Archive for the ‘Obama Administration’ Category

Auto Bailout Loss at $25.1 Billion

In Government Bailouts, Obama Administration on August 14, 2012 at 12:34 am

The Detroit News reported today the cumulative taxpayer loss on the auto bailouts is at $25.1 billion, as of May 31, 2012. [1]



Ethanol Uses 40% of US Corn; Can We Afford It in a Drought?

In Obama Administration, Uncategorized on August 12, 2012 at 1:42 pm


The Wall Street Journal points out, with corn prices projected to hit record levels as US supply is projected by the USDA to drop 13% to 10.8 billion bushels, [1] a rather surprising 40% of US corn production is consumed neither by humans nor animals but by ethanol. [1]

The piece doesn’t make the following point, but it is implicit: if 40% of corn production produces about 13.2 billion gallons of ethanol (because almost all ethanol comes from corn), how do we achieve 36 billion gallons of ethanol in 2022?  The US Renewable Fuels Standard requires that much ethanol by 2022, of which 15 billion is to be corn-based and 21 billion gallons from other ethanol forms (e.g. sugar), [2] but the question is how can that even be achieved?  That implies a larger proportion of the US corn crop and then an incredible amount from currently non-economically feasible, essentially non-existent sources.

International aid agencies have asked the US EPA to temporarily suspect the ethanol mandate (the US accounts for a full 60% of global corn exports) but it is unlikely to happen in an election year when President Obama trumpeted support of ethanol in battleground Iowa.  I see another failure of US government energy policy.


[2], retrieved on 8/12/12.

Picture from Wikipedia Commons.

Washington Picks Losers & Subsidizes Chinese Solar Panel Makers With Your Money

In American Recovery & Reinvestment Act (Stimulus), Government Spending, Obama Administration, Uncategorized on August 2, 2012 at 8:29 pm

The Solyndra scandal is back in the news after today’s Washington Post article,

As the Obama administration moved last year to bail out Solyndra, the embattled flagship of the president’s initiative to promote alternative energy, a White House budget analyst calculated that millions of taxpayer dollars might be saved by cutting the government’s losses, shuttering the company immediately and selling its assets, according to a congressional investigation.

Even so, senior officials in the White House’s Office of Management and Budget did not discourage the Energy Department from proceeding with its plan to restructure a federal loan to Solyndra— a move that put private investors ahead of taxpayers for repayment if the company closed, [1] 

It is not just Solyndra.  Several articles help us take the big view about what a disaster government energy “investments” are:

Like the mythical monster Hydra—who grew two heads every time Hercules cut one off—President Obama, in both his State of the Union address and his new budget, has defiantly doubled down on his brand of industrial policy, the usually ill-advised attempt by governments to promote particular industries, companies and technologies at the expense of broad, evenhanded competition.

Despite his record of picking losers—witness the failed “clean energy” projects Solyndra, Ener1 and Beacon Power—Mr. Obama appears determined to continue pushing his brew of federal spending, regulations, mandates, special waivers, loan guarantees, subsidies and tax breaks for companies he deems worthy.

Favoring key constituencies with taxpayer money appeals to politicians, who can claim to be helping the overall economy, but it usually does far more harm than good. It crowds out valuable competing investment efforts financed by private investors, and it warps decisions by bureaucratic diktats susceptible to political cronyism. Former Obama adviser Larry Summers echoed most economists’ view when he warned the administration against federal loan guarantees to Solyndra, writing in a 2009 email that “the government is a crappy venture capitalist.”

Even under optimistic projections, heavily subsidized wind and solar would each amount to a tiny fraction of global energy by 2030 and thus cannot be the main answer to energy-security or environmental problems… Mr. Obama is spending immense sums for subsidies to particular industries and technologies, almost $40 billion for clean-energy programs alone (some, appropriately, for pre-competitive generic technology). [2]

As T.J. Rodgers, CEO of Cypress Semiconductor, writes, industrial policy can have unintended effects. 

Consider the current 30% federal solar energy subsidy. A home solar system with 60 solar panels produces about 15,000 watts of power, enough to completely offset the $6,000 annual electricity bill of a typical upscale California home. The system costs about $90,000 prior to the 30% federal income-tax credit, which reduces its cost to $63,000. After a simple payback period of about 10 years, the homeowner literally enjoys free electricity for the remainder of the guaranteed 20-year system life, a very profitable 10 years.

But what if that $27,000 tax credit, the accelerated-depreciation tax savings, and most of the hefty post-payback profits went to Wall Street firms with a “tax appetite,” not the homeowner? That’s just what happens with the majority of new home solar-system installations today.

Today, most new home solar systems are purchased by special Limited Liability Corporations (LLCs) that are specifically created by Wall Street firms to purchase home solar systems and to sell power to the homeowner on a cell-phone-like contract. The homeowner does not mind giving up the tax benefits as long as the “free” system reduces utility bills.

However, when the system is paid off and the monthly LLC profit jumps to 100% of the electricity bill, the LLC solar electricity price to the homeowner is maintained just below market—and the profit really begins to roll into the LLC. Since the risks to the LLC grow as the solar systems age, many banks offload their risk by selling the LLCs before their 20-year lifetime is up, locking in much of the long-term profit. There is now a growing market for what might be called “solar-backed securities.” Wall Street understands the time-value of money; the federal government and consumers do not.

One of the largest solar-system installers in the U.S., SolarCity Corp., uses the LLC strategy and currently buys a majority of its solar panels from the low-cost Chinese supplier, Yingli. Thus when President Obama said that we must subsidize our solar industry to remain competitive with the Chinese, it would have been more accurate to say that we subsidize Wall Street to create employee-less corporations that buy and install Chinese solar panels in the U.S. Wall Street and consumers understand that free markets are borderless; Washington does not.

Just last week, the U.S. International Trade Commission found the Chinese solar industry guilty of “dumping” solar panels in the U.S. Tariffs are likely to be levied against Yingli and others. Here then, is a practical guide to the Obama administration’s nonsensical solar policy: Washington gives tax breaks to Wall Street to fund LLCs that buy solar panels from the Chinese to “help” the American solar industry, while the ITC threatens to levy a tariff on those solar panels, which would raise the price of solar energy to U.S. homeowners. In short, Wall Street pockets the money and consumers get higher solar-energy prices. [3]




Picture from Wikipedia Commons.

Obama No Friend to Hispanic Immigration but GOP No Better

In Immigration, Obama Administration on July 6, 2012 at 1:20 pm

The GOP allowed Obama to box it in on immigration.  Look at how little Obama actually did for Hispanics:

1. Obama is the top deporter in history at 400,000+ per year. [1]  He stepped up deportation audits of American employers.

“The president is trying to have it both ways–appease the enforcement hard-liners while appealing to Hispanic voters,” said Craig Regelbrugge, co-chairman of the Agriculture Coalition for Immigration Reform, a group that lobbies for a loosening of restrictions on illegal immigrants. The audits “routinely hit good employers who … treat workers well, leaving crippled farms and shattered families in their wake.” [2]

2. The President made no effort on promised immigration reform during the first two years of his Presidency, even with a supermajority in each house of Congress.  

3. In the Fast and Furious scandal, the Obama Administration illegally allowed guns into Mexico, resulting in the deaths of at least 150 Mexicans plus one US border agent. [3] 

4. Hispanic unemployment (11.0% in June 2012) remains stubbornly high and above the white jobless rate. [4]

5. The much touted Obama recent policy change on deportation delays did what?  It tells you, young undocumented person, you may stay in the US for another two years.  Then you will be deported (see #1 above).  In the meantime, your parents, your brother and your sister – all may be deported today (see #1).  Good luck fending for yourself in the meantime.  Obama offers no path to citizenship. [5]  [6]   In other words, Obama did very little but most in the GOP offer even less (exceptions exist, see Senator Marco Rubio (R-FL).  Hello, Governor Jan Brewer.

6. Obama picked fights with the Catholic Church on matters such as whether churches can choose to cover contraception in their health plans.  Some 68% of American Hispanics are Catholic. [7]

Pinata ceiling at Mi Tierra restaurant, San Antonio, Texas


President Obama took Hispanics for granted, giving the GOP an opening.  But the Republicans failed to use their chance. 

America’s dismal economy diminished the need for new workers.  Recently, immigration from Mexico dropped to net zero as many recent comers have returned to Mexico for better opportunities. [8]  Mexico now has higher GDP growth than the USA.  The fact US Hispanic unemployment is higher than whites suggests Latinos are not ‘stealing’ jobs.

Jobs accepted by fresh immigrants tend to be work native-born Americans simply will not take, such as busing tables, mowing lawns in summer heat and working in dairy farms in remote corners of South Dakota. [9]

Kung Pao chicken

The GOP’s failure to move forward with serious immigration reform allowed President Obama to offer virtually nothing to Hispanics even as he looks set to win a strong plurality of Latino votes.  Immigration is one area where what’s best for the US economy happens to be what’s in the best tradition of America (openness to people who, after all, are eager to move here).  The utter lack of progress on immigration constitutes a political failure of Obama, the Democrats and the GOP, too.




[4], accessed on 7/6/12.






Mi Tierra picture by author.  Ellis Island, Chinese-American food and famous immigrant picture (Sergey Brin, founder of Google) from Wikipedia Commons.

Supreme Court Knocks Down Curious Obama Labor Dept. Overtime Idea

In Obama Administration, Regulation on June 19, 2012 at 8:05 pm

Why is President Obama seen as so anti-business by many in commerce?  Behind the scenes, myriad government agencies fight against American enterprise everyday, often for the flimsiest of reasons.

One example of Obama Administration overreach was rejected by the US Supreme Court on Monday June 18, 2012. [1]

It is long-standing law that traveling salespeople are not covered by overtime rules.  Paying every hour a salesperson is on the road would be very expensive.  It is alrady factored into the job, which pays well. 

The Obama Administration’s Labor Department took the unique viewpoint that pharmaceutical representatives must be covered by overtime rules because they aren’t really salespeople.  Technically, government regulations already hold drug reps aren’t to “sell” to doctors but rather promote medications to doctors. [2]  That line of reasoning made me smile.  Speak of splitting hairs!

In reality, drug reps are not working differently than other traveling salespeople.  Thus, the Supreme Court upheld drug reps are not covered by federal overtime rules. 

Justice Alito said the Labor Department’s position was “quite unpersuasive.” [1]

Why would the Obama Administration invest time and expense to obtain OT for drug reps?  Sometimes we hear the Administration is concerned about medical costs yet Administration actions like this would increase costs for pharma and other medical companies.  Wouldn’t some of these higher OT costs be passed along to consumers (and the government itself as payer of Medicare and Medicaid)?

Doesn’t the Administration claim to be out for the little guy?  Drug reps earn a median, not average, pay in excess of $90,000 a year.  [2]  I’ve known a few drug reps over the years and they also receive use of a company car in order to call on doctors.

This Administration attempt was fortunately put down by the SOTUS, but is yet another example of why American business trembles about our government.



 Pictures from Wikipedia Commons.

Statistics Show 2009-12 The Weakest Economic Recovery Ever

In Economy, Obama Administration, Regulation, Unemployment on April 11, 2012 at 1:16 am

The worst economic recovery ever? 

Yes, this ‘recovery’ is worse than those following the Great Depression and the near depression of the 1980, 1981-2 double dip recessions.  Deep recessions are usually followed by broad-based booms.  Consumers and corporations have delayed needs that are typically fulfilled through accelerated purchases.  Twenty Twelve does not have a feel even remotely like robust 1984.  Few would refer to today as “Morning in America.” 

An excellent free piece (not behind the paywall) at the Wall Street Journal comes from Edward P. Lazear. [1]  Highlights follow:

The Great Depression started with major economic contractions in 1930, ’31, ’32 and ’33. In the three following years, the economy rebounded strongly with growth rates of 11%, 9% and 13%, respectively.

The current recovery began in the second half of 2009, but economic growth has been weak. Growth in 2010 was 3% and in 2011 it was 1.7%. Who knows what 2012 will bring, but the current growth rate looks to be about 2%, according to the consensus of economists recently polled by Blue Chip Economic Indicators. Sadly, we have never really recovered from the recession. The economy has not even returned to its long-term growth rate and is certainly not making up for lost ground.

Contrast this weak growth with the recovery that followed the other large recession of recent decades. In the early 1980s, the economy experienced a double-dip recession, with contractions in both 1980 and ’82. But growth rates in the subsequent two years averaged almost 6%. The high growth that persisted throughout the 1980s brought the economy quickly back to the trend line. Unlike the current period, from 1983 on, the economy was in rapid catch-up mode and eventually regained all that had been lost during the early ’80s.

It would be difficult to argue that government polices over the past three years have enhanced confidence in the U.S. business environment. Threats of higher taxes, the constantly increasing regulatory burden, the failure to pursue an aggressive trade policy that will open markets to U.S. exports, and the enormous increase in government spending all are growth impediments. Policies have focused on short-run changes and gimmicks—recall cash for clunkers and first-time home buyer credits—rather than on creating conditions that are favorable to investment that raise productivity and wages.


Pictures from Wikipedia Commons.

Justice Alito Points Out Health Insurance Mandate Would Apply to Burial Insurance

In Government Power, Obama Administration, ObamaCare on March 28, 2012 at 10:43 pm

By President Obama’s reasoning, the US government can force you to buy burial insurance.  Perhaps burial insurance will be a future “reform” that Washington will mandate on us.

Justice Samuel Alito pointed this out in Tuesday’s Supreme Court oral arguments on the Constitutionality of the insurance mandate of ObamaCare/PPACA.  As shown in the transcript below [1], Alito calls out that Solicitor General Donald Verrilli is incorrect in saying burial services are different.  The exact same logic applies. 

In fact, as shown in numerous articles [2] [3], many states have been inundated with indigent burials.  Illinois actually stopped paying for them for a time.  If the government can force you to buy health insurance lest you later receive services you cannot pay for, it can also force you to buy burial insurance.  Everyone dies and those who lack burial insurance and lack the means to pay for a burial are paid for by everyone else through indigent burials.

JUSTICE ALITO: Do you think there is a, a market for burial services? 

VERRILLI: For burial services? 


VERRILLI: Yes, Justice Alito, I think there is. 

JUSTICE ALITO: All right, suppose that you and I walked around downtown Washington at lunch hour and we found a couple of healthy young people and we stopped them and we said, “You know what you’re doing? You are financing your burial services right now because eventually you’re going to die, and somebody is going to have to pay for it, and if you don’t have burial insurance and you haven’t saved money for it, you’re going to shift the cost to somebody else.” 

Isn’t that a very artificial way of talking about what somebody is doing? 

VERRILLI: No, that – 

JUSTICE ALITO: And if that’s true, why isn’t it equally artificial to say that somebody who is doing absolutely nothing about health care is financing health care services? 

VERRILLI: It’s, I think it’s completely different. The — and the reason is that the, the burial example is not — the difference is here we are regulating the method by which you are paying for something else — health care — and the insurance requirement — I think the key thing here is my friends on the other side acknowledge that it is within the authority of Congress under Article I under the commerce power to impose guaranteed-issue and community rating forms, to end — to impose a minimum coverage provision. Their argument is just that it has to occur at the point of sale, and – 

JUSTICE ALITO: I don’t see the difference. You can get burial insurance. You can get health insurance. Most people are going to need health care. Almost everybody. Everybody is going to be buried or cremated at some point. What’s the difference? 

VERRILLI: Well, one big difference, one big difference, Justice Alito, is the — you don’t have the cost shifting to other market participants. Here – 

JUSTICE ALITO: Sure you do, because if you don’t have money then the State is going to pay for it. [1]





Government Backed Fisker Car Breaks Down for Consumer Reports

In Electric Cars, Obama Administration, Top 1% on March 12, 2012 at 1:14 am

Consumer Reports tests new cars.  Sometimes flaws are exposed but the US government backed Fisker, a subsidized $107,850 car for the ultra-rich, gave Consumer Reports a new experience when it suffered a catastrophic malfunction with less than 200 miles on the odometer. [1]

We the taxpayers are playing venture capitalists through the US government’s backing of start-up electric car companies.  Fisker, which builds its cars in Finland, received a $529 million US government loan. [2]

Consumer Reports wrote: 

We have owned our [Fisker] car for just a few days; it has less than 200 miles on its odometer…. After calling the dealer, which is about 100 miles away, they promptly sent a flatbed tow truck to haul away the disabled Fisker.

We buy about 80 cars a year and this is the first time in memory that we have had a car that is undriveable before it has finished our check-in process.

We encountered other problems with a Karma press car that visited the track for a few hours, and we have heard of problems at press events. In addition, we see that some owners are experiencing a variety of issues, as evidenced by forums such as [1]

Financing a brand new venture is always a risk.  The US government deals to back private car companies are wrong on many levels. 

First, the risk is asymmetric: if a company like Fisker is successful, the benefit goes to its investors.  They might become very rich.  At best, the US taxpayer gets its money back, but the interest rate charged Fisker is below market rates, meaning it is a lousy deal, even if successful.  At worst, companies like Fisker fail and the taxpayer is never repaid.

Second, it is an improper role of the government to back private, for-profit companies.  It is picking winners and losers.  It amazes me we hear so much about bank bailouts and the “1%”, yet few decry this sort of corporate welfare. 

Thirdly, there is no need.  Venture capital and banking are long-established in the US.  Private companies with promising outlooks will find financing without burdening the already stressed US Treasury.

Fourth, the money is subject to politics and it may or may not be coincidence Obama campaign contributors just happen to back a private electric car company that received a government loan. [2] 




For more on electric car subsidies, specifically Tesla, see also:  Pictures from Wikipedia.

$10,000 Government Cash For The Rich: $175K Earners Get Volt Rebates

In Electric Cars, Obama Administration, Tax Breaks, Top 1% on February 28, 2012 at 10:44 am

I hope you enjoy subsidizing the rich because President Obama loves the rebate checks sent to the crème-de-la-crème who can afford ultra-expensive electric cars.  Mr. Obama is proposing expanding the free money to $10,000 per vehicle.  Is this a good idea?

Sure, if you are a rich buyer of an electric car.  The average annual income of a Chevy Volt buyer is $175,000. [1]  By comparison, Nissan Leaf buyers are relative paupers, earning a mere $125,000 a year. [2] No wonder they need the check from Uncle Sam!   It turns out the Leaf isn’t attracting buyers new to hybrids for all that money, either, most Leaf buyers already have owned a hybrid. [2]  But they will get your taxpayer money, anyway.

Electric cars still have problems like short battery lives and high costs, thus the Obama Administration is determined to sell thousands more of these expensive cars through highly expensive subsidies.  I would prefer to have people use their own money to buy their cars; this is doubly so for the rich consumers who buy Teslas and Volts. [4]




[4] Rebates were $7,500 from the US Treasury (an additional $5,000 available from the State of California), pending the President’s proposed expansion to $10,000 per car.

Pictures from Wikipedia Commons.

Road Trip to See Your Tax Dollars at Work: $140,000 Car for the 1%

In Electric Cars, Federal Deficit, Obama Administration, Tax Breaks, Top 1% on February 1, 2012 at 11:30 pm

In the interest of optimizing your blog reading experience, econscius went mobile today to see what all the taxpayer subsidies are doing for us in the world of electric cars. 

I took my blog on the road to see a Tesla Roadster at a Tesla Motors showroom.  More precisely, the Tesla vehicle at a Tesla Motors showroom.  These things aren’t exactly flying off the shelves and there is only one at the nearby dealership.  The car is very sharp, indeed, but it runs about $140,000.  The base price is supposed to be $109,000 so I am unclear why they were quoting me a much higher price.  Perhaps this yellow one has some upgraded options or maybe it is just supply and demand, they only have the one for sale here.  Perhaps I’d need to negotiate better.  Nevermind, though.  If you can afford $109,000 plus Illinois sales tax, you probably can afford $140,000.

The car is an example of fine design and engineering.  If I ever sell advertising on this blog and become filthy rich, sure, it would be nice to have one or two of these in an expanded garage!

“Filthy rich”?  Does that imply the 1% to you?  You know, the folks who earn over $343,927 a year? [1]  There are not many working class people who can afford to purchase a Tesla.

I hope you don’t mind a few Reverse Robin Hood manuevers subsidizing your 1% neighbors who’d like a Tesla!  Because you are doing exactly that.  According to the IRS, this Tesla Roadster qualifies for a $7,500 tax credit under Internal Revenue Code 30D, the “Qualified Plug-In Electric Drive Motor Vehicles”. [2]

There was a tax break of up to 50% of the cost of a battery charger installed in your garage, but the new frugal Congress just ended that credit. [3]

Tesla also received a $465 million loan from the Federal Government to develop an electric sedan. [4]  Unlike some other bankrupt Obama Administration green initiatives (think Solyndra, Beacon Power or Ener1), Tesla has not yet defaulted on its loan.  Also, there actually is a car here that runs and is freeway legal in every state.  Perhaps even more surprising, the Tesla is mostly made here in America unlike the Fisker electic car which is backed by a $529 million US government loan, only to be made in Finland! [5]  Tesla liked its first loan from you, the taxpayer, so much it was requesting a new one, but that financing need seems to have died down in the wake of the Solyndra scandal. [6]   Oddly enough, Tesla has never been profitable and continues to rack up a half billion in losses, despite the taxpayer assistance and the high price of the Roadster. [5]

This roadster will only go 244 miles on a battery charge [7], so it is best for cruising around and showing off to the yard help in a 1% neighborhood; it is not for driving the kids to camp or seeing the relatives in Ohio.

Thank you for reading, but please get back to work; President Obama and your Tesla desiring wealthy neighbors would appreciate you working a bit harder to provide the taxes to fund these cool toys for the 1%!  The Obama campaign contributors who will reap the rewards if Tesla is successful [5] surely would appreciate you putting in a little ovetime so they can get richer.

I know, I know, you say “what ever happened to Venture Capital?”  Yes, it is true that way back, before 2009, private investors used to invest their own money in new business ventures.  It worked for Microsoft, Groupon, Facebook, eBay, Amazon and thousands of other companies.  But that is so pre-Obama.  Today, private investors still put forward new companies but instead of turning to Venture Capitalists for funding, you the taxpayer are to be on the hook for tens of billions in government “investments”.  Enjoy the view of the Tesla, you paid for it!

Roadster 2.5 windmills trimmed.jpg


[2],,id=214841,00.html and






Showroom picture by author.  Windmills and roadster picture from Wikipedia Commons.