Budget Conscious

Paul Krugman has been criticizing President Obama for enacting a much too small stimulus package. Dr. Krugman's take is that Obama is appeasing the Republicans and not willing to admit that his strategy last year was a mistake. But I think Dr. Krugman is wrong, I don't think the size of the stimulus package was the result of strategy, I think it was a deliberate policy choice.

President Barak Obama is a budget-conscious socialist. The giveaway was his appointment of Peter Orszag (a budget hawk) to the head of the Office of Management and Budget. Too many of the choices that the President has made have been seen as concessions to the Republicans rather than penny pinching by the President. President Obama wants Universal Healthcare but only if wasn't too expensive. Contrast this with President Bush and Medicare part D.

Time to be Presidential

Many people forget that Barak Obama was just a few years ago, merely a state legislator. It was only 2005, not quite six years ago, that he first came to Washington as a Senator. While in the Senate, he was mentored by some of the old hands there, including Senator Ted Kennedy, Senator Robert Byrd, Senator Tom Daschle and Senator Harry Reid. If Senator Reid loses his re-election bid, as most polls indicate, none of the people listed will be in the Senate next year.

When I look back at President Obama's first two years in office, what strikes me is how passive he has been. The stimulus bill passes was quite tepid; the signature Healthcare Reform was left to the hands of the Democratic leaders of the House and Senate and only rescued by Presidential action when the election of Scott Brown threatened to block it. The Financial Reform bill was also quite mild, partly because of intense lobbying by the banking industry but also because the attitude in the Whitehouse was "We need a bill but we don't care what's in it." In many ways, we've experienced two years of Senator Obama instead of President Obama.

With the departure of Rahm Emmanuel and Larry Summers, the Clintonite aspects of the current administration will likely fade and we will see much more of Obama's style of leadership, if he has any. The founders of the country created the office of the President because they felt that the country couldn't simply run on auto-pilot. We are still waiting to see of Barak Obama is up to the job.

Terrorist Free

Most gas stations in the U.S. sell three blends of gasoline. The regular is an unleaded low octane blend, usually the cheapest of the three blends. The premium blend is a higher octane fuel required by high performance engines that use a higher compression ratio. The higher octane prevents premature combustion at the higher pressure. The third blend is a left over from the days when gas station sold an older regular leaded blend in addition to the unleaded regular required by cars with catalytic converters. This tends to be a blend with an octane rating between regular and premium, without any particular reason for being sold other than the infrastructure for selling three blends exists.

Instead of selling a middle octane blend, gas stations should offer a blend that is only refined from North American crude oil: a Terrorist-Free gasoline. They should be able to charge a higher price than regular gasoline. This blend could have a higher octane and more additives, in fact it could be the exact same formula they sell now but with the paperwork to prove that it was refined from Crude Oil pumped from the U.S., Canada, or Mexico.

Just as consumer can choose a dolphin-safe tuna or a conflict free diamond, they should be able to prefer domestically produced gasoline over gasoline that may or may not be made from imported oil.

Marketing should be simple:
Help bring the troops home; buy terrorist-free gasoline.
If you want energy independence, just pay for it.

To the oil companies, I say, “Give America a choice. Sell Terrorist Free gasoline at every gas station.”

Energy Independence Now

While I am not friend to government spending in general, I do believe it makes sense in some cases for government to make investments that provide indirect benefits to the whole population.

One such investment that makes a lot of sense is investing in technologies that would reduce our dependence on foreign oil. Many alternative energy technologies exist to produce electricity but we already have relatively cheap electricity, so Photovoltaic (PV) and Wind, while renewable don't increase our energy independence. And while hybrid and electric vehicle will help eventually, turning over our vehicle fleet will take a very long time. We need something that will move the needle of energy dependence much quicker.

We need to invest in

• CNG for commercial vehicles
  
• biofuels from algae
  
• Solar thermochemical production of gasoline.
  

Changing our trains and trucks from diesel to compressed natural gas would lessen oil imports and make better use of a resource that we have in abundance now: natural gas. Much of the 'oil' resources that are available from deep water drilling in the Gulf is actually in the form of natural gas. We need money to encourage the installation of equipment to refuel CNG vehicles, tax breaks for purchase of commercial vehicles using CNG and subsides for converting existing vehicles to CNG. Commercial vehicles are a good focus because they comprise a smaller fleet than passenger vehicles and they tend to use more oil products per vehicle.

The second technology we need to pursue is hydrocarbons from algae. Unlike ethanol from food crops, growing algae doesn't compete for valuable farm land. It is the kind of operation that can occur in urban settings as well as rural. Since a key component of growing algae is carbon dioxide, it can use the exhaust from existing thermal plants to 'feed' the algae. There are also potential to use algae as part of the sewage treatment process to clean the water and produce hydrocarbons as a byproduct.

Recent algae links:

• http://www.brighterenergy.org/16288/news/transport/solazyme-wins-150000-gallon-navy-order-for-algal-biofuel/
  
• http://www.favstocks.com/department-of-energy-announces-57m-for-small-businesses-in-phase-iii-xlerator-program-algal-biofuels-advanced-vehicle-technologies-and-fuel-cells-included/1624809/
  
• http://www.nctimes.com/business/article_243b5d24-6bac-5b84-9ddf-4ce7dd50ba66.html
  

The last technology uses solar heat to power basic chemical reactions, splitting carbon dioxide into carbon monoxide and oxygen. The carbon monoxide can be mixed with steam to produce various hydrocarbons. Electricity can also be produced from the waste heat of the chemical reaction. This is the ultimate solution: Sunlight + air + water = gasoline. The capital costs upfront are large but the running costs are very low, so the fuel produced can be very cheap.

Don't focus on the salaries; invest for the benefits to the wider economy. $1/ gallon for gasoline would create a lot of jobs. The money saved by consumers can either pay down debt or begin a new cycle of consumption. Even small amounts of cheap fuel would drive down the costs of existing sources as countries attempt to monetize their resources while they still can.

We have talked about energy independence for decades and it has been within our reach but we haven't been willing to pay the price for independence. The time to act is now, when we have spare labor and capital available and the cost of borrowing is low. All of the technologies are proven now; there are no new discoveries needed, just investment and engineering stand between us and a future with less dependence on foreign oil.

Thank You

Alaska Libertarians say no to Murkowski Senate Nomination
Yes. We don't need no stinking, big spending socialist on the Libertarian ticket.

Spare a dime?

The Federal Highway Trust fund, which is funded by a 18.4 cent a gallon tax on gasoline, is the primary federal source for paying highway construction and maintenance costs. The fund has been depleted recently both due to fewer miles being driven during the weaker economy and fuel economy improvements.

A ten cent increase in the excise tax would help pay for needed improvements in our infrastructure as well as employ Americans to build things that Americans use. It will also reduce our dependence on foreign oil.

They used to tell me I was building a dream
With peace and glory ahead
Why should I be standing in line
Just waiting for bread?

Once I built a railroad, I made it run
Made it race against time
Once I built a railroad, now it's done
Brother, can you spare a dime?

Test

This is a test. This is only a test. If this has been a real emergency, you would have received instructions for where to tune in your area for further instructions. This is only a test.

Libertarianism

Austerity is the new fashion in politics. The Greeks need it; the Germans want it. Some in Congress feel we don't have enough of it in the U.S.

But no one wants real austerity; just ask the Latvians. What politicians want is the respectability of fiscal discipline without actually asking voters to lower their standard of living. What they are dabbling with is the equivalent of ordering a Diet Coke with their bacon triple-cheese burger. The Senate is considering a $30 billion dollar "jobs" bill. Whether it is a good bill or a bad bill, saving $30 billion in one time expenditures is a paper cut on a $1.3 trillion budget deficit. This is not austerity.

Real austerity can not be a fad. It has to be followed for years before it shows results. In today's "get through the next election" policy mentality; austerity is not possible. The danger is that the austerity posers will prevent government from making the needed investments to fortify economic growth. And economic growth is the best solution to our deficit problem. A side order of real austerity would be nice; but I don't see it on the menu.

Quickie

Signs you may be a Libertarian:

When government says "Don't worry, we'll take care of it.", you have a hard time sleeping at nights.

Anniversary

This week Obama has been trying to tout the success of his stimulus program. As I said last year, the package passed by Congress was too small to have a noticeable effect on the economy. There are very few times when additional fiscal spending can prove effective and now that interest rates are less accommodating, the Democrats suddenly realize that they need to create jobs. To create jobs this year, they need to budget the money last year. So expect to see a lot of expensive and useless election year gimmicks being proposed and some fraction of them being passed into law.

Overall, Obama has been ineffective in his first year in office, but he has exceeded my incredibly low expectations. Hopefully, he is learning the lesson that he can't just let Congress create legislation by itself. This is a President who wants to be liked by everyone, but if he wants the job to get done, he's going to have to step on a few toes. I suspect he will be very polite as he does so.