| Home Page | Blog | Social Security | Healthcare | Energy | Education |
| Taxes | Budget Discipline | Outreach | References | Links | Join Us |
SAFE’s “hit nail on head” blog
(Please direct feedback to ww3@atlanticbb.net)
7/26/10 – D.C. update: the “green” energy push
We predicted several months ago that passage of the “healthcare reform bill” (GovCare) would not mark the end of this year’s push for bigger, more intrusive, more costly government. Raising the ante: America’s future is at stake, 3/29/10.
The rule of thumb that consequential legislation never gets enacted in an election year has been shattered, and the president’s party may see nothing to lose in pushing more leftist initiatives while it still has a big edge in both houses of Congress.
Other likely targets were identified as “immigration reform” and a cap-and-trade energy bill, but, as it turned out, “financial reform” (GovFinance) came first.
SAFE’s assessment of the GovFinance bills (House & Senate versions) was that (1) neither would reduce the risk of future financial crises, and (2) both addressed a host of irrelevant issues, notably consumer finance practices. “Reforming” the financial system: a play in three acts, 5/3/10; GovFinance: too bad to fix, 5/10/10.
A reconciled GovFinance bill squeaked through the Senate; it was signed by the president on July 21. Among other things, this legislation will unleash a flood of new federal rulemaking, thereby contributing to the climate of business uncertainty that is delaying an economic recovery. U.S. Chamber says Congress “failed” in its attempt to reform financial system, press release, 7/15/10.
“Congress had a historic opportunity to fix a broken system and it failed,” [U.S. Chamber of Commerce President Paul] Donohue said. “For years – long before the markets collapsed – the Chamber has called for modernizing our capital markets. Instead of fixing the system, Washington just piled bureaucracies and massive new regulations onto a broken system. This will only exacerbate uncertainty and jeopardize job creation.”
A recent Chamber study pointed out that this financial reform bill creates 533 [233 per a 7/14/10 Wall Street Journal editorial] required regulatory rulemakings, 60 studies, and 93 reports. By contrast, the Sarbanes-Oxley legislation passed in 2002 only had 16 rulemakings and six studies.
Intriguingly, the SEC accepted a settlement ($550 million fine, lesser charge) in a fraud proceeding against Goldman Sachs only two hours after the final Senate vote on GovFinance. The SEC’s fishy deal with Goldman, Washington Examiner, 7/20/10.
Meanwhile, comprehensive “immigration reform” stalled, although there will be finger-pointing aplenty this fall. Obama alienates GOP over immigration bill: Democrats, Republicans say bill won’t pass this year, Stephen Dinan, Washington Times, 7/1/10.
Which brings us to energy legislation, which is scheduled to come to the fore this week with the presentation of a major bill on the Senate floor. To understand the current situation, some back-story is required.
Recall the Waxman-Markey (W-M) bill, passed by the House in June 2009, which was designed to force a hugely expensive switch from fossil fuel to renewable energy by imposing a cap and trade regime for carbon emissions and much else. The high cost of “green” energy, 5/25/09.
Senators John Kerry (D-MA) and Joe Lieberman (I-CT) developed a modified bill (K-L), which was thought to be more palatable to energy companies and others but set the same carbon emission reduction targets as the W-M bill. Kerry, Lieberman say climate bill would reduce oil imports, create jobs, stem global warming, Matthew Daly, Washington Examiner, 5/12/10.
The legislation aims to cut emissions of carbon dioxide and other heat-trapping greenhouse gases by 17 percent by 2020 and by more than 80 percent by 2050. Both targets are measured against 2005 levels and are the same as those set by a House bill approved last year.
Unable to line up 60 votes for the K-L bill, Senate Democrats considered a pared-down version that would restrict the carbon emissions of large power plants only. Amid talk of jobs and the economy, Dems go for global warming, Chris Stirewalt, Washington Examiner, 7/14/10.
A ‘utility-only’ approach has emerged as a fallback as more sweeping plans covering more emissions sources — like factories, motor fuels, refineries and other sectors — ran into political headwinds.
It was ultimately decided to drop the K-L bill in favor of a “spill bill” that would increase the liability costs for oil companies in the event of future accidents like the BP oil spill [$20 billion wasn’t enough?] and create new subsidies for developing natural gas vehicles and products that reduce home energy use. Lack of votes for Senate Democrats’ energy bill may mean the end, Perry Bacon, Washington Post, 7/23/10.
Majority Leader Harry Reid (D-NV) blamed the GOP for the decision to drop “a broad, comprehensive bill that creates jobs and breaks our addiction to foreign oil,” but there was also opposition within his own party. Senate Dems retreat on global warming, Susan Ferrechio, Washington Examiner, 7/23/10.
Is the push to limit carbon emissions in the name of combating manmade global warming now over? Don’t count on it, because the proponents of this concept are determined and resourceful. Here are some things for the opponents to watch out for.
# Read the spill bill very carefully. It has been rumored that there may be an attempt to slip in a limit on carbon emissions by public utilities, thereby imposing “a massive new tax on energy that will kill jobs and send electricity prices skyrocketing.” Punishing you for BP’s spill, Dan Kotman, American Solutions, 7/16/10.
# In the “lame duck” session of Congress after the November elections, cap and trade or a carbon tax could be supported without fear of near-term consequences. Other liberal issues might be taken up as well, including tax proposals recommended by the Fiscal Commission on December 1. The Obama-Pelosi lame duck strategy, John Fund, Wall Street Journal, 7/9/10.
While such a course might seem dishonorable if the Republicans do well in the elections, says Charles Krauthammer, shame should not be counted on. His suggestion is to publicly raise the issue before the elections. Don’t let Democrats get away with liberal legislation in a lame-duck Congress, Seattle Times, 7/23/10.
Every current member should be publicly asked: In the event you lose in November — a remote and deeply deplorable eventuality, but still not inconceivable — do you pledge to adhere to the will of the electorate and, in any lame-duck session of Congress, refuse to approve anything but the most routine legislation required to keep the government functioning?
# The Environmental Protection Agency (EPA) has the administrative power to shut down coal power plants without cap and trade legislation.
Smaller coal-powered power plants are doomed: they will be forced to close by tighter limits on conventional pollutants. Why small coal-fired plants are going away, Jonathan Fahey, Forbes, 7/19/10.
. . . dozens of small and midsize coal plants nationwide [will] likely be shut down over the next several years. The back-and-forth in Washington for months has been all about carbon dioxide, whether and how to price it. But clean air regulations already in place, affecting pollutants like sulfur dioxide and nitrogen oxides, are becoming strict enough to beat carbon taxes to the punch.
State regulation may play a contributory role, as shown by a coal power shutdown plan recently announced in Delaware. Closing 3 coal-fired boilers an environmental triumph, News Journal, 7/17/10 [microblog entry].
Editorial rehashes the news story on 7/16 of the shutdown of three of four reactors at the Indian River power plant and lauds the outcome. Among other things, “the plan will cut carbon dioxide emissions by 50 percent and other pollutants by 80 to 90 percent.” [No mention of how the power will be made up. Also, one more time, CO2 is not a pollutant.]
http://www.s-a-f-e.org/global_warming.htm [Suggestion: bookmark this link now!]
To close down larger, cleaner coal power plants, the EPA is contemplating restrictions on carbon emissions pursuant to its 2009 finding that CO2, etc. are “pollutants” for purposes of the Clean Air Act. Congress could block such a move, of course, but a recent Senate resolution (introduced by Senator Lisa Murkowski, R-AK) to rein in the EPA fell short (53-47). Even if the resolution had passed and there had been a similar action in the House, a presidential veto would have been virtually certain. Murkowski vote isn’t the end of the story, H. Sterling Burnett, Washington Times, 6/14/10.
Whatever one’s views about the manmade global warming theory, isn’t it evident that unelected bureaucrats of the EPA should not be allowed to force a wholesale restructuring of the nation’s electric power infrastructure, thereby usurping the legislative responsibilities of Congress? We think so.
Senators who voted against the Murkowski resolution, however, apparently see the ends as justifying the means. Here is what Senator Tom Carper (D-DE) said in a letter attempting to justify his vote.
I believe that the passage of Senator Murkowski’s resolution would have delayed the debate we should be having – which is how to move this country toward a cleaner energy future. We must develop a long-term, comprehensive energy policy to achieve energy security and independence.
# Finally, green energy mandates and subsidies can mask the cost disadvantage of alternative energy sources.
As a case in point, the U.S. Energy Information Administration (EIA) projects a relatively modest economic penalty for the K-L bill. U.S. gross domestic product would be reduced by 0.2% over the next 25 years, with a reduction of some $200 in average household consumption levels, and little net effect on jobs. EIA report, 7/16/10.
http://www.eia.gov/oiaf/servicerpt/kgl/index.html
The EIA assumes that prescribed reductions in carbon emissions would be achieved by relatively sensible investments in natural gas, nuclear, and “clean” coal power plants, but this is not what is actually contemplated. EIA ignores hidden costs of Kerry-Lieberman bill, James Taylor, Heartland Institute, 7/19/10.
In the real world there is no way environmental activists will allow the large increase in nuclear power, natural gas power, and clean coal power necessary to keep Kerry-Lieberman costs at “only” $200 per household per year. Relying on far more expensive wind and solar power instead, costs will “necessarily skyrocket” just as President Obama himself has admitted.
The preference for wind power, solar power, and biofuels (e.g., ethanol) is an article of faith with environmentalists and the business interests that would benefit. Any argument that supports the desired conclusion goes – and will be slavishly reported by the mainstream media. Energy microblog, SAFE newsletter, summer 2010.
Even if we could prove global warming is not a problem, [the Greens] would still have extreme weather events (2/9/10), biodiversity (3/12/10), coral reefs (3/26/10), rising sea levels (2/27/10), costly oil imports (7/5/10), risk of technology failures (7/11/10), and spiritualism (3/13/10) to fall back on.
http://www.s-a-f-e.org/nwsltr58.htm#Energy
Now you may be thinking the public is not anxious to pay more for the energy it consumes (monthly electric bill, motor fuel, etc.), and this is true. Americans not inclined to pay more to fight global warming, Rasmussen Reports, 6/16/10.
Fifty-six percent (56%) of Americans say they are not willing to pay more in taxes and utility costs to generate cleaner energy and fight global warming *** Twenty-two percent (22%) of adults are willing to pay $100 more a year. Just 10% are willing to pay more than that.
With government mandates and subsidies, however, people may not realize how much extra they are paying (as consumers and/or taxpayers) for green energy.
Thus, power companies face state-imposed requirements to sell increasing amounts of wind electricity, and wind power producers are queuing up for government loan guarantees. It has even been proposed that the Department of Defense, etc. should commit to buy major amounts of wind electricity, which could result in the cost penalty being buried in the federal government’s cost of doing business. Wind power pitched to Obama: Govs. Markell, O’Malley encourage federal commitment, Aaron Nathans, News Journal, 7/22/10 [microblog entry].
Meanwhile, unnecessarily burdensome regulations are imposed on fossil fuel and nuclear power plants, which drives up the cost of energy from these sources. See, e.g., Nuclear growth puts region at risk: With nine reactors 40 miles or less from Delaware, proposals to build more make safety a real concern, Jeff Montgomery, News Journal, 7/11/10 [microblog entry].
While it would be tough to quantify just how much energy costs are being inflated by these policies, one does not need an advanced degree in economics to figure out that the effect is significant
Are fiscal visionaries fighting an endless battle, and what can we do to regain the initiative? One idea might be to remind this country’s current and aspiring political leaders that the bigger, more intrusive, more costly government policies of recent years are ill suited to maintain a prosperous and growing economy.
Here is a letter that SAFE is sending to the members of Congress from Delaware. It will take many voices to make a difference, and we urge you to reach out as well.
http://www.s-a-f-e.org/contacting_legislators_2.htm#July_26,_2010
Additional Blogs below:
7/19/10 – Resolving the fiscal mess: SAFE responds to a fictional inquiry Read Replies
Imagine yourself as a member of the National Commission on Fiscal Responsibility and Reform, which is supposed to recommend a cure for the government’s dire fiscal problem.
Last week we reported on the Fiscal Commission’s meeting and public hearing on June 30, which revealed sharply divergent opinions as to what recommendations should be made.
7/5/10 – Fiscal Commission update: lots of input, little progress.
Last week’s entry expressed concern about the feasibility of resolving the profound disagreement in this country as to the proper size and role of government.
More in our "Archives"