Taxpayer's Tab: The President's Coming to Town on Your Dime

The President's Coming to Town on Your Dime

As President Obama traveled to California to deliver a commencement speech at UC Irvine, NTUF Policy Analyst Michael Tasselmyer was calculating the flight costs of Air Force One. The news site Zocalo Public Square published an op-ed by Michael, who wrote that "the 10-hour round-trip total comes in at nearly $2.3 million."

Michael goes on to explain how researchers, let alone taxpayers, are unable to obtain Presidential travel information such as overall costs or how the White House defines official versus political trips. He writes that "the problem isn't as simple as a $2.3 million flight to California. It isn't that we have reason to believe the president has intentionally abused his travel privileges. It's just that without a more transparent system, we'd never have any idea if he did."

Have something to say about the President's trip? Check out Michael's op-ed on Zocalo Public Square and his summary on Government Bytes.

Most Expensive Bill of the Week

The Bill: S. 2287, the Carbon Capture and Sequestration Deployment Act of 2014

Cost Per Year: $197 million ($984 million over five years)

In the wake of expansive new regulatory authority proposed by the Environmental Protection Agency (EPA) to limit carbon emissions from U.S. power plants -- targeting the operation of coal power plants in particular -- there’s been a renewed debate in Washington regarding how the government can and should pursue or encourage “clean energy” initiatives. Fossil fuels like coal, oil, and natural gas still make up a large portion of the country’s energy consumption -- by most estimates, about 82 percent -- and renewable energy technology remains expensive and difficult to produce on a large scale, and have their own adverse consequences: solar arrays and wind turbines can be deadly to birds. As a result, policymakers and energy producers often weigh a difficult set of economic and environmental costs and benefits when trying to reduce pollution.

One possible policy alternative is known as “carbon capture,” a process by which carbon dioxide emissions from the burning of fossil fuels are collected before they enter the atmosphere, then pressurized into liquid form and stored in a reserve. The EPA estimates that carbon dioxide capture has the potential to reduce greenhouse emissions from power plants by 80-90 percent, and that the U.S. could store anywhere from 600 to 6,700 years of emissions underground. Doing so, however, would require significant infrastructure development in order to pressurize, transport, and store the carbon emissions, and some scientists have expressed concern about the health risks associated with storing large amounts of liquid CO2 underground.

To incentivize construction and retrofitting of carbon capture facilities, Senator John Rockefeller (D-WV) introduced S. 2287. The Carbon Capture and Sequestration Deployment Act would authorize $20 billion in guaranteed loans meant to finance large-scale carbon capture projects. It would also offer a tax credit to cover between 15 and 30 percent of the construction costs incurred by facilities that capture 65 percent or more of the carbon they emit. An additional $110 million per year would be devoted to research projects involving both private industry and the Department of Energy, in the pursuit of “novel and innovative” uses for carbon dioxide emissions.

Senator Rockefeller represents West Virginia, a state that produced more coal than all but one other (Wyoming) in the fourth quarter of 2013. In a statement released on the bill’s introduction, he acknowledged the economic challenges of pursuing alternative energy: “The reality for West Virginia and the rest of the country is that we need coal; we can’t meet our energy needs without it. ... It is simply unrealistic to think that we can stop burning coal and shift to cleaner sources of energy instantly. [But] we have to prepare for the future.” He called his carbon capture legislation a bill that protects the “bedrock industry” that is coal production, while “protecting our clean air and water” for future generations.

S. 2287 authorizes new guaranteed loans under Section 1703 of the Energy Policy Act of 2005. According to the Office of Management and Budget, the average subsidy rate for loans (i.e., the portion of the loans issued that will not be recoverable) made under that law are projected to be 2.17 percent in 2015 (page 411) – meaning that if the government were to guarantee $20 billion in loans that year, as Senator Rockefeller’s bill directs, it would cost about $434 million to do so. NTUF assumes that these loans will be made over a period of five years, for an annual average cost of $87 million per year. Adding the $110 million authorized for research and development funding brings the net average annual cost of S. 2287 to $197 million, or $984 million over five years.

Most Friended

The Bill: H.R. 4810, Veteran Access to Care Act of 2014

Cost Per Year: $207 million ($620 million over three years) Partial Estimate

Number of Cosponsors: 158 House Members

Earlier this year, it was discovered that at least 40 veterans died while waiting for treatment they were entitled to at the Veterans Affairs (VA) medical center in Phoenix, Arizona. The issue received widespread attention after reports surfaced showing that some VA officials, both at the Phoenix medical center and at others across the country, had falsified records to make it appear as if treatment waiting times had been shorter and doctors were seeing more patients than they actually were. Presumably, the officials in question had done so in order to take advantage of rules that allowed them to collect bonuses if wait times were minimized. The controversy resulted in a series of investigations, which remain ongoing, and then-Secretary Eric Shinseki’s resignation.

Under the current system, Veterans Affairs covers most medical treatments for veterans and the costs are borne by taxpayers. While in some cases VA will cover the cost of treatment obtained at non-VA facilities, there must be a significant obstacle – such as distance traveled – to obtaining treatment at a medical center within the system, and pre-authorization is required (except in the event of an emergency). Because of those restrictions, veterans are typically required to go to VA facilities with waiting lists many months long if they can’t afford the cost of treatment outside the system. There are an estimated 57,000 veterans who have been waiting for an initial appointment for more than 90 days. At least 13 percent of VA schedulers reported to investigators that they were told to deliberately falsify wait-time information in order to make it appear that they were meeting VA’s standards for delivering care.

To help tackle the backlog of unprocessed claims for coverage – a problem that has been proven to cost lives – some lawmakers are proposing that veterans should have easier access to treatment at non-VA medical centers. Congressman Jeff Miller (R-FL) introduced one such bill, the Veteran Access to Care Act, which would direct the VA Secretary to contract with private facilities in order to provide care to vets that either live more than 40 miles from a VA facility, or have waited longer than the wait-time goal (14 days). To expedite the process further, H.R. 4810 also directs VA to reimburse hospitals with which it doesn’t have a contract for treating veterans (through 2016). The bill prohibits any VA employee from receiving bonuses in the next two years.

Rep. Miller noted that the legislation directs VA to use an authority it already has to address the backlog, stating in a press release: “... the department has had the authority to offer veterans health care services outside of the VA system for years. However, the continuing revelations of data manipulation and interminably long patient wait times have made it disturbingly clear that VA is unwilling to utilize that authority as often as it should.”

CBO submitted a partial cost estimate to Congress that includes the bill’s direct spending effects. The agency estimates that H.R. 4810 would increase spending by about $620 million over the next three years, but notes that it would also “substantially” affect discretionary spending for veterans’ health care services and the total budgetary impact could be much higher. As of its passage in the House last week, the bill had 158 cosponsors, including 126 Republicans and 32 Democrats.

The Wildcard

The Bill: S. 2411, the United States Employee Ownership Bank Act

Cost Per Year: $100 million ($500 million over five years)

An employee stock ownership plan (ESOP) is a benefit program through which a company can contribute shares of its own stock to workers. The company invests shares of stock (or money to buy shares) into a trust fund, which are then allocated to accounts for individual employees. The company’s contributions are (partially) tax-deductible, and employees are gradually vested in their ESOP accounts over time. When an employee retires or otherwise leaves the company, they are given the stock that accumulated in their accounts, which the company can only buy back at its market value.

The ESOP is touted as a way to make sure that employees’ interests are aligned with those of the company’s shareholders – indeed, the ESOP makes them essentially one in the same. The rationale is that employees will work harder to improve the company’s products and services if they have a stake in how well the company’s stock performs. While there are limits established by the IRS, ESOPs provide attractive tax benefits for companies that contribute stock or cash to such programs. However, it’s not cheap to establish an ESOP over more common benefit programs like the 401 (k), with some estimates ranging from at least $150,000 to as much as $250,000 upfront.

Senator Bernie Sanders (I-VT) has introduced legislation that would provide federal funding to assist companies with some of those costs. S 3419 would establish a new fund within the Treasury Department, which would provide loans to businesses helping them establish ESOPs. The legislation stipulates that loans can only be approved after a business plan has been submitted to the Treasury demonstrating that the company will be at least 51 percent employee-owned; give shareholders the ability to vote for the company’s board of directors; and offer employees “basic information about company progress.”

“[W]ith the economy continuing to struggle to create jobs that pay a livable wage, we need to expand economic models that help the middle-class. ... I strongly believe that employee ownership is one of those models,” Senator Sanders said in a press release. According to his office, there are over 10,000 employee-owned businesses in the U.S. today, and 30 ESOPs in his own state of Vermont. Similar legislation was introduced in the last Congress as S. 3419.

The bill’s text authorizes $500 million in Fiscal Year 2015 to carry out its provisions, with “such sums as may be necessary” in the years following. NTUF assumes that outlays from the bill will be spent over time, for an annualized estimate of $100 million per year over the next five years.

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