As President Trump’s presidency reaches its conclusion and Joe Biden heads into the White House fortified by Congressional majorities (albeit narrow ones) we can undoubtedly expect some ambitious “green” energy policies. While the media and the political left (often one and the same) continue to decry the supposed damage Trump did to the climate over the past 4 years, the reality is that CO2 emissions in the US are at their lowest TOTAL levels since Ronald Reagan’s first term as President. See below:

Yes, 2020’s decline was “aided” by the shutdown of the US economy, but the long-term trend was toward lower emissions anyway thanks both to the abandonment of coal fired power plants and the advent of fracking and cheap natural gas. Trump didn’t do anything to change that.

The real question is whether (with the COVID vaccine and, presumably the broader reopening of the US economy) whether “green” Joe Biden will preside over an INCREASE in CO2 emissions over the next year or even his next four years. Talk about ironic!

On this week’s Tipping Point NM podcast Paul and Wally look forward to and make predictions about 2021.

Are we really just “halfway home” on COVID 19? If so, what does that mean?

The left suddenly agrees that the ETA needs fixing. We said this at the time, but Wally and Paul suspect the motivations of these legislators don’t involve defending ratepayers.

Churches face fines due to violations of Gov.’s orders. Paul attended Christmas Eve services and shares his thoughts.

Finally, Paul and Wally make their predictions for 2021:

First, with the Legislature meeting, what will happen on Pot legalization, mandatory paid sick leave, tax hikes, do they attack oil and gas directly? What about another minimum wage hike? Will reforms to Social Security or the GRT happen? Will the Legislature vote to tap the permanent fund and if so, will they simply spend more on ECE or will they do something more/better? Will the Legislature pass and will effective limits on the Gov’s power in an emergency be put in place?

Will kids be back in school in-person this spring? How about this fall?

Will Cliff’s Amusement Park and Hinkle Family Fun Center reopen? How about the Albuquerque Isotopes?

When will restaurants in Bernalillo County be allowed to open up?

Will Virgin Galactic launch from Spaceport America? How about the Rail Runner?

Who will win the Senate races in Georgia?

United Van Lines has released its report on where people are moved to and from in 2020. You can check out the map below.

Update: there is a similar report from Allied Van Lines. It largely reflects the trends found in the report above and can be found here:

According to the latest from our State “overlords” New Mexico is “halfway there” in terms of COVID 19 (whatever that means).

That means that far from being a breath of fresh air, 2021 will simply mean “more of the same” for New Mexico as it will be locked down and your freedoms will remain “on hiatus” until September as Scrase states in the article.

One of the many problems with such statements is that they don’t give us any useful information. For starters:

Cliffs Amusement Park says they need to open this March in order to save their business. Is that realistic or are they likely to lose ANOTHER full season?

Are bowling alleys, ice rinks, movie theaters, concert venues (inside and out) going to be treated the same or is there any way they can reopen sooner than later?

What about churches?

Will the Albuquerque Isotopes have a season or not?

Does this mean (as we suspect) that students in New Mexico’s government-run schools will not return to in-person learning until next fall?

Are restaurants REALLY going to be closed to indoor dining until we get out of red or can something be done to help them this winter like we saw with big-box stores?

The State Fair is expected to begin on September 9. What needs to happen for that to open as planned?

What about spring sports for New Mexico student/athletes?

Are there other businesses or cultural events you worry might be lost completely OR lost for a 2nd-consecutive year thanks to the Gov. and her heavy-handed COVID policies? Send us a note: info@riograndefoundation.org

On this week’s interview podcast, Paul sits down with Doug Messier of the space privatization website Parabolic Arc. They discuss the recent aborted launch at Spaceport America, corruption issues with the facility’s leadership, and management changes at Virgin Galactic. There are many issues and challenges as Virgin Galactic HOPES to launch in 2021.

When it comes to writing a history of 2020 there is no question that COVID 19 is THE dominant issue. The real question is (as we have seen after every crisis) to what extent government will grow and freedom will recede when the Virus no longer predominates.

Objectively, government officials have done a poor job throughout. They based lockdowns and “social distancing” policies on a science fair project done more than a decade ago by an Albuquerque 15 year old. on Here is an excellent piece detailing 12 times the “lockdowners” were wrong.

And then there are the ongoing school closures (see link and story below). Of course here in New Mexico our Gov. and her lockdowns have destroyed hundreds (even thousands) of businesses and resulted in absurd “breadlines” to get into grocery stores.

Unlike most of New Mexico’s harmful economic policies, arguably the most problematic aspect of the current situation is that it has been undertaken by ONE person (the Gov.) with no real checks or balances let alone transparency. This HAS to change when the Legislature convenes in 2021.

On this week’s podcast, Wally and Paul review the year that was 2020. But, before discussing what was a very challenging year, they discuss President Trump’s decision to sign the $900 billion stimulus bill and $1.4 federal funding legislation.

Biden has called the legislation a “down payment” on what we can only imagine will be an even bigger “stimulus” in the near future.

Also, since COVID dominated 2020 like few issues since at least World War II, Paul and Wally run through this article which details “12 times when the lockdowners were wrong.“

With that, Wally and Paul review 2020 starting in “the olden days” of January 2020 with a “normal” New Mexico legislative session and a massive budget surplus and take us through the year’s events and right back up to the present.

On this week’s podcast, Paul interviews Dean Stansel. Dean is a Research Associate Professor at the Bridwell Institute for Economic Freedom in the Cox School of Business at Southern Methodist University, but the main topic of the discussion is the 2020 version of the Fraser Institute’s Index of Economic Freedom of North America.

The following appeared at National Review’s website on December 25, 2020

We have known for decades the extent to which progressives dominate Hollywood. In the age of social media, Hollywood celebrities waste no opportunity to show that they stand with the poor, the downtrodden, and the righteous. But they have a way of showing themselves up as the hypocrites we already know that they are.

Let’s start with “fracking.” Fact: a few years ago, more than 100 Hollywood A-listers signed on to an effort under the banner of Artists Against Fracking to ban hydraulic fracturing. Yet it’s no secret that many of Hollywood’s numerous well-heeled opponents of “fracking” have something of a weakness for private planes and, even in their humbler moments, for large SUVs. It’s not much of an exaggeration to think that some of them probably gobble up more energy in a day than average Americans do in weeks.

But without hydraulic-fracturing technology, oil and gas production in my home state of New Mexico would almost completely dry up. This industry has made New Mexico a major energy producer, a crucial source of revenue and jobs for a state widely recognized as one of the poorest in the country. Fracking has safely opened massive new energy deposits with production concentrated in the Permian Basin, located in southeast New Mexico and shared with Texas. In fact, New Mexico is the third-largest oil-producing state, with over 1 million barrels per day at the end of 2019. One-third of the state’s entire budget is generated by the industry.

Too bad. If the nation follows the advice of Hollywood’s anti-fracking activists, a poor state and its poor residents will be denied the benefits of an important natural resource and simply go without. While fracking remains legal (for now) in New Mexico, Hollywood’s hypocrisy goes far beyond merely advocating against this technology: some of its leading companies have found a way to suck up tax revenues right here in New Mexico that would otherwise be spent on public schools, health care, and other government services.

In an effort to attain the glitz and glamour of Hollywood, New Mexico’s liberal politicians are handing out some of the most generous subsidies available anywhere to Hollywood film companies. That those companies tend to lean liberal is, of course, only a coincidence.

Netflix is the latest production company to bring significant operations to the Land of Enchantment. The streaming company recently announced that it would expand its operations in the state, spending an additional $1 billion in New Mexico over the next 10 years.

That sounds good, but however liberal it may be, the entertainment industry is still the entertainment industry, and the deal comes with a catch. Netflix may be spending in the state, but it will also be receiving a very generous incentive from the New Mexico taxpayer, something of an irony when one-third of the state’s taxes are paid by “wicked” oil and gas.

Netflix (like any film company that operates in New Mexico) is eligible to have 25 percent of its expenses reimbursed by the State. Better yet, the length of the company’s ten-year lease means it “qualifies” under state law to receive an increased reimbursement of 30 percent.

Just to be clear, if Netflix does indeed spend $1 billion over the next decade as it asserts, it could be entitled to checks from the New Mexico Treasury totaling $300 million. If 33.5 percent of New Mexico’s budget comes from oil and gas over that time period, Netflix alone will effectively be receiving $100 million directly from the oil and gas industry.

Of course, if the “keep-it-in-the-ground” wing of the Democratic Party prevails and bans fracking on New Mexico’s federal lands, the state’s oil and gas revenues could plummet, forcing the State’s other taxpayers to pick up more of the bill for Netflix or triggering some sort of crisis in its relationship with the company

Unfortunately, when it comes to subsidies for Netflix, $300 million is just the down payment. The state is also fronting another $17 million in direct incentives to Netflix while the City of Albuquerque is coughing up another $7 million. These funds come from something called the Local Economic Development Act (LEDA), commonly referred to as a “closing fund.” These are payments made by state or local governments to preferred industries. One might believe that in a state as poor as New Mexico (consistently among the nation’s poorest) that taxpayers picking up the bill for 30 percent of a profitable corporation’s business expenses would be enough.

As things seem at the moment, Netflix is going to continue to grow and over time it should create more jobs in New Mexico. That will generate all the usual headlines about how great the company is for the state and its economy, but it will come at a tremendous cost. That cost is not just in lost revenue, but in tax rebates borne primarily by state taxpayers. This subsidy is both unfair and unsustainable.

As one of Hollywood’s biggest businesses, Netflix is a member of that elite group of publicly traded stocks known as the FAANGs (Facebook, Amazon, Apple, Netflix, and Google). Netflix flaunts its rapidly growing profitability, but it is still prepared to consume massive taxpayer subsidies not only from one of the poorest states in the country, but from a state that can only afford to pay out those generous subsidies thanks to the revenues it receives from the oil and gas industry that so much of Hollywood condemns.

Senator Bernie Sanders is still a hero to many in the entertainment industry and, to be fair, he at least takes a principled approach to such corporate welfare. Unfortunately, the same cannot be said for many in Hollywood and Democratic politicians like New Mexico governor Michelle Lujan Grisham. She has locked our state in to paying Netflix outrageous sums of money over the next decade at a time of great uncertainty for New Mexico and its economic outlook and thrown away the key. That much of that uncertainty comes from her own party only piles irony upon irony.

Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility

I never in a million years thought that going to church would be an act of civil disobedience and that holding services would result in fines being imposed, but that  is where things stand these days in New Mexico. The Gov.’s often belligerent spokesman Tripp Stelnicki even called the Christmas Eve gatherings “illegal and selfish.”

I attended the Christmas Eve service held at 3pm with my family. It was definitely “not legal” under the Gov.’s orders, but overwhelming majorities of attendees DID have masks on and seating was in every other row. I actually watched the proceedings outside near a lovely and warm fire but my entire family watched inside and no one is sick or showing signs of illness five days after the fact.

I don’t know where this all goes next. I for one would be willing to let the Gov. send the police in and force them to arrest me and others. It has gotten to that point.  By the way, if others don’t want to attend church or go out in public, they have every right to live that way. It is none of my business. But, if I want to keep living my life that is called freedom and it is something Americans used to care for.

I don’t have pictures of church. My kids took their masks off for pictures with Santa after church though. Also, Skip’s sermon was great. I’m new to Calvary. As a frustrated Catholic I have enjoyed my experience so far at Calvary services and events.

Congress has passed a very ugly, bloated, pork-laden “stimulus” (you can read all 5,000+ pages here). Many of the details have been discussed extensively elsewhere.

One of the most troubling aspects of the bill is that it explicitly prohibits funds from being used for educational alternatives to help children whose schools have been shuttered since last March and have been stuck with ineffective “virtual” programs since then. Just which special interest group might have had the political power to get THAT provision inserted?

Here is the actual text of the prohibition from the legislation.

There is a new COVID strain in Europe. Paul and Wally discuss what we know and what is happening now.

Federal stimulus agreement reached. It’s $900 billion and VERY ugly. Here’s some of what’s in it.

BCSO sheriff “won’t enforce unconstitutional laws under COVID response” What does this mean?

Deb Haaland named to head Secretary of Interior. While sympathetic to the idea of a Native American in charge at Interior, her policies would be devastating to New Mexico. Two separate posts on the issue here and here.

According to a new study from the University of Wyoming’s Dr. Timothy Considine, New Mexico would see even steeper revenue losses under the study’s forecasts. The state would lose on average $946 million per year in oil and gas tax revenue in the first five years under a leasing moratorium and on average $1.2 billion per year in tax revenue in the first five years under a drilling ban. A drilling ban would cause the state a $48 billion loss in oil and gas tax revenue over the next 20 years.

PFM Consultants have released a report on New Mexico tax policy. Overall it makes an absurd pitch for massive tax hikes, but there was some useful information in the report.

The Rio Grande Foundation backs legislative efforts to repeal the Social Security tax imposed by New Mexico. ANY effort to reduce New Mexicans’ tax burdens would help.

The following article includes several quotes from RGF’s Paul Gessing regarding the City of Carlsbad recently joined the call for repeal of this unnecessary tax. I discuss the chances of such a proposal making its way into law in the article linked above from the Current-Argus.

New Mexico is one of only 13 states that currently assess tax on Social Security income. Unfortunately, New Mexico’s Democrats have moved quite a bit to the left since even the days of Bill Richardson.

The following conversation between RGF president Paul Gessing and Mick Rich (former US Senate candidate and owner of a construction business) aired on local television in Albuquerque, NM recently. It is split into four segments of about 10 minutes apiece.

In the first segment Mick and Paul discuss health care reforms made under ObamaCare, why it has failed, and how Biden plans to move forward with the same government-driven philosophy.

In segment two we discuss the evolution and economics of New Mexico’s film industry and its oil and gas industry.

In the third segment we discuss some of the crime issues at play in the City of Albuquerque.

In this segment we discuss the upcoming 2021 legislative session, the Rail Runner, Spaceport, and five things the Legislature SHOULD do to bring prosperity to our state.

Scientists widely agree that climate change is real. After all, we’ve had ice ages and other major climate shifts over millions of years. And then humans came along. Native Americans managed their environment. In the story below which is from the Los Alamos Monitor and ran in August 2019 Haaland claims that “climate change in the US started when Europeans arrived and started killing the buffalo.”

It’s an interesting take. There is no doubt that killing the bison was a tragedy and undoubtedly had an impact on the climate. That said, I hope the Senate takes a hard look at her views and whether she has scientific underpinnings for her policy views on how to manage federal lands.

Yesterday we said we’d get an analysis of the PFM report on New Mexico’s tax code. As indicated in that post, there is some good information in the report even though we disagree with many of its findings. One of the best points made is the following which is taken directly from the report:Too often the only “equity” discussion that takes place is over “progressive” or “regressive” taxation. The PFM report acknowledges that New Mexico’s gross receipts tax is unfair to competing businesses within the same industries. As the text above points out this bias assists bigger firms and penalizes smaller ones.

Overall, the analysts seemed concern about the gross receipts and specifically argued for NOT raising rates on that tax. Unfortunately, that’s where the restraint went out the window. The report FAILED to mention New Mexico’s heavy (existing) tax burden (7th-highest as a percent of income) and bloated and inefficient government, yet it included numerous MAJOR tax hikes and NO tax cuts. The tax hikes mentioned included:

• • Higher marginal rates at higher income levels.
  • Eliminating the capital gains personal income tax exemption.
  • Re-institute an estate tax.
  • Increase the gas tax rate.
  • Establish a structure for taxing recreational marijuana (we support the policy, but of course this is still more government revenue).
  • Broaden the gross receipts tax base to include food and, for lower income taxpayers while enacting a revenue neutral refundable personal income tax credit.
  • Continue to expand excise taxes to align with new forms of goods or services, such as vapor products.
  • Consider a carbon tax or so-called “market-based approaches.”

While there are elements of some of these ideas that could be part of a broad-based, revenue-neutral tax reform plan, including “shifting greater local funding responsibility to property taxes and away from gross receipts taxes” the report is WAY too focused on generating more money for the State and focuses far too little on spurring economic growth and job creation.

Finally, although the overall report is lacking, one additional bit of good news is that PFM specifically calls out film subsidies. Again, the full text is below directly from the report:

On this week’s interview, Paul has a wide-ranging discussion on health care issues with Dr. Deane Waldman. Deane is a retired pediatric cardiologist and is an MBA as well. During the first half of the show, he and Paul discuss the response to COVID-19 in the United States and New Mexico. With a background in pathology, Deane has a great deal of information to share about the Virus and its impacts.

In the second part of the show, Dr. Deane and Paul discuss Joe Biden’s plans for American health care, most notably Medicare for All, more broadly speaking. What will Biden’s policies do to American health care if adopted? Be sure to tune in to this fascinating and informative episode.

UPDATE: Per several news reports, Haaland HAS indeed been chosen to head the US Department of the Interior.

New Mexico women appear to have the inside track in the Biden Administration for Interior Secretary. The post was apparently offered to Gov. Lujan Grisham who turned it down. Now, Albuquerque-area Congresswoman Deb Haaland is being promoted for the job by none other than Speaker Nancy Pelosi.

We at the Rio Grande Foundation have been critics of Lujan Grisham’s economic and COVID policies, but on energy issues, Lujan Grisham is actually a moderate while Haaland is on the far-left wing when it comes to energy issues. If implemented, her stated policies would be a disaster for New Mexico and other energy producing states.

Haaland told The Guardian, “I am wholeheartedly against fracking and drilling on public lands,” she said. She is also a staunch supporter of the Green New Deal.” According to a recent study of the issue, “New Mexico would see even steeper revenue losses under the study’s forecasts. The state would lose on average $946 million per year in oil and gas tax revenue in the first five years under a lease moratorium, and on average $1.2 billion per year in tax revenue in the first five years under a drilling ban.”

Lujan Grisham, on the other hand, voted FOR crude oil exports when she was in Congress. She also has said that she’ll ask for an exemption from any future drilling ban (on federal lands). While Lujan Grisham has said that New Mexico would “transition away from fossil fuels” and she even signed New Mexico’s own version of a “Green New Deal,” she is nowhere near as radical as Deb Haaland when it comes to energy.

If Haaland becomes Secretary of the Interior, energy-producing Western states better watch out!

Yesterday, a report called “State of New Mexico Tax Structure: Issues and Alternatives”was released by a firm called PFM Consulting. The report is worthy of a detailed analysis and it has generated several stories in the media. 

A few initial thoughts: 1) I’m glad they posted the report at a link that can be easily-accessed by the public and policymakers. 2) As these documents go it is relatively accessible in terms of its language. 3) Taxes are a very important component of public policy, BUT they are one of several policy areas that must be addressed to make New Mexico economically competitive. 4) Analysts and legislators of differing backgrounds can view the same data and have completely different conclusions. While the media have covered some reactions from policymakers, we will offer our insights in a 2nd post to be published tomorrow (December 17).

Here are a few charts taken directly from the report which illustrate New Mexico’s serious economic challenges:

1. Over the last decade New Mexico’s neighbors saw much faster employment growth although we did outperform Alaska and Wyoming which the report includes by way of further comparison.

2. New Mexico faces deeper poverty challenges than any of its neighbors or Wyoming/Alaska.

3. Related to poverty, New Mexico’s median incomes lag. 

Whatever your take on the Trump tax cuts or the economy under his watch, it is hard to see how ANYONE can blame the President for the current economic situation. Of course leave it to New Mexico’s leftist advocates like Bill Jordan to do that.

And, whether you think tax cuts are the key to economic growth or merely one component of a broad-based economic reform strategy, not many economists take the position that “tax cuts HURT the economy.” Bill really needs to read “Economics in One Lesson.”

On this week’s Tipping Point discussion Paul and Wally discuss the fact that electors in the nation’s Electoral College were casting their votes for president. The Electoral College is an important safeguard of our democratic-republic.

Good news for New Mexico and the US as the Pfizer COVID 19 vaccine has begun shipping across the USA including to New Mexico. President Trump and his Administration deserve great credit for this achievement as do the scientists at Pfizer and other companies.

New Mexico hospitals authorized to “ration” care. What does this mean?

ABQ City Council pushes sick leave vote back to February 1.

NM’s PED secretary says “I think we’re going to be back in person in the fall of 2021.” 

NM’s jobs situation remains among the nation’s worst according to Wallethub. 

Another failure to launch at Spaceport America. Saturday morning’s test flight was aborted because its rocket engine failed to ignite, but the crew made it back to the spaceport safely.

In a true case of “burying the lede” as they say in journalism (yes, it is lede), this story from the Albuquerque Journal discusses the State’s education budget proposal for the upcoming legislative session being “near-flat.”

But, if you read the full article there is this gem from Secretary Ryan Stewart, “I think we’re going to be back in person in the fall of 2021. It all depends on the course of the virus and what the risks are going forward.”

Many New Mexico parents hold out hope of restarting in-person learning sometime this spring (and if you are in a conservative rural community or another area that has done in-person learning this year like Rio Rancho) that may be true, but Stewart seems to be referring to big districts like Albuquerque and Las Cruces which have NOT had in-person learning for a vast majority of students this year.

This article appeared in the Roswell Daily-Record on December 15, 2020 and in several other New Mexico newspapers.

New Mexico remains among the most locked down states in the nation when it comes to the CoronaVirus. In October the State’s unemployment rate was among the highest in the nation at 8.1%. This difficult economic news combined with the election of a more “progressive” Legislature in November mean that tax increases (and even spending cuts) are likely in store for the upcoming 2021 legislative session. With New Mexico relying heavily on oil and gas revenues, the State’s economic pain will last beyond the coming year.

A new deal announced by Gov. Lujan Grisham with the well-known streaming service Netflix is being touted as good news for New Mexico’s economy. In announcing the deal the Gov. claimed, “My administration has expanded our state’s competitive film incentives, facilitating higher-wage employment for New Mexicans all across the state.” Under the terms of the deal, Netflix will dramatically-expand their footprint in the State spending $1 billion over the next decade.

Unfortunately, despite all the hype and big-sounding numbers, the Netflix deal is just another example of New Mexico’s economically-ignorant political leadership “buying” jobs and economic activity with taxpayer money. The reality is that New Mexico’s already strapped budgets will be drained even more in the years ahead by this new plan to subsidize Hollywood.

Something that too few in the media do is look closely at the particulars of the deal itself. For example: the State offers a 25% film “tax credit” which is really a rebate of 25% of the costs of production. Netflix is able to boost that rebate by another 5% since they are considered a “qualified” production facility.  That means taxpayers will reimburse Netflix for 30% of their spending in NM. According to a new report from the Legislative Finance Committee (LFC) states that film subsidy payouts could increase annual tax credit payouts by $25 million beginning next fiscal year.

Lest there be any doubt that film subsidies actually cost the State and its taxpayers money, a separate 2019 LFC report  noted, “Because film tax credit payouts are booked to Corporate Income Tax (CIT), actual CIT receipts are higher than the final amounts distributed to the general fund.” These subsidies take corporate tax dollars right out of the State Treasury and hand them to film companies.

“Tax credits” are just the starting point. Additionally, the State is providing $17 million in LEDA incentives; the City of Albuquerque is providing another $7 million in LEDA, and they will also provide an industrial revenue bond to abate some or all property taxes over a 20-year term for the first $500 million investment to build out the facility.

In total Netflix will receive $300 million + $17 million + $7 million + the IRB tax abatement to eliminate their property taxes.

Finally, even though NM has an annual cap on film tax rebate expenditures, the legislation exempted companies that purchase or sign a 10-year lease for a qualified production facility: this means the cap does not apply to Netflix.

In other words, Netflix is definitely going to grow and appear to create more jobs in New Mexico (which will make a lot of headlines), but it will do so at taxpayer expense. That cost is not just in lost revenue, but in actual spending. Those costs, generated through the tax credit, really a rebate, are borne primarily by State taxpayers. This subsidy is both unfair AND unsustainable.

Governor Michelle Lujan Grisham has now locked us in to paying Netflix outrageous sums of money over the next decade at a time of great uncertainty for New Mexico families and the state’s economic outlook.

Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

You may have heard the news by now that over the weekend Virgin Galactic aborted a launch at Spaceport America. The issue had to do with a failure to complete “The ignition sequence for the rocket motor.” Thankfully no deaths or injuries were involved, but it is likely that this will further delay any commercial space flights from Southern New Mexico.

As Doug Messier of commercial space flight website Parabolic Arc noted in a 2019 Tipping Point NM podcast (the engine/technology discussion starts at about the 36 minute mark below). The issue with the engines involves the motors which burn a combination of nitrous oxide and rubber.

You can also check Doug’s website Parabolic Arc for coverage of the attempted Virgin Galactic flight here. By the way, at the end of the podcast Doug says he would NOT fly with Virgin Galactic even if given a FREE ticket.