Skinning the Cap-and-Trade Cat with Clean Energy Standards

Posted on January 28, 2011 by

Speaking before a new Congress in his State of the Union address, President Obama gave an alternative suggestion for Congress now that cap and trade is out of the picture. He pitched an aggressive clean energy standard, saying he wants 80 percent of our electricity to come from carbon-free sources of energy by 2035.

For reference, the Energy Information Administration shows that carbon-free sources generated 31 percent of our total electricity in 2009 (20 percent nuclear, 7 percent hydroelectric, and 4 percent other renewables). As Kim Strassel points out in today’s Wall Street Journal, a clean energy standard is cap and trade without the carbon revenue:

It’s also cap and trade by another name. Consider: The goal of cap and trade is to impose crushing taxes on fossil fuels—oil, coal, natural gas—thereby forcing utilities to switch to costly renewables. Under Mr. Obama’s new proposal, the government skips the tax part and outright requires the use of costly renewables. The result is the same: dramatically higher energy prices, from carbon-free sources. Now you know why even climate warrior John Kerry was so sanguine about the president’s failure to say “climate change” in his speech. “I’m very sympathetic,” said the Massachusetts senator, who clearly got the strategy memo.

A clean energy standard forces Americans to use more expensive energy sources. If these energy sources were cost-competitive, they would not need a government-guaranteed share of the electricity market.

A clean energy standard is less onerous than a renewable electricity standard—which mandates that a predetermined percentage of electricity must come from government-selected energy—but including nuclear and clean-coal lures increases the probability of passage and also increases the grab bag of special interests. Strassel explains that President Obama will “lure Republicans into negotiations, then cement their support with lavish energy pork for their home-state nuclear, clean-coal, wind, biofuels and solar projects. As a bonus, the plan gives cover to nervous coal state Democrats.”

President Obama’s contradictory remarks in his State of the Union demonstrate the economic impracticality of a clean energy standard. He first (correctly) said, “None of us can predict with certainty what the next big industry will be, or where the new jobs will come from.” This is the beauty of the market. The President pointed to the importance of innovation in creating cars, planes, the Internet, Facebook, and Google.

Minute later, however, when discussing a clean energy standard, President Obama remarked, “Now, clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they’re selling.” Guaranteed shares in the marketplace remove the process of innovation the President praised earlier in his speech.

A clean energy standard may reward certain energy producers in the short term but will hurt both producers and consumers in the long run because it eliminates competition, reduces the incentives to lower costs, and encourages government dependence. Political winners are market losers, and it’s the consumer who suffers.

Posted in cap and trade, clean coal, clean energy, clean energy standard, Energy and Environment, nuclear, President Obama, renewable energy | Comments Off

Remembering Challenger: 25 Years Later

Posted on January 28, 2011 by

Today, America marks the 25th anniversary of the space shuttle Challenger tragedy. On January 28, 1986, America lost seven brave explorers – Dick Scobee, Michael Smith, Ellison Onizuka, Judith Resnik, Ronald McNair, Gregory Jarvis and Christa McAuliffe – when NASA suffered its first-ever in-flight loss.

The loss of the Challenger marked one of those vivid moments in our nation’s history that are unforgettable, including where you watched it, heard of it or how you grieved. For millions of Generation Xers, they were in their school rooms, cafeterias and libraries set to witness the historic flight of Christa McAuliffe, a teacher from Concord, New Hampshire whose flight was scheduled to inspire future generations of explorers, scientists and dreamers.

On the evening of January 28, President Ronald Reagan addressed the nation from the Oval Office. In a moment that helped define the character and compassion of Reagan’s presidency, he spoke directly to those school children, when he said: “I know it is hard to understand, but sometimes painful things like this happen. It’s all part of the process of exploration and discovery. It’s all part of taking a chance and expanding man’s horizons. The future doesn’t belong to the fainthearted; it belongs to the brave. The Challenger crew was pulling us into the future, and we’ll continue to follow them.”

President Reagan also committed to continuing America’s exploration of space despite the tragedy, and celebrated the openness of our space program despite the challenges our nation faced during the Cold War: “I’ve always had great faith in and respect for our space program, and what happened today does nothing to diminish it. We don’t hide our space program. We don’t keep secrets and cover things up. We do it all up front and in public. That’s the way freedom is, and we wouldn’t change it for a minute. We’ll continue our quest in space.”

In less than five minutes, President Reagan mourned with a nation, honored its lost heroes and demonstrated our collective resolve. As Reagan told the nation: “The crew of the space shuttle Challenger honored us by the manner in which they lived their lives. We will never forget them, nor the last time we saw them, this morning, as they prepared for the journey and waved goodbye and ‘slipped the surly bonds of earth’ to ‘touch the face of God.’”

Posted in challenger, christa mcaullife, nasa, Ongoing Priorities, Oval Office, Ronald Reagan, Speech | Comments Off

Hands Off My Purse! Why Money Bills Originate in the House

Posted on January 28, 2011 by

The House of Representatives is not merely a larger Senate. The Constitution divided the legislative branch into two Houses, with different constituencies, term lengths, sizes, and functions for each house. For example, only the Senate offers advice and consent on treaties and appointments of judges and executive officials. And as Erik M. Jensen explains in his Constitutional Guidance for Lawmakers essay, only the House of Representatives holds the power to raise revenue – an essential element of the power of the purse.

Federalist No. 58 described the House’s power over the purse as “as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for carrying into effect every just and salutary measure.” In recent years, however, the Senate has usurped the House’s prerogative. The Senate has construed its power to amend bills so broadly as to replace the entire text of revenue bills that had originated in the House. Members of the House of Representatives should be more zealous in protecting their exclusive duty. Next time the Senate attempts to usurp the House’s power over bills of revenue, members of the House shouldn’t be afraid to say: “Hands off my purse!”

Posted in Constitutional Guidance for Lawmakers, Federalist Papers, First Principles, House of Representatives, U.S. Constitution | Comments Off

Green Jobs Cronyism and Cannibalism

Posted on January 28, 2011 by

To rephrase President Obama’s State of the Union theme:  “This is our generation’s apparatchik moment.”

Yes, he said “Sputnik” instead, but his actual agenda is about the apparatchik—government by party leaders, bureaucrats and the well-connected.

His agenda is symbolized by his push for “green jobs” as the path to a better future.

Simply put, the green jobs agenda spends billions of taxpayer dollars to destroy existing jobs and replace them with jobs in politically-favored businesses, raising the costs of energy along the way.

The politically-connected win. Existing job-holders and companies lose. Home electric bills go up. Power also costs more for companies, making it more expensive to go into business or to stay in business.

It’s cronyism that is building a political power structure based on false claims about clean green jobs. It’s cannibalism because creating the green jobs requires killing off existing jobs.

As Bloomberg News reported, “Subsidizing renewable energy in the U.S. may destroy two jobs for every one created if Spain’s experience with windmills and solar farms is any guide.”

One Heritage Foundation study showed that proposed mandates for using “renewable energy” to generate electricity would cost 1-million jobs.  Had last year’s cap-and-trade bill been passed, we might have lost almost 2-million jobs. That compares to claims by the renewal energy industry that 274,000 jobs would be created by their producst.  We would lose 3 to 7 jobs or more for every one that we gain.

This is Obamamath. Obama wants us to pay for the privilege of destroying jobs. His State of the Union called for “incentives that will finally make clean energy the profitable kind of energy in America.”

Guess what?  If it requires incentives, it isn’t profitable!

“When the President and Congress talk about green jobs, they are talking about ones created via federal tax breaks, subsidies, or outright mandates,” noted The Heritage Foundation’s Ben Liebermann.

The green jobs agenda is all about making a large group dependent on the politicians who provide them money and who in exchange receive campaign donations and other political support. It is the ultimate in Tammany Hall-style political bossism—the political earmark that dwarfs all others. The green jobs agenda is a political spoils and cronyism system operating in the open, justifying itself through political correctness and overblown claims that it is dictated by global warming.

POLITICO reported that the alternative energy sector only spent $2.4-million on lobbying in 1998, but that grew to $30-million a year by 2009.  The story noted, “The speed of expansion is eye-popping,” and added, “Wind, solar, ethanol up and other alternative energy groups are also stepping up their political contributions to candidates – almost all of them Democrats.”  Yes, the fossil fuel lobby spends about five times more than the alternative energy lobby, but fossil fuel produces over 20 times as much power—about 70% of our national electricity compared to about 3%.

How about claims that existing federal policies already advantage fossil fuels?  A report from the federal Department of Energy shows that each megawatt of power produced by wind or solar power receives subsidies almost 100 times higher than for oil and natural gas, and about 50 times higher than for coal.

Even The New York Times reported that wind-generated power costs 50% more than power generated from fossil fuel, and power from solar energy costs 2-3 times more than wind power.

Perhaps someday those who profit from subsidizing alternative energy will admit what they’ve done, just as Al Gore now admits his push for billions in ethanol subsidies was a mistake based on political gain—not even counting his monetary gain since leaving office.  As The Wall Street Journal said, “ethanol has become a purely political machine: It serves no purpose other than re-electing incumbents and transferring wealth to farm states and ethanol producers.”

But don’t some business interests support the green agenda?  Sadly, yes.  They tend to be those who profit from these subsidies. Writing in Forbes, Jerry Bowyer noted, “What is the difference between crony capitalism and socialism? Not much.”

We did not win the space race by putting extra costs and burdens on ourselves to benefit a team of politicians and businesses that scratch each others’ backs.  Obama’s call to action isn’t based on Sputnik; it’s based on apparatchik.  We don’t need that cronyism.  Or to cannibalize existing jobs so cronies can build more power for themselves.

Posted in crony capitalism, Energy and Environment, green jobs, state of the union | Comments Off

Morning Bell: The Left Must End Their War on School Choice

Posted on January 28, 2011 by

This Wednesday morning at 10 am, after serving nine days of a 10-day sentence, Kelley Williams-Bolar was released from the Summit County Jail in Akron, Ohio. Her crime? Trying to provide her two daughters with a better education. How on earth did trying to provide your children with a better education become a crime in the United States? Because the political party that currently occupies the White House is completely dependent on the power of education unions, and these unions see all efforts to shift power away from them, and to parents like Williams-Bolar, as a threat to their very existence. The case of Williams-Bolar is a perfect opportunity for the left to stop and reconsider their war on school choice.

Before January 15, Williams-Bolar had no criminal record. She lived in an Akron housing project with her two daughters, worked as a teaching assistant at Buchtel High School, and was going to college to further her own education career. Like any parent, Williams-Bolar wanted to give her children the best education possible. But the grade 6 reading and math scores of students in the Akron City School District are almost 30 points lower than those in neighboring Copley-Fairlawn City School District. While Ohio does allow school choice intradistrict, Copley-Fairlawn does not offer open enrollment to children who live in the Akron City School District. Ohio also offers private-school-tuition scholarships to students in Cleveland, but that program is not available to children in Akron.

So starting in August 2006, Williams-Bolar signed forms claiming her two daughters lived at their father’s address in the Copley-Fairlawn School District. Two years later the Copley-Fairlawn School District hired a private investigator who shot video of Williams-Bolar driving her children from their home in the Akron City School District to a school in their district. “It does not matter if, when she started the lie in 2006, she didn’t know she was going to get caught,” Summit County prosecutor Michael Cody yelled in his closing argument.

While Williams-Bolar went to jail for practicing school choice, leaders of the Democratic Party practice it themselves every day. Growing up in Chicago, Secretary of Education Arne Duncan attended a private school. Later as Chicago Public Schools chief, Duncan maintained a list of requests from the politically connected for their children to attend the schools of their choice. In the 111th Congress, 44 percent of Senators and 36 percent of Representatives had at one time sent their children to private school.

Growing up in Hawaii, President Obama attended a private school. Growing up first in Chicago and now in Washington, Obama’s two daughters attended and still attend private schools. Questioned how he could possibly justify this in September, President Obama responded: “I’ll be very honest with you. Given my position, if I wanted to find a great public school for Malia and Sasha to be in, we could probably maneuver to do it. But the broader problem is: For a mom or a dad who are working hard but don’t have a bunch of connections, don’t have a choice in terms of where they live, they should be getting the same quality education as anybody else, and they don’t have that yet.”

So then why did President Obama take away such a choice for 216 children as one of his first acts as President? The District of Columbia Opportunity Scholarship Program (DCOSP) was passed by Congress in January 2004 and provides $7,500 scholarships to low-income D.C. school children. In the fall of 2008, 216 new low-income students were notified by the Department of Education that they had been selected to receive scholarships. Then at the behest of Obama’s education union allies, Secretary of Education Arne Duncan sent letters to the 216 families informing them that he was taking back the $7,500 in scholarship money that the DCOSP had previously awarded them. The Democratically controlled Congress later voted to phase the program out entirely. Mothers like Latasha Bennett were left scrambling to find good schools for their kids. The DCOSP has been a tremendous success. Students that used a scholarship to attend a private school have a 91 percent graduation rate compared to the less than half of children in D.C. public schools that graduate high school.

The same morning that Williams-Bolar was released from prison, House Speaker John Boehner (R–OH) and Senator Joe Lieberman (I–CT) announced that they will introduce a bill—the Scholarships for Opportunity and Results (SOAR) Act—to reinstate the DCOSP. The announcement was intended to coincide with the height of National School Choice Week, but the story of Williams-Bolar makes it all the more poignant. Do we really want to live in a nation that jails parents for sending their children to the school of their choice?

Quick Hits:

Posted in Education, government unions, Morning Bell, National School Choice Week, School Choice, teachers unions | Comments Off

Financial Report Reflects Ideology More Than Facts

Posted on January 27, 2011 by

The release of the final report(s) of the Financial Crisis Inquiry Commission (FCIC) brings to mind the story of several blind men trying to describe an elephant. One felt the legs and decided an elephant was like a forest, while another felt the trunk and decided that elephants are like snakes.

Sadly, the FCIC went the same way by releasing three different reports, each of which reflects a certain view of the 2008 financial collapse. The majority report lists many causes of the crash but lays most of the blame on deregulation, greed, and poor judgment by financial institutions, mortgage-related banks, and credit-rating agencies. This mainly ideological view appears to be more a defense of the Dodd–Frank legislation than anything else.

On the other hand, three of the four Republican appointees centered their report on the global conditions that played a significant role in the crisis, such as the glut of capital that put such pressure on interest rates that investors would go to any lengths to get a return on their money. They point out that the crisis hit with equal ferocity in Europe and Asia, which were not subject to U.S. regulatory policy.

The fourth commissioner, Peter Wallison, points to the role of the government-created housing finance entities Fannie Mae and Freddie Mac, as well as other government housing policies, as the major cause of the crisis. Wallison points out that a major flaw in the Dodd–Frank bill is that it largely ignored both Freddie Mac and Fannie Mae. Opinions differ on the extent of their role, but they definitely contributed to the crisis.

There were many causes of the 2008 crash, and their interaction was extremely complex. New financial products were much riskier than most issuers, customers, or rating agencies understood, and it is clear that underwriting standards were poor. However, it stretches credibility to assume that these practices occurred only because of deregulation in the U.S. or because of greed or mismanagement on Wall Street. While there is plenty of blame to spread around, just focusing on the U.S. is shortsighted.

The inability to come to a single conclusion is in large part due to the flawed structure and role of the FCIC. Unlike the Pecora Commission of the 1930s, which investigated the crash of 1929 before Congress acted, the FCIC was designed to report after Congress had already decided on its own to impose additional regulations on the financial services industry. That, combined with a partisan structure where six commissioners were appointed by Democrats and four by Republicans, ensured that its report would be written in response to a political agenda rather than as a neutral study of the situation.

As a result, despite a great deal of honest effort by all of the commissioners and their staffs, the report will have little lasting value. There is still a need for technical and academic experts to do an unbiased study that will guide future generations in how to avoid a repetition of 2008’s events.

Posted in Dodd-Frank, Enterprise and Free Markets, FCIC, Financial Crisis Inquiry Commission, financial markets, financial regulation | Comments Off

Podcast: Senate Filibuster

Posted on January 27, 2011 by

Congressional debate is ready to commence on the Senate filibuster. Thomas Jefferson and James Madison wanted the Senate to be the “anchor” of government, allowing time for bills to be debated and examined, or as George Washington coined, a place for bills to be “cooled” by the passions of the House of Representatives.

Some, however, charge that during the 111th Congress the filibuster was abused beyond the founders’ intent, and propose that it should therefore be eliminated. Others, apprehensive of total elimination, argue that it should be amended, so that the procedure is weakened enough to allow passage of more legislation; and still others maintain it should be left alone.

So, currently, what is the proper role for the filibuster? Was it abused in the recent session of Congress? And how would changing this procedure actually affect everyday Americans?

Listen to Heritage experts discuss some of the history of the filibuster and its proper role, here.

Posted in American Leadership, Cloture, Congressional Rules, filibuster, Senate Filibuster, Senate Rules | Comments Off