January 2012

Fumento on the Tube

by Michael Fumento on March 15, 2010

in Odds & Ends

Fox & Friends, Fox Channel (duh!), 8:35 AM Tuesday.

Dodd bill punishes Main Street entrepreneurs, rewards Fannie and other high rollers

by John Berlau on March 15, 2010

in Bailout Watch, Deregulate to Stimulate, Economy, Legal, Personal Liberty, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Zeitgeist

With the focus this week on health care’s “home stretch” and concerns about government limiting the ability of ordinary Americans to make choices about medical treatment, another threat to freedom is accelerating this week that could harm Americans’ abilities to start a business, invest for retirement, and get affordable home and auto insurance policies. Today, after abruptly shutting down earnest negotiations between Senate Republicans, Senate Banking Committee Chairman Chris Dodd announced a partisan so-called financial regulatory reform bill that he will try to ram through his committee within a week.

Dodd’s bill would do nothing to put restrictions on two entities that were proximate causes of the housing bubble, the government-sponsored Fannie Mae and Freddie Mac, and instead would hit Main Street businesses and entrepreneurial firms that had nothing to do with the crisis. The bill’s specific provisions would penalize the corporate structure of public companies from Google to Warren Buffett’s Berkshire Hathaway, tax prudent banks and stable home and auto insurers and their policy holders to pay for the bailout of the next Lehman or AIG,depress revenues from incorporation fees in Sen. Harry Reid’s Nevada and Vice President Biden’s Delaware by federalizing corporate governance laws, and put thousands of retailers who issue gift cards or even offer layaway plans under a new Federal Reserve bureaucracy to regulate credit.

The one virtue the Dodd bill has is making the President of the Federal Reserve Bank of New York subject to Presidential nomination and Senate confirmation. But that will not fix the bill’s many other provisions giving the Federal Reserve direct regulatory power over thousands of America’s big and small businesses without more transparency and accountability for the entity itself.

Here are the highlights of some of the main provisions for the economy.

1.  The Shareholder Rights jujitsu with “proxy access” and other corporate governance mandates.

According to Politico, so-called “proxy access” language was one of the main issues “not resolved.” There is good reason for it was not resolved is because proxy access has nothing to do with complex financial products and everything to do with empowering shareholder groups on the Left, such as union pension funds, to pressure public companies to bow to their various agendas.

For more than 150 years, state law has governed the director nomination and election process for corporations and their shareholders. In states such as Delaware and Nevada, where many companies are incorporated, any shareholder can nominate a candidate for the board, but that candidate has to pay for the campaign out of his or her own pocket. Under Dodd’s bill, the federal government would force the companies and other shareholders to subsidize the campaigns of dissident shareholders and include them in a company’s proxy materials.

But as I have written in BigGovernment.com, subsidizing shareholders to let them run director candidates on the cheap opens the floodgates to special interest agendas that hurt the bottom line for ordinary shareholders. “Groups from unions to animal rights groups could run their own candidate for corporate directors and promote their special interest agendas at the company’s (and ultimately other shareholders) expense.”

The bill also takes the unwise step of forcing companies to justify having the same person serve as chairman and CEO. Some corporate governance activists have flagged this as a bad practice, but there is no evidence it harms shareholder returns. In fact, shareholders of Google and Berkshire Hathaway seem quite pleased with their CEOs – Eric Schimidt and Warren Buffett, respectively (both of whom supported Obama) — also serving as chairmen, and would be quite angry if the government were to penalize this practice that had been so effective for these companies’ growth.

Finally, the one-size fits all corporate governance procedures would greatly reduce the competitiveness of Delaware and Nevada in attracting firms from all over the world incorporating their because of the variety of corporate structures the states allow that work both entrepreneurs and investors.

More to come.

Mike on TV

by Michael Fumento on March 15, 2010

in Odds & Ends

Neil Cavuto again, 4:10 EST today, FoxBusiness, Prius hoax.

Regulation of the Day 126: Cheese-Rolling Races

by Ryan Young on March 15, 2010

in International, Nanny State, Personal Liberty, Regulation, Regulation of the Day

One of Great Britain’s most light-hearted traditions is the cheese-rolling race. Every year on the May Bank Day holiday, wheels of cheese are rolled down Cooper’s Hill in Brockworth, Gloucester. Adventurous and/or foolhardy souls roll down the hill in hot pursuit; the one who gets a hold of the cheese before reaching the bottom of the hill wins. You can watch a video of last year’s race here. Winners get to keep the cheese as a prize.

Cheese-rolling races have been held at Cooper’s Hill since the 1800s. Until this year, that is. Health and safety regulators shut down this year’s event because it has become too popular. The Daily Mail reports:

More than 15,000 spectators turned out last year, which, at three times the site’s capacity, means it has ‘outgrown the location’.

Richard Jefferfies, one of the organi[z]ers, said: ‘‘We have had to cancel on the advice of the police and local authorities this year because of the issues of health and safety and other aspects.

‘As well as concerns about the safety of the crowd and the competitors, local landowners were also worried by the amount of damage done by people climbing over fences and that sort of thing.’

It is hoped the races will return next year.

Increase sugar imports and reduce prices

by Fran Smith on March 15, 2010

in Agriculture, International, Trade

Today the front page of the Wall Street Journal published an article (subscription required) focusing on the current fight to increase the amount of sugar certain countries can export duty-free to the U.S.  Those quotas are part of the U.S. sugar program, together with the program’s price supports and domestic production restrictions; it has long needed to be dismantled.  But the major opportunity to do so – the last farm bill —  just made the sugar program worse.  The  centrally controlled program results in U.S. sugar prices usually double the world price, which means consumers pay more for many products, and sweetener-using companies look for opportunities in other countries where their sugar costs are less.

There is limited flexibility in the sugar quota system, whereby about 40 countries are allowed to export a predetermined amount of sugar without tariffs; above that amount, stiff tariffs are levied.  Before April 1 the U.S. Secretary of Agriculture can increase the quotas if there is an emergency or disaster.  After April 1, the USDA  can reallocate the quotas or increase them. Sweetener users say that more imports are needed mainly because of the price differential between the U.S. and world sugar price but also because users may face a shortage of domestic sugar in the near future.

CEI has long pushed for the abolishment of the sugar program.  See here and here and here for a few CEI publications on the sugar issue.

ObamaCare’s Enormous Cost Is Hidden by Dishonest Gimmicks, Says New York Times Columnist Who Supported Obama in 2008

by Hans Bader on March 14, 2010 · 6 comments

in Health and Illness, Healthcare, Insurance, Politics as Usual, Precaution & Risk, Regulation, Sanctimony

New York Times columnist David Brooks, like other columnists at that staunchly liberal newspaper, supported Obama in the 2008 election. But even he can now see that Obama’s health care plan is full of dishonest gimmicks that hide its enormous cost and the fact that it will drive up the deficit and health-care costs:

They’ve stuffed the legislation with gimmicks and dodges designed to get a good score from the Congressional Budget Office but don’t genuinely control runaway spending.

There is the doc fix dodge. The legislation pretends that Congress is about to cut Medicare reimbursements by 21 percent. Everyone knows that will never happen, so over the next decade actual spending will be $300 billion higher than paper projections.

There is the long-term care dodge. The bill creates a $72 billion trust fund to pay for a new long-term care program. The sponsors count that money as cost-saving, even though it will eventually be paid back out when the program comes on line.

There is the subsidy dodge. Workers making $60,000 and in the health exchanges would receive $4,500 more in subsidies in 2016 than workers making $60,000 and not in the exchanges. There is no way future Congresses will allow that disparity to persist. Soon, everybody will get the subsidy.

There is the excise tax dodge. The primary cost-control mechanism and long-term revenue source for the program is the tax on high-cost plans. But Democrats aren’t willing to levy this tax for eight years. The fiscal sustainability of the whole bill rests on the naïve hope that a future Congress will have the guts to accept a trillion-dollar tax when the current Congress wouldn’t accept an increase of a few billion.

There is the 10-6 dodge. One of the reasons the bill appears deficit-neutral in the first decade is that it begins collecting revenue right away but doesn’t have to pay for most benefits until 2014. That’s 10 years of revenues to pay for 6 years of benefits, something unlikely to happen again unless the country agrees to go without health care for four years every decade.

There is the Social Security dodge. The bill uses $52 billion in higher Social Security taxes to pay for health care expansion. But if Social Security taxes pay for health care, what pays for Social Security?

Earlier, health care cost expert James C. Capretta explained how “Obamacare Is A Budgetary Disaster” that will cost at least $1.4 trillion more than promised.

The Congressional Budget Office, which refused to question Obama’s gimmicks to lowball the cost of his health care plan, nevertheless admits that “President Obama’s policies would add more than $9.7 trillion to the national debt over the next decade.”

There are $3,000,000,000,000 in tax increases in Obama’s budget.  But he’s spending money at such a furious pace that the deficit will skyrocket anyway: “The president’s budget would borrow 42 cents for each dollar spent in 2010,” and “double the national debt over the next decade.”

Obama’s healthcare plan will further increase deficits, as even Democrats have admitted.   ObamaCare would reduce medical innovation, raise taxes, drive up insurance premiums, break campaign promises, and increase state deficits.  It  would cut the quality of  care, while imposing restrictions that failed when tried at the state level.  It ignores advice from experts about how to cut costs.

Obama recently ran up the largest budget deficit in history, by a huge margin.

Fumento scheduled for Today Show Monday AM on Prius Hoax

by Michael Fumento on March 14, 2010

in Nanny State, Precaution & Risk

No guarantees! Starts at 7AM EST. Regarding my Forbes expose on the Prius Balloon Boy, James Sikes.

Gov’t report backs up my Prius hoax revelation

by Michael Fumento on March 14, 2010

in Regulation, Sanctimony

As I reported in Forbes Online on Friday, and am scheduled to discuss tomorrow on NBC’s Today Show (beginning at 7AM EST), the Balloon Boy in a Prius incident was baloney from beginning to end. Now a congressional memo available in its entirety online has provided further substantiation based on an analysis of the vehicle.

Here’s a summary of what I reported in Forbes, which is essentially a summary of what nobody else in the entire U.S media reported:

Sikes repeatedly says he stood on the brakes or lay on the brakes and he couldn’t even slow the vehicle. Yet Car and Driver tested three cars at full throttle at 100 mph and brought them all to a full stop, including a 540-horsepower Mustang. The 2008 Prius has 110 anemic ponies under the hood.

You can listen to the tape of the 911 operator repeatedly begging Sikes to either stop the engine with the ignition button or put the car into neutral. Sikes never says these functions didn’t work; he says he was afraid to try them giving various contradictory or absurd reasons.

Regarding his refusal to shift into neutral, Sikes told CNN “I was afraid to try to [reach] over there and put it in neutral. I was holding onto the steering wheel with both hands – 94 miles an hour in a Toyota Prius is fast.” Yet:

• We know he spent most of the ride with a cell phone in his hand.

• He claims he reached all way under the dash to try to physically pull up the floored accelerator. I have average-length arms and can barely touch the pedal in the full up position. There’s an excellent chance Sikes is physically incapable of what he claims. Nobody asked him to repeat the motion. In any case it’s an incredibly awkward movement for somebody who insisted he couldn’t take his hands off the wheel.

• Finally, the 2008 Prius shift knob is mounted on the dash inches away from the steering wheel, expressly to allow shifting without lifting the right hand.

And here’s something I missed in the original piece, though it’s included in the version on my website: After Sikes stopped the assisting officer observed that the accelerator was in the up position. Why would stopping the car make it pop back up? That makes no sense.

Sikes turned out to have a checkered past. He is $700,000 in debt and owes $20,000 of that on his Prius. He also has a history of filing insurance claims for allegedly stolen items. In other words, it was already case closed. The memo is just playing pile on.

It says that during two hours of test drives of Sikes’ car Thursday, technicians with Toyota and the National Highway Traffic Safety Administration failed to duplicate what Sikes had described. “Every time the technician placed the gas pedal to the floor and the brake pedal to the floor the engine shut off and the car immediately started to slow down,” the document written by the Republican staff of the House Committee on Oversight and Government Reform said.

Also, the Prius is designed to shut down if the brakes are applied while the gas pedal is pressed to the floor. If it doesn’t, the engine would “completely seize,” according to the report citing Toyota’s “residential Hybrid expert.”

“It does not appear to be feasibly possible, both electronically and mechanically that his gas pedal was stuck to the floor and he was slamming on the brake at the same time,” said the memo.

Naturally Sikes’ attorney said “Pay no attention to those facts behind the curtain!” He seems to think it important, as I’ve heard others also say, that Sikes says he has no intention of suing Toyota. Granted I happen to be a lawyer but a quick Google search reveals he couldn’t have sued Toyota in any case. He was physically unhurt. While California is one of the few jurisdictions allowing suits for unintentional infliction of emotional distress, it allows it in only three specific circumstances and Sikes alleged wild ride falls under none of them.

The media will insist that until the government report came out they had no way of knowing. Go back to the beginning of this blog and read what I wrote in Forbes. The evidence was there all along and I reported it two days before the memo was leaked.

Ultimately Sikes has proved himself to be dumber than the proverbial box of rocks. He only got as far as he could because while journalists in school are taught, “If your mother says it, check it out” in this case their motto was “In Sikes We Trust.”

Why, after all, didn’t they question the congressional testimony of Rhonda Smith that their Lexus suddenly accelerated on its own to 100 mph and nothing she tried, including braking, putting the car in neutral, or even turning off the engine worked. Yes, four of the car’s functions all froze at once. What saved them? “God intervened,” they said. Inexplicably, they sold this creature to somebody else who drove it 27,000 trouble-free miles before selling it to NHTSA.

Like Congress, the media wanted to believe. They wanted a piece of Toyota’s hide and they weren’t about to allow little things get in the way – such as that demonic possession of automobiles might make a good plot line for Stephen King novels but has no place in the investigation of possible wrongdoing on the part of a car company.

$3,000,000,000,000 in Tax Increases in President Obama’s Budget

by Hans Bader on March 13, 2010 · 1 comment

in Deregulate to Stimulate, Economy, Employment, Health and Illness, Healthcare, Insurance, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere, Trade, Zeitgeist

The president’s proposed budget raises taxes by three trillion dollars over the next ten years, notes Washington fiscal analyst Brian Riedl in the Wall Street Journal.  Yet, in spite of that, “The president’s budget would borrow 42 cents for each dollar spent in 2010,” and “double the national debt over the next decade.”

The Obama administration recently ran up the largest budget deficit in history — so big that the monthly deficit was much bigger than George Bush’s entire annual deficit in 2007.

The president wants a new $267 billion stimulus package, on top of the $800 billion one that passed earlier.  Obama claimed the stimulus package was needed to avert “irreversible decline.” But the Congressional Budget Office concluded that the stimulus package will actually cut the size of the economy in the long run.

Unemployment has skyrocketed past European levels, as big-spending countries have fared worse than thrifty ones.  As the Examiner notes, “If his stimulus program was approved, Obama promised, unemployment would not go above 8 percent this year. The reality is that it passed 10.3 percent.”

The stimulus package destroyed thousands of real world jobs in America’s export sector.  Meanwhile, the administration claimed credit for creating thousands of imaginary jobs in non-existent congressional districts.  The stimulus is full of wasteful spending.

“President Obama’s policies would add more than $9.7 trillion to the national debt,” the Congressional Budget Office said.   That’s roughly fifteen times the cost of the Iraq and Afghanistan Wars combined.

The president’s health care proposals will add still more to the national debt, through budget gimmicks.  Even Democrats have expressed alarm about their unaffordable cost.   Their true cost, experts say, is at least $2.3 trillion, dramatically increasing the budget deficit.   ObamaCare would reduce medical innovation, raise taxes, drive up insurance premiums, break campaign promises, and increase state deficits.  It  would cut the quality of  care, while imposing restrictions that failed when tried at the state level.  It ignores advice from experts about how to cut costs.

In the 2008 campaign, Obama promised a “net spending cut,” but as soon as he was elected, he proposed massive spending increases.

Video from my Prius hoax appearance with Neil Cavuto

by Michael Fumento on March 13, 2010

in Nanny State, Odds & Ends, Precaution & Risk

I was on Neil Cavuto’s show on Fox Business for five minutes yesterday regarding the Toyota Prius hoax. Personally I refuse to look at it because I HATE watching myself on TV. But I can’t deny other the right.

Once you’ve seen the video clip, read the article!

THEN while on my website read my LA Times article “Toyota Hysteria” and check out my blogs on the Toyota witch hunt. In a broader sense, it’s all a hoax.

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