Friday, May 28, 2010

Highway Trust Fund Reauthorization – No Time Soon

Despite pressure from influential state and local officials like California Governor Arnold Schwarzenegger and Pennsylvania Governor Ed Rendell, and New York City Mayor Michael Bloomberg, as well as influential lobbies like the Amalgamated Transit Union and the Transport Workers Union of America, Transportation Secretary Ray LaHood predicts there won’t be any action on a full six year reauthorization of the Federal Highway Trust Fund until after the November 2010 midterm elections. Blue Dog Democrat Congressmen and other House fiscal conservatives don’t want to be pushed into voting this session for the tax increases which will be needed to fully fund a $500 billion, six year reauthorization.

As a result, Connecticut Senator Chris Dodd is pushing legislation to create a $2 billion emergency fund to subsidize state and local transit operations until a new Highway Trust Fund bill can be enacted. Without such a measure, local transit agencies all around the country will be facing route and schedule cutbacks and employee layoffs before a new House can be elected in November.

Blue Dogs Cut House Extender Package – Senate Delays Action

With authorization for longer unemployment benefits and COBRA subsidies expiring after Memorial Day, the House passed a cut back version of the extender legislation this week, but the Senate adjourned without taking any action, once leaving out of work Americans whose benefits expire in limbo until Congress reconvenes June 7. Fiscally conservative House “Blue Dog” Democrats cut $33 billion from the proposed legislation before it passed, and separated out $23 billion in Medicare doctor reimbursement extensions for consideration apart from unemployment benefits. Both House measures now extend doctor pay and unemployment compensation only through November 2010 rather than through June 2011 as originally proposed.

As passed by the House, the bills will still increase the federal budget deficit by $50 billion, and the Senate threatens to reinstate the June 2011 cutoff date when it reconvenes June 7. The House measure also includes $6 billion for federal bond issues to support local and state infrastructure construction projects.

Of course, all these Senators and Congressmen are getting their regular paychecks while they keep out of work Americans waiting two or three more weeks for their next benefit payments.

Wednesday, May 26, 2010

Extenders In Jeopardy

Leaders in both the House and the Senate are threatening to keep their bodies in session through the Memorial Day recess, in spite of members desire to travel home to their respective districts now for holiday parades and rallies. Nevertheless, it looks like the proposed legislation extending unemployment and COBRA benefits, along with Bush era tax breaks for individuals and small businesses, and Medicare payment levels for physicians, is doomed. Neither House nor Senate leaders have the votes to pass the proposed extenders through year end, because of the cost to the federal government. While the House could probably pass a three month extension, even that short relief appears to fall flat in the Senate, leaving those still looking for work whose benefits have already run out, or will run out soon, with little hope of further relief.

Senators and Congressmen who face tough reelection battles have added a number of revenue raising measures to the extender proposal, including an increase in oil excise taxes from eight cents to 32 cents per barrel, limits on corporate use of foreign tax credits, and a 157% increase in the tax rate venture capitalists pay on “carried interest” earnings. Business lobby protests over these tax increases could scuttle the entire benefits extension package. In addition to extension of benefits for the jobless, the bill also includes $24 billion in assistance to state governments with serious budget deficits, $6 billion to fund summer job programs for young people, and $65 billion to postpone pay cuts for doctors treating Medicare patients.

Fiscal discipline went out the window when the Obama administration wanted to stimulate the economy and pay for nearly universal health care benefits, but now that midterm elections are approaching it seems like Congress is completely willing to try balancing the federal budget on the backs of those who have still been left behind by the effects of the stimulus measures.

Health Care “Reform” Becoming Health Care “Conform”

When stumping for his federal health care legislative package, President Obama repeated over and over at every rally and speech to Congress that “if you like your existing health coverage, you can keep it” under the bill which he signed into law this spring. As the Department of Health and Human Services begins writing the rules and regulations that will carry the provisions of the new law into effect, it is becoming clear that Obama’s promise was just a technicality on the road to limiting everyone’s health coverage to what the federal government wants you to have.

The proposed regulations will provide a penalty of $3,000 per year per employee against any employer whose health plan costs any of its employees more than 9.5% of their earnings. Of course, this penalty will eventually push all employers into offering only the health coverage the federal government wants you to have. Furthermore, there is no guarantee whatsoever that federal bureaucrats won’t reduce the 9.5% figure even lower in the future, in the name of “affordability” of health insurance. Because most Americans get health coverage through their employment, this provision of the new law puts the federal bureaucracy at HHS firmly in charge of what form of health insurance will be available to the vast majority of the population.

Yes, you can keep your current health plan, but only for a little while. Eventually, fewer and fewer employers will be offering health coverage costing more than 9.5% of the pay of the lowest employee on the totem pole, and rapidly declining demand for more comprehensive health coverage will drive insurers which might offer better coverage out of the market. Before long, we will all be on something that looks a lot like Medicaid, regardless of how much we would be willing to pay for better health insurance.

Pricing Cuts Promote Commercial Scale Solar Power Development

According to panelists at the 12th Annual Electric Power Conference and Exhibition in Baltimore this week, decreasing material and construction costs of commercial scale photovoltaic power plants [PV] and thermoelectric solar power production facilities [CSP/CST] are promoting commercial scale solar power production developments in climates where sunlight is available most of the year to “fuel” such facilities. Leo Casey, Vice President and Chief Technical Officer of Satcom Technology Corp. in Boston told attendees that utility scale installation cost for PV facilities has dropped from $5 per watt to $4 per watt already, and he expects future pricing cuts down to the level of $1 per watt for solar panels and $1.50 per watt for construction cost, or a total of as little as $2.50 per watt of installed capacity. According to William Bettenberg of Applied Materials, Inc., more and more utility companies are embracing PV technology, with 485 megawatts of PV generating capacity installed last year.

Bob McDonald of Skyline Solar, Inc., echoed the same theme regarding CSP/CST solar power production facilities. McDonald cited both reduced module cost and improved installation expense as contributing to an improved position for commercial scale solar thermal power generation, particularly since the stored heat involved in the CSP/T process makes such production facilities especially useful as load following power generation facilities, rapidly becoming less expensive to build than other types of “peaker” generating units.

Sunday, May 23, 2010

Financial Market Reform Legislation Moves Ahead

With Senate passage of a second version of the financial markets regulatory legislation last week comes a prediction by Congressman Barney Frank that the conference committee will have a final markup very soon, and Congress will have a bill on President Obama’s oval office desk by Independence Day. If you are in the business of building houses and condominiums, it won’t matter which version of this bill comes out of conference committee, the legislation will put another brick on financing for your business. New rules on consumer lending will make it harder for home buyers to get mortgage loans, and this will keep the housing market in the doldrums for both new and existing homes and condos. New working capital for home builders is going to remain difficult to find because of this legislation.

Frank and his Senate counterpart Christopher Dodd have yet to release a timetable for conference committee action on the bills. The principal difference between House and Senate version of the measure is the Senate requirement that banks spin off their financial derivatives business into separately capitalized business units. Lobbying activity respecting this legislation will surely intensify in the coming weeks. So far in the 2009 and the first quarter of 2010 business and consumer groups have spent $1.33 billion in lobbying efforts regarding this bill, with 3,000 lobbyists contacting our 100 Senators and 435 Representatives, making a ratio of more than five and a half lobbyists for every politician in Congress.

Will Power Plant Carbon Capture Costs Prove Prohibitive?

Carbon capture technology for coal fired power plants has been one of the darlings of Congressional committees working on climate change bills during the last year and a half, but panelist comments from industry leaders at the 12th Annual Electric Power Conference and Exhibition suggest that two aspects of carbon capture – cost and facility location – could toss a monkey wrench into the grand legislative plans surrounding this approach to greenhouse gas emission control. A representative of AES Corporation told the conference last week that under cap and trade the carbon dioxide allowances for coal fired electricity cost about $2 per ton. On the other hand, construction of a carbon capture facility adds $37 per ton to the cost of coal fired power, and transportation of CO2 to a storage site could add another$13 per ton, for total carbon capture cost of up to $50 per ton.

Just as the issue of nuclear power spent fuel rod disposal generated the acronym NIMBY, for Not In My Back Yard, conference attendees were busy discussing the new acronyms already in use regarding opponents of carbon capture facility site construction: NUMBY for Not Under My Back Yard; NOPE for Not On Planet Earth; and the new pejorative acronym for environmental activists opposed to carbon burial sites – BANANA, for Build Absolutely Nothing Anywhere Near Anyone. At least the debate is enriching Washington’s alphabet soup.

CAFÉ Standards For Big Rigs May Hit Construction In 2014

President Obama announced last week that USEPA is going to expand the motor vehicle emission standards to include large trucks, including 18 wheel dump trucks widely in use by construction businesses. After they go into effect in 2014, the truck standards will undoubtedly result in significant price increases for new dump trucks you are planning to add to your fleet. The construction industry, so recently prized as the engine of economic stimulus legislation, is taking yet another 2x4 to the back of the head on this one.

War Funding Bill May Include Renewable Power Loan Rider

The $58.5 billion emergency military funding legislation for Iraq and Afghanistan now working its way through Congress might give a small boost to power plant construction in the form of $180 million in loans for nuclear plant construction and wind and solar power plant development. Speaker Pelosi is insisting that a nuclear loan program proposed for addition to the emergency funding bill give parity to wind and solar power development, with $90 million for nuclear construction loans and $90 million for wind and solar power development. If the package survives the legislative process, this funding could support as much as $9 billion in additional loan guarantees for nuclear power plant construction and $3 billion in loan guarantees for wind and solar power generating facility construction, including the $2 billion “borrowed” from earlier legislative proposals to fund extension of the “cash for clunkers” program in the economic stimulus package.

“Extenders” Delayed Another Week

Despite the pain and agony additional delay is inflicting on every American citizen out of work and looking for it, Congress has delayed action for an additional week on legislation extending unemployment benefits for folks whose checks ran out weeks or months ago. The “extenders” of unemployment and COBRA benefits, Bush era tax breaks for individuals and small businesses, and other essentials for the survival of the economically disadvantaged, was supposed to be put to a vote last week. Neither house of Congress is prepared to act, in spite of the fact that the last temporary extension of these provisions expires over the Memorial Day weekend.

Wednesday, May 19, 2010

Federal Highway Trust Fund Reauthorization Stalled

There has been no significant legislative action to move forward the stalled reauthorization of the Federal Highway Trust Fund since House Transportation and Infrastructure Chairman James Oberstar’s hearing over a month ago on innovative financing methods for surface transportation infrastructure construction. Everyone in Congress recognizes that motor fuel taxes will be woefully inadequate to fund a six year $500 billion reauthorization measure, yet, in an election year, no one wants to sponsor new revenue measures to bridge the funding gap. Consequently, we can look forward to continuation of the series of three and six month interim funding measures for federal surface transportation projects, and the resulting inability of state and local government officials to make any long term plans or budgets for transportation infrastructure construction projects.

While the construction industry segment of the struggling American economy continues to languish behind the pace of nascent recovery, you would think our legislators in the nation’s capitol would take some interest in legislation with a very good chance of picking up the pace of job creation in construction, but you would be mistaken.

American Company Leads In Wind Power Operations

With 23 years of experience as a third party operator of wind power generation facilities, NAES Corporation of Issaquah, Washington, right here in the United States, is the world’s largest third party operator of wind energy generation facilities. NAES manages and operates 43 billion watts of wind energy facilities at 122 operating plants.

With 375 additional gigawatts of wind energy under development worldwide, NAES is a leader in power production even before passage of any American federal legislation promoting renewable energy growth and development. Hats off to one example of American technological ingenuity continuing to progress in spite of Congressional indifference.

Power Industry Lobbying Efforts Support Senate Climate Bill

Electrical generation industry leaders at the twelfth annual Electric Power Conference executive forum in Baltimore yesterday rallied behind the Kerry/Lieberman American Power Act, the Senate’s alternative to the Waxman/Markey cap and trade bill passed last year by the House. Urging his colleagues to get behind passage of the Kerry/Lieberman legislation, James Connaughton, Executive Vice President of Constellation Energy Group, told the assembled power industry executives: “In Washington, difficult legislation is often declared dead – right before it is passed.”

Lamenting that heavy handed USEPA regulation of carbon dioxide emissions is the likely alternative should Congress fail to pass any climate change bill this session, Connaughton told the power industry leaders that in his experience USEPA rules usually accomplish about a quarter of their goals at four times the estimated cost to industry.

During the executive round table on climate change legislation, Connaughton’s sentiments in support of the Kerry/Lieberman bill were echoed by Keith Trent of Duke Energy.