Tuesday, November 24, 2009

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.

Thursday, November 19, 2009

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.

Wednesday, November 18, 2009

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.

Friday, November 6, 2009

Back To Square One On Climate Change

Senator Barbara Boxer’s action in discharging the climate change bill from her Environment and Public Works Committee without and Republican committee members in attendance has angered so many leaders on both sides of the aisle in that chamber that three Senate leaders have determined to go back to the drawing boards and craft an entirely new measure for consideration, rather than continuing to advance the Kerry/Boxer bill reported out Thursday.

Democrat John Kerry, Republican Lindsey Graham and Independent Joe Lieberman are already working on Plan B, a bill to promote green job creation while protecting the coal and steel industries, expanding nuclear power production, authorizing more offshore oil drilling, and subsidizing renewable energy research and development.

The possibility that plan B will focus on job creation rather than reducing carbon emissions and fighting climate change has fractured the environmental interests into warring factions. One side of the fissure, including the Environmental Defense Fund, is already putting out ads featuring energy made in America, 1.7 million “green jobs,” and reduced dependence on foreign oil. The other side, including the World Wildlife Fund and the Center for Biological Diversity, excoriates what they see as dilution of the global warming alarm message in favor of soft soaping ads they call “climate-light.”

Meanwhile, with Senate leaders acknowledging that a floor vote in any sort of climate change bill in the Senate won’t likely happen this year, energy lobbyists are ramping up their spending, and representatives of African nations are walking out of negotiations in Barcelona preliminary to the UN conference on a replacement agreement for the Kyoto Protocol set for December in Copenhagen. It remains to be seen whether the Boxer maneuver is a complete barrier, or just a speed bump on the road to Congressional action later in the calendar.

Military Construction Appropriation Coming Soon To Your Senate Floor

Senate Majority Leader Harry Reid said he hopes the Senate will pass the military construction appropriations bill early next week, in time for the Veterans’ Day holiday. The bill appropriates a total of $133.9 billion for military and veterans’ affairs, including a total of $23.2 billion for military construction projects not funded in the stimulus package.

Senators Rip Texas Wind Farm Use Of Chinese Made Turbines

In a blinding flash of protectionism, New York Senator Charles Schumer has written a letter to Energy Secretary Steven Chu, asking Chu to block federal funding for development of a huge $1.5 billion Texas wind farm which will be build using turbines manufactured in China. The project is expected to create 330 jobs in Texas and 800 jobs in the Chinese factory which will build the turbines. “The purpose of the Recovery Act was to jump start the economy to create and save jobs – American jobs,” Schumer wrote. “American taxpayer dollars should not be used to finance those Chinese jobs.”

Walt Horniday, president of one of the U. S. partners in the project, responded, “This project will not take place without the planned benefits of the American Recovery and Reinvestment Act. Any characterization of this planned project as anything other than an economic development lifeline to the wind industry during tough economic times is just inaccurate.”

National Republican Senatorial Committee Chairman John Cornyn of Texas used the wind farm project as one example of a failure of Obama administration economic policies. “This just shows how ridiculous this whole stimulus proposal was,” Cornyn said, acknowledging, however, that “Texas would like to have the investment.” Cornyn seems to forget that the American Recovery and Reinvestment Act was crafted in Congress, and apparently passed without much thought by Senators and Representatives as to what American businesses would do with the $787 billion they were doling out.

Thursday, November 5, 2009

Boxer’s Committee Reports Out Climate Change Bill, Hopes For Copenhagen Conference Dim

The Senate Environment and Public Works Committee chaired by Barbara Boxer reported out the Kerry/Boxer climate change legislation on a vote 0f 11-1, with none of the Republican members in attendance. The lone Democrat voting against the bill was Senate Finance Committee Chairman Max Baucus, who strongly opposes the bill’s 20% greenhouse gas emission requirement. Baucus’ opposition to the bill will make it difficult to secure passage in a floor vote.

The 950 page legislative measure must still be pieced together with the work product of five other Senate committees having some sort of jurisdiction over global warming and greenhouse gas emission legislation, and a floor vote in the Senate looks unlikely before next year.

State Department Special Envoy on Climate Change Todd Stern holds out little hope of any significant action on an international climate change treaty at the Copenhagen conference coming up next month. The current treaty, the Kyoto Protocol, which the U.S. refused to ratify, expires in a little over a year. Noting that developing nations see carbon emissions as a problem created by developed economies, and worry that their own economic growth will be suppressed by a climate change agreement restricting their emissions, Stern said “The mentality that looks at the world through those lenses will not produce results.”

Nevertheless, in the absence of US action establishing a basis for belief that the economies of the first world are willing to negotiate in good faith, there is little chance that anything will come out of Copenhagen beyond a calendar for future talks.

Recovery.gov Range Of Mistaken Data Expands

It isn’t just education where job creation figures reported on the federal RAT Board website Recovery.gov have proven inaccurate. In addition to the situations we covered earlier where schools were reported to have saved or created more jobs than they have teachers on their payrolls, it seems other areas of the stimulus spending are also over reporting job preservation or creation statistics.

For a particularly egregious example, Fayetteville National Cemetery in Arkansas used $1,047 in stimulus cash to purchase a single lawn mower. The agency reported to Recovery.gov that its lawn mower purchase saved or created 50 jobs. Huh?

The real criticism of the stimulus spending, beyond the obviously outrageous job creation claims of some of the reporting government agencies, is that, despite President Obama’s promise that 90% of the stimulus created jobs would be in the private sector, of the 640,000 jobs the web site claims were created or saved by stimulus appropriations, 325,000, or more than 50%, are in the public sector. So much for accuracy of economic predictions.

Postal Service Shipping Rates Increasing

If your business ships documents or products using U. S. Postal Service flat rate boxes, widely advertised as an economical and efficient shipping method on TV, your costs will go up the first of next year. While small flat rate box shipping cost will remain $4.95, medium box rates will increase from $10.35 to $10.70, and large box rated will go up from $13.95 to $14.50.

Express mail envelope rates will increase from $17.50 to $18.30. Standard, parcel post and first class mail rates will remain unchanged.

Wednesday, November 4, 2009

House Health Care Reform Measure Sharpens Differences

Tuesday night’s release of a 42 page managers’ amendment to the 1990 page House health care reform bill sharpens the focus of Congressmen on the differences within the Democratic caucus which still plague efforts to marshal the required 218 votes to pass the legislation. Still missing from the 2032 page legislative package are the provisions respecting denial of federal funds for abortion coverage, and for excluding illegal immigrants from participation in federally subsidized health insurance.

The fact that these two issues remain the most contentious within the Democratic caucus gives Republican Congressmen hope that there is still a chance to delay or derail health care reform altogether. House Rules Committee Chair Louise Slaughter expects the House floor vote on the health reform measure to take place Saturday, since language for the abortion provision is still being worked out, and will have to be included in the rule on the bill, expected to come up for a Rules Committee vote at 2:00 p.m. Friday. “We’re further trying to craft language,” said Congressman Jim Langevin, leaving House Majority Leader Steny Hoyer’s office this afternoon. “We don’t want the abortion issue to be the issue that derails universal health care reform.”

Republicans are already bridling at the move to leave the abortion provision to consideration in the vote on the rule, since the proposed language will not be made public for 72 hours before the floor vote. Michael Steel, spokesman for House Minority Leader John Boehner, complained, “If Speaker Pelosi intends to address critical issues like taxpayer funding for abortion in the rule, they should make it available for the American people to read for 72 hours. Transparency means putting the whole bill online for 72 hours.”

New things which are covered in the terms of the managers’ amendment include a $1 billion dollar fund available to states for use in controlling health insurance premium increases, language forcing insurers to disclose pricing differences between on exchange and off exchange policies, limits on “excessive or unjustified” health premium increases, and an estimated $24 billion “pay for” ending paper mill tax credits for burning “black liquor” as a cellulosic alternative fuel.

In the meantime, in efforts to focus the political differences over health care policy, Republicans have introduced their own 219 page health care reform measure, eliminating mandates for citizens to buy coverage and for employers to offer it, and limiting malpractice damage awards for pain and suffering and impaired quality of life to $250,000 in any case of injury or death.

Senate Majority Leader Harry Reid predicts debate on health care reform in that chamber will spill over into December, and would not commit to being able to send a bill to the Oval Office before the end of this year. “We’re not going to be bound by any timelines. We need to do the best job we can for the American people,” Reid announced at a news conference.

Text of Managers’ Amendment:

Text of House Bill:

Text of Republican Alternative:

Recovery.gov Numbers Miss By A Mile

Figures don’t lie, and the teacher will check your work. Obama RAT Board officials responsible for reporting on the economic effects of the spring’s stimulus legislation must have missed class the day that lesson was presented. In a rush to produce figures showing a positive effect of the $787 billion appropriation on the American economy and employment, the Recovery.gov website got it wrong – way wrong. Just looking at numbers reported on Recovery.gov and comparing them to what we know about local suburban school districts here shows that “teaching jobs created or saved” as reported on the federal website exceed the total number of teachers employed in the district. Who knows what other mistaken numbers are contained in the federal information?

Recovery.gov says the $1.25 billion in education funding received by Illinois schools from the stimulus package saved or created 14,330 teaching jobs in the state. A quick review of district by district reports demonstrates, however, that the reported number on the website could be off by more than 20%. Some examples:

Dolton/Riverdale: Recovery.gov says 382 teaching jobs were created or saved. The district employs only 240 teachers altogether.

Kankakee: Recovery.gov says 665 teaching jobs were created or saved. The district employs only 600 teachers altogether.

North Chicago: Recovery.gov says 473 teaching jobs were created or saved. The district employs only 290 teachers altogether.

Wilmette: Recovery.gov says 166 teaching jobs were created or saved. The district’s superintendent says there were no teaching jobs created or saved.

The average margin of error in just these four examples is over 22.6%. That’s just not “close enough for government work.”

Chinese Drywall Situation Under Health Scrutiny

Congress, the Consumer Produce Safety Commission, USEPA and the Centers for Disease Control are investigating whether smelly Chinese drywall installed in 100,000 new homes in 30 different states is a health hazard to the families living in the houses. Acknowledging the existence of indoor air contamination in the affected homes, which are the subject of civil lawsuits in Louisiana, Florida and other states, Michael McGeehin of CDC says other contaminants besides sulfurous gasses have been identified in the homes in question, including formaldehyde. Health officials say the formaldehyde does not come from the drywall, and further testing is needed to determine whether the medical symptoms of home occupants are caused by gasses emitted from the drywall.

Federal officials awaiting test results say it may be another month before they have answers to the health issues plaguing people who live in the homes, where dramatic corrosion of copper water pipes and air conditioning coils is just one of the problems the drywall is causing. CPSC head Inez Tenenbaum has talked with Chinese government officials about the drywall issue, but has received no commitments of help in dealing with the problem from China.

Record Hill In Maine Getting Wind Farm Despite Congressional Foot Dragging

Even though the timetable for Congressional action on climate change legislation keeps getting pushed further and further down the calendar, some renewable energy projects are proceeding without waiting to see what Congress has in mind for the future of fuel and power in America. Record Hill Wind, a project being built along a north to south ridge line in Roxbury, Maine, is already under construction. The project will include 22 wind turbine generators along the peak of the ridge line, optimally arranged to catch the prevailing westerly winds from Canada and New Hampshire.

The 50.6 megawatt facility will produce 130 million kilowatt hours of power annually – enough to power every household in Oxford County. Delivery and erection of the turbine generators will start next June, with the facility to be commissioned in early fall 2010.

Union Pacific And CenterPoint Building $370 Million Container Terminal In Joilet

Construction is underway on a 785 acre rail/highway container terminal at the Union Pacific property in Joliet, near I-55 and I-80, with general contractor Ragnar Benson already putting down over 18 miles of railroad tracks. The fast track construction project is expected to create 1,200 construction jobs between now and June 2010.

William Charles construction is the site work contractor, and it will be placing 470,000 tons of ballast underneath the 10 rail tracks in the project. The facility will ultimately handle half a million containers a year.

Mandatory Paid Sick Leave Bill Introduced

House Education and Labor Chairman George Miller is pushing a bill to require employers to grant paid sick leave if they ask workers with the H1N1 flu or other contagious illness to stay home from work. Miller says 50 million Americans have no paid sick leave, particularly in the food service and hospitality industries, and that these workers are the most likely to face employer requirements to stay away from work if they get sick. Employees, Miller insists, should not have to choose between their paychecks and the health of coworkers and customers.

The bill applies to all businesses with 15 or more employees, but exempts any business already providing at least five days of paid sick leave to workers. Miller plans to hold a hearing on the bill this month, and bring it to the floor for a quick vote before the flu season gets info full swing.