Obama's Virtual Economy

It's endless fun, fiddling with the dials on the real world.

• By DANIEL HENNINGER

If you were a president who for three years presided over an economy with more than 13 million unemployed, a growth rate gasping around 2%, an historic credit downgrade and underwater home mortgages drifting like icebergs toward the American Titanic, what would you do?

You'd do what Barack Obama's done: Reboot.

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Welcome to the Sim City Economy. You really can make it up.

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With his recently announced campaign platform—An Economy Built to Last—President Obama has essentially constructed a virtual economy. Instead of the economy we all live in, he's making one up and inviting us to pretend we are living in it. Welcome to the Sim City Economy.

Sim City, one of the most popular products ever in the imaginary world of video games, lets players bring to life towns of their own devising in great detail. It's endless fun, fiddling with the dials on the real world.

In his State of the Union Address, Mr. Obama described what will be a major claim of his re-election campaign—that he renewed the American dream by bailing out General Motors. About the defensibility of this policy we can argue. But as is his wont, Mr. Obama erected a generalized theory of social betterment atop this one event. "What's happening in Detroit can happen in other industries." Mr. Obama announced. "It can happen in Cleveland and Pittsburgh and Raleigh."

It can?

What's interesting about this claim is that the corridor between Cleveland and Pittsburgh, much of it economically moribund for years, is experiencing a rebirth thanks to real economic forces, not a president who types in the name of another beleaguered city and hits Ctrl-Shift-Enter to solve its problems.

Most of this revival is taking place around the godforsaken city of Youngstown, Ohio, and the formerly dying steel towns west of Pittsburgh, an area better known today as the Marcellus Shale Natural Gas Field. Last summer, a French steel company, Vallourec & Mannesmann Holdings Inc., began construction on a new $650 million plant to make steel tubes for the hydraulic fracking industry. About 400 workers are building it. Nothing Barack Obama has done in three years—not the $800 billion stimulus or anything in his four, $3 trillion-plus budgets—is remotely related to the better times in Ohio and Pennsylvania.

But other than grudging acknowledgment of the private entrepreneurs' natural-gas success, don't expect to hear the carbon-based word "fracking" much in the president's stump speech when he paints in the numbers of the American economy as he imagines it. That pitch will run more toward the ideas in the Presidential Memorandum released this Tuesday, directing the Department of Agriculture to put in motion a program called "Promoting a Bioeconomy."

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Chad Crowe

The Obama Bioeconomy will come to life after the Ag Department "increases the purchase of biobased products" under a program that originated in the 2002 farm bill. After mandating a 50% increase in products designated as biobased, "items like paints, soaps and detergents . . . are developed from farm grown plants, rather than chemicals or petroleum bases." This, the president says, "will drive innovation and economic growth and create jobs at marginal cost to the American public."

You can't make this up. On the other hand, that's the point: You can make this up, and then sell it, or try to sell it, as An Economy Built to Last.

The announcement Tuesday of the impending Bioeconomy was of course overwhelmed that day by the president's White House speech celebrating Congress's one-year extension of his payroll tax cut. This was the biggest economic policy event in Washington the past two months. The president himself announced the payoff for the American people: "It means $40 extra in their paycheck." Sounds real, but barely.

Moments later, he drew attention to an initiative "we passed" that will "create jobs by expanding wireless broadband and ensuring that first responders have access to the latest lifesaving technologies." When Newt makes claims like this, he's nuts; with Barack Obama, it's a vision.

A cynic might argue that none of these pretend ideas for reviving a $15 trillion economy in the second term matters much because the lasting damage was done in the first term, with ObamaCare's redo of the health sector—16% of the economy—and Dodd-Frank, which even the bureaucrats asked to write things like the Volcker Rule admit they can't figure out.

A cynic might say further that much of what Mr. Obama is outputting from his laptop for the next four years are pop-gun ideas or phantom tax policy. The Buffett Rule will never become a real law. On Wednesday Mr. Obama proposed an array of corporate tax changes—some up, some down—but as the reporting noted repeatedly, with virtually "no specifics." Ctrl-Alt-Delete. The scheme to revive manufacturing—taxes overseas that are reprogrammed into domestic hires—would challenge even Sim City's programmers.

Cynical resignation and a president living in a videogame economy aren't what the U.S. needs at this turn in history. The biggest burden on this week's two Republican front-runners, Rick Santorum and Mitt Romney, will be to describe—in detail—what really happened to the U.S. economy the past three years. Against that reality, Mr. Obama will repeat until November that he wants an economy "where everyone plays by the same set of rules." If he's writing them, it may not compute.

Write to henninger@wsj.com

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Obama gives Oil-Rich Islands to Russia! Bush, 

Clinton and Obama all responsible

By Joe Miller

The Obama administration, despite the nation’s economic woes, effectively killed the job-producing Keystone Pipeline last month. The Arab Spring is turning the oil production of Libya and other Arab nations over to the Muslim Brotherhood. Iraq is distancing itself from the U.S. And everyone recognizes that Iran, whose crude supplies are critical to the European economy, will do anything it can to frustrate America’s strategic interests. In the face of all of this, Obama insists on cutting back U.S. oil potential with outrageous restrictions.

Part of Obama’s apparent war against U.S. energy independence includes a foreign-aid program that directly threatens my state’s sovereign territory. Obama’s State Department is giving away seven strategic, resource-laden Alaskan islands to the Russians. Yes, to the Putin regime in the Kremlin.

The seven endangered islands in the Arctic Ocean and Bering Sea include one the size of Rhode Island and Delaware combined. The Russians are also to get the tens of thousands of square miles of oil-rich seabeds surrounding the islands. The Department of Interior estimates billions of barrels of oil are at stake.

The State Department has undertaken the giveaway in the guise of a maritime boundary agreement between Alaska and Siberia. Astoundingly, our federal government itself drew the line to put these seven Alaskan islands on the Russian side. But as an executive agreement, it could be reversed with the stroke of a pen by President Obama or Secretary Clinton.

The agreement was negotiated in total secrecy. The state of Alaska was not allowed to participate in the negotiations, nor was the public given any opportunity for comment. This is despite the fact the Alaska Legislature has passed resolutions of opposition – but the State Department doesn’t seem to care.

The imperiled Arctic Ocean islands include Wrangel, Bennett, Jeannette and Henrietta. Wrangel became American in 1881 with the landing of the U.S. Revenue Marine ship Thomas Corwin. The landing party included the famed naturalist John Muir. It is 3,000 square miles in size.

Northwest of Wrangel are the DeLong Islands, named for George Washington DeLong, the captain of USS Jeannette. Also in 1881, he discovered and claimed these three islands for the United States. He named them for the voyage co-sponsor, New York City newspaper publisher James Gordon Bennett. The ship’s crew received a hero’s welcome back in Washington, and Congress awarded them gold medals.

In the Bering Sea at the far west end of the Aleutian chain are Copper Island, Sea Lion Rock and Sea Otter Rock. They were ceded to the U.S. in Seward’s 1867 treaty with Russia.

Now is the time for the Obama administration to stand up for U.S. and Alaskan rights and invaluable resources. The State Department’s maritime agreement is a loser – it gives us nothing in return for giving up Alaska’s sovereign territory and invaluable resources. We won the Cold War and should start acting like it.

The Obama administration must stop the giveaway immediately.

Author’s addendum, Feb. 17, 2012: This is not a new issue. In fact the Bush and Clinton administrations are directly at fault for the same inaction. A maritime agreement negotiated by the U.S. State Department set the Russian boundary on the other side of the disputed islands, but no treaty has ratified this action. Consequently, it is within the president’s power to stop this giveaway. The Alaska delegation’s failure to put pressure on the administration is inexplicable. State Department Watch, an organization that assisted with this article, has confronted each administration and is currently confronting the Obama administration — and has been met by silence. I’m hoping this piece will help reinvigorate efforts to stop this handover.

---

Joe Miller was the 2010 Republican nominee for the U.S. Senate from Alaska. He is a West Point graduate and decorated combat veteran from the first Gulf War. A former judge, Joe graduated from Yale Law School and was later awarded an advanced economics degree from the University of Alaska. He is presently chairman of Restoring Liberty Alaska PAC and Restoring Liberty Action Committee. Follow Joe at Facebook and Twitter.

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THIS is ANOTHER REASON WHY RUSSIA Remains a threat to Freedom

Let's not for second think that they or China are our friends.

Russian tycoon Khodorkovsky again found guilty

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AP – Mikhail Khodorkovsky stands behind bars at a court room in Moscow, Monday, Dec. 27, 2010. A Russian judge …

• Slideshow:Mikhail Khodorkovsky

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By LYNN BERRY and NATALIYA VASILYEVA, Associated Press – 39 mins ago

MOSCOW – Mikhail Khodorkovsky was convicted Monday of stealing oil from his own company and laundering the proceeds, a verdict likely to keep the oil tycoon who once challenged the power of Vladimir Putin behind bars for several more years.

The unrelenting legal attack on Khodorkovsky, once Russia's richest man, has come to define the country's transformation under Putin. The outcome of the second trial exposes how little has changed under President Dmitry Medvedev despite his promises to strengthen the rule of law and make courts an independent branch of government.

Putin, now prime minister, remains the more powerful leader. Any lingering doubt that the verdict would be guilty was dispelled this month when he said Khodorkovsky was a proven criminal who should sit in prison.

Putin, seen as the driving force behind the trial, has not ruled out a return to the presidency in 2012 and appears unwilling to risk the possibility that a freed Khodorkovsky could help unite and lead his political foes.

During his seven years in prison, Khodorkovsky has been transformed into a symbol of the struggle for democracy in Russia. His hair, now gray, is cropped short and his complexion is pasty from lack of sun and exercise, but he appears strong and unbroken.

It was clear from the opening pages of his verdict that the judge had found Khodorkovsky and his business partner Platon Lebedev guilty. Reading the full verdict and announcing the sentence was expected to take several days.

U.S. Secretary of State Hillary Clinton led a chorus of political figures in the United States and Europe in condemning the verdict, which she said "raises serious questions about selective prosecution and about the rule of law being overshadowed by political considerations."

Khodorkovsky, 47, is nearing the end of an eight-year sentence after being convicted of tax fraud in a case seen as punishment for challenging the Kremlin's economic and political power, in part by funding opposition parties in parliament.

The conviction on charges of stealing nearly $30 billion worth of the oil that his Yukos company produced from 1998 to 2003 and laundering the proceeds could keep him behind bars until at least 2017.

Prosecutors accused Khodorkovsky and Lebedev of stealing the oil from Yukos' own production units and then selling the oil abroad at higher prices. The defense called the charges ridiculous, arguing that prosecutors do not understand the oil business, including the payment of transit fees and export duties.

One of Khodorkovsky's lawyers, Vadim Klyuvgant, said Monday that if this logic were extended to the state oil and gas company Gazprom, the same charges could be brought against Medvedev.

"The court ruled that the difference between the oil price at the production site and at the market represents theft," Klyuvgant said. "Gazprom, where Medvedev served as board chairman, buys oil at the production site at a price 10 times lower than the market price in Rotterdam. Isn't that selective justice? Do they have any shame?"

Numerous witnesses, including current and former government officials, testified during the 20-month trial that the charges against Khodorkovsky and Lebedev were absurd.

Hundreds of Khodorkovsky supporters rallied outside the courthouse, holding up signs saying "Freedom" and "Russia without Putin." Police roughly detained some of them as they chanted "Freedom" and "Down with Putin."

In the courtroom, Judge Viktor Danilkin read the verdict in a rapid-fire monotone, his low voice drowned out at times by loud chants from outside. Khodorkovsky and Lebedev sat impassively in a glass cage. Khodorkovsky exchanged glances with his elderly mother, Marina. His father, Boris, sat next to her, his head bowed.

"Frankly speaking I'm just shocked," Khodorkovsky's mother said. "Before I thought the judge was a clever and professional person. I still think so but I guess he was subjected to strong pressure and that he is ashamed to look up."

The judge rarely raised his eyes as he read for more than seven hours with two short breaks. Khodorkovsky's lawyers estimated that if Danilkin maintains the current pace, he could finish reading all 250 to 300 pages in another couple of days and then announce the sentence. They then plan to appeal.

Boris Nemtsov, who was among a number of opposition leaders who joined the protest rally, said the case has nothing to do with the law or justice

"Danilkin is the person who will make public the political decision primarily of citizen Putin, who is suffering from an acute form of Khodorkovsky phobia," Nemtsov said. "He needs to be treated."

When Putin came to power in 2000, Khodorkovsky was among a handful of oligarchs who controlled much of Russia's economy and were used to dictating their terms to the Kremlin.

Putin set out to put them in their place, a task made easier because most Russians reviled the businessmen who had grown fabulously rich in the 1990s at a time when many of their countrymen were thrown into poverty.

Khodorkovsky's arrest in October 2003 and the subsequent state takeover of his Yukos oil company allowed the government to reassert control over the energy sector and tamed the other wealthy businessmen, who have obediently followed Kremlin orders ever since.

The Kremlin also consolidated its hold over political life. Soon after Khodorkovsky's arrest, parties that he had funded were shut out of parliament or sidelined. New controls were imposed on non-governmental organizations, like those once funded by Khodorkovsky, that have worked to help strengthen civil society in Russia.

On Friday, Khodorkovsky published an opinion piece in the daily Nezavisimaya Gazeta containing a scathing criticism of Putin. "I wish Putin kindness and tolerance, I wish him to be loved, not feared. Maybe not by all, but loved sincerely and unselfishly, and not just by dogs," he wrote in a reference to Putin's fondness for animals.

Medvedev, who despite his title remains Putin's junior partner, has promised to strengthen the rule of law as part of his mission to modernize Russia and attract more foreign investment. An acquittal in the Khodorkovsky trial would have been seen as evidence that Medvedev has the power to deliver on his promises.

German Foreign Minister Guido Westerwelle characterized the trial as "a step back on the way to modernizing the country."

While the guilty verdict was condemned by many political figures in the U.S. and Europe, it was expected and is unlikely to cause any lasting damage to relations.

Khodorkovsky's wife Inna said in an interview with the monthly Snob magazine that she expects him to be kept behind bars at least until 2012. She said that her husband wasn't expecting any clemency from the authorities.

"My husband is a strong man," she said. "He has made a decision for himself and has no hope."

____

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