Bush Approves Transfer: America Adds $8 Billion in Debt

From the AP (via Forbes):

The bill transfers $8 billion from the Treasury’s general fund to shore up the financially teetering highway trust fund, which supports road and bridge projects around the country. In July, the White House threatened a veto, saying taking money from the general fund was “both a gimmick and a dangerous precedent that shifts costs from users to taxpayers at large.”

Supporters of the transfer argued that the Treasury was merely returning $8 billion it took from the then-prospering trust fund in 1998 for deficit reduction.

So basically, to cover “paying off the deficit” back in the 1990’s, lawmakers took money out of the highway trust fund (the checking account where all the gas tax revenues go). Which is funny because I thought the budget surplus was from income tax revenues, but I guess everything gets included in this. So now that the Schumer hits the fan (I swiped that from www.survivalblog.com, which I think is a great euphemism for the actual phrase, if not accurate), the money gets “loaned” back. Of course, this just means that whatever “debt reduction” is done is actually just been eliminated. Awesome accounting guys.

But this also means that the states get their precious highway money, construction companies’ political contributions and lobbying did not go in vain, and whatever useless highway projects that this money is being spent on can continue. At least until next year.

What I also found interesting is that one proposal floated by the Bush administration was to reduce the MASS TRANSIT portion of the trust fund. Motorists, you’ll be happy to know that your gas taxes are going toward those empty regional transit buses you’re stuck behind on the road. Of course, the Democrats wanted nothing to do with that, being that they love mass transit, even if it is cross-subsidized by motorists.

And the same thing has already happened with Social Security. The government has been using the money in the SS trust fund to pay for the usual stuff. So in about 2020, when the trust fund starts to run out, the government will just “get the money back” from the Treasury, since it was already “loaned out”. So don’t worry, Social Security WILL BE SAVED. You’ll just end up paying 50-80% income taxes to do it.

Government: The largest legal Ponzi scheme ever created.

More on the Gas Run

Gas prices surge as Ike moves in | ajc.com.

States warn gas stations against price gouging

These stories is just full of juicy quotes about indignant consumers (read: voters) about this gas run.  I’ll present some quotes:

Larry Ruiz of Duluth said it cost him $45 Tuesday to fill up his small pickup. Friday, it cost him $60. “It really is just too expensive,” he said. “The government has lost control of the gas.”

Larry, the government doesn’t have control over gas prices.  At all.  It controls one thing, the location and siting of oil refineries.  You know who has control over gas prices?  You.  But I bet you’re not willing to take responsiblity for your actions.  It’s alot easier to set blame on the government than yourself.

The wholesale price for a gallon of gasoline rose about $1, to $4.25, Thursday morning, topping the high price five years ago when hurricanes Katrina and Rita raked the Gulf Coast, said Tom Kloza, publisher of the Oil Price Information Service in Wall, N.J. It was uncertain whether that price spike will filter down to the retail level.

“It’s pure panic,” Kloza said. “It’s related to the fact that there are worries about whether there’s going to be enough (gasoline) in the distribution system to satisfy some of the September pumping needs on the Gulf Coast.”

More proof that this is a run.  People don’t know if there’s going to be supplies, so they hoard.  This will become a self-fulfilling prophecy.

“Every time there’s a hurricane this happens. They’re just doing this to rip people off,” said 19-year-old Megan Cohen, a South Carolina college student who settled for paying $4.11 a gallon after going to three stations.

Uh, this wasn’t the case in any other hurricane season except following Katrina, Megan.  It hadn’t happened with any of the hurricanes this year, including Gustav, which hit another large section of the oil and gas producing area of the country.  But Megan, you’re not helping by going to three gas stations and “settling” for $4.11 a gallon.  This means that you didn’t need gasoline (then why go to three stations unless they were out, and there’s an easy way to figure out if the station is empty: noone’s getting gas).  But Megan probably has never taken an economics class at her South Carolina college, otherwise she would know about SUPPLY AND DEMAND.  It’s not that hard people.  Less supply means prices go up.  Demand going up sharply because of panic buying means prices go up even futher.  Or, if they don’t go up quickly enough, there’s a shortage.

S.C. Gov. Mark Sanford asked residents to avoid filling up unless necessary. “Instead, this is a time to think of ways in which each of us can make a difference on what may come our way if refineries in Texas are significantly damaged,” Sanford said in statement. “It might mean riding to the football games with a neighbor or on Sunday riding to church with a friend. It might mean watching a video at home rather than going to the movies or riding to work with a co-worker.”

I know there’s not alot that can be done legally, but as the leader of a state, can’t Mark do something with a little more leadership?  Making a difference?  Throwing out silly suggestions?  This is wimpy politico talk here.  Man up, Mark!  Tell people to stop being so stupid and panicking, if this isn’t a problem.  If it is… be more forceful in telling them that this might be the case for a while.  But if this is his idea of leadership, then this state’s got problems.  This was also true of the Hanna situation, which was equally feeble in the public response.

In South Carolina – where gas prices increased about 20 cents a gallon on average Friday – Attorney General Henry McMaster said gas stations that price gouge would face criminal prosecution. He did not set a threshold, saying each case must be investigated separately to see whether prices were raised to an “unconscionable” level.

But putting the gouging laws into effect?  Now THAT’S going to make things better!  Making the suppliers walk on egg shells in pricing so that if some 19-year old tart with no clue of how things work gets pissed off and files a complaint, then you’ll have to deal with investigations for the next year.  Or you could price it so low that you’ll be out in 5 minutes, but you don’t have to deal with the state lawyers.  Or you could just go on vacation for the next 15 days until this expires.  Then you’re fine and it’s only the customers who get screwed.  But we already knew that about these types of laws.

North Carolina Republican Congressman Robin Hayes called for a federal investigation into some prices rising more than $1 per gallon in a day.

“I understand there is a substantial hurricane in a sensitive area of the country, but this dramatic spike in gas prices is breathtaking,” he said.

I just wanted to point out the party of the pandering politician here.  What’s a federal investigation going to do that the myriad of state investigations won’t?  Oh, that’s right.  Make it seem like you’re doing something about it.

How Much Does the Government Spend on Energy Subsidies?

Thanks to the Energy Information Agency, I get little email every once and a while alerting me to when they have produced something called “Energy in Brief.” So this week, I got one in the email called:

“How much does the Government spend on energy-specific subsidies and support?”

Jackpot.

And the answer to this question: $16.6 billion just in the past year. To put that in pork perspective, that’s 45 to 60 Bridges to Nowhere, depending on which figure you use (total price of bridge to nowhere or just the famous 2005 earmark). That’s right, we can connect 45 to 60 small towns with their airports for just how much the government gives out for energy.

And what does the government do with this money? Not much, by the EIA’s own accounting:

Have Subsidies Affected Prices or Production?

Between 1999 and 2007, the average real price of total energy per British thermal unit (Btu)3 consumed increased more than 80%. Meanwhile, total energy consumption or demand, including imports, grew by about 5%. Most subsidies and support to energy producers should stimulate supply; so too should higher prices and rising energy demand. Yet in 2007, the United States supplied roughly 72 quadrillion Btu from domestic resources, about the same amount as in 1999. This leaves the impression that energy subsidies had little effect on net domestic production other than to help prevent further declines. But the enactment of various production-oriented tax incentives in the Energy Policy Act of 2005 and subsequent legislation may have contributed to the slight increase in primary energy production over the last two years.

So as a result of billions of dollars in subsidies and tax incentives, the US might have had a slight increase in energy production. At least with the 45 to 60 Bridges to Nowhere, we would have ACTUAL BRIDGES, not possible things that people would be hard pressed to identify.

You’d think that because of T. Boone Pickens’ ad campaigns that we don’t do anything to support wind energy right now. And, like most things T. Boone Pickens says, this is pretty wrong. Again from the EIA:

Did You Know?
The estimated value of production tax credits to wind producers in FY 2007 was $666 million. The benefit was distributed over an estimated 27.7 million megawatthours, making wind power the largest beneficiary of production tax credits among all renewable technologies.

And this doesn’t even include other incentives given to wind producers that AREN’T tax credits, like direct subsidies. And this doesn’t even take into consideration that wind power DOESN’T produce much energy. So the per unit cost is an astronomical $.02/per kilowatt-hour. Considering that your energy bill is anywhere from $.08 to $.20 / kWh per unit, wind gets a subsidy that’s equal to 10 to 25% of your per unit costs. That sounds like it’s doing a whale of a job.

But believe it or not, wind ISN’T even the worse offender when it comes to government largess. That would be “clean coal”, which gets $2 billion to produce a tiny fraction of the energy in the US. But once again, clean coal and coal-to-liquids have huge backers in the Senate in the form of Robert Byrd and Mitch McConnell. And that’s money that’s not doing a lick of good.

So before we start heaping MORE money on renewables, a la the Pickens Plan, we should look to see what works and what doesn’t. Right now, wind and solar aren’t.

John McCain Uses the Pickens Lie

From John McCain’s acceptance speech last night:

My fellow Americans, when I’m President, we’re going to embark on the most ambitious national project in decades. We are going to stop sending $700 billion a year to countries that don’t like us very much. We will attack the problem on every front. We will produce more energy at home. We will drill new wells offshore, and we’ll drill them now. We will build more nuclear power plants. We will develop clean coal technology. We will increase the use of wind, tide, solar and natural gas. We will encourage the development and use of flex fuel, hybrid and electric automobiles. (Emphasis added)

I’ve documented the fact that $700 billion is a bald-faced, economically illiterate number that was conjured up by T. Boone that has no basis on the realities of the oil market or just plain facts. Add to the fact that McCain just lumped natural gas in with solar and wind (“one of these things is not like the other, one of these things is just not the same”), and T. Boone must have been jumping for joy with the speech last night. I’m sure one of the first things McCain will reach across the aisle to Nancy Pelosi is to force private fleet vehicles to run on natural gas.

So if you oppose the Pickens Plan, or don’t like the fact that it’s based on sketchy numbers, has a significant chance of screwing up our electricity market and backed by someone who has a huge financial stake in it, then you don’t have a choice in the election. Well you do, but you won’t hear about it in the media.

I would call on John McCain’s campaign to fully disclose their relationship with T. Boone and fess up to the fact that he cited a horribly incorrect number during a nationally televised speech. It’s the least that he can do “for the country.” But I doubt that will happen.

McCain Invents New Constitutional Power

Again, from John McCain’s acceptance speech:

We need to change the way government does almost everything: from the way we protect our security to the way we compete in the world economy; from the way we respond to disasters to the way we fuel our transportation network; from the way we train our workers to the way we educate our children. All these functions of government were designed before the rise of the global economy, the information technology revolution and the end of the Cold War. We have to catch up to history, and we have to change the way we do business in Washington.

I must’ve missed that part of the Constitution where it says that the government sets the standards for transportation fuel. Yes, yes, I know I’m in a minority opinion, where the Supreme Court has given the federal government carte blanche to do whatever it wants with the economy. Of course, no one has opposed the ethanol mandates, or the EPA gasoline/diesel requirements yet either, at least not successfully. Of course, as a nation, we have long accepted federal limits on economic freedom. Perhaps when you’re required to trade in your gasoline powered car for a T. Boone special, you might make a peep, or not.

Regardless, this is just another way that McCain is letting everyone know that he’s going to be fulfilling the Pickens Plan when he gets into office. He just doesn’t want to say it so directly. So much for that openness and accountability that he’s running on.

Response to a Barrett Comment

From the comments on the Gresham Barrett Brings the Stupid post:

Right on, Mike! I’m with you all the way. Next time I’d like to hear you thoughts on Jane B Dyer the Democratic Party’s candidate for Barrett’s job.
She is the kind of candidate SC needs but the media seem to be conspiring to keep her candidacy quiet. She’s been an Air Force flier, She is now a FEDEX captain on one of those big freighters besides being a Mom and a Grandmother. She lives in Easley and she needs the help of guys like you.
Bill

Well, lest anyone think that I’m partisan in my distrust of politicians (unlike most of the media out there), here’s my thoughts on Ms. Dyer:

Sorry Bill, but it looks like Barrett doesn’t have any kind of competition in this race. Ms. Dyer is parroting the same rhetoric that has become standard for all politicians. But I think she’d get the T. Boone Pickens seal of approval.

Below is a more detailed look at Ms. Dyer and her environmental energy policy.

Gresham Barrett Brings the Stupid

Here in Columbia SC, we’re doomed to have at least one talk radio host who’s a complete moron, Kevan Cohen. He’s the definition of a neo-conservative, and makes my ears bleed if I listen to him for more than 15 minutes at a time. You can’t go five minutes without him making some pro-military or pro-war comment, but on every other topic, he’s about as spineless as they come.

So that’s why I didn’t hear him and Congressman Gresham Barrett talk about energy until the end of their conversation. Hannity wasn’t doing it for me today, so I switched to the other station. I only caught the end of the conversation, but this is where Mr. Barrett brought it. And by it, I mean his completely stupid idea.

Make SOUTH CAROLINA energy independent.

There’s enough problems with making the US energy independent. Like the fact that our electric grid is connected to both Canada and Mexico. But it’s at least possible given the resources of the entire country.

South Carolina, on the other hand, doesn’t have the resources to independent from anyone on energy. We don’t have coal beds, we don’t have natural gas production areas, we don’t have uranium mines. And most importantly, we don’t have the ability to use solar, wind or geothermal energy:

So in order for South Carolina to be energy independent, we’d have to completely rely on the state’s hydroelectric dam system. Needless to say, this isn’t a very smart way to encourage economic development, or keep the lights on in South Carolina.

So what does energy independence for South Carolina look like for Mr. Barrett? Pork. Lots and Lots of Pork.

Pork for nuclear.
Pork for biofuels.
Pork for hydrogen.
Pork for universities.
Pork for everyone.

He will basically be hiding a pork bill under the guise of making South Carolina the “leader in energy.” But he has to return the investment that his sponsors have made in him. His top sponsor, Washington Group International runs the Savannah River Site, which handles, you guessed it, the Department of Energy’s nuclear research. He also has received money from South Carolina’s investor-owned and electric cooperatives who have a heavy stake in all of the nuclear reactors found in the state. So any pork toward nuclear, which he’s pushing heavily, goes towards his financial benefactors. Big surprise there.

Finally, he came up with this bit of genius. He mentioned in passing that by building nuclear reactors, they can serve as desalinization plants as well. Uh, yeah. There’s just a little question of… where are you going to put this nuclear desalinization plant? Myrtle Beach? No, they can’t even handle motorcycles, nevermind a nuclear reactor? Charleston? Perhaps. But do you remember a little thing called Hugo, Mr. Barrett?

The point is that “energy independence” has become a phrase that has lost all meaning. Much like “going green,” this is a phrase that means whatever the person using it wants it to mean.

Another Rent Seeker Using Scare Tactics to Get Government Money

Ladies’ Home Journal’s Red Light Problem – Reason Magazine.

This is similar to another “crisis” where people are agitated about something that had been happening for quite a few years now, but were (blissfully?) unaware of until now.  And now that they have been agitated, they demand action by the government to solve this problem that was never a problem in the first place.

And who’s behind all this?  Someone who stands to make alot of money off of the government’s decision to force people/localities into doing something they didn’t want to do in the first place.

Red Lights meet wind power, just another way to restrict people when there wasn’t a problem in the first place.  And where the cure is worse than the disease.

(Don’t get me wrong, I have nothing against traffic lights.  But automated red light cameras will become the 21st century speed limits.  A government policy put in place purely to serve as a revenue generator with no relationship to reality).

Wall Street Journal and Rush Limbaugh Pick Up on the Gang of 10

On Monday, I posted on the Gang of 10, a group of Senators seeking to bring bi-partisanship and results on the energy issue to the Senate. I looked at more of the spending aspects of the bill, but neglected both the drilling and political aspects of this issue.

So today, the political aspects were addressed by the Wall Street Journal in an article by Kimberley Strassel. So the cat is now out of the bag and how “bi-partisanship” is going to take a key issue off the table for Republicans.

The Institute for Energy Research did a thorough look at all aspects of the bill, as currently announced. Of course, we haven’t seen an actual bill yet, so it could be significantly different in certain ways and have impacts yet unforeseen.

One thing that I had completely forgotten about was the fact that the off-shore drilling ban is set to expire on September 30th:

Republicans are winning the energy debate and will continue to highlight the issue until Democrats are forced to either renew the existing offshore ban when it expires on September 30, or allow it expire. Democrats need to hope for prices to come down and stay down until the election. Whether they have a legislative way to bring that about (such as releasing fuel from the Strategic Petroleum Reserve) is unclear.

So this is a new wrinkle to the bi-partisan plan. Don’t do anything (let the ban expire) and you get what you want (more drilling) . Do something (pass the compromise) and you do less of something (limit the amount of area available for drilling).

So this came up big-time on Rush Limbaugh’s show today. So much that Georgia US Senator Saxby Chambliss called in. Of course Rush put him on right away. There were quite a few things that the Senator said but there are a few that I want to highlight… and pick apart.

RUSH: … The ban on offshore energy production is set to expire at the end of September if Congress does nothing, giving the American people exactly what they want. Now, here comes your bill, The New Era Bill, and it says that new production will only be permitted in four states, and the state legislatures are in charge of it, not the federal government anymore, and only 50 miles or further offshore in those four states, which eliminates the richest fields and things like ANWR. It has 84 billion dollars in tax credits, subsidies and federal handouts for alternative fuels and renewables. It basically, according to the Wall Street Journal today, will eliminate any effort for new drilling.

CHAMBLISS: Well, it’s actually designed to do just the opposite, Rush. First of all, our bill has nothing to do with whether or not the moratorium remains on after September 30. That’s going to be an up-or-down vote on either continuing resolution or some sort of omnibus bill. That’s where it will be included. I intend to vote to lift the moratorium. I think all five of us will do that. I’m sure all five of us will. This doesn’t have anything to do with that. What it does have to do with is we’ve got a commitment for the first time that I can remember in my now 14 years in the Senate, a significant number, although five may not sound significant, but it really is. We’ve got five Democrats who are willing to say, “Look, you know, we think we need to be reasonable and we need join with you guys, so let’s work on a compromise bill that will allow additional offshore drilling,” something we haven’t done in the last 28 years.

Three things I want to mention:

1. This has everything to do with the moratorium. If you replace law that is set to expire in two months with a new set of laws that keep the law in place, then you’re extending the moratorium. In this case, they’re just keeping the moratorium in place 50 miles off-shore and in. But it’s still in place. If you don’t do anything, the moratorium expires, and you get to drill EVERYWHERE. You win.
2. If Congress passes the moratorium extension in an omnibus bill, then Senators have two options: strip it out in an amendment (straight up or down vote) or have President Bush veto the bill and not override it. Even if the law is passed, Pres. Bush can still veto it, and the Democrats absolutely do not have the votes to override it. Just so long as Republicans keep playing the drilling issue up, which is a political winner for them. Especially if there are 5 Democrats willing to go along with drilling.
3. Since when did a “continuing resolution” have the force of law? If the President doesn’t sign it, it’s not law. Period. If that’s not the case anymore, then 216 years of a Constitutional Republic have just been blown up. And then we have a pretty good legal case on our hands. A continuing resolution that’s not signed by the President (that whole checks and balances thing, remember?) SHOULD NOT and DOES NOT have the power of law. If I’m an oil exploration company, I challenge that law as soon as possible.

Pretty much, the rest of the interview is mostly Sen. Chambliss defending his position that “his constituents want me to do something” and I’m doing something. Whether or not his something will amount for anything is a different matter altogether.

The entire conversation is below the cut.

Beware bi-partisan energy plans

Have you ever heard of a Gang that has done anything well? Gang of Four? Gang of Fourteen? Now, there’s the Gang of Ten, pushing a bipartisan energy bill that does… well, it’s alot of tax credits and drilling. That’s pretty much it.

Since it has the word Gang in it, of course Lindsey Graham, McCain’s lapdog in the Senate, has to be involved. But it can’t be good for conservatives, that’s for sure.

Basically, Republicans get their bone (more drilling), and the democrats get their bone (tax credits and R&D monies for alternative fuels). In the end, it’s going to be alot of money spent ($85 billion and not all of it paid for:

Offsets
The $84 billion in investments in conservation and efficiency in the New Era bill will be fully offset with loophole closers and other revenues. Approximately $30 billion will come from new revenues from the oil and gas industry through such measures as modifying the Section 199 manufacturing deduction for oil and natural gas production and other appropriate measures to ensure that the federal government receives its fair share of revenue from Gulf of Mexico leases. Remaining offsets will be finalized in consultation with the Finance Committee after accounting for interaction effects with other pending legislation.

Translation: We’ll try and bleed as much as we can from oil companies, but for the rest, we’ll just tax and borrow like we always do. We don’t need no stinkin’ pay-go rules, this is an election year!

This will do pretty much the same as it was before, so there’s not going to be any real change in US government energy policy with this Gang of 10 bipartisanship. Huh, just like the Gang of 14.

One more note, this another time I’ve noticed that more spending for infrastructure “$2.5 billion in R,D&D on next generation biofuels and infrastructure; Tax incentives for the installation of alternative fueling stations, pipelines and other infrastructure;”

This, along with the other proposals (ie. the Obama plan and the fuel tax increase), all mention shifting money towards construction in infrastructure. Now, I don’t have a problem with this in principle, as long as the money is use wisely and correctly. The current political structure, on the other hand, has no idea how to spend money. So we should fix that before we start putting more money toward construction.

Of course, I’m impressed with the lobbying acumen of the highway construction/contractors group, whatever it is. I’m seeing more and more money getting shoveled in their direction. And the most recent highway bill doesn’t expire until next year!