Evelyn Pringle March 5, 2008
More than any time in the past fifty years, this country is in need of a qualified leader with a solid base of combined knowledge and experience. Barack Obama does not fit the bill. The first Clinton Administration provided disaster relief after Bush Sr left office and a first-rate team of responders is needed more now than in 1993.
Bush Jr’s torrid affair with the oil and defense industries has turned the US economy into a war zone with Americans running out of money to pay for the basic necessities in life such as housing, utilities, and health care.
According to Nobel Prize winning economist and former World Bank vice president, Joseph Stiglitz, so far, the war in Iraq has cost $3 trillion, instead of the $50 or $60 billion price presented to the American people in 2003. On February 28, 2008, he provided testimony to the Senate Joint Economic Committee and told lawmakers we are spending $50 billion in operations every 3 months.
But the most important costs, he said, that go beyond the operational costs are the expenditures required to provide health care and disability for returning veterans. “These are likely to be very, very high, and we will be paying these bills for decades to come.” he warned.
Professor Stiglitz also told lawmakers that our country and businesses are suffering due to America’s changed standing in the eyes of the world because of the war and the way it has been conducted and surveys show a clear relation between attitudes towards America generally and attitudes towards American businesses. “In many quarters,” he stated, “the supposed war for democracy has even given democracy a bad name.”
He pointed out that the mounting war debt means we have borrowed more and more money from abroad. “The fact that we borrowed rather than paid the bills as they came due does not mean that the war was for free;” he said, “it only postponed the payments.”
He criticized the “lose monetary policy,” a “flood of liquidity,” and “lax regulation” which allowed household saving rates to plummet to zero, the lowest since the great Depression, and fed a housing bubble, allowing hundreds of billions of dollars to be taken out in mortgage equity withdrawals that increased the irresponsible consumption boom.
He said, “the subprime mortgages and lending programs with slogans like “qualified at birth” meant that easy credit was available for anyone this side of being on a life support system.”
According to the Professor, we were living on borrowed money and borrowed time and the day reckoning has now arrived. “The games we played—which for a time allowed us to hide the true costs of the Iraq war—are now over,” he stated.
He noted the huge problem facing the social security system, and the jeopardy to the economic security of our elderly and said, “for a fraction of the cost of this war, we could have put Social Security on a sound footing for the next half century or more.”
His prepared statement says the defense contractors and oil companies have been the only true winners in this war, evidenced by what has happened to their stock prices.
This assertion is proven by the August 30, 2006 report, “Executive Excess 2006, Defense and Oil Executives Cash in on Conflict,” by the Institute for Policy Studies and United for a Fair Economy, which shows that between 2002 and 2005, the CEOs of the top 34 defense contractors enjoyed average pay levels double the amount they received during the period of 1998-2001.
Defense contractor's pay was up 107% in 2005, compared to 2001, and the average compensation for the top 34 CEOs went from $3.6 million to $7.2 million. Halliburton CEO, David Lesar made $26.6 million in 2005, a bigger package than the $24.2 million send-off awarded to his predecessor, Dick Cheney, the report points out.
In stark comparison, the average pay for Army privates in combat in 2005 was only $25,085, and military generals with 20 years experience, only earned $174,452, with housing allowances and extra combat pay included.
According to the report, between the end of the year 2000 and the end of 2005, the share prices of the top 34 defense companies increased 48% on average.
The oil industry contributed $2,627,825 toward the 2004 reelection of George Bush. In 2005, the top 15 US oil company CEOs were paid an average of $32.7 million, and received an average raise of 50.2% over their 2004 pay packages.
Lee Raymond, the outgoing CEO of ExxonMobile, was the third highest paid and he made $69.7 million, according to the report. Exxon reportedly gave Raymond a send-off package worth nearly $400 million, in combined pension, stock options and other perks, including a $1 million consulting deal, the use of a corporate jet for professional purposes, 2 years home security, and a car and driver.
Throughout his first campaign, Bush was critical of the Clinton Administration. He taunted President Clinton every chance he got for failing to get the Organization of the Petroleum Exporting Countries (OPEC), to increase oil production.
During the first Republican primary debate, in December 1999, Bush said President Clinton “must jawbone OPEC members to lower prices.”
"What I think the President ought to do is he ought to get on the phone with the OPEC cartel and say we expect you to open your spigots," he said during a January 2000 debate.
"The President of the United States must jawbone OPEC members to lower the price," he stated.
“I think the president ought to get on the phone with the OPEC cartel and say: ‘We expect you to open your spigots’." he said in the Financial Times on February 2, 2000.
"And if, in fact, there is collusion amongst big oil, he ought to intercede there as well,” Bush told the Times.
On June 28, 2000, the New York Times reported comments Bush made the day before during a news conference while campaigning in Michigan and stated:
"Gov. George W. Bush of Texas said today that if he was president, he would bring down gasoline prices through sheer force of personality, by creating enough political good will with oil-producing nations that they would increase their supply of crude."
"I would work with our friends in OPEC to convince them to open up the spigot, to increase the supply," Bush told reporters.
Implicit in his comments, the Times said, "was that as the son of the president who built the coalition that drove the Iraqis out of Kuwait, Mr. Bush would be able to establish ties on a personal level that would persuade oil-producing nations that they owed the United States something in return."
"Ours is a nation that helped Kuwait and the Saudis, and you'd think we'd have the capital necessary to convince them to increase the crude supplies," Bush told reporters.
When asked why the Clinton Administration had not been able to use the power of personal persuasion, Bush stated: "The fundamental question is, 'Will I be a successful president when it comes to foreign policy?' "
"I will be," he said.
"But until I'm the president," he told reporters, "it's going to be hard for me to verify that I think I'll be more effective."
He verified his effectiveness all right - to the oil companies. During his first 3 years in office, the top 3 US companies, ExxonMobile, ChevronTexaco, and ConocoPhillips, raked in more than $33 billion in profits.
During the first quarter of his second term in 2004, oil companies and refineries reported record profits for operations in the US. Earnings for domestic refining and marketing operations increased by 294% for Chevron-Texaco, 165% for British Petroleum, 125% for ExxonMobil, and 44% for ConocoPhillips.
On May 12, 2004, the International Energy Agency released a study warning that higher oil prices had hurt the global economy and would further depress economic growth, fuel inflation, and increase unemployment over the next two years if prices stayed near the current levels at that time.
Five months later, on September 24, 2004, oil topped a record level of $50 a barrel, and CBS News noted that, "Mr. Bush has shown no propensity to personally pressure, or “jawbone,” Mideast oil producers to increase output."
Ten months after the start of his second term, ExxonMobil posted a quarterly profit of $9.9 billion, "the largest in U.S. corporate history, as it raked in a bonanza from soaring oil and gas prices," Reuters reported on October 27, 2005.
On October 28, 2005, the Wall Street Journal noted that Exxon's quarterly profits "amounted to a per-minute profit of $74,879.23 during the quarter." The Journal also reported that Shell said its third-quarter net income rose 68% to $9.03 billion.
The same week, Energy Information Administration data showed the price of a gallon of gas was up 28% from the year before.
A month ago, on February 2, 2008, the Washington Post reported that, “Exxon broke the record it previously had set for profits by a U.S. corporation, earning $40.6 billion last year.”
“Exxon's profit for the year came to $4.6 million an hour,” the Post calculated.
Twenty-five days later, crude oil prices hit a record high of $103 a barrel. On February 27, 2008, Nigel Gault, an economist at Global Insight, told the New York Times, “You’re adding an oil shock on top of a crunch on credit and a housing collapse.”
“Even the U.S. economy cannot withstand all of that at the same time,” he stated.
The skyrocketing energy costs have a trickle down effect on everything that happens in the US. On average, every time oil prices go up 10%, an estimated 150,000 Americans lose their jobs, according to calculations based on data from the Bureau of Labor Statistics and Federal Reserve Board.
In a survey conducted in June 2006, 75% of small businesses said increasing energy costs had impacted their businesses. Twenty-eight percent of those surveyed had to increase the prices they charged customers, and others coped by limiting production.
If the price of energy goes up, it costs more to turn on the power to run equipment and machinery in offices and manufacturing businesses alike. If prices go up, it costs more to heat and cool the buildings for businesses, schools, and government agencies.
The majority of products purchased in the US are transported by trucks, trains and ships that burn diesel fuel. A rise in the cost of diesel fuel can increase the price of nearly every product sold to consumers across the board.
Higher fuel prices increase the costs for every kind of service depended on by Americans in daily life, from school buses to taxi cabs to emergency vehicles to pizza delivery cars.
Bush’s Sham Energy Policy
Two and a half years ago on August 8, 2005, while signing a new Energy Policy into law, Bush lied through his teeth, when he told the country that the “Energy Policy Act of 2005 is going to help every American who drives to work, every family that pays a power bill, and every small business owner hoping to expand.”
According to an analysis of EIA data, when Bush took office in 2001, the average American family spent $3,300 on home heating, gasoline, and electricity combined.
In May 2001, the price of home heating oil was $0.76 per gallon. On February 25, 2008, the average residential heating oil price set a nominal high record at $3.46 per gallon.
The price of natural gas was $4.52 per thousand cubic feet in May 2001, and 6 years later, for the year-to-date through October 2007, the average price was $7.05, a 23.8% increase over the October 2006 price.
In 2001, the average cost of residential electricity was 8.62 cents per kilowatt-hour. The average price in November 2007 was 10.69 cents. The price of propane was $0.51 per gallon in May 2001, and on February 25, 2008, the average residential propane price reached an all-time high of $2.58 per gallon.
The Department of Energy estimates that heating oil costs would be up 26% this winter. In New Hampshire families are paying more than $3 a gallon, up from just over $1 in 2000. In Maine, one of the coldest states in the US, state officials have estimated that heating oil will cost more than $2,700 for the average household in 2008.
In November 2007, Senator Chuck Schumer released a report that showed New Yorkers would pay an estimated $830 million more this winter to heat their homes than last winter. His report included homeowners and renters who used gas, fuel oil, or electricity.
This year, Wisconsin experienced a 40% increase in home heating oil costs, according to the Wisconsin Public Service Commission.
A December 2007 poll commissioned by CreditCards.com found that in 2008, two out of 3 Americans plan to cut back spending on other things, as a result of higher energy costs, and nearly 25% said they would cut back significantly.
As many as 27 million Americans will have to borrow money for home heating, and 20 million will use credit cards to pay utility bills. The poll found that 27% of adults who earned between $20,000 and $30,000 a year, believed they would have to borrow money to pay their utilities during the winter of 2008.
The average family uses 1,429 gallons of gasoline a year. On January 20, 2001, the day Bush was sworn into office, the price of gas was $1.44 per gallon. On February 29, 2008, MSNBC reported that the average price of gas was $3.16 a gallon.
In 2001, a family buying 1,429 gallons of gas would have paid $2,057. In 2008, the same family will pay $4,515, providing the gas remains at $3.16 per gallon for the year.
Families living in rural communities are worse off because they must drive long distances to work, to shop, to drop off kids at school, and to access healthcare. Rural households drive 28,000 miles a year on average, or 15% more than urban families, and use 22% more fuel, according to Economic Research Service/USDA. This means families living in rural areas will pay $5,779 for gas in 2008.
The Department of Energy predicts that gas prices will peak this spring near $3.40 per gallon but some energy analysts say the cost could be as high as $4 this summer.
Among the hardest hit by rising energy costs, is the trucking industry, which includes hundreds of thousands of small businesses. Eighty percent of communities in the US get their goods solely by truck.
As of November 2006, there were over 700,000 interstate carriers in the US classified as small businesses, with 97% operating 20 or fewer trucks, according to a June 14, 2007 statement before the Senate Committee on Small Business and Entrepreneurship, by Timothy Lynch, Senior Vice President of the American Trucking Associations.
Fuel is the second-largest operating expense for trucking companies, after labor. In order to haul the nation’s freight, Mr Lynch told the Senate Committee, the industry would consume 51 billion gallons of fuel, at a record cost of $106 billion in 2007, more than double the fuel bill of the industry in 2003.
Mr Lynch noted that Energy Information Administration analysts then estimated
that diesel fuel would average $2.75 per gallon in 2007 and $2.76 a gallon in 2008.
On November 29, 2007, the Bangor Daily News reported on a meeting in Damariscotta, Maine of 400 members of the Professional Logging Contractors of Maine and Coalition to Lower Fuel Prices in Maine with federal and state lawmakers, where truckers complained that diesel prices were already more than $3.50 a gallon.
Government had always squeezed logging truckers, they said, but diesel prices were pushing them out of business. They predicted a massive shutdown unless prices fall, according to Bangor Daily.
With diesel prices rising to as high as $3.65 per gallon, Brian Souers, president of a Lincoln logging firm, Treeline Inc, told lawmakers, costs had increased 23% in 90 days for some truckers. "We're not making 4 percent," he said.
"The people who work for us need more money, too," he pointed out, and asked, "Where's it going to come from?"
“The cost of diesel is putting us out of business one day at a time, one truck at a time,” said Larry Sidelinger, owner of Yankee Pride Transport in Damariscotta.
Scott Hannington of Wytopitlock said his company had 65 workers 2-and-a-half years ago and now only has 11. Robin Crawford & Son of Lincoln reported hauling 247,000 cords of wood in 2001, but said the company might handle 80,000 in 2007.
"Less than 10 percent of the people in this room will stay in this business if it keeps going like it is," businessman Dick Day told the lawmakers.
Maine's overall economy is dependent on the logging industry which contributes more than $10 billion a year.
The next month, half way across the country in the Upper Peninsula of Michigan, a group of truckers, loggers and industry shareholder met at community centers in the small towns of Mass City and Quinnesec, Michigan to discuss the effects of the rising costs of diesel fuel on the future of that state's logging industry.
“If things continue as they are, we’ll all be done by spring,” said Jason Tapani, an owner/operator and one of the meeting’s organizers at the Mass City meeting, according to a report in the December 3, 2007 Daily News.
During the meeting, Mr Tapani explained that 10 years ago, the industry standard was a formula of allowing 25% for wages, 25% for insurance and maintenance, 25% for truck payments and 25% for fuel. At $3.56 for a gallon, he said, fuel now account for 50% of his total expenses, according to the Daily News report.
“I’m working 85 hours a week and I’m barely surviving,” he said. “I shouldn’t have to work that hard and not see it in my business.”
The other organizer of the meeting, Marty DeHaan, told the audience: “Basically, by this point the weak have fallen.”
“We all know guys who were driving a year ago who are now out of business,” he stated.
The Daily News also reported on the December 10, 2007 Quinnesec meeting and quoted Mr Tapani giving an example of how hard it is to make a profit hauling timber.
“Let’s say I get paid $761 dollars for a one-way trip covering 160 miles,” he said. “The cost of fuel is going to eat up nearly 50 percent of that.”
“By the time I take money out for my truck payment, insurance, maintenance and other costs, I’m left with $22,” Mr Tapani stated.
On November 25, 2007, Nathan Phelps reported in the Green Bay Press-Gazette, that rising diesel prices, "just a tick under $3.58 a gallon in the Green Bay area," is one of the challenges facing truckers and the industry this year. "When you're putting in 107 gallons of fuel at a time, those costs add up fast," he pointed out.
On February 29, 2008, Ellen Simon, in the Atlanta Journal-Constitution, reported that Lebanon, Tennessee trucker, Robert Griffith, is on the road 3 out 4 weeks a month, but because the cost of diesel has doubled over the last four years, Mr Griffith's take-home pay has plunged from $50,000 to $11,000, in 2007.
Mr Griffith is literally burning money and "spent $64,000 on diesel in the last eight months," according to the Journal.
A one-cent increase in the price of diesel fuel costs the trucking industry an additional $350 million a year. In the latter part of February 2008, the average price of diesel hit a new record; with the on-highway retail average at $3.55 a gallon, according to the EIA.
With higher energy costs, farmers are being hit from every which way. Increased prices means it costs more to grow and harvest crops because of higher prices for fertilizer, pesticides, and fuel.
Gasoline, diesel, natural gas and propane are needed to run the equipment used to plant, water, harvest and deliver crops to market. Poultry and pork producers use propane to keep chicken and hog houses warm.
The additional energy costs reduce the selling price and profits from crops because shippers and food manufacturers are also paying more for transportation and production.
According to the January 29, 2008 Rapid City Journal, the average net farm income for South Dakota's 31,300 farmers in 2006 was $28,400, down from an average of $58,000 a year earlier in 2005, citing the National Agricultural Statistics Service,
The costs for fuel and other energy-related expenses are offsetting good grain and cattle prices for farmers and ranchers, especially those who live long distances from nearby towns, Boyd Waara, vice president of First National Bank of Philip, and John Johnson, president of First Western Bank in Sturgis told the Journal.
In addition to the higher costs for fuel to run tractors, pickups and combines, farmers and ranchers are paying higher delivery charges on everything they buy, including fuel, livestock feed, fertilizer and equipment parts, according to the Journal.
Mr Johnson said the residents of rural towns are also seeing higher prices for groceries, clothing and other goods as well as for propane and electricity. "I think everybody is affected by it," he told the Journal.
He said the sales of large-ticket items such as vehicles, kitchen appliances and television sets have all been slow over the past 5 to six months. "We have to assume that some of that is due to less spendable income caused by the price of oil," he added
On November 16, 2007, Capital Press reported that energy costs are taking a big bite out of farm businesses across the West, from keeping crops in production and moving products to markets. Propane prices at the Cal-Nevada Wholesale Nursery, near Sacramento, had increased to $2 a gallon from $1.50 the year before. The owner told Capital Press that even though it would add 25 cents to the price of each plant, he had no choice but to keep 6 heaters running at night to keep the temperature from dropping below 65, or he'd lose the crop.
He also said the nursery business has been hurt by higher freight charges to ship flowers by air. "It used to be $12 to $13 a case and now it us up to $24 a box," he told the Press.
The president of the Washington Apple Commission told Capital Press that the rising cost of fuel to power equipment to pack, process and ship the state's $1.4 billion apple crop has become a major concern. Apple shippers saw surcharges on overseas containers rise $100 per container in 2007, according to the Press.
When Bush took office, the price of jet fuel was $0.86 per gallon. With a usage rate of 19.5 billion gallons of fuel a year, each penny increase per gallon adds $195 million in annual costs to the airline industry, according to the Air Transport Association.
In 2006, airlines spent a record $38 billion on fuel, 3 times the cost in 2002. Airlines raised fares a total of 12 times in 2005, and in the first quarter of 2006, American Airline raised domestic round-trip tickets by $10, and both Continental and Southwest reported a 5.4% increase.
In the fall of 2007, Carnival Cruise Lines and Royal Caribbean began charging a fee of $5 per day per passenger and both companies applied the fee to future and already existing reservations. Norwegian Cruise Lines added a fee of $7 per day to future reservations
Americans do not have the money to pay these ever rising costs. Statistics released by the Department of Labor in January showed real weekly earnings increased only 0.9 percent nationally in 2007. Median weekly earnings increased only 0.9 percent between 2000 and 2006, compared with 7.1% between 1996 and 2000, under the Clinton Administration
The Bush tax cuts have paid off well for those intended. IRS data shows that the wealthiest 1% of Americans, those with an average income of $1,316,000, earned over 21% of all income in 2005, while the workers in bottom 50% earned less than 13%.
And as far as job creation, Bush is competing with his old man to see who ends up with the worst record since Herbert Hoover over 70 years ago. As of October 5, 2007, Labor Bureau statistics show that non-farm payroll jobs increased by 5.6 million since Bush took office. More than 20 million jobs were added during the Clinton Administration.
In January 2009, we need a team of qualified experts on the ground in the White House ready to clean up the disaster that Bush left. The first Clinton Administration faced the same daunting task in 1993. Hillary Clinton is the only candidate in the race with enough knowledge and experience to get the job done.