Drudging Up The News

One of the web sites I visit almost every day is The Drudge Report.  It looks like I am not alone.

The New York Times reports today on "How Drudge Has Stayed on Top" out of all news sites even though the 14-year old site is a relic by web standards.  No web site beyond Google drives more traffic to other news sites than Drudge.  In fact, Drudge accounts for more than twice the referrals to other news sites than Facebook.  It all adds up to traffic of about 12 to 14 million unique visitors every month.

How does Matt Drudge continue to attract all those eyeballs month after month?

“When you look at his influence, it cuts across all kind of sites, both traditional news outlets and online-only sites,” said Amy S. Mitchell, the deputy director of the Project for Excellence in Journalism and one of the authors of the study. “He was an early and powerful force in setting the news agenda and has somehow maintained that even as there has been a great deal of change in the way people get their news.”

With no video, no search optimization, no slide shows, and a design that is right out of mid-’90s manual on HTML, The Drudge Report provides 7 percent of the inbound referrals to the top news sites in the country. “It’s a real achievement,” said John F. Harris, the co-founder of Politico. “I covered the Clinton White House in 1997 and 1998 and I would never have conceived that he would be an important player in the landscape 12 years later. He does one thing and he does it particularly well. The power of it comes from the community of people that read it: operatives, bookers, reporters, producers and politicians.”

So in a news age when the next big thing changes as often as the weather, how can a guy who broke through on the Web before there was broadband still set the agenda? How can that be?

His durability is, first and foremost, a personal achievement, a testament to the fact that he is, as Gabriel Snyder, who has done Web news for Gawker, Newsweek and now The Atlantic, told me, “the best wire editor on the planet. He can look into a huge stream of news, find the hot story and put an irresistible headline on it.”

On Thursday, a fairly straightforward Reuters article about a NATO attack on Col. Muammar el-Qaddafi’s compound occupied the skyline of the site with a particularly odious picture of the strongman girded by a headline that blared, “NEXT UP: NATO GOING FOR THE KILL.” Underneath, there were tons of links, news and pictures (Mr. Drudge has a real knack for photo editing) with all kinds of irresistible marginalia: “Desperate Americans Buy Kidneys from Peru Poor” was just above an article about what a prolific e-mailer Osama bin Laden was in spite of his lack of access to the Internet.

Yes, Mr. Drudge is a conservative ideologue whose site also serves as a crib sheet for the likes of Rush Limbaugh and Sean Hannity. But if you believe that his huge traffic numbers are a byproduct of an ideologically motivated readership, consider that 15 percent of the traffic at WashingtonPost.com, which is not exactly a hotbed of Tea Party foment, comes from The Drudge Report.

Bear in mind that this was a guy that was working for CBS in 1995.  Not CBS News.  He worked in the CBS Studios Gift Shop in LA and started The Drudge Report on the side. He first gained real recognition as the first outlet to break the Monica Lewinsky-Bill Clinton scandal in 1998.

The Drudge Report is a must read every day.  As the Times story states, "Everyone goes there because, well, everyone else goes there".  If you are not going there...you should.

Who Is The Real Loon?

I remember not long ago that if you found a Canadian coin in your change you would get angry.  I remember seeing dual pricing on magazines.  It might be $US 2.25 but it would cost you $C 3.25.

How times have changed in a few short years. This chart shows the change in the US Dollar vs. the Canadian "Loonie" (the nickname for the Canadian dollar since a loon is on the back of the dollar coin).  10 years ago a Canadian dollar was only worth about 65 cents.  It is now worth about $1.05!

An editorial in today's Wall Street Journal points out that as the Canadians moved to more conservative policies over the last 10 years its economy and fiscal position has dramatically improved.  This success has also been noted by the voters who gave Conservative Party leader Steven Harper a landslide vistory in Monday's national election.

10 years ago Canada's net government debt was about 60% of GDP.  The U.S. was about 35%.  Canada's net debt is now at 35% and the U.S. is at 80% and heading for 100%.  Since Harper took over in 2006 they  have cut taxes, kept a rein on government spending and have continued a willingness to exploit their rich oil and mineral deposits that began in earnest a decade ago.  The tax cuts included a reduction in the general sales tax from 7% to 5% and a cut in the corporate income tax rate to 16.5% with another reduction to 15% scheduled for 2012.  The U.S corporate tax rate is 35%.  Harper states that he is planning to balance their budget by 2015.  We are expected to be another $1 trillion in the red.

It has been a long time since I have found a Canadian penny in my change. Who is the real loon?

Context Is Everything When Assessing Anything

Context is everything when assessing anything.  The human brain needs to compare and contrast items to effectively analyze information.

For example, President Obama has been attacking the oil and gas industry and arguing that the federal government is subsidizing the industry in an amount of $4 billion per year.  Actually the subsidies are tax advantages (some might call them tax loopholes) rather than outright cash subsidies. (Under this way of thinking, your mortgage interest deduction would be considered a subsidy.)  $4 billion sounds like a lot to  the average American who is making $40,584 per year and is now paying over $4 per gallon for gasoline.  Heck yes, stick it to those oil companies!

How about a little context?  The Department of Energy announced last week that it has given $21 billion in subsidies to the alternative energy industry in the form of loan guarantees. That is five times the amount of subsidies that oil and gas is receiving annually!  Since the stimulus bill of 2009, direct subsidies to alternative energy producers have increased dramatically but there does not seem to be any central source for reporting all the subsidies according to this report from The Science and Environmental Policy Project.  These include direct tax subsidies in the form of a $7,500 tax credit for the purchase of electric cars (budgeted at $1.5 billion, $2.4 billion in grants to establish 30 electric vehicle battery projects and $2.6 billion in loans to build electric car factories according to The Energy Collective. 

What are these tax advantages (loopholes)?  The Science and Environmental Policy Project explains,

The tax subsidies, "loopholes," to oil and gas companies are largely in three categories: 1) oil depletion allowance, 2) expensing indirect drilling costs, and 3) a tax credit for taxes paid to foreign nations during foreign operations (foreign tax credit). The first category is a favorite among independent producers (and similar depletion allowances are available for all mineral extraction, timber, etc.). The independent producers can pass the depletion on to individual investors. Since the mid-1970s, the allowance has not been permitted for integrated oil companies. The smaller producers will bitterly fight for this "loophole" and the larger producers will be blamed.

I might add that the depletion allowance is similar to a depreciation allowance.  The theory is that when you invest your capital to find oil or gas that you should have a way to write off that investment as the resource is "depleted".  This is similar to when you invest in a machine and, over time, it depreciates.  In either case, the policy behind the allowance is to provide the investor a way to ratably write off the asset over time rather than waiting to the end.  In this way it frees up capital to the investor that could then be used as an incentive to make further investments (drilling for more oil and gas etc).  Of course, why would we want anyone to have an incentive to find more oil and gas right here in the good old United States of America?

The second category permits writing off indirect drilling costs in the year incurred rather than capitalizing them and writing them off over several years. Closing this "loophole" would only change timing of taking the expense, not total amounts of the so-called tax subsidy. The third category is available for all international companies. Closing this "loophole" would discriminate against oil and gas companies in favor of other international companies such as General Electric.

$4 billion for oil and gas subsidies does not sound quite as bad when viewed in context does it?

An assist on this post to PowerLine who sums it up this way,

It is ludicrous for the administration to complain about "subsidies" to the oil companies when ExxonMobil pays more in taxes than it earns in profits, and when the "green" energies favored by the Obama administration actually are subsidized, and in fact would not exist without government favoritism.

UPDATE: Hot Air provides further context on these "oil subsidies".  Hot Air explains that oil and gas does not get anything special that any other extraction industry is getting.