Wednesday, March 28, 2012

Lying About Oil Production

Republicans keep harping on gas prices. They want very much to blame Obama, and they do so through some astonishing rhetoric. Romney in particular insists that Obama has a weak and ineffective energy policy, and that it is the reason why gas prices continue to climb.

Three points are worth noting; one is Romney's breathtaking willingness to lie, a subject I'll address in greater detail separately; second is that his own economic advisers have distanced themselves from his claims.

And then there is point number three: Romney's charges about oil production are wrong. In fact they are laughably, face-palm in disbelief kind of wrong. I have already touched on this point before. I referenced an article in the Houston Chronicle that discussed the transformation in oil production that is taking place since Obama took office. And here is how the New York Times reports it (emphasis mine):
The desolate stretch of West Texas desert known as the Permian Basin is still the lonely domain of scurrying roadrunners by day and howling coyotes by night. But the roar of scores of new oil rigs and the distinctive acrid fumes of drilling equipment are unmistakable signs that crude is gushing again.

And not just here. Across the country, the oil and gas industry is vastly increasing production, reversing two decades of decline. Using new technology and spurred by rising oil prices since the mid-2000s, the industry is extracting millions of barrels more a week, from the deepest waters of the Gulf of Mexico to the prairies of North Dakota... 

Taken together, the increasing production and declining consumption have unexpectedly brought the United States markedly closer to a goal that has tantalized presidents since Richard Nixon: independence from foreign energy sources, a milestone that could reconfigure American foreign policy, the economy and more. In 2011, the country imported just 45 percent of the liquid fuels it used, down from a record high of 60 percent in 2005. 
Pretty good, though obviously that is not what Romney is claiming. The real problem here is the White House does not tout its accomplishments very well. President Obama has allowed Republicans on all levels, including their allies at Fox, to establish the narrative. That is a mistake Democrats are prone to making. I expect the talking heads at Fox to lie, including the buffoons at Fox and Friends, but Mitt Romney is repeatedly and deliberately misrepresenting the facts.

I leave you with one other factoid, the picture below, that Mitt Romney is shamelessly lying about. Note the sharp increase in the blue line. Note the date. Who became president just before the blue line started to go up?

Go ahead and say it, Mitt. No lying this time.

Friday, March 23, 2012

Lying: An Unregulated Industry

We keep hearing the same theme on the Republican campaign trail, the same tired bromide about how government weighs heavily on the private sector, the onerous regulations that sap our energy, and the ruinous taxes that undermine private initiative. And of course, all of this is what President Obama wants, because liberals, especially the foreign-born dark ones, want bureaucrats to take over the economy. That's why there are fewer civil servants now than when Obama assumed office. He wanted to destroy the big banks, which is why he rescued them. And his anti-corporate mentality explains not only that GM is turning profits and cutting paychecks, but that corporate profits are way up, as is the stock market. Private sector job creation has steadily climbed, despite Obama's confiscatory socialism. And he wants to drive up oil prices, which is why domestic oil production-and domestic drilling permits-- have increased every year since Bush left office, the same year Wall Street triggered the recession.

For some people, in other words, facts don't matter. Not even to presidential candidates. We have been subjected to a barrage of rhetoric that says essentially two things: 1) taxes are too high, and that is half the reason why the economy is sluggish, and 2) regulations are too numerous and burdensome, which is the other half. The solution? It's simple. In the Manichean mind of Republicanism, all policy prescriptions are simple; cut taxes and regulations. 

Never mind that we already have the lowest taxes in the OECD; no where else are the very wealthy able to protect so much of their money. And that nonsense about corporate taxes at a ruinous 35%? I addressed that here. Union death-grip on the economy? The United States has the lowest union membership in the entire OECD. And it has been steadily declining, exactly what conservatives have always wanted. And we have the cheapest gasoline in the OECD as well.

But that campaign theme, the one about unleashing the private sector by gutting taxes and government? None of the four Republicans left standing (OK, Paul and Gingrich are on their knees) ever misses a chance to tell voters that fewer corporate regulations means freedom for us all. We are left with a truism that Republicans have understood better than Democrats: you can get enough people, not all, but enough of them, to believe outrageous and nonsensical tripe if you just repeat it enough, preferably with confidence and conviction, if not outright rage.

Now for some reality. According to Ifo Institute for Economic Research at the University of Munich, in a study that compiled World Bank data, and entitled Business Regulation in International Comparison (available here), the United States is a mighty fine place to do business. The US is suffering, and fares poorly when broad demographic data are compared to similar OECD members, but when it comes to business getting what it wants, the US scored higher than any other large country. It was third overall (among a total of 30 OECD and non-OECD countries), bested marginally by smallish New Zealand and Singapore.

The US scored highest in category 5 -protecting investors- confirming the charge that government prioritizes the interests of the investor class. And we were fourth-best, right up there with the two authoritarian states, Hong Kong and Singapore, when it came to the relative ease of starting a business. The real kicker is that the US was also ranked fourth-best when it came to hiring and firing workers, where nations scored high if business was able to fire workers easily and avoid costly penalties and benefits.

Republicans like Romney and Santorum have been telling us that they will unleash the private sector from that horrid Obama, and they will do it by ever more tax cuts, ever fewer regulations.

They are full of shit. The reality is almost the complete opposite of their fact-free narrative. If suppressing working-class wages and unions, enabling and subsidizing the welfare queens on Wall Street, cutting taxes for the investor class, and letting management compensation run wild were the appropriate policy tools, Wall Street would not have crashed and we would not have had the recession in the first place.

If you know anything about economic history, you know that we have been on this path for decades. And all the Republican candidates can do is call for more of it.

Thursday, March 15, 2012

Getting Simpletons to Blame Obama

This crap about trying to blame President Obama for rising gas prices needs to be seen for what it is: a cynical attempt by Republicans and their official partner, Fox News, to derail the President's reelection prospects. They, Republicans, do it in part to divert attention away from the inane clown car called the Republican presidential primaries. But they also do it it part because they know that many low-information voters will fall for it, like the guy below.

For those interested in the real reasons why gas prices fluctuate, and why they should be rising at this particular time, I invite you to read Why are Gas Prices Skyrocketing?  It is worth noting the evidence he provides showing that Asia and Europe are buying up oil because of the fear that, once again, the US will precipitate a war in the Middle East and jeopardize supplies from Iran.

But the real reason gas prices are rising is because Wall Street speculators are driving up prices. The Commodity Futures Trading Commission knew it was true in 2008, when gas prices shot up under Bush, and it knows it is true under Obama. CFTC Commissioner Bart Chilton explains in the video below how it works and who pays. It is part and parcel of conservative economic policies that ensure the transfer of capital from Main Street to Wall Street. 

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The video below is from 2008, when Bush the Lesser was still President, and is why I say Fox News panders to low information voters; especially those with short memories. Speculators drove up prices near the end of Bush's tenure. Most at Fox don't want to shine the light on Wall Street traders, but at least Bill O'Reilly knew enough--in 2008--to recognize the role of speculators and that an American President doesn't wield power to dictate gas prices, or to curb speculation.

Except, apparently, when the President is a Democrat.

The mendacious inconsistency of the arguments thrown out in the unceasing effort to undermine the Obama administration would be downright hilarious were it not for the stakes involved.

Sunday, March 4, 2012

Obama's Burden

A recent cover story of The Week magazine relates the difficult choices President Obama faces in Afghanistan. These choices are part of the larger set of problems he has faced since his first day in office. The two endless (and thankless) wars in the Middle East were only his biggest foreign challenge for a president who also had to overcome the biggest economic recession since the 1930's, the spectacular fallout from Wall Street's recklessly irresponsible activity; activity, it should be added, that was condoned and even applauded by free market ideologues, including Alan Greenspan.

All of this in addition to a massive trade deficit, one caused by policies that have allowed widespread offshoring of jobs and a corporate culture that does not take manufacturing seriously--these are the prime reason industries have been hollowed out.  This bears repeating: It is our own incoherent industrial policies that have contributed the most to our weakened industrial base and the mammoth trade deficit that it engendered, not China, not Japan, not foreign oil.

Obama faced two hugely expensive wars, neither of which was going well. He was forced to choose from several poor choices. The wars have added enormously to the national debt, an issue that did not seem to bother Republicans while Bush was in office.

The US has generally paid for its wars by raising taxes. We certainly did so in WWII, the Korean War, and Viet Nam. Many voters have forgotten how unusual and as we now know, reckless it was for George W. Bush, who inherited a huge budget surplus, to first squander the surplus by passing costly tax cuts for those already wealthy.  He too was faced with a large national debt as well as a seriously eroding infrastructure. He opted for tax cuts, the budget deficits returned, and then he went to war. Bush and the Republican-controlled congress refused to pay for it and the federal government has been growing its deficit ever since.

Obama tried to do what many economists said he must do; stimulate the economy, and keep the budget deficit from becoming too large, not an easy task, but then he did not create the conditions and policies in place when he took office. Others created them; Obama is getting blamed for them.

The irony is that Obama's fiscal stimulus was conventional, mainstream, and conservative. Keynes himself made it clear that government stimulus spending was very much a conservative alternative to the much greater pain of allowing massive unemployment and the resultant upheaval and unrest.

Obama gets blamed for continuing unemployment too, of course. The realty is that we have a much smaller industrial base that will call back workers when conditions improve. This is a big reason the recession lasted as long as it did, and why the recovery is so slow: there are far fewer good-paying jobs. Instead, millions of people have been forced to settle for poorer paying jobs than the ones they once held, and often with fewer benefits. Lower wages exacerbates economic recovery.

The final kicker is one left out of most analyses that focus on the mortgage crisis. The middle class carried the economy all the way until near the end of Bush the Lesser's second term. They did so by running up massive personal debts on their credit cards. That was unsustainable, of course, so once the Wall Street bankers crashed the economy, and unemployment started to rise, middle class consumers cut back on expenses. The cutbacks were prudent for the individual, but they hurt spending, tax receipts, and other peoples' jobs that depended on spending.

This is the mess the President faced on inauguration date. None of it started with him. And the process, the wars, the deindustrialization, the irresponsible tax cuts, the eroding infrastructure, the mortgage bubble, the suppression of wages, the dominance of unaccountable banks, all of it, was well under way long before most of us had even heard of Barack Obama.

Now bear in mind that most of the same people who got us in this mess, including essentially every Republican in congress, are completely opposed to Obama's every effort to extricate us, as if we can actually dig ourselves out of the hole, the one the middle class did not dig, without some pain and sacrifice. So if Obama tries to raise taxes to where they were in the Clinton boom years, he is a big government socialist. Never mind that taxes were higher under Reagan. If he tries to cut subsidies to Big Oil, as if they they needed it, he is undermining business. If he tries to rein in our out of control defense spending, he is endangering America's security. Never mind that the level of spending he proposes would still be higher than it was in Bush's first term. And every effort to get Wall Street under greater control, before it ruins it again for the rest of us, is opposed. Republicans insisted in 2010 that the Bush tax cuts be extended, and they were willing to shut down Washington to get them.  And now, of course, Obama gets blamed for the inevitably larger budget deficit.

Republicans have left the President with few options: Republicans will continue to support looser regulations and lower taxes (for the rich). Never mind that these are what created the financial mess in the first place. Only now are Republicans insisting on lower spending, not coincidentally on the programs that help the bottom half of society. Any honest appraisal of the federal budget will show that even significantly lower spending will do little to close the budget gap, not when tax revenues-from individuals and corporations alike-are the lowest they have been in decades.

Here is a short video that covers much of the above. It offers up in graphic form the impact on the federal deficit and debt of the wars, the bank bailouts, the recession, and most of all the Bush tax cuts.

One more thing; Obama even got Osama bin Ladin, after the trail had gone cold, so no, Bush, you don't get credit.