Obama--another reason to distrust him

You’ve probably heard by now the “oops” incident with Obama and the Russian puppet (er . . . President) Medvedev during a chat at the nuclear summit in South Korea. In a discussion about missile defenses, Mr. Obama was overheard telling the Russian that "This is my last election. After my election I have more flexibility." Mr. Medvedev, who will soon turn over the presidency to Vladimir Putin, replied that "I understand. I will transmit this information to Vladimir, and I stand with you."

This is a chilling exchange for a couple of reasons. First of all, one of the big issues of this election will be what Mr. Obama might do in a second term once he is unchecked by any future electoral constraints. Would he unleash the EPA and other regulators that he has restrained somewhat (the ozone rule) this past year before an election campaign? Would he use his executive powers to further empower labor unions? Would he continue to pursue people of faith who don’t want to support abortion and contraception on demand?

A bigger reason we should all be worried about this exchange has to do with national security, where Congress has far less power to limit Presidential policies. A bit of background, thanks to the Wall Street Journal, is useful here. Putin wants to limit or kill U.S. missile defenses in Europe and elsewhere. Obama hasn't dared to cut such an arms control deal in his first term, but what about in a second? He has made clear his stance in previous comments. For example, in 2001, he told a Chicago TV station that "I don't agree with a missile defense system."

On Tuesday, Mr. Obama insisted his private exchange with Mr. Medvedev was "not a matter of hiding the ball" until a second term. But for those of us who have been repeatedly confronted with a man who is far more leftist than we imagined, this looks like another attempt to transform America. He won’t quit until we are another Europe—heavily in debt and unarmed.

Jerry Brown, California, and taxes

I live in California where every election year there’s something new on the ballot to hate. This year we owe our ballot loathing to Governor Jerry Brown. A recent Wall Street Journal article highlights the depressing details.

He recently agreed to adjust his November ballot initiative to include an even higher top tax rate. Previously he favored an increase to 12.3% from 10.3% today. But the government-unions that live off tax revenues had threatened to sponsor their own ballot measure raising the top rate even higher. To make sure there weren’t competing ballot measures, he and the unions agreed to back only one initiative with a top rate of 13.3%. Oh, by the way, the measure would also raise the state sales tax by a quarter of a percentage point to 7.5%, or more than 9% including the sales tax in some cities. One final reason to hate this is its duration—it will be in place seven years.

All of this is said to be necessary to balance a $9.2 billion budget deficit. Mr. Brown expects about $9 billion in added revenue, up from $7 billion in his first package. But the state Legislative Analyst's Office has already told Mr. Brown that he's crazy to think he can get that much money from a corner of the taxpayer base.

The top 1% in California pay between one third and half of all state income tax revenues, depending on the condition of the economy. California already has the fourth highest income tax in the nation, behind Hawaii and Oregon at 11% and New York City at nearly 13%. The national average for the top income tax rate is under 6%. Nine states have no income tax.

Of course, the cry is heard that this is the only way to get more money out of taxpayers. But consider an enlightening example. One of the last states to have a tax rate as high as California is proposing was Delaware in the 1970s. Its rate hit 19.8%. Then-Governor Pete du Pont cut the rate to 10.3% in 1979 and later to 5.95%. How did that turn out? Lefties would guess that all the revenues dried up. Not true. After five years the state's revenues had nearly doubled and its credit rating went from the worst to one of the best.

Now, this will be ignored by Brown and his fellow Dems. Why? Because the tax increase is simply about the political power to deliver money to the interests that live off government. But what will happen when the monies aren’t as forthcoming as the liberals hope? You guessed it . . . They'll raise taxes again—and again, and . . . .

I hold out hope that at some time the voters will wake up and realize this can’t go on. But who knows out here in the bizarre state of leftist California.

A national budget plan we should consider

OK, I'm an English major, not a math major. So I have to depend on math from others to figure out what's going on regarding budget plans in Washington. From what I've read in The Wall Street Journal, Paul Ryan's fiscal 2013 budget represents a good way forward even if the Democrats will toss it aside.

Far from retreating on Medicare, Ryan once more leads the charge by bringing back his "premium support" reform. The plan would offer seniors a fixed payment to buy insurance from a government-approved list of vendors. What's different from his proposal last year is that his formula for increasing the support payment over time would be more generous. And as part of his compromise with Oregon Democrat Ron Wyden, Mr. Ryan would allow seniors to stay on fee-for-service Medicare if they prefer. The policy bet is that seniors will migrate en masse to private plans over time given the right incentives. The compromise is an easier sell politically, though it means reform (and thus any savings) would be more gradual.

Of course, you can guess the response of the Obama team. The claim is that all of this will "destroy Medicare as we know it," but in fact it is the only reform that will prevent Medicare from destroying itself.

I really like Ryan's budget when it comes to taxes and spending. His proposal would reduce spending over a decade by some $5 trillion. On the other hand, Mr. Obama's would increase spending by $1.5 trillion above the current budget baseline. Spending as a share of GDP never falls below 23% under Mr. Obama but slows to 20% of GDP under Mr. Ryan.

Mr. Obama's budget contains $1.9 trillion in tax increases over the next decade and raises income, dividend and capital gains tax rates. The Ryan budget outlines an ambitious tax reform, collapsing today's six rates to two—25% and 10%—while retaining the 15% tax rates on capital gains and dividends and eliminating inefficient tax deductions and credits. He gets the corporate tax down to 25%, roughly the international average (right now we have the highest in the industrialized West), and below the 28% rate Mr. Obama suggests. The Ryan plan isn't a pure flat tax, but it takes the IRS code a giant stride in that direction and creates a tax system far more conducive to faster job creation and greater investment.

There are other items in the budget that appeal to me. Probably one of the best is a plan to block-grant Medicaid, food stamps and dozens of other welfare programs to states. Republican Governors have told the White House and Congress that this is a deal they would readily take: less money but more discretion and fewer federal rules. I'd much rather see entities closer to the people spend this money.

So, there are serious proposals out there for the public to consider. Or, we can listen to the soothing voice of the President, who told us some time ago that his Obamacare would save money and that the unemployment rate wouldn't go over 8 per cent.

North Korea and our failure to learn

Well, they're at it again. This time I can't place all the blame on the Obama administration. Once again, North Korea has snookered the United States. When will we learn? It would be funny except Iran can watch and play the same game.

Last week our State Department proudly announced the umpteenth breakthrough toward the goal of denuclearizing North Korea. The two sides agreed that Pyongyang would suspend uranium enrichment and other "nuclear activities" at its Yongbyon facility, allow very limited international inspection, and implement a moratorium on long-range missile launches. In State's telling on Feb. 29, we gave nothing in return for the North's (apparently) unilateral concessions, "designed to improve the atmosphere for dialogue and demonstrate its commitment to denuclearization."

We've heard this song before. The announcement contains nothing new or different from a long string of past "commitments" North Korea has broken and lied about with impunity. Pyongyang has repeatedly violated Security Council resolutions requiring it to cease nuclear and missile activities.

Here's one problem with the "new" agreement. International Atomic Energy Agency inspectors will be limited to the Yongbyon facility, which is like looking at North Korea through a straw—and at the wrong place no less. The overwhelming mass of the North's important nuclear-weapons activities have long been deeply buried in hidden locations, unknown even to U.S. intelligence, let alone IAEA inspectors.

We've also heard the one about missiles before. There was a similar moratorium in 1998, after a North Korean Taepodong missile panicked Japan by flying over it and landing to its east. That moratorium also covered only launch testing, and not the countless other critical aspects of ballistic-missile development. In response, Pyongyang simply shifted to deeper cooperation with Iran, which uses the same Soviet-era Scud-missile technology, the ban thus driving the two rogue states closer.

But here's the most disgusting part of the agreement. The U. S. says we gave nothing to the North Koreans for this deal. Oh, yeah? According to The Wall Street Journal, we are providing 240,000 tons of food aid that will almost certainly be diverted to the North Korean military and political favorites.

Keep in mind this contradicts our own statements in the past. Secretary of State Hillary Clinton said last year that "we do not intend to reward the North just for returning to the table. We will not give them anything new for actions they have already agreed to take."

So now we have played the game once again, and the mullahs in Tehran are sure to ask us to play this same game with them. It's sad.

The Golden State no more

One more blog on California, my native state. It’s so sad to see a place that I remember fondly from childhood become a warning to other states who are tempted to follow its political path.

Look at a few statistics from The Wall Street Journal. From the mid-1980s to 2005, California's population grew by 10 million, while Medicaid recipients soared by seven million; tax filers paying income taxes rose by just 150,000; and the prison population swelled by 115,000. California's economy, which used to outperform the rest of the country, now substantially underperforms. The unemployment rate, at 10.9%, is higher than every other state except Nevada and Rhode Island. With 12% of America's population, California has one third of the nation's welfare recipients.

What happened? Part of the blame lies with generous union wages and benefits, inflexible work rules and lobbying for more spending. We’ve ended up with a state that spends too much and achieves too little. For example, annual spending on each California prison inmate is equal to an entire middle-income family's after-tax income. Many of California's K-12 public schools rank poorly on standardized tests. The unfunded pension and retiree health-care liabilities of workers in the state-run Calpers system, which includes teachers and university personnel, totals around $250 billion.

Then there’s the legislature, dominated by leftist Democrats. The state lurches from fiscal tragedy to fiscal farce, running deficits in good times as well as bad. The general fund's spending exceeded its tax revenues in nine of the last 10 years (the only exceptions being 2005 at the height of the housing bubble), aided by creative accounting and temporary IOUs.

Now, our beloved governor, Jerry Brown, has come up with a way to get us out of this mess. If you guessed new taxes, you know California and its political leaders. Gov. Jerry Brown's budget increases spending next year by $7 billion and finances the higher spending with income and sales-tax hikes. Specifically, he's proposing a November ballot initiative raising the state's top income tax rate to 12.3%, making it the nation's highest, and raising the basic state sales tax rate, already the nation's highest, to 7.75% from 7.25%. You’d also not be surprised to learn this increase will not be balanced by more cautious spending. He has failed to embrace a bold reform agenda to save money, improve services, and restore confidence among the state's beleaguered taxpayers and bond holders.

What has been the result on our population of these disastrous policies? Pretty obvious--many Silicon Valley CEOs say they won't expand in California because of high taxes and burdensome regulation. And net migration has recently reversed, with hundreds of thousands of workers and their families leaving the state in search of better opportunities. Our state is near the bottom in business and tax climate and state bond ratings. It's a complex picture, but at its core is the high-tax welfare state run amok.

So what’s the take-away we have from pondering this system? Relying on ever-higher taxes to fund payments to an outsized population of benefit recipients is a recipe for exporting prosperity. That is one California trend that other states emulate at their peril.

North Dakota and California--two very different pictures

Another amazing statement from our President this past week: “we can’t just drill our way out of” our energy woes. Actually, we can. I've been reading about the tremendous shale boom that's taking place in several spots across America.

The Wall Street Journal recently highlighted one such spot known as the Bakken Shale in North Dakota. It will will later this year be producing more oil than any other site in the country, surpassing even Alaska’s Prudhoe Bay, the longtime leader in domestic output. And the oil rush is making Dakotans rich in a hurry, with farmers and other landowners becoming overnight millionaires from lucrative royalties and leases.

All this is thanks to the technological leap forward represented by hydraulic fracking, a process that allows drillers to blast through underground shale rock and pump out oil and natural gas. The good news is that projections of how much oil is here seem to grow every year. In 1995, the U.S. Geological Survey estimated 150 million “technically recoverable barrels of oil” from the Bakken Shale. In April 2008 that number was up to about four billion barrels, and in 2010 geologists at Continental Resources (the major drilling operation in North Dakota) put it at eight billion. This week, given the discovery of a lower shelf of oil, they announced 24 billion barrels. Current technology allows for the extraction of only about 6% of the oil trapped one to two miles beneath the earth’s surface, so as the technology advances recoverable oil could eventually exceed 500 billion barrels. Amazing . . .

Now for the bad news. Let's compare the boom in North Dakota with our state of California. It's not a pretty picture. While North Dakota’s oil production has tripled since 2007 (to more than 150 million barrels in 2011), the Golden State’s oil production has fallen by a third in the past 20 years, to 201 million barrels last year from 320 million in 1990. I always thought the problem was simple--we just were running out of oil here. But that's not true. In 2008, when the USGS estimated four million barrels of recoverable oil from the Bakken, it estimated closer to 15 million barrels in California’s vast Monterey Shale. So we have the oil, but we don't have the politicians willing to get it out.

What has that done for California? Let's compare some statistics. North Dakota led the nation in job and income growth in 2011. It has the nation's lowest unemployment rate, at 3.3% (California's is 11.1%), and it saw a huge 38.5% increase in its number of millionaires between 2009 and 2010, according to state tax return data. California, by contrast, lost nearly 50,000—or almost one-third—of its high-income residents ($500,000 and above) between 2007 and 2009, according to the Sacramento Bee. North Dakota is also flush with cash and a budget reserve of at least $1 billion, out of a $3.5 billion biennial budget. The state has already cut income taxes, and it is building thousands of miles of "shovel ready" infrastructure projects—roads, bridges, railroads, pipelines—without almost any of Uncle Sam's funny money. Bismarck may be the only state capital in the country that debates what to do with all its tax riches. And our state? California's budget analysts just announced their fifth straight year of fiscal disaster, with up to $6 billion of red ink for 2012-13. Budgets for schools, transportation, health care, libraries and museums are being cut, even though the state already has one of the nation's highest income and sales taxes. Gov. Jerry Brown is sponsoring a ballot initiative this year to raise those taxes yet again.

Thanks to Brown and fellow Democrats, we are suffering in this state. They and the President don't understand reality; they would prefer to live in a world of make-believe, where all our energy can come from the sun, wind, and other renewables.

A cheater and those who defend him

I’ve been reading on the internet about global warming hijinks. If the theory of man-made global warming were such a self-obvious truth, the result of scientific consensus, then why do advocates for this idea keep committing frauds to advance it? We have another story that illustrates this.


Peter Gleick, founder of the Pacific Institute for Studies in Development, Environment and Security in Oakland, admitted that he committed fraud to obtain documents he thought would embarrass a conservative think tank that has been a leading debunker of some of the overheated (get it?) claims of the climate-change Chicken Littles.


The memos, which reveal the group’s political and fund-raising strategies, didn’t turn out to embarrass the Chicago-based Heartland Institute, but it has damaged the reputation of a respected man, who now takes a leave of absence from the institute, faces public embarrassment and possible prosecution.


What’s more amazing to me is the reaction of the press to this story, according to The Wall Street Journal. A Los Angeles Times columnist, Michael Hiltzik, defended him: “It’s a sign of the emotions wrapped up in the global warming debate that Gleick should be apologizing for his actions today while the Heartland Institute stakes out the moral high ground.” Others echoed this:“Peter Gleick lied, but was it justified by the wider good?” asked James Garvey of the British Guardian newspaper. He compared Gleick’s action to that of a man who lied to keep his friend from driving home drunk. “What Heartland is doing is harmful, because it gets in the way of public consensus and action,” he argued. “If his lie has good effects overall—if those who take Heartland’s money to push skepticism are dismissed as shills, if donors pull funding after being exposed in the press—then perhaps on balance he did the right thing. … It depends on how this plays out.” Think about what he just said: Heartland was standing in the way of steamrolling the public into an ill-conceived decision on climate change, so it was OK to destroy the organization. Why not cheat, as long as it “has good effects”?


So that’s where we are in this debate. One side says it’s OK to cheat because the issue is so important and their side is correct. That’s a lot of nerve.

Israel, Iran, and Obama's new tough language

Gee, there must be an election this year? How did I come to that startling conclusion? Besides the endless Republican primaries? Think about what Obama has just done when it comes to Israel. What a U-turn after three years of trying to woo the Iranian mullahs to the bargaining table with diplomacy and slapping Israel, our best ally, repeatedly in the face.


Mr. Obama opened the annual conference of the American Israel Public Affairs Committee Sunday with a keynote whose strong talk on Iran kept the audience coming to its feet. The President took credit for isolating the Islamic Republic diplomatically and imposing a de facto oil embargo that has sent the Iranian rial tumbling. His speech follows an interview last week with the Atlantic's Jeffrey Goldberg in which Mr. Obama went out of his way to call a nuclear Iran "unacceptable." He referred to the "military component" of U.S. policy and said that "I think that the Israeli government recognizes that, as President of the United States, I don't bluff." As startling, he added that containing a nuclear Iran wouldn't work because of near-certain proliferation in the region and that "the risks of an Iranian nuclear weapon falling into the hands of terrorist organizations are profound." Did someone kidnap the real Obama and replace him with another person?? Hard to believe this is the same man who has dissed Israel over the last three years.


The timing of all this is no accident as Benjamin Netanyahu meets Mr. Obama in the White House today amid intense speculation about an imminent Israeli strike on Iran. In an interview with Journal editors on Friday, Eyal Gabbai, the former director general of the Israeli Prime Minister's office, said Mr. Netanyahu's meeting with Mr. Obama "will be the last time they can speak face-to-face before a decision is taken."


The Israelis believe Iran's nuclear programs will soon enter a "zone of immunity," beyond which they may be effectively invulnerable to a non-nuclear Israeli strike. But also driving Israeli fears is the sense that the Obama Administration isn't prepared to use military means if diplomacy, sanctions and covert acts don't persuade Iran to stand down.


Well, no wonder they don’t trust Obama. Those fears are far from groundless. Though Mr. Obama now takes credit for sanctions, his Administration fought Congress tooth-and-nail on sanctioning Iran's central bank. The President only reluctantly signed the sanctions into law as part of a larger defense bill. His aides also worked to stop legislation to cut off Iran from making financial transactions via the Swift banking consortium.


As for military strikes, senior Administration officials have repeatedly sounded as if their top priority is deterring Israel, rather than stopping Iran from getting a bomb. Here’s one example. As recently as November, Defense Secretary Leon Panetta said a military strike would have "unintended consequences" and wouldn't necessarily result in "deterring Iran from what they want to do."


It's welcome news if Mr. Obama is now trying to put those fears to rest, but he is also more outspoken than ever in trying to avert Israel from acting on its own. "Do we want a distraction in which Iran can portray itself as a victim, and deflect attention from what has to be the core issue, which is their pursuit of nuclear weapons?" Mr. Obama told Mr. Goldberg—the "distraction" here meaning an Israeli attack.


The question Mr. Netanyahu and Israeli leaders have to ponder is whether Mr. Obama now means what he says. The President has built up an immense trust deficit with Israel that can't be easily dispensed in a week. All the more so when Israelis know that this is an election year when Mr. Obama needs to appear more pro-Israel than he would if he is re-elected.


It's good to hear Mr. Obama finally sounding serious about stopping a nuclear Iran. But if he now finds himself pleading with Israel not to take matters in its own hands, he should know his Administration's vacillation and mixed signals have done much to force Jerusalem's hand. More fundamentally, a President who says he doesn't "bluff" had better be prepared to act if his bluff is called. These are serious times, and we need prayer now more than ever.