The Daily Grasshopper

Today’s lead editorial in the New York Times, “The Axis of Oil,” is of interest for many reasons, not the least of which is that it paints a pretty accurate picture of the state of the world’s oil economy on the eve of Bush & Co.’s descent into Mideast Madness (White House spin: “We’re liberating the Iraqi people.” Real world translation: “We’re liberating the Iraqi people’s oil – from them.”)

But there’s something else, too. Here’s the final paragraph:

“One positive aspect of the current uncertainty is that it reinforces the need for Washington and its cold-war adversaries – Russia and China – to work closely together on energy policy. At home, it should also prod the Bush administration to address sensible measures to encourage efficiency.”

OK, got that? Be sure to remember the part about the call for the “Bush administration” to address “sensible measures to encourage efficiency,” because we’re about to head over to the Business Day section of the Times, where right at the top of the front page we see this headline:

“Bush Proposal May Cut Tax on S.U.V.’s For Business”

I can practically hear you scratching your head, asking "But, won’t cutting taxes on S.U.V.’s for business encourage more people to buy them?” Indeed it will. In fact, according to the Times, the story broke in Detroit, which means Christmas came to Motor City twice in the space of 30 days.

I’m sure some of you think I’m making this up, so I’ll provide links, as usual, to both stories. Here’s the “Axis of Oil” editorial:

http://www.nytimes.com/2003/01/21/opinion/21TUE1.html

And here’s the story on the Bush administration’s plan to encourage MORE S.U.V. sales:

http://www.nytimes.com/2003/01/21/business/21AUTO.html

All partisan politics aside, is there ANY reason, ANY AT ALL, for providing incentives to S.U.V. buyers at a time when 1) we’re about to go to war over oil in the Mideast, 2) supplies from South America are still choked off, 3) we’re the target of worldwide anger for pulling out of the Kyoto Agreement, and 4) there is a growing backlash against S.U.V.’s in this country, as epitomized by a recent ad campaign (like it or not, it raises troubling questions about our country’s dependence on people like the Saudi royal family)?

Here’s a quote from the story, which does a good job of explaining the tax break (it’s accompanied in the print version by a chart that shows how the deduction would compare for a Toyota Prius and a Hummer):

“Tax experts and environmentalists say the plan would provide incentives for businesses to choose the biggest gas-guzzling trucks because it takes several years to depreciate the cost of passenger cars and smaller sport utility vehicles.”

Later on there’s a great quote from a member of the Union of Concerned Scientists, David Friedman: the deduction is “yet another loophole that the government is keeping open that is increasing our oil dependence.” And people call me cynical.

The question, naturally, is WHY does the Bush administration pursue these policies? We’ll get to that in a moment, but by way of indirectly answering, I’m going to also suggest that you take a look at a business story that was reported by the Associated Press, and ran in both the Boston Globe and the Boston Herald today.

Here’s the Globe version (“Telecom lobbyists feted Bush official”):

http://www.boston.com/dailyglobe2/021/business/Telecom_lobbyists_feted_Bush_official+.shtml

The Herald, our little tabloid, always has better story heads. In their paper, it was entitled “Bush telecom rep mired in ethics flap.”

The basic gist of the story is that a Bush administration official, Assistant Commerce Secretary Nancy Victory, who is the “point person for telecommunications policy,” had a big party at her house that a bunch of corporations paid for. Ten days later, she asked the Federal Communications Commission to “immediately repeal restrictions” that these same companies wanted off the books. Asked about possible conflict of interest, Victory responded: “Ridiculous.”

I’m sure you think I’m making this up. But I’m not. Read the article. And then think about these two realities:

A) In the current political climate, this patently obvious episode of influence-peddling is such a non-story that it’s relegated to the middle of the business pages, instead of where it could be expected to appear in a functioning democracy: Page A1.

B) Faced with such a flagrant example of graft, here’s how the AP reporter characterized reaction to the episode: “Ethics experts said the arrangement heightens public concerns about the appearance of a conflict of interest.” An “appearance” of conflict of interest? How’s that for hard-hitting journalism?

Now, I just started sending out these e-mails a few weeks ago, so people might get the impression that I really don't like Republicans. And that would be accurate, but I’m no fan of the Democrats, either. This sort of thing went on all the time during the Clinton administration, too. In fact, Victory’s little favor to Cingular and SBC is kids’ stuff compared to what some of the same players got out of the 1996 Telecommunications Act that had bipartisan congressional support, and which Slick Willie signed. The problem is the system: under current campaign finance laws, this stuff is all LEGAL. Read the article again – the only thing Victory did wrong, from the government’s perspective, is “not report the October 2001 party as a gift on her government ethics disclosure form.” (Speaking of oxymorons, there’s one for you - “government ethics.”)

So when industry can basically buy the laws it wants by throwing a party for the person in charge of writing or reviewing them, then you are quickly to the point where corporate interests have totally replaced the people’s interests, which is where we are today, right now, in January, 2003. We have government of the corporations, by the corporations, and for the corporations. And Corporate America is getting ready to throw a big party for the Corporate-Whore-In-Chief. Get ready for campaign 2004...

You wonder why Bush wants tax breaks for S.U.V.’s? Because Ford, GM, and Daimler-Chrysler make more profits on sales of light trucks (S.U.V.’s) than all their other makes and models combined. And the Big Three have given Bush a lot of his money over the years. And right now, they’re facing pretty stiff competition from Honda and Toyota in the S.U.V. department. They need to encourage more sales, to get their numbers back up. Call the President.

This is from a recent MSNBC story, posted on their website (http://stacks.msnbc.com/news/837603.asp?cp1=1):

“The auto industry has strong ties to the Bush administration that could come in handy in a regulatory fight. Mr. Bush’s chief of staff, Andrew Card, is a former General Motors lobbyist. During the 2000 presidential campaign, the industry’s contributions went more than 10-1 to Mr. Bush, who received $1.2 million, compared with $114,540 for former Vice President Al Gore, according to the Center for Responsive Politics, a Washington watchdog group.

Congress established the CAFE [Corporate Average Fuel Economy] standards in 1975 in response to the Arab oil embargo. A company’s score in relation to the target is the result of a complex set of formulas that factor in a vehicle’s fuel economy and its sales. That means that even if a car company produced a single SUV model that averaged 40 miles a gallon, that wouldn’t necessarily mean a big improvement in the company’s overall average performance if the bulk of its sales came from big, low-mileage pickups.

Auto makers have increasingly chafed against the CAFE system as Americans, encouraged by cheap fuel, have bought larger, more-powerful SUVs and pickups during the past decade. A big SUV can generate $8,000 or more in pretax profit, while small cars typically sell at a loss or a marginal profit in the U.S.”

Here’s the problem (and the solution):