Lower CA Gas Prices by Drilling!

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In 2004, then Attorney General, Bill Lockyer, updated his 2000 report on Gasoline Prices in California.  Looking back is an interesting read as we watch gas prices rise beyond $4.00 on their way to, as some are predicting, to as high as $6.00, if not even higher.

Evil Oil Companies Reap Big Profits Cause Gas Prices to Spike!

What is fascinating about both the current concern over the rise in gas prices and the report published by AG Lockyer is the consistent amount of spin on what it was that was causing the rise in prices.  As we move into the next few weeks and months, once again we will hear from the media, and many talking heads, how it is the “evil” Oil companies’ fault—how they are making record profits, preying upon the people of California, or on the national scale, the U.S. citizens, to enrich their shareholders and continue to pay huge salaries and bonuses to the 1%’rs and leaving the 99% in a worse and worse position. But there is a big problem with this spin!  For the most part it is just not true.

I have no vested interest in the Oil companies.  I am also not a fan of some of what they do sometimes.  Sure, Oil companies make a huge amount of profits when you look at the overall dollars but, like other such vilified industries and their executives including, big Pharma, and insurance companies among others, the percentage of profit is ridiculously small, when compared to other businesses and most small businesses.  More telling, however, is that the real profit built into the Gas and Oil supply chain has reduced significantly since Lockyer published his updated report in 2004.  The enclosed chart shows the break out of costs for a gallon of gasoline as reported by the California Energy Commission in 2004 and again as of today in 2012.  What is startling is that the “evil” Oil companies’ and refineries have reduced the cost and profit part of the price over 27% while the state of CA has increased their percentage per gallon over 42% and the federal government has also increased their take per gallon by 20%.

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Another, great misconception—misrepresentation—is that the cost per gallon is driven solely by the per barrel price of crude oil.  Well again, if you look at the chart I prepared, you see that if that logic was, in fact, correct, the price per gallon would now be $6.02 per gallon already instead of the $4.04 it is today.  So, there is some disconnect in the price per barrel equivalence to the price at the pump.  Clearly, this is not a direct corollary.  While it likely does have some impact, I suspect there are a number of other things at work that drive the price at the pump. So, one may want to question if the conventional headline as shown at the beginning of this section is true?

What else could be driving up gas prices in California?

One other interesting segment of the Lockyer report is the change in 2004 from MTBE to ethanol.  For many who don’t know, and for those that do not remember, MTBE was the additive to California gasoline demanded by the environmental movement to reduce gasoline’s polluting effects.  With a large amount of money, and huge political activism, the activists forced CA to enact a law requiring this additive.  The cost of refining gas for use in California went up and so did the taxes on gas to help pay for the increased bureaucracy required to monitor compliance.

Now like most things driven by ideology, a number of years later the same environmental factions now came forward to demand the removal of MTBE from our CA gas as it was polluting the environment (it had been found in high concentrations in the water table of Lake Tahoe).  So once again Californians had to foot an increase in the cost of gas as a result of this change and an increase in the cost of the additive (ethanol) as well as an increase in the bureaucracy to manage compliance—oh and let’s not forget increase in fees and taxes. So far I have yet to see an acceptance of responsibility for the initial inclusion of MTBE in the first place, no offer to pay for the removal, and no apology for the mistake from those that promoted the MTBE solution in the first place!

On a side note, you will also be hearing how the profits made in California by the evil oil companies surpass the national average!  Well the percentage is actually less but the price per gallon is a lot more, so of course the total dollars will be higher.  Further, the costs of operating a business in California are intrinsically higher due to higher labor, infrastructure, legal, regulatory and insurance costs.  When you look at all the costs, what is surprising is that overall California gasoline retailers, distributors and refiners have fought to lower their costs significantly over 27% since 2004.  Not the work of evil geniuses!

The Law of Supply and Demand

Recently, some news outlets are questioning why, since the general demand for Gas and Oil in the U.S. is down significantly and we have had a surplus in supply; prices are still rising—not falling as predicted by the law of supply and demand.  Welcome to the One World Economy.  There are those in the progressive movement, evidently our President included, that have long desired the U.S. to become a member of the One World vision—a One world Economy.  For the past 20 years, much of Europe has been experimenting with this vision of utopian fairness.  Looking at the status of Europe today, particularly Greece, France, Italy, and Spain one would really want to ask how this is working out for the citizens of those countries!

The problem with the One World Economy is now supply and demand for our U.S. refined products, regardless of their in-ground point of origin, is based on demand anywhere in the world.  One can take a narrow view and determine that Oil refined in the U.S. should stay in the U.S. but economically that doesn’t work because when “evil” Oil companies ship this product to other markets, that will pay a higher price, it is actually a good thing for the economy because the U.S. adds revenue to its export sales, reducing the amount of money we need to print to pay for our international purchases.  We must remember that the U.S. is a net importer of products; therefore more of our dollars flow out of the U.S. than we get back in sales of our goods and services outside of the country.

As an example, suppose you live in a hose with your wife and one child.  Your Mortgage is $1,000 per month, your other expenses are $1,000 per month, you and your wife both work and you both get paid $1,500 per month.  You are selling your services in excess of what you are spending and each month you gain real asset value of $1,000 each month.  Now let’s assume one of you loses your job.  Now each moth you are buying $500.00 more in goods and services than you are taking in.  All things being equal you can do this for twice the amount of time of when you were both working. When you get to that point when you have spent all the money you accumulated, you look in your checkbook and see you still have checks.  So you keep writing them.  It won’t be long before someone comes and knocks on your door.  We have for the last 50 years been ignoring this very  problem of just writing checks because they were in the book and now have a $12 trillion accumulated trade deficit.  Not only is this a big problem for our general economy, it is a big problem when it comes to real value commodities like gasoline and oil.

Since we eliminated the international gold standard in 1972, countries whose economy is based on net exports of goods and services have currencies, like China’s Yuan, that are based on increasingly real tangible values.  The U.S. economy, being a net importer, has an economy whose currency is more and more based on intangible, perceived value.  While the U.S. dollar is still the benchmark currency, perception of many in the world is changing.  Oil is perhaps now the single most valued commodity.  Its price, like gold before it, is set by world demand. There are those who argue that “petrol dollars” should become the new world benchmark.  In other words it would be the new gold standard.  The day that the dollar is replaced, the U.S. currency will simply get crushed! If you think gas is expensive now…

So companies selling products today have an interesting problem when it comes to U.S. customers.  They can take their production and sell it to us and get paid in a currency that has a total amount of money in circulation of $16 trillion dollars with arguably a real tangible value of only $5 to $6 trillion. Remember they will be selling this valuable commodity to a country that each year is buying much more than it is selling so the tangible value of the assets backing its dollar are continuing to slide down or, they can sell them to China whose currency is now internationally recognized and is relatively stable and is backed by a constantly increasing national asset base due to huge net exports and low manufacturing costs.  Barring a simply patriotic reason, most will sell to the increasing asset value country.

Drill, Baby, Drill!

We can increase domestic production, and we can drill more, and we will find that we will reduce local prices somewhat.  While the President says, that drilling will not solve the problem, he is not telling the whole truth.  We can’t mildly increase our production; if we do then he is correct.  We have to significantly increase production to have the effect we seek. The break point for lowing domestic costs is when we get enough production to reduce the dependency on foreign oil to such a level that the vagaries of their price gaming become meaningless.  There are enough oil reserves in the U.S., with existing technologies to get to it, to replace most, if not all, reliance on foreign sources.  What is necessary to get there, is time and the will of the people.  Unfortunately, we are coming to the point when we simply must face the reality that while protection of the environment is a noble goal it cannot be the only, or preeminent, factor in our decisions.

Finding alternative sources for energy is necessary step and is a proper goal.  But, the solutions found in the alternate sources, can neither cost more than the available domestic oil, gas and coal sources, nor can they require us to collect taxes from some, or all, to subsidize the price to pay for us to use it.  Following the subsidized route is the height of lunacy.  The money we need can no longer come out of thin air as it has for the past 40 years.  Taking money from ‘us’ to pay for purchases by ‘us’ from ‘us’ is not only a zero sum game, it is simply increasing our costs as a nation and making us further uncompetitive with other nations who in turn are happy to produce the goods that we can actually afford to buy.  In the end, we get where we are with Gas and Oil today.  We can produce it, but we just can’t afford to buy it.  So then we have to sell it to countries like China that can.

(Tom Loker served as the Chief Operating Officer of Ramsell Holding Corporation. Prior to joining Ramsell, Mr. Loker was the founder and senior partner of Wild Tiger Holding Company and Thomas Loker Consulting. Visit his website at www.loker.com and his blog at tloker.wordpress.com.)

North Dakota: The real boom is in traditional energy, not “green jobs”

If California policymakers want to lift the state out of its economic malaise, they would do well to emulate . . . North Dakota. Once the least-visited state in America, the Peace Garden State is rapidly becoming the economic envy of the nation. Its 3.5 percent unemployment rate is the lowest of any state, according to the Bureau of Labor Statistics. North Dakota also boasts a state budget surplus of $1 billion. Compare these figures with California’s 11.7 percent unemployment rate—second highest in the country—and a likely $13 billion budget deficit in the coming fiscal year, and suddenly the Great Plains look like an attractive alternative to the Golden State.

How did North Dakota pull it off? Oil production has driven the recent boom. Drilling restrictions in Alaska, the Gulf of Mexico, and even Canada have given North Dakota an opportunity to expand its oil industry substantially. North Dakota now accounts for 6 percent of U.S. domestic oil production and already ranks fourth in the nation behind Texas, Alaska, and, yes, California. Unlike California, however, North Dakota is a fairly new player in the oil-production market. The state imposes no energy-efficiency resource standard for electricity or natural gas, and it has no mandatory statewide residential or commercial energy code. North Dakota lawmakers have let market demand dictate coal and oil production. According to North Dakota U.S. Senator John Hoeven, the state government’s approach to energy is to “develop all of our energy resources, both traditional and renewable . . . in a way where we incentivize new technologies to create more energy more dependably and more cost-effectively with good environmental stewardship.”

While California is rich in both conventional and renewable energy, gridlock in the state legislature has hampered development of these resources. Unlike North Dakota’s officials, who welcome the economic growth and new revenues, California lawmakers seem intent onreducing the state’s role in domestic oil production. Legislators have imposed laws much stricter than federal standards and worked aggressively to subsidize alternative energy sources and mandate their use. California’s Global Warming Solutions Act of 2006 and subsequent legislation—requiring that the state obtain at least one-third of its energy from renewable sources such as wind, solar, and geothermal—will impose onerous costs not only on businesses, but on every ratepayer and consumer in the state. Estimates vary, but at least one study projected that the law would cost the state economy $183 billion—a staggering burden for Californians already struggling under the highest energy prices in the nation.

By contrast, North Dakota’s underdog story illustrates how a different approach to public policy—and in particular, to traditional energy procurement—can bolster economic activity and job creation. North Dakota’s energy boom has caused a host of “problems” every state wishes it had—such as the need for more infrastructure development and more housing to accommodate job growth. Some of the state’s rural communities have seen population double virtually overnight. And forget about that “least visited” label—trying to book a hotel room in many places is next to impossible.

While Golden State legislators bow to special interests and dither in a dream world where “green jobs” save the day, North Dakota is reaping the economic benefits of traditional energy production. It’s time California did the same.

(Brian Calle is a columnist and editorial writer for the Orange County Register. Originally posted on City Journal.)

Unlike CA government, San Jose understands the need for pension reform

Jerry Brown paints a bleak picture of the future of “civilization” if Californians refuse to back his proposed tax increase, now vying for a place on the November ballot. If voters reject the initiative, warned the governor in December, it would reveal a deep “skepticism of public service” and send a message that “the common institution called government is not something we want to invest in.” The stark choice before voters, the governor says, is higher taxes or diminished public services. But in San Jose, the state’s third-largest city, a liberal Democratic mayor wants to give voters a third option: stretching taxpayers’ dollars by slashing the excessive costs of government services, especially pensions and other benefits for the people who administer those services.

In December, San Jose’s City Council voted six-to-five to place an initiative on this June’s municipal election ballot that would overhaul dramatically the city’s public-pension system. The brainchild of Mayor Chuck Reed, the measure would create a hybrid system for new hires—combining traditional defined-benefit pensions and 401(k)-style defined-contribution plans—while also significantly increasing contributions that current employees must make to their pensions. As the Reed administration’s fact sheet explains:: “New employees would pay for at least 50 percent of the total cost of the new plan and the city’s contribution would be capped at 9 percent of an employee’s salary (the city currently contributes more than 50 percent of an employee’s salary for retirement benefits).”

The council’s vote came during a raucous session filled with angry public employees unlikely to be pacified by the council’s willingness to pursue a negotiated settlement or modify ballot language in lieu of a June election fight. City Manager Debra Figone on Tuesday recommended that the council soften the measure’s language before sending it to the registrar of voters, despite the failure to reach an accord with the unions this month. The council is expected to vote on the new language on March 6, just three days before the registrar’s deadline. According to Ed Mendel of Calpensions, a website that covers the state pension crisis, Mayor Reed is relying on a city charter provision that sets down only minimum benefit levels as his authorization for cutting current-worker benefits. And the city is within its rights, Reed argues, because the charter allows changes to existing pension benefits. In fact, faced with the budget crisis, Reed initially wanted to declare a fiscal emergency, giving officials even greater cost-cutting powers, but the council rebuffed him.

The San Jose effort—and a similar one in San Diego, where officials are trying to put a far-reaching pension-reform measure on the ballot—may be a sign of things to come in California. The real story in San Jose isn’t the lower benefit level for new hires, which would only have a minimal effect on the city’s unfunded pension liability; it’s the plan’s changes for current employees, who are driving the unfunded pension crisis. Under the plan, current employees would have two options: pay far more to keep their current retirement plan or choose a lower-cost plan (though workers would keep all the benefits of the old plan that they had accrued to date). Simply put, workers would have to contribute more out of their paychecks or accept fewer benefits.

Under the first option, the city explains, employees “would contribute an additional 5 percent of their salary starting in [fiscal year] 2012-13 to help pay off the pension plan’s unfunded liabilities. These additional contributions would increase by another 5 percent each year until they cover half of the cost of paying off the unfunded liability (or reach 25 percent of pay).” The second option would increase the retirement age to 57 for public-safety employees and to 62 for all other public workers, reduce the city’s retirement obligation, and cap cost-of-living adjustments. It would also base pension payouts not on the final year of pay but the final three years. Finally, voters would have to sign off on all new pension increases. The softer language, if approved, would reduce the amount employees pay toward their pensions to cover accumulated debt, and it would boost benefits for new hires.

Mendel notes that Reed’s plan “takes on what the [official government watchdog group] Little Hoover Commission called ‘the elephant in the room,’ a way to reduce the cost of pensions promised current workers.” San Jose is now spending 20 percent of its general-fund budget on retirement benefits, the costs of which have tripled in the last decade, Mendel reports. What’s more, “the city’s pension contribution for police next year is expected to be about 60 percent of pay,” an imbalance that has forced the city to lay off 66 younger police officers over the last few years.

In the past, California courts have nixed such “going-forward” reforms, which might suggest Reed’s plan is stillborn. San Jose’s city attorney opposes Reed’s plan and sent a letter to the council claiming that the initiative is unconstitutional. Even if voters pass the measure in its revised form, the issue will doubtless end up in the courts. San Jose now stands on the cutting edge of pension reform, much to the fury of public-sector unions and their leadership.

San Jose’s case for renegotiating pension benefits is straightforward: “The city’s ability to provide its citizens with essential city services has been and continues to be threatened by budget cuts caused mainly by the climbing costs of employee benefit programs, and exacerbated by the economic crisis.” The city claims, with good reason, that cuts in service levels are unacceptable and would place residents “at an imminent risk.”

The city’s approach offers a stark contrast with Governor Brown’s assertion that only tax hikes can get California out of the current crisis. In fairness to the governor, he did introduce a pension-reform plan late last year that would stretch government dollars somewhat. But Brown doesn’t seem interested in using his political capital to advance the plan, which otherwise will be dead on arrival in the Democrat-dominated legislature.

In Brown’s view, resistance to tax hikes reflects an unnatural public skepticism. But are California voters so wrong to be skeptical of yet-higher taxes after the last decade of overly generous pension and health-care deals for government employees? Are voters wrong to resist giving the government more money when they see how that money is spent? Officials in San Jose understand that the greatest threat to the government programs they value is the excessive cost of administering them. Thus far, the governor and his fellow Democrats in Sacramento refuse even to consider that argument.

(Steven Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity. Originally posted on City Journal.)

Winning Back the CA Legislature: It Can Be Done!

Congressman Kevin McCarthy delivered a rousing speech on the first night of the California Republican convention, describing how the GOP took back the majority in the House back in 2006, thanks to a highly successful “Young Guns” program, and how California can experience the same results in its state legislature with a new “California Trailblazers” program, a follow-up to the “Young Guns.” Following remarks by Rep. Darrell Issa at the dinner, the House Majority Whip drew comparisons between the US four years ago and California today, and how it is essential to find people that are true to the Conservative cause and can be trained to become leaders within the legislature.

After Republicans lost the majority in Congress back in 2006, TIME Magazine stated that the GOP would never be a relevant party in America ever again. Yet just four years later, eighty-seven new freshmen Republican members of Congress beat out some sixty Democrat incumbents, and the Republican Party successfully regained control of the US House of Representatives. “We believed we could do it, but the rest of them laughed at us and made fun of us for it,” said Rep. McCarthy. “But we did it.”

“The same concept that was used across the country can be implemented in California,” said McCarthy. “What we did back east, we can do exactly the same here.” Comparing the state of the nation in 2006 with the current situation in California, Rep. McCarthy detailed the need to find people that are true to conservative causes that will stand by causes and come up with proper solutions for the state. However, many Californians today doubt the relevancy of the California Republican Party and believe its significance has essentially gone down the drain. In fact, the fastest growing party in California is decline-to-state. “Are we going to admit that we’ve hit rock bottom and can only go up from here?” questioned McCarthy. “We’re not just going to sit back—we’re going to hold seats!”

Rep. McCarthy is a California native, having lived in the state all his life for 47 years. “I’ve watched this state fall from first to last,” he stated during the dinner. ““In California, the Democrats control all. Their idea that problems can be solved by enlarging government has failed, and we need to give a vision of the right solution… Our government dictates how much water you can have in your toilet bowl, what kind of light bulb you can use, what kind of religion you can have. If there was ever a time to stand up for America, now is the time.” McCarthy emphasized the importance of coming up with a solution using conservative principles—and it’s not necessary to create a 100-page plan to do it.

Mirroring the techniques used in the “Young Guns”, the “Trailblazers” program is commissioned to “identify, recruit and advise a new generation of fiscally conservative leaders to victory for California Assembly and Senate seats in 2012 and beyond.” Candidates are equipped with the knowledge, support, and advice on how to run a successful campaign, and are given “insight from Republican leaders and political experts on what it takes to win.” With the unique landscape in California due to redistricting, Republicans running for office need to be more prepared than ever, and with the help of individuals like Rep. McCarthy and other dedicated leaders, it will be possible to take back the legislature, and in doing so, take back our state and propel it forward.

It can be done—these are the four words inscribed on a plaque that sat on Ronald Reagan’s desk. “The question is—do we agree with that?” asked Congressman McCarthy. “Too often, we don’t remember who we are as Americans. We start with the largest economy in the world. We have $2 trillion, not in government, but in free market businesses. We have the greatest military on earth. We even have the resources to be energy independent.” Too often, we are bombarded with facts on America’s weaknesses and threats to the homeland, without giving thought to our strengths or opportunities at hand. “We’re in a battle for the big ideas. Don’t fight for pastel colors—make it bold,” said McCarthy, taking a quote from Ronald Reagan. “It’s not going to be easy. But this country is worth fighting for, and this state is worth fighting for. And I believe it can be done.”

(Josephine Djuhana is Assistant Editor for the California Political Review.)

How will California Republicans become relevant?

As Republicans from across the state gather Friday through Sunday in San Francisco at the state GOP’s annual Spring convention, one wonders if party leaders will address a question on the minds of many voters and political onlookers since the abysmal results for Republicans in the Golden State’s 2010 elections: How will the California Republican Party become relevant again?

After 2010, the California GOP seems to have been further relegated to regional political party status rather than a statewide power. And with a redistricting process that has skewed electoral boundaries in the state even more to benefit Democrats, some believe it is only a matter of time before the Democratic Party gains two-thirds majorities in the Assembly and Senate. Of course, Democrats already occupy every statewide elective office, from the governor on down.

Republicans will have to rebuild their brand in California, a brand tarnished, if not tainted, by former Gov. Arnold Schwarzenegger. While a registered Republican, the former actor often times acted like anything but a typical conservative. In his wake, the party has no roster of formidable potential candidates for statewide office.

Even before Mr. Schwarzenegger’s arrival in 2003 Republicans were on the defensive. The last time Republicans held a majority in either house of the Legislature was in the Assembly, briefly, in 1996.

Michael Schroeder, the Orange County attorney who chaired the California Republican Party from 1997-99, advised the party to do more to engage communities the GOP has typically avoided.

“My No. 1 focus as chairman,” he said, “was to increase the Republican Party’s reach into the Asian, Latino and African-American communities.” He also changed party rules for the state’s presidential primaries from winner-take-all to winner take all by congressional districts to “force the party to learn to campaign to Latin, African-American and Asian voters.”

He said the party today should aggressively continue such tactics and do everything it can to register additional Republican voters in various communities and build the volunteer base to make sure they vote.

To do so, Mr. Schroeder argues, Republicans “need to have a relevant message and show respect.”

One benefit California Republicans may have this election year in building some momentum is that the Golden State’s primary, June 5, actually may wind up helping decide the GOP presidential nomination. None of the four remaining candidates has broken out to a big lead in delegates. One of them, former House Speaker Newt Gingrich, whose candidacy has lost steam, was scheduled to speak at this weekend’s convention. And California has more Republican delegates at stake than any other state, 172.

Nationally, Republicans have a lot to be happy about and have a strong bench of rising political stars: Florida Sen. Marco Rubio, New Jersey Gov. Chris Christie and Wisconsin Gov. Scott Walker, among others. California’s Republican Party must start rebuilding its bench, a task that should be addressed at this weekend’s convention.

(Brian Calle is a columnist and editorial writer for the Orange County Register.)

Congress Fiddles While Our Infrastructure Burns

Imagine as the CEO of a business or the head of a household, that you limited your long-term planning to six months. That’s how Congress has been managing transportation and infrastructure since 2009, when the Safe, Accountable, Flexible, Efficient Transportation Act- A Legacy for Users (SAFETEA-LU) expired. Eight short-term extensions have only served as a Band-Aid. Repeated delays have hurt our economy, stymied job creation and allowed for the continued deterioration of our nation’s roads, highways, bridges and transit.

While some in Congress think they are saving money, the public pays the price for the government’s lack of action. Unattended maintenance leads to traffic snarls, more car repairs and accidents that endanger loved ones. Businesses pay the price in lowered work production as employees toil in traffic and truck shipments miss deadlines. The California Transportation Commission estimates that Californians lose 458 million hours annually due to congestion.

Much of America’s transportation infrastructure is in disrepair and the gap between what we need and what we can afford is widening. The 18.4 cent per gallon gas tax that funds the Highway Trust Fund (HTF) hasn’t changed since 1993 when the price of gasoline was less than $1.25 per gallon.  Add in the increase in vehicle fuel efficiency and the increase in construction costs and you have an HTF with less purchasing power each year. That is not a solid foundation for a competitive, 21st century economy and transportation system.

Our municipalities have picked up the slack. In California, 65 percent of transportation dollars come from local sources; in the Southern California Association of Governments region, it’s as high as 74 percent. Regions as diverse as Los Angeles and Orange County have approved tax increases to fund repairs to roads and bridges, maintain highways and develop mass transit systems. However, it’s not enough. Our local transportation agencies need a multi-year federal commitment that maintains our existing federal infrastructure and streamlines the timeline for improvements.

We are closer now than at any other time since 2009 to getting a new multi-year reauthorization. Both the House and Senate have released legislation that has been working its way through committees and should be on the floor soon after Congress returns from President’s Day recess this week. The Senate’s two-year $109 billion bill has achieved broad bi-party consensus, while the House’s five-year $260 billion language has come under fire for partisanship. In the past, investments in infrastructure have generally been above party politics, unfortunately that seems to no longer be the case even though there are many areas of agreement in both bills, including expanded funding for America Fast Forward.

Every $1 billion invested in our infrastructure system creates 18,000 jobs. For a Congress whose mantra is supposed to be “jobs, jobs, jobs,” there has been a lot of fiddling while Rome burns. It’s imperative that Congress douse the flames and set our infrastructure on the right course. That’s what our Los Angeles delegation will be telling members of Congress during ACCESS Washington, D.C. on March 5-7. Join us in person or take the time today to personally urge your member of Congress to pass transportation reauthorization this spring.

(Gary Toebben is the President & CEO of the Los Angeles Area Chamber of Commerce.)

White Knight won’t happen for the GOP

So far, the Michigan Republican primary hasn’t done much to clarify the race for the GOP presidential nomination, but it has increased speculation about a brokered convention, where a White Knight would be anointed to rescue the party from mediocrity.

Talk of the nominating contest being settled at the Tampa, Fla., convention instead of on the campaign trail is intensifying, largely because of the inability of any of the remaining quartet of Republicans to stoke the passion of voters.

The GOP establishment desperately wanted Mitt Romney to catch fire. But Romney is struggling in his native state, and if he doesn’t win Michigan, it will be hard for him to make a case to Super Tuesday voters that he is the most electable choice.

Rick Santorum and Newt Gingrich continue to rise and fall on the whims of social conservative and tea party voters, who find Romney too moderate. And Ron Paul hangs in there to skim 10 percent off the party’s libertarian edges.

If they all stay in the race and continue to play seesaw, no candidate may accumulate the 1,144 delegates necessary to automatically secure the nomination. The GOP’s decision to allow states to award delegates on a proportional basis, rather than winner-take-all, increases that possibility.

Going into March without a clear front-runner has some in the party yearning for a do-over. It’s too late for another contender to join the campaign trail, but a draft movement at the convention could elevate someone Republicans had lusted for, but who rejected their overtures.

Former Alaska Gov. Sarah Palin thinks she’s one of them, and has been teasing the idea on her many cable TV appearances. Other names on the wish list include Indiana Gov. Mitch Daniels, former Florida Gov. Jeb Bush and New Jersey Gov. Chris Christie.

Thad McCotter, the Livonia congressman who briefly was in the presidential race, is lobbying against the idea of what he calls an “orchestrated” convention.

“We just can’t do that,” McCotter says. “If we don’t trust our voters to pick a nominee through the primary process, how can we expect voters to trust us in the general election?”

McCotter agrees that it’s possible none of the current four will get to Tampa in August with enough delegates to claim the nomination. But he still thinks one of them should be the nominee.

“All of the names being mentioned made a decision not to run,” McCotter says. “They’d have to explain why they weren’t willing to commit to the primary process.”

There were reasons all of the dream candidates didn’t get in the race. Palin must know in her heart that an electorate that thoroughly rejected her as a vice presidential candidate won’t like her any better on top of the ticket.

Daniels’ wife nixed his bid because she didn’t want to draw scrutiny to the couple’s past marriage problems. Christie hasn’t finished the job in New Jersey. And Bush is a Bush, and that’s not an asset.

The reality is that the four names voters will see on their GOP ballots Tuesday are the menu choices for Republicans. That won’t change.

They’ve got their work cut out for them to make one of them president. The first task is to get excited about one of them as the nominee.

(Nolan Finley is editorial page editor of The Detroit News. Originally posted on the Michigan View.)

Fuel to Fire Obama: Rising Gas Prices, Green Energy, and Keystone XL

On Friday, Mitt Romney has an opportunity to bury Barack Obama.

The GOP frontrunner, struggling in Michigan against Rick Santorum and trailing President Obama in national polls, will give a Detroit Economic Club-hosted speech before a sellout crowd at Ford Field. Insiders say that Romney’s speech will not break new ground – that it will be consistent with his campaign themes. Meanwhile, the former Massachusetts governor has just been handed a gift.

Gas prices this week soared past $4.00 a gallon, up 90 percent since Obama took office. They are a golden opportunity for Romney to explain how Obama’s Green radicalism has made America more vulnerable to international oil price swings – price swings that every voter feels in their wallet. The cornerstone of this reckless energy policy is Obama’s veto of the Keystone Pipeline project promising 900,000 barrels of oil a day from friendly Canada and 20,000 jobs in the United States.

Keystone is Barack Obama’s Achilles heel.

At a time when the Obama Campaign is highlighting the successful auto bailout in what it sees as an opportunity to embarrass Romney in his home state primary, a Romney speech on Keystone would turn the tables. Romney can explain how Obama – by strangling domestic oil production – has deliberately run up domestic oil prices, endangering a Detroit auto industry recovery built on cheap gas and light trucks – not Obama’s electric cars.

“Somehow we have to figure out how to boost the price of gasoline to the levels in Europe,” said Obama’s Energy Secretary Steven Chu in September 2010, explaining the administration’s preference to force consumers into more-efficient cars like high-gas price Europe.

Ouch. Make the Obama administration eat those words.

Gas price rises are complex, owing to Mideast turmoil, changes to federally-mandated seasonal blends – and the Obamatons will surely blame Big Oil greed as well. But in the face of such uncertainty Keystone is inexplicable.

In his interview with The Detroit News last week, Romney explained how Detroit automakers have suffered under excessive labor costs, executive mismanagement. . . and federal mpg mandates forcing the industry to build cars Americans don’t want to drive. Americans want big cars – a choice they cannot have if Obama continues to choke domestic production.

Keystone exposes an administration that cares about Green ideology, not oil independence; an administration that talks about embracing allies even as it offends Canada; and an administration that would rather prolong a recession than provide needed jobs.

Romney insiders say that their boss is a patient man who will use his best tools when necessary. Gas prices, Mideast tension, and Keystone are aligning in a perfect storm – a storm that means trouble for President Obama’s re-election.

(Henry Payne is editor of The Michigan View, where this article was originally posted.)

Carving Up California: Time to Split Up the State?

This issue of Splitting California into two or more states has come into the greater public eye once again. This matter is dredged up every few years by a different group of Californians who are not happy with current arrangements. A recent proponent was  Riverside County Supervisor Jeff Stone.

However often the issue of splitting the state has been brought up, the actual splitting has never occurred. This leaves the question for many of usHow does a state get split? The further question that needs to be asked and answered is: What needs to occur in order to actually cause a State to split?

The process of splitting a state is codified in Article IV Section 3 of the U.S. Constitution:

New States may be admitted by the Congress into this Union; but no new States shall be formed or erected within the Jurisdiction of any other State; nor any State be formed by the Junction of two or more States, or parts of States, without the Consent of the Legislatures of the States concerned as well as of the Congress.”

The state splitting process generally begins when a state’s legislature first votes to split the state. Once the measure passes both chambers of that state, it is submitted to Congress. Once there, the matter is discussed. If both chambers of Congress vote to pass it, the state can then be split.

There seem to be two options on how a state can split. In the first instance, the state decides how it’s going to be split before sending the proposal to Congress.

In the other instance, the state does not decide how to split itself before the bill is sent to Congress. Congress generally establishes a partition committee once the bill to split a state has been affirmed by Congress.

Partition committees are quite important to the splitting process. When a vote to split a state occurs, there are many details that must be worked out. These details include what resources are to be partitioned to which new state, how any existing state debt will be distributed between the two new states and how the state Constitution will be addressed or changed by the new states. A key component of a partition committee can include how to draw the lines and how many new states may be created. So, proponents may be a bit ahead of themselves by drawing such maps.

What If Congress Chooses Not to Act? 

What happens if the state itself votes to split, but Congress either fails to take the matter up, or chooses not to? That wasthe case in 1864, when Californians passed a ballot initiative to split California and the Legislature voted and passed it as well. Unfortunately, Congress chose not to discuss it and the matter was left undecided. This poses a problem, but needs to be examined.

If an existing state is too small to divide and yet tries to split, it would be argued that Congress has a material interest in acting as a check to stop the process. If, for instance, Vermont tried to split itself into two or more parts, many would see that the resulting new states would be too small in both size and population and should not have the benefit of another U.S. House member, much less two more U.S. Senators.

However, considering the sheer size of California and its population, not to mention the size of our economy, some have suggested that California is a de facto country of its own. One would think that any attempt for California to split into two or more states would not run into the same problem.

In my opinion, Congress should vote to support California splitting. If Congress lets the issue die, as it did in the 1864, then we have a real dilemma.

California could have other options if Congress chooses not to act. Article IV, Section 4 of the U.S. Constitution guarantees:

“The United States shall guarantee to every State in this Union a Republican Form of Government….”

If Congress chooses not to pass such a split of California, that provision could be invoked in the the federal courts if manageable standards could be advanced. (I believe they could be.) Though it is not clear if such a process would be successful, it could help to build the political pressure needed to force a split.

The only other remedy to split a state is would be a direct appeal by California to the other states to call a Constitutional Convention, following Article V of the Constitution. The Convention would change the process of splitting a state. This would a very long and difficult procedure.

History of State Splitting in America 

The very first state to split was New Jersey. For a brief time there was a West and East Jersey. This happened in 1676, but the experiment was short lived and the two parts were reunited in 1702 as modern day New Jersey. At that time, New Jersey was still a colony and it is not clear what caused the splitting or reunification to occur.

The next split to take place was Vermont. It was formed from the Northeast corner of New York state, in an area for which there were land claims by New York, New Hampshire and even Massachusetts. In 1777, the locals living in the area of this cross-claimed land themselves took title (it seems unilaterally) and formed “The Republic of New Connecticut,” declaring it an Independent country. Six months later, at a constitutional convention, 72 delegates adopted the name of Vermont.

In 1791, Vermont became the 14th state. It was Vermont’s circumstances that led to the creation of Article IV Section 3 at the Constitutional Convention held in Philadelphia by the Founding Fathers. They realized that there may be a need for states to split or even be able to combine two or more states into one. This is what led to the constitutional codification.

Maine became the first post-colonial state to split. It was a territory that the French and English fought many wars over until it was finally claimed by Massachusetts in the mid-18th Century. Maine is not physically attached to Massachusetts and was called “an exurb.” Until Maine was formed as its own state, representatives were sent to the Massachusetts statehouse to represent the citizens in the Maine territory.

In 1807,  disputes over land grants in Maine led to a vote in the Massachusetts Assembly to split the state. That vote failed.

However, the first step to actually split did occur. There is one key reason why. Massachusetts was well represented in the lower chamber of its legislature in those days. In fact, there was about one representative for about every “150 ratable polls” (one representative for every 150 white men over age 21) in its lower chamber, far more than any other state at the time or even now. In 1812, there were representatives in the Massachusetts lower chamber. It is likely the high level of representation led to the state considering the split, even though the split was voted down.

During the War of 1812, the British captured and took control of Maine, but then it was released back to Massachusetts after the war. So, for a time, representatives were no longer sent to the Massachusetts legislature. Massachusetts finally voted to allow Maine to become a State in 1820 as part of the Missouri compromise to keep the balance of slave states and free states.

Virginia is the greatest splitter of all. It began as one of the first and oldest colonies and then grew to the point in which encompassed the area of West Virginia and Kentucky. It was these latter areas that separated from Virginia to form their own states that we recognize today.

Kentucky split from Virginia and became the 15th State in November of 1861 as part of the secession movement. Kentucky citizens formed a convention and voted to secede from Virginia. Kentucky does not appear to have invoked Article IV, Section 3 in its formation. It seems that this was done summarily after Virginia seceded from the Union.

West Virginia followed a similar pattern to Kentucky. Since Virginia became a Confederate state, the people residing in the northwestern portion of Virginia formed a convention and voted to break off from the greater state, like Kentucky not asking Virginia’s consent to split. West Virgnia simply applied to the U.S. Congress to become a state. The application was granted.

It appears that Maine is the only state to have split under Article IV Section 3.

How Could California Split? 

There are many people who are not satisfied with the California’s current boundaries and others who believe that splitting the state would solve many internal problems. This is particularly true of people who feel they have no access to the Legislature or are simply being controlled by factions of the state who do not share their interests.

However, with the number of attempts that have been made, it is clear that a good deal more political will needs to be developed to advance a breakup.

The key question: What would need to happen in order to push a successful split forward? The answer lies with an issue more obscure than the intricacies of state splitting itself. The main problem is there needs to be an increase in the number of representatives in the California Legislature because the will of the people is not being expressed by this small Legislature.

Currently, California has 80 Assembly members and 40 Senators representing 28 million people.

In 1862, those same 80 Assembly members and 40 Senators represented just more than 400,000 people statewide. That is, each Assembly member in 1862 represented 5,000 people; and each state senator, 10,000.

James Madison noted in the Federalist Papers that each representative in a state legislature should represent about 3,000 people. He got that idea by looking to democracies throughout history that had successful representative government. So originally, California was not far from Madison’s ideal.

Representation in California has degraded to the extent that now each Assembly member has close to 500,000 constituents and each state senator has close to 1 million. It is almost impossible for the average person to ever even meet their representative, much less feel that their concerns are heard, understood and acted upon. The more people represented by each legislator, the more power and less accountability each has. This alone is a powerful incentive to maintain the current system. It also serves to defeat all attempts to split California.

If California ever increases the number of state representatives enough to correct the people’s incredibly poor access, the Legislature would likely take splitting the state. However, until then, we are simply left to drawing maps.

(Michael Warnken is president of Project Commonwealth, at Projectcommonwealth.com. Originally posted on CalWatchdog.)

CA Teacher’s Association Seeks Cover in Occupy Movement

Unfortunately, the OWS crowd doesn’t understand that CTA and other public employee unions are a major part of the problem.

Last week, part of my post concerned itself with the March 5th “Occupy the Capitol” protest being promoted by the California Teachers Association. I wrote,

“Not only is CTA inviting the OWS rabble, they are calling for teachers to attend, even though it is a school day, thus costing taxpayers all over the state untold thousands in costs for subs and robbing children of a productive school day.”

Little did I know, March 5th was just the tip of the iceberg. The CTA website is now touting a “Week of Action” covering the first seven days of March. Many activities are planned and will be led by various “Occupy” groups that have sprung up like weeds. The result is a grand mishmash of radical organizations coming together to vent their spleen over various and sundry issues, and all links to their activities are available through the CTA website.

Right on the CTA homepage you can access the MarchFirst DayofAction Facebook page which whines about the evils of corporations and privatization.

Then there is March 1 National Day of Action for Education website which blasts,

“We call on all students, teachers, workers, and parents from all levels of education —pre-K-12 through higher education in public and private institutions— and all Occupy assemblies, labor unions, and organizations of oppressed communities, to mobilize on March 1st, 2012 across the country to tell those in power: The resources exist for high-quality education for all.” If we make the rich and the corporations pay we can reverse the budget cuts, tuition hikes, and attacks on job security, and fully fund public education and social services.”

This site, with its clenched fist logo, also has a list of supporting organizations. The roster consists of a motley collection of radical retreads — SDS and MEChA and latter day acolytes – By Any Means Necessary and Occupy groups from all over the country.

Occupy Education California has a list of accomplices on their home page – American Federation of Teachers, California Federation of Teachers, Berkeley Faculty Association, Codepink, La Raza, SDS, Socialist Organizer and Old Lesbians Organizing for Change.

There is even a meet-up page online, so that if you are an OWSer and think that you must “do something,” you can find an event here. (Amazingly, there is a group in Beverly Hills. So I guess after stuffing yourself at Trader Vics, you can go out and rail at the

All these groups’ messages are a thinly veiled attack on capitalism and can be summarized as such:

  • Corporations and rich people bad.
  • Big government good. They take money from corporations and rich people and give it to us.

Clearly there is a 1960s flavor to all this – a pastiche of angry student groups and serious radicals, but with a new wrinkle, especially in CA – teachers unions and college faculty associations are involved. During the 60s, most unions of any kind wouldn’t be caught dead at protest rallies, but these are different times and different unions. The irony here is palpable. The teachers unions and other public employee unions, barely existent in the 60s, are claiming victimhood, but in reality are a big part of the problem.

One of the mantras of the Occupy crowd is that corporations should pay their fair share.

Do the OWSers know that the California Teachers Association and other teachers unions are corporations with a special 501(c)(5) tax status which means that they pay no tax? Yes, CTA is a corporation that brings in nearly $200 million a year and pays no taxes. Yet, CTA is promoting events that call for corporations to pay their fair share??!! (If anyone reading this blog has the misfortune to get caught up in an Occupy event, why not ask one of the protesters if they think it’s fair that CTA should pay nothing in taxes. Please post their response in the “comments” area below.)

Do the OWSers know that private corporations in the U.S. have a 35 percent tax rate which is the second highest corporate tax rate of all industrialized countries?

Do the OWSers know that many the leaders of the unions they are partnering with make in the neighborhood of $500,000 a year which makes them one percenters?

Do the OWSers understand that corporations are behind their beloved revolutionary accoutrements – smart phones, lap tops, social media websites, etc?

Do the OWSers understand that CA is in deep financial trouble in large part due to overly generous public employee union pension funds and that these funds invest in the stock market (a collection of corporations) to make up for the shortfall?

Do the OWSers and their new best friends in the teachers unions have a clue as to how many teachers have money tied up in 403(b)s? These tax sheltered annuities provide a way for teachers to invest in stocks (corporations) and defer any tax payments on capital gains until after they retire?

The anti-corporate hysteria has spread like wildfire, but corporations are not the problem. CTA and other public employee unions, with their privileged tax exempt status and endless demands on the private sector, are the real greed mongers. Yet CTA et al have the cojones to join forces with the OWSers. And the OWSers are either too uninformed or too brainwashed to realize the irony.

(Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues. Originally posted on Union Watch.)