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Today, the Congressional Budget Office (CBO) released multiple reports on the state of the U.S. economy. One of them, "The Slow Recovery of the Labor Market," examines current job market conditions and projects where employment figures are heading relative to historical trends. The full report is available online, but here are three quick take-aways summed up in graphical form (visuals courtesy of CBO):
The first in a new weekly video series from your friends at National Taxpayers Union! We'll keep you updated on what's really going in in Washington, and the issues that will affect your pocketbook.
$40 BILLION is the cost of President Obama's State of the Union, and that's just what can be quantified - NTUF's Demian Brady explains. Plus, Pete talks Obama's hypocrisy on energy; and the Outrage of the Week goes to the Super Bowl (sort of)!0 Comments | Post a Comment | Sign up for NTU Action Alerts
The Lone Savings Proposal in President Obama's Speech
President Obama used last night's State of the Union address to lay out his agenda for the coming "year of action," as he described it. NTUF analyzed the remarks and estimated that, if the 13 proposals we were able to score are passed, federal spending would increase by just under $40 billion per year.
At one point in the speech, the President asked Congress to help him bring stability to housing markets without burdening taxpayers:
"And since the most important investment many families make is their home, send me legislation that protects taxpayers from footing the bill for a housing crisis ever again, and keeps the dream of homeownership alive for future generations of Americans."
There's been legislation introduced in Congress that aims for a similar goal, and NTUF featured it in a recent issue of The Taxpayer's Tab. We based our score of the President's housing proposal on the Congressional Budget Office's (CBO) cost estimate for S. 1376, the FHA Solvency Act. Senator Tim Johnson (D-SD) introduced that bill in order to address financial difficulties facing the Federal Housing Administration's (FHA) Mutual Mortgage Insurance Fund (MMIF). The MMIF required a $1.7 billion bailout from taxpayers in 2013 after it couldn’t meet financial obligations it took on during the housing market crisis.
Part of the bill stipulates that the troubled FHA program has to maintain a higher capital reserve ratio (three percent) than it has in the past (two percent), in order to ensure it has sufficient funding to cover expected losses. One of the ways in which it does that is by raising premiums on the mortgage insurance it offers.
This doesn't directly decrease federal outlays, but CBO records these receipts as offsets against spending. The higher rates would take effect in 2018, when CBO expects the government to collect $522 million. Meanwhile, the bill's other requirements would increase spending by about $2 million per year.
This proposal was the only one the President made in his speech that NTUF was able to quantify as a net savings measure. Note that isn't because it reduces outlays, but rather, increases receipts enough to offset the program's potential long-term costs.
This could help minimize the risk that taxpayers would be stuck "footing the bill" for the next housing crisis, but would it guarantee that this won't happen again? The FHA guarantees approximately 1 in 5 mortgages for new homes. Fannie Mae, a "government-sponsored enterprise", remains the largest single issuer of single-family mortgage-related securities. Its market share covers nearly half of all new single-family mortgages. As long as federally-backed entities continue to play such a significant role in the market for new mortgages, taxpayers will be at risk.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Yesterday, I wrote that one of the top four ways the President can make good on his promise to uphold an “all of the above” energy policy would be to move forward with the Keystone XL pipeline:
The Keystone XL pipeline would bring with it 20,000 much-needed jobs over time, and support thousands of other jobs in many sectors. That’s not to mention an additional 500,000 barrels of oil a day from Canada, our largest and most stable trading partner. This would inject our economy with billions of dollars in additional activity. … President Obama’s State Department can stop their delay tactics and approve the pipeline’s permit at any point.
Today, the pipeline cleared a major hurdle. The Associated Press reports:
The long-delayed Keystone XL oil pipeline from Canada moved a significant step toward completion Friday as the State Department raised no major environmental objections to its construction.
Of course, this isn’t the first time the pipeline has passed environmental muster. During President Obama’s first term, the State Department conducted a study and found that the pipeline would not have any substantial environmental impact. However, the pipeline’s permit was still rejected by the President, and TransCanada, the company behind the project, was forced to reapply.
TransCanada did so, but the President postponed a decision until after the 2012 election. Meanwhile, other reports have found that the tar sands derived oil that will be transported by the pipeline is no more risky to transport than other kinds of crude oil and TransCanda has agreed to comply with ever more stringent construction conditions. The whole saga is described in greater detail here.
Due to the Administration’s past delay tactics, it’s too soon for taxpayers to start popping the champagne. But one thing is clear today: the President has run out of excuses to stop Keystone XL.0 Comments | Post a Comment | Sign up for NTU Action Alerts
NTUF Celebrates National School Choice Week, Donates to Local Charter School
In celebrating National School Choice Week (NSCW), NTU Foundation and the Alexandria, Virginia chapter of Liberty on the Rocks brought together local taxpayers, educational freedom supporters, and students for a night of discussion, teaching, and skee ball. The Wednesday night event was one of over 5,500 events going on in every state that aimed to build awareness of local and national school choice efforts and educate citizens about the benefits and challenges of changing schools and school systems.
For this event, NTUF sponsored a “Skee Ball 4 School Choice” game where everyone played a game of skee ball and afterward joined in the larger group talks on what charter and voucher schools are, what everyone’s personal experience was and is in education, and where we see room for reform in educating students at all levels and ages. Congrats to Holly, Juli, & Demian for being the top three scorers in our friendly game of skee ball!
We also called on attendees to bring school supplies to help the efforts of Perry Street Prep, a DC charter school that serves low-income families and sometimes homeless students. The turnout for the students was overwhelming, collecting 3 boxes of assorted supplies like notebooks, composition books, crayons, and pens. Financial donations were also made to directly help the students and teachers at Perry Street Prep. If you would like to help NTUF’s and Liberty on the Rocks’ support, learn how to at their Giving page.
This was the first time that NTU’s education and research arm, NTUF, has hosted a NSCW event but it is not the only instance of our involvement in school choice. For the past three years, NTUF has organized in-person and online events for the Milton Friedman for Freedom Legacy Day, reaching hundreds of taxpayers across the country.
The Alexandria, Virginia chapter of Liberty on the Rocks has hosted school-choice events for three years, including NSCW and Milton Friedman for Freedom Legacy Day. The social group is dedicated to enhancing and expanding the cause of freedom. Check the group’s national site to see or start a chapter new you or go to the Alexandria chapter page to see when the next event will be held.
Thanks to everyone who donated or contributed to our school supply drive! Be on the look out for more chances to donate to Perry Street Prep and for more information on school choice.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Troubling Contradictions: Obama on Energy Taxes in his State of the Union
In the President’s address Tuesday night, sharp-eared observers might have noticed he took credit for growth spurred by the oil and gas industry, saying:
“And here are the results of your efforts: … A manufacturing sector that's adding jobs for the first time since the 1990s -- more oil produced -- more oil produced at home than we buy from the rest of the world, the first time that's happened in nearly twenty years.”
The President’s excitement over the accomplishments of the energy sector might come as a surprise considering he has consistently worked to make life more difficult for those businesses.
The trouble is, sending signals like these can do damage, not only to the economy but the cause of tax reform too … and, most ironically, to the Treasury’s bottom line.1 Comments | Post a Comment | Sign up for NTU Action Alerts
It’s Time for a True “All of the Above” Energy Plan
President Obama reiterated his commitment to an “all of the above” energy strategy in his State of the Union address Tuesday. In the past, this strategy has looked more like a “renewable or nothing” plan. However, the President did make surprisingly supportive comments regarding our booming oil and natural gas industries, saying that his “administration will keep working with the industry to sustain production and job growth….”
The President also stated that in order to spur the growth of the natural gas industry he would “cut red tape.” That would be a great first step, but here are a few other areas where we could unleash the enormous potential of the energy sector with just a few snips of the old red tape:
1. Keystone XL Pipeline: H.R. 3, the Northern Route Approval Act, which would clear the way for the construction of the Keystone XL pipeline, passed the House with bipartisan support – but remains lost in the netherworld of Harry Reid’s obstructionist Senate. The Keystone XL pipeline would bring with it 20,000 much-needed jobs over time, and support thousands of other jobs in many sectors. That’s not to mention an additional 500,000 barrels of oil a day from Canada, our largest and most stable trading partner. This would inject our economy with billions of dollars in additional activity. Of course, taxpayers shouldn’t have to wait for the Senate to act (or, more likely, not act). President Obama’s State Department can stop their delay tactics and approve the pipeline’s permit at any point.
2. Permitting Reform: H.R. 1900, the “Natural Gas Pipeline Permitting Reform Act,” and H.R. 3301, the “North American Infrastructure Act,” would streamline the permitting process for natural gas pipelines, putting in place commonsense deadlines and guidelines to remove the regulatory limbo where many projects find themselves. The inability to get energy products swiftly and safely from place to place is hampering markets and hurting consumers who have to pay higher prices, or even worse, are going without.
Back in November, the Boston Globe reported on the capacity crunch facing New England:
The projects come as New England struggles to address growing demand for natural gas and supply constraints created by tight pipeline capacity. Those constraints have led to shortages and price spikes during the peak demand periods, such as extended winter cold snaps, helping to drive the region’s already high energy costs even higher.
“Some days there just isn’t spare gas to be sold,” van Welie said.
Additional pipeline capacity, van Welie added, would help alleviate the issue and could also lead to lower energy costs in New England … .
Today, the cold weather is testing both pipeline and storage capacity in both the Northeast and the Midwest. National Public Radio’s Jeff Brady reported:
With drilling booms in places like Pennsylvania and Texas boosting the country's supply, there's plenty of gas to go around. The problem is building the pipelines and other infrastructure needed to deliver it. This has led to some extreme cases where natural gas prices have been bid way up. Last week in New York, one desperate buyer was willing to pay about 25 times the typical price for gas.
And in Ohio:
Like in the Northeast, the problem is not supply so much as getting the gas to where it's needed, when it's needed. During the cold spell in early January, one utility had problems that left a few thousand customers without gas for more than a day. State regulators are asking customers to conserve to make sure that doesn't happen again.
3. War on Coal: President Obama has made it clear over the years that coal is his least favorite source of energy. Still, it is a crucial part of any true “all of the above” energy policy. Given its widespread availability and the fact that many alternatives are still prohibitively expensive and unreliable, coal should continue to be a part of our energy profile for the foreseeable future. The President’s Environmental Protection Agency (EPA) and other administrative departments have tried to throw up one roadblock after another to keep coal out of the picture. The “War on Coal” has been so successful that almost no new coal-fired electricity plants are being built in the U.S. The few that are have to be outfitted with costly new carbon capture technology. The Washington Post reports:
Last year, the Congressional Budget Office concluded that it was unlikely the technology would become cost-competitive anytime soon. Power plants that can capture and store their carbon are initially expected to cost about 75 percent more than regular coal plants. And those costs won't fall unless there's either a huge technological breakthrough or utilities invest a lot more of their own money in building new plants. Neither appears imminent.
Representative Whitfield (R-KY) has introduced a bill, H.R. 3826, the “Electricity Security and Affordability Act,” to help rein burdensome EPA regulations by enacting common-sense checks and balances that would restore accountability in the rule-making process. The legislation establishes new guidelines for future power plants that are well within the realm of the possible (for a nice change), repeals earlier proposed rules, and requires more Congressional oversight.
4. Renewable Fuel Standard: The corn ethanol mandate imposed by the Renewable Fuel Standard (RFS) has had far-reaching negative consequences. Corn ethanol drives up costs for consumers in the form of lower gas mileage, engine damage, and volatile food prices. It encourages farmers to plant on marginal land better left untilled. The list is long. The RFS also set up a market for Renewable Identification Numbers (RINS), which are renewable fuel credits to help refiners comply with the EPA’s cellulosic fuel mandate. Unfortunately, this market has become rife with fraud. Companies that have unknowingly bought and used fake RINs in their attempts to comply with the law have been hit with huge fines by the EPA.
Currently, the EPA is considering lowering the volume of ethanol it will require refiners to blend into the gasoline supply in 2014 due to the fact that gasoline consumption is down, yet the law requires greater and greater volumes of ethanol to be blended. That’s only a small, uncertain improvement – one that won’t fix the longer term problems imposed by the RFS. Still, it does reinforce the fact that the RFS is a broken, failed policy – hurting everyone but the corn growers for whom the RFS has been little more than a wealth transfer from one portion of the agriculture sector to another.
A bipartisan team of legislators in the House comprised of Rep. Goodlatte (R-VA), Rep. Womack (R-AR), Rep. Costa (D-CA), and Rep. Welch (D-VT), has introduced H.R. 1462, the Renewable Fuel Standard Reform Act, which would eliminate the corn ethanol mandate, reduce the cellulosic ethanol mandate, and cap ethanol blends at E10.
Washington shouldn’t be picking and choosing winners and losers. Red tape, costly regulations, and unsustainable mandates – not to mention subsidies, tax credits, and loan guarantees for “green energy” projects – all wreck havoc on the energy market. Too often, the end result is higher costs for consumers. Further, these misguided policies have left taxpayers holding the bag for failed government backed enterprises. If President Obama is serious about an “all of the above” energy policy, the remedy is simple: get government out of the energy market.2 Comments | Post a Comment | Sign up for NTU Action Alerts
As we celebrate School Choice Week, we recognize that the key to economic prosperity and a brighter future is through empowering parents and giving children a first-rate education, not mindlessly throwing money at ineffective public school systems when they fail to deliver.
This past November, we saw yet another attempt at tax hikes for education; this time in Colorado. Fortunately, taxpayers rallied against the multi-billion dollar income tax hike and defeated Amendment 66 by a 3 to 1 margin. Coloradans—and millions of Americans—understand that our children deserve an approach to education that stresses increased accountability, more choice, additional parental control, and better use of our tax dollars.
Thanks to the hard work of school choice supporters, we’ve seen greater utilization of charter schools, tuition tax credits, and school vouchers. This has led to countless success stories in numerous cities and states. For the sake of America’s future, let’s keep that momentum going.
If you’re local to the DC area, please join us tonight at The Lighthorse in Alexandria, VA for a special School Choice Happy Hour. More info can be found HERE.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Report: Last Night’s Speech has $40 Billion Price Tag
NTU Foundation researchers were up long into the night and woke up extra early to tabulate the proposed costs in this year’s State of the Union (SOTU). Similar to NTUF’s candidate studies, we went line-by-line through the speech & identified all of the legislative actions President Obama proposed to the Nation. We then referenced those items with cost estimates from his own budget, legislation being considered in Congress right now, and third parties (like the Congressional Budget Office) to come up with a total spending agenda. Here’s a breakdown:
Though this was not President Obama’s longest SOTU address, he managed to announce 29 different policies that would affect the budget. Because of the lack of information included in his speech and in documents released by the White House, NTUF was able to score 13 of those items; the other 16 could resurface with more clarity in future legislative measures, executive orders, or more regulations in the U.S. Code. How much are we talking about? Check out the totals:
This total is light compared to last year’s $83.41 billion SOTU cost, but remember that this is just under $40 billion in NEW spending (i.e. adding to the deficit, which is projected to be $744 billion this year, according to the Administration’s Mid-Session Review). So if the 13 items were enacted, the government would be forced to borrow more money and keep future taxpayers on the hook for today’s decisions.
The largest budget-changing proposals include (figures are annualized):
The only savings proposals that NTUF was able to clearly identify was a call to prevent future bailouts of the housing market, which was matched with a bill currently in Congress that would decrease spending by $103 million each year. S. 1376, the FHA Solvency Act was covered in a recent edition of The Taxpayer’s Tab and would bring in more mortgage insurance premium fees (counted as an offset to direct spending). More information on this bill can be found in a post by NTUF Policy Analyst Michael Tasselmyer (coming soon).
Wondering how each of President Obama's speeches compare? Check out NTUF's homepage.
Stay tuned for more SOTU analyses from the best team of tax and budget analysts in the country.0 Comments | Post a Comment | Sign up for NTU Action Alerts