Last week the Congressional Budget Office (CBO) put out a distorted partial scoring of H.R. 2454, the American Clean Energy Security Act (commonly referred to as Waxman-Markey, but we like to call it the cap-and-tax bill).  The report stated that the cost of the bill is only $175 per family per year.  Now that figure is only for the year 2020 and comes with a lot of footnotes that need to be carefully read. 

Speaker Pelosi was so delighted that the report ignored the huge destructive effects this legislation would have on the economy and enormous exploding costs on future generations that she wants to ram the bill through the House before anyone figures that out.

Fortunately, the Wall Street Journal (WSJ) ran an excellent editorial uncovering this budget gimmickry.  The WSJ wrote:

A closer look at the CBO analysis finds that it contains so many caveats as to render it useless.

For starters, the CBO estimate is a one-year snapshot of taxes that will extend to infinity. Under a cap-and-trade system, government sets a cap on the total amount of carbon that can be emitted nationally; companies then buy or sell permits to emit CO2. The cap gets cranked down over time to reduce total carbon emissions.

To get support for his bill, Mr. Waxman was forced to water down the cap in early years to please rural Democrats, and then severely ratchet it up in later years to please liberal Democrats. The CBO’s analysis looks solely at the year 2020, before most of the tough restrictions kick in. As the cap is tightened and companies are stripped of initial opportunities to “offset” their emissions, the price of permits will skyrocket beyond the CBO estimate of $28 per ton of carbon. The corporate costs of buying these expensive permits will be passed to consumers.

Essentially, the cap-and-tax bill sets a bunch of landmines that will damage the economy.  CBO then did a damage assessment before the bombs have gone off.  All they are reporting is the little bit a dirt that was removed to plant the landmine.

But that isn’t enough of a distortion.  The WSJ piece goes on to point out:

The biggest doozy in the CBO analysis was its extraordinary decision to look only at the day-to-day costs of operating a trading program, rather than the wider consequences energy restriction would have on the economy. The CBO acknowledges this in a footnote: “The resource cost does not indicate the potential decrease in gross domestic product (GDP) that could result from the cap.”

The hit to GDP is the real threat in this bill. The whole point of a cap-and-trade scheme is to hike the price of electricity and gas so that Americans will use less.  These higher prices will show up not just in electricity bills or at the gas station, but in every manufactured good, from food to cars.  Consumers will cut back on spending, which in turn will cut back on production, which results in fewer jobs created and higher unemployment.  Some companies will instead move their operations overseas, with the same result.

This is the equivalent of CBO saying that the landmine will only redistribute some dirt when it is thrown into the air after the explosion.  It misses the whole point of the landmine – which is to spread destruction.  Just as the landmine will do far more serious damage to the human that steps on it or a vehicle that runs over it, the cap-and-tax provisions will do widespread, nasty damage to its intended target – the economy.

Let’s examine what CBO means when it slips in a footnote stating, “The resource cost does not indicate the potential decrease in gross domestic product (GDP) that could result from the cap.”  

The National Black Chamber of Commerce did an excellent study on the collateral damage caused by this bill, which CBO’s footnote alludes to.  The study found that the cap-and-tax bill is a “jobs” bill.  The problem is that this bill kills jobs.  It may create some temporary green jobs, but it kills many, many more.  After the landmine explodes on the economy by 2030, this bill will lead to a net decrease of 2.5 million jobs.

This result is confirmed by the results in Europe.  This study illustrates the devastating effects these environmental mandates have had on the economy in Spain.  It points out that Spain’s efforts to create green jobs is enormously expensive and, on net, a job killer.  For every “green job” created, 2.2 other jobs were destroyed.  What’s worse is that each of these now “green jobs” required a subsidy of over $750,000 with new wind energy jobs costing Spanish taxpayers $1.4 million.

Now you know why CBO wanted to cover up this mess with an oblique footnote.

Members of the House are expected to vote as early as tomorrow on the Waxman-Markey ‘cap-and-trade’ bill.  Though cleverly hidden, this bill will impose massive new taxes on all Americans.  Apparently, proponents seem to think that this is just what we need at a time when the economy is failing and the national debt has skyrocketed to $11.4 trillion: more taxing and more spending.  

The Heritage Foundation’s Center for Data Analysis found that by 2035 the Waxman-Markey legislation would result in $9.4 trillion in GDP losses, raise an average family’s annual energy bill by $1,241, and destroy 1,145,000 jobs. 

That’s a hefty price to pay, especially for a bill that, according to numerous studies, will have virtually no environmental impact.  Climatologist Chip Knappenberger has found that in the year 2050 with an 83 percent emissions reduction (as called for in the legislation), the temperature reduction is only nine hundredths of one degree Fahrenheit, equivalent to just two years of avoided warming.  So much for being ‘green.’  The only thing this bill will do is spend green, and lots of it.

For those who can’t imagine the bloated bureaucratic mess this bill will create, I have included a flow chart below, courtesy of the House GOP Conference. 

Because the Cap and Trade Bill (The Waxman-Markey Clean Energy Bill) has a little known provision that affects trees in Brazil and beyond.  According to the Washington Times: 

The provision, called “offsets,” has been attacked by both environmentalists and business groups as ineffective and poorly designed. Critics contend it would send scarce federal dollars overseas to plant trees when subsidies are needed at home, while the purported ecological benefits would be difficult to quantify.

The offsets “would be a transfer of wealth overseas,” said William Kovacs, vice president for environmental affairs at the U.S. Chamber of Commerce.

This bill is a mess and this offset provision shows just how clueless Congress is.  Passing the legislation will put a dagger in the heart of an economy already on life support.  The same Washington Times article also noted:

“The international offsets market is not a huge or cheap market,” said Joseph Romm, a climate expert at the center. “By 2020, the U.S. could be spending $4 billion on international offsets.”

Waxman-Markey is a lose-lose proposition for taxpayers and businesses.

The Transportation Authorization Bill is set to expire at the end of the fiscal year (September 30) and the trust fund is running dangerously low.  According to Politico:

Amid all its other budget woes, the Obama administration now estimates it will need $20 billion in new savings or revenues to shore up the finances for the highway trust fund until after the 2010 elections.   Transportation Secretary Ray LaHood confirmed the $20 billion figure to POLITICO after meeting with senators at the Capitol on Monday evening. And with the trust fund running dangerously low by late August, its shaky finances can’t be ignored much longer by Congress.

This should come as no shock to anybody because events such as skyrocketing gas prices and the recession have contributed to people driving less and less thereby reducing the amount of money collected for the trust fund.

According to Politico, the solution that is being sought is to pass an 18 month extension:

LaHood is pressing for an 18-month reauthorization that will carry the fund through next year’s elections and set the stage for a major debate then on a long-term answer to the problem of declining revenues from federal gasoline taxes. The administration remains opposed to any increase now in the 18.3-cents-per-gallon levy but appears willing to dip into other revenue raisers in the president’s budget in order to close the budget gap.

If only Congress and the previous administration would have listened to CCAGW in 2005.  In a letter to Congress, CCAGW complained about the $24 billion in pork barrel projects:

CCAGW, Taxpayers for Common Sense Action Group, National Taxpayers Union, the Club for Growth, Americans for Prosperity, and FreedomWorks all agreed in their letter to President Bush that exceeding the budget ceiling by $2.5 billion was “reason alone” for a veto.  The groups cited several other reasons for opposing the legislation: 

• H.R. 3 includes an $8.5 billion rescission of past budget authority that takes effect on September 30, 2009, the last day the bill remains in force, which is a reduction in spending that is not likely to occur.  Added to the $2.5 billion Congress approved above the President’s “ceiling” of $284 billion, this would break the President’s spending limit by $11 billion.
• There are nearly 6,500 pork-barrel projects stuffed into the bill by members of Congress that total more than $24 billion, or nearly 9 percent of the total spending.
• The President’s expressed goal of halving the deficit by 2009 would be subverted if he signed the bill, especially in light of the rescission shenanigans.

Oh, if Congress and the President only would have listened to us.  They didn’t and now they are in a bit of a pickle.   Congress and the President  need to show some courage and drop health care and cap and trade and address transportation ASAP.

A great op ed in today’s Ft. Worth Star Telegram.  The author concisely deconstructs each of the other sides very weak arguments in favor of an alternate engine. 

The Defense Department should have one mission; building and maintaining the best-trained, best-equipped American war-fighting infrastructure at a price taxpayers can afford.  Maintaining the industrial base and being a make-work program should not be its highest priority.  

We don’t find ourselves saying this often, so let me say it loud and clear:  WE AGREE WITH PRESIDENT OBAMA…it is time to ground the alternate engine program.

My earlier post on how $3.4 million in “stimulus” money is being used by the Florida State Department of Transportation to build an eco-passage for turtles elicited a humorous response from a “shell-shocked” Florida resident, Russell Price, a self-employed businessman in real estate development and concerned taxpayer, who wrote: 

The proposed new turtle tunnel will be located under US 27 N  in Leon County Florida outside of Tallahassee.  Presently, there is already a large 10′ wide by 8′ high culvert under the road that the turtles apparently do not like and therefore do not use. 

A simple temporary filter fence, installed at an estimated cost of under $5000  by volunteers directed by a biologist who was conducting a turtle study, has functioned well for the past nine years.  Successful lobbying by turtle enthusiasts, coupled with the availabilty of “free” Barrack Bucks, has accomplished what local elected officials have previously been unwilling to do; fund the $3,400,000 new and improved permanent turtlebahn, guranteed to carry no turtles to nowhere faster. 

Government spokespeople, sensing public outrage and increased scrunity, have become highly creative in their defense of the expenditure.  They now cite public safety as one of the prime reasons behind the construction, even though no one can cite a single incident of a flying or waddling turtle causing an auto accident.  In lieu of actual accident data of turtle-caused auto accidents, shocking visual imagery of flying snapping turtles crashing into drivers’ windshields at 60 miles per hour was floated in off-the-cuff comments by the spokesman. 

If stimulus money is being spent on projects like this one in Florida’s capital city, where the project actually received public scutiny and still is moving forward, one can only imagine the projects that are being funded that are located in areas where public scrutiny is missing.

Thanks for the update and the laugh…..still no signage, though?

For a number of years, CAGW has been dedicated to eliminating waste and inefficiency in government. Particularly, CAGW emphasizes the importance of the government taking as small a role in theprivate sector as possible.  This is especially true with technology.  On June 17, 2009, Liya Palagashvili, Koch Fellow and Summer intern at CAGW, had the opportunity to attend a broadband symposium hosted by the Internet Innovation Alliance (IIA) on “Developing a National Broadband Strategy: Deployment, Adoption, and the Stimulus.” IIA hosted a number of notable speakers who addressed a variety of significant issues facing broadband.

Here are Liya’s findings:

An interesting fact provided by John Horrigan, Associate Director of Pew Internet and American Life Project, was that home broadband adoptions had increased by 8% since last year (now standing at 63% of adult Americans who use broadband at home), despite the current financial hardship. Low-income Americans (earning less than 20k/year), high school graduates, senior citizens, and rural Americans experienced the greatest growth in broadband adoption since May 2008. Another point to note is that in areas with multiple broadband providers (a.k.a. areas of increased competition), the average monthly price of broadband is lower than in areas that contain only one, or two suppliers of broadband. John Horriganshowed that the average monthly price of broadband in areas with one supplier is $44.70 and in areas of more than four suppliers is $32.00—economic theory working in practice!

Furthermore, Mike Gallagher from the Entertainment Software Association explained the importance of broadband and video games. He also provided some fun statistics on video gamers:

• Average gamer is 35 years old
• Women represent 40% of all gamers
• 25% of all gamers are over the age of 50
• 70% of businesses use video games to train new employees
• Over 400 Academic institutions now offer video game programs and courses
• Dance, Dance, Revolution is used in over 1,300 schools in 31 states as part of their Physical Education Program

Also present at the symposium was Ron Packard, the chief executive officer and founder of K12, who highlighted the benefits of national broadband for online education. Ron Packard explained the dilemma for students of low-income families who often cannot afford to move or attend a private school if their public school provides poor education. A possible solution for that student is to participate in online education, which has the same level of quality as regular schools (arguably) and at a decent price tag.

Other speakers addressed ways to make broadband affordable to all Americans and ways to bring broadband to un-served communities. Howie Hodges from the One Economy Corporation proposed having tax incentives for providers and buyers of broadband as a way of expanding it.  

A rather ironic speech was given by the governor of West Virginia, Joe Manchin III, on the importance of not relying on federal funding. He alluded that the federal government should not be a provider for many state projects. Note: this is coming from the governor of the 5^th ranked state of Pork Per Capita, whose pork amounted to $257,635,000 in fiscal year 2009.

While listening to the speakers at this symposium, it dawned upon me that the government getting involved in this national broadband strategy will crowd out and hinder many private sector innovations. The private sector has done a phenomenal job in recent innovations and we have seen an unreal jump in both the speed and quality of broadband in such a short period. Although universal broad has become a policy goal, I am hesitant about the capabilities and success of the public sector in this already, privately-enriched field. For example, just recently Free Press held a conference expressing the need for government to mandate an all-you-can-eat pricing mechanism to protect high-volume users. Companies are concerned that all-you-can-eat pricing mechanism completely abandons and punishes the high majority of non high-volume users. This is analogous to saying that a casual user who checks e-mails and sends a few photos here and there should pay the same as the teenager who is downloading thousands of songs and High Definition movies.

Policies such as the all-you-can-eat pricing mechanism are a perfect example of why government involvement in this industry would actually cause more harm than good. A public choice analysis of government involvement further illustrates this point and leaves me no other choice but to ask the government to stay out of the private sector.

Thank you Liya, well put.  Now that you understand this, let’s hope more government bureaucrats and politicians get the message.

This is the kind of quote we jaded waste warriors wait for.  Today’s AP has a story about the fact that Sen. Tom Coburn (R-Okla.) released a preliminary report on how states are using stimulus money. 

In his 45-page report, which you can find here, Dr. Coburn mentions $3.4 million that was used by the Florida Department of Transportation to construct an “eco-passage” on I 27, which is really a little tunnel under a road for wildlife trying to cross, especially turtles which, as you can imagine, just don’t have the steam to get across the roads without being crushed. 

It gets so much better, though, because in this ”say-anything” culture, it isn’t enough to defend this ridiculous use of federal tax dollars by just saying it saves turtles (and by the way, wasn’t the goal of the $787 billion “stim” bill to save jobs?). 

No, instead, Josh Boan, the Florida Transportation Department’s natural resources manager, perhaps recognizing for the first time just how lame the explanation was when it was described out loud, to a reporter, felt compelled to add that ”In addition to protecting wildlife, he said the project is needed for safety: turtles hit by vehicles can become flying projectiles.“

We live for this stuff, really.  But what about signage for the turtles?  Shouldn’t we at least use some of that money to create itty-bitty, but clearly marked signs so the turtles know where the eco-passages are?

Prepare to see a lot more of these sorts of stories:  today’s WSJ describes the birth of a new breed of entrepreneur – someone who excels not at manufacturing a better widget or outselling his/her competitor, coming up with a revolutionary breakthrough in technology or medicine.  No, in the brave new big-government era that is sweeping the nation, the next-gen entrepreneur is going to be that go-getter who is…savvier at cadging at the federal trough for stimulus money!

Since the onset of the financial crisis nine months ago, the government has become the nation’s biggest mortgage lender, guaranteed nearly $3 trillion in money-market mutual-fund assets, commandeered and restructured two car companies, taken equity stakes in nearly 600 banks, lent more than $300 billion to blue-chip companies, supported the life-insurance industry and become a credit source for buyers of cars, tractors and even weapons for hunting.

The effects are rippling into nooks of the economy far beyond Wall Street and Detroit’s troubled car industry. The massive intervention has shifted the way companies do business in a host of ways — not all of them intended by the government. Increasingly, companies big and small are competing on the basis of their ability to tap government money. A divide is opening between gets and get-nots.

Today’s Roll Call has an illuminating article about the behind-the-scenes struggle in the House over Appropriations Chairman David Obey’s (D-Wisc.) intent to block earmarks for “Monuments to Me!”:  that is buildings, roads or facilities that will bear the name of the member of Congress who earmarked the taxpayer money for it. 

In this case, the culprit is Rep. Maxine Waters (D-Calif.), who is apparently miffed that Obey intends to deny her request for an earmark for the Maxine Waters Employment Preparation Center.  If you have ever been privy to one of Maxine Waters’ outbursts, be glad you were not in the meeting…and be afraid for Obey. 

Appparently Obey is attempting to quietly preempt a bid by some Republican lawmakers to pass a statute that would ban the practice altogether:

An amendment by Rep. Michael McCaul (R-Texas) banning “monuments to me” passed on the Federal Aviation Administration authorization bill last month with just two Members voting in opposition, and a similar McCaul amendment passed on the military construction and Veterans Affairs appropriations bill last year.

McCaul had promised to offer his amendment on every appropriations bill this year, with the first bills scheduled to hit the floor this week.

Republicans have made the issue the cornerstone of their call for additional earmark reforms, targeting funding for the Charles B. Rangel Center for Public Service at the City College of New York and the John Murtha Johnstown-Cambria County Airport in Johnstown, Pa., among others. The Murtha airport in particular has received significant attention in recent months because of the millions Murtha has steered to it and the dearth of passengers it handles….

Further on in the Roll Call article:

“If that in fact is happening, it means there’s a recognition among an increasing number of Members that these ‘monuments to me’ are a really bad thing that the public believes is emblematic of waste and self-dealing,” Rep. John Campbell (R-Calif.) said.

“If this is the Obey policy, it is a big victory for us,” said Rep. Mark Kirk (R-Ill.), the only appropriator who does not request earmarks and one of the chief critics of earmarks named for Members.

Kirk said the growing opposition to “monuments to me” reflects mounting concerns by the public about the record deficit and the fact that some of the most powerful Members who have projects named after them also are facing ethics clouds.

Roll Call reporters Steven T. Dennis and Tory Newmyer made good use of a quirky little feature we have on our CAGW website called Byrd Droppings, which lists many of the roads, facilities, and buildings names after the Grand Daddy of Monuments to Me, Sen. Robert Byrd (D-W.Va.):

But longtime appropriator and former Senate Appropriations Chairman Robert Byrd (D-W.Va.) may be the most memorialized of all. The anti-earmarking group Citizens Against Government Waste has devoted a section of its Web site to chronicling more than 30 home-state projects named for him, including the Robert C. Byrd Locks and Dam, the Robert C. Byrd Academic and Technology Center, the Robert C. Byrd Clinic at the West Virginia School of Osteopathic Medicine, the Robert C. Byrd High School, the Robert C. Byrd Visitor Center at Harpers Ferry National Historic Park, and several roads and highways.

Check out this old YouTube chestnut in which Byrd whimsically describes his facility at getting taxpayer money to name facilities after himself. 

And, lest we all forget who else is fond of absconding with your tax dollars to erect Monuments to Me, check out this video of Rep. Don Young, in which he states that he and (former) Sen. Ted Stevens are the second largest economy in the state of Alaska (it runs 9:40, but the good stuff starts at about 2:30 into the clip).