Political Class Insanity, May, 2012 - Part 2: Alternative Energy Disasters, TSA Antics, Social Security Myths and More

Yesterday we reviewed the first half of the latest political class insanity that has popped up over the past month or so. We learned that we are now the Obesity Poster child of the World according to Brazilian officials, we are also the Regulation Nation of The World, even our politicians are getting upset (and profane) about how screwed up our political and government processes have become, and NYC has completely lost its mind when it comes to hassling its citizens.

Without further delay, let's finish up the insanity and idiocy that our political class has bestowed on us over the past month or so:

- Most citizens are aware that the Obama administration has already wasted billions of taxpayer dollars with investments, or "bets" as they officially call them, with alternative energy companies that are either bad ideas or are run badly by bad business people. Many of these bad bets just so happen to have contributed to Obama's previous election campaigns. Solyndra is the most obvious disaster, destroying $530 million worth of taxpayer wealth with nothing in return.


Despite the horrid experience of giving money to incompetent alternative energy businesses (e.g. Beacon, Spectra, Evergreen, etc.), it appears that desire to siphon off more taxpayer money still goes on. Consider the plight of A123:

• A123, a maker of batteries for electric vehicles, received a Federal grant of $250 million in 2009. This was a grant, not a loan or loan guarantee, a flat out gift from the American taxpayer courtesy of the Obama administration.
• The stock price of the company recently dipped below a dollar a share.
• The company lost $257.7 million last year.
• Two of its clients make up half of its business, and one, Fisker Automotive, is also struggling financially.

Does not sound like a good financial deal. The company has already burned through a quarter of a billion dollars, its customer base is small and fragile, its stock price is tanking, and it is a money loser. But you have to give it credit for spunk. Despite all of the above points, the company has applied for ANOTHER taxpayer funded grant of $233 million.

The big question: is the political class, and the Obama administration, insane enough to grant the additional request? Given that the Federal government has never had a rule or a history of not throwing good money after bad, do not be surprised if we are out another quarter of a billion dollars pretty soon.

- Staying with failed alternative energy fiscal disasters, I came across an interesting piece of fiscal insanity from the Hot Air website and one of its articles from December, 2011. The article was entitled, Gov’t Subsidies For Chevy Volt Up To $250,000 Per Car?" The article was written by a gentleman named Ed Morrissey.

For those that do not know, the Chevy Volt is a General Motors electric car that recently had is production stopped because it was a dog of a product in the market, severely missing its modest sales goals. The political class in Washington thought it would be a good idea to give away taxpayer money to anyone who bought the electric Volt, a rebate that cost the taxpayers $7,500 for each car sold.

Given the car has been a failure, one could be upset of the $7,500 rebates the taxpayer paid out for this dog of a product. However, as Mr. Morrissey points out, a Mackinac Center For Public Policy study proved that $7,500 for each car is just the tip of the insanity iceberg when looking out how much the Federal government lost on this endeavor.

The study did not just look at the end consumer rebate. It looked at the entire supply chain and manufacturing process to get to that rebate point. If you look at both Federal and state government loans and grants to all of the manufacturing parties involved in the Volt, the actual per vehicle cost to the American taxpayer was over $250,000 per car. That's insane, $250,000 spent for each of about 6,000 sold cars that have a range of less than 30 miles before they have to recharge. What an idiotic waste of wealth and hype.

- We are on insanity roll so let's stay with the "alternative energy insanity" category for $200, Alex. Consider the plight of our taxpayer money relative to another alternative energy company that has received millions and millions of dollars from the political class:

• Another alternative energy company, Ecotality, received a $26.4 million Energy Department grant in October of 2011 in addition to a $115 million grant the Federal government had previously been given to the company
• This grant came in the midst of a Securities and Exchange Commission (SEC) investigation that started at least as far back as October 2010.
• The SEC has targeted 18 people involved with the company, including its CEO Jonathan Read, his son Colin, the company’s vice president of corporate development, Colin’s wife and father-in-law, Ecotality’s senior VP of engineering, its former secretary and treasurer, a member of the board of directors, the director of stakeholder services at Ecotality North America, and numerous major Ecotality investors. Obviously, a family affair or a potential scandal.
• In other words, while the company was waist-deep in a major SEC Federal investigation, the Federal Energy Department insanely doubled down on the company with more taxpayer dollars
• The company is in dire financial straits with its stock price down almost 84% since May, 2010 with the stock price now below $1 a share.
• According to Forbes, the company has a five-year average return on invested capital of negative 210%.
• Ecotality’s latest earnings report shows it posted a quarterly loss of about $34 million.
• It's Energy Department payouts, totaling $6.8 million, accounted for 60% of its revenues in the first nine months of 2011, up from 38% during the same time period in 20111.
• Not only is the company a failure from a  financial perspective but it is also a failure from an operational perspective. The company was supposed to install 15,000 electric car charging stations around the country but has fallen far short of that objective, installing less than half of the stations it was supposed to have installed already.
• But despite the company’s horrendous financial performance, Ecotality more than doubled compensation for its executives last year.

Who in the political class and Federal government thought this insanity was a good use of taxpayer money? Overpaid family executives, under performing business plans, what lunacy. 

- According to an April 25, 2012 Associated Press article, two former and two current Transportation Security Administration employees have been arrested on Federal drug trafficking and bribery charges. Their offense? They allegedly allowed large amounts of cocaine and other illegal drugs to pass through X-ray machines at airport security checkpoints in exchange for cash.

And this apparently is not a one or two time occurrence. The charges include a twenty two count indictment of the four. Rather than focusing on airport, airline, and Americans' safety, these bozos allegedly were busily distracted, making sure they got the contraband through security so that they could enrich themselves while being paid by the Federal taxpayer. Sweet deal if you can get it.

Makes you wonder how many other distractions are going on, both legal and illegal, relative to TSA's staff and efficiency. The AP article pointed out another such case from last week when a former TSA officer pleaded guilty to conspiracy to illegally distribute oxycodone in a painkiller trafficking ring. Insanity. Government workers putting their personal, and illegal activity, above the safety of the traveling public.


- Beyond using their positions of security for drug trafficking and personal enrichment, the TSA is always a good source for insanity. According to an article in the May 4, 2012 issue of The Week magazine, a four year old Montana girl was subjected to a full body pat down by a TSA security officer when she hugged her grandmother AFTER she passed through airport security. The TSA justified the search of the four year old by saying that 1) one of the screeners had once come across a gun hidden in a teddy bear and 2) suggesting that the grandmother may have passed the four year old a gun.

Two problems with this inane explanation. First, there is no mention in the article that a teddy bear was anywhere in sight during the altercation, wiping out the first excuse. Two, if they both had already gone through the security check, wouldn't the screeners had already checked for the evidence of a gun toting four year old or grandmother? Love that TSA, they help me write every month's political class insanity post.

- Earlier this week we discussed how the Social Security Trust Fund was a fallacy, an illusion, an accounting scheme, etc. Anyone who understands wealth creation and basic accounting should understand that the Social Security Trust Fund was looted long ago by the political class, its accumulated wealth replaced by valueless Treasury Department IOUs.

Pretty simple concept, unless you are the current Treasury Secretary, Timothy Geithner. Geithner is one of the six trustees overseeing the Social Security system, one would expect he understands the fallacy of the trust fund. Unfortunately, and dangerously, he apparently does  not understand the basic concept.

He recently and publicly stated that Social Security is adequately funded "for years to come." But how can that be if the process has been in a negative cash flow position since 2010 (i.e. it collects less in Social Security taxes than it pays out) and the trust fund was looted long ago? If one of the trustees does not understand this reality than we really are all screwed when it comes to our retirement funding.

Insane that the Treasury Secretary believes this falsehood. Even more insane and out of integrity if he really understands the reality but lies about it in public for political purposes.

- But Geithner is not the only Washington politician that is ignorant of financial realities or lies about it for political purposes. Consider President Obama's class warfare tactic of continually insisting that wealthier Americans pay more in taxes rather than show some real leadership and:

1. Force all of Washington's political class to stop wasting hundreds of billions of dollars a year from criminal fraud, waste, and inefficiencies in major government programs such as Social Security, Medicare, Medicaid, etc.
2. Actually reform and simplify the 70,000 page Federal tax code rather than insist a very, very small part of it be changed for his political gain.

How small is this tax obsession? Consider some numbers from the February 3, 2012 issue of The Week magazine:

• The richest 25 hedge fund investors earned more than $25 billion in 2009, money that is taxed at 15%.
• If that tax rate was doubled to 30%, like Obama wants to do, roughly an additional $3.75 billion in taxes would be collected.
• If these additional taxes could be paid out to every American household, each household would receive about $32 a year or only about $.09 a day.
• The $3.75 billion would cover only about .3% of a typical year of Obama deficit spending.
• This $25 billion was six times more than ALL of the chief executives of the 500 largest publicly traded companies put together.
• Getting really insane, if we taxed the compensation of the 500 chief executives at 100%, i.e. the Federal government confiscated everything every one of the 500 chief execs earned, the theoretical daily take for every American household would be about $.10.

In other words, even if Obama got his way and doubled the tax rate for these top hedge fund managers or confiscated 100% of what top execs earned, the impact on other American households, the national debt, and Obama's deficit spending would be infinitesimally small. To say anything else would be insanity, lunacy, or an outright political lie.

[Note: I am not saying the tax rate should not be raised from 15%. I am saying that the President's obsession on such a trivial plan will have no impact relative to the fiscal cliff we are about to drive the country over. Any political discussion of this Presidential proposal diverts everyone's attention away from the true issues of our $15 TRILLION national debt to a purely personal political issue/gambit.]

That's enough for this month. The torrent of insanity keeps coming and we are always in front of what the political class flushes our way. That is why Step 39 from "Love My Country, Loathe My Government" is so important. Step 39 would impose term limits on all Federal politicians in order to turn off the torrent of insanity from our current politicians. These politicians are the cause, not the solution, to our problems.

Consider two quotes from Albert Einstein that prove this very smart man would support Step 39:

"The definition of insanity is doing the same thing over and over and expecting different results."

"We can't solve problems by using the same kind of thinking we used when we created them."

Wise words from a wise man, words that we can use to justify term limits and stop the insanity.


We invite all readers of this blog to visit our new website, "The United States Of Purple," at:

http://www.unitedstatesofpurple.com/

The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.

The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment/