stimulus bill

BP Supported Obama Stimulus Package, Global Warming Bill, and Corporate Welfare; BP Bankrolled Obama Campaign

by Hans Bader on June 9, 2010

in Agriculture, Bailout Watch, Deregulate to Stimulate, Economy, Employment, Energy, Environment, Ethanol, Global Warming, Health and Illness, International, Natural Resources, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere, Trade, Zeitgeist

Columnist Tim Carney notes that BP, responsible for the massive oil spill, is “a close friend of big government whenever it serves the company’s bottom line.” It lobbied for President Obama’s $800 billion stimulus package, the “cap-and-trade” global-warming bills backed by Obama, and “the Wall Street bailout” that Obama voted for.  “BP has more Democratic lobbyists than Republicans.”  Obama is the biggest recipient of campaign cash from BP executives.

Obama’s global warming legislation expands ethanol subsidies, which cause famine, starvation, and food riots in poor countries by shrinking the food supply, and also result in deforestation, soil erosion, and water pollution. Subsidies for biofuels like ethanol are a big source of corporate welfare: “BP has lobbied for and profited from subsidies for biofuels . . . that cannot break even without government support.”

The $800 billion stimulus package is using taxpayer subsidies to replace U.S. jobs with foreign green jobs. It is also destroying jobs in America’s export sector.

Obama falsely claimed that the stimulus package was needed to prevent “irreversible decline,” but the Congressional Budget Office admitted that it would actually shrink the economy “in the long run.”  Unemployment has skyrocketed past European levels, as big-spending countries have fared worse than thrifty ones.  As the Examiner notes, “If his stimulus program was approved, Obama promised, unemployment would not go above 8 percent . . . The reality is that it passed 10.3 percent.”  In 2008, Obama promised a “net spending cut,” but as soon as he was elected, he proposed massive spending increases.

Obama’s global warming legislation would also drive jobs overseas, since it would impose a costly cap-and-trade carbon rationing scheme on American industry, while leaving foreign plants operated by multinational corporations unregulated.  That’s one reason why many big companies with plants overseas are lobbying for the global-warming legislation, which would give them an advantage over competitors that make their products largely in America.  The legislation would result in a tax increase for American consumers of up to $200 billion a year or $1,761 per household.

Unlike other oil companies, which have good records of safety and avoiding spills when it comes to oil drilling, BP has a bad record, earning it the label of “serial environmental criminal” from critics.  The Obama administration granted BP a waiver of environmental regulations in April 2009, yet it blocked Louisiana from protecting its coastline against the oil spill by delaying rather than expediting regulatory approval of essential protective measures.  It has also chosen not to use what has been described as “the most effective method” of fighting the spill, a method successfully used in other oil spills.  Democratic strategist James Carville called Obama’s handling of the oil spill “lackadaisical” and “unbelievable” in its “stupidity.”

Obama is now using BP’s oil spill to push the global-warming legislation that BP had lobbied for.

“Saving” Jobs Isn’t Always Good

by Michelle Minton on October 28, 2009

in Odds & Ends

The Obama administration is patting itself on the back for saving the jobs of thousands of educators by doling out stimulus funds earlier in the year.
But should we all cheer just because Ms. Frizzle didn’t get the boot? Teachers, like all professionals, have no right to employment. In the private market people who are good at their jobs are in demand and courted with money. People who are bad either work for less money or have to find a different profession. This leads to high-performing workers receiving just compensation and bad employees get sacked. When it comes to your child’s education, does that really seem like such a bad thing-should every teacher good or bad continue to teach or every ineffective administrator continue to clog up the system and waste taxpayer money? That is what the White House and the Dept. of Education assert when they pat themselves on the back for “creating” and saving 250,000 education jobs. Not only are they retaining many school-workers who, perhaps, deserve to be let go, but they are also preventing the emergence of a private market for education. Because of a “free” public option with salaries and pensions paid for with taxes, it is almost impossible for private academies to profitably compete for teachers and pupils.
Far from congratulating the Obama administration, we ought to be condemning such actions as a threat to the health of the American economy, the destruction of any private market for education, and a stab at the rights of individuals to choose which schools and teachers are worth saving with our money.

Subsidize Cheese to Stimulate?

by Ryan Young on July 20, 2009

in Economy, Stimulus to Nowhere

$1,562,568 of stimulus money went to subsidize mozzarella cheese in Rep. Marcia Fudge‘s district.

Hat tip to Evan Banks.

Who Cares About the Consumer?

by Iain Murray on February 13, 2009 · 2 comments

in Deregulate to Stimulate, Economy, Energy, Global Warming, Regulation, Stimulus to Nowhere

Electricity consumers beware! The so-called-stimulus bill includes provision for something called “decoupling.” E&E Daily reports:

Also included in the final version is a requirement that governors who want additional state energy efficiency grants ensure that their state regulators guarantee revenue to utilities to support efficiency programs.

State regulators and consumer advocates strongly opposed the provision, saying it ties regulators’ hands and is not the best tool to promote efficiency.

The National Association of Regulatory Utility Commissioners said many regulators cannot assure that “decoupling” requirements will be met. “These ambiguous conditions will create confusion and legal uncertainty and will likely delay or preclude the release of these critical funds,” NARUC said in a statement. “This benefits neither the States the utilities, nor, most importantly, the citizens they serve.”

“Decoupling” is a mystifying-sounding name for an economically terrifying concept. This is how it is described in government/regulatory jargon:

In order to motivate utilities to consider all the options when planning and making resource decisions on how to meet their customers’ needs, the sales-revenue link in current rate design must be broken. Breaking that link between the utility’s commodity sales and revenues, removes both the incentive to increase electricity sales and the disincentive to run effective energy efficiency programs or invest in other activities that may reduce load. Decision-making then refocuses on making least-cost investments to deliver reliable energy services to customers even when such investments reduce throughput. The result is a better alignment of shareholder and customer interests to provide for more economically and environmentally efficient resource decisions.

Now, in English: the laws of supply and demand mean that if the quantity demanded goes down, you sell less of the product you supply. In energy supply terms, this means that if conservation works, energy utilities see their profits decline, because in general they are regulated so tightly that they cannot raise their prices, which is the usual response to declining demand. Therefore, if there is a policy goal of increasing energy conservation, then utilities are likely to stand in the way, because their profits depend on selling more energy; they are unlikely to install technologies that reduce the need for energy, for example. Accordingly, the link between quantity sold and profits must be broken, or “decoupled.” This is normally done by regulating rates such that if more energy is sold, the marginal rate goes down and, if less is sold, the marginal rate goes up.

Now, to some this may sound like supply and demand at work, but it is actually a market manipulation aimed at achieving a policy goal. In fact, it most resembles a supply-side reform designed by someone who doesn’t understand supply-side economics. The utility remains regulated and the incentive structure is designed such that the utility is more inclined to respond to the regulator rather than the consumer. When profits are essentially guaranteed at a certain level, the utility will be more likely to spend money pleasing the regulator and delivering service improvements to that body than to the consumer. The consumer may end up paying more money for less electricity and the utility and regulator will both be happy. The dangers here are obvious; insulating the supplier from the consumer is a terrible idea.

Here is a useful paper from the Electricity Consumers Resource Council that raises several further objections to decoupling, which it says is a blunt instrument. They are:

  • 1. Decoupling Promotes Mediocrity In The Management Of A Utility.
  • 2. Decoupling Shifts Significant Business Risk From Shareholders To Consumers With
    Only Dubious Opportunities For Net Increases In Consumer Benefits.
  • 3. Decoupling Eliminates A Utility’s Financial Incentive To Support Economic
    Development Within Its Franchise Area. This Includes The Incentive To Support The
    Well Being of Manufacturers And Their Workforce.
  • 4. Revenue Decoupling Mechanisms Tend To Address ‘Lost Revenues’ And Not The Real
    Issue, Which Is Lost Profits.
  • 5. The First And Most Important Step Regulators Can Take To Promote Energy
    Efficiency Is To Send The Proper Price Signals To Each Customer Class.
  • 6. Several States Have Successfully Used Alternative Entities—Including Government
    Agencies—For Unselling Energy. This Creates An Entity Whose Sole Mission Is To
    Promote Energy Efficiency, And Retains A Separate Entity Whose Responsibility Is To
    Efficiently Sell And Deliver Energy.

    • (Not sure about that last one, but if there’s a policy goal to reduce energy consumption, that’s certainly a better way to go about it than decoupling).

    A true supply-side reform would actually reduce regulation to the basics (reasonable safety requirements etc) and thereby not only allow but encourage the best conservation measure of all – demand-based pricing. This would allow rates to increase and decrease not according to some bureaucrat’s assessment of whether a policy goal is being met, but hourly, according to whether the system is being over- or under-used. Less energy will be consumed at peak times, thereby reducing the need for back-up energy generation, and more will be used at off-peak times, reducing the amount of wasted energy then. Overall, as long as the consumer responds to the price signal, consumers will probably use less electricity but also see their bills drop, while the utilities will save in lower production costs. Decoupling-style rate regulation actually stands in the way of this win-win goal.

    Image by Skagit Information Management Systems, used under Creative Commons License.

    Coming to a Pharmacy Near You: One Size Fits All

    by Greg Conko on February 12, 2009

    in Features, Healthcare, Personal Liberty, Politics as Usual, Regulation, Stimulus to Nowhere, Zeitgeist

    You’ll never see Bill Gates using an iPhone or see General Motors CEO Richard Wagoner driving a Ford. So, naturally, when Novartis pharmaceuticals’ CEO Daniel Vasella revealed last year that he takes the Pfizer statin drug Lipitor to treat his high cholesterol instead of Novartis’s Lescol, it raised more than a few eyebrows.

    It’s well known among doctors that people respond differently to different medications that treat the same condition. Vasella says he had some unpleasant side-effects when taking Lescol. And plenty of others have tried one or another statin without reaching their cholesterol reduction goals, only to find success with a different one.

    Unfortunately, the pharmaceutical industry’s biggest critics just don’t get it. Marcia Angell, a former editor of the New England Journal of Medicine, argues that drug companies are little more than “marketing machines” that produce few innovations, just “me-too” drugs that are similar to but no better than others on the market to treat the same condition. Public Citizen’s Sidney Wolfe argues that “most new drugs [a]re ‘me-too’ or copycat drugs that have little or no therapeutic gain over existing drugs.”

    Unfortunately, former Senator and erstwhile health czar Tom Daschle and many other congressional Democrats have been listening. Tucked away in the stimulus bill is a provision providing $1.1 billion to fund a new government agency called the Federal Coordinating Council for Comparative Clinical Effectiveness Research. It’s goal, as Daschle wrote in his 2008 book, Critical: What We Can Do About the Health Care Crisis, will be to evaluate medicines an decide which ones are effective enough for government health care plans like Medicare and Medicaid to purchase. So, if the Council decides Lipitor is the most effective colesterol drug, Medicare recipients who, like Daniel Vasella, see better results with a different statin are out of luck.

    Fortunately, critics of the proposal, like Arizona Republican John Shadegg, have been quick to blow the whistle on this outrage. While supporters claim the program is merely intended to supply doctors with better information about the drugs they prescribe, Shadegg and others have pointed out that the Council is modeled after the UK’s National Institute for Health and Clinical Excellence (which goes by the ironic acronym NICE), which has repeatedly denied citizens of that country access to breakthrough drugs for life-threatening conditions like cancer and multiple sclerosis. Shadegg notes the case of UK resident George Robinson, who died of lung cancer after NICE deemed the drug Tarceva not cost-effective.

    Think that can’t happen here? Think again, because it already has. Last year, the state-run Oregon Health Plan refused to pay for the exact same drug to treat 64-year-old Barbara Wagner. Adding insult to injury, the private firm administering Wagner’s health benefits on behalf of the state informed her that Oregon would pay for a cheaper option. The state health plan would be happy to pay for Wagner to take advantage of Oregon’s legal doctor-assisted suicide, if she wished to hasten her death.

    Dr. Walter Shaffer, medical director of the state Division of Medical Assistance Programs, defended the policy, telling the Eugene, Oregon Register-Guard that “[w]e can’t cover everything for everyone. Taxpayer dollars are limited for publicly funded programs.” Indeed.

    As libertarians, we normally applaud government employees for trying to cut costs. But, when our government tries to herd us all into the same one-size-fits-all health care plan, I believe we should demand a bit more choice. Or, at the very least, options that provide just a bit of basic human dignity.

    Palaces For The Bureaucrats

    by Jonathan Tolman on February 3, 2009 · 3 comments

    in Economy, Politics as Usual, Stimulus to Nowhere, Zeitgeist

    Included in the massive stimulus bill that passed in the House of Representatives are several line items appropriations to renovate federal buildings in Washington.  Included is $150 million to renovate a Smithsonian museum, $500 million for a new National Institutes of Health building, and $400 million for renovating a Social Security Administration building.  For the renovation of the Social Security building, the agency estimates that the renovation will create 400 jobs.  In other words, it will cost $1 million dollars for each job created.

    If you think that is an exorbitant sum for each job, keep in mind that last year the Secretary of Interior renovated the bathroom next too his office on fifth floor of the main Interior Department building.  The total cost — $235,000, including  a shower, refrigerator, freezer, and monogrammed towels.  Also included in the massive stimulus bill is $44 million to renovate the headquarters of the Agriculture Department. Apparently the Secretary of Agriculture feels he needs a new bathroom as well.

    Renewable Energy Jobs Will Have To Wait

    by Jonathan Tolman on February 2, 2009

    in Deregulate to Stimulate, Economy, Energy, Environment, Odds & Ends, Politics as Usual, Stimulus to Nowhere, Zeitgeist

    The porcine stimulus bill passed by the House contains $15 billion in capital investments and loan guarantees for renewable energy projects and new electric transmission lines.  But the billions of dollars targeted toward renewable energy aren’t likely to generate many “green collar” jobs anytime soon.  That’s because the environmental and permitting regulations for these types of projects typically take years.  This is particularly true for new transmission lines.  And without the new transmission lines, new solar or wind power stations won’t bring many benefits.

    For example, the Tehachapi Transmission Project, a 250 mile transmission project to deliver electricity from wind farms in Southern California, took over 10 years to design, permit, and begin construction.  One of the reasons for the long wait is that all of these projects have to go through a lengthy environmental review process to comply with NEPA before they can obtain a permit from the Federal Energy Regulatory Agency.

    If Congress is serious about focusing the stimulus on creating jobs as soon as possible, it should grant a categorical exclusion from NEPA for projects funded with the stimulus.  There is actually some precedence for this.  In the Energy Policy Act of 2005, Congress modified the environmental compliance requirements for a broad range of energy related projects.

    Without a more streamlined regulatory process it’s unlikely the renewable energy stimulus will be creating any jobs any time soon.  But this problem of delayed spending isn’t just true for renewable energy and electricity transmission.  According to the Congressional Budget Office, the federal government will only be able to spend $432 billion in 2009, and estimates that the government won’t finish spending all of the $820 billion until 2019.

    Kiss Off to Consumers

    by Jonathan Tolman on January 27, 2009 · 8 comments

    in Bailout Watch, Deregulate to Stimulate, Economy, Energy, Odds & Ends, Politics as Usual, Stimulus to Nowhere, Zeitgeist

    The appropriations portion of the House stimulus bill is not the only legislation with bad ideas.  The House Energy and Commerce Committee has also marked up their portion of the stimulus package.  During the Committee markup, Chairman Henry Waxman (D-CA) inserted a provision that would “decouple” utility rates from the amount of electricity or natural gas that the utilities sell.  According to the “decoupling” provision, states that accept federal energy efficiency grants from the economic stimulus package will have to ensure that utilities recover the revenue lost when consumers use less energy.

    In other words, in states that accept the energy efficiency grants, utilities that use the grants to help consumers lower the energy consumption will be able to raise their rates to compensation for the loss in revenue.  Consumers who participate in the programs may see their energy use go down, but may not see any change in the size of their utility bills.  This is the legislative equivalent of a giant wet kiss to utility and environmental lobbyists but a giant kiss off to consumers.

    Green Pork

    by Jonathan Tolman on January 27, 2009 · 2 comments

    in Agriculture, Deregulate to Stimulate, Economy, Environment, Politics as Usual, Stimulus to Nowhere, Zeitgeist

    In addition to tens of billions of dollars in the House stimulus bill for infrastructure and other projects to create jobs, there are also funding items that appear to do the exact opposite.  For example, the House stimulus bill contains $175 million dollars for Natural Resource Conservation Service to purchase conservation easements in floodplains.  Funding for the program would effectively be spending tax dollars to pay farmers to stop farming.  Not only would such conservation easements not be creating any jobs, they actually would likely be doing the opposite by taking farmland out of production.

    What makes this funding even more egregious is that removing farmland from production tends to increase food prices.  What makes this provision seem even more out of place is the House stimulus bill also includes $200 million in funding for Senior Nutrition Programs, claiming the programs need additional funding due to “rising food costs.”  If Congress was really concerned about rising food costs one would think that they would be less eager to take farmland out of production.

    Geithner confirmed — but with bipartisan “nays”

    by John Berlau on January 26, 2009

    in Bailout Watch, Politics as Usual, Stimulus to Nowhere

    The U.S. Senate voted to confirm Timothy F. Geithner tonight, but the vote was closer than expected with more “nays” than any previous nominee of President Barack Obama. The 60-34 confirmation was also the first nomination vote of the Obama administration with any Democrat voting no.

    Because of the nagging questions remaining about Geithner’s failure to pay four years worth of self-employment taxes and his role in designing the Troubled Asset Relief Program, four members of the Democratic caucus joined with 30 Republicans in opposing Geithner’s nomination. (10 Republicans unfortunately voted for him). Those four are Tom Harkin of Iowa, Russ Feingold of Wisconsin, Robert Byrd of West Virginia and Bernie Sanders of Vermont, the independent self-proclaimed socialist who usually caucuses with Democrats.

    “Had he not been nominated for treasury secretary, it’s doubtful that he would have ever paid these taxes,” Byrd said, according to the Associated Press report. Harkin asked during the Senate floor debate how someone of Geithner’s supposed “financial sophistication” could have made such careless mistakes, and not corrected them for all the years he made the errors until Obama nominated him. “How can Mr. Geithner speak with any credibility or authority?” Harkin said.

    A Rasmussen poll late last week found that 41 percent of Americans oppose Geitner’s nomination and two-thirds think that his confirmation would show that different standards and rules apply to powerful people. This impression was confirmed by statements such as that of Sen. Kent Conrad, D-N.D., that “in normal times, that would be enough to cause me to oppose his nomination, but these are not normal times.” The perception that both corporations and individuals can be “too big to fail” because of their supposed importance undermines the very credibility needed to restore confidence in our financial system.

    While his serious tax infractions should have still disqualified him from heading a department that enforces the nation’s tax laws, there are steps Geithner can take to assuage these concerns. He can call for an end to government policies that prop up failing institutions with taxpayer dollars. The failures could be orderly and arranged to minimize damage to the financial systems, but big corporations must be allowed to fail, just as small businesses do every day. That would send a message that no business or individual plays by a different set of rules.

    And given his own serious breach of the tax laws, which he only corrected completely after being chosen as Treasury Secretary nominee, Geithner should show sympathy with the difficulties of individuals and small businesses in dealing with the complexities of taxes and regulations. New financial regulations from the Treasury Department should be carefully thought out so that they don’t hinder small investors and entrepreneurs. If Geithner reflects on and learns from his personal and policy errors, he can be a more effective Treasury Secretary.

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