Friday, October 30, 2009

Climate Change Coal Compromise Soothes Baucus

Montana Senator and Finance Committee Chairman Max Baucus is backing down from his considerable disappointment expressed during hearings earlier this week on the Kerry/Boxer climate change measure, now that incentives have been written in for “early actors” who adopt carbon sequestration technology at their coal fired power plants if they can capture 50% of greenhouse gas emissions. Montana has the largest coal reserves of any state in the nation, but they are mostly undeveloped because transportation costs for Montana coal price it out of the market in rust belt states with numerous coal fired power plants. Construction of new, efficient, carbon capturing coal fired power plants could develop a big new market for Montana coal.

Pennsylvania’s Arlen Specter and Ohio Coal Association President Mike Carey are both still opposing the Kerry Boxer bill because they say it will be a job killer in their states. Senate Environment and Public Works Chair Boxer has scheduled a markup of the Kerry/Boxer bill in her committee beginning Tuesday, following three days of hearings featuring 54 witnesses on the bill this week. Republican members of the committee have said they will delay the measure by boycotting the markup, which would deny Boxer the quorum required under Senate rules for conducting a markup of the bill.

Senator Durbin Says Front Loaded Infrastructure Spending Should Be The Next Stimulus

Although no one has as yet proposed a specific mechanism for funding a six year, $500 billion reauthorization of the federal Highway Trust Fund, it seems everyone in Congress expects that will be the funding level once new revenues are decided upon. Illinois Senator and Majority Whip Dick Durbin suggested yesterday that one additional move the folks in Washington can make to further stimulate the economy would be to “front load” that spending, instead of using the money evenly across the six year time period.

Durbin’s idea is to allocate $150 billion to the first of the six years, accelerating road, bridge, transit and waterway construction projects to the present, while leaving $70 billion per year for the remaining five years of the reauthorization. Durbin is enlisting Pennsylvania Governor Ed Rendell, California Governor Arnold Schwarzenegger and New York City Mayor Michael Bloomberg in his effort. While House Ways and Means Chairman Charles Rangel has not proposed any revenue measure for funding the $500 billion, Durbin says Senate Finance Chairman Max Baucus “has come up with enough money to take us through next year.”

Meanwhile, the continuing resolution attached to the Interior – Environment appropriation bill on its way to the Oval Office today extends the Highway Trust Fund at current levels through December 18, 2009, and Senate Environment and Public Works Chair Barbara Boxer is still at loggerheads with House Transportation and Infrastructure Chairman James Oberstar respecting how to keep funding road projects currently underway until revenue measures supporting a six year reauthorization can be proposed and passed.

Consortium Using Stimulus Cash To Erect Chinese Made Wind Generators

A consortium of American and Chinese companies, using Chinese bank financing and US government grants and loans under the stimulus legislation, plans to build a $1.5 billion wind farm on 36,000 acres in West Texas, using 240 2.5 megawatt wind turbines manufactured in Shenyang, China.

Construction is scheduled to begin next March, when the first turbines will be arriving on site. The project will create 300 temporary and 30 permanent jobs, and when completed, should generate 600 megawatts of wind power. Companies involved in the project include A-Power Energy Generation Systems, U. S. Renewable energy Group, and Cielo Wind Power.

Thursday, October 29, 2009

Broadband Oversight Hearings Highlight Burdensome Grant Paperwork

House Small Business Chair Nydia Velazquez gave Commerce Department and Agriculture Department officials an earful Wednesday over the complexity of the 200 page long grant application for businesses seeking to extend broadband coverage into communities needing the most help. The grant process has fallen nearly a month behind schedule, and Velazquez complained that the application paperwork discouraged otherwise viable applicants from getting grants and loans to extend service to folks needing help the most. “More often than not, small businesses can’t afford in house lawyers, accountants, or support staff,” she pointed out in asking the bureaucrats to find a more streamlined grant process.

Small Business ranking member Sam Graves echoed her concerns. “As the first round of broadband funding concludes,” he remarked, “it is imperative that government make changes.”

Greenhouse Gas Limit Debate Moves To Senate

How far should the United States reduce greenhouse gas emissions below their 2005 levels? This issue has plagued the drafters of climate change legislation in the House, which ultimately passed a measure establishing the goal of a 17% reduction by 2020. Now, in the Senate Environment and Public Works Committee hearings on the Kerry/Boxer bill proposing a 20% reduction, Senate Finance Committee Chairman Max Baucus says he believes the proposed 20% reduction will be too much of a drag on economic recovery, and that he has serious reservations about the Kerry/Boxer bill.

Senate Environment and Public Works Chair Barbara Boxer can get her bill reported out of her committee without Baucus’ vote, but doing so would highlight a leadership split which would make floor debate rancorous and passage difficult. Meanwhile, the Obama administration’s budget called for only a 14% reduction. Seems like lawmakers have a long and winding road to travel before a final piece of legislation materializes on this issue.

Wednesday, October 28, 2009

Broadband Construction Stimulus Grant Program 288% Oversubscribed

Yesterday’s hearings at the Senate Commerce Committee regarding oversight of the stimulus package grants of $7.2 billion for construction of broadband networks in unserved and underserved areas of the nation revealed that 2,200 applications seeking a total of $28 billion in funding have been submitted against the appropriation. Commerce Committee Chairman Jay Rockefeller and Missouri Senator Claire McCaskill both complained about the fact that responsibility for awarding the funds is divided between the Commerce Department’s National Telecommunications and Information Administration and the Agriculture Department’s Rural Utilities Service. Have they forgotten that they are part of the Congress which set up the stimulus package that way?

Meanwhile, Comcast and a number of other internet and cable TV providers are complaining that a large number of the grant applications, supposedly intended to get internet service to citizens in areas of the nation where none is available, propose network construction in areas where the companies already provide service.

Senate Cap And Trade Hearings Highlight Democratic Party Fault Lines

Ongoing hearings in the Senate Environment and Public Works Committee on the Kerry/Boxer cap and trade bill are bringing to light fissures in the Democratic Party block regarding the proposed climate change legislation. Opposition to Senator Barbara Boxer’s chairman’s mark of the 923 page bill, released Friday, was voiced by both Senator Arlen Specter and Senate Finance Committee Chairman Max Baucus. Baucus says he has serious reservation about the measure’s goal of reducing U.S. greenhouse gas emissions 20% below 2005 levels by a 2020 deadline. Specter wants Congress, rather than USEPA, top set the emission limits. “There’s a great deal to be gained by certainty so people can make plans,” Specter told USEPA Administrator Lisa Jackson. “That’s our job.”

Republican critics of the Kerry/Boxer bill are threatening to delay forward movement of the proposed law by skipping meetings of the Committee scheduled to mark up the bill, thereby denying Boxer the quorum required for holding a mark up under Senate rules. They complain about USEPA’s failure to run any economic modeling of the Kerry/Boxer bill, which EPA justified based on the similarity of the measure to the House passed bill EPA already analyzed. In the face of such a maneuver, Boxer’s committee could report the bill out without a markup, under Senate Rule 14.

West Point Public Works Privatization Plans Stifled

Army plans announced last March to contract with Ginn Group of Peachtree City, Georgia, to take over plumbing, carpentry and grounds maintenance services at the United States Military Academy at West Point, New York, have fallen victim to a GAO report contending the plan would be a waste of tax dollars, and political opposition from New York Congressman Maurice Hinchey. Senator Charles Schumer announced Monday that Secretary of the Army John McHugh proposes to scrap the privatization plans, though the Army has taken no formal action yet.

Defense Contract Audit Agency Head Reassigned

Defense Contract Audit Agency Director April Stephenson, under criticism for creating “a work environment not conducive to performing quality audits,” has been reassigned to the staff of Undersecretary of Defense Robert Hale, and will be replaced by Army Auditor General Patrick Fitzgerald, effective November 9. Stephenson was roasted in a GAO report last month for emphasizing the churning out of reports over independence in auditing defense contracts.

Highway Trust Fund To Advance By Baby Steps

Senate Environment and Public Works ranking member James Inhofe said yesterday that it looks like the federal Highway Trust Fund will get another one month funding extension at current levels while House and Senate leaders continue trying to iron out their differences over proceeding towards a full six year reauthorization and the revenue sources for funding $500 billion over the six year reauthorization period. Senate leaders fear the revenue debate will get in the way of work on health care reform and climate change, the Obama administration’s apparent top priorities. Meanwhile, a construction industry already on life support awaits news regarding whether there is any medicine in the cabinet to keep it alive while Congressional leadership postpones the search for a cure.

Monday, October 26, 2009

Oberstar Still Insisting On Highway Trust Fund Reauthorization By Year End

Now that Senate leaders have backed off an 18 month temporary extension of the federal Highway Trust Fund, House Transportation and Infrastructure Chairman James Oberstar is digging in his heels and insisting on a much shorter two month extension, with permanent reauthorization to be enacted before the end of this year. Oberstar has been discussing the temporary fix with Senate Environment and Public Works ranking member James Inhofe, and describes their meeting as a “nice conversation,” but still wants to stick with a two month temporary extension bill he plans to bring to the House floor this week. “The planets are in motion,” Oberstar remarked.

Senate Majority Leader Harry Reid plans to bring a bill for a temporary six month extension to the Senate floor, also this week. Soothsayers predict a conference report calling for extending present funding levels by four months.

EPA Sees 180 New Nuclear Power Plants Over The Horizon

USEPA’s analysis of pending climate change legislation predicts construction of 180 new nuclear power reactors by 2050, more than doubling the currently operating 104 reactors in 31 states, which provide 20% of the nation’s electric power. Presently the Nuclear Regulatory Commission has only 30 applications pending for new reactor construction. At an estimated investment of $10 billion each, the projected increase represents total projected cost of nearly two trillion dollars.

It will be interesting to see whether environmental groups come out in greater force against nuclear waste storage or carbon sequestration as the debate over details of greenhouse gas reduction legislation proceeds in Congress. Either way, nasty stuff is getting buried underground in someone’s back yard.

Sunday, October 25, 2009

Unemployment Benefits Extension Still Tied Up With Amendments

The cloture vote in the Senate on extending unemployment benefits for an additional 14 weeks in all states, and 20 weeks in states with more than 8.5% unemployment, set for last Friday didn’t happen. The vote is rescheduled for Tuesday afternoon, depending on whether or not Senators can agree on proposed amendments on extending and expanding the homebuyer tax credit in the stimulus package, and extending business loss tax carry back provisions an additional two or three years.

Present leadership plans are to pass whatever final package is approved in the Senate, and send it to the House without any conference committee, for action later this week. Senate Majority Leader Harry Reid and Senate Finance Chairman Max Baucus are proposing a one year extension of the homebuyer tax credit, to begin phasing down from the $8,000 in the stimulus package in April, 2010. Real estate and housing construction interests oppose this version of the measure, citing April through June as the best home sales months of the year. Senator Johnny Isakson of Georgia proposes a seven month extension of the full $8,000 credit to carry through the summer selling season.

National Association of Realtors President Charles McMillan says the summer months are needed to bring down housing inventories to a normal six month level. “We can achieve a consistent six month supply if the $8,000 tax credit is extended without phase outs through mid 2010. Consumers, particularly first time buyers, need certainty about the amount of the credit so that they can plan their transaction without any worry that a timing problem would penalize them,” he said in a letter to Majority Leader Reid.

The Reid/Baucus proposed amendments also include extending the tax loss carry back from two to four years, but using it only in 2008 or 2009 tax years, with a 20% reduction in the credit. Senator Jim Bunning of Kentucky wants a five year carry back, for both 2008 and 2009 losses, with no reduction, but that would involve a costly $16.3 billion revenue loss. The proposed offset to the cost of extending the tax loss carry back is a $17.1 billion revenue raiser involving a requirement that corporations report transactions with each other on 1099 forms to the government.

Finally, funding of the unemployment benefit extension is also controversial. Reid and Baucus want to extend the federal unemployment payroll tax to cover the $2.4 billion cost, while business groups and Republicans oppose extending the payroll tax, and seek instead to fund the extended benefits from unspent stimulus cash.

Stimulus Impact Expected To Begin Tapering Off Now

White House Council of Economic Advisers Chair Christina Romer says the impact of the stimulus package Congress passed early this year has already reached its peak impact, and will now begin to taper off. The stimulus won’t contribute any significant economic expansion in 2010, Romer says. She testified to the Joint Economic Committee that she expects unemployment to remain above 9.5% nationally through the end of 2010, peaking at 10.1% during the second quarter of next year. She acknowledged considerable uncertainty in her estimates, pointing out that the economy needs to add nearly 100,000 jobs a month just to keep up with population growth, before any recovery of the 7.2 million jobs lost since the beginning of the recession can be expected.

Political Rancor Holds Up Government Appropriations

Unable to come to any agreement on funding levels for most major federal government departments in the Senate, Congress is preparing to pass another continuing resolution to keep federal government’s doors open through December 15, 2009. The current continuing resolution expires October 31. The resolution will probably be attached to one of the appropriations bills expected to come out of conference committees this week for floor votes in both houses. The most likely vehicle for the continuing resolution appears to be the conference report on the Interior and Environment Department appropriations for FY 2010.

Highway Trust Fund Extension Battle Narrows

Last time Congress paid any attention to the need for a long term federal funding mechanism for highway, waterway and transit construction, the battle was between House leaders who wanted a long term bill by the end of this year, and Senate leaders, who wanted an 18 month extension to try and figure out how to make up for declining motor fuel tax revenues as vehicles get better mileage while folks drive less. The Senate desired extension through March 2011 would have pushed any tax increase needed beyond the next election cycle.

The battle is still going on, but Senate leaders have backed down to asking for a temporary funding extension at past levels through the next six months, and House Transportation and Infrastructure Chairman James Oberstar seeking a three month extension, so a six year permanent funding bill can be completed before year end. Either way Congress will have to face the revenue issue before the next elections. Oberstar has a draft bill appropriating $500 billion over the next six years, but House Ways and Means as yet has not begun to explore ways to raise that much revenue. Motor fuel taxes won’t do it at present rates of taxation and fuel consumption. Motor fuel tax increases, a new tax on miles driven, with some method of tracking personal and commercial vehicle mileage, and other alternatives have been raised, but none has been explored in detail.

Climate Change Initiatives Still Face Major Hurdles

In a speech at MIT Friday, President Obama praised the efforts of Congressional leaders to move forward climate change legislation, ahead of hearings this week in the Senate Environment and Public Works Committee on the Kerry/Boxer cap and trade bill. Environment and Public Works Chair Barbara Boxer will preside Tuesday, Wednesday and Thursday over hearings which will include 54 witnesses from various federal agencies to be involved in administering the proposed legislation, business and industry leaders who will be affected by the measure, and analysts involved in predicting its costs to various sectors of the American economy.

Boxer hopes to mark up the bill in her Committee the first week in November, but Environment and Public Works ranking member James Inhofe is threatening to withhold the required quorum for a markup unless the complete text of the bill is released, together with details of the USEPA cost analysis of the proposal. Other government climate change initiatives also face strong opposition.

Wisconsin Congressman David Obey is heading up a contingent of Great Lakes Democrats seeking to block a new USEPA rule on ship diesel fuel sulfur content, The EPA proposal would prohibit ships operating within 200 miles of US coastlines from burning high sulfur diesel fuel. The effect of the 200 mile limit would mean all lakers would be required to burn only low sulfur diesel, significantly increasing shipping costs over competing rail and highway transportation of cargo. James Weakley, president of the Lake Carriers Association, estimated that compliance would cost $210 million annually in increased fuel costs, bankrupting 24% of the lake carrier fleet. On the opposite hand, EPA estimates the rule will prevent at least 13,000 air pollution related deaths by 2020.

Paper mill “black liquor” burned as alternative fuel at the mills, produces tax credits of $2.5 billion annually for the paper industry. An IRS memo made public last week appeared to qualify black liquor for a $1.01/gallon tax credit as a cellulosic biofuel, which would magnify tax credits for paper mills by a factor of ten. However, before that can happen, USEPA will need to approve black liquor under the Clean Ari Act, and the agency has no procedure for registering non-transportation fuels. Current technology makes it impossible to use black liquor as a motor fuel.

President Obama wants to end the existing tax credit for black liquor, and Senate Finance Chairman Max Baucus and ranking member Charles Grassley have drafted legislation to do just that.

Some Senate leaders are pressing the committees with jurisdiction over climate change legislation to report out their bills by Thanksgiving, so the bills can be combined and brought to the Senate floor before the end of this year. After that, a conference committee would have to merge any Senate bill with the measure already passed by the House, and bring it up for final votes in both chambers.

Health Care Debate Likely To Extend Into Next Year

Unresolved issues in the merger of five committee measures on health care reform include Medicare reimbursement rates as a basis of payment to doctors and hospitals under any public option, regional disparities in payments to rural hospitals, coverage for medical devices, and the always thorny issue of federal funding for abortion services. Versions of the bill presently under consideration in Congress attempt to be “abortion neutral,” requiring availability of insurance plans covering abortions as well as plans which do not. The issue of how to account for premium payments from individuals required to buy private insurance, but subsidized by government tax credits towards their premium payments, is more complex. Can that person use federal subsidies to pay part of the premium for a policy covering abortion services? If not, how is that restriction not a denial of the individual’s right to get an abortion?

Congressman Bart Stupak of Michigan leads a group of about 40 legislators who say they won’t permit health care reform legislation to come to the floor unless a vote is allowed on an amendment specifically prohibiting federal funding for abortion. No one has as yet offered language parsing the accounting complexities enforcement of such a ban in the context of mandatory individual health insurance coverage subsidized in part by taxpayer money.

A floor vote in the House on health care reform is expected the week of November 6, with leaders advising Congressmen to expect to stay in Washington Saturday November 7 and the following Monday and Tuesday as well. The Senate vote will likely come later. According to House Republican Study Committee Chairman Tom Price, conference committee work merging the measures from the two chambers will likely “bleed into January or February.”

Friday, October 23, 2009

Urban Democrats Press For Additional $4 Billion For High Speed Rail Construction

While the Obama administration is seeking only $1 billion for high speed rail construction in the 2010 Transportation/HUD appropriations bill, urban region Democrats in Congress want to bump that number up to as much as an additional $4 billion, on top of the $8 billion already included in the American Recovery and Reinvestment Act.

States wanting to create high speed, intercity rail corridors have already submitted applications for $50 billion in funding against the $8 billion the stimulus package makes available, and leaders in both houses believe high speed rail construction is one way to create new jobs with good pay. Also, many believe the level of 2010 funding for high speed rail development will indicate whether the stimulus funds for that purpose are merely an aberration, or a real government commitment to improving intercity rail transportation infrastructure across the nation. Senator Charles Schumer of New York says expansion of high speed rail networks will help "the country mitigate some of the environmental, energy and congestion issues that plague our roads and airspace."

No New Stimulus, But Some Job Creation Measures, Pelosi Says

House Speaker Nancy Pelosi says her chamber will not consider another major stimulus package this session, but that Congressmen are preparing some individual measures designed to promote increased employment in the coming months. Bills under consideration, according to Congressional leaders, include the stalled expansion of unemployment benefits, increasing the tax loss carry back time period for businesses, extending and expanding the home buyer tax credit, a business tax credit for new hires, increased transportation construction appropriations, and extensions of food stamp and COBRA health insurance benefits for the jobless.

President Obama is proposing an increase in SBA lending limits from $2 million to $5 million to stimulate hiring by small businesses. He plans to lower the interest rate smaller community based banks pay to borrow from the Treasury Department for loans to smaller businesses in SBA programs.

Tuesday, October 20, 2009

Housing And Real Estate Groups Press Home Buyer Tax Credit Extension

The Mortgage Bankers Association, National Association of Realtors and National Association of Home Builders sent a letter to Treasury Secretary Timothy Geithner, Housing and Urban Development Secretary Shaun Donovan, and National Economic Council Chairman Lawrence Summers, urging a one year extension of the $8,000 home buyer tax credit, as well as expansion of its applicability to all purchasers, not just first time buyers, an increase in the amount of the credit, and making the money available to cover closing costs.

Senate Banking Chairman Christopher Dodd and Georgia Senator Johnny Isakson are proposing legislation to extend the $8,000 credit for an additional seven months, removing the first time buyer limitation, and doubling the income threshold to $150,000 per person and $300,000 per family. Their proposal would cost an estimated $16.7 billion.

Chicago Based Walsh Construction Participates In $1.3 Billion LAX International Terminal Expansion

Family owned Chicago contractor Walsh Construction, in a joint venture with Austin AECOM, has been awarded $1.3 billion in contracts for expansion and renovation of passenger terminals at Los Angeles International Airport. The bond financed project is not part of the federal stimulus appropriations. This work represents the first significant improvement to the LAX international terminal since the City of Angels hosted the 1984 Summer Olympics. It will add over a million square feet of space to the terminal, with two new concourses and nine new gates.

Energy Projects Moving Forward With Or Without Congressional Climate Change Action

While the politicians in Washington grind their teeth over the details of thousand page legislative proposals on energy policy, some energy projects continue to move forward without awaiting Congressional action. The federal Minerals Management Service has approved plans by Shell Offshore, Inc. for exploratory drilling in the Beaufort Sea off Alaska's North Slope, where producers expect to find 8.2 billion barrels of oil reserves and 27.6 million cubic feet of natural gas reserves.

On the other end of the renewability spectrum, Siemens Energy of Germany has been awarded six wind turbine generator orders for installation across the North American continent, aggregating $900 million. The 242 turbines in the combined six orders will have a power generating capacity of over 565 megawatts.

Can The Government Regulate Cap And Trade When It Can't Handle Energy Star?

While in the business of handing out $300 million in stimulus rebates to consumers who purchase Energy Star rated appliances, the US Department of Energy acknowledges in an internal audit that that it does not properly track whether products labeled with the Energy Star actually meet the required specifications for energy efficiency. Windows, and certain lighting products carrying the Energy Star label have to be tested by independent labs, but manufacturers can self-certify refrigerators, washing machines, dishwashers, water heaters and room air conditioners, and certain manufacturers, as well as Consumer Reports, note that tests have shown certain Energy Star labeled appliances do not live up to federal requirements.

The internal audit noted that promised retail assessments of Energy Star labeled products have often not materialized, and that when the Department of Energy does find non-conforming products in stores, it is not following through to see that the Energy Star labels are removed from the non-conforming goods.

Friday, October 16, 2009

Despite Obama's Restrictions, Lobbyists Still Have Plenty Of Access

When the economic stimulus legislation passed, President Obama made a big show of restricting the federal officials charged with distributing the $787 billion from accepting meetings, e-mails, documents or phone calls from lobbyists from businesses seeking to share in the grants and contracts stemming from the huge appropriations. So, the front door of the administration was shut tight on K Street. However, as many industry groups have managed to discover, there's a wide open back door, and they are making good use of it.

Every rule coming out of the federal bureaucracy has to be vetted by the Office of Management and Budget for a review of its impact not only on government budgets but also on the parties to be regulated by the rule. The OMB office charged with this task is called the Office of Information and Regulatory Affairs, or OIRA. OIRA keeps meticulous records of who sits in on meetings to review each proposed rule. Regulations require OIRA to meet with anyone who asks, from a business or organization likely to be regulated under a proposed rule.

One of the rules drawing a lot of back door lobbying was the stimulus legislation's mandate that domestic industries be favored in government construction contracts funded with stimulus cash, called the "Buy American" provision. In March and April OIRA hoisted three meetings with more than 20 people to discuss the Defense Acquisitions Regulations Council proposed buy American rule, including six lobbyists from the United Steelworkers Union, the United Autoworkers Union, and the American Steel and Iron Institute. The Japanese Embassy (Japan makes steel, too) also attended one of these meetings. So much for closing the door on lobbyists.

A second proposed rule, on the renewable fuel standard provisions on calculating greenhouse gas emissions from ethanol production, attracted more than 40 people to four meetings in March, including lobbyists representing Shell Oil, the American Petroleum Institute, the Environmental Defense Fund and the Union of Concerned Scientists. The biggest lobbyist draw of all so far was the EPA proposed rule on industry reporting of greenhouse gas emissions, which attracted over 50 folks to six meetings last month, including lobbyists for Chevron, BP America, Exxon, Mobil, Shell, the American Petroleum Institute, and the American Paper and Forest Association. Seems like government always has a back door.

Transparency Can Hoist Obama On His Own Petard

Republican politicians all across the country today are preparing to skewer the Obama administration with its own partial data on economic stimulus activity released yesterday on the website. The reports thus far show only 30,083 jobs created by stimulus appropriations spent to date. Obama's allies argue that the reported data represents only 5% of stimulus spending to date, and that if the other 95% of the spending is creating or saving jobs at the same rate, the stimulus actually produced 600,000 jobs directly. They further argue that these 600,000 jobs would have meant an indirect creation of a similar number, for a total job creation of about 1.2 million due to the stimulus appropriations.

Vice President Biden's Chief Economist Jared Bernstein says, "All signs - from private estimates to this fragmentary data - point to the conclusion that the Recovery Act did indeed create or save about 1 million jobs in its first seven months." Republicans point instead to Obama's failed promise that the appropriations would hold unemployment under 8%. Ken Spain, spokesman for the National Republican Congressional Committee, put his response this way, "After wasting taxpayer dollars to produce an unimpressive 397 jobs in Michigan, middle class families are still asking one thing: Where are the jobs?"

Republican Leadership Seeks To Tap Stimulus Cash For Social Security Payment

Continuing to argue that the American Recovery and Reinvestment Act is not working, Senate Minority Leader Mitch McConnell and House Minority Leader John Boehner both said yesterday that the Obama administration's proposed one time $250 check to each Social Security recipient should be paid for with unspent cash from the stimulus appropriations. Neither leader went so far as saying he would oppose the measure if it is not paid for. The Obama proposal would cost about $14.25 billion, to fund a single check to each of about 57 million Social Security recipients.

House Speaker Nancy Pelosi views the proposal as an extension of the economic stimulus package, noting that the original legislation provided a similar $250 check to each Social Security beneficiary. Boehner said, "I'd be happy to support the president's proposal; if we pay for it out of stimulus funds that have not been spent. The stimulus bill is not working."

International Coal To Expand Williamsville Underground Mine

International Coal Group, Inc. is beginning work on a $20 million expansion of its Viper underground coal mining operation near Williamsville, Illinois. The Viper mine is a room and pillar underground mine bringing up coal from the Springfield Seam, also known as the Illinois Number 5 Seam. Viper sells 58% of its output to electric utilities, and processes the raw coal at its preparation plant on the mine site.

Thursday, October 15, 2009

Economic Factors Could Stymie Climate Change Accord

CBO Director Douglas Elmendorf testified yesterday to the Senate Energy and Natural Resources Committee that overall employment may not be significantly impacted by cap and trade legislation, but that particular industries heavily reliant on production or consumption of fossil fuels will be hard hit as employment shifts away from them toward renewable energy sectors of the economy. "The shifts will be significant," Elmendorf said, and added that addressing climate change will require "some cost to the economy."

At the same hearing, Senator Sam Brownback of Kansas said Kansas City utilities predict a 44% increase in energy prices under the Kerry/Boxer proposal, while Senator Mary Landrieu of Louisiana said oil refinery operating cost increases under the measure could force Louisiana refineries out of business, resulting in more foreign gasoline imports. Adding to the confusion, Larry Parker of the Congressional Research Service, when asked by the committee to review various cost estimates released by federal agencies and private interests, testified that "long term cost projections are at best speculative, and should be viewed with attentive skepticism."

The same sort of troubling economic uncertainties plague the run up to the UN Copenhagen conference on climate change. The range of economist predictions regarding the world wide cost of greenhouse gas emission reduction runs from a low of $100 billion per year by 2020 to a high of $1 trillion per year. Luiz Alberto Figueiredo Machado, the lead climate negotiator for Brazil, sums up the global situation succinctly: "The level of ambition in funding is not matching up to the sense of urgency everyone now has. ... Developing countries are not convinced that the market will find them the $100 billion they need. They want guarantees."

At the same time, pledges from the governments of industrialized nations to the UN Adaptation Fund for fighting climate change have almost completely failed to materialize. And, some planned clean energy projects already on the drawing boards are being scuttled because lack of growing demand for power has scotched their project financing. Dong Energy of Denmark is pulling investment out of two planned clean coal power plants, in Scotland and Germany, though it remains involved as a design consultant on the Scotland project. E.On AG of Germany has shelved plans to build a controversial Kingsnorth clean coal power facility in southeast England.

However, one California company, eSolar Incorporated of Pasadena, has partnered with Clean Energy Solutions of South Africa to distribute eSolar's power technology in a seven nation swath across sub-Saharan Africa. Earlier this year eSolar licensed its solar thermal power plant technology to Acme Group for development of power facilities in India over the next decade.

Bipartisan Home Ownership Assistance Proposal

Republican Senator Johnny Isakson of Georgia and Democratic Senator Chris Dodd of Connecticut are introducing a $16.7 billion proposal to extend the $8,000 first time home buyer tax credit through June 30, 2010, and making it available to single filers earning up to $150,000.00 and joint filers making up to $300,000.00. The Senators expect to offer their proposal as amendment to legislation scheduled for floor action this week.

Republican Leadership Slams Job Creation Tax Credit

Without waiting for the Obama administration to even propose new legislation creating tax credits for businesses which hire new workers, House Minority Whip Eric Cantor yesterday said credit access was more important to business growth than tax credits for new hiring. "We need to do something to look at how small businesses can access credit, how can they regain their certainty to go ahead and invest capital," Cantor pronounced. "I think that many have demonstrated this type of tax provision is fraught with peril and potential for abuse - and frankly not able to deliver the real results that we want."

House Subcommittee Passes $315 Million Drinking Water Safety Bill

Wednesday the Energy and Environment Subcommittee of the House Energy and Commerce Committee passed by voice vote HR 3258, which would require USEPA to establish drinking water system standards for security against terror attacks. Rules promulgated under the bill would apply to all drinking water systems serving more than 3,300 people. The measure appropriates $315 million in 2011 to finance drinking water system upgrades away from use of high risk volatile purification chemicals.

Subcommittee Chairman Edward Markey noted that the legislation has the backing of the Association of Metropolitan Water Agencies. Republican members of the panel criticized the bill as "an environmental notion masquerading as national security." The measure requires drinking water systems to adopt what the USEPA will define as "inherently safer technology" for water purification.

Wednesday, October 14, 2009

Eight Senators To Watch On Healthcare Reform

Tired of trying to figure out what 100 Senators are going to do about the 5,000 pages of proposed health care legislation floating around the conference rooms of the Capitol? The bill will need 60 votes to pass the Senate, but there are eight key Senators to watch. You can call them the Wind Sock group, because their reaction to the way the five different committee proposals are eventually merged into a final bill will tell everyone which way the wind is blowing in Washington.

The key to the votes of this group of 8 is the so called "public option." Three members of the Wind Sock group are in the "must not have" position, three are in the "must have" position, and the other two have already compromised on the possibility of a public option in the future initiated by a "trigger" proving unavailability of affordable health insurance from private insurers in certain regions of the country. A change in the position of any one or more of these Senators could well be predictive of the direction the final legislation is taking as it is sculpted behind the closed doors of Capitol conference rooms and offices.

The "must not have a public option" group: Republican Susan Collins of Maine, Democrat Blanche Lincoln of Arkansas, and Democrat Mary Landrieu of Louisiana. The "must have a public option" group: Democrat Roland Burris of Illinois, Democrat John Rockefeller of West Virginia, and Independent Bernie Sanders of Vermont. Finally, the "trigger" advocates are Republican Olympia Snowe of Maine and Democrat Ben Nelson of Nebraska. Stay tuned.

The "Real" Health Care Reform Bill Is Being Sculpted In Secret

Despite being the only Republican vote in favor of the Max Baucus Senate Finance Committee health care reform proposal yesterday, Senator Olympia Snowe of Maine is likely to be excluded from the meetings of Democratic congressional leaders as they take the five lumps of pla-dough they have been handed by three House and two Senate committees, and attempt through Congress' byzantine legislative processes to sculpt them into a final piece of legislation which can garner the required number of votes in House and Senate roll calls before delivery to the Oval Office for President Obama's signature.

Why exclude her? Well, the Democrats don't want their secret deliberations disclosed to Republican talk show hosts, the press, and opposing Republican leaders in either chamber until their undoubtedly contentious negotiations are completed, and they come up with a single version of the legislation which they think can pass both the House and the Senate. After all, the real policy disputes over the details of this new law divide the Democrats from each other far more than they divide the Republicans from the Democrats.

Going forward, the process will probably look like this: Senate Majority Leader Harry Reid has only two versions of the legislation to merge, and says he expects to bring something to the Senate floor the week after next. House leaders will wait to see what the Senate passes before completing merger of their three bills, since they don't want to pass a House bill which would only die aborning in the Senate. Once the House sees what the Senate has passed, leaders there can bring either the Senate version, or a similar version highlighting only those policy differences they think they can push through the conference committee, to the House floor. Until a conference committee report emerges on this one, most Representatives and Senators, like the ordinary citizens outside the beltway, will have no idea at all what is being voted on.

We do know the final bill will require all citizens to buy health insurance, either through their employers, or individually, or pay a fine in the form of additional taxes. We don't know how big the fine will be. We also don't yet know whether or not the final measure will require employers to provide health insurance to employees, or whether it will include a government run health insurance company to compete with private insurers for premium dollars from those uninsured who will be forced to have coverage under the new law.

Most significantly, we don't know how Congress will ultimately raise the cash to pay for all this. The Senate version imposes a 40% tax on health plans costing over $8,000/year for individuals or $21,000/year for families, while the House increases income tax rates for those individuals earning over $500,000/year or families earning over $1 million/year.

Health insurers and labor unions have already come out strongly against the Senate Finance Committee bill. Unions, which often have negotiated hefty health plan benefits for their members, strongly oppose the "Cadillac health plan tax" in the Baucus measure, as do business groups, which don't want to lose generous benefit packages as a way to attract the most talented work force. Health insurance companies say the Finance Committee bill penalties are too low to force the healthiest young folks to buy health insurance, and that premiums will skyrocket because only the sick uninsured will become new health insurance customers.

The saddest fact of all is that there is still no commitment from either House or Senate leadership to give Senators and Congressmen, much less average citizens, sufficient time to read over the final legislation before either chamber votes on it.

Boxer Schedules Climate Change Hearings

Senate Environment and Public Works Chair Barbara Boxer has scheduled three days of hearings the last week of October on the Kerry/Boxer version of cap and trade legislation, despite the fact that USEPA has not yet finished its cost analysis of the proposed legislation, and CBO will not score the proposal until after her committee marks up the legislation. Witnesses scheduled at the October 27 hearing include Energy Secretary Steven Chu, Interior Secretary Ken Salazar, Transportation Secretary Ray LaHood, EPA Administrator Lisa Jackson, and FERC Chairman Jon Wellinghoff. Witnesses for the following two days have not yet been announced.

USEAP is analyzing the proposed bill without knowing the details it will include regarding nuclear power production, and without details of a final allocation formula for emission credits. Coal state senators Thomas Carper, Robert Byrd, Arlen Specter, Max Baucus and Mark Werner have expressed satisfaction with the draft bill's treatment of the coal industry, including incentives for construction of a new generation of carbon capturing coal fired power plants.

Immigration Reform On The House Agenda

Illinois Congressman Luis Gutierrez held a rally yesterday on the Capitol's West Lawn where he outlined his proposals for immigration reform legislation he proposes to introduce "probably sometime right after Thanksgiving." Representative Jan Schakowsky said she expects the Gutierrez bill will include both a pathway to citizenship for workers already here illegally, along with tougher enforcement measures and border security controls. Gutierrez said he expects his bill will require illegal immigrants applying for citizenship to submit to criminal background checks and also to take English proficiency classes. He said he believes his bill is needed to keep families together.

House Judiciary Committee ranking member Lamar Smith immediately spoke out in opposition to the Gutierrez outline. "Allowing millions of illegal immigrants to stay and take jobs away from citizens is like giving a burglar a key to the house," he said.

Tuesday, October 13, 2009

New Mexico Clean Power Hub Adopting Superconductor Pipelines

New Mexico governor Bill Richardson is announcing today that the Tres Amigas SuperStation hub, the first connection among all three United States major power grids, will use superconduction technology to transfer and balance the transfer of gigawatts of electric power from one region of the nation to the other two. The United States electric power transmission infrastructure is divided into three main grids, or interconnections: the Eastern, Western and Texas Interconnections. There are a few locations where two of the three can share power across their geographical boundaries, but there is nowhere yet that a sharing arrangement among all three exists.

That is about to change. Tres Amigas SuperStation, to be built on 22.5 square miles of land near Clovis, New Mexico, is one place having easy access to power from all three interconnections. The project is designed to use a triangular arrangement of underground direct current superconducting electric power "pipelines" to enable all three regional grids to share and balance power transmission. Such an interchange is required to make it possible for clean hydroelectric, wind, and solar power generated in less populated areas of our country to be efficiently sold in more populated locations. The successful implementation of any of the cap and trade proposals now pending in Congress will require the existence of the Tres Amigas Superstation, or something like it.

Tres Amigas has already received the right to lease the 22.5 square miles from the New Mexico State Land Office, and is in the process of filing for FERC permission to operate as a merchant transfer entity, allowing Tres Amigas to charge a fee for power transfers across its hub.

Parking And Transit Link Up

Green roofed parking garages with energy conserving lighting circuitry are the wave of the future, according to attendees at the Parking Show of Shows in National Harbor, Maryland this week. Martin Stein, president of the National Parking Association, explains the connection between parking availability and mass transit ridership: "Without abundant parking near transit stations in suburban areas, people won't bother to hop on subways and trains. The perception of convenience is very important."

According to Gloria Ohland of Reconnecting America, "There is this whole dynamic and irony at play here. Unless there are parking spaces, you're not going to get people to use transit." Dave Rich, a parking consultant at Rich & Associates, says the marriage of parking and transit is a growing segment of his business. "Forty percent of the projects we're doing right now involve planning and conceptual design of parking in transit oriented environments." So, all you green advocates out there, remember, if you want people to get out of their cars, you need to give them someplace to park.

Corn: Feed, Food, Booze Or Fuel?

Widening splits among the three major lobbying groups in the ethanol industry seem to be torpedoing a unified front regarding the treatment of ethanol as a fuel in pending climate change legislation in Congress. Growth energy, an ethanol lobby formed last year by ethanol plant builder Jeff Broin and retired General Wesley Clark, believes the National Corn Growers Association and Renewable Fuels, the third big ethanol lobby, are soft on ethanol fuel development because RFA is dominated by Archer Daniels Midland, a major livestock feed processor.

Tom Buis, Washington, D.C. lobbyist for Growth Energy, says flatly: "When we have excess grain, like we do, and idled corn ethanol plants, like we do, and we have an increasingly expensive reliance on foreign oil, there's an easy solution to all of this - ethanol." Growth Energy is known for advertising countering the argument that using corn based ethanol for motor fuel increases food prices, and for lobbying hard against USEPA's plans to consider jungle deforestation in evaluating the impact ethanol as fuel has on climate change in awarding carbon emission reduction credits under proposed cap and trade legislation.

Healthcare Reform Battle Lines Are Drawn

This afternoon the Senate Finance Committee reported out its version of a health care reform measure, on a vote of 14 - 9, with Maine's Olympia Snowe the only Republican senator voting in favor of the bill. Snowe said her vote was only for the bill as it now stands, and she reserved judgment on her floor vote until she sees what emerges from the close door leadership conference to merge the Finance Committee proposal with Ted Kennedy's earlier HELP version of the legislation.

The next step is for Senate and House leaders to merge the bills the five committees have reported out, and bring the legislation to the floor of each chamber for a vote. But, the policy differences within the Democratic Party won't be ironed out in either house of Congress - that final pressing will have to await conference committee work, since it seems clear the House and Senate will not pass identical versions of health care reform bills. The Senate bill may not pass that chamber if it includes the so called "public option," while House leaders insist they cannot pass a bill with out a public option.

Furthermore, the two chambers can't agree on how to pay for the trillion dollar cost of the legislation over the next decade. The House version will rely on a "millionaire tax" imposed on individuals earning more than $500,000 per year, or families earning over $1 million a year. The Senate bill imposes a 40% tax on health insurance plans costing over $8,000 per year for individual or $21,000.00 per family, known as the "Cadillac plan" tax. House Majority Whip James E. Clyburn of South Carolina says the "Cadillac plan" tax will never pass the House. "I think taxing benefits is a tough thing to do. On the House side we're coming up with a much better "pay for" than taxing benefits.

Another hurdle for any final reform legislation is yesterday's insurance industry analysis predicting that the Senate Finance Committee's action in cutting back penalties for families who choose not to buy health insurance will drive up premiums for those who are covered to as much as $26,000.00 per family by 2020.

So here's the scoop - the average citizen still has no idea what this legislation will look like, if it passes at all - and neither do the Senators and Congressmen who will have to vote on it. Senator Snowe acknowledged as much: "My vote today is my vote today. It doesn't forecast my vote tomorrow," she said. It will be a major stroke of luck if the conference committee version of this legislation is available to Senators and Congressmen in time for them to read it carefully before they vote on it, much less available to the general public for perusal and feedback to our elected representatives before the final roll calls.

Monday, October 12, 2009

Investing In Political Campaigns

Ever wonder what the rate of return is on those political donations businesses make to campaign funds? Well, these days it's a lot better than the stock market. When it comes to defense contractors, political campaign donations can return an average of nearly $610 on the dollar!

There are 18 Senators on the Senate Defense Appropriations Subcommittee. Among them they collected a total of $1.25 million in campaign contributions from 123 businesses receiving defense contracts earmarked by subcommittee members. An earmark is funding for a specific project written into the appropriations bill, which the Defense Department must spend on that project, whether the Defense Department really wants and needs the project, or not. The 123 businesses making the campaign donations received earmarks in the FY 2010 defense appropriations bill totaling $762.3 million, according to analysis by Taxpayers for Common Sense. That's a return on investment of $609.84 for every campaign dollar donated.

Modification Of Home Mortgage Modifications

The Treasury Department's announcement that it has met its self imposed November 1, 2009, deadline for half a million voluntary home mortgage modifications under its HAMP program is being met by skepticism that many of these modifications will ultimately save the borrowers from foreclosure. The Congressional Oversight Panel released a report Friday morning recommending that Treasury criticizing the home loan modification process as outdated, "targeted at the housing crisis as it existed six months ago, rather than as it exists now." Harvard University law professor Elizabeth Warren, who chairs the panel, says it does nothing at all to help borrowers at risk because of a job loss in the family.

House Financial Services Chairman Barney Frank is threatening to add a provision to the financial regulatory reform bill authorizing bankruptcy judges to reduce the principal amounts of home loans for bankrupt borrowers. The House has already passed a stand alone bill to achieve the same result, but that measure has not been called in the Senate. Senate Majority Whip Dick Durbin is expected to push the bankruptcy mortgage cram down measure hard, though the Senate already rejected the earlier House proposal.

Floor Time Constraints May Delay Unemployment Benefit Extension

Senate Majority Leader Harry Reid hopes to push the 50 state 14 week extension of unemployment benefits through the Senate by unanimous consent this week, but has not said whether he can find floor time for the bill of a Republican Senator blocks the unanimous consent request. The Senate bill also gives a further 6 weeks of benefits to the jobless in states which have averaged over 8.5% unemployment for the last three months.

The House has already passed a 13 week benefit extension, and conference committee negotiations could quickly resolve the differences between the two bills, making it possible for the measure to be in the Oval Office for signature before Hallowe'en. Without unanimous consent on the Senate floor, though, Thanksgiving looks more like the holiday of choice for a bill signing.

Healthcare Reform Debate Quickly Coming to A Conclusion

With the Senate Finance Committee expected to report out its version of a healthcare reform measure Tuesday along a strict party line vote, House and Senate leaders will caucus behind closed doors at the Capitol, in an effort to reconcile the divergent details of two Senate and three House committee versions of the legislation before bringing any bill to the floor for a vote. Whatever blended bill comes up for floor debate will run into two obstacles to easy passage in either chamber: Republican contentions that failure to include and reform of medical malpractice laws is costing $41 billion, and Monday's insurance industry report arguing that the watered down penalties for failing to purchase coverage will increase the premiums for covered families by as much as $4,000 per year.

The three major proposals which have to be blended include the Senate Health, Education, Labor and Pensions Committee bill pushed by Senator Edward Kennedy before his untimely death, costing $645 billion, Max Baucus' Senate Finance Committee measure, costing $829 billion, and the likely House version, costing $1.05 trillion. The Baucus plan omits a "public option, while both other measures have one. The Baucus measure also omits a mandate that employers provide health coverage for their workers, while the other two bills include such a requirement. All three bills impose penalties in individuals and families who fail to purchase health insurance, either individually or through their employers, with an annual penalty of $750.00 in the two competing Senate bills, and a fine ranging from 1.5% to 12% of annual modified adjusted gross income in the House measure.

Finally, the details of how any of these proposals will be paid for remain murky and incomplete. All we have is the promise of President Obama and Congressional leaders that the final law will be "deficit neutral," whatever that means.

Friday, October 9, 2009

House Panel Promotes Beefing Up Small Business Assistance

Yesterday the House Small Business Finance and Tax Subcommittee cleared two bills intended to provide additional financial assistance to America's small businesses through the current economic downturn. The first, sponsored by Indiana Congressman Brad Ellsworth, updates the SBA microloan program, offerring up to $35,000 start up loans for new small businesses established by low income, woman, minority and military veteran borrowers. The second, sponsored by Arizona Congressman Ann Kirkpatrick, adds a $120 million reauthorization of SBA's New Markets Venture Capital Program, aimed at assisting small businesses in low income geographic areas reduce energy consumption and update manufacturing machinery and equipment.

Unemployment Extension Deal Reached In The Senate

Dumping the idea of tapping as yet unspent stimulus cash to fund extension of unemployment benefits, Senate leaders reached a deal yesterday to bring a bill to the floor next week under regular order, extending the federal unemployment tax through June 30, 2011 to pay for the bill's costs. The Senate compromise measure would give all 50 states an additional 14 weeks of benefits, and a total of 20 more weeks in any state where unemployment exceeds a three month average of 8.5%.

Conference committee action resolving differences with any House passed extension could keep us all hanging through Thanksgiving before we know what the real benefit extension will look like.

According to House Speaker Nancy Pelosi, other House initiatives to attack growing unemployment could include both time extensions and increased eligibility for the $8,000 home buyer tax credit, acceleration of depreciation deductions for businesses, a five year tax loss carryback to replace the current two year provision, and additional federal assistance with cash strapped state budgets. When Pelosi brought these ideas out of a series of morning meetings with Senate Majority Leader Harry Reid in the Oval Office, House Minority Leader John Boehner panned the concepts. "These high unemployment rates are not coming down. The stimulus is not working, and some of the policies that are continuing to be promoted here are not going to help the situation, they're going to make it worse."

FAA's New Air Traffic Computers Flunk First Exam

Salt Lake City's regional air traffic control center was the test site for roll out of a new computer system to control civilian air traffic in the U.S. Last weekend the FAA tried to deploy the new computers at the Salt Lake City facility, and according to representatives of the air traffic controllers' union, the Salt Lake roll out was unsuccessful. The new electronics are supposed to be operational in all 20 regional FAA centers by the end of next calendar year. Doubtful.

Congressional Schedule To Extend Through Mid-December

House Majority Leader Steny Hoyer announced late yesterday that he expects your Congressman will be home for Christmas, but not much sooner. Hoyer said on the House floor that he would do everything possible to be sure the House wraps up its agenda by the end of the second week in December, rather than the original House adjournment target of October 30. He doesn't expect to overwork the assembled Congressmen too much, however, promising them a week off for Veterans Day and another week at Thanksgiving, unless they are still debating health care reform at those times.
Speaking of health care reform, Senate Minority Leader Mitch McConnell has low expectations of what will be in the final conference committee version of health reform legislation. "The real bill will be written by Democratic leaders in a closed-to-the-public conference room somewhere in the Capitol," McConnell predicted. "The reall bill will be another 1,000 page, trillion dollar experiment that slashes a half-trillion dollars from seniors' Medicare, raises taxes on American families by $400 billion, increases health care premiums, and vastly expands the role of the federal government in the personal health care decisions of every American."
Senate Majority Leader Harry Reid expects to bring a bill to the Senate floor the first week in November, and a House bill is expected on the floor of that chamber a week sooner. Of course, no one at all knows yet what will be in either measure, and even greater mystery shrouds what may come out of a conference committee after each house has passed a bill. Congressman Gerry Connolly of Virginia left a Thursday morning caucus meeting telling reporters that the proposed tax on "Cadillac" health insurance policies is "dead as a doornail," and that support in the House is growing for a "windfall profits" tax on health insurance companies to fund the House reform measure.

Wednesday, October 7, 2009

High Speed Rail Grants 712% Oversubscribed

Out of the $787 billion in economic stimulus appropriations included in the American Recovery and Reinvestment Act, $8 billion was set aside for grants to develop high speed rail transportation projects around the nation. Yesterday the Federal Railroad Administration announced that it has received a total of 259 applications for grants, from 34 different states, requesting a total of $57 billion. Among the proposals are 45 projects requesting $50 billion for advancement of intercity rail corridors on which trains could travel faster than 100 m.p.h. The other 214 applications from 34 states ask for $7 billion to upgrade rail travel at speeds less than 100 m.p.h.
Of course, this oversubscription represents another cause of the incessant delays in injection of federal stimulus cash into the nation's economy. While the FRA deliberates over deciding which states and which projects will be winners and losers in this race, the gandy dancers of America remain firmly seated on the sidelines, hammers between their knees.

Stimulus Politics? FAA Funds Low Priority Projects

The stimulus appropriations included $1.1 billion to the FAA for high priority airport construction projects. FAA procedures rate project priority on a scale of 1 to 100, and in a typical fiscal year, FAA grants go only to projects scoring above 41 on the agency's priority scale. When the stimulus legislation passed, the agency adjusted its grant process for stimulus funds by raising the priority score threshhold to a minimum of 62.

Now that specific FAA stimulus grants have been announced, however, it turns out that nearly a quarter of the appropriation, or over $270 million, will go to projects ranked below the 62 point threshhold. At least five of the stimulus finded projects fail the ordinary requirement of scoring above 41. The lowest ranked of all stimulus grants will be $1 million for baggage handling at the Rockford, Illinois International Airport, which primarily serves cargo planes, and $1.85 million to expand the passenger terminal at the Pocatello, Idaho Regional Airport. Those two projects both received priority ratings of 31 points.

Three other projects which will get stimulus funding, despite ranking below the FAA's usual 41 point priority floor, including $14.7 million for the Ouzinkie, Alaska airport, $14.0 million for the Akiachak, Alaska airport, and $11.6 million for the Freeland, Michigan airport. That's a total of $43.15 million in stimulus grants for projects the FAA would never have funded even under its usual process. So much for the idea that stimulus spending would be scrutinized for wasteful abuse.

New Hire Tax Credits Pick Up Support

Columbia University Nobel Prize winning economist Edmund S. Philips is throwing his considerable influence behind proposals that Congress enact some form of the corporate tax credit for hiring new workers which was stripped out of the stimulus bill at the last minute to bring its price tag within the desired limits. A new propsal circulating on Capitol Hill would provide a two year tax credit for new hires, equal to 15.3% of the new worker's salary in the first year, and 10.2% the second year, to be credited against the payroll tax obligations of the employer, up to an earnings cap of $106,800.00 per hire.

"It's beautiful if it can be timed at a dire moment like this," Phelps says, "when unemployment is way too high and appears to be going somewhat higher." Actually introducing legislation to enact such a tax credit, however, cound have the uninteided consequence of making the economy worse, warns University of California economist Lee Ohanian. "Particularly for big employers, if they think a job creation tax credit is on the offing, it could certainly be an incentive to delay hiring," while the legislation is debated in Congressional committes and on the lfoor of both houses. Failure to aciheve prompt passage of such a bill, Ohanian says, would be counterproductive. "It could have the perverse effect of actually prolonging the recession."

Cap And Trade To Save The Jungles?

Climate change legislation lobbying has taken a different twist this week as advocates from the Commission on Climate and Tropical Forests, including Michael Morris, CEO of American Electric Power, urge the Senate to allocate 5% of emission allowances to international forest conservation programs aiming to save the world's jungles. The Committion proposes that the U. S. invest substantially in programs to reduce jungle deforestation, beginning with $1 billion per year in 2012 and increasing to $5 billion per year by 2020.

The House climate change bill allows American energy companies to purchase carbon emission cresidt from programs reducing deforestation, and lobbyists want the Senate measure to allow emission offsets purchased by maintaining tropical rain forests.

Tuesday, October 6, 2009

Stimulus Extension Under Serious Discussion In The White House

Preferring to call it extension of the current stimulus legislation, rather than a new stimulus proposal, senior Obama administration adviser David Axlerod said yeaterday that the White House is exploring a number of job saving and creating measures for Congressional action next year. Among the ideas being kicked around the Oval Office are a $3,000 tax credit for new hires, expansion of five year tax loss carry backs, extension of the $8,000 first time home buyer tax credit, and a $100 billion extension of unemployment benefits along with the 65% COBRA subsidy for the unemployed to continue health insurance coverage.

U.S. Leads Geothermal Power Production Capacity

According to the latest update from the Geothermal Energy Association, the United States continues to maintain world leadership in geothermal power production capacity. Total installed U.S. geothermal power production capacity is now nearly 3.16 million megawatts, representing 4% of 2007 total renewable energy consumption in the nation. Geothermal power output is currently concentrated in Alaska, California, Hawaii, Idaho, New Mexico, Nevada, Utah and Wyoming. In 2006 there were 34 such facilities in the U.S., and currently there are 132 on line.

Experts forecast 3% annual growth in the geothermal sector, though pending legislative cap and trade initiatives could double that growth to 6% annually. Success rates for geothermal power exploration are limited to about 25%, and exploration and production costs can range from $1,600 to $5,000 per kw of generation capacity. Once government policies are solidified, and available federal subsidies are identified more clearly, construction of such facilities in certain regions of the country could expand dramatically, with plans already on the drawing boards for facilities in Oregon, Mississippi, Florida, Louisiana and Colorado.

Estate Tax Compromise - Another Attack On Small Businesses

The American Family Busiuness Institute came out swinging yesterday in an e-mail blast opposing the Senate estate tax compromise supported by 46 trade associations in a September 24, 2009 letter. The Senate proposal would permanently extend the estate tax, though at a compromise rate of 35% on the portion of estates over $5 million in value. Unhappy with the collapse of opposition to an estate tax extension by the U. S. Chamber of Commerce, the National Association of Manufacturers, and the National Federation of Independent Businesses, among other major trade groups, AFBI's e-mail says the Institute is "deeply disappointed by the Chamber's and NFIB's decision to abandon small businesses and farms in the name of compromise."

Of course, family owned construction contracting businesses of all sizes are another segment of the economy directly affected by continuance of the estate tax at a confiscatory 35% rate. Ownership succession planning in capital intensive construction businesses is complex enough without having to think about cashing out when the government suddenly wants to take 35% of the value of the company.

Agriculture Industry Split On Climate Change

Echoing the deep divisions within the industrial sector of our economy over climate change legislation working its way through Congress, the agriculture industry is also split over Congressional proposals for greenhouse gas emission limits. In an effort to keep a seat at the table while legislative policy continues to be formed in Washington, the National Corn Growers Association has taken a wait and see position respecting the Kerry/Boxer Senate climate change bill. At the opposite extreme, the American Farm Bureau Federation says it will oppose the Senate version of climate change legislation even more fiercely than it lobbied against the bill which has already passed the House.

Salivating over a potential 25 billion gallon ethanol market once cap and trade legislation passes, the corn growers want to keep whatever influence they may have over provisions in a final measure respecting indirect land use analysis. Corn farmers object to including the effects of increased ethanol use outside the U.S. on denuding of tropical rain forests when computing the "carbon footprint" of corn based ethanol production. The Farm Bureaus, already disappointed with that possibility, see the legislative measures only getting worse for American farmers.

Apple Quits U. S. Chamber of Commerce Over Climate Change

The latest major business to resign from the U. S. Chamber of Commerce over the Chamber's opposition to pending climate change legislation announced it's immediate resignation in a letter suggesting the Chamber should take a more positive role in efforts to control greenhouse gas emissions. In a letter sent yesterday to U. S. Chamber of Commerce President Thomas Donahue, Apple, Inc.'s vice president for worldwide government affairs Catherine Novelli wrote that Apple "would prefer the Chamber take a more progressive stance ... and play a constructive role" in the climate change regulation process. Apple's resignation is effective immediately.

A Chamber spokesperson issued a brief response stating that it represents "the broad majority of our membership" on ths issue, but that "there are some companies who stand to gain more than others with the current options on the table."

Monday, October 5, 2009

Business Leaders Jumping On The Cap And Trade Bandwagon

Executives from businesses in several different sectors of the American economy are letting their senators and representatives know this week that their companies support cap and trade legislation to curtail climate change. Over 150 busniess people wi8ll swarm Capitol Hill tomorrow and Wednesday - from companies including eBay, Hwelett PAckard, Gap, and PAcific Gas & Electric - to meet with at least 35 different legislators in support of cap and trade legislation. Separately, other businesses - including United Technologies, Johnson & Johnson, General Electric, and Weyerhauser - are teaming up with environmental groups - including The Nature Conservancy and Environmental Defense Action Fund - to launch a million dollar advertising campaign promoting climate change legislation in Congress.

Chicago based Exelon is participating in both efforts. Exelon CEO John Rowe explains the motivation behind these business campaigns: "Companies need the legislative certainty to start making the substantial investments needed to jump-start a low carbon economy and create jobs." Jeff Swartz, CEO and PResident of Timberland (yes, the shoes and boots) expressed a somewhat more jaded view of the legislative process: "I wish the government thing was a lot simpler - an 800 page bill! Come on, guys - 800 pages. What the hell does that mean? It means you don't really want change, It means you want to get re-elected."

Universal Broadband Access Will Depend On Private Capital

FCC Chairman Julius Genachowski emphasized at an agency hearing Thursday that extension of internet service to all Americans will depend on investment of up to $350 billion in private capital when telemedicine and "smart grid" electrical power monitoring are factored into the expansion of internet useage. With internet non-profits like Free Press, which helped candidate Obama formulate tech policies, lobbying intently for new net neutrality rules at FCC, and with those proposed regulations adamantly opposed by the broadband purveyors who have the capital required to fund a $350 billion internet expansion program, a clash of titanic proportions is looming as the February, 2010, deadline for presentation to Congress of FCC plans for universal broadband access approaches. The major internet providers have already opted out of the government loan and grant programs in the stimulus package which were aimed at promoting network expansion into rural regions of the country.

An Alternative Chinese Drywall Solution

A better understanding of the cause of the smelly and corrosive fumes released by certain lots of drywall imported from China has led one company to a solution for the problem in homes and other buildings, short of tearing out the offending drywall and replacing it along with any affected copper containing mechanical elements of the structure. Slingerlands, New York based Sabre Technology Services has developed a technique costing $10 to $15 per square foot, using a tent placed over the affected home or other building and fumigating the entire tented structure with chlorine dioxide gas.

Apparently the chlorine dioxide not only kills the bacteria in the drywall which produce the gas, it also neutralizes whatever sulphurous fumes have already been released and absorbed into other components of the structure, preventing the recurrence of smells and corrosion which sometimes happen even when all the offending drywall product has been physically removed. Sabre has even developed a technique for using dry filter units to detect the presence of fumes in suspect structures which are too new to have become smelly as yet. It seems Sabre is the only company owning chlorine dioxide generating equipment with enough capacity to perform this service.

Thursday, October 1, 2009

Secretary LaHood Doesn't Understand The Meaning Of "Out The Door"

In testimony today before the House Transportation and Infrastructure Committee, Secretary of Transportation Ray LaHood swore that the Obama administration is spending the stimulus appropriations for highway, transit, rail and maritime infrastructure as fast as it can, testifying that $29.4 billion of the $48.1 billion appropriated is "obligated" as the American Recovery and Reinvestment Act requires. "We've followed every guideline," LaHood testified. "The money is out the door."

While Secretary LaHood's testimolny probably would not subject him to a perjury prosecution, he is dead wrong if he believes what he said. Most of the money is still in Treasury Department vaults. Only $1.4 billion, or a little less than 5.1% of the money, has actually been spent, finding its way into the hands of contractors and material suppliers. So far, very little of it is actually in the hands of the tradespeople and plant workers on their payrolls. LaHood was challenged to do better by Congressman John Mica, who pointed out that in the 10 states with the highest rates of unemployment, the numbers of jobless have either stayed the same or increased since the stimulus legislation was passed.

If you are wondering where your share of the stimulus appropriations is, call Secretary LaHood and ask him.

Highway Fund Compromise Hits The Guardrail - Continuing Resolution To The Rescue

The Senate and House leaders could not resolve their 11th hour differences over a three month extension of the federal Highway Trust Fund in time to beat the stroke of midnight last night, so the 2005 reauthorization's recission of $8.7 billion in unspent appropriations will take effect until both houses can send a conference committee bill of some sort to the Oval Office. The Senate's three month extension bill, including a reversal of the recission of unspent money, failed to pass by unanimous consent, with Republican senators wanting to fund the recission reversal with unspent construction stimulus money, while the Democrats wanted to use unspent TARP funds to pay the highway trust fund bill.

Had the Senate passed its version of the measure, House Transportation and Infrastructure Committee Chairman James Oberstar would have scotched any chance of final legislative action, since the House version did not include a reversal of the unspent funds recission, due to House rules on pay as you go legislation.

Nevertheless, Congress did arrange another month to work on resolving House and Senate differences by sending the Legislative Branch appropriations bill to the Oval Office for signature last night, including a 31 day continuing resolution extending all government funding at current levels, with some increases for Veterans Health Administration and the Cencus Bureau. On a floor vote of 61-39 the Senate also included a provision permitting the Postal Service to defer a namdated $4 billion contribution to fund retiree health benefits. Isn't it interesting how the end of the fiscal year produces so much eleventh hour legislation robbing Peter to pay Paul?

"Card Check" Without The Card Check

Senator Sherrod Brown of Ohio said today he expects the Senate to eventually pass the Employee Free Choice Act in a compromise version which will dump the provision eliminating secret ballot elections when a majority of employees have signed union authorization cards. Brown himself opposes elimination of the provision, but acknowledges it would be extremely difficult to get the required 60 votes, over intense business lobbying against the measure, unless the card check - no secret ballot clause is dropped from the bill.

Broadband Extension Costs Estimated Up To $350 Billion

How broad is broadband communication? That's the question the FCC must answer by February 17, 2010, the deadline for it to report on the cost of extending broadband service to every American household, enacted in the stimulus legislation. FCC Chairman Julius Genachowski announced to reporters yesterday that providing all underved households only the bandwidth required for e-mail and web surfing would likely cost $20 billion, while expanding service to include high definition movie transmission and video conferencing would cost as much as $350 billion.

Present statistics show that 4% of the population has no access to internet service, while 33% choose not to pay for the service, and 63% are already subscribers. Whether the FCC chooses the low end, the high end, or some middle ground in the range of its estimates, there will be a lot of cash in this program for construction businesses.

Senate Cap And Trade Bill Faces Uphill Battles

Senate Foreign Relations Committee chairman John Kerry and Senate Environment and Public Works Committee Chairman Barbara Boxer unveiled an 800 page partially complete draft of their cap and trade climate change proposal today, but the measure faces strong opposition even within their own party. Democratic Senators Jay Rockefeller of West Virginia and Kent Conrad of North Dakota expressed objections to the bill's requirement of a 20% reduction in greenhouse gas emissions by 2020, a 3% increase over the terms of the measure passed this summer in the House. According to coal state Senator Rockefeller, the higher goal "is unrealistic and harmful -- it is simply not enough time to deploy the carbon capture and storage and energy efficiency technologies we need. Period."

Democratic Senators Kent Conrad, Byron Dorgan and Maria Cantwell object to the measure's lack of provision for oversight of the carbon allowance market, fearing market manipulation harmful to their states' argicultural interests. Other democrats object to the fact that the draft includes no details yet on how free and auction based carbon credits will be allocated among businesses in various segments of the economy which will be affected wither by the carbon emission restrictions or the higher enegry costs resulting from emission caps.