Legislative Committee OKs $2 Billion Oil Tax

The Senate Education Committee last week approved a $2 billion tax hike on California’s oil industry that critics say would drive up energy costs and push businesses out of state. Proponents of Senate Bill 1017 tout the additional revenue it will provide for higher education, parks and social services.

“I’m authoring this bill because California is the only major oil producer in the world which does not collect taxes on oil production,” Sen. Noreen Evans, D-Santa Rosa, told the committee on April 24. “As a result, California is losing out on billions of dollars in revenue, amounting to massive subsidies for big oil companies. And as result, our children are suffering.

“I’m authoring the bill because California can no longer afford to leave revenues on the table when the exploitation of California resources by oil companies is reaping huge profits for them. And this is a time when we are forcing our children into debt to pay for their own education. And it is indefensible for California to continue subsidizing the oil companies.”

Taxes on top of taxes

The bill imposes a 9.5 percent tax on oil and gas extracted in California.

Evans said that the total taxation on the oil industry in California was $4.20 per barrel, versus $14.33 in Texas, according to 2011 data from the Franchise Tax Board and the Board of Equalization.

The current global market price of crude oil is just under $100 a barrel.

She argued that the tax will not be passed on to consumers because “oil prices fluctuate according to the global market. The fact is that this bill will not affect prices at the pump.”

Evans acknowledged that Californians recently agreed to tax themselves extra through Proposition 30, but pointed out the tax ends in 2017.

“It is not a permanent solution to California’s revenue problem,” she said of Prop. 30. “One of the solutions is in this bill. Enact an oil severance tax on large oil companies to help strengthen our economy. Oil companies had a record profit of $137 billion in 2011. And it is time for them to pay their fair share.”

However, opponents of the tax point out that oil drillers already are paying sales, property, business income and ad valorem taxes. And such taxes are among the highest in the country. So when all those taxes are added up, today the state is in the middle of the pack for oil taxation among the country’s 10 largest oil-producing states, according to a 2008 study. A 9.9 percent oil severance tax would shoot California to the top of the oil taxation list.

Education cuts

The bill lays out the need for increased funding for higher education in California:

  • “Since the budget cuts enacted in 2010, over 32,000 teachers and faculty have been laid off. This has resulted in cuts in classes being offered, an increase in the ratio of students to teachers, and a reduced quality of education in the state.
  • “Moreover, University of California student fees have almost doubled in the last five years alone, while California State University student tuition fees have risen 80 percent, and California Community College student tuition fees have risen 130 percent.
  • “As a result, over 750,000 students are no longer seeking to attain an advanced degree in California.”

Jefferson McGee, representing the Sacramento chapter of the Alliance of Californians for Community Empowerment, spoke against Big Oil.

“Taxing  Big Oil is the right thing to do,” he said. “California is the fourth largest oil-producing state, and the only major oil producer to not tax Big Oil for extraction. For some reason Big Oil has been given a pass here. Especially frustrating is the fact that California is a major profit center for Big Oil. They made nearly $20 billion in profit in California last year alone.

“The oil industry with their immense profits should be required to pay for our natural resources and also reinvest in the state that allows them to make so much profit. We know the oil lobby in California is strong. And they aren’t afraid to spend money to keep their profits high and their taxes as low as possible. I would like to urge all of the senators to stand with their constituents who desperately need the $2 billion in revenue this tax would provide.”

Several students asked the committee to support the bill.

“For many middle-class students such as myself, the CSU is really the only financially viable way for us to obtain the degree that many of the jobs in our state’s workforce will require us to have,” said Shawn Kiernan, a senior at CSU Fresno.

Opponents of the bill agreed with the need for more education funding. But they said it shouldn’t come at the expense of the oil industry.

Kern County would be hard hit

Opponents also pointed out the tax would come at the expense of one area, Kern County, which produces more than 70 percent of California’s oil and more than 60 percent of its natural gas, according to Kern County Supervisor David Couch. He said 12,000 people are employed in the oil industry in his county.

“Not only is Kern County’s oil and natural gas important to California, it is the lifeblood of Kern County and our economy,” said Couch. “The nearly 10 percent severance tax would cost thousands of jobs in California.

“Besides the loss of good paying jobs, the tax proposed in SB1017 would depress the value of the petroleum properties by approximately $2.7 billion. Meaning county government and local schools would suffer reduced property taxes each year of about $27 million. We do not think it’s fair to ask the people in Kern County to shoulder the burden of financing these statewide institutions that benefit all Californians.

“We are not opposed to more funding for education. We are opposed to the mechanism. It’s very similar to the so-called ‘sin taxes’ on alcohol and tobacco. Except that in Kern County our sin is apparently producing the oil and gas on which 96 percent of California vehicles depend.”

The tax would definitely impact California’s oil industry, said Eloy Garcia, representing the Western States Petroleum Association.

“The idea that we can add a 10 percent tax and all things will remain the same – the level of production, the level of investment in California – is fundamentally wrong,” he said. “There are right now in the United States, domestically, a number of opportunities that are available to oil producers.”

Oil schizophrenia

Garcia suggested that state legislators may be conflicted over oil.

“We have a bit of schizophrenia over oil production in California,” he said. “We don’t want it, but we want the revenue. You can’t have both. That is our basic concern with this approach is we want more money, but we are not looking at the regulatory structure, the cost of producing oil in California. Those all have to be considered together.

“The oil industry pays the state … to the tune of about $500 million a year coming to the General Fund in the way of tide and oil revenues. Where the oil producers don’t own the mineral rights, they pay royalties for those mineral rights. Those are substantial payments, substantial investment from the oil industry in California.”

John Kabateck, executive director of the National Federation of Independent Business/California, told the committee that the oil tax would add “to the uncertainty on Main Street. Small business owners … right now are facing not only the highest gas taxes but the highest sales and income taxes and most egregious regulations in the state and lawsuit abuse. So uncertainty is understandable. A new tax right now, this is not just hitting the Big Oil community. This is absolutely passed along to small businesses.

“Right now, what small businesses need is job creation. There are 2 million people already out of jobs. Many of our small business owners are big supporters of employment. But they can’t do that if they are inhibited with a tax burden time after time after time, when we are the leader in tax burden in California.”

Tax sends wrong message

Dorothy Rothrock, representing the California Manufacturers and Technology Association, said the oil tax sends the wrong message to business.

“We’ve seen manufacturing investment and employment decline severely over the past several decades,” she said. “Part of the reason is high energy cost, high tax rates. This new tax is unnecessary. We need to send the signal to investors out there that California is the place you want to come and put your money in the ground. We want to rebuild the industrial base of the state. This bill goes in the wrong direction.”

The committee discussion was dominated by Sen. Bob Huff, R-Diamond Bar.

“It’s a noble issue to find a dedicated source for education,” he said. “But this is also deemed by the Legislative Analyst as a volatile source of revenue. We already have a volatile source of revenue, which is the basis of our whole budget – we tax the top 1 percent [of income earners] very high. We tax other things that are volatile, capital gains. So it gives us that boom-bust that makes it very difficult to feed a government program one year and then have to cut it back the next. This would exacerbate that problem.”

He was referring to a 2011 LAO analysis, which found, “A wide range of revenues, however, is possible due to the wide fluctuation in oil and gas prices.”

Huff continued, “I believe higher education is something that we need to figure, ‘Is this a priority? Are we going to fund it at a higher level than we are now?’ And if the answer is yes, then … we work on growing jobs, we work on creating revenues in ways that creates a growing job base, growing revenue base, rather than punishing a single industry and driving oil production out of state.”

Democrats on the education committee supported the bill’s cash infusion for higher education, voting 5-3 to approve SB1017. Sen. Cathleen Galgiana, D-Stockton, was the only Democrat to join Huff and Sen. Mark Wyland, R-Escondido, in opposition.

The oil severance tax bill has become a legislative perennial over the past six years. Previous incarnations have either not made it out of committees, failed passage in the Assembly or been vetoed.

SB1017, if it makes it through the Legislature this year, could also wind up on the chopping block if Gov. Jerry Brown follows through on his response to a question about the oil severance tax at a Jan. 9 press conference.

“I don’t think this is the year for new taxes,” he said. “I went up and down the state campaigning for Proposition 30. I said it was temporary. It is going to be temporary. And I just think we ought to do everything we can to learn to live within our means before going back again and trying to get more taxes.”

Brown is running for re-election and the June primary is a month away.

SB1017 next goes to the Senate Governance and Finance Committee.

(Dave Roberts is a political commentator and contributes to CalWatchdog. Originally posted on CalWatchdog.)

LA Times Blames “Geography” for Business Moves

The Los Angeles Times went on the offensive Friday sticking up for California’s battered business climate in the wake of Toyota’s big move to Texas. In a multi-front campaign, the paper’s front page had a featured news article with charts to argue that California businesses are doing fine relative to Texas. The editorial page carried a lengthy editorial answering its own question if California was bad for business (think again, the editorial advised). In addition, there was an editorial cartoonaimed at the Texas “rustlers,” while the cartoonist wrote acolumn on-line attacking Texas.

All on the same day.

The Times’ volley of ink on the business situation in the Golden State can be summed up in the paper’s headline over the news story as it continued on the inside pages of the paper: “Moved Based on Geography.”

Is it?

The Times points to Toyota executives claiming that the move has nothing to do with displeasure with the business conditions in California, but rather the need to find a central geographical location for its sales and marketing operation closer to manufacturing. (Remember, Toyota already moved its last manufacturing plant out of California a few years ago.)

Indeed, Toyota mentioned geography in a letter to Governor Jerry Brown about the move. Also, in that letter was a list of Toyota operations that would remain in California. Of course, with these functions remaining in the state, it is prudent of Toyota executives to be careful not to upset California politicians about a difficult business climate. Better to talk about geography.

The Los Angeles Times news article said that Occidental Petroleum was moving its headquarters for geographical reasons, as well — to be closer to the Texas oil patch.

There is a pretty big reserve of oil and gas in California, too, but the state’s regulations make it harder to tap. There is also the constant threat of a drilling moratorium and new taxes on oil in the Golden State. These threats to the oil and gas business offer an inducement to consider moving to another state. The threats to the oil and gas business were not mentioned in the Times’ article.

To be fair, the editorial does offer a warning that California policymakers “need to pay attention to the costs that make California less attractive to business.”

Nothing new there. CEO’s in an annual survey consistently rank California at the bottom in the worst state to do business. The Tax Foundation places California near the bottom in itsState Business Tax Climate Index.

By emphasizing geography as the chief problem spurring business relocations, pressure is alleviated on lawmakers to make changes needed to encourage businesses to remain in California.

(Joel Fox is the Editor of Fox & Hounds and President of the Small Business Action Committee. Posted on Fox and Hounds.)

Under Obama’s Bed


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Obama Economy’s Turn for the Worse

From U-T San Diego:

The Obama economy nearly stopped breathing in the first quarter, giving the Republicans new political ammunition for a full takeover of Congress in the November elections.

No sooner did the Commerce Department announce that the economy barely grew by one-tenth of 1 percent in the first three months of this year than the news media were searching for the toughest words to describe the U.S. economy’s demise under President Obama’s anti-growth, anti-jobs policies.

(Read Full Article)

Barack Obama

Kashkari Tests Limits of Moderation in California GOP

From The Sacramento Bee:

Neel Kashkari traveled to San Diego to announce his “Students for Kashkari” coalition late last month. Looking at the 11 students gathered, he acknowledged an obvious concern.

“You’ve probably seen the polls that have come out,” said Kashkari, whose campaign for governor barely registers at 2 percent.

Kashkari told the students at University of California, San Diego, “it’s still early.” While most Californians don’t know who he is, the “good news,” Kashkari said, is they are unfamiliar with other Republicans running, as well.

(Read Full Article)

220px-Neel-kashkari

Issa To Subpoena Kerry

From The Daily Caller:

House Oversight Committee Chairman Darrell Issa announced Friday his intention to subpoena Secretary of State John Kerry to testify during a public hearing in regard to the Benghazi attack that left an American ambassador and three others dead in 2012.

According to Issa, the State Department’s “response to congressional investigation of Benghazi has shown a disturbing disregard for its legal obligations to Congress,” the California Republican representative posted on Twitter Friday.

(Read Full Article)

Photo courtesy of Wikimedia commons.

Photo courtesy of Wikimedia commons.

Game-Changer Jobs Report?

From The Daily Caller:

Does a solid jobs report change the overall economic picture, and offer the beleaguered Democratic party a new leg up for the midterm elections? My answer is no and no.

Even with all the political slicing and dicing that accompany these big reports, the April employment  survey was a lot stronger than virtually anyone expected. Nonfarm payrolls surged by 288,000. Private payrolls gained 273,000. The unemployment rate registered a big decline, dropping from 6.7 percent to 6.3 percent.

(Read Full Article)

Jobs BS

Fifteen Years of Bad Faith from CalPERS

From U-T San Diego:

In 1999, flush with funds because of the stock-market dot-com boom, officials with the California Public Employees’ Retirement System made an extraordinary recommendation. They called on the Legislature and Gov. Gray Davis to approve a 50 percent retroactive increase in the formula used to calculate the pensions of state employees. A glossy report informed lawmakers that this could be done at little or no long-term cost to taxpayers.

But another CalPERS analysis — which warned of vast funding shortfalls if investment returns declined and the stock market cooled — was kept under wraps. A public corporation that acted in such dishonest fashion would face civil and perhaps criminal charges.

(Read Full Article)

calpers

Brown Satisfied with CA’s 24% Poverty Rate

If you live in a state that has by far the highest effective poverty rate in the U.S. — at just under one-quarter of the population — you would seem unlikely to express satisfaction with the economics status quo.

But if you’re the governor of that state, and the media think you’re a whiz-bang because there aren’t any more budget stalemates every summer, you can just blithely say that 24 percent poverty is just the way it is, man. This was in the Sac Bee.

“Brown defended California’s business environment, citing venture capital and foreign investment in the state.

“There’s a fellow named Schumpeter who talked about the creative destruction of capitalism,” he said, referencing the economist Joseph Schumpeter. “And, I put the emphasis on creative, and, change is inevitable. We’re getting 60 percent of the venture capital, we’re the number one place for direct foreign investment in the United States. Do we have everything in all respects? No. But we have an abundance that constitutes a two trillion dollar economy.”

Brown celebrates dynamics that are roiling San Francisco

media-blackout-efxAs my Cal Watchdog colleague John Seiler notes, it’s pretty cool to see California’s governor invoke an economist who is a free-market icon, not a Krugmanite — even if it’s Texas that reflects Schumpeter’s core insights far more than Cali. But it’s also very curious in that anyone who celebrates the California status quo certainly isn’t looking at the 24 percent of folks in poverty. Or the stagnant middle class. More than anyone, such a celebration is about the tech titans of Silicon Valley and San Francisco — the allegedly evil 1 percenters.

It’s no stretch to say Jerry Brown is celebrating the same economic dynamics that have San Franciscan lefties going goon on rich techies.

But then we live in a state in which outside of Christopher Cadelago and Dan Walters at the Sac Bee and Steve Greenhut at the U-T San Diego and the editorial board of the U-T (which includes me), practically no one ever mentions that California has the nation’s highest poverty rate if cost of living is included.

Do these journos think cost of living shouldn’t be included? Or are they just clueless? Or are they scared to break with the pack?

I don’t know which of these is true. But it is stunning that so few of the media articles about California simply omit our nation’s worst poverty ranking.

(Chris Reed contributes to CalWatchdog. Originally posted on CalWatchdog.)

Oligarchy in the 21st Century

Think rich conservatives rule the world? Think again.

“To see what is in front of one’s nose,” George Orwell famously wrote, “needs a constant struggle.” In front of my nose as I write this is a copy of last Sunday’s New York Times. I have opened it to the business section. Below the fold is one of many Times articles on Thomas Piketty, the French economist and author of Capital in the Twenty-First Century, which argues that America has entered a second Gilded Age of vast inequality, inherited fortunes, and oligarchic politics, where the shape of public discourse and public policy is determined by a wealthy few. Capital in the Twenty-First Century, the Timessays, “follows in a tradition of works on political economy” that includes The Wealth of NationsAn Essay on the Principle of PopulationPrinciples of Political EconomyDas Kapital, and The General Theory of Employment, Interest, and Money. They’re not kidding.

Above the article on Piketty is another profile, headlined “Comcast’s Real Repairman.” Its subject is David Cohen, the executive vice president of the communications giant Comcast, who wants the government to approve the proposed merger between his company and Time Warner Cable. The deal would make Comcast the largest cable provider in America, with some 30 million customers.

Last year Cohen made about $14 million. He began his career as chief of staff to Ed Rendell, the former Democratic governor of Pennsylvania. And while he backs some Republicans, mainly Pennsylvania politicians who stand to make life easier for his Philly-based conglomerate, Cohen leans left. His political giving favors Democrats, as does the overall giving of his company. President Obama, who appears frequently on Comcast-owned networks, has golfed with Cohen’s boss. Obama has been to Cohen’s house. “I have been here so much,” he said during a 2013 visit, “the only thing I haven’t done in this house is have Seder dinner.” There is always next year.

If the business editors of the Times were aware of the irony of lamenting the political influence of great wealth on one half of their page while handling it with kid gloves on the other, they gave no sign. “Mr. Cohen says he understands the criticism that he has access most citizens do not,” says the article, before handing Cohen the microphone. “But I also don’t believe in unilateral disarmament,” he said. Two paragraphs earlier, he had said, “My priorities in political giving are Comcast priorities. I don’t kid myself. My goals are to support the interests of the company.”

There you have it: A wealthy Democratic donor admits he funds candidates to improve his bottom line. And yet I hear from the Senate floor no denunciations of his attempts to buy American democracy, no labeling of him as un-American. I have not received a piece of direct mail soliciting donations to fight David L. Cohen’s hijacking of the political process, nor do I wake up every day to investigations of the Cohen political and charitable network. Why?

My confusion only grows as I turn the pages of the paper and come to an article in the Sunday Styles section headlined “Including the Young and the Rich.” Here I learn that last month the White House held a secret meeting with “an elite group of 100 young philanthropists and heirs to billionaire family fortunes.” This “discreet, invitation-only summit” was intended, the author says, “to find common ground between the public sector and the so-called next generation philanthropists, many of whom stand to inherit billions in private wealth.” Media were not allowed, the author says in a parenthetical, but he was “invited to report on the conference as a member of the family that started the Johnson & Johnson pharmaceutical company.” The author’s name is Jamie Johnson, he is worth around $610 million, and as of 2011 he was, I see, one of the world’s most eligible bachelors.

“I was a little worried they were going to get a bunch of rich kids in the room and fundraise for the Democratic Party,” said one of the participants. “But they didn’t.” The quote comes from 30-year-old Liesel Pritzker Simmons, whose billionaire cousin is the secretary of Commerce, and who along with her brother earned a $560 million inheritance by suing her dad. The Obama team did not have to hit up Pritzker Simmons for cash. She and her husband, an heir to the Montgomery Ward fortune, have contributed hundreds of thousands of dollars to Democrats and liberal groups in recent years, including to ActBlue, the DSCC, Harry Reid’s Majority PAC, Priorities USA, Elizabeth Warren, and congressional candidate Sean Eldridge. Like Eldridge needs the money. He is married to Chris Hughes, who lucked into rooming with Mark Zuckerberg at Harvard and now is worth around $400 million.

Not every attendee at the trust-fund summit was an Obama donor. Zac Russell, “an eloquent 26-year-old” who recently joined his Russell Family Foundation, is “not an ardent supporter of the Obama administration.” Indeed, not even 30 years old, he speaks “with an air of cynicism” befitting his “scraggy Brooklyn-style facial hair” and “loosely fitting suit without a necktie.” He told Jamie Johnson, “Their head of public affairs contacted me and said, ‘Let’s talk,’ and so we’ll talk.” What they talked about was climate change and “grass-roots efforts to improve water quality in Puget Sound.” You know: real Tea Party stuff.

The world of unequal incomes that liberals self-righteously lament, the world of concentrated, inherited wealth, of politics dominated by the concerns of a few, is a world constructed by liberal methods according to liberal ideals. “The ruling ideas of each age have ever been the ideas of its ruling class,” Marx and Engels wrote in 1848. And there can be no denying that the ruling ideas of our age—diversity, multiculturalism, cosmopolitanism, gun control, free trade, unrestricted migration, sexual autonomy, feminism, environmentalism—are liberal ones.

The popular rhetoric of income inequality, the attacks on Charles and David Koch, the assertion that the system is rigged against the common man, the accusations that a vast right-wing conspiracy has despoiled the American landscape and society and polity—these are the means by which the ruling class masks its true position and justifies its continued agglomeration of power and of wealth.

The campaign against inequality and the call for higher taxes and the regulatory burdens placed on extractive industries further the self-interest of the liberals who rule our world partly because those liberals are already established in society and have already made their money, partly because like David Cohen or Tom Steyer or George Soros or Elon Musk or Warren Buffett they stand to benefit financially from their preferred outcomes, but also because there are fortunes to be made, there is status to be gained, in justifying the continued expansion of the welfare state, in designing plans for the redistribution of tax dollars, in demonizing those sections of the elite, and that minority of Americans, which dissent from the ruling ideas.

Seven of the 10 richest counties in the country voted for Barack Obama in 2012, many of them by huge margins. Six of the 10 are in the Washington, D.C., metro area, which has benefited from government employment and payment regulations, from government contracting, and from consulting, lobbying, and lawyering for clients petitioning the government. The median income of Falls Church City, Va., is $121,250 dollars. In 2012, Falls Church City voted for Obama 70 percent to 30 percent.

Democrats represent eight of the ten richest congressional districts in the country. Democrat Carolyn Maloney represents the district with the highest per capita income of $75,479. Outgoing congressman Henry Waxman represents the district with the second-highest per capita income of $61,273. The only two Republicans on the list are Rep. Leonard Lance, whose New Jersey district ranks seventh, and outgoing Rep. Frank Wolf, whose Virginia district ranks tenth. The average per capita income of Democratic House districts is $1,000 more than Republican ones.

Congressional Democrats have a higher median net worth than congressional Republicans. House Democrats have a higher median net worth ($929,000) than House Republicans ($884,000), while the median net worth of Senate Republicans ($2.9 million) is higher than that of Senate Democrats ($1.7 million). But it is not like the Senate Democrats are hurting financially. They have lost some wealthy members in recent years (Herbert Kohl, John Kerry, Frank Lautenberg). Of the 10 richest members of Congress, only three are Republicans.

The top 20 entries in the Forbes list of the 400 wealthiest Americans include conservative bogeymen such as Charles and David Koch (tied at number 4) and Sheldon Adelson (number 11). But these men are overwhelmed by Democratic fundraisers such as Warren Buffett (number 2), Michael Bloomberg (number 10), Jeff Bezos (number 12), Larry Page (number 13), Sergey Brin (number 14), and George Soros (number 19), as well as by billionaires who have donated more evenly between parties, such as Bill Gates (number 1) and Larry Ellison (number 3). Members of the Walton family, who fill four of the top 10 spots, have also donated to both parties, but in recent years have leaned Republican.

That does not include the Waltons’ charitable giving, however, which includes sizable donations to the left-wing Tides Foundation and Obama aide John Podesta’s Center for American Progress. Indeed, the partisan makeup of the super-rich is less interesting, and less important, than their ideological unity. The issues that the richest Americans care most passionately about, from gay marriage to comprehensive immigration reform to gun control to drug legalization to foreign aid, are liberal issues. Only the Kochs and Adelson are famous for making defiant and public stands against the spirit of the age.

The list of the 20 most highly compensated CEOs contains many Republicans, and some conservative ones. But it also contains plenty of Democrats and liberals. Ticket-splitter Ellison, who was paid $78.4 million in 2013, tops the list. Next is Disney CEO Bob Iger, who received $34.3 million in compensation in 2013, and is a generous Democrat. Other highly paid CEOs whose giving since 2009 has favored Democrats include outgoing Ford chief Alan Mulally, Larry Merlo of CVS, Kenneth Chennault of American Express, and Paul Jacobs of Qualcomm. When you make more than $19 million a year the line separating Democrats from Republicans becomes hazy. Is Lloyd Blankfein of Goldman Sachs a movement conservative? Is GE’s Jeffrey Immelt?

Eight of the 10 largest private foundations are liberal. The Bill and Melinda Gates Foundation, the largest foundation with $37 billion in assets, to which Warren Buffett has pledged his trust, has delivered grants to the Tides Center and the Center for American Progress. So have the Ford Foundation ($11 billion in assets), the Robert Wood Johnson Foundation ($10 billion), the Hewlett Foundation ($8 billion), the MacArthur Foundation ($6 billion), and the Gordon and Betty Moore Foundation ($6 billion). The Kellogg Foundation ($8 billion) has donated close to $30 million to the Tides Foundation and to the Tides Center, and the Packard Foundation ($6 billion) has chipped in another $30 million to Tides affiliates, as well as founding, at a cost of $71 million, the environmentalist Energy Foundation.

Of the top 10 foundations, only number 7, the Lilly Endowment (with $7 billion in assets) leans conservative. Other notably liberal foundations in the top 100 include Bloomberg Philanthropies, the Kresge Foundation, George Soros’s Open Society Foundation, the Walton Family Foundation, the Heinz Endowments, and Soros’s Open Society Institute. The notorious conservative foundations that constitute the “counter-establishment” do not even crack the top 100. The Lynne and Harry Bradley Foundation, the largest conservative foundation, has assets of $640 million. The Charles G. Koch Foundation in 2012 had assets of $277 million. Conservative foundations are out-gunned.

So, too, are conservative media. The right has talk radio, Fox News Channel, the New York Post, the Wall Street Journal editorial pages, the Washington Times, the Weekly StandardNational Review, and a bunch of plucky websites. Liberals have the New York Times, the Washington Post, the Los Angeles Times, the Financial Times, NBC, ABC, CBS, CNN, PBS, NPR, MSNBC, BBC, the Huffington PostSlate, the Atlantic Monthly, the New Republic, the Daily BeastGQEsquireTime, Vogue, and many, many others. Not a single prominent institution of higher education, not a single prominent institution of high culture, can be described in any way as conservative. New York magazine admits that the “vast left-wing conspiracy is on your screen.”

The campaign of Barack Obama outraised the campaign of Mitt Romney. Overall, in 2012, the “red team” slightly outspent the “blue team” by a little more than $100 million. It made no difference. Not a single one of the top “all-time” institutional donors between 1989 and 2014 tilted Republican, according to a list compiled by the Center for Responsive Politics. Senate Democrats arewinning the 2014 money race. Even as they denounce Supreme Court rulings that loosen restrictions on political speech, liberal billionaires pledge gifts of $100 million and $50 million to Democrats in the 2014 election, and meet anonymously and in secret to coordinate giving to the multitude of organizations that make up the professional left. So effective has been the fundraising of hedge-fund billionaire Tom Steyer that President Obama, having delayed the Keystone pipeline yet again, is likely to kill it.

“It’s very difficult to make a democratic system work when you have such extreme inequality,” Piketty told the Times last Sunday, “and such extreme inequality in terms of political influence and the production of knowledge and information.” In fact the mechanisms of democracy seem to be working precisely as the capitalist and petty-bourgeois liberals would like them to work: the question among Democrats these days is just how permanent their majority is likely to be.

What we are in danger of losing because of the “extreme inequality in terms of political influence and the production of knowledge and information” are the classical liberal values of negative freedom, of religious liberty, of equality before the law, of free markets. The inequality of income our bipartisan ruling class sanctimoniously condemns is the very tool it uses to shore up the inequalities of power and communication from which it benefits. Affluent, self-righteous, self-seeking, self-possessed, triumphalist, out of touch, hostile to dissent—this is what oligarchy looks like in the twenty-first century. And it is all in front of one’s nose.

(Matthew Continetti is editor in chief of the Washington Free Beacon. Prior to joining the Beacon, he was opinion editor of the Weekly Standard, where he remains a contributing editor. Published on Union Watch.)