Monthly Archives: June 2009

Pelosi rams through $0.8 trillion tax increase, calls it a “jobs bill”

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On June 26, a narrow margin of 219 to 212, the U.S House of Representatives passed a “cap and trade” bill, H.R. 2454, the American Clean Energy and Security Act of 2009, or Waxman-Markey bill.

The 1,200-page bill is said to “literally save the planet,” while creating “millions of green jobs.”

In closing debate, Speaker Nancy Pelosi (D-CA) said, “Just remember these four words: Jobs, jobs, jobs, and jobs.”

The goal is overall reduction of U.S. greenhouse gas emissions by 17% from 2005 levels by 2020, and 83% by mid-century (Wall St J 6/27/09).

It was not possible for Congress to know the true impact of the bill, if enacted and implemented, especially as it was reportedly not possible to find the 1,200-page version of the bill, including the 3 a.m., 300-page amendment, by the time of passage.

The Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) estimated that federal revenues would increase by about $846 billion over the 2010-2019 period, starting slowly at $0.9 billion in 2010 and growing to $132 billion in 2019 (CBO Cost Estimate 6/5/09). There would, however, also be direct expenditures of $821 billion over the same period, so that the bill could only reduce the budget deficit by $24 billion.

This would fall far short of the $646 billion windfall hoped for by 2019 to cover the “down payment” on health care reform (AAPS News of the Day 3/2/09).

The bill would affect every aspect of American life, and impose massive reporting requirements on energy generators and users—including clinics and hospitals. “Every aspect of our lives must be subjected to an inventory in order to battle global warming and reduce our carbon footprints,” said Pelosi in May (Marc Morano, Climate Depot 6/26/09).

The lowest cost estimate is Obama’s—the cost of a postage stamp per day. “It’s paid for by polluters who currently emit dangerous carbon emissions” (AP 6/27/09). The CBO estimate is $175/yr for the average household, after tax credits and rebates, but not counting effects on employment or gross domestic product. Taking the Obama Administration’s estimate of $650 billion from auctioning carbon permits, and “knowledgeable” estimates of $2,000 billion for impact on consumers, and dividing by the number of households and 10 years, the Science and Environmental Policy Project (SEPP) calculates $650 to $2,000 per year per household. (The Week That Was 6/27/09).

The net reduction in jobs, according to Charles River Associates International, would be between 2.3 million and 2.7 million per year, as manufacturing is outsourced to China and India.

In the House Energy Committee, three Republican amendments were defeated during the few days in which debate was allowed: to suspend the program if gasoline prices hit $5/gal, or electricity prices increased 10%, or unemployment rates hit 15% (Wall St J 6/26/09).

If the emissions reductions goal were met—reducing carbon dioxide emissions to 1907 levels, when the primary mode of transportation was horses—the largest possible effect on temperature by the end of the century would be 0.2 degrees Fahrenheit, according to a climate modeling study by Chip Knappenberger (ibid.) Obama called the initial targets set by the House bill “modest” (NY Times 6/28/09).

As the House was voting on the biggest tax increase in history on 100% of Americans, the Obama Administration attempted to suppress a report by EPA scientists that “completely blows apart the scientific underpinnings of the endangerment finding that the EPA administrator made on CO2” (NY Times 6/26/09).

Alan Carlin and John Davidson were ordered, in emails obtained by the Competitive Enterprise Institute (CEI), not to communicate to the public their conclusion that the global warming theory is bunk, because the Administration had decided to go ahead with “the endangerment finding.” CEI has posted the report.

Obama pulled back an address on the urgency of health care reform, substituting a message focusing on the House “climate victory.” He is already turning up the pressure on the Senate, where the “cap and tax” energy-rationing proposal faces stiff opposition (NY Times 6/28/09).

Voting against the bill were 44 Democrats, and voting for it were eight Republicans: Mary Bono Mack (R-CA), Mike Castle (R-DW), Mark Steven Kirk (R-IL), Leonard Lance (R-NJ), Frank LoBiondo (R-NJ), John McHugh (R-NY), Dave Reichert (R-WA), and Chris Smith (R-NJ).

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Where is the money for “health care reform”?

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At a Tucson “tea party” on June 22, Steven Knope, M.D., opened the discussion with the remark that the U.S. just doesn’t have the money for the proposed “change” in American medicine—or anything else.

This is becoming increasingly clear to foreigners, if not to Americans. The U.S. was told “no” when it requested to attend the June 15/16 meeting in Yekaterinburg, Russia, as an observer. The six-nation Shanghai Co-operation Organisation was discussing ways to challenge American economic hegemony.

Member nations are Russia, China, Kazakhstan, Tajikistan, Kyrgyzstan, and Uzbekistan. Iran, India, Pakistan, and Mongolia have observer status.

“If China, Russian and their allies have their way,” writes Michael Hudson, the “world’s largest debtor” will no longer be able to “live off the savings of others” (Financial Times 6/15/09).

Some believe that the U.S.—or “Wall Street”—has been propping up the dollar by temporarily smashing the prices of commodities such as gold and crude oil. Having been thwarted in its efforts to buy an important stake in Western commodity firms such as Unocal or Rio Tinto, China has been directing its dollar reserves toward hedge funds, writes Jim Willie. He views this as part of an encirclement strategy, which will deprive the U.S. of a key method of supporting the dollar.

“China commands the Great Wall of Money that will eventually cascade onto world markets. That cascade could be more important as a factor in generating U.S. price inflation than the buildup and spillover of the USFed balance sheet” (Goldseek.com 6/18/09).

Chinese students recently laughed at U.S. Treasury Secretary Timothy Geithner when he told them that Chinese dollar assets were safe. Former Chinese central bank advisor Yu Yongding referred to the Federal Reserve as the “world’s biggest junk investor.”

If one counts private debt, official government debt, off-budget obligations, and internal commitments, America owes 100 times as much as Weimar Germany. And it just keeps borrowing more. In 2009 alone it will borrow $1.3 trillion, “just shy of the debt that sank the Weimar Republic,” writes Bill Bonner (LewRockwell.com 6/22/09).

The Federal Reserve is adding bank reserves at a rate that allows the money supply to expand geometrically, at a rate of 4,500%. Any normal bank that did that would be closed down immediately, Bonner states.

In 1923, Karl Helferich, Chairman, Central Bank of Germany, wrote: “To follow the good counsel of stopping [the inflation machine] would mean…that in a very short time the entire public, factories, mines, railways and post office, national and local government, in short, all national and economic life would be stopped.”

Some argue that hyperinflation will not occur—because the inflation machine simply will not work any more. Deflation is inevitable, they say, because of continuing debt collapse. Open market paper, instead of growing as it had in almost every prior quarter in history, is collapsing at an annual rate of $662.5 billion. The only major player borrowing money in big amounts is the U.S. Treasury, sopping up $1,442.8 billion of the credit available, leaving less than nothing for the private sector, writes Mish Shedlock (Mish’s Global Economic Trend Analysis 6/24/09).

Would more regulation work? Richard Maybury writes that instead of being restrained by a free market (contracts, courts with informed juries, and competition), all financial entities, no matter how incompetent or dishonest, are now under the same massive regulatory umbrella, so it is impossible to distinguish good guys and bad guys. Regulations are providing camouflage for crooks. Massive malinvestments in the U.S. economy are not being corrected. Huge injections of money are simply not being circulated. (Daily Bell 6/7/09).

The current version of “regulatory reform,” in any event, amounts to handing dictatorial control of the entire U.S. economy over to the Federal Reserve, said Congressman Ron Paul, M.D. (R-TX).

Paul concludes, in his June 22 weekly address, that the apparent goal of the Administration and Congress, with the continuing round of “stimulus” packages, is to bring about the total economic collapse of the United States.

“Bank robbers rob banks because that’s where the money is. Similarly, governments tax producers because that’s where the money is,” observes Robert L. Hale (Reactionary Utopian 5/20/09). Compared with the other five-sixths of the economy, how well off is medicine? Is it likely to be the sink for redistributed money—or the source?

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Kennedy bill breaks Obama’s promises

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In his campaign speeches and recent talk to the AMA, Obama promised that all Americans would “be able to get the same kind of coverage that members of Congress give themselves.”

The proposed Kennedy bill, the Affordable Health Choices Act, however, specifically exempts members of Congress and other employees from being pushed into stingy plans with HMO-type controls (section 3116), notes Betsy McCaughey (Wall Street Journal 6/16/09).

Contrary to what many seem to believe, the Federal Employee Health Benefits Program (FEHBP) is not a public plan. Rather, it offers a wide range of private plans, paid for by the employer—the federal government. Those plans include low-cost, high-deductible plans coupled with health savings accounts.

Ordinary Americans would have to enroll in a “qualified” plan—or else be tracked down and fined (sections 3101 and 6055). We won’t know all the requirements until after the bill gets passed and the Secretary of HHS writes the rules. The language suggests that the plan will require a “medical home” (sections 3101 and 2707). That is likely to be this decade’s version of the HMO gatekeeper, writes McCaughey.

The “payment structure” will be based on “incentives” to “provide the best care, rather than more care.” In other words, an incentive to get paid more by doing less.

Both Obama and Kennedy promise that if you like your plan you can keep it. The question is, how big a fine will you have to pay? The bill sets no limit, but says it will be enough to “accomplish the goal of enhancing participation in qualifying coverage” (section 161).

Obama also promises people that they can keep their doctor. Assuming, of course, that he’s still available on the patient’s plan. Or still in practice at all, after automatic, across-the-board Medicare spending cuts are triggered by failure to meet cost-cutting targets, as proposed by Senator Baucus.

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