Climate Change Advocates Move Slowly, Embracing Nuclear Power

Now that world leaders have acknowledged the impossibility of coming to any binding agreement at next month’s Copenhagen conference, Senate action on climate change legislation has lost its urgency for the time being. The Obama administration, however, still wants a comprehensive cap and trade measure, like the House bill passed earlier this year, rather than a more limited measure targeted at the electric power production industry, as some legislators have been heard to suggest.

White House climate adviser Carol Browner said last week that incremental greenhouse gas emission reduction measures are not in the cards. “We need comprehensive energy reform,” she said, including power plants, refineries, factors, farms and other sources of carbon emissions. She said she expects negotiation of an international climate treaty to replace the Kyoto Protocol will take up to a year after the Copenhagen conference.

Meanwhile, former Greenpeace commando Stephen Tindale, who once broke into a nuclear power facility to scrawl “Danger” on the side of the reactor building, acknowledges that significant greenhouse gas emission reduction in future years will depend upon construction of a large number of nuclear generating plants around the world. “It’s really a question about the greater evil – nuclear waste or climate change. But there is no contest any more. Climate change is the bigger threat, and nuclear is part of the answer,” Tindale says. “Like many of us, I began to slowly realize we don’t have the luxury any more of excluding nuclear energy. We need all the help we can get.”

Jobs Bill, Maybe, Wall Street Transaction Tax, Maybe Not

House Speaker Nancy Pelosi scoffs at the idea floated last week by some of her Democratic colleagues that new job creation legislation could be funded by a tax on stock, bond and futures transactions on Wall Street financial markets, and Obama administration officials are equally cool to the idea, though some executive branch officials have spoken favorably in recent days about the desirability of “targeted” proposals for quick new laws to boost American employment. Oregon Congressman Peter DeFazio and New York Congressman Michael Arcuri are circulating a proposal for a financial transaction tax to raise $150 billion every year. Pelosi says such a new tax could drive Wall Street jobs overseas. Treasury Secretary Timothy Geithner echoes that such a tax would be “inappropriate” for the United States.

Vice President Biden’s chief economic adviser Jared Bernstein says, though, that the administration is looking for new ways to make sure the economic recovery is not a jobless one. Bernstein’s suggestions include direct public works programs such as hiring the jobless to board up vacant buildings, help with child care, and paint school buildings.

Meanwhile, at a hearing last Thursday before the House Oversight and Government Reform Committee, Congressmen continue attacking the claim on Recovery.gov that the $787 billion stimulus package has created 640,000 jobs so far. GAO reported at the hearing that the web site was replete with “a range of significant reporting and quality issues,” including 60,000 jobs reported as created without any dollars being spent, and 9,000 reports of money spent with no jobs created. House Oversight and Government Reform Chairman Edolphus Towns said after hearing the GAO testimony, “It is clear that errors found by GAO and others should be corrected immediately, not months later, no matter how difficult.”

Finally, economists are beginning to challenge President Obama’s campaign emphasis on green job creation as a solution to continuing economic growth. Georgia State’s Economic Forecasting Center Director Rajeev Dhawan says green jobs are “not the spark. This is not the solution to the current big unemployment problem.” His sentiments are seconded by Manhattan Institute economist Max Schulz: “For all the talk about green job creation, there’s an unavoidable problem with renewable energy technologies and the policies that promote them: From an economic standpoint, they’re big losers. Renewables can’t produce the large volumes of useful, reliable energy that our economy needs at attractive prices. Government subsidizes renewable because – all things being equal – the free market won’t.”

A recent survey by the Transportation Construction Coalition is also putting a damper on the pet political theory that additional funding for road and bridge projects will be a job saving legislative measure. Despite injecting $27 billion into such projects through the stimulus package, more than a million construction sector jobs have been lost in the past 12 months. Furthermore, this month’s Coalition survey indicates that 44% of road and transit contractors expect to lay off more permanent employees this year, even though they have received stimulus supported contracts.

Recovery.gov Numbers Embarrass Obama’s Bureaucrats

News reports of grievous mistakes in numbers reported for job creation on the stimulus web site Recovery.gov have been popping up ever since the first claims by the Obama administration that the stimulus appropriations have saved or created 640,000 jobs to date. Now the worst of all seems to be a report that stimulus spending of $761,420 in Arizona’s 15th Congressional District has created 30 jobs there. The problem? There is no 15th Congressional District in Arizona!

House Appropriations Chairman David Obey said it best: “The inaccuracies are outrageous, and the administration owes itself, the Congress, and every American a commitment to work night and day to correct the ludicrous mistakes. We designed the Recovery Act to be open and transparent. Whether the numbers are good news or bad news, I want honest numbers and I want them now.” In a surfeit of understatement, Vice President Biden acknowledged, “We know this is not 100% accurate. Further updates and corrections are going to be needed.”

Job Creation On The Agenda

Quick action to stimulate employment and halt rising unemployment will be the next agenda item before Congress adjourns for Christmas. Leaders in both houses are already pressing for a compromise six month extension of the federal Highway Trust Fund at current levels, so the relevant committees can begin work immediately on a permanent six year reauthorization bill. Senate forces wanted an 18 month extension, while House Transportation and Infrastructure Chairman James Oberstar wants to finish the six year bill before Congress adjourns for the holidays. Senator Barbara Boxer, Chair of the Environment and Public Works Committee, has already accepted the six month extension strategy, and says a full six year reauthorization measure is her committee’s next priority.

Chairman Peter DeFazio of the House Highways and Transit Subcommittee, says that rising unemployment makes “infrastructure a front burner issue.” While Republican politicians say unemployment rates above ten percent show failure of the earlier stimulus legislation, House Majority Leader Steny Hoyer responds that Republicans consistently vote against economic growth bills. “Votes don’t lie. Republicans have consistently said ‘no’ to creating jobs and helping Americans during this recession,” Hoyer contends.

The renewed talk of job legislation is also bringing out lobbyists. The U. S. Conference of Mayors and the Associated General Contractors both press for transportation appropriations targeted at urban areas, where construction sector unemployment tops 18%. The Mayors are also encouraging votes in favor of increased block grants for energy efficiency and conservation, community development, and police services. Solar panel makers are lobbying for a new 30% tax credit for investments in equipment to make solar energy components, in addition to the grants already appropriated to support solar panel factory construction in California and wind turbine factory expansion in Idaho.

Proposals to fund all this job creation legislation include a new Wall Street financial transaction tax of 0.25% on stock trades, and 0.02% on commodity future trades. The annual expected revenue of $150 billion would go $75 billion for national debt reduction, $55 billion for miscellaneous job creation programs, and $20 billion for highway and other infrastructure construction. Retirement, education and health savings transactions would be exempted from the tax.

Another proposal being floated by Congressmen Barney Frank, Peter DeFazio and Earl Blumenauer is to dip into the $317 billion in as yet unspent TARP funds for infrastructure construction, assistance to homeowners facing foreclosure, and loans to small businesses. Any other unspent TARP cash or money repaid by financial institutions which got federal assistance, would go toward paying off the national debt. Unless legislators act on such measures before it adjourns December 18, Treasury Secretary Timothy Geithner is expected to notify Congress that he will extend the TARP program through October 2010.

Copenhagen Climate Change Summit Expectations Slashed

The Obama administration is backpedaling rapidly on the eve of the Copenhagen conference for negotiating a replacement for the soon to expire Kyoto Protocol on greenhouse gas emission controls. Deputy National Security Adviser for Economic Affairs Michael Froman said Monday “It was unrealistic to expect a full, legally binding international agreement to be reached between now and when Copenhagen starts in 22 days.”

Congressional leaders acknowledge that climate change measures in the Senate have been bumped off the fast track by the extended health care reform debate and the need to focus on job creation and financial market reform before any detailed cap and trade emissions program can be put into place. UN Secretary General Ban Ki-moon expects the Copenhagen talks to result in little more than a political agreement to continue negotiations on the terms of a potential binding replacement treaty.

Senator Dick Lugar acknowledges that the present is an especially difficult time for US negotiators to enter into discussions about payments to developing nations to help them convert to clean technologies and cope with already occurring climate changes. “There’s the thought of transfer of wealth to so-called developing countries and billions of dollars in the midst of this [American unemployment at 10.2 %]. This is real money. All I’m saying is, get real,” Lugar pronounced. President Obama and other world leaders are now looking for a two step process, with Copenhagen representing the first step: a nonbinding political agreement calling for greenhouse gas reduction and aid to developing economies. Step two will be another meeting late next year to negotiate a binding treaty, presumably after Congress has committed the US to specific emission reduction goals.

Small And Family Business Tax Breaks In The Works

Politicians believe small businesses are the job engine of the US economy, and besides direct job creating measures, legislative leaders are also proposing work on a couple tax breaks for family owned and other small businesses before this session of Congress comes to a close. Despite Obama administration resistance to a permanent fix for the estate tax this session, House Ways and Means Chairman Charles Rangel is still pushing for permanent changes in the estate tax.

On the Senate side, Senators Thomas Carper and George Voinovich have introduced a bill to index the estate tax exemption to inflation. Their measure carries a cost of $23 billion in lost revenue to the federal government. A different measure supported by Congressmen Shelly Berkley and Senator Blanche Lincoln, would lower the estate tax rate to 35% and raise the exemption to $5 million, costing a revenue loss of $70 billion altogether.

Carper and Voinovich tout their proposal as a compromise measure. “For the sake of families and small businesses, we can’t let the estate tax go back into full effect,” Carper says, “and yet as long as we are running huge budget deficits we can’t afford full repeal, either.”

In an effort to give a break to some businesses which entered unwittingly into discredited tax shelter investments, the House Ways and Means leadership and the Senate Finance leadership are proposing a measure to relieve small businesses from fines grossly disproportionate to the tax benefits they purported to receive with the barred tax shelters. Some businesses have been fined as much as $300,000.00 for claiming an improper tax benefit of $15,000.00. House Ways and Means Oversight Subcommittee Chairman John Lewis spoke about such situations: “This is not fair. Small businesses should not be run out of business by tax shelter penalties aimed at big corporations.”

Last June the IRS stopped collecting the disproportionate penalties, to give Congress an opportunity to correct the situation. A bill introduced in both houses of Congress Monday would limit the penalty to 75% of the tax benefits improperly claimed.

Jobs Are Job One

House Majority leader Steny Hoyer said Tuesday that he and other House leaders are pushing for a December 18 floor vote on another job creation bill. He said the measure will focus on public sector jobs, job generating tax credits, infrastructure projects, and assistance to state governments. “Clearly, 10.2% unemployment is unacceptable and is causing great pain to literally millions of people around the country,” Hoyer stated.

Hoyer added that he believes the legislation ought to include another extension of unemployment benefits and health insurance premium assistance for those out of work.

On the Senate side, Majority Leader Harry Reid says his first priority after finishing health care reform legislation will be a jobs bill. Senate Democratic Policy Chairman Byron Dorgan echoes that sentiment. “With 10% unemployment, the first priority for our government is to focus on helping the private sector create new jobs,” Dorgan announced. Leaders in both houses are now considering the possibility that a six year Highway Trust Fund reauthorization measure could be designated a jobs bill and pushed through Congress on a faster track than anyone thought possible a few weeks ago.

Meanwhile, there are signs that the North American economy may be turning around. Since the beginning of this year, 6,080 new capital investment projects totaling $350.9 billion have begun in the U.S. and Canada. Another 3,633 capital projects, representing investment of $1.2 trillion, though delayed, are still expected to begin in a year or two. The discouraging factor is that 2,835 investment projects, representing $283 billion of investment, have been put on hold indefinitely or cancelled outright.

Highlights of economic investment are the light rail sector, with $17 billion of new construction begun this year, and semiconductor manufacturing, with $10 billion total investment in 2009.