Freedom Line Blog

In an interview with CFIF, Marita Noon, Executive Director for Energy Makes America Great and Citizens’ Alliance for Responsible Energy, discusses what President Obama has not done for American energy workers, the lessons he could learn from Texas Governor Rick Perry’s efforts to convince companies to relocate to Texas, and the important role that energy plays in our lives.

Listen to the interview here.

With so much attention on the turf war between Congress and the President, it’s easy to overlook another, equally disturbing separation-of-powers crisis – the swift erosion of federalism.

Just as the U.S. Constitution assigns certain powers and duties to the three coequal branches of the federal government (legislative, executive, and judicial), so too does it differentiate lines of responsibility between the federal and state governments. This latter idea is known as federalism, and it’s in pretty bad shape according to a thought-provoking essay by Richard Epstein and Mario Loyola.

In particular, the practice of conditioning receipt of federal money on capitulation to federal regulations is turning states into mere enforcement officers.

“Federal officials exert enormous influence over state budgets and state regulators, often behind the scenes,” write Epstein and Loyola. “The new federalism replaces the ‘laboratories of democracy’ with heavy-handed, one-size-fits-all solutions. Uniformity wins but diversity loses, along with innovation, local choice, and the Constitution’s necessary limits on government power.”

Both parties are guilty, but the Obama administration has accelerated the trend. Poison pill programs like Common Core, ObamaCare’s Medicaid expansion, the federal highway system and the Clean Air Act all condition money for popular programs on local officials committing their states to dependency status.

“Federal ‘assistance’ to the states currently accounts for 30 percent of state budgets, on average,” according to the authors. “Since the early 1980s, the federal government has transferred about 15 percent of its budget to the states, which is almost as much as the federal deficit in an average year.”

Let that sink in for a moment. Annual federal transfer payments to the states roughly equal the yearly federal budget deficit.

Of course, eliminating the deficit isn’t as simple as zeroing out all federal-state spending relationships. Much of the logic of federal transfer payments hangs on the idea that poor states are funneled the resources they need to close the gap on some quality of life indicators with rich states. Until relatively poor states like North Dakota are allowed to fully exploit their natural economic advantages – such as being able to extract and export its huge oil reserve – ending redistribution without removing wealth-inhibiting regulations doesn’t make sense.

However, seeing the connection between the deficit and transfer payments to states does highlight the unsustainable nature of our current federalism-destroying arrangement. If we as Americans want to have more financial flexibility at the national level, we first need to remove the barriers to economic opportunity at the state and local level.

“By boosting our energy production, the U.S. could restore its diminishing influence in the world without expending blood and treasure – in fact, we would reap major economic benefits,” writes Rep. Devin Nunes (R-CA).

Nunes is an up-and-coming member of the House Ways and Means Committee and is known for thinking big on how to use tax reform as a means to reestablish American leadership in the global economy.

Rationalizing our energy policy would go a long way too.

Thanks to improvements in technology large, untapped domestic oil and natural gas reservoirs are now reachable. States like North Dakota, Texas and Oklahoma are moving to capitalize, while huge potential awaits enterprising politicians and businesses in California and Colorado.

The benefits are many. More energy production means more jobs in extracting, refining and shipping. For example, an entry-level rig worker in North Dakota averages about $66,000 a year, while the average oil industry job in the state was $112,462 as of 2012. That also means more jobs for people serving workers flush with disposal income.

There’s also a national security angle. With Iraq’s oil fields under siege by Islamic militants, Venezuela constantly swayed by demagogic collectivists and Russia threatening to cut off natural gas shipments, it’s time for the United States to take the steps necessary to ensure greater energy independence.

Unsurprisingly, Nunes wants President Barack Obama to approve the Keystone XL pipeline, as well as implement other measures to put the nation in a game-changing position. Of course, that isn’t happening unless Obama adopts Bill Clinton’s triangulation strategy.

Don’t hold your breath.

Still, Nunes makes a compelling case for using national energy policy as a way to improve both our domestic economy and global prestige.

It’s an angle that economically recessed, war-weary Americans might soon embrace.

In this week’s Freedom Minute, CFIF’’ Renee Giachino discusses the special interest-driven politics that is to blame for the ongoing delays preventing construction of the Keystone XL Pipeline.

In my column last week, I wrote about how rapidly predictions of catastrophic global warming are unraveling. Despite the fact that the case for skepticism is probably better than ever, the Obama Administration is still proceeding with new EPA regulations to cap carbon emissions, which will have the practical effect of crippling the coal industry.

What’s perhaps most remarkable about this crusade is that the EPA claims the problem can be handled through carbon sequestration — a technology that’s not commercially viable (though this should come as no surprise coming from the same people that think solar and wind power are the wave of the future). As Larry Bell notes at Forbes:

EPA’s latest climate battle plan is to prohibit construction of new coal-fired power plants that can’t achieve 1,100 pound per megawatt hour carbon emission limits. To accomplish this will require plant operators to capture and store (“sequester”) excess CO2, something that cannot be accomplished through affordable means, if at all. [The Institute for Energy Research estimates] that this “regulatory assault” will eliminate 35 gig watts of electrical generating capacity…10% of all U.S. power. As the Competitive Enterprise Institute observes, “If the carbon dioxide emissions standard for power plants proposed by the EPA today is enacted, the United States will have built its final coal-fired power plant.”

The liberal environmental establishment wants to bankrupt the coal industry. That’s their prerogative. But they should at least be honest about it instead of acting like they’re simply helping the industry transition to the next best thing. Perhaps they could take a page out of this fella’s book:

In an interview with CFIF, William Yeatman, Assistant Director at the Competitive Enterprise Institute’s Center for Energy and Environment, discusses the Obama Administration’s climate agenda, its all-out war on coal, the Keystone Pipeline project and the EPA’s assault on state sovereignty.

Listen to the interview here.

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

Mark Mills writing in The Wall Street Journal says that projections about California’s latent shale oil reserves could be the silver bullet for the state’s fiscal woes:

The overall economic benefits of opening up the Monterey shale field could reach $1 trillion. One can only imagine the impact on California’s education system, social programs, infrastructure, and even energy-tech R&D. Moreover, with that kind of revenue, Sacramento tax collections could wipe out debt and deficits.

But is it really plausible that California’s big-spending political class would use the $1 trillion windfall to pay off the state’s debts and seed a rainy day fund?  Call me cynical, but it seems way more likely that state spending would increase above and beyond whatever windfall comes from oil drilling.

That said, I’d love for Sacramento to prove me wrong.  Let the fracking begin!

NBC News quotes U.S. Senator-Elect Heidi Heitkamp (D-ND) from a campaign debate on what she would say to President Barack Obama about his energy policy:

“You’re wrong on energy. You’re headed in the wrong direction. You made bad decisions,” she said, according to The Associated Press. “You promised that you would promote clean coal technologies, that you would be a champion of coal, and you haven’t done it.” She also urged the president to replace Energy Secretary Steven Chu and EPA administrator Lisa Jackson.

Certainly, that kind of independence helped Heitkamp eke out a win in a state Mitt Romney won by 20 points.  Now that she’s earned the right to speak her mind in the U.S. Senate, let’s see if she’s willing to make good on her promise.  With the coal industry staring at death by a thousand regulations, the sooner the better.

It was just a few weeks ago that President Obama was on the debate stage telling that nation that Mitt Romney had unfairly tarred his administration as anti-energy development:

We have increased oil production to the highest levels in 16 years … Now, I want to build on that. And that means, yes, we still continue to open up new areas for drilling.

As I noted at the time, Obama’s defense of his record was essentially dishonest. Increased oil production was due almost entirely to a combination of private-sector development and federal efforts initiated by the Bush Administration. As for his pledge to open up new drilling sites? Well, judge for yourself. From The Hill:

The Interior Department on Friday issued a final plan to close 1.6 million acres of federal land in the West originally slated for oil shale development.

The proposed plan would fence off a majority of the initial blueprint laid out in the final days of the George W. Bush administration. It faces a 30-day protest period and a 60-day process to ensure it is consistent with local and state policies. After that, the department would render a decision for implementation.

…

Interior’s Bureau of Land Management cited environmental concerns for the proposed changes. Among other things, it excised lands with “wilderness characteristics” and areas that conflicted with sage grouse habitats.

The sage grouse, it should be noted, is not endangered, though it is on the waiting list to earn that classification. In 2010, the Fish and Wildlife Service described the bird’s status as, “numerous relatively small populations existing in a patchy mosaic of increasingly fragmented habitat.” Count me skeptical that  a population in such shape requires 1.6 million acres (2,500 square miles) to survive.

The Heritage Foundation tees up five issues that so far haven’t been mentioned in the Romney-Obama or Ryan-Biden matchups:

1)      Welfare Reform

2)      Trade

3)      Medicaid

4)      Federal Spending and Debt

5)      American-Produced Energy

Each of these is not only critical to American prosperity, but also conveniently is attached to a disastrous policy decision by the Obama Administration.

This summer Obama’s HHS gutted the work requirement for receiving welfare checks that was the hallmark of the mid-1990’s reform.

The President and his fellow liberals in Congress held hostage free trade agreements negotiated by the Bush Administration as a favor to labor unions, and in the process damaged our international standing.

Obamacare is scheduled to hit Medicaid doctors with a 19 percent pay cut starting in 2014.

This is the fourth consecutive year of $1 trillion budget deficits presided over by President Obama, and there is no indication the incumbent will do anything differently if reelected.

As for domestic energy production, Obama’s rejection of the Keystone XL pipeline angered not only consumers paying high gasoline prices, but also the unionized labor that stood to benefit from short- and long-term job creation.

Mitt Romney should look for ways to insert these failures of leadership into his answers during tonight’s townhall debate with Barack Obama.  People need to be reminded that the President’s kneejerk liberalism is bankrupting the country.

I have a working theory to explain the existence of pundits like the New York Times’ Gail Collins, self-parodists who find themselves incapable of escaping the intellectual shallows of liberalism: they must all be secretly financed by a group of wealthy conservatives who regard providing endless fodder for bloggers on the right to be a form of public service.

In Collins’ newest dispatch from the outskirts of sentience, she travels to Williston, North Dakota, a sort of 21st century boomtown where unemployment hovers around one percent thanks to the huge oil reserves now accessible from the Bakken formation.

The reality of the economic dynamism in Williston is so painfully clear that Collins is forced to present it in a fairly positive light, though that doesn’t keep her from some of the reflexive sneering of a Manhattan imperialist (she sniffs that there’s a Wal-Mart instead of an adequate mall and that “The most ambitious restaurants would be classified under the heading of ‘casual dining.’).

Because Williston’s success is fueled by conventional (read: useable) energy, however, the gravitational pull of Collins’ liberalism kicks in when, in the second half of the article, she sets out to expose the unseemly side of Williston’s growth. The results are pathetic.

First, Collins takes a swing at fracking so half-hearted that she doesn’t even seem to have bothered indulging her reflexive impulse to crib some talking points from a Huffington Post op-ed by Alec Baldwin (lest you think I’m joking, it’s here).  Her devastating critique includes the fact that the process “uses a lot of water” and makes the town dustier. Well.

Where she really goes off the rails, however, is in her attempt to portray the local economy as a thing of horror:

… Right now … there’s no place to live. Honestly, no place. To house its teachers, the school district has already purchased two apartment buildings, which have long since been filled even though the residents are all required to share their homes with another teacher. Superintendent Viola LaFontaine has taken to the radio airwaves, urging citizens to come up with places for the new faculty to stay.

“We’ve been getting good applicants,” LaFontaine said. “But they’ll make $31,500. When they find out an apartment is $2-3,000 a month, they say they can’t pay that.”

Yes! Housing costs in Williston, N.D., are approaching those in New York City. Many of the oil workers stash their families back wherever they came from, and live in “man camps,” some of which resemble giant stretches of storage units.

…

If the place you love can’t quite climb out of the recession, think of this as consolation. At least you’re not living in a man camp and waiting half an hour in line for a Big Mac.

Ms. Collins, meet supply and demand. Supply and demand, meet Ms. Collins.

What our fearless columnist is describing is the typical trajectory of boomtowns. The sudden surge of demand sends prices skyrocketing. But if her view extended beyond the tip of her nose, Collins might realize that this is the predicate for a second round of employment growth and a general lowering of prices. When demand is so high that a remote region of North Dakota can charge rents rivaling those of the beating heart of New York City, it’s an open invitation for developers to make their way to Williston, relieve the housing shortfall, and get rich in the process. Ditto the overcrowded restaurants. That means new jobs created. And the increased supply means lowered prices.

One final note: it’s telling that teachers are Collins’ go-to example. Reading her column, one could reasonably wonder how Williston’s housing stock could be both (a) so expensive that it’s prohibitive for many potential tenants and (b) filled to the gills. The answer: private-sector workers are making more than enough to meet the demands of the city’s rent. Only in the public sector, where wages are set by government diktat instead of the market, are crucial employees priced out of a place to live. That’s a real shame for the teachers of North Dakota. If the school system was privatized, they’d all be getting rich now too.

This is a big win for those who don’t want to see the United Nations’ grow in both power and resources. From the Daily Caller:

With 34 Republican senators now opposing a United Nations effort to regulate international waters, the Law of the Sea treaty effectively has no way forward in the U.S. Senate.

Republican Sens. Kelly Ayotte of New Hampshire, Rob Portman of Ohio, Mike Johanns of Nebraska and Johnny Isakson of Georgia joined 30 other GOP members in agreeing to vote against the U.N. treaty.

For guidance as to why this was the right decision, one need look no further than an op-ed penned by former Attorney General Edwin Meese earlier this year in the Los Angeles Times:

President Reagan so strongly opposed the United Nations Convention on the Law of the Sea that he didn’t just not sign the treaty. He very publicly refused to sign it. He also dismissed the State Department staff that helped negotiate it. And in case anyone didn’t get the message, he sent special envoy Donald Rumsfeld on a globe-trotting mission to explain his opposition and urge other nations to follow suit.

…

In a 1978 radio address titled “Ocean Mining,” he asserted that “no nat[ional] interest of ours could justify handing sovereign control of two-thirds of the Earth’s surface over to the Third World.” He added: “No one has ruled out the idea of a [Law of the Sea] treaty — one which makes sense — but after long years of fruitless negotiating, it became apparent that the underdeveloped nations who now control the General Assembly were looking for a free ride at our expense, again.”

This was exactly what was at stake here. Passage of the Law of the Sea Treaty would have given United Nations bureaucrats a veto over American deep-sea mining efforts, redistributed royalties from American energy development to other nations, and even created the potential for back-door international carbon regulation through the treaty’s requirements for mandatory dispute resolution.

Senate Republicans did the responsible thing — they won one for the Gipper.

Angela Logomasini, senior fellow for the Center for Energy and Environment at the Competitive Enterprise Institute, discusses how misguided and oftentimes foolish some activists are in calling for bans on plastic bags and certain cosmetics.  Logomasini makes the case for why the use of junk science must be stopped.

Listen to the interview here.

Free Market America, a new group operating in partnership with Americans for Limited Government, has a powerful new video out that makes an important point: if one was setting out to intentionally inflict harm on the American economy via energy policy, the resulting strategy would look a lot like what the Obama Administration is proposing.

The point here is not that Obama’s agenda is a covert plot to damage the nation — it’s not — but rather that its effects will be just as calamitous as if it was. Take a look for yourself:

Politico reports that an Inspector General’s investigation concluded the Department of Energy’s loan to Solyndra corrupted a process to serve a political agenda.

The Treasury Department’s review of Solyndra’s $535 million federal loan guarantee was “rushed” through in about one day in March 2009, “based on an expedited review request from DOE so that a press release could be issued,” according to a Treasury inspector general report that gives further evidence of the early Obama administration’s eagerness to announce progress in funding clean energy.

…

The report also found that DOE didn’t consult with Treasury on the terms and conditions of the loan deal before or during the Energy Department’s own review process, including the review of Solyndra’s credit worthiness.

Nor did DOE include Treasury in negotiations that later allowed private investors to skip past taxpayers in the repayment line in the event – which turned into a certainty – that Solyndra went bankrupt.

The corruption in the Solyndra loan process is unique in that – so far – no one inside the government has been accused of being bribed for making so many financially ruinous decisions with taxpayer money.

The only explanation is the triumph of ideology over process.

In the Teapot Dome scandal members of the Harding administration got kickbacks for no-bid contracts on oil drilling.  The HUD scandals of the late 1980’s made some officials, lobbyists, and construction companies rich at the expense of the poor.  But with Solyndra and other failed alternative energy busts, Obama’s DOE blew billions of dollars on nothing more than a bankrupt ideology; namely, the fantasy that green technology can be subsidized into sustainability.

At least with bribes you can follow the money.  The Obama administration’s version of corruption is something arguably new.  The only way to ensure its eradication is to fire the people who hire the ideologically-driven bureaucrats.

CFIF Senior Fellow Quin Hillyer discusses how the Obama Administration’s anti-oil industry policies and practices are driving up gas prices and threatening American energy companies. 

Listen to the interview here.

It looks like Energy Secretary Steven Chu’s 2008 musings about manipulating gas prices so people would be forced to buy electric cars was bad politics and bad economics.  The statement was bad politics because it confirms that liberals like Chu are willing to distort energy prices – Keystone XL, anyone? – to serve the environmental left’s ideological agenda.  It turns out to be bad economics because consumers have several more options available than purchasing a Toyota Prius.

In a hyper-link-heavy post, Time reporter Brad Tuttle – who makes no reference to Chu – explains that as the national average for gasoline has risen to $4 a gallon, Americans are responding by buying small inexpensive fuel-powered cars like the Ford Fiesta (40 mpg) and Chevy Cruze (36 mpg); hanging onto old cars longer by delaying non-essential repairs; and in the case of the 21-34 age group, preferring ride-sharing and public transit to car purchases.

Of course, none of these Econ 101 responses to rising prices will convince Secretary Chu and President Barack Obama to stop meddling in the market.  The White House is pushing an increase in the tax incentive to buy hybrids like the Prius, Chevy Volt, and Nissan Leaf from $7,000 to $10,000.  But this incentive disproportionately benefits hybrid buyers.  As Troy has noted, Volt owners average $170,000 in annual income; not exactly the people needing tax incentives to help make car purchases.

Still, it’s nice to see that no matter how much the experts in Washington twist policy into an endless barrage of mandates and tax breaks, consumers in a (relatively) free market are able to make their own decisions.

The Wall Street Journal reports that of the 32 loans made under the Energy Department’s renewable energy loan program, 10 have been put on an internal watch list for being “high risk investments”.  Though the Department redacted the identities of the companies on the list, at least one is Solyndra, the failed California solar panel company that went bankrupt last year, and left taxpayers with over $535 million in losses.

The Journal indicates that another member of the watch list may be Prologis Inc., a company approved for $1.4 billion in federal loans about six months ago.  Now, the firm says it won’t meet an upcoming deadline.

Here’s why:

Prologis originally intended to use Solyndra’s solar panels. Energy Secretary Steven Chu intervened last summer to help move the loan forward and called the Prologis project “remarkable” when it closed Sept. 30.

What’s remarkable is that Chu’s name isn’t on a White House watch list for seriously mismanaging billions in taxpayer money on failed ventures.

Check out this video clip of President Barack Obama speaking to what looks and sounds like a campaign crowd in a community college outside Washington, D.C.

The problem is that federal officeholders – like the U.S. President – aren’t supposed to campaign on the taxpayers’ dime.  That’s why presidential campaigns like Obama for America exist.  The press picked up on this and asked White House Press Secretary Jay Carney to comment.  His response: “It’s a policy statement” to call Republicans who won’t subsidize alternative energy boondoggles like Solyndra “members of the flat-earth society.”

And the O-Man wonders why Republicans don’t like him?