Ideal Taxes Association

As former counsel and trainer in political tactics for ACORN, President Obama used a well-known ACORN tactic, the shakedown, in getting BP to create the $20 billion escrow (slush!) fund without any law, legal controls, or binding rules to guide it on how, to whom, and how much those injured materially by the oil spill will be paid. Attorney Kenneth Feinberg, well-respected and well-known for heading the September 11th Victim Compensation Fund, was appointed by the President to administer the escrow fund. BP will pay $5 billion into the fund for four years, starting in 2010.

BP announced early after the spill that it would pay all justifiable claims resulting from the disastrous oil spill. It opened 25 claims offices. As of June 15, BP approved initial payments that amounted to $63 million, expected to rise to $85 million by the end of the week, to businesses claiming $5,000 or more in damages. Why did the President insist that his own personal organization take over the job of paying claims? After all, supervising reparations is a judicial function, not an executive function. BP created its own fund and appointed its administrator and determined how it will be staffed with a view to ensuring only qualified persons, businesses, and governments would be reimbursed for its losses. Now those decisions will be made politically. It is obvious that BP’s CEO agreed to create this fund and allow the President to administer it to prevent President Obama from bankrupting their company. i.e, otherwise. After all, the President was on record that would “kick BP’s ass” and a cabinet members declared he would “put his boot on BP’s neck.” The President when announcing the creation of the fund stated the terms of the fund would keep BP viable. He cannot know this. BP’s liability is not affected by the fund except to the extent claims are voluntarily settled. Those refusing to settle and their lawyers are not bound by it nor are juries that will hear their lawsuits.

The President has no legal authority to create the escrow fund and no authority to compel BP to contribute to the fund. Forcing BP to agree to the terms of the escrow is ultra vires, i.e., illegal, beyond the powers of his office. Rep. Barton (R,Texas) accurately described the slush fund as a “shakedown”, i.e., blackmail, a felony. If so, Pres. Obama has committed an impeachable offense. Congress itself does not have the authority to create the escrow fund retroactively. Congress will have no voice at all except to vilify any Republican who raises questions about it. All the ACORN employees who lost their jobs when the banks stopped paying “blackmail” to ACORN can be sure of getting better-paying new jobs processing claims. ...

Three provisions remain on the table as the House and Senate conference committee negotiates the final provisions of the financial reform bill this weekend. An Associated Press analysis by Daniel Wagner discusses their likelihood of being included in the final draft:

On April 29, my father predicted on this blog that the Southern European countries would be forced to leave the euro zone. He wrote:

Nouriel Roubini was the next to make this claim. See my blog posting from May 12.

On May 29, in the American Thinker (The Euro: This Marriage Can't Be Saved), we repeated my father's prediction that Southern European governments would give up the euro, based upon their self-interest.

On May 30, Times On Line reported that British economists at the Centre for Economics and Business Research (CEBR) recommended that Greece give up the euro, based upon its own interest. Here's a selection from the report:...

Having learned nothing from the BP oil spill, partly caused by a failure of government regulators to require testing of deep-sea shut-off valves, the United States Senate just passed a financial reform bill which relies upon the intelligence and incorruptibility of government regulators.

What was actually needed was the Volcker Rule, proposed by Obama's competent economic advisor, former Fed Chairman Paul Volcker. That rule would have broken up "too big to fail" banks so that they would no longer be too big. The UK Guardian has a summary of the bill. Here's what it says about the Volcker Rule:...

On May 18, in a victory over the Republican establishment, Rand Paul, son of the Federal Reserve's chief opponent in the U.S. Congress, won the Republican Senatorial primary in Kentucky. He and his father object to the important roles being played by the Federal Reserve in the American economy.

It's time for the Federal Reserve to clean up its act. The Federal Reserve under Greenspan and Bernanke has been blowing it big time. The United States is mired in economic stagnation due to the loss of a large part of its manufacturing sector from 1998 through the present. Even worse, the solution endorsed and enacted by the Federal Reserve has been a corrupt bailout of the big banks.

The Pauls want to take the United States back to Andrew Jackson's closing of the Federal Reserve's predecessor which, when combined with a return to a strict gold standard, caused such a constriction in the U.S. money supply that a depression ensued which lasted from 1837 to 1844. The Pauls would throw the baby out with the bathwater. The Federal Reserve has important roles to play:...

On September 11, 2001, al-Qaida, then sheltered by the Taliban rulers of Afghanistan, bombed the World Trade Center and the Pentagon. In response, during the winter of 2001-2002, we attacked Afghanistan, driving al-Qaida and their Taliban protectors out of the country. The Taliban had ceased to be an organized force. We had won!

American troops had been welcomed as liberators in the Afghan countryside because the Taliban had banned the cultivation of the opium poppy in 2001, a disaster for the Afghan farmers whose chief crop was the poppy. The graph shows the 2001 drop-off in Afghan opium production.

As the supply went down, the price of opium poppies skyrocketed. According to the United Nations Office of Drugs and Crime (UNODC):..

There is an important economic lesson here. You can't stop an addictive drug by interdicting its supply. Addicts will demand the drug, no matter what the price. If you want to reduce consumption, you have to cut demand, not supply.

After the U.S. victory, the UN was anxious to prevent the resumption of opium planting. In February 2002, the UNODC (then called UNODCCP) conducted a quick survey which revealed the resumption of opium planting. That's when President Bush snatched defeat from the jaws of victory. With UN bureaucrats cheering from the sidelines, he used American troops to conduct an unsuccessful eradication campaign which turned the countryside against both American troops and UN surveyors, as the UNODC noted:...

Do we want to win the war against Al Qaida, which is winnable, or fight a war on drugs that cannot be won? We won the war in a blitzkrieg in Afghanistan in 2002 with the help of a people that welcomed us as liberators. We drove the little that remained of the Taliban army out of Afghanistan. The Taliban had ceased to be an organized force.

Why were we welcomed in the Afghan countryside as liberators? The Taliban were hated in the countryside because their religious leaders banned the cultivation of the opium poppy in 2000, a disaster for the Afghan farmers whose chief crop was the poppy.

But after the victory, President Bush made a huge mistake. In order to keep our troops occupied, he began a moral crusade against opium, urging the farmers to grow other products. What nonsense as it turned out! We destroyed their crops of poppy where we could. The resurging Taliban offered them protection to continue growing poppies, the chief cash crop of Afghanistan, and, as a result, regained power over the Afghanistan countryside.

On October 26, 2009, while President Obama was determining his Afghanistan policy, we wrote a commentary, published by Enter Stage Right, which urged him not to repeat Bush's mistakes. We wrote:

Have we lost the war? Probably. Can we win it? Perhaps. We would have to declare that we shall no longer interfere with the cultivation of poppy in Afghanistan. To show we are serious, we should encourage the Afghan government to legalize the cultivation of poppy. It should tax poppies and opium as the Taliban have been doing. And to do it right, we ought to legalize drugs in the U.S. as well.

Let us recognize the fact that prohibition did not work with alcohol and has not worked with cocaine, marijuana, or heroin. Instead of wasting money as we have been doing for decades, we shall gain revenues instead. We shall gain friends instead of making enemies abroad as we have been doing.

We believe the war against the Taliban and al-Qaida is unwinnable as long as the drug war continues in Afghanistan.

But President Obama, decided to continue President Bush's losing crusade against opium. He attacked Afghanistan's President Hamid Karzai, with whom we were allied, for not joining the U.S. war against the Afghanistan farmer. Here's a selection from an April 7 commentary by Tony Blankley detaling Obama's attacks against Karzai:...

A lifelong Democrat runs into a lifelong Republican, and they begin to debate the just-passed health care bill:...

We live in an age of scientific conformity that is the result of the peer-review system for determining whether a scientific paper is worth publishing and whether scientific research is worth funding.

There are two types of standards that can be used in judging science: (1) objective standards based upon a theory's ability to make predictions and (2) subjective standards based upon the popularity of a theory among scientists. In this age of scientific conformity, objective standards are often ignored.

Take the case of Gioacchino Giuliani, a researcher at the Gran Sasso Physics Institute in Italy. He predicted the recent Itallian earthquake and tried to warn the populace. But scientists who oppposed his theory convinced the local politicians to suppress Giuliani's warnings while convincing the local press to ignore his alarms. Wikinews reports the story. Here is a selection:

Giuliani claims to have predicted the quake by monitoring radon gas emissions. Last month, cars with loudspeakers drove around the area, broadcasting the researcher's warning that a quake would soon strike. He was then reported to the authorities for making false alarms, and was obliged to remove his findings from the Internet....

Giuliani holds a patent on a device measuring atmospheric levels of radon in order to predict earthquakes. In 2005 he gave a seminar at Gran Sasso discussing the device and its use to predict tremors in the area of L'Aquila, but has not published papers on the topic....

The use of radon levels to anticipate seismic events has been under study by the seismological community since the 1970s, but a generally-accepted proven link has not been established.

Or take climate change. The carbon dioxide global warming theory has been unable to make accurate predictions. Michael Crichton, author of many science fiction books about man-made disasters, started out to write a book about the coming climate disaster. But when he did his research, he discovered that the predictions made by the carbon dioxide theory were not coming true. He ended up writing State of Fear, a book that debunks that theory. He drew heavily from the writing of retired professors who no longer had to conform.

There is now an alternative climate change theory, cosmoclimatology, which is being developed by scientists from countries where peer pressure is less powerful than it is in the United States. Cosmoclimatology has been able to make many accurate predictions. Every step of the theory has been proven: (1) cosmic rays cause ionization, (2) ionization causes cloud formation, (3) low lying clouds reflect sunlight and heat back into space, and (4) solar activity wards off cosmic rays. This theory precisely predicts the periodic ice ages and greenhouse ages of the geological past as well as the opposite temperature trends in the northern hemisphere and Antartica. It also successfully predicts the current cooling period resulting from low solar activity. But the entire field of cosmoclimatology is ignored by the American press.

For example, Marilyn Head wrote a report this week for ABC Science about the current cooling of the earth in correspondence to the quieter sun, a prediction made by cosmoclimatology. But instead of interviewing a cosmoclimatologist, she interviewed a New Zealand mathematician who claimed that there was no scientific basis for a link between solar activity and earth temperatures. Here is a selection:

Dr Sean Oughton, an associate professor of mathematics at New Zealand's Waikato University, says the sun's lack of solar activity is expected.

"What we are experiencing is a very deep solar minimum, but it is still completely within the bounds of what is normal," he says....

He says no mechanism has been found which would prove a connection between minimal sunspot activity and cooler temperatures.

There you have it. The refuge of the subjective scientists is to claim that “no proven link" has been found or that “no mechanism has been found which could prove a connection.” What they mean is that they have not yet been subjectively persuaded by the arguments of the theory's adherents.

In the field of economics, there is a similar phenomena. You can't get tenure as an economist in academia if you disagree with the consensus that unilateral free trade is always the best policy. Economists invariably "prove" the benefit of unilateral free trade with examples in which trade is in balance. They never consider what would be the effect of unilateral free trade upon on a country running trade deficits.

My father broke with the conformist thinking of the economics profession in a September 2003 commentary in the Pittsburgh Tribune Review which advocated balanced trade. He did not have to fear that he would lose out on publications, promotions, or research money because he had already retired.

We expanded his 2003 piece and brought it up to date as part of our 2008 book Trading Away Our Future. Even though we predicted what is happening now and will happen in the next several years, nobody in the economics profession will review our book because doing so might encourage "protectionism."

The problem is the over-conformity encouraged by the peer-review process. Government research grants should no longer be authorized by peer review. Instead, they should be contest awards for the research work that makes the best predictions or achieves engineering goals. Predictions and achievements are the measure of objective theory. Peer review is the conformity-enforcing process that is currently corrupting science.

I am not the only researcher to identify this problem. Scientists all over the country are arriving at the same conclusion. University of Washington professor of surgery, Donald W. Miller, and University of Washington professor of bioengineering Gerald Pollack were two of the scientists from the Seattle area who hold the same belief as noted in an March 2008 editorial column about enforced scientific conformity in the Seattle Times by Bruce Ramsey. Here is a selection:

Here is a list of beliefs in the biomedical and climate sciences that must not be questioned if you're applying for a government grant:

That global warming is caused by humans;

That AIDS is caused by a virus;

That radiation, cigarette smoke and other toxins are dangerous in proportion to their strength, no matter how small the dose;

That heart disease is caused by saturated fats;

That cancer is caused by mutations.

This is part of a list offered by a University of Washington professor of surgery, Donald W. Miller, who is a heart surgeon at the VA Medical Center in Seattle....

What that means, Miller says, is that "If you say low doses of radiation aren't bad for you, or that global warming is due to variations in the sun, you can't get funded."

He says this happened to University of California scientist Peter Duesberg, who challenged the viral theory of AIDS, and to Harvard's Willie Soon, who challenged the pollution theory of global warming, and to others. In a paper published in 2007 in the Journal of Information Ethics, Miller argued that conformity is built into the system of government grants....

In 2005, in the scientific journal Cellular and Molecular Biology, Pollack made an argument similar to Miller's. American science, he wrote, has become "a culture of believers" whose rule is, "just keep it safe and get your funding."

The press has an important role here. Reporters must learn to ignore the scientists who are trying to suppress the predictive theories. They should no longer ignore earthquake warnings. They should no longer ignore cosmoclimatology. They should no longer ignore plans that would achieve balanced trade. Instead, they must learn to ignore barriers set up by incompetent scientists and give a hearing to those scientists whose predictions are coming true.

Possibly as a result of the Republican victory in the Massachusetts Senate race, President Obama appears to have changed economic advisors. His bank reform ideas come from the previously-ignored Paul Volcker, not Larry Summers, who made economic policy last year. The White House's January 21 Press Release features Paul Volcker, but does not even mention Summers by name. It begins:

WASHINGTON, DC- President Obama joined Paul Volcker, former chairman of the Federal Reserve; Bill Donaldson, former chairman of the Securities and Exchange Commission; Congressman Barney Frank, House Financial Services Chairman; Senator Chris Dodd, Chairman of the Banking Committee and the President's economic team to call for new restrictions on the size and scope of banks and other financial institutions to rein in excessive risk taking and to protect taxpayers.

Volcker was America's most competent Federal Reserve Chairman ever. He slowed the increase in the money supply in order to reduce the inflation rate from 10.4% in the first quarter of 1981 down to 3.3% in the third quarter of 1984.

In contrast, Summers may be America's most incompetent economic advisor ever. He let Congress take most of the infrastructure spending out of Obama's recovery plan. He let China grow by stealing our manufacturing jobs. He has wasted hundreds of billions of dollars in taxpaper money in a doomed attempt to keep house prices from falling to their normal values. He has added more than a trillion dollars to the American government debt, creating huge problems for the future.

I don't know whether Volcker will be able to get America out of the Great Recession. But I do know that the policies that he will suggest will be based upon America's long-term good, not just short-term considerations.

Just before yesterday's Massachusetts election, President Obama tried to skewer Republican candidate Scott Brown for opposing a just-proposed $9 billion tax on some banks. President Obama was trying to save the U.S. Senate seat for the Democrats through populist rhetoric. Blomberg reported:

Obama thinks that typical Americans are motivated by a desire to see the rich hurt. But typical Americans don't hate bankers; they oppose handouts to Wall Street because they understand corrupt pay-offs to campaign contributors. They aren't the frustrated hatemongers of Obama's mind when he reportedly told his contributors at an April 2008 San Francisco fundraiser:

President Obama is trying to skewer the Republican Senate candidate in today's Massachusetts election for opposing his new proposal to place a special tax on some banks. Here's a selection from the Bloomberg article about the Massachusetts Senatorial campaign:

“Bankers don’t need another vote in the United States Senate -- they’ve got plenty,” Obama said in Boston, signaling a broader political strategy to tie Republicans in this year’s races to Wall Street greed.

In the world of Obama, proposing a $15 billion tax on banks makes him a populist! But on Christmas eve he raised the limit from $400 billion that he is willing to shovel out to banks as part of his mortgage bailout, and he has done nothing about Chinese currency manipulations, which benefit American banks (who get Chinese money to lend), while hurting American producers. And let's not forget the Geithner Plan to rescue the banks from their troubled assets, which, as Paul Krugman noted, invites banks to play "heads I win, tails the taxpayers lose."

The top 10 campaign contributors to President Obama's campaign included Goldman Sachs, Citigroup, and JP Morgan Chase & Co, yet Obama wants us to think of him as a populist, representing the people against the banks.

He is right, though, when he said "Bankers don't need another vote in the United States Senate." The bankers don't need another Senator; they've got the President!