Good news for Generic Republican, who already has established himself as a legitimate contender for the White House in 2012: OPEC is not bailing us out. The oil cartel is making it known that it is cool with $100 oil and will not act unless prices move significantly higher and stay there. Oil, like most commodities, has been rising steadily as governments around the world keep their printing presses running to dump new money into the global economy.
Oil producers have a real good to sell, one with intrinsic value. They do not want to be paid in devalued currencies. Neither do producers selling precious metals, fertilizer, farm products, etc., which is one reason why wholesale food prices are going zoom, zoom, zoom.
Oil at $100 and unemployment ~10 percent is bad news for Obama’s re-election hopes, of course. (It should go without saying that it is bad for America, too, and that I do not wish for economic suffering to be visited upon my fellow citizens in order to hamper the Obama administration.) But you know what’s even worse than $100 oil? $150 oil, which the CEO of Gulf says would not surprise him. There will be tremendous political pressure put on OPEC and the other producers if that happens. But why would OPEC want to bail us out? What is in it for them? Devalued U.S. dollars? If the Obama administration will not get behind a solid dollar for sound economic reasons, maybe narrow political self-interest will be enough.
We spend a lot of time thinking about our competition with China in producing goods and services; but it is equally important, probably more important, that we compete with the Chinese and the other rising economies as consumers of goods and services. The United States is still the big boss in terms of global energy demand, but small, steady changes elsewhere are making it a new game. The energy autarkists who like to rave about the evils of “Arab oil” (never mind that the biggest part of our oil imports are Canadian and Mexican) fail to appreciate that with every passing month it matters a little bit less to the Arab world whether we buy their oil or don’t. Clout has a shelf life, and money talks. What is our money saying, vis-à-vis oil, food, metals, etc.? I think it’s saying “Help me!” in that tiny, terrifying little voice at the end of the original The Fly.
Back to Obama: I’m starting to think that we despairing deficit hawks have to be more politically engaged. I’ve operated for the past several years under the theory that when it comes to the big, macro debt-and-deficit issues, it does not much matter who holds political power: I did not see much evidence that a Republican Congress or a Democratic Congress was going to act before the market acts, forcing fiscal discipline on the United States by jacking up borrowing costs. Yes, there are differences, but the differences between the parties is very small compared with the difference between either of the parties and what reality requires.
But I am starting to reconsider that. The Republican party still is not serious about the fiscal issues, but there is an element within the party that is, and it needs to be encouraged and empowered. Somebody has a chance to own this issue. Who will?
— Kevin D. Williamson is a deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, just published by Regnery. You can buy an autographed copy through National Review Online here.
We get the politicians we deserve. There is still no genuine popular will to do anything about the debt, because there is no real support for doing anything about Social Security and Medicare. As long as that is the case, neither political party will own it... and, frankly, can you blame them? When there is real popular support for actually addressing the debt, there will be no shortage of politicians willing to own the issue.
Reply to this commentLinkReport AbuseThere is no real political will to pre-emptively deal with our fiscal mess. All hell will have to break loose first before it begins to be dealt with because those in power will follow the tried-and-true method of staying in power as long as possible, by telling the voters what they want to hear, and by paying back thier special interest funding with favorable legislation regardless of the cost.
Reply to this commentLinkReport Abusedmt117,
Someone has to lead, take some gutsy chances and build the popular support. Who? Pickle thinks Pence might be the man. Pawlenty? Daniels? My money is on Palin. She will have to take chances and be unconventional, but she already has plenty of practice at that. I believe Sarah has been isolated long enough up in Alaska to the point where she hasn't been too polluted by Washington dogma. I hope she goes all in.
Reply to this commentLinkReport Abusemdc,
If only you and I were voting, Pence or Palin would be the next President. Unfortunately, a lot of other people are voting and most of them don't want Medicare or Social Security touched. So Palin/Pence/Whomever have no chance of being elected if they admit to plans to reform S.S. or Medicare.
Restoras is right. Things are going to have to get a lot worse before they get better. Wish it weren't so.
Reply to this commentLinkReport AbusePeople have been 'paying' into Social Security and Medicare their entire lives. (Man! could FDR bait the hook or what)
There is no way they are going to voluntarily take a cut. Would you if you thought you 'paid' for something?
Especially when they see all the tremendous waste in other areas like million dollar grants to study that pig dung is smelly.
Reply to this commentLinkReport AbuseOne word - TUNISIA!
Reply to this commentLinkReport AbuseWe will have to get to the point where a generation has grown up not expecting to receive SS before things get better. That coupled with a younger generation that realizes just how badly they have been screwed and you will have enough impetus for change. The kicker is whether this is before or after the whole house of cards comes tumbling down.
Reply to this commentLinkReport AbuseWe have had exactly one relatively recent success at doing large cuts when up against entrenched political interests and that was with the BRAC process that let us rid ourselves of a lot of useless bases, some of which had been around since the indian wars. A BRAC process for the entire budget that would identify the least useful expenditures is the only road forward that has any real chance of success.
Reply to this commentLinkReport AbuseWith the rescinding of the mining permit in wVa, the new restrictions on coal fired generating plants, almost complete stoppage of oil drilling anywhere in this country, if oil does reach $150 a barrel, will anyone be able to afford it? Steven Chu already said he would be happy with $7 a gallon on gas. Two years is an awful long time considering what the Obama administration is already doing.
Reply to this commentLinkReport AbuseFirst, if enough new oil comes on line, OPEC will drop their prices to maintain income.
More oil will come on line at $100, than at $80 -- but it might well no longer be enough to lower the price.
Hmm, prices going zoom, zoom, zoom. Wasn't their at least one courageous politician to complain about that. Why yes, I'm pretty sure Sarah Palin, in the WSJ, complained about QE 2 and rising inflation. I disagree, myself, in thinking the small (?) rises in prices are better than even worse house price meltdown, but I don't think the monetary expansion has been as voter friendly as it has been big, rich bank friendly.
On owning the deficit, it is clearly too much spending. False promises by the Dems for gov't spending that is wasteful. I think Palin is the one most out front against that, too.
A bit sad that so many Dems, and Reps, can bad mouth Palin on so many issues, but almost seem to avoid mentioning her on issues where she is among the conservative leaders advocating the right policy.
Reply to this commentLinkReport AbusePutting aside for the moment the expected accelerating Social Security and Medicare costs, the fraud alone in both programs is immense, but in Medicare it's estimated by the FBI that the annual fraud amount in 2010 was between $70 billion and over $200 billion out of a $450 billion budget! I'm not making this up. Another watchdog group estimated it at well over $60 billion per year.
Reply to this commentLinkReport Abuse$60 billion a year is $600 billion in 10 years, $200 billion a year is $2 trillion in 10 years!
When will Congress do what's necessary to end massive Medicare fraud? No US program has as much fraud.
Perhaps when Congress decides to end massive illegal immigration? That 4% to 7% of people living in the US (10 to 20 million) are here illegally is astonishing.
Both actions would save our economy more than enough to balance our budgets. There is so much fat in our budgets republicans could cut non-stop and barely make a dent, starting with the $6 billion annual ethanol subsidy.
3.5% across the board spending cuts (not cuts in growth of spending), each year for 10 years, will reduce the deficit to zero.
I'm 55, unemployed, no prospects, and broke. When do we start?
Reply to this commentLinkReport AbuseTMLutas:
That is precisely what is needed. BRAC was a success in spite of Congress's attempts to undermine it, and a similar process could prove really useful, at least on "discretionary" spending.
Reply to this commentLinkReport Abuse"Somebody has a chance to own this issue. Who will?"
It won't be the Republicans. I should remind you that Obama came to power with a promise to reform America's energy and transportation policies with a view towards reducing our dependency on oil. Not our dependency on "foreign oil", that inane idea the Republican party is pushing, but, to put facts on the ground that will enable the American economy to shrug high oil prices aside the way Europe's economy can.
The Republican party, on the other hand, decided to fight Obama every step of the way over this, making opposition to Obama's high speed rail program a lynch pin of the mid-term election. With this much precedent in mind, I'll bet this issue belongs with the Democrats. And so will my vote.
It's not just the opposition to every concrete step to get us off oil that has me angry. It's the inanity of the rhetoric the Republicans have put about it. And worst of all, the Republican answer to our oil predicament: we should use up our remaining oil reserves even faster so we'll be in even direr straits 10 years down the road!
Yes, a lot of people out there will vote against the incumbent because of gas prices. That stupid sentiment was unfair to the republicans in 2008 and it will be unfair to the democrats in 2012. But there are people like me who noticed that Obama had concrete ideas on what to do about it, and the Republicans did not. And we're angry too. So, Mr. Williamson, about 2012, are you a gambling man?
Reply to this commentLinkReport AbuseOmri:
So Obama is serious about cutting government spending because he proposed massive new government spending, incompetently organized, on a rail program nobody wanted.
Not really convinced that's the actual reason you're voting for him. You pretty much always vote for the Democrat, yes?
Reply to this commentLinkReport AbuseReplay to Polybius
"We will have to get to the point where a generation has grown up not expecting to receive SS before things get better. That coupled with a younger generation that realizes just how badly they have been screwed and you will have enough impetus for change. The kicker is whether this is before or after the whole house of cards comes tumbling down."
Yes!
Reply to this commentLinkReport AbuseI suggest this every chance I get. Don't attempt to change the course of a tanker ship like SS with the shock and awe mentality of the POTUS. That approach just casts us a against people currently on SS. Let it phase out over a generation. Beginning on the day after the "Kill SS" bill is signed, babies born will plan with their parents to invest & save wisely to provide for their futures. The 2nd best thing? All the bureaucrats and people with jobs supporting SS will have time to get jobs producing something of value!
Omri:
What on Earth makes you think Europe can "shrug off" oil price spikes? The last big one caused riots and a truckers' blockade. There's more to Europe than the tourist district in Amsterdam.
Reply to this commentLinkReport Abuse"What on Earth makes you think Europe can "shrug off" oil price spikes? The last big one caused riots and a truckers' blockade. There's more to Europe than the tourist district in Amsterdam."
Mr. Willliamson, I believe you know full well that there is a difference in degree here, one large enough to count as a difference in kind. BTW, lots of people will pick semantic nits over whether Britain counts as "Europe" in this context. I would say "no", since Britain's transportation and development policy the last few decades has closely modeled America's, while on the Continent, more countries have been taking notes from Holland.
You seldom have ordinary consumers in Europe being driven to bankruptcy by gas prices. You do in the United States. You don't have people living 20 miles away from the nearest store where they can buy milk. You do in the US. A gas shortage in Europe is unpleasant. In the US it's a realistic threat of a humanitarian crisis.
Obama had (and has, I hope) several proposals on what to do about it. The republicans decided to make their opposition a big part of the last campaign. Those of us who pay attention to more than just the price of gas, well, we'll remember.
Reply to this commentLinkReport AbuseOmri - I don't understand the fascination with HSR. Do you know what that requires to actually be high-speed? Most points are too short or too long. Does it not use fuel? Rail needs straight-a-ways. If you said mass transit including rail, maybe a few HSR lines, then you'd have a good starting point. Slogans like HSR by itself isn't adequate, it sounds good but isn't plausible.
On to 'clean' or 'green' or whatever the new cutesy thing is now. Most people would be interested in not using coal or oil, it's just that the only true alternative is nuclear, and we know how that fight has gone for 3 decades. There is byproduct for nuclear, but Solar is still extremely inefficient and circumstantial. Wind is the same plus requires huge transmission lines, noisy, kills birds, and require repairs. Solar also has a life-span just like other manufactured items. Biofuel, well food prices plus the supposedly-greenhouse-gas CO2.
You'd be better off trying to convince people to use bicycles, since we've become accustomed to using cars to go down the block. Consumption is a problem, but trying to convince switching to inferior options instead of using less of better ones is, well, idiotic.
Your premise that Obama has some magical plan is incorrect. What he has is many persons in positions to affect either by oratory persuasion or by forced coercion. Global partners help, such as the UN and manipulative scientists and pols in many countries. Democrats were loud a few years ago when oil/gas prices were at current levels, today they are silent. Moratorium was the beginning, nudging China and India is part of it, from now to the summer will be the crescendo. They will try to force our hand and say there is no other option like, maybe even state that there is no time to delay...like Stimulus, Fin Reg, and Health Insurance requirements (not health care reform, cause it's not). Remember it's Armageddon if they don't get some legislation passed on any topic.
K-dub - I agree with you, politicians continue to be actors and will still not be honest or be truthful, because they're scared. They are usually about themselves and their future. If there aren't more Chris Christie's, then we need to point out the self-grandizing of these folks, at each level of government. Honestly, I feel most times they are incompentent, rather than being geniunely dishonest.
Reply to this commentLinkReport Abuse"Omri - I don't understand the fascination with HSR. Do you know what that requires to actually be high-speed? Most points are too short or too long. Does it not use fuel? Rail needs straight-a-ways. If you said mass transit including rail, maybe a few HSR lines, then you'd have a good starting point. Slogans like HSR by itself isn't adequate, it sounds good but isn't plausible."
Well, Obama's agenda did include a lot more than HSR. And also faced Republican opposition. Everything he proposed that actually would lower our oil dependency, the republicans answered with naysaying, and inane naysaying to boot.
But why HSR? Because HSR runs off whatever you hook up to the catenary wires. Nuclear, natgas, oil, coal, hydro, wind, gerbils on treadmills, whatever you have. That is why nations with HSR are less sensitive to oil price spikes than nations without it.
"You'd be better off trying to convince people to use bicycles, since we've become accustomed to using cars to go down the block."
We've become accustomed to being at the risk of utter destitution if oil spikes. We've become accustomed to food stamps. We're even starting to get accustomed to receiving foreign aid. The Dutch have been operating a foreign aid program in car-dependent rural Mississippi.
President Obama brought forward several energy policy proposals to start UN-accostoming the country to being so leveraged. None of them are magical, but they are better than what the Republican party proposed, which is a pretty low bar as is.
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