Biden’s Clueless Energy Policies May Cost Him Reelection

Biden’s Clueless Energy Policies May Cost Him Reelection

Authored by Louis Navellier via The Epoch Times,

The recent Arctic blast was great for natural gas demand, but last Friday it shocked me that the Biden administration halted approval for new licenses to export liquified natural gas (LNG) due to concerns about climate change and national security. Specifically, President Joe Biden said, “We will take a hard look at the impacts of LNG exports on energy costs, America’s energy security, and our environment. This pause on new LNG approvals sees the climate crisis for what it is: the existential threat of our time.”

Ironically, environmental advocates urgently want developing nations to stop using coal and are urging Europe to power its economy without using Russian natural gas.

So far, so good: this opens up huge markets for U.S. LNG.

But these same environmentalists refuse to build the infrastructure required to ship LNG. That ensures our natural gas will be wasted (burned off) for generations to come.

I can only say that “it’s hard to fix stupid.” Stopping the expansion of LNG exports will just result in wasting our natural gas. In my opinion, some zealots in the Biden administration are so stupid they need to be put out to pasture.

Prohibiting LNG exports will just result in more coal burning, which is booming globally, since coal is cheap and popular in China, Eastern Europe, India, Indonesia, and many other emerging economies. There is a glut of natural gas in the United States since much of it is a byproduct of crude oil production. Since we have more natural gas than we can use in the United States, it is just going to be wasted (flared) if we do not export it.

Mike Sommers, president of the American Petroleum Institute (API), the oil-and-gas industry’s biggest lobby, denounced the decision by Biden administration, saying that it benefits Russia and is a broken promise to our allies, adding, “It’s time for the administration to stop playing politics with global energy security.” In addition, Neil Chatterjee, a former chairman of the Federal Energy Regulatory Commission (FERC), appointed by then-President Donald Trump, said that LNG projects support jobs not only in Republican states like Texas and Louisiana, where most terminals are, but also in swing states such as Ohio and Pennsylvania, which produce a significant proportion of U.S. natural gas. In other words, President Biden just lost Ohio and Pennsylvania, which are two key swing states in the upcoming presidential election.

The Energy Information Administration (EIA) reported that U.S. crude oil inventories have declined in recent weeks and are now at 430 million barrels, or 4 percent below a year ago. The API reported last week that crude oil inventories declined by 6.7 million barrels in the latest week. However, the API also reported that gasoline inventories surged by 7.2 million barrels in the latest week, and many Americans stayed off the roads during the recent Arctic blast, so the prices at the pump are expected to remain low until demand picks up in the spring. So far, crude oil prices have risen more than 10 percent since Jan. 8 owing to low inventories, the disruption to shipping in the Red Sea, and evidence that crude oil demand could rise from any Chinese economic stimulus as well as U.S. economic growth.

The expansion of the war in the Middle East has also helped boost crude oil prices, with Iranian proxies effectively closing shipping in the Red Sea. Furthermore, U.S. troops are now effectively “piñatas,” being hit with relentless attacks. Several troops recently suffered “traumatic brain injuries” from missile attacks at the Ain al-Asad air base in Iraq. U.S. and British naval attacks on Houthi rebels in Yemen persist, and eight new targets were hit last Monday in a major assault. In addition, the United States attacked Iran proxies in Iraq after the Ain al-Asad air base attack. The latest escalation was an oil tanker, the Marlin Luanda, hit Friday by a Houthi missile in the Gulf of Aden. The fire wasn’t extinguished until Saturday. Ironically, the Marlin Luanda was carrying Russian naphtha, a product used to make plastics and gasoline.

Due to chaos in the Middle East and disrupted shipping lanes, crude oil shipments and production could be disrupted in upcoming months. Do not be surprised if crude oil prices hit $80 during the next flareup in the Middle East. After Ukraine bombed Russia’s natural gas pipeline and the Trans-Siberian Railway, there is rising concern that Russia’s crude oil pipeline could be bombed, which could also send crude oil prices soaring. Ukraine’s latest major attack was a drone attack on a chemical transport facility in the Ust-Luga port last week, about 100 miles southwest of St. Petersburg. This port is a crucial location for Russia’s energy infrastructure. It is operated by Novatek, Russia’s second-largest natural gas producer.

Meanwhile, the Chinese are taking over the electric vehicle (EV) market, as the price wars have expanded to Europe and Tesla has temporarily closed its Berlin plant due to the Rea Sea supply disruptions. Frankly, Tesla needs to make a cheaper city-oriented EV for China, and Europe needs to get its “mojo” back and capture market share from Chinese EV maker BYD. Tesla has a new, lower-cost EV in the works with a code name of “Redwood” that would use “revolutionary manufacturing technology.” It is supposed to be introduced in mid-2025.

The other interesting EV-related news is that Apple will be introducing its EV in 2028 with level 2 driver assistance. Clearly, Apple’s attempts at autonomous driving via “Project Titan” has fallen short of its ambitious expectations, but when Apple introduces any product, it strives to be reliable and problem-free, so I suspect its EV will be a hit and will capture some market share from Tesla and other EV carmakers.

The recent Arctic blast has revealed several problems with EVs: Bitter cold can cut the range of EVs, and cold weather also closed down many charging stations. The EV glut continues to grow at car dealerships. Ford announced that it will continue to slash its production of the F-150 Lightning due to weak demand. Effective April 1, F-150 Lightning production will be reduced to just one shift, so 1,400 employees from the second shift will be reassigned to other shifts at other assembly plants. Meanwhile, Ford is increasing its Bronco and Ranger pickup production, as the demand for internal combustion vehicles remains strong.

The Wall Street Journal last week had an article about how BYD, which passed Tesla as the largest EV manufacturer, is moving upscale to take more market share away from Tesla. Specifically, BYD introduced an upscale brand of EVs, Yangwang, to make more luxurious and exciting EVs, including one model that looks like a Lamborghini(!) The truth of the matter is that EVs can be a bit boring, so great style and design are important to boost sales. Personally, I find Tesla’s Cybertruck a bit hilarious. Elon Musk said that the Cybertruck is designed for the “Zombie Apocalypse!” After the Cybertruck launch, there have been a lot of comparisons with other electric pickups, and the Ford F-150 Lightning has fared well. However, good media reviews are not enough to boost sales. Interestingly, Ford and Toyota hybrids are outselling their respective EVs, so it appears that EV range anxiety persists, especially in the truck world.

I still hold high expectations for energy and refining stocks that are poised to surge as seasonal crude oil demand picks up in the spring. Since seven of eight people (87 percent) live in the Northern Hemisphere—seven billion versus one billion in the Southern Hemisphere—crude oil demand naturally rises as the weather improves.

Tyler Durden
Thu, 02/01/2024 – 15:25

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Test Scores Are Rebounding After Pandemic School Closures, but Some Students Will Never Catch Up


Classroom with young students |  Douglas R. Clifford/ZUMA Press/Newscom

American students experienced historic losses in reading and math performance during COVID-19 school closures. Years after schools reopened, there is continuing evidence of lasting harm to student learning, with everything from ACT scores to school attendance showing continued slumps when compared to pre-pandemic years. 

But a new study shows that students have regained some of the ground lost after the pandemic, sparking hope that depressed academic achievement may not be permanent.

Researchers at Harvard, Stanford, and Dartmouth looked at test scores of third- through eighth-graders from around 8,000 school districts in 30 states. They found that 35 percent of school districts lost more than half a year of instruction immediately after the pandemic, while just 27 percent saw either no change or improved results. 

Unsurprisingly, learning losses were most extreme in low-income school districts. In many states, recovery in scores is driven primarily by improvements in higher-income school districts. However, there were some outliers—poor districts where scores made seemingly miraculous improvements and wealthy districts where scores continued to decline.

The researchers found that by 2023, students had regained about one-third of their losses in math and about one-quarter of their losses in reading. Of the 30 states studied, only one—Oregon—failed to improve upon its 2022 scores in 2023.

An analysis of the researchers’ data published in The New York Times on Wednesday proposed that how schools spent federal relief dollars played a major role in which schools improved and which didn’t. When the federal government poured $190 billion in a bid to help schools recover after closures, only 20 percent of the funds schools received were required to be used to address learning loss. 

As a result, many school districts devoted the majority of their funds to cover expenses that have nothing to do with student learning—like building new athletic facilities, paying custodial workers, or even building a city-owned birding center. Unsurprisingly, the researchers found that schools that spent a higher portion of their funds on addressing learning loss rebounded better after the pandemic. When the Times interviewed educators at school districts with unusually high score recovery rates, school employees emphasized how their schools focused on spending federal aid money primarily on academics. 

Unfortunately, the study also found that many students would likely never recover from the losses they experienced as a result of extended school closures—meaning that thousands of American schoolchildren are likely to enter adulthood with major academic gaps and could face permanently depressed earning potential.

“Few would be content to know that poor children paid a higher price for the pandemic than others—but that is exactly the path many states are on,” wrote the researchers in a report of their findings. “Last year, students made up one-third of the pandemic loss in math and one-quarter of the loss in reading. Although good news, it also means that even if schools maintain the same pace this year, students, especially in lower-income districts, are unlikely to have returned to 2019 levels of achievement when the federal dollars are gone.”

The post Test Scores Are Rebounding After Pandemic School Closures, but Some Students Will Never Catch Up appeared first on Reason.com.

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Institutions Sold Stocks At Record Pace As S&P Hit All Time High

Institutions Sold Stocks At Record Pace As S&P Hit All Time High

After a near record stretch of euphoria, in which the S&P rose in 12 of the past 13 weeks during what Goldman called one of the “most powerful short-cycle rallies we’ve ever seen“, the market’s relentless ascent is now in jeopardy and as of today, the current week is set for a modest drop (sparked thanks to Powell’s unabashedly hawkish presser yesterday), although that may well change depending on what AAPL, AMZN, and META report after the close.

However, one group of investors isn’t sticking around to find out which way the after-hours wind blows, and has quietly taken advantage of the relentless meltup to cash out: in the last week of January, institutional investors pulled out of US stocks at a record-breaking pace, signaling the top may be in for the market for the near future.

According to the latest BofA Securities and Equity Client Flow Trends report (available to pro subs in the usual place), institutional clients, which include mutual funds, pension funds, insurance companies, and banks, had their second-largest selling outflow in data history (since ‘08) and the largest since 2015. The cohort concentrated its selling in tech and consumer discretionary names ahead of this week’s slew of Big Tech earnings reports, which have so far been quite lackluster.

\Not everyone was downbeat however: at the same time as institutions were dumping, BofA’s private clients (i.e., high net worth individuals) and hedge funds were buyers.

That said, the bears dominated, and adding across the three groups reveals that BofA clients were net sellers of US equities (-$0.7B) for the first time in three weeks. Clients sold single stocks for the first time in eight weeks vs. bought equity ETFs for the first time in four weeks.

Also, despite last week’s big outflows, institutional clients’ outflows from stocks for the month of January were in-line with what BofA’s desk has seen on average over the last five years.

Elsewhere, while corporate buybacks decelerated they are still tracking above typical levels at this time for an eleventh week in a row. YTD, buybacks as a percentage of S&P 500 market cap (0.29%) are above ’23 highs (0.26%) at this time,

According to BofA’s Jill Carey Hall, while it’s too soon to tell whether the outflow indicates a more cautious stance toward stocks, it does hint that sentiment on equities is cooling after the S&P 500’s recent advances.

Other indicators suggest some investors may be taking a breather after the US benchmark advanced 1.6% last month and hit an all-time high. BofA’s most recent sell side indicator posted a strongly neutral reading — signaling somewhat tepid attitudes toward equities.

Meanwhile, as Bloomberg flags, the AAII bull-bear spread dropped to its lowest in two months, with individual investors increasingly noting that they are ‘neutral’ as opposed to bullish on the stock market’s prospects.

More in the full report available to pro subs.

Tyler Durden
Thu, 02/01/2024 – 15:05

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The Best And Worst Performing Assets Of January 2024

The Best And Worst Performing Assets Of January 2024

Despite the S&P hitting multiple all-time highs toward the end of the month, January was a mixed month as far as markets were concerned, because as DB’s Henry Allen writes, financial assets saw a fairly divergent performance. On the one hand, economic data kept surprising on the upside for the most part, which meant equities continued their gains from late 2023, and the S&P 500 reached a new all-time high. However, geopolitical concerns have persisted, particularly given attacks from the Houthi rebels on commercial shipping in the Red Sea. And sovereign bonds also lost ground as investors dialled back the prospect of rate cuts in Q1, with Fed Chair Powell suggesting that a cut by March was unlikely.

Month in Review – The high-level macro overview

January saw several developments for markets, but an important one was that hopes for a soft landing continued, which meant risk assets kept up their momentum from November and December. For instance, US data surprised on the upside once again, with Q4 growth at annualised rate of +3.3%, whilst the unemployment rate remained at 3.7% in December. That was echoed in various surveys as well, with the University of Michigan’s consumer sentiment index rising to a two-and-a-half year high in January. Likewise in the Euro Area, although growth has been weaker, the single currency area unexpectedly avoided a technical recession in Q4, as GDP was unchanged, rather than contracting by -0.1% as the consensus expected.

That positive momentum helped global equities to advance for the most part, with both the S&P 500 (+1.7%) and Europe’s STOXX 600 (+1.5%) posting a third consecutive monthly gain. However, another continued theme from 2023 was how narrow the equity rally was, since the equal-weighted S&P 500 was actually down -0.8% over the month, continuing to lag the overall index. Moreover, regional bank stocks lost ground after NY Community Bancorp reported a loss on January 31 after raising their expected loan losses on commercial real estate. That meant the KBW Regional Bank Index was down -6.8%, mainly thanks to a -6.0% loss on the final day of the month. In addition, Chinese equities didn’t share in the broader gains amidst concerns about the economic outlook there, with the CSI 300 (-6.3%) losing ground for a 6th consecutive month and closing at a 5-year low.

Another important story was geopolitics, as the strikes from the Houthi rebels on commercial shipping in the Red Sea led to significant supply-chain disruption. And in turn, the US and the UK responded with air strikes against the Houthi rebels. Against that backdrop, oil prices rose again in January after three monthly declines, with Brent Crude up +6.1% to $81.71/bbl. Most notably, freight costs have soared, with Drewry’s World Container Index up to $3,964 per 40ft container as of 25 January. That’s almost triple its levels from late-October, when costs were at a post-pandemic low. Towards the end of the month, a drone attack also killed three US troops in Jordan, which has continued to raise fears about a wider escalation in the region.

In the meantime, sovereign bonds also struggled as central bank officials pushed back on the prospect of Q1 rate cuts. For instance, a rate cut from the Fed by March was fully priced in at the end of 2023, but was down to a 35% likelihood by the end of the month. In part, that followed Fed Chair Powell’s remarks after the January meeting, where he suggested a March cut was unlikely. Likewise at the ECB, the likelihood of a cut by March fell from 65% to 23% over the course of January. So investors are still expecting rate cuts to happen fairly soon, but the confidence about cuts as soon as Q1 has been dialled back. In turn, US Treasuries were down -0.2% by the end of the month, and Euro sovereign bonds were down -0.6%.

January’s Biggest Winners

  • DM Equities : Over January as a whole, the S&P 500 (+1.7%) and the STOXX 600 (+1.1%) both advanced in total return terms. However, the advance continued to be a narrow one, with the equal-weighted S&P 500 down -0.8%.
  • Oil : The geopolitical backdrop meant that oil prices rose after three consecutive monthly declines, with Brent Crude (+6.1%) and WTI (+5.9%) both posting gains.
  • US Dollar : After losing ground in November and December, the Dollar Index strengthened by +1.9% in January, and the US Dollar strengthened against every other G10 currency.

January’s Biggest Losers

  • Sovereign Bonds : As investors grew less confident that central banks would cut rates in Q1, sovereign bonds lost ground. US Treasuries ended the month -0.2% lower, and Euro sovereign bonds were down -0.6%.
  • EM Assets : It was a difficult month for EM assets, with the MSCI EM index down -4.6%, whilst EM bonds were down -1.2%.

Finally, as DB’s Jim Reid recaps, across the board there were more losers than gainers in January in USD terms, with Brent crude oil (+6.1%) topping the list and the Hang Seng (-9.2% in USD terms) the largest decliner. The S&P 500 (+1.7%) and Nasdaq (+1.0%) eked out gains but the Russell 2000 (-3.9%) was lower. Indeed, most global equity and bond markets were slightly lower in USD terms on the month due to a stronger dollar. Returns in many European markets were slightly positive in local currency terms.

On the last day of the month yesterday, we saw a notable risk-off tone. That was because of a slightly hawkish FOMC versus market expectations (see our econ recap here), as well as the news that New York Community Bancorp (-37.67%) had reported a loss as they raised their expected loan losses on commercial real estate. That meant the KBW Regional Banking Index (-6.00%) saw its largest decline since the regional banking turmoil last March. In addition, Aozora Bank (-21.49%) in Japan reported losses overnight that were also because of US commercial property.

 

Tyler Durden
Thu, 02/01/2024 – 14:24

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Florida Student Arrested for Threatening to Shoot Jewish Students

From WFLA (Kaycee Sloan) Monday:

According to documents, Palestinian-American student Seif Asi, 21, approached a table of Jewish students and got into a one to two-minute “heated conversation” during a UCF Office of Student Involvement approved pro-Israel free expression event on Jan. 23….

When UCFPD stopped Asi, he told them that he was Palestinian and had family in Palestine, adding that he was tired of seeing Jewish supporters on campus and complained about a pro-Israel match that occurred last week.

The arrest report shows that Asi told police he saw the same group of students at the march, and it made him upset when he saw them setting up their table on Tuesday. He also told police that he’s “tired of seeing students on campus defend the killing of Palestinian people.”

The 21-year-old said he was on his way back from working out when his “emotions got the better of him.” … The three victims, who are part of a group called “Students Supporting Israel” or SSI, provided sworn verbal and written statements consistent with each other. The students said Asi accused them of supporting the death of his family members back home. Then, all three students allegedly heard Asi say, “You won’t be here anymore when I come back and shoot you.”

Asi was charged with three counts of intimidation based on display of indicia of religious or ethnic heritage, under Fla. Stat. § 784.0493, which reads:

784.0493 Harassment or intimidation based on religious or ethnic heritage.

(1) As used in this section, the terms “credible threat” and “harass” have the same meaning as in s. 784.048(1).
(2) A person may not willfully and maliciously harass or intimidate another person based on the person’s wearing or displaying of any indicia relating to any religious or ethnic heritage.
(3) A person who violates subsection (2) commits a misdemeanor of the first degree, punishable as provided in s. 775.082 or s. 775.083.
(4) A person who violates subsection (2), and in the course of committing the violation makes a credible threat to the person who is the subject of the harassment or intimidation, commits a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
(5) A violation of this section is considered a hate crime for purposes of the reporting requirements of s. 877.19.

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Missouri Student Pleads Guilty for Damaging Display Supporting Israeli Hostages

From University of Missouri’s The Maneater (Sophia Anderson & Vivi Hirshfield) last Friday:

On Wednesday, Jan. 17, an MU student pled guilty to second degree property damage in Columbia Municipal Court for flipping a display Shabbat table with symbolic place settings for Israeli hostages in Speakers Circle in November 2023….

[Students Ilay] Kielmanowicz [of Mizzou Students Supporting Israel] and [Daniel] Swindell had set up two tables — one of which was arranged like a Shabbat table to show support for Israeli hostages. The other had “books and pamphlets about Israel and Jews and Zionism and the Israeli Palestinian conflict, which students were able to take,” Kielmanowicz said. The Shabbat table included fliers with photos of Israeli hostages that read “KIDNAPPED” above them….

The police report states that the student approached Swindell because he was wearing a garment that said “Zionist.” Swindell confirmed this detail, and Adam Kruse, Assistant City Prosecutor, cited it in court.

The student stated they found the display “insensitive and offensive,” according to Kielmanowicz. The two engaged in a conversation about display and the Israel-Hamas war until the student reportedly flipped over the volunteers’ Shabbat table, breaking the place settings consisting of Swindell’s dishes….

“The university is committed to ensuring everyone on our campus continues to have the right to demonstrate in a peaceful manner,” Christian Basi of the MU News Bureau wrote in a statement to The Maneater. “We will not tolerate actions that disrupt others[‘] rights to demonstrate or exercise their free speech rights.” …

UPDATE: I erroneously omitted the sentence: “a year of probation, 20 hours of community service and a court fee of $31.50.”

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“Ohio Man Sentenced to 18 Years in Prison for Firebombing a Church that Planned to Host Drag Show Events”

From a Justice Department press release Jan. 30:

Aimenn D. Penny, 20, of Alliance, Ohio, was arrested and charged last year with one count of violating the Church Arson Prevention Act, one count of using fire to commit a federal felony, one count of malicious use of explosive materials, and one count of possessing a destructive device. On Oct. 23, 2023, Penny pleaded guilty to the church arson hate crime and using fire and explosives to commit a felony.

According to court documents, on March 25, 2023, Penny made Molotov cocktails and drove to the Community Church of Chesterland (CCC), in Chesterland, Ohio. Angered by the church’s plan to host two drag events the following weekend, Penny threw two Molotov cocktails at the church, hoping to burn it to the ground. Through Penny’s guilty plea, he admitted to using force through fire and explosives, intending to obstruct CCC congregants in their enjoyment and expression of their religious beliefs….

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NSA Purchases Internet Metadata To Spy on You Without a Warrant


Cameras with eyeballs come out of a laptop, signifying that your browsing history is spying on you. | Nmedia | Dreamstime.com

The National Security Agency (NSA) is the latest intelligence agency spying on Americans without a warrant by buying access to their data.

That revelation comes from a letter released last week from Sen. Ron Wyden (D–Ore.) to Director of National Intelligence Avril Haines. “As you know,” Wyden wrote, “U.S. intelligence agencies are purchasing personal data about Americans that would require a court order if the government demanded it from communications companies.”

Now, Wyden writes, the snoop in question is the NSA, which is “buying Americans’ domestic internet metadata.” Such information “can reveal which websites they visit and what apps they use,” according to a press release from Wyden’s office.

Wyden is right that Haines is likely already aware of the practice: A report from the Office of the Director of National Intelligence (ODNI) completed in January 2022 (but only declassified in June 2023) found that the intelligence community “currently acquires a significant amount of [commercially available information] for mission-related purposes,” information which “can include credit histories, insurance claims, criminal records, employment histories, incomes, ethnicities, purchase histories, and interests” and “in some cases social media data.”

Data brokers collect and package this data for sale. Often this information is purchased by other companies for purposes like advertising, but increasingly, government agencies are purchasing the information for their own purposes: During the COVID-19 pandemic, the Centers for Disease Control and Prevention purchased cellphone location data in order to monitor compliance with lockdown orders; the IRS paid for similar data in an effort to track criminal suspects.

“Until recently, the data broker industry and the intelligence community’s (IC) purchase of data from these shady companies has existed in a legal gray area, which was in large part due to the secrecy surrounding the practice,” Wyden wrote. “The secrecy around data purchases was amplified because intelligence agencies have sought to keep the American people in the dark.”

Wyden says he actually learned the NSA was buying Americans’ internet metadata in March 2021, but the agency “refused…to clear the unclassified information for public release” for nearly three years. “It was only after I placed a hold on the nominee to be the NSA director that this information was cleared for release.” Wyden includes letters from NSA officials written in December 2023, agreeing to allow the information to be released.

In Carpenter v. United States in 2018, the Supreme Court ruled that it was a violation of the Fourth Amendment for law enforcement to access cellphone location data without a warrant. The 2022 ODNI report noted that under Carpenter, “acquisition of persistent location information (and perhaps other detailed information) concerning one person by law enforcement from communications providers is a Fourth Amendment ‘search’ that generally requires probable cause.” But since “the same type of information on millions of Americans is openly for sale to the general public,” intelligence agencies “treat the information as” publicly available and “can purchase it.”

Similarly, Under Secretary of Defense for Intelligence and Security Ronald Moultrie advised Wyden that “I am not aware of any requirement in U.S. law or judicial opinion,” including Carpenter, that intelligence agencies “obtain a court order in order to acquire, access, or use information, such as [commercially available information], that is equally available for purchase to foreign adversaries, U.S. companies, and private persons as it is to the U.S. Government.”

That explanation is cold comfort when, as Wyden’s press release noted, spy agencies can “us[e] their credit card to circumvent the Fourth Amendment.” The intelligence community previously seemed to understand this, with the 2022 ODNI report noting that while it “cannot willingly blind itself to this information, it must appreciate how unfettered access to [commercially available information] increases its power in ways that may exceed our constitutional traditions or other societal expectations.” The collection of such data could also “raise the risk of mission creep,” as information “collected for one purpose may be reused for other purposes.”

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Biden Reportedly Is Planning To Unilaterally Mandate Background Checks for All Gun Sales


President Joe Biden | Shawn Thew/UPI/Newscom

Nearly a year ago, President Joe Biden issued an executive order aimed at “increasing the number of background checks conducted before firearm sales, moving the U.S. as close to universal background checks as possible without additional legislation.” According to the watchdog group Empower Oversight, which cites two unnamed “whistleblowers” at the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), the agency is working on regulations that would go all the way, purporting to require background checks for all private gun sales. It is hard to see how the ATF can do that “without additional legislation.”

Under current federal law, background checks are required only for sales by federally licensed dealers. A rule that the ATF proposed last September would expand the definition of “dealer” to encompass some but not all occasional gun sellers. But even that controversial proposal does not go as far as the plan described by Empower America’s sources, who say “the ATF has drafted a 1,300-page document in support of a rule that would effectively ban private sales of firearms from one citizen to another by requiring background checks for every sale.”

Federal law defines a gun dealer as someone who is “engaged in the business of selling firearms,” which until 2022 was defined as “devot[ing] time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms.” The 2022 Bipartisan Safer Communities Act (BSCA) excised “with the principal objective of livelihood and profit” and replaced it with “to predominantly earn a profit.”

As the Congressional Research Service explains, that change was “intended to require persons who buy and resell firearms repetitively for profit to be licensed federally as gun dealers, even if they do not do so with ‘the principal objective of livelihood.'” According to the amendment’s supporters, “there was confusion” about whether the definition of dealers as people “engaged in the business of selling firearms” covered “individuals who bought and resold firearms repetitively for profit, but possibly not as the principal source of their livelihood.” The statutory definition still explicitly excludes “a person who makes occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection or for a hobby, or who sells all or part of his personal collection of firearms.”

The proposed rule that the ATF published in the Federal Register on September 8 addresses what it means to be “‘engaged in the business’ as a dealer in firearms.” Previous proposals considered by the Obama administration and pitched by Vice President Kamala when she ran against Biden in the 2020 presidential primaries would have deemed someone a “dealer” if he sold more than a specified number of firearms in a year. But “rather than establishing a minimum threshold number of firearms purchased or sold,” the ATF says, “this rule proposes to clarify that, absent reliable evidence to the contrary, a person will be presumed to be engaged in the business of dealing in firearms” if he meets any of several criteria.

Someone would be presumptively considered a dealer, for example, if he “sells or offers for sale firearms, and also represents to potential buyers or otherwise demonstrates a willingness and ability to purchase and sell additional firearms.” Likewise if he “spends more money or its equivalent on purchases of firearms for the purpose of resale than the person’s reported taxable gross [income] during the applicable period of time.” Or if he “repetitively sells or offers for sale firearms” within 30 days after buying them, repetitively sells guns that are “new” or “like new” in the original packaging, or repetitively sells guns of “the same or similar kind” and “type.”

Some of these categories, especially the last one, could conflict with the statutory exclusion of collectors and hobbyists. And the ATF adds that “the activities set forth in these rebuttable presumptions are not exhaustive of the conduct that may show that, or be considered in determining whether, a person is engaged in the business of dealing in firearms.” It says “a person would not be presumed to be engaged in the business requiring a license as a dealer when the person transfers firearms only as bona fide gifts, or occasionally sells firearms only to obtain more valuable, desirable, or useful firearms for their personal collection or hobby, unless their conduct also demonstrates a predominant intent to earn a profit.”

That “predominant intent to earn a profit” criterion, which is supposed to conform with the change made by the BSCA, potentially extends the definition of “dealer” to encompass the collectors and hobbyists that Congress explicitly sought to protect. In essence, says Independence Institute gun policy expert David Kopel, the ATF is “purporting to require anyone who sells a firearm for a profit, ever,” to obtain a dealer’s license.

The plan that Empower Oversight describes would go even further. If it would in fact cover “every sale,” it would not matter whether the seller made money, let alone whether that was his “predominant intent.” That “seems like something that is legally impossible,” Kopel says.

It seems legally impossible because the only way to expand the federal background check requirement “without additional legislation” is by treating more sellers as dealers and requiring them to obtain licenses. The ATF claims the BSCA gave it the authority to do that. But that law plainly did not give it the authority to simply decree that anyone who buys a gun has to pass a background check.

States that notionally mandate “universal background checks” do so through laws that require private sellers to complete transactions via federally licensed dealers. Research suggests those requirements are widely flouted by gun owners who either are unaware of the law or object to the cost and inconvenience that compliance entails. In any event, this option is not available to the ATF “without additional legislation.”

Empower Oversight’s description of the ATF’s reported plan only adds to the puzzle. It refers to “a 1,300-page document in support of a rule that would effectively ban private sales of firearms from one citizen to another by requiring background checks for every sale.” The ATF’s entire rule elucidating its proposed definition of “engaged in the business,” including the agency’s legal rationale, is just 31 pages. What could the ATF possibly have to say on this subject that would take 1,300 pages, and how could a document of any length get around the statutory exemption for collectors and hobbyists? If the ATF is planning to “effectively ban private sales,” that could be accomplished only by requiring those collectors and hobbyists to be licensed as dealers, which flagrantly contradicts the treatment mandated by Congress.

Empower Oversight says “the document’s drafting is reportedly being overseen” by ATF Senior Policy Counsel Eric Epstein. On Wednesday, the group’s president, Tristan Leavitt, sent Attorney General Merrick Garland and ATF Director Steven Dettelbach a Freedom of Information Act request for relevant records, including emails to or from Epstein; communications among the ATF, the Justice Department, and the White House regarding Biden’s executive order; and communications about “regulating or banning the sale of firearms between private individuals.”

In his letter to Garland and Dettelbach, Leavitt notes the statutory and constitutional issues such a plan would raise. “Such an expansive rule that treats all private citizens the same as federal firearms licensees would circumvent the separation of powers in the Constitution, which grants ‘all legislative Powers’ to Congress while requiring that the President ‘take Care that the Laws be faithfully executed,'” he says. “To the extent such a rule prevents the private sale of firearms, it would also clearly violate the Second Amendment to the United States Constitution, which declares that ‘the right of the people to keep and bear Arms, shall not be infringed.'”

Biden has not been shy about trying to rewrite the law in pursuit of his gun control agenda, as illustrated by ATF rules dealing with pistol braces and “ghost guns,” which take a page from the Trump administration’s unilateral ban on bump stocks. But treating all gun sellers “the same as federal firearms licensees” would not only require an implausible reading of a supposedly ambiguous statute. It would fly in the face of clearly expressed congressional intent.

“Like Biden’s student debt bailout plan, such a sweeping rule seems almost certain to be struck down in the courts,” Leavitt says on X (formerly Twitter). “It’s thus hard to view it as anything other than a cynical [play] to energize his base in a presidential election year.”

The post Biden Reportedly Is Planning To Unilaterally Mandate Background Checks for All Gun Sales appeared first on Reason.com.

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Politicians Need To Stop Pretending the National Debt Is Sustainable


Politicians are seen in front of the U.S. Capitol and behind a $100 bill | Illustration: Lex Villena; Midjourney

Over the years, I’ve offered many explanations about why the trajectory of the national debt is deeply troubling. At this point, though, my worry isn’t rooted in a dogmatic adherence to the principles of a balanced budget. Nor does it come from my desire for a smaller government. Instead, I’m alarmed by politicians’ unwillingness to look at the numbers and have a serious discussion about changing course.

When I first started paying close attention, the U.S. was essentially carrying a credit card balance of 40 percent of America’s gross domestic product (GDP). Today, according to the Congressional Budget Office (CBO), that balance hovers around 98 percent. Imagine credit card debt equal to your yearly salary, interest costs piling up, and more inevitable debt coming your way. Congress doesn’t seem to mind, which partly explains why even optimistic scenarios project the debt to soar to a staggering 180 percent within 30 years.

Many politicians would rather pretend there’s nothing to fear; that the U.S. is such a powerhouse that there will always be people paying our bills. But even for a financial powerhouse of sorts, this reality raises questions about the kind of future we want to leave for the next generation. Further down the path we are on lies a point where interest payments alone consume such a large portion of the budget that government will be unable to fund essential programs and respond to unforeseen crises. We also risk inflation skyrocketing again, which makes the debt-to-GDP look more sustainable on paper as it worsens Americans’ standard of living. We also face the prospect of tax increases at a time when economic growth is slowing down.

Still, some would have us believe these are mere theoretical possibilities. That perspective requires the real imagination. The retirement of 75 million baby boomers is not a speculative event. Their exploding health care cost is also a reality happening now, and the obligation is set in law. As a result, the government’s deficits are ballooning, adding to our debt and interest costs. Even if interest rates remain low, deficits are undermining the very foundation of our fiscal stability. In 2021, the Manhattan Institute’s Brian Riedl wrote a comprehensive report warning of the folly of assuming interest rates will remain indefinitely low. His concerns have since been validated by higher rates further straining the budget.

CBO scenarios, in which the government never pays more than 4.4 percent interest rates for the next 30 years, seem increasingly pollyannaish. Rates above and beyond that are likely, and even a single percentage point will add trillions to the debt over the next few decades.

The pushback against what you’ve just read often comes from those who believe interest rates can remain perpetually low. That belief was the foundation of the fashionable but short-lived theory of “R versus G”—the relationship between real financing costs and economic growth. According to this theory, if economic growth (“G”) outpaces the debt’s financing costs (“R”), there’s little to worry about. Unfortunately, things fall apart as soon as R goes up, as we’ve seen in the last few years.

The main mistake behind the R-G theory has been believing that because interest rates had been declining and relatively low for years, they would always stay low. Many of these same people also believed that because we’d had no real inflation since the 1980s, inflation was somehow defeated.

Keep politicians’ propensity for wishful economic thinking in mind when, for example, someone argues that we can handle a debt-to-GDP ratio of 200-300 percent like Japan does. Japan is not a model we should emulate. Relative to America, Japan is poor and its economy stagnant, the victim of decades of slow economic and wage growth.

Let’s stop confusing the speculative with the imminent and tangible.

If we can finally clear that up, we can address the urgent need to find pragmatic solutions and get our national debt under control. This involves making difficult decisions, including, yes, reforming entitlement programs—especially Social Security and Medicare. And while some reform of the tax code is needed, we must also acknowledge that we cannot solely tax our way out of this situation. Raising taxes on the wealthy, while politically appealing to some, would not only fail to close the gap but also dramatically slow the same economic growth which was supposed to keep us ahead of the debt burden.

To accomplish all of that, we first need politicians who will stop pretending we can continue down this fiscal path.

COPYRIGHT 2024 CREATORS.COM.

The post Politicians Need To Stop Pretending the National Debt Is Sustainable appeared first on Reason.com.

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