Thursday, March 03, 2011

Obama asleep at the wheel over oil supplies

Gasoline prices are jumping toward the "Oh my God!" level, and if they continue upward, will soon have an unpleasant impact on consumer behavior. An economy still struggling to recover can't afford for Americans to get nervous about spending. High pump prices have that effect. The huge 2008 run-up in oil prices throttled consumer spending, hitting the automobile industry — and thus, Michigan — particularly hard.

The turmoil in the Middle East has pushed oil above $100 per barrel again, and gasoline prices are following suit. In Metro Detroit, many stations are posting prices above $3.30, with predictions that they will move higher unless oil supplies increase.

Unfortunately, at the same time foreign supplies are falling, domestic production is being curtailed by policies of President Barack Obama's administration.

The Interior Department continues to defy a federal court order that lifted a ban on deepwater drilling in the Gulf of Mexico, put in place during last spring's oil spill. Rather than complying with the judge's order, federal regulators have stalled the issuing of permits so that almost no new drilling has occurred in the Gulf in more than six months.

In addition, the administration is standing firm on a seven-year ban on new drilling in the eastern Gulf and off the East Coast, and has expanded by 100 miles the no-drill zone off the coast of Florida.

Vast areas in the nation's interior have been placed off-limits to drilling, as has the oil-rich Arctic National Wildlife Refuge in Alaska.

Additional impact on consumers will come if Obama succeeds in his bid to raise taxes on oil companies. Those higher costs will be passed along.

Pressure is being felt as well from rising worldwide demand for oil as the economy recovers.

It adds up to the real possibility that gasoline could return to the $4 a gallon level it hit in 2008, and possibly go higher.
Democrats in Congress are urging the president to ease prices with releases from the Strategic Petroleum Reserve. But that oil serves the purpose of protecting the country against a more serious contraction of imported oil. A better strategy would be to resume deepwater drilling in the Gulf, and consider exploring other domestic reserves.

Rising gasoline prices serve the purpose of those who want an immediate and drastic reduction in the use of fossil fuels. But the notion that alternative energy sources can significantly replace the demand for oil anytime soon is a pipe dream.

The only sure way to offset the decrease in foreign production is to increase domestic production, which has fallen to 5 million barrels a day from a high of 10 million.

The last time oil prices headed so sharply in this direction, Democrats and Republicans fretful about the impact on the 2008 elections agreed to expand domestic drilling. That pledge was largely revoked after the election, and restrictions on drilling have instead become tighter.

The risk that higher oil prices will send the economy back into recession is too great to ignore. Easing restrictions on domestic production is a necessary safeguard.



ObamaCare to stiff the elderly and the seriously ill

The Galen Institute has an excellent summary of the damage that ObamaCare has already caused, such as driving insurers out of the child-only, small-group and individual markets. The article is only about four pages long, with plenty of supporting tables at the end.

It also contains a summary of Medicare Advantage plans getting out of the market. That apparently has the Obama Administration worried enough that HHS Secretary Kathleen Sebelius sent out a letter recently that per-capita payments to Medicare Advantage would increase 1.6% in 2012 — don’t want more seniors losing their plans in an election year!

However, ObamaCare is supposed to cut about $136 billion from Medicare Advantage over the next decade, so an increase in 2012 means that even steeper cuts must follow. Of course, those can happen beginning in 2013, when President Obama will no longer have to worry about re-election.

That’s not the only consequence ObamaCare will have for Medicare Advantage. To stay in business, other plans will likely engage in what can be called “reducing costs on the back end.” That is, they will impose cost-sharing or deny care when patients are sickest and in most need of the protection that insurance is supposed to provide.

It’s already happening with one Advantage plan: Many Philadelphia area Medicare Advantage beneficiaries will be hit with a new 20 percent coinsurance on some drugs, including chemotherapy, and a new $25 copay for radiation and dialysis treatments starting next year.

The changes implemented by the region’s largest insurer, Independence Blue Cross, will affect more than 40,000 Medicare beneficiaries in Bucks and Montgomery counties enrolled in PPO and HMO plans. Previously under the plans, they had no copays for Part B drugs, including drugs that are injected or infused in doctor’s offices. Part B drugs include oral anti-cancer, immunosuppressive and drugs requiring administration via a nebulizer or infusion pump in the home.

This is what happens when insurance pays for a lot of the up-front costs that we should be paying for out-of-pocket, such as physician visits, and minor procedures and tests. Thanks to the employer-based tax exclusion for health insurance and benefit mandates imposed by most state governments, insurance has paid for more and more up-front costs. But to make revenues meet expenses, insurers cut costs somewhere. That somewhere is on the back end, when patients are often the sickest and where politicians are less likely to focus legislative protections.

ObamaCare only exacerbates this, as now all Medicare plans must fully pay for most preventive care. They can’t even charge copays. With the resulting increased demand in preventive care that insurance companies must pay for, they will inevitably save costs in areas that are not legislated, like chemotherapy drugs.

This may not fit the needs of patients very well, but it suits the needs of politicians quite well. After all, politicians want to maximize their political survival. They can please voters by giving them lots of “free” stuff, and the more voters you can so please, the better. Lots of voters want free preventive care, so politicians find it worthwhile to force insurers to give it to them. Far fewer voters, however, will develop a serious illness, so protecting them is not nearly as useful for politicians who wish to get re-elected.

The truly insidious thing about it is that politicians will be able to blame others for the problems they have created. They will get on their high horse and excoriate the heartless and cruel insurers like Independence Blue Cross. Politicians excel at obfuscation, making it difficult, as Thomas Sowell says, to trace their fingerprints back to the murder weapon.

But as long as ObamaCare remains law, get used to less and poorer quality care for the sickest. The number of people who get seriously ill each year represent a sliver of voters compared to those who have minor illnesses or no illness at all and would just like a checkup or other test. Which group do you think politicians will cater to when it comes to health care policy?



A Union Education: What Wisconsin reveals about public workers and political power

The raucous Wisconsin debate over collective bargaining may be ugly at times, but it has been worth it for the splendid public education. For the first time in decades, Americans have been asked to look under the government hood at the causes of runaway spending. What they are discovering is the monopoly power of government unions that have long been on a collision course with taxpayers. Though it arrived in Madison first, this crack-up was inevitable.

We first started running the nearby chart on the trends in public and private union membership many years ago. It documents the great transformation in the American labor movement over the latter decades of the 20th century. A movement once led by workers in private trades and manufacturing evolved into one dominated by public workers at all levels of government but especially in the states and cities.

The trend is even starker if you go back a decade earlier. In 1960, 31.9% of the private work force belonged to a union, compared to only 10.8% of government workers. By 2010, the numbers had more than reversed, with 36.2% of public workers in unions but only 6.9% in the private economy.

The sharp rise in public union membership in the 1960s and 1970s coincides with the movement to give public unions collective bargaining rights. Wisconsin was the first state to provide those rights in 1959, other states followed, and California became the biggest convert in 1978 under Jerry Brown in his first stint as Governor. President Kennedy let some federal workers organize (though not collectively bargain) for the first time in 1962, a gambit to win union support for his re-election after his cliffhanger victory in 1960.

It's important to understand how revolutionary this change was. For decades as the private union movement rose in power, even left-of-center politicians resisted collective bargaining for public unions. We've previously mentioned FDR and Fiorello La Guardia. But George Meany, the legendary AFL-CIO president during the Cold War, also opposed the right to bargain collectively with the government.

Why? Because unlike in the private economy, a public union has a natural monopoly over government services. An industrial union will fight for a greater share of corporate profits, but it also knows that a business must make profits or it will move or shut down. The union chief for teachers, transit workers or firemen knows that the city is not going to close the schools, buses or firehouses.

This monopoly power, in turn, gives public unions inordinate sway over elected officials. The money they collect from member dues helps to elect politicians who are then supposed to represent the taxpayers during the next round of collective bargaining. In effect union representatives sit on both sides of the bargaining table, with no one sitting in for taxpayers. In 2006 in New Jersey, this led to the preposterous episode in which Governor Jon Corzine addressed a Trenton rally of thousands of public workers and shouted, "We will fight for a fair contract." He was promising to fight himself.

Thus the collision course with taxpayers. Public unions depend entirely on tax revenues to fund their pay and benefits. They thus have every incentive to elect politicians who favor higher taxes and more government spending. The great expansion of state and local spending followed the rise of public unions.

Professors Fred Siegel and Dan DiSalvo point out that even during the Reagan years, growth in state and local government jobs was double the rate of population growth. The effect on the private economy is a second order problem for public unions, as we've seen from the recession's far more damaging impact on private than on public workers.

Current AFL-CIO chief Rich Trumka has tried to portray Wisconsin Governor Scott Walker's reforms as an attack on all unions, but they clearly are not. If anything, by reining in public union power, Mr. Walker is trying to protect private workers of all stripes from the tax increases that will eventually have to finance larger government. Regarding public finances, the interests of public union workers and those of private union taxpayers are in direct conflict. Mr. Walker is the better friend of the union manufacturing worker in Oshkosh than is Mr. Trumka.

Notice, too, how fiercely the public unions are willing to fight for collective bargaining power even if it means public job layoffs. Without Mr. Walker's budget reforms, Wisconsin will have to begin laying off thousands of workers as early as today. The unions would rather give up those jobs—typically for their younger members—than give up their political negotiating advantages. They know some future Governor or legislature will get those jobs back, as long as they retain their inordinate political clout.

This is the imbalance of political power that Mr. Walker is trying to break up, and he is right to do so. As important, the public in Wisconsin and around the U.S. seems to be listening and absorbing his message. The cause has been helped by the sit-ins and shouting of union members, the threats toward politicians who disagree with them, and by the flight of Democratic state senators to undisclosed locations in Illinois. It's hard to claim you're protecting democracy when you won't show up to vote. Taxpayers need to win the battle of Wisconsin for the sake of self-government.




Is the TSA good for ANYTHING? "A passenger managed to waltz past ramped-up security measures at JFK with three box cutters in his luggage, easily boarding an international flight while carrying the weapon of choice of the 9/11 hijackers. The breach grounded the flight for three hours on Saturday night and drew fury from US Port Authority cops, who accused the Transportation Security Administration (TSA) of being asleep on the job, the New York Post reported. Once aboard Santiago-bound Flight 837, flight attendant Fausto Penaloda, 40, asked him to stow his luggage in the overhead storage bin. As Peraltalajara's shoved it into the compartment, Penaloda saw the box cutters fall out of the bag. Peraltalajara told authorities that he used the box cutters for work at a Secaucus manufacturing plant and simply forgot that they were in his luggage. He was not charged with any crime.

NH: Bill would make TSA gropings a crime: "Lawmakers and residents engaged in heated debate Tuesday over a bill that would make random airport security pat-downs and body scans criminal in New Hampshire. The bill (HB628-FN) 'makes the touching or viewing with a technological device of a person’s breasts or genitals by a government security agent without probable cause a sexual assault,' according to the introductory text of the bill. 'Let's put their name on the sex offender registry, and maybe that will tell them New Hampshire means business,' said bill co-sponsor Rep. Andrew Manuse, R-Derry."

OH: Senate votes to bar state workers from striking: "The Ohio Senate has narrowly approved legislation barring public employees from striking and from bargaining over health care, sick time and pension benefits. The measure, which would apply to about 360,000 state, university and local government workers, creates a new contract-dispute process that involves elected officials, says."


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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


1 comment: said...

The unionists in Wisconsin, Ohio and Indiana fail to see the direct link between Obamacare and the end to collective bargaining in their states.

Were it not for Obamacare, fiscal conservative Republicans would not have swept the nation's state assemblies.

How ironic that Obama's policies may have inadvertently saved the nation.