At a town hall meeting in Berea , Ohio, today, Senator Obama (D-iva), called John McCain and his campaign ignorant for mocking Obama’s tire inflation plan.

You know the other day I was in a town hall meeting and I laid out my plans for investing $15 billion a year in energy efficient cars and a new electricity grid and somebody said, ‘well, what can I do? what can individuals do’

So I told them something simple, I said, ‘You know what? You can inflate your tires to the proper levels and that if everybody in America inflated their tires to the proper level, we would actually probably save more oil than all the oil we’d get from John McCain drilling right below his feet there, or wherever he was going to drill.’

So now the Republicans are going around - this is the kind of thing they do. I don’t understand it! They’re going around, they’re sending like little tire gauges, making fun of this idea as if this is ‘Barack Obama’s energy plan.’

Now two points, one, they know they’re lying about what my energy plan is, but the other thing is they’re making fun of a step that every expert says would absolutely reduce our oil consumption by 3 to 4 percent. It’s like these guys take pride in being ignorant.

You know, they think it is funny that they are making fun of something that is actually true. They need to do their homework. Because this is serious business. Instead of running ads about Paris Hilton and Britney Spears they should go talk to some energy experts and actually make a difference.

First, as Jake Tapper points out, this is not exactly what Obama said “the other day.”  In fact, he said, “we could save all the oil that they’re talking about getting off drilling if everybody was just inflating their tires.” (Note the background laughter in the audience after he says this.  Perhaps someone at the pep rally was also proud to be ignorant.)

There’s something more devious, however, than Obama’s merely recasting what it is he said to make him look less of an idiot.  By slight of hand, he also converts a 3-4% increase in fuel economy to a 3-4% decrease in demand, and puts words in the mouths of experts who never said any such thing.

So what would this air inflation savings really mean?

1. Only about 1/3 to 1/4 of drivers have underinflated tires.  That means that the average fuel economy increase would only average out to 1-1.33%. (taking the pro-Obama number of 1/3).
2. Fuel economy is inversely proportional to fuel demand.  Put another way, a 4% increase in fuel economy is not a 4% decrease in demand.  For example, let’s say your car has under-inflated tires and gets 20 mpg as is.   If you drive 1000 miles a month, you use 50 gallons.  You then inflate your tires to get a whopping additional .8 mpg (a 4% increase).   It now takes 48.08 gallons (a savings of 3.8%).  This effect is even high as your percent increase increases.  (For example a 10% increase is only a 9.1% reduction in fuel demand.  A ).  It may seem like a small difference, but .2% of total fuel consumed in the US is 14.6 million barrels per year.  In any event, this 3.8% reduction in demand only applies to 1 out of every 3 drivers (at most), meaning it’s really a 1.27% decrease in overall demand for gasoline.
3. Finally, gasoline is not the only product made from crude oil.  Jet fuel, plastics, lubricants, waxes, asphalt and other products are made from crude oil.  Gasoline is only about 50% of a barrel of crude oil, so a 1.27% decrease in our gasoline demand may not, necessarily, result in a 1.27% decrease in overall demand for crude oil.  That would depend on what is driving demand for crude.  My guess is that gasoline and deisel are the drivers, but that may not be true year-round.

The point here is that no expert has ever said anything of the kind.  Just like Clinton’s ridiculous claim that “Russian missles are no longer pointed at our children,” this comment is made of thin air.

The media have been screaming bloody murder over Exxon’s recent quarterly results. Even the Anointed One has decreed that these profits are “excessive” and has announced a blatantly socialist plan to further tax Exxon so that he can buy votes with $1000 stimulus checks.

While it’s true that Exxon’s net profits of $11.7 billion is a record quarterly profit for any company, the numbers are far more interesting.  Mark Perry at iStockAnalyst points out that Exxon paid 3 times that amount in taxes already!

As I noted briefly in his comment section, if you simplify Exxon to be solely a gasoline vendor, here is how the average $4 per gallon price breaks down:

That means, all tolled, the government (federal, state and local) receives $1.23 per gallon and Exxon receives $0.31 per gallon.

So, who’s making the windfall profit?

By the way, the $2.46?  That mostly goes to foreign governments who own the only lands our Congress will allow us to drill.  I’m sure that will end well.

UPDATE: By the way, if Obama’s $50 billion stimulus plan were enacted, the taxes would (as they are now) merely be passed on to the consumer.  Meaning that, assuming for simplicity sake, everything else remained constant, Obama’s $50 billion would add $1.32 to the price of gasoline.  Even if you assume Exxon’s profits went to zero, the price of gas would instantly go up to about $5.00 per gallon.

$5/gallon gas in January?  Yes We Can!

UPDATE #2:  One reader pointed out that Obama’s plan would spread his “windfall profits tax” over 5 years (and presumably more oil companies than just Exxon).  That would only increase the price to about $4.30 or so.

Jim Gereghty at the Campaign Spot points out Obama’s flimsy New Math on tire pressure.  I agree with Jim in general, but I think there’s an easier way to make the point.  First, Obama’s connecting this with offshore oil drilling is ridiculous.  That’s like a doctor telling a man with a cold, if you lay down part of the day, you’d cough less and you won’t need so much cough syrup.  Okay, but why don’t I do both, would that be better?

In any event, Obama is claiming that properly inflating tires would have a significant impact on gas prices.  Let’s take Jim’s assumptions and see:

Assuming:

• The average commuter commutes 33 miles per day;
• The average car gets 24 mpg (unlikely, but okay);
• Improper tire pressure decreases efficiency by 2.5 mpg (average of 2-3 mpg);
• And 1 out of 3 commuters has improper tire pressure.

Take three random commuters: two travel 33 miles each at 24 mpg (1.375 gallons per day) and the other at 21.5 mpg (1.53 gallons).  The evil, unAmerican commuter is wasting .16 gallons per day.

To put into perspective, this means that uninflated tires increase domestic demand by .16 gallons for every 4.125 gallons.  (All three commuters with properly inflated tires would use (1.375 * 3 = ) 4.125 gallons.)   Put another way, this is an effect of less than 4% (.16 / 4.125).

Assuming you believe in the law of supply and demand, a 4% decrease in demand should correspond to at most a 4% decrease in price.  This ignores effects like stockpiling and the cost of the federal beauracracy needed to ensure compliance.  If the average price of gas is now roughly $4.00 per gallon, a 4% decrease would make it $3.84, saving $.16 per gallon.

To sum up, forcing every motorist to properly inflate their tires would save, at most, $.16 per gallon.

In contrast, the federal tax on gasoline is $.184 per gallon.  Wasn’t there a candidate who said that eliminating this tax was a “typical Washington gimmick” that wouldn’t amount to any real savings?

There are two conflicting views of reality fluttering through the Democratic Congress and both involve the effects of speculation.  On the one hand, Harry Reid and Nancy Pelosi are absolutely convinced that speculators are driving up the price of oil.  On the other, Chuck Schumer is equally convinced that his open and public speculation about the financial health of a bank had no effect on its immediate collapse and takeover by the FDIC.  The terrible truth is that, like Democrats on most issues, they are both provably wrong.

When a market participant decides to buy (or sell) a futures contract on oil, they are betting that the future price will rise (or fall).  These “evil, manipulative speculators” are people who use oil or gas and need to manage their risk.  For example, if you run an airline, a large portion of your cost is the cost of fuel.  Unfortunately, there is no market for managing the risk of refined Jet-A fuel, so you have to rely on the proxy of crude oil.  For example, let’s say the price of oil on July 1, 2008 was $140 per barrel.  You believe the price will go up in a year, so you buy several contracts that will, theoretically let you buy oil in a year at today’s price.  If, on July 1, 2009, the price of oil is $200 per barrel, you have a piece of paper that allows you to buy a barrel for $140 and the other party makes up the difference.  If, on the other hand, the price goes down to $100 per barrel, you have to pay $140 (in reality, you pay $40 to the counterparty and no oil changes hands).

So, if your company uses a lot of oil, and you’re worried the price will go up, you would buy a lot of these contracts.  If the price does, indeed go up, you have the “profits” from the future contracts to offset the increased cost.  In other words, you enter into 10,000 of those contracts, your cost of jet-A goes up by $400,000, you can offset that cost by the $400,000 you receive from the futures contract.  As you (hopefully) can tell from my description, no where in the futures market is the price of oil manipulated.  People are speculating (that’s a Harvard word for guessing) about whether the price will go up or down, but no oil changes hands.

This is very similar to betting.  I can assure you from personal experience that betting on a team to win will in no way effect their chances of winning.  If Harry Reid were right about this, the favorite would win every sporting contest.  (And his home state of Nevada would lose a ton of legal and illegal revenue).  There is no economist that I’m aware of who has ever said that speculating has an impact on price.  Indeed, as the Wall Street Journal pointed out, when the federal government banned commodity trading on onions the result was a disaster.  When market participants could not manage their risk, prices became more volatile, not less.  Learning from history, it seems, is not a part of the Democratic agenda.

Separately, Chuck Schumer (D-umbass) and senior senator from New York, decided he wanted to collapse a bank, apparently to prove he could do it, or more cynically, to advance the leftist anticorporate agenda.  His public letter questioning the solvency of Indymac led to two weeks of frantic withdrawals by depositors.  After the federal government needed to step in on Saturday and take over the bank, Schumer, surprising no one, tried to blame Bush.  after causing the bank collapse, Schumer charged that president Bush had “blamed the fire on the guy who called 911.”

This is how stupid or dishonest Chuck Schumer is.  Either he is so dumb that he doesn’t realize that openly questioning the solvency of a bank would cause its depositors to withdraw their money, or he is so dishonest, he believes that you are so stupid that he can get away with it.  When a sitting U.S. senator (frequently referred to as a failed lawyer) on the senate banking committee openly questions the solvency of a major bank, there are consequences.  People who either (1) still have faith in their goverment or (2) realize who monumentally stupid such a thing is to do; will rush to their bank and take out their money.  As Mr. Schumer appears immune to any real facts, he might want to re-watch “It’s a Wonderful Life,” as this was a major plot point.

Mr. Reid is the kind of idiot who thinks gamblers have an impact on the game.  Mr. Schumer is the kind of idiot who, when hiding with the Franks in the attic, sees nothing wrong with shouting “DO YOU THINK THE NAZIS CAN HEAR US?!?” in the middle of a ghestapho raid.

If this is not the height of government stupidity, I fear what that might look like. The city of Washington D.C. (which, you’ll recall, is federal property overseen by the United States Congress) bought 3 electric streetcars three years ago for a total price of $10,000,000. Why? No one really knows, as the city does not have the overhead power lines needed to run the cars, nor does it have a plan to build them.   So the streetcars remain in a factory in the Czech Republic, presumably where the person who bribed the incompetent idiot in D.C. works.

Your tax dollars at work.

April 14, 2010

In an effort to alleviate decreasing consumer confidence and skyrocketing food and energy costs, President Obama announced a broad tax relief package today. The plan, which is modeled after President Obama’s anti-foreclosure plan, allows federal judges to reduce the tax burdens of those who cannot afford the fat, bloated government they purchased.

“Just like the economic recovery plan I proposed when running for president,” noted President Obama, “this plan allows for an ex post facto repricing. If a taxpayer is having trouble paying for the enormous bloated bureaucracy they bought when they elected me and my fellow Democrats, they can declare bankruptcy and a federal judge will be empowered to adjust their tax burden.”

Critics of the plan note that it will create what one Senator calls “a reverse ponzi scheme.” At first, the lower middle class will begin to file bankruptcy, “which will increase the burden on those left paying taxes, causing them to file for lower taxes. Eventually, you won’t have anyone left to pay taxes except George Soros, Hillary Clinton and Al Gore.”

President Obama dismissed these claims as unhopeful, saying “I find your lack of hope disturbing.” John Sweeney, the new Secretary of the Treasury, noted that the plan would be “as, if not more successful as the anti-foreclosure rule.” The Treasury department reported that exactly zero home foreclosures have occurred since last month, down from 25 the previous month.

“We have not seen the ‘dramatic’ increase in interest rates predicted by the so called ‘experts,’” noted Secretary Sweeney. The nationwide average interest rate on a 30 year mortgage remains steady at 24%.

I’ve been off for a week, in the words of a liberal friend, “gleefully” enjoying the Spitzer ordeal.  I try not to take joy from the misery of others, but in Eliot Spitzer’s case I will make an exception.  Mr. Sptizer built his career on overzealous prosecution.  he used tactics more fit for totalitarian states, personally threatening those who had the audacity to challenge him or his politically motivated prosecutions.  His holier than thou attitude should never be condoned in government service, but because he attacked those evil corporations, the media “gleefully” allowed it to pass without challenge.

The fact that Mr. Spitzer’s downfall involved prostitution comes as a surprise.  In fact, it demeans the oldest profession.  As part of the libertarian wing of the Republican party, I have no moral conviction against prostitution.  It is illegal, but as Michael Barone points out, not really illegal.  It is only illegal around election time when politicians need to justify their over inflated budgets.  Anyone who has spent more than 5 minutes on Craigslist knows how to get hold of a prostitute.  If it were really illegal, why is it so easy to find?  Of course, sometimes the best you can do is charge Capone with tax evasion.

As for Mrs. Spitzer and her children, I have nothing but the greatest of sympathy for them.  I would assume that they feel more betrayed than anyone, though the NY Times has reported that Mrs. Spitzer encouraged her husband to stay governor.  That is a curious bit of trivia as most people in her shoes would be perfecting their Lorena Bobbit impression, not engaging in career counseling.

Also interesting is the fact that it was the New York Times that broke the story in the first place.  Is it completely coincidental that this exposé comes only a few weeks after a botched hit job on Mr. McCain?  As one commentator noted, Republicans must beware the ides of March.  Surely the media will not let a Democratic scandal go without a Republican one of equal or greater value.  In fact, most mainstream media are not even mentioning the fact that Mr. Spitzer is a Demorcat, or even a Hillary supporter.  (In fact, one news agency even called him a Republican).  This labelling campaign is one of the most subtle and damaging forms of media bias.  If you listen carefully, you will notice that only Republicans and “independents” do bad things in the media.

The irony in this case is, just by itself, delightful.  Apparently, Mr. Spitzer had created shell bank accounts and had been making large cash deposits and withdrawals.  That raised suspicions with his bank, who filed suspicious activity reports with the IRS and FBI, as required by laws that, ironically, Mr. Spitzer championed.  Following his lead, though with far less fanfare, federal prosecutors followed the money all the way to Kristen.   There are two important differences between the prosecutors who brought down Mr. Spitzer and the former governor himself: (1) they didn’t need a media smear campaign to coerce a confession; and (2) their criminal charges will stick.

As I said, I don’t believe prostitution should be illegal.  I don’t believe anyone should go to jail for what is really a moral issue and a victimless crime.  But, in Mr. Spitzer’s case, we should make an exception.  He built his career on prosecuting businessmen for practices that were not only legal (as evidenced by his stunning 0-fer conviction record), but also commonplace.  Mr. Spitzer should be made to live up to his own standards.  Especially after the unremorseful speech he gave.  Al qeada operatives have appeared more contrite.

Finally, I can’t let this go without repeating a the funiest Spitzer comment I’ve heard.  As you probably have heard, Spitzer allegedly asks his prostitutes to “do something that most people might not think is safe.”  As one Fark commentator put it, “yeah baby, run an under-capitalized hedge fund for me!”  Alas, Spitzer is revealed to the world for what he is, a bad joke that you need a law degree to fully appreciate.

The IRS announced today that it would send letters to 130 million U.S. tax (presumably) payers to make sure these people take advantage of its free money giveaway. At a cost of now $.42 each, that’s almost $55,000,000 in additional government waste to encourage people who are too stupid or out of touch to file for a rebate. That is, of course, in addition to the $55 million it will spend to send the checks totalling $168 billion to those, confessedly, idiotic taxpayers.

Is it just me, or is there something terribly wrong here? I, of course, am too wealthy to qualify for these rebates. As one of those “fat cats who don’t pay taxes,” last year I paid over $90,000 in taxes last year (not including sales taxes, telecommunications excise, you-don’t-pay-enough-so-we’ll-charge-you-more taxes (state and federal) and countless indirect taxes on luxury items, like milk and gasoline). In fact, I’m so wealthy that they made a special “alternative” tax just for me.

All of this wealth, and yet my wife and I have one car, can’t afford to buy a house and still have over $100,000 in consumer and student loan debt. It’s great to be wealthy, I just wish it didn’t cost so much.

Of course, there are people who are less fortunate. People like George and Martha Doughn-Reade, who make less income than me, yet still decided to take out an interest only adjustable rate mortage to buy a house they couldn’t possibly afford. It doesn’t take a high-priced Manhattan lawyer to tell you that your payments after the interest-only period will nearly double, or worse.

Now that they’re in trouble, the government also wants me to step in and bail them out. So I’m paying for some schmuck to live in a house that I can’t even afford. To make things worse, the fact that this guy won’t be forced to sell his house means the inflated housing market will stay inflated that much longer. And to top it all off, even the government doesn’t think Mr. and Mrs. Doughn-Reade are smart enough to know there’s a rebate waiting for them. Must be an election year.

Now, the purpose of these rebates is to stimulate the economy. How, exactly, is someone who doesn’t know that an interest-only ARM is a bad idea, going to stimulate the economy with $600 in their pocket? Not to mention that this is a person who, according to the IRS, still doesn’t know that he or she qualifies for that rebate?

If you really want to stimulate the economy, (1) stop robbing people who are making a good living and (2) take your $168 billion and give it to small businesses, who are the heart and soul of the American economy. Of course, what do I know? I’m just one of the “top ten percent” who don’t pay any real taxes.

June 16, 2013

California governor Nancy Pelosi signed the Minority Birthrate Equivalence legislation today. The bill, which requires all child-bearing couples to ensure that at least 50% of their offspring belong to “specified groups.” The law, which is retroactive to January, is designed to alleviate the pressure on California companies subject to the Minority Hiring Requirements Law of 2009.

Under the MHRL, all California companies are required to hire at least 50% of their employees from minority or “specified groups.” The specialty groups include racial minorities as well as the 27 “alternative sexual preference” groups. “This has been particularly difficult,” notes Henri Sunnible, professor of Social Quotas at University of California, Berkely. “You have to understand, that, by their nature, minorities represent less than 50% of the population.” Professor

“By encouraging families to have alternative children, and punishing those who do not, we will be ensuring that California companies will have a broad and diverse employee pool in 18-35 years, when these children enter the workforce,” explained Governor Pelosi.

The MHRL followed California’s passage of the Race-based Charity Enforcement Law, which required all charities to be at least 50% controlled by and donate at least 50% of their proceeds to “specialty group” charities.

October 10, 2011
The Clinton administration, in an effort to the “Health Insurance for All” program, is looking into the criminalization of poverty.  “Garnishment of wages is just not working, and we still have a significant number of uninsured in this country,” noted one administration official. 

The Department of Garnishment Redistribution and Administration of Benefits has noted that many workers are simply not cooperating with the mandatory insurance enrollment program.  “If people aren’t going to cooperate by earning enough money, we’re going to have to get more aggressive,” noted Hahn Dowt, a GRAB administrator.  “I think there are a number of mechanisms that are possible, including arresting those who refuse to make enough money to pay for their own healthcare.”