American Elephants

Correction, Mr.Obama, Here’s the Real State of American Energy. by The Elephant's Child

(h/t: Maggie’s Farm)

The Big Jobs Speech: No Change, Not Much Hope. by The Elephant's Child

Vacation is over, and next week, President Obama will give his big speech on jobs, or maybe the week after. He has announced his nomination of  Princeton University’s labor economist Alan Krueger to be chairman of the White House Council of Economic Advisers.

Mr. Krueger returned to Princeton a year ago after serving as assistant Treasury secretary for economic policy during the first two years of the Obama administration. He will replace Austan Goolsbee who has returned to the University of Chicago.

Krueger testified before the Senate Banking, Housing and Urban Affair Committee in support of government infrastructure spending, and Obama’s pet “Infrastructure Bank.” At least, Krueger  has co-authored a paper that shows that extending unemployment benefits will likely make unemployment worse, so that is a tiny step in the right direction — if he can convince the president. Krueger points out that it may be good safety-net policy, but will lengthen unemployment spells. The president has already signaled his intention to extend unemployment benefits and his belief that they will stimulate the economy.

Obama’s big jobs speech will offer more of the things that have not worked. The “shovel-ready” infrastructure jobs that turned out not to be shovel-ready, will return in the form of more infrastructure spending, and the bank as well. Unemployment will be extended, green jobs will be promised, the payroll tax reduction will be extended, and more food stamps.  It will not be a jobs speech, but a campaign speech in disguise. The government will once again be there to help you.

There is no way that Obama can support a real jobs program. A real jobs program would attack  the core beliefs of his political party, such as the idea that raising the minimum wage helps the poor and raising taxes on the rich will boost the economy.

The left believes in welfare, a strong government that will care for the people, that corporations have too much power, and that business needs much closer regulation.  The left believes that the fossil-fuel pollution emitted by industry and SUVs must be stopped to save the planet.  They believe that people must be instructed — and if necessary, forced — to move to a “clean green economy,” where they will use the lightbulbs, cars and appliances chosen by the government, and use energy and water economically, aided by smart meters that will ensure that they do.

What would a real jobs program look like? It is not as if nobody has described what is needed. As one small business owner said:

I’m not only sitting on my hands in terms of expansion and hiring, I’m paring back expenses wherever possible, getting lean as I can.  To say Ive lost confidence in Obamanomics is like saying the liberal media has lost confidence in Sarah Palin’s ability to govern if elected.  True enough, but it goes a bit beyond loss of confidence.

…The assault on folks like me comes on many fronts—business taxes, personal taxes, regulations, inflation, energy prices, Obamacare, etc. I have no way to reasonably outline any business plan(s) for the short or the long term.  All the variables are up in the air.

It is further exacerbated by the fact that I cannot predict what else these jackals might do to hurt me.  With most administrations and congresses, whether you agree with them or not, at least you could usually predict the limits of harm or help they might do to you.  Not with this Obama crew, and not with the Dems in Congress.

What do you suppose it says to American business when Obama’s National Labor Relations Board’s (NLRB) files a lawsuit against the Boeing Company for daring to build a manufacturing plant in a right-to-work state? No government has ever attempted to tell a private business where they must locate and who they may hire.  There is no Constitutional justification for such an attack.

The feds raided the Gibson Guitar Company last week; a swat team raided factories and offices, seizing pallets of wood, computers and guitars, and shutting the company down. The question seems to be about small amounts of ebony or rosewood used on the fingerboard of guitars. The wood is certified by the Forest Stewardship Council, and satisfies FSC standards.

The Justice Department apparently wants Gibson to not buy any wood from India, and to make their guitars in India — eliminating at least some of the company’s 2000 U.S. employees, but that isn’t clear yet. The government claims that Indian wood not finished by Indians is somehow illegal, but that is not what Indian law says.  That’s clear, isn’t it? Why would this send a tremor through American business?

Just these two cases demonstrate why business is hunkered down defensively. Add to that the enormous bundle of regulation the EPA is attempting to place on the back of the American economy. All forms of energy will become more costly. Brownouts and blackouts will be common. The cost of everything will rise because of higher energy costs. The government is trying to shut down oil pipelines, close coal-fired power plants, build unwanted and unaffordable high-speed rail, keep oil companies from drilling for oil.  Obama wants a new stimulus, and a renewed Fannie and Freddie.

There will be a new jobs program of some sort. It won’t help. No change, and not much hope.

John Stossel Defends the Indefensible by The Elephant's Child

Here’s some food for thought.  Many economic ideas are not as simple as they seem.


Choose: Economic Growth Or Turn Off America’s Light Switch? by The Elephant's Child

Representative Vicky Hartzler (R-Mo) inquired of the Environmental Protection Agency of the economic impact and employment consequences of its initiatives. Assistant EPA Administrator Gina McCarthy was very clear in her response:

Under the Clean air Act, decisions regarding the National Ambient Air Quality Standards (NAAQS) must be based solely on evaluation of the scientific evidence as it pertains to ;health and environmental effects.  Thus, the agency is prohibited from considering costs in setting the NAAQS.

Responding to a question by Representative Cory Gardner (R-Col) before the House Environment and Energy Committee regarding regulations that would govern industries that recycle coal ash and other fossil fuel byproducts for concrete, wallboard and roofing materials, EPA Administrator Mathy Stanislaus stated:

We have not directly taken a look at jobs in this proposal.

President Obama issued an Executive Order 12563 in January that specifically required that all new rules issued by federal agencies take job creation into account. Everybody has suggestions about what President Obama can do  to get the economy moving again. The EPA is currently pushing an extensive rewrite of air-pollution rules in an attempt to shut down a big chunk of America’s coal-fired power plants. I’m sure you remember Mr. Obama’s pledge to bankrupt the coal industry.

Coal-fired power plants provide 40% of U.S. baseload capacity in the United States, and almost half of net power generation.  The EPA has their agency eye on about 8% of all U.S. generating capacity.That doesn’t sound like much until you recognize that it the equivalent of wiping out all power generation for Florida and Mississippi.

In practice, this means blackouts and rolling brownouts, and rising electricity rates for consumers. As the Wall Street Journal says, if terrorists did that in  a cyber attack, it would be considered an act of war.

Later this year, the EPA will release regulations that require utilities to further limit mercury and other “hazardous pollutants.” Full compliance will be required by 2015, 36 months after the final rule is public and plants that can’t be upgraded in time will be required to shut down.  The industry says that the average lead time for retrofitting scrubbers was 52 months.

The Clean Air Act was revised in 1990, and the amendments added at that time contain a proviso that would allow Mr. Obama overrule EPA Administrator Lisa Jackson, exempting all power plants from compliance with any standard  or limitation for two years. None of these regulations were demanded by  Congress, but are the result of bureaucratic discretion. The big question is whether the Administration’s green campaign is more important than the country’s economic growth.

The EPA’s own estimate is a cost of $11 billion annually., but that’s a lowball estimate.  Don’t expect Mr. Obama to rein in his regulators. He has already demonstrated that his green priorities are more important to him than American jobs.

Annual federal funding for policies purportedly directed at climate change has been increasing substantially.  According to the GAO, annual climate spending has increased from $4.6 billion in 2003 to $8.8 billion in 2010 — $106.7 billion over that period. That’s for technology for reducing greenhouse gas emissions, science to understand climate change, international assistance for developing countries, and wildlife adaption to changes. That doesn’t begin to count  all the regulation costs.

The Small Business Administration estimates that compliance with such regulation costs the economy more than $1.75 trillion per year, about 12 to 14% of GDP, and half of the $3.456 trillion Washington is currently spending.  The Competitive Enterprise Institute believes the annual cost is closer to $1.8 trillion.  CEI further notes that these regulation costs exceed 2008 corporate pretax profits of $1.436 trillion. That’s alarming.

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