half in seven states) come from sales taxes, but it's hard to imagine them snapping all the way back up to where they were just a few years ago. Americans are now saving much more then they used to relative to how much they are spending. This sudden shift will mean that even in good economic times to come consumers will likely spend less and therefore pay less in sales taxes than they did during bubble years.

Even if Americans wanted to go back to their high-spending, high-borrowing ways, will anyone lend them the funds to spend like it's 2007 all over again? Consumer credit will remain tighter as a matter of both sound business practice and new government regulation. Home equity appreciation is gone as a huge source of collateral, even if lenders were either willing or permitted to loan freely against it.

The "progressive" states that built their enormous public burdens by soaking the wealthy will hit the wall first and hardest. California, which extracts more than half its income taxes from a fraction of 1% of its citizens, is extreme but hardly alone in its overreliance on a few, highly mobile taxpayers. Both individuals and businesses are fleeing soak-the-rich states already. Those who remain in high-tax states will be making few if any capital gains tax payments in the years to come. Even if the stock market comes roaring back to life, the best it could do is speed the deduction of recent losses.

Sadly, the political impulse to protect government largess leads many states to aggravate their dilemma. Already more than half have raised taxes, often on businesses, serving only to chase them and their tax payments away and into the open arms of states like Indiana. Our traffic flow of interested investors is as heavy as it was in 2007. Since January we have welcomed the consolidation of more than 30 firms that closed up shop elsewhere and chose us as the low-cost, enterprise-friendly environment among their current locations.

Indiana was near bankruptcy five years ago but is relatively solvent today because we have spent the intervening years making hard choices. We have reformed state procurement, contracted out some jobs, cut costs, and relentlessly scrutinized expenditures in pushing for annual improvement in departments large and small. We've also reduced the number of state employees by some 5,000 from the 2004 level.

In contrast to the national pattern, our per capita state spending has cut, on average, 1.4% each of the past five years. Indiana is now the sixth thriftiest state by this measure. And if we Hoosiers are realizing that we need to re-examine what we can afford to have our government do, what must they be thinking in Albany, Lansing or Trenton?

Truth be told, officials in those cities are probably not thinking about this at all. But they will because state governments will soon have to choose between a major downsizing or consigning themselves to permanent decline. Wishing for an improbably huge boom while chasing your own tail through self-destructive taxes won't prove much of a strategy.

Unlike the federal government, states cannot deny reality by borrowing without limit. The Obama administration's "stimulus" package in effect shared the use of Uncle Sam's printing press for two years. But after that money runs out, the states will be back where they were. Even if Congress goes for a second round of stimulus funding, driven by the political panic of bankrupt Democratic governors, it would only postpone the reckoning.

The time to plan and debate is now. This is a test of our adulthood as a democracy. Washington, as long as our Chinese lenders enable it, can practice denial for a while longer. But for states the real world is about to arrive.

Mr. Daniels, a Republican, is the governor of Indiana.

The Conservative Case for Reform By Bobby Jindal


October 5, 2009

A majority of so-called Republican strategists believe that health care is a Democratic issue. They are wrong; health care is an American issue, and the Republican Party has an opportunity to demonstrate that conservative principles work when applied to real-world problems.

But memo to Washington: The debate on health care has moved on. Democratic plans for a government takeover are passé. The people don't want it. Believe the polls, the town halls, the voters. Only Democrats in Washington would propose new taxes on businesses and families in the middle of a recession, $900 billion in new spending at a time of record deficits, and increased taxes on health insurance and products to reduce health-care costs.

Washington is the only place in the country that doesn't realize that this debate is over. Democrats may march forward anyway, but they will do so without the people, and at their own peril.

Yet hope for meaningful reform need not be lost. Only two things need to happen. First, Democrats have to give up on their grand experiment and get serious about bipartisan solutions. Second, Republicans have to join the battle of ideas.

To be clear, the Republicans in Congress who have led the opposition to the Obama-Pelosi vision of health-care reform have done the right thing for our country. If they had rolled over, the results could have been devastating for our health-care system and our nation's budget.

But Republicans must shift gears. Conservatives should seize the mantle of reform and lead. Conservatives either genuinely believe that conservative principles will work to solve real-world problems such as health care or they don't. I believe they will.

The people do not want Republicans to offer their own thousand-page plan to overhaul health care, and that is not what the nation needs.

So here are 10 ideas to increase the affordability and quality of health care. Some of these are buried within various Republican and Democratic plans that have been floated. They offer a path forward toward significant bipartisan reform. These proposals would require insurance companies to do their jobs and spread risk over large populations, restore patients' power to make their own health-care decisions, and focus our system on quality instead of activity.

-- Voluntary purchasing pools: Give individuals and small businesses the opportunities that large businesses and the government have to seek lower insurance costs.

-- Portability: As people change jobs or move across state lines, they change insurance plans. By allowing consumers to "own" their policies, insurers would have incentive to make more investments in prevention and in managing chronic conditions.

-- Lawsuit reform: It makes no sense to ignore one of the biggest cost drivers in the system -- the cost of defensive medicine, largely driven by lawsuits. Worse, many doctors have stopped performing high-risk procedures for fear of liability.

-- Require coverage of preexisting conditions: Insurance should not be least accessible when it is needed most. Companies should be incentivized to focus on delivering high-quality effective care, not to avoid covering the sick.

-- Transparency and payment reform: Consumers have more information when choosing a car or restaurant than when selecting a health-care provider. Provider quality and cost should be plainly available to consumers, and payment systems should be based on outcomes, not volume. Today's system results in wide variations in treatment instead of the consistent application of best practices. We must reward efficiency and quality.

-- Electronic medical records: The current system of paper records threatens patient privacy and leads to bad outcomes and higher costs.

-- Tax-free health savings accounts: HSAs have helped reduce costs for employers and consumers. Some businesses have seen their costs decrease by double-digit percentages. But current regulations discourage individuals and small businesses from utilizing HSAs.

-- Reward healthy lifestyle choices: Providing premium rebates and other incentives to people who make healthy choices or participate in management of their chronic diseases has been shown to reduce costs and improve health.

-- Cover young adults: A large portion of the uninsured are people who cannot afford coverage after they have "aged out" of their parents' policies. Permitting young people to stay on their parents' plans longer would reduce the number of uninsured and keep healthy people in insurance risk pools -- helping to lower premiums for everyone.

-- Refundable tax credits (for the uninsured and those who would benefit from greater flexibility of coverage): Redirecting some of the billions already spent on the uninsured will help make non-emergency care outside the emergency room affordable for millions and will provide choices of coverage through the private market rather than forcing people into a government-run system. We should trust American families to make choices for themselves while we ensure they have access to quality, affordable health care.

In short, ideas matter. The public is interested in solutions that will improve America's health-care system, not dismantle it. Republicans can lead on this.

The writer, a Republican, is governor of Louisiana.

The 'Absurd Results' Doctrine: Turning the carbon screws on businesses so they lobby Congress for cap and trade.


OCTOBER 4, 2009

'In recent years, many Americans have had cause to wonder whether decisions made at EPA were guided by science and the law, or whether those principles had been trumped by politics," declared Lisa Jackson in San Francisco last week. The Environmental Protection Agency chief can't stop kicking the Bush Administration, but the irony is that the Obama EPA is far more "political" than the Bush team ever was.

How else to explain the coordinated release on Wednesday of the EPA's new rules that make carbon a dangerous pollutant and John Kerry's cap-and-trade bill? Ms. Jackson is issuing a political ultimatum to business, as well as to Midwestern and rural Democrats: Support the Kerry-Obama climate tax agenda—or we'll punish your utilities and consumers without your vote.

The EPA has now formally made an "endangerment finding" on CO2, which will impose the command-and-control regulations of the Clean Air Act across the entire economy. Because this law was never written to apply to carbon, the costs will far exceed those of a straight carbon tax or even cap and trade—though judging by the bills Democrats are stitching together, perhaps not by much. In any case, the point of this reckless "endangerment" is to force industry and politicians wary of raising taxes to concede, lest companies have to endure even worse economic and bureaucratic destruction from the EPA.

Ms. Jackson made a show of saying her new rules would only apply to some 10,000 facilities that emit more than 25,000 tons of carbon dioxide each year, as if that were a concession. These are the businesses—utilities, refineries, heavy manufacturers and so forth—that have the most to lose and are therefore most sensitive to political coercion.

The idea is to get Exelon and other utilities to lobby Congress to pass a cap-and-trade bill that gives them compensating emissions allowances that they can sell to offset the cost of the new regulations. White House green czar Carol Browner was explicit on the coercion point last week, telling a forum hosted by the Atlantic Monthly that the EPA move would "obviously encourage the business community to raise their voices in Congress." In Sicily and parts of New Jersey, they call that an offer you can't refuse.

Yet one not-so-minor legal problem is that the Clean Air Act's statutory language states unequivocally that the EPA must regulate any "major source" that emits more than 250 tons of a pollutant annually, not 25,000. The EPA's Ms. Jackson made up the higher number out of whole cloth because the lower legal threshold—which was intended to cover traditional pollutants, not ubiquitous carbon—would sweep up farms, restaurants, hospitals, schools, churches and other businesses. Sources that would be required to install pricey "best available control technology" would increase to 41,000 per year, up from 300 today, while those subject to the EPA's construction permitting would jump to 6.1 million from 14,000.

That's not our calculation. It comes from the EPA itself, which also calls it "an unprecedented increase" that would harm "an extraordinarily large number of sources." The agency goes on to predict years of delay and bureaucratic backlog that "would impede economic growth by precluding any type of source—whether it emits GHGs or not—from constructing or modifying for years after its business plan contemplates." We pointed this out earlier this year, only to have Ms. Jackson and the anticarbon lobby deny it.

Usually it takes an act of Congress to change an act of Congress, but Team Obama isn't about to let democratic—or even Democratic—consent interfere with its carbon extortion racket. To avoid the political firestorm of regulating the neighborhood coffee shop, the EPA is justifying its invented rule on the basis of what it calls the "absurd results" doctrine. That's not a bad moniker for this whole exercise.

The EPA admits that it is "departing from the literal application of statutory provisions." But it says the courts will accept its revision because literal application will produce results that are "so illogical or contrary to sensible policy as to be beyond anything that Congress could reasonably have intended."

Well, well. Shouldn't the same "absurd results" theory pertain to shoehorning carbon into rules that were written in the 1970s and whose primary drafter—Michigan Democrat John Dingell—says were never intended to apply? Just asking. Either way, this will be a feeble legal excuse when the greens sue to claim that the EPA's limits are inadequate, in order to punish whatever carbon-heavy business they're campaigning against that week.

Obviously President Obama is hellbent on punishing carbon use—no matter how costly or illogical. And of course, there's no politics involved, none at all.

MAMMOTH DISCOVERY: Companies bet big on South Texas gas find By Brett Clanton


Oct. 6, 2009

Last October, just as the economy was tilting into crisis, a small oil and gas company in Houston quietly announced the discovery of a mammoth natural gas field in South Texas that at any other time might have garnered bigger headlines.

Petrohawk Energy's find, however, did not go unnoticed in the oil and gas industry — and it didn't take long before oil companies large and small began making their moves.

Today, though the economy and natural gas prices remain weak, the Eagle Ford shale remains one of the hottest prospects in North America, and energy companies are moving forward there even as they're pulling back elsewhere.

That's because of what some companies suggest is a virtually recession-proof combination of highly productive wells and low drilling costs they say can yield profits even as natural gas prices hover near seven-year lows.

Also attractive: the flat South Texas ranch land, where obstacles are few and Gulf Coast oil and gas infrastructure is nearby; and landowners have grown comfortable with the industry after decades of oil drilling.

“You can certainly make more money from wells than cows,” said Joe Martin, whose family leased nearly 20,000 acres of land to Petrohawk in LaSalle County for drilling.

But it may still be a while before the full potential of the Eagle Ford shale is known. Though early results are promising, companies have been cautious about overstating what could be in the ground, especially since so few wells have been drilled so far.

“What we're going to find out, as with most shale plays, is there's going to be sweet spots,” said Bob Banks, chief operating officer at Swift Energy, a Houston-based oil company with nearly 90,000 acres leased in the Eagle Ford. “That's what we don't know yet, which areas are really going to work better than the others because it's pretty early days.”

Recently discovered U.S. shale plays, including the Haynesville in Louisiana and Marcellus in Pennsylvania, are expected to provide a major boost to U.S. natural gas supplies in coming years. The dense rock formations, once thought too difficult to explore, have been unlocked with the help of recent advances in drilling technology.

The core areas of the eight largest U.S. shale plays may contain 475 trillion cubic feet of recoverable resources, according to an estimate by Ross Smith Energy Group, an industry research firm in Calgary, Alberta. That's roughly ten times the size of Texas' famed Barnett shale play in the Dallas-Fort Worth area, which supplies nearly 10 percent of U.S. natural gas production, excluding Alaska.

$3.88 break-even point
While the Eagle Ford is among the smallest of the group, with some 19 trillion cubic feet of natural gas remaining, the economics is among the best, the firm said.

Producers in the Eagle Ford can break even when natural gas is priced as low as $3.88 per million British thermal units, the firm said, versus break-even prices of $5.18 in the Barnett, $3.74 in the Marcellus and $4.49 in the Haynesville.

Natural gas closed at $4.99 per million BTUs Monday in trading on the New York Mercantile Exchange, down from nearly $14 in summer of 2008, amid a recession-related drop in demand and bulging stockpiles. Consumption will fall by 2.4 percent this year and remain flat in 2010, according to the Energy Information Administration's most recent short-term forecast.

A potential boom
Yet that has not stopped companies from pushing ahead in the Eagle Ford play, which starts near the Mexican border and extends east below San Antonio across a string of counties including Webb, Dimmit, LaSalle, McMullen and Live Oak.

“It's got the potential of being a boom,” said Martin, whose family leased to Petrohawk, noting that land prices in the region have risen to $1,500 per acre in some places, 10 times what they were two years ago.

Houston's Petrohawk, with 210,000 acres in the Eagle Ford, has been the most active. It operates 17 wells in the Eagle Ford and aims to add another seven or eight by year-end, said Joan Dunlap, the company's head of investor relations. This month, the company said it will sell its properties in West Texas' oil-rich Permian Basin to an unidentified privately held company for $376 million to focus on its assets in the Eagle Ford and Haynesville shale plays.

Asked if the Eagle Ford could be as big as other major U.S. shale gas plays, like the Barnett shale, Dunlap said, “it's a big question mark.”

Other oil and gas companies including Pioneer Natural Resources, Swift Energy and Anadarko Petroleum Corp. also have drilled wells in the Eagle Ford or are planning to in coming months.

Less clear are the intentions of Houston-based ConocoPhillips and Irving-based Exxon Mobil Corp., each of which has large acreage positions in the Eagle Ford.

Houston's ConocoPhillips, with 300,000 acres, considers the region “one of the top resource plays in the lower 48” and will concentrate much of its 2009 exploration spending in the Eagle Ford and other North American unconventional resource plays, spokesman Charlie Rowton said. But he declined to elaborate.

Exxon Mobil confirmed it holds an interest in the Eagle Ford shale in La Salle and McMullen counties, but a spokesman said, “the details of the exploration program are considered confidential.”

Exxon Mobil confirmed it holds an interest in the Eagle Ford shale in La Salle and McMullen counties, but a spokesman said, “the details of the exploration program are considered confidential.”

Bob Fryklund, industry analyst with IHS-Cambridge Energy Research Associates in Houston, said highly diversified oil majors may not have the same urgency to act as independent oil and gas producers do.

“This is just one portion of their portfolio, while for a lot of the independents it's their whole portfolio,” he said.

But increasing moves by major international oil companies into U.S. shale plays, he said, suggest they may see more potential there than they once did.

Sunday, October 04, 2009

'Rock n Roll' Radio Legend Jim Nettleton Dies at 69

'Rock n Roll' Radio Legend Jim Nettleton Dies at 69

by KYW’s David Madden

Posted: Sunday, 04 October 2009 11:42AM

Cancer has claimed the life of longtime Philadelphia radio personality Jim Nettleton at the age of 69. Here is a look back at the career of one of the original “Boss Jocks” of the glory days of “Rock n Roll Radio in Philadelphia”.

Mixing personality in with more music put Nettleton’s team over Wibbage in one of the greatest radio face-offs ever.

There was Hartford, New York and Tampa, but it’s his Philadelphia work for which Nettleton will be best remembered included stints at WOGL and WPEN. Although his first stop was his fondest, as he recalled at a reunion three years ago:

“It was the best experience of my radio life; worked with, probably, the most talented group of people that, I think, ever had gotten together in one spot.”

Ironically, his last on-air gig was down the shore -- a recorded morning show for a re-created “Wibbage”.

Bill's Comment: Mr. Nettleton was also one of the "Boss Jocks" for 56 WFIL-AM during the 60's and '70's. Our loss is Rock n' Roll Heaven's gain. R.I.P., Jim.