“Against all odds and expectations, enrollments in health plans qualified under the Affordable Care Act are surging Monday toward — and maybe beyond — the 7-million figure projected by the Congressional Budget Office before Oct. 1, when the open-enrollment period began. The deadline for starting enrollment applications for 2014 plans is midnight Monday.

“The surge is creating a big problem for the ‘train wreck’ narrative of Republican opponents of the ACA, who have been holding out hope for Obamacare’s utter failure. So the excuse-making has begun.”

Here’s what’s really going on, in particular with Covered California, our state’s implementation of Obamacare.

Item 1:

“LA MESA, Calif. – A local couple called 10News concerned after they received an envelope from the state’s Obamacare website, Covered California. Inside was a letter discussing voter registration and a registration card pre-marked with an “x” in the box next to Democratic Party. 

“The couple – who did not want their identity revealed – received the letter and voter registration card from their health insurance provider Covered California, the state-run agency that implements President Obama’s Affordable Care Act.”

Yep, it’s really all about registering more Democrats, who then will vote for more socialist programs.

Well, not all about that.

Item 2:

“SACRAMENTO (CBS13) — On the deadline to sign up for health coverage through Covered California, some hearing-impaired residents were sent to a chat line offering ‘hot ladies’ instead of an insurance navigator.”

That must be what Hiltzik means about there being no “train wreck” over Obamacare.

Mostly because of Gov. Andrew Cuomo’s dithering and pandering,  nothing seems to be changing in the Empire State, where a fracking moratorium is looking more and more permanent.

But Europe is having second thoughts about its green energy policies.

First came the stories about the crushing economic burden facing Euro nations because of the forced shift to renewable energy. This, of course, has deep implications for California and its AB 32 experiment.

Now comes along another story with implications for the Golden State and its nascent efforts to regulate fracking and bring the Monterey Shale’s vast oil wealth into our economy. A once-deeply skeptical British government now says fracking is safe. This is from Reuters:

“The risks to public health from emissions caused by fracking for shale oil and gas are low as long as operations are properly run and regulated, the British government’s health agency said on Thursday.

“Public Health England (PHE) said in a review that any health impacts were likely to be minimal from hydraulic fracturing, or fracking, which involves the pumping of water and chemicals into dense shale formations deep underground.

“Environmental campaigners have staged large anti-fracking protests in Britain, arguing that it can pollute groundwater and cause earthquakes. …

“Since there is currently no fracking in Britain, the PHE report examined evidence from countries such as the United States, where it found that any risk to health was typically due to operational failure.

“The currently available evidence indicates that the potential risks to public health from exposure to emissions associated with the shale gas extraction process are low if operations are properly run and regulated,” said John Harrison, director of PHE’s center for radiation, chemical and environmental hazards.”

It’s just another dirty-but-manageable heavy industry

Which brings us to another angle with implications for California. British regulators consulted with U.S. regulators. And surprise, surprise, the Obama administration experts said what they’ve said for years: fracking is just another dirty heavy industry that can be made tolerable with basic regulations.

The angle for California here? The astounding newspaper blackout in the Golden State of the fact that the Obama administration considers fracking safe.

Here’s a look at egregious “analysis” by the Sac Bee’s Tom Knudson.

Here’s a look at the staggering breadth of Obama-fracking-view-omitters on the staff of the L.A. Times.

Here’s a look at the single most stunning example of California media disinformation on Obama and fracking, which contrasts how the L.A. Times covered a press conference on fracking with Obama’s commerce secretary with how the New York Times covered the same event.

Bias in reporting rarely is easier to document than this: The vast majority of CA reporters covering fracking never even mention that the administration of the greenest president in history thinks that it is safe.

Hey, newsrooms of California, isn’t that news?

Bueller? Bueller? Bueller?

By Chris Reed

All over California, school districts are doing illogical, unethical, unseemly things with their finances.

Unconstitutional attempts to make parents pay for basic educational materials. Siphoning funds from federal school lunch programs for the operating budget. Most absurdly, using 30-year borrowing to pay for basics old (maintenance) and new (electronic teaching devices) in direct contravention of the historical use of “construction bonds” to pay for long-term capital improvements.

All of this is done because automatic “step” pay raises that most teachers get just for showing up create gigantic pressure on operating budgets in years in which the state doesn’t increase school funding significantly.

L.A. Unified’s assault on common sense

So when the state’s largest school district does this sort of crazy borrowing, one would assume that the state’s largest newspaper offers appropriate context in its coverage to explain why the district did so. Guess again. L.A. Times reporter Howard Blume gives NO CONTEXT AT ALL. Amazing. He didn’t even mention this angle until the 18th paragraph of a 21-paragraph story on the school board’s decision to spend $30 million on iPads that won’t be paid off until current LAUSD high schools are middle-aged:

“Chief Strategy Officer Matt Hill also noted that the funding is from facility bonds, which can’t be used to hire regular school staff.

“This source of funding also has been controversial because school bonds are typically used for construction and paid off over decades.”

Paying for 2013 laptops in 2043: Insane and unexplained

Does Blume explain why it’s “controversial,” namely that it’s insane that the district will still be paying for iPads in 2043 that have been lost, broken or stolen for 28 years? Nah. It’s just “controversial,” whatever that means.

What makes this particularly pathetic is that the Times editorial page and its (anti) business columnist Michael Hiltzik have for years gone after corporate malfeasance and bad behavior. That’s perfectly appropriate. But if this sort of stuff is unacceptable in the private sector, why is it OK in the public sector?

This is never explained. Instead, governmental financial shadiness is accepted by most of the media.

Why? Seriously. Why?

I won’t hold my breath on getting a response.

By Chris Reed

The new Los Angeles Times poll showing sharp skepticism among Californians about hydraulic fracturing — the newly improved oil-gas drilling process that has triggered a brown energy revolution — should trigger fierce pride among Times reporters Neela Banerjee, Evan Halper, Julie Cart, Wes Venteicher, Bettina Boxall, Shan Li, Michael J. Mishak, Kathleen Hennessey, Amy Kaufman, Kenneth Turan, Nicole Sperling, Ronald D. White, Tiffany Hsu, Ruben Vives and Michael Hiltzik.

A Nexis hunt shows that over the past year, each of these L.A. Times’ reporters has written about fracking WITHOUT EVER MENTIONING THAT THE OBAMA ADMINISTRATION DISMISSES ENVIRONMENTAL CRITICISM OF THE PROCESS.

Why do I uppercase this? Because it is literally incredible that journalists for an important, powerful newspaper think that the position of the greenest president in the history of the nation is irrelevant to one of the most pitched public policy debates in the nation.

Energy and interior secretaries, EPA chief, task force all call it safe

To recycle some of what I’ve written before:

— A task force commissioned by the Obama administration’s Energy Department concluded in a 23-page report issued in November 2011 that fracking was just another heavy industry, one with significant but manageable pollution concerns.

— The president’s first energy secretary, UC Berkeley’s Steven Chu, said: “We believe it’s possible to extract shale gas in a way that protects the water, that protects people’s health. We can do this safely.”

— Chu’s replacement, MIT physicist Ernest Moniz, said the risk that fracking posed to water supplies was “challenging but manageable.”

— The president’s first Environmental Protection Agency director, Lisa Jackson, disputed claims that fracking, which occurs 5,000 feet below the surface, had polluted water tables which are usually less than 1,000 feet below the surface. She testified before a House committee that she was “not aware of any proven case where the fracking process itself has affected water.”

Neela Banerjee: Serial factual omitter

The single most graphic example of the fact that there is a calculated decision made to not mention the Obama administration’s views comes from a recent article by Neela Banerjee — who has written more than any other LATer about fracking — and Wes Venteicher. Published on May 17, it dealt with Sally Jewell, Obama’s interior secretary, and her announcement of new federal fracking rules for drilling on public and Indian lands.

Banerjee and Venteicher noted the controversy over fracking and turned to an industry spokesman to offer the context that fracking has been around decades and hasn’t been the devil.

“‘States have been successfully regulating fracking for decades, including on federal lands, with no incident of contamination that would necessitate redundant federal regulation,’ said Kathleen Sgamma, vice president of government and public affairs for Western Energy Alliance, a Denver-based trade group.”

The New York Times covered the same press conference and, like Banerjee and Venteicher, also quoted Jewell. But while the LAT offered mushy generalities from the interior secretary, veteran NYT reporter John M. Broder believed it was somewhat more significant that she said this:

“Anticipating criticism from environmental advocates, she said: ‘I know there are those who say fracking is dangerous and should be curtailed, full stop. That ignores the reality that it has been done for decades and has the potential for developing significant domestic resources and strengthening our economy and will be done for decades to come.’”

Fracking safety: NYT cites Obama Cabinet member, LAT quotes flack

How does Banerjee sleep at night, slanting things this dramatically? When trying to steer the public toward an opinion on fracking’s safety, she quotes an oil industry flack. The New York Times quotes OBAMA’S SECRETARY OF THE INTERIOR. And it’s a quote the LAT reporter could have used but chose to ignore.

I rest my case.

By John Seiler

I often have criticized Los Angeles Times columnist Michael Hiltzik for almost always favoring more government — more taxes, more spending, more controls. But I have to commend him for his recent column, “Showing the IRS some love after witch hunt.”

That’s the actual title. So he really does  the IRS.

What’s commendable is that it makes sense. According to one of Burnham’s Laws, “Who says A must say B.”

In this case: Who wants massive, expensive government must go along with paying for it with massive confiscations of private wealth through a government organization, in our case the IRS. The government programs don’t pay for themselves.

The IRS is what libertarians call “the business end of the State.” When people think of government, they like to think of the nice things: A poor person being fed. An elderly person receiving a life-saving operation. Or the necessary things: A murderer caught, tried, convicted, imprisoned.

But even the nice and necessary things mean money must be coerced from people who generally don’t want to give it up. That’s the “business end” — forcing you to do something.

And because the system uses force, government inevitably metastasizes into things that aren’t so nice or necessary, such as the massive military-industrial complex Eisenhower warned us about back in 1961.

According to a recent biography, in the 1960s Ike was “bitterly critical” of the escalation of the Vietnam War by JFK and LBJ, which ended up killing 58,000 Americans and more than 3 million Vietnamese, while effectively bankrupting America.

As Country Joe warbled at Woodstock, “There’s plenty good money to be made, supplying the Army with the tools of the trade.”

‘Horrible customer service’

Then there’s the massive compensation for government employees, which federal workers now is twice that of equivalent private-sector jobs.

Hiltzik enthuses:

“You may not have discerned this through the fog and mist of recent weeks, but the Internal Revenue Service is pretty durn good at its job.

“Some experts would go further. ‘I think they do an extraordinary job, considering that they’re historically underfunded and under-resourced,’ says Dennis Ventry, a tax expert at UC Davis law school. Last year, he observes, the agency processed 144 million returns for the personal income tax, 2 million for the corporate income tax, and 3 million for the estate and gift tax, with a speed he calls ‘miraculous.'”

But at his May 17 testimony before the House Ways and Means Committee, former IRS head Steve Miller said of the targeting by the IRS of conservative and libertarian groups, “I can say generally, we provided horrible customer service here. I will admit that. We did horrible customer service.”

I guess it depends on what happens to you. IRS agents provide excellent customer service — except when they don’t.

Hiltzik wrote in an earlier column, “The real IRS scandal“:

“Here are the genuine scandals in this affair: Political organizations are being allowed to masquerade as charities to avoid taxes and keep their donors secret, and the IRS has allowed them to do this for years.”

I always hate it when my fellow journalists, who are protected by the First Amendment, want to reduce others’ free speech. His newspaper, the Los Angeles Times, can print whatever it wants to and avoid any government scrutiny whatsoever. That’s as it should be. But journalists should want others to enjoy that privilege.

Is there a difference between non-profit foundations and a private, for-profit company like The Tribune Company, which owns the Times? Well, for one thing, the Tribune Company hasn’t made money in years and only recently emerged from bankruptcy.

For another thing, the Tribune Company could end up reorganized as a non-profit that doesn’t pay corporate taxes. How different then would it be from the 501(c)4 groups Hiltzik wants taxed? Even if the Tribune Company remains for-profit, the non-profit model is taking hold for many publications as a way to survive in the Internet world.

So, for these non-profit newspapers, who at the IRS determines if their news truly is “non-profit” and not “political”?

Hiltzik:

“The organizations at issue are known as 501(c)4 groups (call them C4s for short) after the section of the tax code that applies to them. They’re nonprofit “social welfare” organizations that by law must be devoted primarily to programs broadly serving their communities, not private groups. IRS forms reveal what the agency considers to be mainstream C4s: religious groups; cultural, educational and veterans organizations, homeowners associations, volunteer fire departments. In recent years, however, overtly political groups have been claiming C4 status, which allows them to keep their donor lists secret and to avoid paying taxes on certain income.”

Again, who decides if a “cultural” or “educational” organization — such as an ethnic newspaper with editorials, or an “educational” group that teaches about, say, IRS abuses — runs afoul of Hiltzik’s definition of “political groups”?

Private persons

Moreover, Hiltzik does not report that it wasn’t just non-profits the IRS targeted in its witch hunt, but private persons and their individual tax returns, on which they paid the same high taxes as everybody. One example was described by The Blaze:

“Dr. Anne Hendershott, a devout Catholic and a noted sociologist, professor and author, exclusively told TheBlaze that she believes she may have been one of the IRS’s targets.

“According to Hendershott, the IRS audited her in 2010 and demanded to know who was paying her. While they did not ask directly it seemed as though the agent wanted to know about the leanings of these particular organizations….

“Hendershott noted it was particularly surprising that she, alone, was audited. Her husband, who brings in the vast majority of the family’s income, was not included in the IRS’s inquiry — even though the Hendershotts always files jointly….

“The process was a grueling one, including many questions that Hendershott felt were political in nature. Numerous records were requested before the in-person meeting, as well as during and after….

“Her writings for the Catholic Advocate soon ceased because, Hendershott admits, the IRS audit silenced her. If her suspicions are true, this may have been its chilling intention.

“ ‘I haven’t written for them since the audit, because I was so scared,’ she said (records show her last article for the organization was on July 10, 2010 — the same month the IRS audit unfolded).”

Is this free America, or East Germany circa 1985? By the way, she hardly made any money from the articles. The story continues:

“So far, she has only shared her story with friends and those close to her, but in light of the recent IRS scandal, she has decided to speak out.

“ ‘It was clear they didn’t like me criticizing the people who helped pass Obamacare,’ she said of the audit, later adding, ‘The IRS is very frightening.’

“In addition to creating stress and fear, Hendershott said that the experience came at a great emotional and financial expense for the family, noting that even after the audit the government sought more information from her.

“ ‘It was like they just couldn’t find what they wanted because they wanted more and more and more,’ she said.”

Pro-Israel groups

And as a Wall Street Journal editorial noted, the IRS also targeted pro-Israel groups:

“A Pennsylvania pro-Israel group called Z Street says it filed for 501(c)(3) status in December 2009, intending to operate purely as an educational group. Founder Lori Lowenthal Marcus says that its tax counsel called the IRS in July 2010 to check on the slow pace of approval, and the IRS acknowledged its targeted enforcement.

“Asked about the slow pace of approval, the IRS auditor on the case, Diane Gentry, said the application was taking so long because auditors were supposed to give special scrutiny to groups ‘connected with Israel.’ Ms. Marcus says Ms. Gentry further explained that many applications related to Israel had to be sent to ‘a special unit in D.C. to determine whether the organization’s activities contradict the Administration’s public policies.’ Z Street filed suit in August 2010 in federal court in Pennsylvania alleging ‘viewpoint discrimination,’ and its case has since been moved to Washington, D.C. Ms. Gentry did not return our phone calls.”

I checked out Z Street’s Web site. They have some new stuff about the IRS harassment:

“FINALLY!  Two and a half years after filing a Complaint in federal court seeking relief from the Internal Revenue Service for viewpoint discrimination against our strongly pro-Israel organization, Z STREET has a hearing date in the District of Columbia federal district court on JULY 2, AT 2:30 P.M. Z STREET v. IRS (Douglas H. Shulman, IRS Commissioner)”

Now, is Z Street advancing a political position? Or is it a religious position, based on its interpretation of the Bible? What should be allowed as a tax exemption, and what not?

The Real IRS

That’s the reality of the IRS. Perhaps, as Hiltzik writes, “The Internal Revenue Service is pretty durn good at its job.” 

But its real “job” is to send “hither swarms of Officers to harrass our people, and eat out their substance.”

Hiltzik’s solution as to which groups should get tax exemptions:

“It’s about time the IRS subjected all of these outfits to scrutiny. The agency’s inaction has served the purposes of donors and political organizations on both sides of the aisle, and contributed to the explosive infection of the electoral process by big money from individuals and corporations.”

So the solution is his usual prescription: more government and more taxes.

My solution is different: Avoid the problem by getting ride of the IRS entirely, and the whole income tax system along with it. No taxes, no need for audits. And don’t “replace” it with the so-called “Fair Tax,” really an unfair national sales tax of more than 20 percent.

Instead, replace the income tax with nothing, and take a meat cleaver to spending.

That really is the choice: A gigantic government paid for by an IRS that has a “chilling” effect on free speech. Or no IRS and no income tax, leaving us free.

By John Seiler

In the Los Angeles Times’ continued attack on our gun rights, Michael Hiltzik writes:

“Consider the most important statistic related to California’s gun laws. In 1981, before the most stringent rules were adopted, California’s rate of 16.5 firearms-related deaths per 100,000 population was 31st worst in the nation and higher than the national average; by 2000, a decade after the laws started getting tightened, the state ranked 20th, with a rate of 9.18, below the national average. In 2010, the latest year for which the Centers for Disease Control and Prevention offers figures, the state ranked ninth, with a rate of only 7.9.

“And this is a big, diverse state with not inconsiderable pockets of gang lawlessness and drug abuse, and sizable populations of hunters, target shooters and other gun fanciers. Many factors may have contributed to the downward trend in firearm deaths since 1990, but the numbers strongly indicate that regulation works.”

Notice how he mixed up the dates. He’s comparing the decline in deaths since 1990, not 1981. He should have noted that firearms deaths have decline almost everywhere in the United States since 1990. So he’s comparing two different periods.

And he doesn’t mention that the era of peak gun killings in California, the 1980s, also was the era of the crack cocaine epidemic. The Crips and Bloods were shooting up the town as if it were an Arnold Schwarzenegger action flick. The crack epidemic especially affected Califonia more than any other state. There were few, if any, gang shootouts in Minnesota or Vermont.

When the crack epidemic ended and gang shootings were reduced, if not eliminated, then naturally California’s gun homicide rate would drop faster than that in other states.

This is from a 1997 study by the U.S. Justice Department:

“Drug epidemics tend to follow a natural course. The popularity of a  particular drug–such as crack cocaine–tends to start within a limited subpopulation. Sometimes use of a drug catches on and the rate of use increases dramatically until it is widespread. At some point the drug may go out of favor, leading to a slow but steady ebb in its use.”

And this is from “The Developmental Cycle of a Drug Epidemic: The Cocaine Smoking Epidemic of 1981-1991,” an article by Ansley Hamid in the Journal of Psychoactive Drugs 24(4):337-348:

“The groundwork for the cocaine-smoking epidemic in low-income, minorit neighborhoods was laid when cocaine (hydrochloride) powder — for intranasal use or snorting — became popular in restricted circles around 1979. Many persons who initiated the cocaine use then remained active and central throughout the epidemic, metamorphosing as they traversed the six stages and initiating successive categories of users….

“In many neighborhoods very little regulation occurred, and a reputation for crack-related violence, crime, and incivility was won instead.”

The epidemic ended around 1991. At the same time, gun violence dropped. And gun violence dropped faster in California because it was higher to begin with from the crack epidemic, which ended; not because of California’s gun laws.

Let Scarface show why the 1980s were so violent (note: bad language in the video):

By John Seiler

With a name like Lance-Arm-Strong, Lance Armstrong should have kept fighting the anti-doping charges against him. The U.S. Anti-Doping Agency just supposedly “stripped” him of his seven titles, although it’s not clear if they have the authority to do so, and he might still have the titles. Said Robert Luskin, his lawyer:

“I think Lance ultimately decided he’d rather be eaten alive by zombies than locked in a room with lawyers for the next five years of his life with no promise at the end of it that there would be any peace.”

That’s an understandable sentiment. But somebody has to fight these bureaucratic flesh eaters. Moreover, less than three months ago, Armstrong blew $1.5 million pushing Proposition 29, which would have raised taxes on cigarettes for $735 million in unaccountable cancer research. The initiative especially would have hit poor people, who smoke more than the rest of Californians. It would have put in jail more people for violating laws against black markets. And it would have given employment to hundreds more lawyers.

If he was willing that much dough to stick the state with thousands of legal actions, why didn’t he have the guts to keep fighting his own legal action? Maybe he’ll tell us.

Anyway, here’s what Wikipedia wrote about the tyrannical U.S. Anti-Doping Agency:

“The United States Anti-Doping Agency (USADA) is a non-profit, non-governmental^[1] organization and the national anti-doping organization (NADO) for the United States….

“In 2001 the agency was recognized by the U.S. Congress as ‘the official anti-doping agency for Olympic, Pan American and Paralympic sport in the United States.’^[4] USADA is not a government entity, however the agency is partly funded by the Office of National Drug Control Policy (ONDCP), with its remaining budget generated from contracts for anti-doping services with sport organizations, most notably the United States Olympic Committee.^[5]“

“non-governmental”? Actually, if it’s “recognized by Congress” and takes tax money, the USADA really is a part of the government, despite it’s alleged independence. And the legal system itself is run by the government.

Manic McCain

Moreover, the anti-doping mania has been given a boost by grandstanding congressmen, in particular Sen. John McCain, R-Ariz., who lost a presidential bid four years ago. Here’s what happened in July:

“Senator John McCain lent support Friday to the United States Anti-Doping Agency in its case against Lance Armstrong, saying the agency follows a fair process that has been authorized by Congress and that it has the right to investigate and bring charges against Armstrong.

“’This process is the proper forum to decide matters concerning individual cases of alleged doping violations,’ McCain said in a statement.”

Normally I don’t agree with Michael Hiltzik, the L.A. Times columnist. But yesterday he wrote a great column defending Armstrong:

“With the whole world atwitter over Tour de Francechamp Lance Armstrong‘s decision to drop his legal fight against anti-doping allegations, it’s the right moment to be appalled at the travesty in sports this case represents.

“It’s not that the case will be seen as a major victory for sports anti-doping authorities. It’s that the anti-doping system claiming its highest-profile quarry ever is the most thoroughly one-sided and dishonest legal regime anywhere in the world this side of Beijing.

“It’s a system deliberately designed to place almost insurmountable hurdles in the way of athletes defending themselves or appealing adverse findings. Evidence has emerged over the years that laboratories certified by the World Anti-Doping Agency, or WADA, have been incompetent at analyzing athletes’ samples or fabricated results when they didn’t get the numbers they were hoping to see.

“Athletes’ defense attorneys harbored some hope that by picking a fight with Lance Armstrong, the anti-doping system might have sowed the seeds for its own reform. Finally, it was thought, here was an athlete with the money and motivation to expose the legal sophistry, the pseudoscience, the sheer sloppiness that underlies sports anti-doping prosecutions all over the world.

“Instead, the outcome shows that the system is so relentlessly rigged that even Lance Armstrong doesn’t see a point in fighting it.”

Who will fight?

Actually, someone who has the stamina to fight would be someone who won seven Tour de France titles.

I also wish Hiltzik would be more consistent in opposing government encroachments on our lives, instead of so often wanting to give our oppressors more of our tax money. Hiltzik did oppose Armstrong’s Prop. 29 tax increase, but only because he wanted the taxes for other government waste.

It’s the government itself that’s not only run by dopes, but is doped up on steroids that have ballooned government powers to monstrous proportions. And like a junkie, the government supports its habit by stealing, which the government calls “taxation.”

We need to take the steroid syringes from the government by cutting off the tax dollars — all of them. Without our money, government would have to go cold turkey:

By John Seiler

Los Angeles Times business writer Michael Hiltzik is an excellent reporter. But when he gets to policy, his leftist perspective comes to the fore. That can be seen in today’s article on Paul Ryan’s budget proposal. Ryan was just picked by Mitt Romney as the Republicans’ presidential nominee.

In any budget article, the first thing to look for is this: The $16 trillion — and counting — debt the U.S. government has run up. If that isn’t mentioned, then the article isn’t serious. That’s the equivalent of one year’s total U.S. GDP. Not mentioning the national debt is like a person discussing his family finances without mentioning that he’s run up credit card debt equal to yearly family income.

Hiltzik doesn’t mention the debt, nor the $1 trillion-plus additions to the debt from the continuing annual deficits. Instead, it’s all about how Ryan’s proposed cuts would hurt the middle class:

“The more insidious assault on the middle class comes from program cuts. Most of the commentary on Ryan’s budget has focused on his master plan for Medicare and Medicaid, both of which he would gut. But it’s a mistake to think the burden would be shouldered exclusively, or even chiefly, by the poor.”

The Romney-Ryan camp disputes that Ryan would “gut” these programs. And in any case, they are campaigning on Romney’s somewhat different plan because he’s on the top of the ticket, not Ryan’s plan.

Hiltzik also advances the canard that the Ryan Plan would increase taxes on the middle-class. Hiltzik bases his contention on calculations by “the nonpartisan Tax Policy Center” — really a left wing, high-tax group. But that’s not really in the plan. However, it is true that all these numbers, including Ryan’s and President Obama’s, have an air of unreality about them in light of the $16 trillion debt.

Hiltzik doesn’t note that what’s really going to “gut” the middle class — and in fact has for six years now — is interest rates that are kept artificially low by the Federal Reserve Board so the payments on the $16 trillion debt don’t get too high and produce even higher annual deficits. The federal government currently is borrowing money at essentially zero interest.

That hurts the middle class, which is suffering inflation of at least 3 percent, but getting zero percent on its bank and savings and loan savings accounts. An effective decline in value of 3 percent a year for six or more years is a sure way to “gut” the middle class. The poor don’t have much savings and the rich can use sophisticated financial instruments to still make money; you don’t see Warren Buffett suffering.

Eroding wealth

If this zero-interest rate policy continues, the middle class will continue to see its wealth — what’s left of it — eroded. Eventually, the Fed will have to boost interest rates. But then that will boost the federal deficit even higher, raising the debt even faster. Which will lead even deeper cuts in current programs — for the middle class, the poor, the rich, everybody.

Inevitably in a Hiltzik column, there’s a defense of high taxes:

“Ryan advocates cutting the top income tax rate to 25% (from 39.6%, the pre-Bush top marginal rate scheduled to take effect Jan. 1).

“The only way to do so while keeping overall tax revenues at 19% of gross domestic product, Ryan’s stated goal, is to eliminate a wide range of tax breaks. On the surface, this might look palatable to a middle-class taxpayer convinced that the fat cats get all the breaks anyway. In fact, the most popular breaks save billions for the middle class.

“More than 70% of the mortgage interest payments claimed as deductions ($240 billion) appear on returns filed by people in the income range of $60,000 to $200,000, according to the IRS. Many of these middle-class homeowners base their annual financial planning on tax breaks such as the mortgage deduction. Only about 1.4% of the total is claimed by taxpayers earning $1 million or more.”

Actually, this is a fantasy. There’s no way the mortgage deduction ever will be eliminated. Moreover, since World War II ended, the amounting of taxing by the federal government never has exceeded 20 percent of GDP, even when the top tax rate was 91 percent.

So Ryan’s 19 percent threshold is close to the maximum. Hiltzik’s idea that it could go higher is a an illusion. The most that can be wrung from the economy is 20 percent for federal taxation. Try to get more, and people just quit working and investing, or move their money overseas.

100 percent tax?

Moreover, as economist Walter Williams notes:

“All told, households earning $250,000 and above account for 25 percent, or $1.97 trillion, of the nearly $8 trillion of total household income. If Congress imposed a 100 percent tax, taking all earnings above $250,000 per year, it would yield the princely sum of $1.4 trillion. That would keep the government running for 141 days, but there’s a problem because there are 224 more days left in the year.”

That is, even if the top income tax rate were 100 percent — and people actually paid it — the money would fund only 38 percent of the federal budget.

And of course, if the government seized 100 percent of the income of “the rich,” they would just stop working. The businesses and factories they own would close, or be taken over by the government as socialist enterprises.

So, “taxing the rich” isn’t the answer.

Ryan Plan

The real problem with the Ryan Plan is that it doesn’t go nearly far enough. It doesn’t balance the budget for 30 years — which practically means never. In every one of those 30 years, Congress can change whatever it did before.

The fact people don’t want to face, for understandable reasons, is that the whole welfare state now is bankrupt. It’s the result of 80 years of profligacy, and especially of the last 11 years of blowing out the budget that began under President George W. Bush. He inherited deficits from President Clinton. With a little prudence, he might have helped us grapple with the difficulties of paying for the existing entitlement programs. Instead, he goosed the budget with his No Child Left Behind education scheme that has shown zero results; and especially with his Bushcare Medicare expansion, a precursor to Obamacare — not to mention the expensive wars.

So what’s the solution? Massive cuts. Or inflation to burn off the value of that $16 trillion national debt. Either way, there’s massive pain for the middle class, the poor — and for many of the rich, too, if they don’t get their affairs in order (or move to a country with more freedom).

Humans, especially Americans, like to think there always are solutions, preferably instant ones. But this time there aren’t any — any, at least, that people want to advance.

The problem with democracy is that, eventually, 51 percent of the people realize they can vote to rob the other 49 percent, as well as borrow money on the credit card of the 49 percent. That lasts a while until the whole thing falls apart.

Which is where we are now.

Unlike some journalists, make sure you keep in mind that debt of $16 trillion — and counting.

By Wayne Lusvardi

A rerun is playing on TV of the inaccurate 2005 “documentary” movie, “Enron: The Smartest Guys in the Room” about Enron manipulating the California Electricity Crisis of 2001. It features Sen. Barbara Boxer, D-Calif., and former Gov. Gray Davis, D-Calif.

Back in the real world: the California electricity grid operator has accused JP Morgan, Barclays, Deutsche Bank AG, and several other banks of more recently manipulating the California electricity market.

Concurrently, as Katy Grimes reported on CalWatcdhDog.com, the California Legislature passed a hidden trailer bill as part of the 2012 state budget package that shrouds public information on its green energy trades under its Cap and Trade Program trading hub in Delaware.

Apparently, if you’re in the private sector, you have to disclose not only your energy bid, you have to disclose its intent. But if you are in the public sector, you can get away with not disclosing green energy bids at all.  Such is the double standard in California, where the private sector is criminalized before its day in court and the public sector can get away with anything it wants without the mainstream media even reporting it.

Media Focus: “Make-Whole” Payments in the Day-Ahead Energy Market

The energy-trading arm of JP Morgan is said to have cost electricity ratepayers $73 million since 2010 in self-serving energy trades.  The Federal Energy Regulatory Commission is investigating the allegations made by the California Independent System Operator that coordinates 80 percent of the electric transmission grid in California.

At issue to Cal-ISO are trades made by JP Morgan Chase, Barclays, Deutsche Bank AG, and other banks in what is called the “day-ahead” wholesale electricity market.  After the 2001 California Energy Crisis, the California electricity market was reformed to require all retail energy providers to schedule their bids one day ahead of time to prevent market manipulation.  Cal-ISO was established to serve as a coordinator of the grid and also to bring transparency to energy trading. Cal-ISO is an impartial, non-governmental grid operator.

In order to encourage competitive bidding for the provision of retail electricity, Cal-ISO reimburses bidders twice the preparation cost of their bids.  This practice is called “full cost recovery” or “bid cost recovery.”  Where bid manipulation enters the rules of the bidding game is where a bidder bids so low that they qualify for the ISO’s roster of potential electricity suppliers. Once on the roster, the bidder qualifies for double reimbursement for preparing a bid.

The same bidder would then price its electricity so high in the real time “spot market” that the ISO wouldn’t buy it.  Thus, the bidder was assured of never having to actually sell power, but would get reimbursed for submitting a bid.  This bid splitting practice is what Cal-ISO has referred to FERC for review.  Cal-ISO alleges that banks using such bidding strategies never had any intent on selling power, just skimming bidding fees.  This may have cost electricity ratepayers hundreds of millions of dollars.

Shrouded Cap and Trades

Meanwhile, the Committee on Budget and Fiscal Review of the California State Senate attached a rider to its 2012-2013 State Budget Package, Senate Bill 1018, to allow the California Air Resources Board to end run around the California Open Meeting Act on its pollution-credit energy trades.

CARB’s private Delaware Corporation, Western Climate Initiative Inc. — set up to manage air pollution emissions trading under its Cap and Trade Program –- doesn’t have to comply with California’s transparency law for its Delaware trading activities.  This action was snuck into Senate Bill 1018 on July 26 and signed into law with the state budget on July 27.  The same rider on SB 1018 also allows Cap and Trade taxes to be siphoned into designated accounts for use by the State Legislature.

On July 27, Gov. Jerry Brown used his veto power to reduce the amount of funding for State Parks and Recreation, but left CARB’s exemption from the state Open Meeting Law unchanged.

The final vote on SB 1018 in the State Senate was 58 percent in favor.  The minority Republican Party was unable to gain any compromise, amendments, or vetoes to the State Budget Package or rider bills. This was because Proposition 25 eliminated the previous two-thirds vote requirement for taxes and the state budget.

Voters originally passed Prop 25. to permit the passage of a state budget on time, to not delay funding for public schools and the needy.  The state budget was barely passed on time on the June 15 deadline by the Legislature.  Prop. 25 is now being abused to approve items having no bearing on taxes or the state budget. This is one of several reforms sought by political reformers in California in the name of greater “democracy.”

Of course, the mainstream newspaper media, such as the Los Angeles Times and San Francisco Chronicle, have focused on reporting the alleged bank abuses of energy bids. But the same newspapers have “blacked out” any coverage of the Legislature’s granting to CARB an exemption from state meeting laws for its out-of-state pollution credit-trading arm.

Why should the public’s attention be focused only on manipulated energy bids and not also on hidden legislation that would shroud green energy trades?

Is this Enron 2?  We Don’t Know Yet

Times columnist Michael Hiltzik writes that what banks have recently been doing is the same as what Enron did:

“What’s worse, it shows that we haven’t learned anything from Enron’s bogus energy trading, the disclosure of which helped destroy that firm in 2001 and land several of its executives in jail. To the extent it was designed to exploit loopholes in energy trading rules, experts say, the scheme allegedly perpetrated by JPMorgan Ventures Energy Corp. is cut from the same cloth as Enron’s infamous ‘fat boy’ swindle, which cost the state’s ratepayers an estimated $1.4 billion in 2000.” 

From what Cara Ellison writes on The Enron Blog, Enron’s “Fat Boy” trading strategy would have been similar to what JP Morgan is presently accused of.  She quotes California Treasurer Bill Lockyer:

“According to Bill Lockyer and other anti-Enron types, Fat Boy was less a trading strategy than just a plain old lie: Enron traders would tell electricity officials that it was going to use more power than it actually intended to use. That way, Enron would reap extra payments by appearing to deliver more power on a high-demand day when, in fact, it was merely using less power than promised.”

However, I believe Ellison accurately states Enron’s Fat Boy trades were numerically “minuscule, rare, and inconsequential” and a case of prosecutors piling on charges. This in no way denies that Enron executives committed accounting fraud and other crimes for which they were prosecuted and convicted.  All it indicates is that Enron did not cause the California Energy Crisis of 2001 and its energy trading practices were overblown mainly for political gain to keep the focus away from government’s complicity in the Crisis.

Katarzyna Klimasinska of the San Francisco Chronicle says price-manipulation charges against JP Morgan are not the same as for Enron, which was accused of driving up prices by shutting down power plants during the California Energy Crisis of 2001:

“The price-manipulation allegations against JPMorgan’s energy-trading unit appear to differ from charges against Enron Corp.’s power traders during the California energy crisis of 2000 and 2001, John Olson, managing partner of Pool Capital Partners LLC in Houston and former energy analyst at Merrill Lynch & Co., said. Enron was accused of driving up prices by persuading operators to shut down, he said.”

As someone who was behind the curtain of government during the 2001 Energy Crisis, I personally investigated the accusation that Enron manipulated power prices by shutting down power plants.  There’s an infamous tape from Jan. 17, 2001 of Enron traders asking an operator to shut down a 52-megawatt power plant in Las Vegas. But that was grid congestion, not lack of power. Relieving grid congestion would have lowered, not raised, electricity prices.

My experience with the California Energy Crisis of 2001 indicated that it was public utilities such as the Los Angeles Department of Water and Power, the city of Pasadena, and the Southern California Power Authority that gamed the energy trading system the most and reaped huge monetary windfalls.  Moreover, it was private power providers such as the Mirant Corporation that kept electric “spinning reserves” available and were the unheralded heroes of the crisis.

Do Regulators Have a Duty to Keep the Regulated Legal? 

What the media typically know little about the electricity and energy markets.  And is not known typically is misreported and ensationalized.  The press usually asks the wrong questions and thus gets the wrong answers.  To pre-indict the banks named in this energy trading case is premature and irresponsible.  Here are some questions that might be more helpful at this stage of the investigation based on my experience on a 2001 Energy Crisis Task Force for a large water utility, my experience as a real estate appraiser and manager and some plain old common sense.

As pointed out by online newspaper commentators, imagine that California decided to sell off surplus equipment for a few dollars and you knew you could re-sell it for $100 on eBay.  Would it be wrong for you to do so?

Or if an elderly person advertised their old, but historical car with low mileage for sale but you knew you could re-sell it for big bucks, would you buy it?

Or if you are a real estate broker and someone keeps submitting tricky high bids full of weird conditions, should you take the high bid or just take the simple lower cash bid?  If a broker recommends to his client taking the tricky high bid and later gets the seller ensnarled in a lawsuit, can the seller sue them? Most brokers I have encountered prefer to just take the most straightforward bid, despite the price.

Is the problem inherent in such situations the abuse of the buyer or the problem of an unknowledgeble seller?  Should you be able to call in the cops, the district attorney or a small claims court judge to recover what you later learned you lost on your old car?

These questions seem to be how the average person in the street or a professional real estate broker would frame such a problem.  But that is not how Cal-ISO and the mainstream newspaper media frame it.  They frame it as likely criminal or pre-concluded unethical activity.

Indeed, taking advantage of energy trading rules may be found to be an abuse.  But if so, who is to blame?  Is Cal-ISO just covering up the public perception of its own ineptness or is it cracking down as it should as a regulator?  Is it the role of regulators to “acquire” violators, just as cops may be said to acquire criminals? Is the proverbial “thin blue line” of social order to be kept first by citizens or solely by the police?  Do regulators have a fiduciary duty to keep those they regulate out of legal trouble?  Or is using the media to bring attention to such trades a way to publicly shame those who straddle the line between what is legal and what is moral?

And in the case of Legislature, now with no limits on what it can get away with, who will help the public focus on abuses of the Open Meeting Law? Certainly not the mainstream media in California.

Commentary

MARCH 5, 2012

By JOHN SEILER

Today the Los Angeles Times is charging for visiting its site online. This is a suicide attempt that will severely damage the paper. Its parent company, Tribune Co., long has been in bankruptcy, running up $233 million in legal fees.

According to the Times’ own story:

“The Los Angeles Times will begin charging readers for access to its online news, joining a growing roster of major news organizations looking for a way to offset declines in revenue.

“Starting March 5, online readers will be asked to buy a digital subscription at an initial rate of 99 cents for four weeks. Readers who do not subscribe will be able to read 15 stories in a 30-day period for free. There will be no digital access charge for subscribers of the printed newspaper….

“Other news outlets that have begun charging for online journalism include the New York Times, the Wall Street Journal and the Dallas Morning News. Gannett, the nation’s largest newspaper company, this week announced plans to launch a similar program at 80 publications, saying it could boost earnings by $100 million in 2013.”

They don’t get it. They still don’t get it.

Since 1994, when the first decent Web browser, Netscape, became available, the newspaper business model has been doomed. People now expect basic news to be free. They also don’t want to mess around with complicated log-ins and price plans for basic news.

Paid Sites

The Times cited The Wall Street Journal as making money on its paid site. They’re enticed by the subscription figures in the following graph, from The Awl. It shows newspaper circulation from 1990-2009. At the top is the success of the Journal.

The look at the yellow line, the L.A. Times, which has declined the fastest of all — a meteor downward. The circulation decline has continued, from about 625,000 in 2009 to 573,000 today.

The Journal’s model is succeeding because the Journal offers more than basic news: It offers specialty news, on finances. People will pay money to make money. The’ll also pay money for other specialty news, such as dating and game sites. That model also is working for the Financial Times, which specializes in international business news.

If you’re a bond trader making well into the six figures a year, paying for an FT or Journal subscription is chump change. It provides crucial information you use for your business. Those publications also provide large research files for checking out potential businesses to invest in. But that model doesn’t work for publications that provide news one can get elsewhere.

As to the New York Times, it lost $40 million last year. So why imitate their business model?

As to the Dallas Morning News, starting Feb. 15, it charged $33.95 a month for a subscription and full access to its online news. That’s $407.40 a year — in tough economic times. It’s obviously too early to tell if that’s going to work. But a newspaper that once was in the top 10 in circulation in the country now has dropped to 16th — even though Dallas and Texas have seen booming population in recent years.

According to the L.A. Times story, for LAT subscriptions:

“After the initial rate of 99 cents for the first four weeks, the rate will rise to $1.99 a week in a package that also includes the Sunday newspaper. Digital-only access will cost $3.99 a week.”

So, you pay half ($1.99) a week if you get the paper edition, which means they want the ads that pay for everything plopping on your doorstep every day. That’s $103.48 a year. But if you don’t the paper version — maybe the Times’ editorials have convinced you that killing all those trees adds to global warming — then you pay $3.99 a week, or $207.48 a year. It’s not going to work.

Two Problems

There are two problems with the Times. The first is that the newspaper industry continues to erode. This is unfortunate. I’ve been in the newspaper business for 27 years now, and I lament the passing of a great industry. I’ll always be a “newspaperman.” I still get home delivery of the daily printed Orange County Register, my old paper, and the Sunday Los Angeles Times. But that’s the reality.

I don’t know many people under 40 who subscribe to newspapers. This includes smart kids in graduate school. They do everything online.

The Times’ second problem is its grating liberalism. There’s seldom a vast new government program or gigantic tax increase that they don’t support. All of their five top columnists are obsessed with tax increases, as I have detailed on CalWatchDog.com.

And as my colleague Steven Greenhut wrote today, columnist Michael Hiltzik has defended the possibly criminal fraud eco-extremist Peter Gleick perpetrated against the Heartland Institute. Gleick himself has apologized. Yet Hiltzik wrote: “But it’s Heartland, which has tagged Gleick with the epithets above, that should be answering for its nearly three-decade history of corporate shilldom.”

So, Hiltzik says it’s OK for Gleick to perpetuate a fraud. And the Los Angeles Times employes Hiltzik. So why should I believe anything written in the Times?

As to Hiltzik’s charges against Heartland: It’s public knowledge where its funding comes from. And any think tank gets its money from sources favorable to its research. How does any of that justify fraud?

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

It’s also a good question how much money the L.A.Times will derive from this. Its article on the switch to paid online membership explained:

“[Media analyst Edward] Atorino said the New York Times has not sold digital subscriptions at the rate he expected. Most of the subscriptions it sells are highly discounted, diminishing the revenue gain, he said. The company does not break out its revenue for digital subscriptions.”

So no one has any idea if the main non-financial newspaper that switched to digital subscriptions actually is making money from it!

The article continues, quoting Kathy Thomson, president and chief operating officer of Los Angeles Times Media Group.:

“The Times won two Pulitzer Prizes last year, including the gold medal for public service for its coverage of corruption in the city of Bell.

“‘People are going to want to read our award-winning journalism’, Thomson said.”

People don’t care about Pulitzers and other awards. Anyway, 99 percent of the awards go to liberals. And why did it take the Times so long to report on the Bell corruption, which was going on for decades? How hard would it have been to notice that City Manager Robert Rizzo raked in $787,637 a year in salary, with 12 percent annual increases, guaranteed?

The fact is that the Times has been missing stories for years.

And whenever it does break something, its articles quickly are cross-posted to other Web sites, including newspapers that carry the Times’ news service. So, in the end, there’s no need to pay for its stories.

A better model is that of the Orange County Register, which is building up strong online loyalty, for example for their reporting on the Angels baseball team, which has a nationwide following. If you go to that site, the ads are not just local, but national and for Southern California.

“Information wants to be free” is a slogan of techno-anarchists. The Times is going to find that out — the hard way.