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The Late Edition: October 10, 2012
Time is running out! Tell the EPA to Waive Corn Ethanol Mandates.
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RSC Chairman Jim Jordan Demands Answers from Ex-Im Bank
Earlier today, Republican Study Committee Chairman Jim Jordan (R-OH) sent a letter to Treasury Secretary Tim Geithner requesting an update on how negotiations to eliminate export subsidies are going. In a nod to Export-Import Bank (Ex-Im Bank) critics, last spring’s reauthorization requires the Treasury to pursue these negotiations with regular updates to House and Senate Committees. The letter specifically asks for:
A report on the progress of any negotiations to eliminate export subsidies, as described in Public Law 112-122, until the Secretary certifies in writing to the committees that all countries that support subsidized export financing programs have agreed to end the support; and
A report on the progress of any negotiations to eliminate aircraft export credit financing, as described in Public Law 112-122, including the progress of any negotiations with respect to each classification of aircraft set forth in the Act, until the Secretary certifies in writing to the committees that all countries that support subsidized export financing programs have agreed to end the support of the relevant aircraft
While Congressman Jordan’s letter comes as an early reminder of Ex-Im Bank’s obligations, it would be a huge surprise if there was any time left in the day to undertake any such discussions, not when there are millions of new dollars to hand out. Far from working to eliminate unnecessary export subsidies, Ex-Im Bank has been hard at work underwriting seemingly everything that comes across the desk.
Writing just yesterday, our friends at Heritage Action note several recent taxpayer backed loans:
How would you like the taxpayer-backed United States Export-Import Bank to provide direct loans for the export of PV modules to Barbados-based Williams Industries-Williams Evergreen at the cost of $6.4 million, the export of a Lockheed Martin satellite to the government of Vietnam at the cost of $118 million, and the export of goods and services for the construction of an AQUARIUM to the Brazilian state of Ceara for the one low cost of $105 million?
Your wish is the Ex-Im Bank’s command!
It’s true that everyone loves a great taxpayer funded aquarium at the other end of the hemisphere (for anyone who can’t make the trip, there’s a picture here), but the solar power modules for Barbados should be especially troubling to taxpayers. That’s because the government doesn’t have a great track record when it comes to investment in “green energy” projects like the one in Barbados.
One of Ex-Im Bank’s most famous failures is the poster-child for bad green energy investments: Solyndra, maker of uncompetitive solar cells, received $10 million. Another green energy loan recipient laid off 200 U.S. workers in August, soon after receiving a multi-million dollar Ex-Im Bank loan. And the list of taxpayer backed green investments goes on and on when you consider not just the generosity of Ex-Im Bank, but of the EPA’s Title XVII grant program as well. Together, the investments made by these programs are in marked contrast to those being made in the private sector where CNN reports green startups are now considered toxic:
… investors say they won't lend money to green energy companies, especially startups, because they haven't proven they can be profitable on their own.
Unfortunately, the fact that private capital is fleeing the green energy sector doesn’t seem to be a reason why taxpayer dollars shouldn’t be exposed to the same big risks. Only last week, came the news that despite headlining losses in the solar industry, Washington shelled out another $197 million on yet another firm.
SoloPower closed on a guaranteed government loan of $197 million last August, about the time another solar panel manufacturer, Solyndra, filed for bankruptcy. The failure of Solyndra cost U.S. taxpayers more than a half-billion dollars.
The second solar panel maker that received a loan from the Department of Energy, Abound, is also now in bankruptcy. Based in Longmont, Colo., Abound spent $70 million of its green energy loan and next week will auction off its equipment in hopes of paying some of that back.
Industry analysts are not optimistic about SoloPower's prospects.
"It's questionable at this point," says Andrew Soare of Lux Research, "It's uncertain if solar power will be able to produce efficiently and economically at scale. It's something that has not been done yet, and it's still risky."
Whether Congressman Jordan gets a timely or satisfactory response to his request remains to be seen, but his letter is a good reminder that just because Ex-Im Bank was reauthorized doesn’t mean it shouldn’t continue to be held accountable. Subsidies or no subsidies, using taxpayer dollars to back risky loans where private investors fear to tread is irresponsible at best, regardless of whether it’s Ex-Im Bank, the EPA, or any other agency. While efforts to stem the tide of cheap credit have yet to succeed, NTU is glad to see that Congressman Jordan is still leading the fight on behalf of taxpayers everywhere.0 Comments | Post a Comment | Sign up for NTU Action Alerts
The Late Edition: September 26, 2012
Today’s Taxpayers News!
NTU’s Pete Sepp weighs in on Pennsylvania’s new tax incentive proposal for businesses in this article from the Altoona Mirror.
House Republicans are working to end the costly twenty-year precedent of handing taxpayer dollars to companies that produce wind energy, urging House Speaker John Boehner to banish the “wind energy production credit” from the Farm Bill.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Worst Policy Ever Has Bacon on the Path to Extinction
Well, if you’re a fan of bacon in any format, you need to brace yourself. Unless the Environmental Protection Agency (EPA) acts quickly to waive the corn ethanol mandate, it could be the end of a very tasty era for America’s many bacon lovers. The BBC was the first out of the gate with the dire prediction that “there could soon be a global pork shortage, and a sharp rise in prices” – but the news has been pointing this direction in a long time.
Thanks to a double whammy of severe drought and bad energy policies, the price of corn has reached a record high of over $8/bushel. This means livestock producers are finding it costs far more to feed and raise hogs than they can sell them for. This summer’s poor corn yields have exacerbated an already shaky corn supply due to a Renewable Fuels Standard that diverts almost forty percent of our corn to fuel production. The editors at Bloomberg.com explain:
Since 2005, the U.S. government has mandated that gasoline contain ethanol, almost all of it derived from corn. The policy, ostensibly aimed at reducing the country’s dependence on foreign oil and at improving the environment, has been a bonanza for farmers. Land planted with corn soared by a fourth after Congress passed the Energy Independence and Security Act of 2007, which required that gasoline producers blend 15 billion gallons of ethanol into the nation’s gasoline supply by 2015.
… With this year’s crop expected to be the smallest in six years, corn prices have jumped 60 percent since June. The ethanol requirements are aggravating the rise in food costs and spreading it to the price of gasoline, which is up almost 40 cents a gallon since the start of July.
The damage is far-reaching. Beef and pork producers are slaughtering their stocks at a record pace to cut use of corn feed that costs two-thirds more than three months ago.
In the U.S., pork giant Smithfield Foods Inc. saw first-quarter earnings drop 25%, forcing its president to beg the EPA for help:
But like other livestock producers, high feed costs have challenged its bottom line. In July, Mr. Pope called for the U.S. government to waive its mandate requiring the blending of ethanol into the nation's gasoline supply as a severe drought batters the nation's corn crop and drives up prices. Smithfield buys roughly 128 million bushels of corn and corn equivalents each year to feed its hogs, making it one of the largest consumers of the grain in the U.S., Mr. Pope had said.
The Wall Street Journal reports a similarly disturbing picture for our neighbor to the north:
Big Sky Farms Inc., one of Canada's biggest hog farmers, was forced into receivership by lenders earlier this week, the latest victim of a withering North American drought that has sent feed prices soaring for livestock producers across the continent.
Big Sky, based in Humboldt, Saskatchewan, produces about one million hogs a year, generating about 40% of the Canadian province's annual production. It ranks as Canada's No. 2 producer, with operations on both sides of the U.S.-Canada border.
And the Guardian reports a worldwide slaughter of pigs that will lead to sharply increased prices:
Rabobank said the slaughter of millions of pigs has already led to a 31% increase in the price of pork and the costs of other meats are also expected to soar as "US livestock herds are likely to be liquidated at an accelerating pace in the first half of 2013".
Nicholas Higgins, a Rabobank commodities analyst and author of the report, said: "There will be an initial glut in meat availability as people slaughter their animals to reduce their feed bills. But by next year herds will be so reduced that there won't be enough animals to meet expected demand and prices will soar."
While all meat lovers will be affected by the record-breaking price rises, Higgins said bacon butty fans may suffer the biggest increases because it is easier for farmers to slash and rebuild pig herds than cattle.
"Farmers cut back pigs because they can rebuild them the quickest. Replacement cattle take a lot longer to breed – a year and a half compared to six months for pigs," he said.
While the government can’t make it rain, the EPA can waive costly ethanol mandates that require fuel producers to blend corn ethanol into the gasoline supply, thus diverting much-needed food to our fuel tanks. NTU is working with a broad coalition of groups ranging from livestock producers, anti-hunger organizations, and environmental advocates to urge the EPA to waive the ethanol mandate, relieving the pressure on corn markets. Unfortunately, right now it looks like more not less corn will be going into our cars in the near future
E15, gasoline with 15% ethanol (up from the current 10%) could be coming to a gas station near you. Even as corn prices climb, the Administration has been clearing the way for E15 fuel, despite the major risks to engines, the lower gas mileage, and increased greenhouse gas production – just to name a few of the serious downsides to E15.
Rather than letting the market determine our fuel needs –it’s clear that the EPA is willing to continue to plow forward with their ethanol schemes regardless of the outcome.
Sadly, for baconistas everywhere, the EPA’s dogged adherence to failed corn ethanol policies could spell the end of what will one day be remembered as a Golden Age of Bacon. The coming critical bacon shortages will hamper the amazing creativity of baconphiles the world over, rendering (pun intended) bacon less a medium for awesome and delicious inventions, and more a pricey delicacy enjoyed only by society’s elite. At ever higher prices, it will soon become unaffordable to push the limits of pork products and the world may never see the triumph of a Burger King Whopper with not just 1,050 strips of bacon, but 2,100!
Here, at the end of 2012, we may indeed be seeing the very pinnacle of bacon culture and technology, consigning so many bacon bandaids and woven bacon explosions to the grease trap of history. Sadly, this is just one more way big government is making it harder and harder for everyone to bring home the bacon.
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Greenpeace’s recent post that attempts to assail NTU and NTUF for working against cap-and-trade features a failure in logic so self-evident, your average eighth grader could spot it.
Here is the meat of their entry on NTU/F:
The National Taxpayers Union Foundation (NTUF) advocated inaction on climate change, calling the science behind Kyoto inconclusive. "If Congress deems carbon dioxide emissions to be a problem worthy of attention, then it should confront them without raising taxes on struggling American families in the process."
In an open letter to Representative Mary Bono-Mack, NTUF advocated against the cap-and-trade in the ACES bill as a "tax hike" without acknowledging the environmental or economic benefits.
The first paragraph collapses on itself, as any reader is left scratching their head, thinking: “How is saying Congress should address concerns about carbon dioxide without a tax hike the same as saying do nothing?”
One would assume Greenpeace is taking the stance that a tax hike MUST occur to enable action on ‘climate change’. Even so, using a quote that counters the claim you made in the prior sentence might not inspire much confidence in your understanding of logic.
After that initial stumble, Greenpeace face-plants by misidentifying NTUF as authors of a letter on cap-and-trade, when it was NTU. In doing so, they include a direct link to the clearly NTU authored letter!
Though, let’s give them credit for properly quoting and citing NTU, so that it is so stunningly clear that they are wrong about NTUF’s involvement, and transparent in their commitment to tax hikes and spending binges in the name of environmentalism.
We’ll avoid the cheap attacks, there’s plenty to read about Greenpeace’s donors and mission elsewhere.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Politico reported that a bill to extend the farm bill by one more year was pulled at the last minute yesterday:
Facing certain defeat, Republicans pulled their one-year farm bill extension from the House docket late Tuesday in favor of a narrower $383 million disaster aid package to address the immediate needs of drought-stricken livestock producers.
The abrupt turnaround came just minutes before the House Rules Committee had been slated to take up the extension in anticipation of floor votes Wednesday. Within hours, the slimmer 22-page disaster bill had been filed with the promise of floor votes Thursday.
With proponents of Big Ag pushing the extension (H.R. 6228) as a ploy to go to conference with the Senate’s own bloated farm bill, this is a big win for the free market.
The Congressional work-around was floated in order to avoid a full debate of H.R. 6083, the House FARRM bill. Weighing in at almost $1 trillion over the next decade and with far reaching policy implications for farms and consumers alike, the five-year farm bill is a major matter that deserves real and open debate.
While it is true that the drought in the Midwest has wreaked havoc on this summer’s corn and other crop staples, little good can come from legislating defensively to suit emergency circumstances without looking at the long term outcomes and the broader context. Despite claims from special interests that they need an urgent bailout, many farmers will be able to recoup their losses under their current crop insurance plans without any extra taxpayer-funded relief.
In addition, American farmers are coming from a place of record-level profitability thanks to a decade of high commodity prices and better yields. The Department of Agriculture reports that though farming inputs have stayed relatively stable since 1948, productivity has soared. The net income of farmers nationwide last year was almost $98 billion and corn alone raked in $76 billion. Since the 1990s, farm income has trended upward at a much faster pace than other U.S. households. In 2010, the average annual income for a farming household was $84,440, well above the national average of around $64,000.
At the same time taxpayers have continued to struggle with high unemployment and mounting national debt, billions in tax dollars have been redistributed to Big Agriculture through subsidies and direct payments. Just this month the Government Accountability Office reported that from 2003-2011 $10.6 billion in direct payments were given away to producers who did not even plant any crops. And though reauthorization packages in both the House and Senate have been touted as cuts to spending, the price tags are 60 percent higher than the previous 2008 farm bill.
If this is reform, it’s a reform we can’t afford. With farmers riding high on a decade of record profits and strong bipartisan support for repeal of direct payments this might be the best opportunity we have to make serious course corrections.
The best course of action Congress could take to relieve the effects of the drought that are sending livestock-feed prices through the stratosphere is to immediately repeal the ethanol mandate in the Renewable Fuels Standard (RFS). Extending wasteful programs and special interest carve-outs for another year will do little to mitigate the effects of the drought, but Congress can seize this opportunity to repeal a misguided mandate and immediately free up corn supplies.
Even in the heart of the suffering Corn Belt, the Chicago Tribune is advocating an urgent stop to the diversion of food to fuel:
But there is one important step that should be taken soon: The U.S. Environmental Protection Agency needs to waive its requirement for using corn-brewed ethanol in U.S. motor fuels.
Under a program called the renewable fuel standard, the EPA requires petroleum blenders to dilute their gasoline with increasing amounts of biofuel each year. This year, the RFS mandate calls for 13.2 billion gallons, nearly all of it corn-derived ethanol. This page has pointed out many times the absurdity of this intervention in the marketplace. Few government programs cost so much and deliver so little benefit to the public.
What makes matters worse in light of the drought is the enormous drain of ethanol production on the corn supply.
Waiving, reforming, or repealing the ethanol mandate is not just one immediate step that Congress can take to help alleviate the terrible effects of the drought on livestock producers and consumers, one that would save taxpayers money, not cost them – it is also a perfect, though depressing, example of how government meddling affects markets and leads to unfortunate unintended consequences.
While the RFS continues to cut a swath of destruction across our economy, it should make legislators pause before passing enormous farm bills that have an equally broad impact on markets, taxpayers, consumers, and the economy. This is a clear case of government failure and there is no reason to assume, based on past experience, that the House and Senate’s new “reforms’ will be any better. On the contrary, in the face of this sobering mess, things could get far worse.
Taxpayers can breathe a sigh of relief for today - if farm policy can be shelved until 2013, we might just get the time we need to enact the real, free-market reforms the agriculture sector so desperately needs. Of course, there’s still potential it might rear its ugly head during a lame duck session. Still, one thing is clear, whether the battle recommences one month or one year from now, it’s time to get government out of the tractor seat.
Go here to tell your legislators to oppose the farm bill.
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A Real Stimulus And Jobs Bill
After even another dismal jobs report, and an increase in unemployment claims, the President and his rivals continue to go back and forth about what will stimulate the economy and create jobs. One road not (yet) taken is approving the Keystone Pipeline. Declining the project for 1,700-mile pipeline to deliver crude oil from Canada to refineries in the United States was another decision by the President to hold back the power of the free market. According to the Heritage Foundation:
Building the pipeline would bring over 700,000 barrels of oil per day and directly create 20,000 truly shovel-ready jobs. The Canadian Energy Research Institute estimates that current pipeline operations and the addition of the Keystone XL pipeline would create 179,000 American jobs by 2035.
Citing environmental reasons, the President put off answering TransCanada, stating that they needed more time to review the project, even though State Department found only minor environmental effects from the Pipeline. The New York Times reports:
The $7 billion Keystone XL oil pipeline cleared a key hurdle today, as the State Department finalized an environmental review that found limited hazards from the controversial Canada-to-U.S. project
For a President who so desperately needs an economic boost, especially considering this past month’s unemployment numbers, what is the rational behind not forging ahead with Keystone? Scared of upsetting the environmentalists is the only plausible answer here, but as we see, the environmental risks are minimal. Even worries about these potential minor environmental consequences are wasted, because the oil will be extracted anyways, it just won’t come to the United States. China has already made it clear that it would be interested in doing business with Canada. So the oil that could go towards helping lower gas prices in the United States would, instead, go to China.
The administration said that the 60 days given was not enough time to review the program, ironic for a president who rammed through the biggest overhaul of healthcare this country has ever seen without giving legislature enough time to read it. The risks are minimal while the potential gains are huge, and by not allowing it the President is keeping us as dependent on foreign oil as ever, and at the same time holding back what would be a real stimulus to our sluggish economy.0 Comments | Post a Comment | Sign up for NTU Action Alerts
You may remember this letter by NTU’s Andrew Moylan in June, cautioning Ohio Governor John Kasich against “enacting harsh tax hikes on the oil and natural gas industry.” The letter warned that the governor’s proposal to reduce income taxes by passing harmful taxes on energy exploration could have devastating effects on Ohio’s growing energy economy, which was estimated to generate over 200,000 jobs, increase output by over $22 billion and taxable wages by over $12 billion. Fast forward one month. The energy tax hikes are still on the table, and a recently-released report says that Ohio has plummeted from second place to fourteenth in attractiveness for energy exploration. Not exactly the most shocking news of the day.
A number of the oil and gas executives surveyed were quick to criticize Governor Kasich’s proposed tax increase. Though it hasn’t been imposed yet, many energy company officials expressed concern about what the proposal entails for Ohio’s future business tax climate.
After falling TWELVE spots in attractiveness for energy exploration in but the span of just one month, I suppose it’s easy to say “We told you so.” The energy tax hikes will hamper a growing industry and slow an already-difficult economic recovery. While Governor Kasich has the right idea about the necessity of reducing the state’s income tax, it’s time to scrap the harmful energy tax proposal and instead focus on pairing income tax cuts with reductions to spending that grew 43 percent (even after adjusting for inflation) between 2000-2010.
For those of you with an interest in the politics of the Buckeye State, be sure to pick up a copy of Taxpayers Don’t Stand a Chance: Why Battleground Ohio Loses No Matter Who Wins (And What To Do About It) by our good friend Matt Mayer.0 Comments | Post a Comment | Sign up for NTU Action Alerts
House to Tackle Energy Prices
With election season in full swing and a continually sluggish economy, the last thing President Obama wants is high gas prices as well. But if upcoming negotiations with Iran do not go well, we can expect oil prices to rise and gas prices to shoot up. Therefore, it is little surprise that there has already been talk of tapping the Strategic Petroleum Fund (SPR) this summer. The SPR was created in case there is ever a severe shortage in supply of oil, such as during war. The President has already released oil from the reserves once in June of 2011. Human Events reports:
Never before has a president released oil from the Strategic Petroleum Reserve without having replaced previous withdrawals. But, already carrying a $1.3 trillion deficit, Obama has not been able to replace last year’s drawdown. To withdraw from the reserve two years in a row would be unprecedented; moreover, further reduction of our strategic reserve would increase the risk of a serious shortage in the event of a real emergency.
The SPR was not made available for when there is dissatisfaction with gas prices, and withdrawing for this reason creates a bad precedent and potential supply shortage.. Finding ourselves without enough oil could cause massive economic problems, and national security problems.
Representative Corey Gardner (R-CO) has introduced a bill to help tackle this issue. His bill, H.R. 4480, The Strategic Production Energy Act of 2012, ties releasing oil from the SPR to a proportional amount of leases for drilling oil and gas.
Representative Gardner’s bill is a good way to keep energy exploration on the table and deserves support. However, this shouldn’t become an excuse to use the SPR to manipulate oil prices to score a few electoral points. Expanding energy exploration and production are important long-term solutions for greater energy independence and lower prices and deserve support regardless of elections and political favor.
In addition to the SPR component of the legislation, the bill includes a series of plans that take on the Environmental Protection Agency's regulatory impact on fuel prices, increasing domestic energy production, and streamlining the leasing and permitting process for energy exploration on federal lands. Taken together, the package is aimed at decreasing taxpayers' pain at the gas pump and job growth. The House is considering H.R. 4480 today with final votes expected this afternoon.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Despite the fact that millions and millions in wasteful spending on public relations campaigns on the part of big government have come to light in recent weeks, the Department of Energy almost got away with even more propoganda spending.
Though many were appalled to learn Administration and the Department of Health and Human Services had a total of $40.5 million on media campaigns to promote the President's unpopular health care law, were it not for an amendment to H.R. 5325, the Energy and Water Development Appropriations Act of 2013, offered by Rep. Jeff Landry of Louisiana, Americans would be footing the bill for yet another government funded national media campaign. This time it was to promote another unpopular part of the Adminstration's agenda, "to decrease oil consumption in the United States." NTU issued a vote alert urging a "Yes" vote on the amendment.
The amendment to defund the "green energy" media campaign passed by a voice vote. Watch the whole thing here:
Not only should the government not be picking winners and losers in the energy market, when our federal government is already strapped with out of control debt, we shouldn't be wasting money on campaigns to tell us how to behave or think. Thanks to Rep. Landry for catching this big government money grab.1 Comments | Post a Comment | Sign up for NTU Action Alerts