Wall Street Journal

The journal has an excellent editorial today called The Real AIG Outrage that argues the Obama administration is using AIG as a conduit of taxpayer money to make whole AIG counterparties like TARP recipient Goldman Sachs, European banks and others.

When the true scope of this fraudulent use of taxpayer money becomes clear to the US taxpayer/voter, the outrage about the bonuses will seem like a tempest in a teapot.

Yet, the GOP, gropping for months now to differentiate itself from the Democrats, continues to ignore this explosive opportunity. Here is an issue that is politically white hot, that the opposition is mishandling and that has real traction with the American people. Having newly rediscovered our "fiscal responsibility" we and our leaders sit idly by while the Democrats pump billions of taxpayer funds through AIG and into the coffers of their largest campaign contributors; our ire stoked reflexively by a few high profile bonuses.

When this sorry chapter of American history is written, the GOP will be seen as playing compliant handmaid to the Democrats' fiscal malfeasance--the party of No, indeed.

Leadership implies making hard choices and getting out of one's comfort zone. Sadly, our "leaders" do not appear ready to lead on the most important issues of the day.

Bill Smith, ARRA Editor: The following editorial comments are in reaction to the actions this week by the five Republicans in the “Gang of 10.” Most of us have been to varied team sporting events: e.g., Soccer, Football, Basketball, Baseball and Hockey. For the team to win, the members of the team must all remain focused on the goal of winning. During the game, they don't get sidetracked patting opponents on the back and running out on the field with a couple of their team buddies to meet members of the other team, or declaring that they represent their whole and have negotiated the end of game results - so the game is over. We would rightly call these players a "gang; thugs." Obviously, they would at a least be benched or at best, kicked off the team. Razorback fans (other readers substitute your favorite team) go to see their Hogs play - win or lose. They keep coming to see their team play in hopes of defeating the other team. They want to win and they wouldn't like it if a few team members sold out the rest of the team. They understand that the Hogs may lose but they sure don't want the game played with without a full team.

Consider then our form of government; we are a Republic. We, the people, elect our Senators to represent our State and elect our Congressional Representative to represent our individual Congressional District. We expect these men and women to go to Washington D.C. to represent us and not to try to compromise and represent the people of other States or districts. Retuning to the sports analogy, across the country we have in effect elected our all star players to go to Washington to compete both for us - their constituents - and to part of their political "All Star" team. For example, in Arkansas, we know that our Senators, both Democrats, are also playing for the Democrat "All Star" team under the incompetent team coach -- Harry Reid. Others, like Lieberman , an "independent democrat,” play for the Democrat team. Others like Sens. Lindsey Graham, John Thune, Saxby Chambliss, Bob Corker and Johnny Isakson are supposed to be playing for the Republican "All Star" team. Unfortunately, while on the Republican Team, they have decided to break out on their own and negotiate with members of Reid’s team.

Most of us dislike small groups of people who meet privately to make agreements, and decisions that affect us. We call such groups "clicks" when being nice and other names when not feeling so nice. The press has rightly labeled these breakaway elected officials as “gangs.” We do not deny them their right to associate, to talk, to caucus, or to debate. We may not like their continued personally associations but heck we have no say if the go to church, go fishing, visit their local D.C. "watering hole,” or even foot tap" together. But we do mind when they are on the playing field and then they opt out of their teams and join together in a "Gang of 10" to speak for the rest of the elected officials and the members or your political party. This arrogance is intolerable as they are trampling on our Republic and over calling or silencing the voices of our other elected official.

And for those five Senators who are Republicans, how dare you compromise an important bargaining position on which we are supported by a majority of the American people. While the five democrats on the “Gang of 10” are clearly representing their party’s agenda and getting republicans to compromise and to “shut –up,” such is not the situation for the five republicans. The five republicans have “fumbled the ball” without even having their full team present. They have ignored one of the “most exciting and motivating” issues of the day on which Republicans are taking a stand. They have abandoned their team, ignored the coach and compromised a fundamental issue on which Republicans are taking a stand. How can they expect their team members to trust or work with them in the future? American voters do not forget and “Elephant” voters have long memories and have been know to turn out RINOs. Losing to the other team in a hard fought game is understood. Having a few players throw the game is unconscionable. While winning covers a multitude of issues, failure to support the team is unforgivable. Ask any die hard Razorback fan. We love our team and despise anyone who sellouts the team or tramples on the Razorback name. The same is true for voters be they democrat or republican. And currently, the actions referenced in the Wall Street Journal editorial are unacceptable to Republicans.

Kimberley Strassel, Wall Street Journal: It's taken time, but Sen. McCain and his party have finally found -- in energy -- an issue that's working for them. Riding voter discontent over high gas prices, the GOP has made antidrilling Democrats this summer's headlines. Their enthusiasm has given conservative candidates a boost in tough races. And Mr. McCain has pressured Barack Obama into an energy debate, where the Democrat has struggled to explain shifting and confused policy proposals.

Still, it was probably too much to assume every Republican would work out that their side was winning this issue. And so, last Friday, in stumbled Sens. Lindsey Graham, John Thune, Saxby Chambliss, Bob Corker and Johnny Isakson -- alongside five Senate Democrats. This "Gang of 10" announced a "sweeping" and "bipartisan" energy plan to break Washington's energy "stalemate." What they did was throw every vulnerable Democrat, and Mr. Obama, a life preserver.

That's because the plan is a Democratic giveaway. New production on offshore federal lands is left to state legislatures, and then in only four coastal states. The regulatory hurdles are huge. And the bill bars drilling within 50 miles of the coast -- putting off limits some of the most productive areas. Alaska's oil-rich Arctic National Wildlife Refuge is still a no-go.

The highlight is instead $84 billion in tax credits, subsidies and federal handouts for alternative fuels and renewables. The Gang of 10 intends to pay for all this in part by raising taxes on . . . oil companies! The Sierra Club couldn't have penned it better. And so the Republican Five has potentially given antidrilling Democrats the political cover they need to neutralize energy through November.

Sen. Obama was thrilled. . . . Equally gleeful was Louisiana's Mary Landrieu, the Senate's most vulnerable Democrat. She had been sweating the energy debate, especially after her vote against more oil-shale production -- a position her Republican opponent, John Kennedy, had used against her to great effect. Yet there she was, chummily standing with the Gang of 10 and boasting that she is working with "five Republicans" to "lower prices at the pump by increasing offshore drilling here at home."

Mr. McCain, who had been commanding the energy debate, was left to explain why he, of all people, wasn't more enthusiastic about a "bipartisan" effort on energy, especially one that includes "drilling." His camp was forced to take refuge in taxes, explaining that their boss couldn't sign up for a bill that included more. If this is what Mr. McCain's good friend Lindsey Graham considers "helping," somebody might want to ask him to stop.

And pity poor Senate Minority Leader Mitch McConnell, who has been working overtime to stanch GOP losses this fall and head off a filibuster-proof Democratic Senate. His dogged efforts to highlight Democratic opposition to drilling has kept energy in the news and laid the groundwork for GOP candidates to use the issue to their advantage.

In the Colorado Senate race, Democrats had christened former GOP Rep. Bob Schaffer "Big Oil Bob" -- hoping to smear his oil industry career. "Big Oil Bob" has instead embraced his pro-drilling positions and is pummeling opponent Mark Udall for his antidrilling stance. In recent weeks, Mr. Schaffer has erased Mr. Udall's lead. Polls show Republican Sens. Norm Coleman (Minnesota) and John Sununu (New Hampshire) both climbing in the polls on the back of strong energy arguments. . . .

The "bipartisan" Republican senators have undercut these efforts, and boosted Ms. Landrieu. They've even put a smile on Senate Majority Leader Harry Reid's face. He'd been struggling to tamp down the energy debate through November, where he hopes to increase his majority and permanently shelve drilling. He's now counting on the Gang to fruitlessly continue "negotiations" straight through the Senate's short September session and solve his problem for him. Not one of the five Republicans in the Gang is facing a tough election this year. That's the sort of security that leads to bad decisions. And theirs is the sort of thinking that could leave Republicans in a permanent minority.

Obama on Friday proposed a return to the good old days of Jimmy Carter's energy policies by suggesting a windfall profits tax on oil producers.

The new Obama ad also pushes his proposal to revive a windfall profits tax on energy companies and asserts that McCain favors tax breaks for the oil industry.

"A windfall profits tax on big oil to give families a thousand-dollar rebate," an announcer in the ad says.

Obama would use the tax to fund $1,000 emergency rebate checks for consumers besieged by high energy costs.

Congress enacted a windfall profits tax in 1980, during an earlier era of high oil prices, but repealed it in 1988 amid concern it discouraged domestic oil development. Last year, the House approved $18 billion in new taxes on the largest oil companies, but Senate Republicans blocked them.

And thank goodness they did.  The windfall profits tax is a tremendously stupid idea premised on the fact that Americans want to take out their anger on someone.  But a little digging provides more than a few examples of others that should be taxed.  The Wall Street Journal today, helpfully, has a little list and some fact behind the "windfall" lunacy.

What is a "windfall" profit anyway? How does it differ from your everyday, run of the mill profit? Is it some absolute number, a matter of return on equity or sales -- or does it merely  depend on who earns it?

Enquiring entrepreneurs want to know. Unfortunately, Mr. Obama's "emergency" plan, announced on Friday, doesn't offer any  clarity. To pay for "stimulus" checks of $1,000 for families and $500 for individuals, the Senator says government would take "a reasonable share" of oil company profits.

Exactly the problem.  Who gets to define this ridiculous idea?  Apparently, Dick Durbin.

Dick Durbin, the second-ranking Senate Democrat... recently declared that "The oil companies need to know that there is a limit on how much profit they can take in this economy."

Ok, maybe the concept of capitalism has changed since I studied economics in school, but I don't recall "there is a limit on how much profit you can take" being part of the economic formula.  Let's assume it is, however.  Exxon should surely pay its share, right?

Between 2003 and 2007, Exxon paid $64.7 billion in U.S. taxes, exceeding its after-tax U.S. earnings by more than $19 billion.

That's right, Exxon paid more in US taxes than it made in the US.  Quite a bit more.  You see, Exxon is a  company that operates globally.  It's sales are global.  So we actually see a US company taking money out of the hands of foreign nations, and depositing them into the hands of the US government.  Now the Democrats in the US government want to take more money from around the world and spend it on us.

However, we're not tasked with addressing that fact.  We need to figure out what qualifies them for paying such a ridiculous tax.  Since they're entire US revenue already goes to taxes, maybe we can use some other metric to justify the windfall tax.

Maybe they have in mind profit margins as a percentage of sales. Yet by that standard Exxon's profits don't seem so large. Exxon's profit margin stood at 10% for 2007, which is hardly out of line with the oil and gas industry average of 8.3%, or the 8.9% for U.S. manufacturing (excluding the sputtering auto makers).

If that's what constitutes windfall profits, most of corporate America would qualify. Take aerospace or machinery -- both 8.2% in 2007. Chemicals had an average margin of 12.7%. Computers: 13.7%. Electronics and appliances: 14.5%. Pharmaceuticals (18.4%) and beverages and tobacco (19.1%) round out the Census Bureau's industry rankings.

None of those industries are being asked to pony up... So that can't be it...  Maybe it's growth based...

In a tax bill on oil earlier this summer, no fewer than 51 Senators voted to impose a 25% windfall tax on a U.S.-based oil company whose profits grew by more than 10% in a single year... This suggests that a windfall is defined by profits growing too fast. No one knows where that 10% came from, besides political convenience. But if 10% is the new standard, the tech industry is going to have to rethink its growth arc. So will LG, the electronics company, which saw its profits grow by 505% in 2007. Abbott Laboratories hit 110%.

If Senator Obama is as exercised about "outrageous" profits as he says he is, he might also have to turn on a few liberal darlings. Oh, say, Berkshire Hathaway. Warren Buffett's outfit pulled in $11 billion last year, up 29% from 2006.

The fact is, as the WSJ article points out, the idea of a "windfall" profits tax is ridiculous.  It could be assessed against any company in America for any number of reasons.  It's simply another way for big government bureaucrats and politicians to redistribute wealth in America.  Since Exxon's US taxes already exceed its US income, in this case, it's actually a way to redistribute wealth TO America.

That should make Obama's European fans happy, huh?

Today, on the once conservative editorial pages of the Wall Street Journal you will find a column that is a poorly sourced,  flat-out attack on McCain adviser Charlie Black (neither a friend or a colleague of mine) and the Young Americans for Freedom (I was never a member). The columnist digs deep into the archives to build a nonsensical case that YAF equals Fascist, which is suppose to lead to the conclusion that Black as a YAFer was a fascist.

No where is there mention that YAF was founded by Bill Buckley and that its founding statement is an important statement of conservative principles. While there is a sinister sounding aside that many YAF members went on to important positions in government there is no reference to the thousands of YAF volunteers who dedicated countless hours to promoting conservative principles and candidates.

Is this column an example of the new Wall Street Journal? This lousy piece of journalism should never have seen the light of day in any publication. The author writes with the fervor of a paid Obama supporter. Check it our for yourself.