This morning, I had CNN’s Starting Point on in the background as I got ready for work. On it was an interview between CNN’s Soledad O’Brien and one of Mitt Romney’s top surrogates, Senator Ron Johnson of Wisconsin.

I usually tune interviews like this out, because of the nuttiness that is increasingly common from those on the political right. But in this interview, Johnson said something so absurd that I couldn’t help but pay attention.

He said, “President Obama simply doesn’t understand that it’s the free enterprise systems, the private sector, the productive sector, not the government sector that creates long-term self-sustaining jobs. Take a look at the Soviet Union, Venezuela’s economic basket case, and is anybody moving to the island paradise of Cuba?”

O’Brien, visibly perturbed, asked Johnson if this was indeed what he meant. She asked, “You’re surely not suggesting that the idea and the concept behind Solyndra and other green energies like Solyndra is comparable to the Soviet Union and Cuba, right?”

Johnson replied, “No, I am suggesting that, because when you take taxpayer money and you invest that into business, that’s the taxpayer money put at risk. And let’s face it; the lesson of the Soviet Union and other socialist nations is that governments are very poor allocators of capital. It’s an economic model that doesn’t work.”

There are so many things wrong with this that I’m not even sure where to start. For example, one of the biggest problems we face is that private industry isn’t “creating long-term self-sustaining jobs.”

Those arguments aside, my real question for Senator Johnson is, if government subsidizing green energy companies is communist, what does that make government subsidies to fossil fuel companies? What about government subsidies the agriculture industry?

What about the LA Times article detailing evidence that Mitt Romney benefited from government subsidies while he was head of Bain Capital? Or when, as Governor of Massachusetts, he offered subsidies to attract businesses to his state? Does that make Romney a communist?

Of course it doesn’t. Government subsidies to green energy companies aren’t communist either. Subsidies are common practice at the federal and state level, and are given to companies in nearly every industry.

That Romney and his surrogates are making claims this absurd, not to mention categorically false, is evidence of how little they think of the American public.

Here’s the video:

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United States Supreme Court upholds Obamacare

Image Credit: dbking via Flickr

As everyone is no doubt aware by now, the U.S. Supreme Court upheld nearly every provision of the Patient Protection and Affordable Care Act (aka Obamacare) earlier today in a 5-4 ruling.

Despite many predictions to the contrary, the Supreme Court upheld the individual mandate. The Court ruled that the mandate is constitutional as a tax, but not under the Commerce Clause.

“In this case, however, it is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance,” Chief Justice John Roberts wrote in the majority opinion. “Such legislation is within Congress’s power to tax.”

Republicans are desperately scrambling to put a favorable spin on the Supreme Court ruling, insisting that the ACA is nothing more than a new tax that must be repealed. Rep. Jeff Landry (R-La.) went so far as to say that “Obamacare is a malignant tumor that feeds on America.”

Republican attempts to paint the Affordable Care Act as a tax increase rather than a healthcare bill are patently absurd.  The ACA is far from a mandatory tax increase — anyone can choose to opt out of the tax, simply by buying health insurance.

Furthermore, unlike nearly every other Federal tax, there are no real penalties associated with not paying this tax. According to the congressional Joint Committee on Taxation, the tax cannot be enforced with liens or property seizures, interest cannot be assessed, and civil or criminal penalties cannot be imposed for non-compliance.

The Supreme Court also ruled that the Federal government cannot withhold Medicaid funds from states that opt out of the Medicaid expansion proposed in the Affordable Care Act.

All things considered, this is a much better outcome than many pundits expected. However, many are concerned that states with conservative governments will refuse to participate in the Medicaid expansion.

At least one Republican governor, Bob McDonnell (R-VA), appeared to indicate that his state will implement the Medicaid expansion.

“This is going to be a huge expansion of Medicaid,” he said. “In coming months, Virginia’s health care leaders will work to develop the best possible system to meet the health care needs of our citizens.”

While this is far from an explicit assurance that Virginia will implement the Medicaid expansion, it is strongly suggestive that it will.

Gov. McDonnell also claimed that the Medicaid expansion would cost Virginia $2.2 billion over the next 10 years, while conveniently forgetting that the vast majority of Medicaid funding will come from the Federal government.

According to the Center on Budget and Policy Priorities:

Specifically, the federal government will assume 100 percent of the Medicaid costs of covering newly eligible individuals for the first three years that the expansion is in effect (2014-16). Federal support will then phase down slightly over the following several years, and by 2020 (and for all subsequent years), the federal government will pay 90 percent of the costs of covering these individuals. According to CBO, between 2014 and 2022, the federal government will pay $931 billion of the cost of the Medicaid expansion, while states will pay roughly $73 billion, or 7 percent.

Many of the states that would benefit most from the expansion, such as Texas and Florida, are also states with severely conservative governments. Expanding Medicaid in these two states alone will extend health insurance coverage to approximately 2.8 million more people, according to the Urban Institute.

Only time will tell which states decide to implement the Medicaid expansion. In the years to come, it’s likely that even the most conservative states will recognize the overwhelming benefits this expansion will have for their residents.

Neil Bush – Photo Credit: Kiev Ukraine News Blog

On Thursday, May 31, former Massachusetts Governor Mitt Romney stood outside the abandoned headquarters of Solyndra, a bankrupt solar company that was backed by some $500 million in federal loan guarantees, and said, “free enterprise to the president means taking money from the taxpayers and giving it freely to his friends.”

What he didn’t say is, to the Republican Party, free enterprise is exactly that.

The very next day, Konarka, a Massachusetts-based solar manufacturer, announced that it was filing for Chapter 7 bankruptcy protection and would lay off all its employees.

That marks the second bankruptcy of a solar company that was backed by Governor Romney’s administration. The other company, Evergreen Solar, declared bankruptcy in August 2011.

Maybe Obama and Romney’s administrations should have been a little more careful about who got these loans, but that’s also part of free enterprise. Romney’s experience at Bain has undoubtedly taught him that sometimes bad investments happen.

Even so, the administrations didn’t do anything wrong by making these loans. It is common practice for federal and state governments to provide loans and loan guarantees to companies in fledgling industries such as renewable energy.

It is, however, downright hypocritical for Romney and the Republicans to try to make Solyndra into a campaign issue.

At this point, the more conservative among you are probably saying that it’s not the same because “Solyndra’s chief backer was George Kaiser, an oilman who made billions of dollars and was a big donor and fundraiser for the Obama 2008 campaign.”

Or they might point to Romney’s claim that Solyndra funds were steered to “friends and family, to campaign contributors.” This claim, by the way, was debunked in detail by ABC.

But it would be hypocritical for Romney and the Republicans want to talk about steering federal funds to friends and family if they’re guilty of the same thing, right?

Does anyone remember the Silverado Savings and Loan bailout? From Wikipedia:

Silverado Savings and Loan collapsed in 1988, costing taxpayers $1.3 billion. Neil Bush, son of then Vice President of the United States George H. W. Bush, was on the Board of Directors of Silverado at the time. Neil Bush was accused of giving himself a loan from Silverado, but he denied all wrongdoing…

As a director of a failing thrift, Bush voted to approve $100 million in what were ultimately bad loans to two of his business partners. And in voting for the loans, he failed to inform fellow board members at Silverado Savings & Loan that the loan applicants were his business partners.

Neil Bush paid a $50,000 fine, paid for him by Republican supporters, and was banned from banking activities for his role in taking down Silverado, which cost taxpayers $1.3 billion. A Resolution Trust Corporation Suit against Bush and other officers of Silverado was settled in 1991 for $26.5 million.

So Neil Bush almost single-handedly destroyed Silverado Savings and Loan, costing American taxpayers $1.3 billion under the Reagan administration’s savings and loan bailout program.

…And the Republicans accuse President Obama of “crony capitalism”?

What Romney should have said is, “free enterprise to the Republicans means taking money from the taxpayers and giving it freely to their families.”

Image Credit Gage Skidmore

I know I’m not the first person to write about Mitt Romney’s opinion regarding the auto bailouts, and I’m sure I won’t be the last. In the interest of an informed political discussion, I thought we might benefit from a review of what Romney actually wrote in his 2008 New York Times op-ed “Let Detroit Go Bankrupt”.

This issue returned to the forefront of our collective memory recently when Romney tried to “take a lot of credit” for the auto industry’s recovery. People were understandably miffed by this statement, but I believe that a lot of what Romney originally wrote has been lost in the political shouting match that ensued.

He wrote, “A managed bankruptcy may be the only path to the fundamental restructuring the industry needs… The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.”

General Motors and Chrysler did end up going through a managed bankruptcy process. However, this process could not have been funded by private banks and investors, as Romney suggested. As has been widely reported, such sources of private investment had dried up in late 2008, when the bailout was in progress.

Bob Lutz, a Republican who was an executive at GM in 2008, said, “What he [Romney] conveniently forgets is that there was zero liquidity in the country. There was no way to fund a private Chapter 11 — even though, believe me, General Motors really tried to get private debt financing or organize a private Chapter 11. But there was no money to do it.”

So the only way for GM and Chrysler to get the funding they needed in order to undergo bankruptcy reorganization was through the federal government. (By the way, the Canadian government also contributed about $3 billion to the auto bailout.)

To be fair, Romney did suggest federal loan guarantees, but only for “post-bankruptcy financing”, so this wouldn’t have helped to get the funding Detroit needed for reorganization.

But the rest of what Romney wrote in “Let Detroit Go Bankrupt” is actually pretty reasonable.

He also said, “The new management must work with labor leaders to see that the enmity between labor and management comes to an end…This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.”

That’s actually not far off from the agreement that was reached between the car companies and the UAW. All those involved in the restructuring realized that each party would have to sacrifice a little in order to reach an acceptable compromise.

My favorite suggestion of Romney’s was, “The need for collaboration will mean accepting sanity in salaries and perks… Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.”

That was a great idea. Too bad it wasn’t done.

Finally, I feel that it’s important to emphasize that Romney was not against all government support of the auto industry. As he said in the op-ed, “It is not wrong to ask for government help, but the automakers should come up with a win-win proposition.”

I could be wrong, but I think this may indicate that Romney was arguing against giving the auto industry the same sort of no-strings-attached handouts that the banks got, rather than about withholding government funds and letting the auto industry collapse.

Does Romney deserve credit for the auto bailout? No. He wasn’t even in the room. But neither was he suggesting that the auto industry should collapse.

Who knows? Maybe it’s just Romney’s inability to stick to his convictions that makes it so easy for people to question his motives.

Come back tomorrow for a discussion of Romney’s proposed budget.

Image Credit US Coast Guard

In 2011, the top five oil companies (BP, Chevron, Conoco, Shell, Exxon Mobil) posted a combined profit of $137 billion. In the first quarter of 2012, these companies earned a combined $33.5 billion.

These windfall profits were enough to put Exxon and Chevron in the first and second spots, respectively, of the Fortune 500 most profitable list.

Last year, fossil fuel companies got $11 billion in government subsidies.

How can we justify giving these companies our tax dollars when budget cuts have forced the de-funding of social programs and the layoffs of over 100,000 teachers nationwide?

Last week, Senator Bernie Sanders (I-VT) and Representative Keith Ellison (D-MN) announced they will introduce the End Polluter Welfare Act to Congress.

“People are sick and tired,” said Sanders, “of seeing the same folks who want to cut nutrition programs for hungry children fight tooth and nail to preserve federal tax breaks that go to Exxon Mobil – one of the most profitable corporations in history.”

This legislation will save the Federal government (and taxpayers) over $11 billion annually by doing away with fossil fuel subsidies, such as tax breaks, special financing, and taxpayer funded research and development.

According to 350.org, getting rid of fossil fuel subsidies will put $807 per year back into the pockets of US taxpayers.

The fossil fuel industry receives nearly six times more in government subsidies than the renewable energy industry. This creates significant entry barriers (see oligopoly) for the renewable energy industry and stifles competition.

A fact sheet hosted on Senator Sanders’ website shows how doing away with fossil fuel subsidies will save money in the years to come. I’ve listed some of the highlights below:

– $14 billion saved by eliminating the intangible drilling deduction, which allows oil and gas companies to deduct up to 80 percent of the costs of drilling.

– $12 billion saved by repealing a law passed in 2004 that allows oil companies to claim manufacturing tax credits.

– $6.8 billion saved by closing the loophole that allows corporations like BP to deduct costs incurred from cleaning up spills and paying damages. How can we expect oil companies to prevent spills if they can rely on taxpayers to pay for cleanup?

– $10.6 billion saved by recouping lost royalties for offshore drilling in public waters.

The End Polluter Welfare Act is good for the economy because it will reduce market distortions, put money back in the pockets of taxpayers, and promote green job creation.

Senator Sanders is asking citizens to speak out against corporate welfare by calling and emailing their senators and representatives, or by signing the petition.