Friday, April 2, 2010

Barker's Newsbites: Friday, April 2, 2010


Well, kids... I've already added two new threads to the blog today... here's the third:

NEWSBITES...!
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13 comments:

William R. Barker said...

http://online.wsj.com/article/SB10001424052702303395904575158331936921388.html?mod=WSJ_hps_LEFTWhatsNews

The Federal Reserve Bank of New York doesn't have to look far to understand the woes of banks and investors that hold loans and securities underpinned by real estate.

It can look at its own books.

A review of the portfolios the regional Fed bank assumed as part of two financial bailouts in 2008 shows a complex hodgepodge of souring commercial-property loans, securities backed by U.S. subprime loans, credit insurance written on troubled bond and mortgage insurers and loans tied to struggling hotels in Georgia and California. The New York Fed published the detailed portfolios on Wednesday.

* FOLKS... DO YOU UNDEDSTAND WHAT'S BEING REPORTED HERE...??? YES... REPETITION... THE UNITED STATES GOVERNMENT IS AN ECONOMIC BASKET CASE AND IF WE DIDN'T HAVE THE MOST POWERFUL MILITARY IN THE WORLD PLUS THE BIGGEST "MARKET" IN THE WORLD WE'D BE... er... GREECE.

In an unexpected twist, the takeover of the Bear assets effectively leaves the New York Fed as holder of credit-default swaps on bonds issued by the states of Nevada, California, and Florida. That protection rises in value when the bonds decrease in value.

* "UNEXPECTED?" (*SMIRK*) "UNEXPECTED" BY WHOM...?!?! JEEZUS FRIGG'N CHRIST... HOW MUCH INCOMPETENCE ARE THE AMERICAN PEOPLE WILLING TO STOMACH...???

"To say this portfolio is a pile of junk is being unkind to junk," David Zervos, Jefferies & Co. global fixed-income strategist, wrote in a note Thursday.

A spokesman for asset manager BlackRock Inc., which is overseeing the portfolio, declined to comment.

(*SNORT*)

In over 40% of the home loans backing the securities, borrowers only had to state their income. As of March 2010, nearly half the loans in the trust—primarily originated in California, Florida and New York—were delinquent or in default.

Over 80% of the commercial-mortgage loans in the Bear portfolio were for hotels and other properties in the hospitality sector. Another 10% were for office buildings. Among the residential mortgage loans and securities, around half were secured by homes in California and Florida.

Now, owners and operators of those hotels say they are struggling in the tough economy—a potentially ominous sign for the New York Fed, which holds the mortgage loans.

* "...THE NEW YORK FED, WHICH HOLDS THE MORTGAGE LOANS." YEAH. "HOLDS." (*SMIRK*) FOLKS... BAD NEWS... WE'RE THE ONES RESPONSIBLE FOR THIS MISMANAGEMENT AND BREACH OF FIDUCIARY RESPONSIBILITY. (OH... AND BTW... THOSE "MOVERS AND SHAKERS" AT THE FED WHO DESIGNED THIS FRANKENSTEIN'S MONSTER OF A GOVERNMENTAL POLICY... THEY'RE ALL MULTI-MILLIONAIRES AND THEY'RE GOING TO STAY THAT WAY NO MATTER WHAT HAPPENS TO YOU, ME, AND OUR CHILDREN AND GRANDCHILDREN.)

* I CAN'T STOMACH CLIPPING/PASTING ANY MORE FROM THIS ARTICLE. GOD HELP THIS ONCE GREAT COUNTRY.

April 2, 2010 at 11:48 AM
William R. Barker said...

http://blogs.wsj.com/economics/2010/04/02/broader-u-6-unemployment-rate-increases-to-169-in-march/

* AS I NOTED WITHIN YESTERDAY'S NEWSBITES...

The U.S. jobless rate was unchanged at 9.7% in March, flat from the previous month, but the government’s broader measure of unemployment ticked up for the second month in a row, rising 0.1 percentage point to 16.9%.

The 9.7% unemployment rate is calculated based on people who are without jobs, who are available to work and who have actively sought work in the prior four weeks. The “actively looking for work” definition is fairly broad, including people who contacted an employer, employment agency, job center or friends; sent out resumes or filled out applications; or answered or placed ads, among other things.

The U-6 figure includes everyone in the official rate plus “marginally attached workers” — those who are neither working nor looking for work, but say they want a job and have looked for work recently; and people who are employed part-time for economic reasons, meaning they want full-time work but took a part-time schedule instead because that’s all they could find.

A U-6 figure that converges toward the official rate could indicate improving confidence in the labor market and the overall economy. This month pushes convergence even further away.

(*SIGH*)

April 2, 2010 at 11:49 AM
William R. Barker said...

http://online.wsj.com/article/SB10001424052748704896104575140063408610580.html

The constitutional challenges to ObamaCare have come quickly, and the media are portraying them mostly as hopeless gestures...

* AHH... THAT SPECIAL COMBO OF HUBRIS, IGNORANCE, AND PARTISANSHIP THAT OFTEN DESCRIBES THE ATTRIBUTES OF TODAY'S MAINSTREAM MEDIA.

The press corps never dismissed the legal challenges to the war on terror so easily, but then liberals have long treated property rights and any limits on federal power to regulate commerce as 18th-century anachronisms.

In fact, the legal challenges to ObamaCare are serious and carry enormous implications for the future of American liberty.

* WHICH EDUCATED AMERICANS OF CHARACTER UNDERSTAND. (*SHRUG*)

The most important legal challenge turns on the "individual mandate" - the new requirement that almost every U.S. citizen must buy government-approved health insurance. Failure to comply will be punished by an annual tax penalty that by 2016 will rise to $750 or 2% of income, whichever is higher.

[Senator and presidential candidate] Obama opposed this kind of coercion as a candidate but [President Obama] has become a convert.

(*SMIRK*)

As the Congressional Budget Office noted in 1994, "Federal mandates typically apply to people as parties to economic transactions, rather than as members of society." The only law in the same league is conscription, though in that case the Constitution gives Congress the explicit power to raise a standing army.

All human activity arguably has some economic footprint. So if Congress can force Americans to buy a product, the question is what remains of the government of limited and enumerated powers, as provided in Article I. The only remaining restraint on federal power would be the Bill of Rights, though the Founders considered those 10 amendments to be an affirmation of the rights inherent in the rest of the Constitution, not the only restraint on government.

* AGAIN... EDUCATED PEOPLE ALREADY KNOW THIS. AND CERTAINLY EVERY LAWYER IN THE COUNTRY - WHATEVER HIS OR HER PARTISAN AND/OR IDEOLOGICAL AFFILIATION/SYMPATHIES - SHOULD BE WELL AWARE OF THESE FACTS.

The mandate did not pose the same constitutional problems when Mitt Romney succeeded in passing one in Massachusetts, because state governments have police powers and often wider plenary authority under their constitutions than does the federal government.

* THIS ONE IS DEBATABLE ON A NUMBER OF GROUNDS, BUT FOR THE SAKE OF ARGUMENT LET'S ASSUME IT A LEGITIMATE POINT.

As for the assertion that the mandate is really a tax, this is an attempt at legal finesse. The mandate is the legal requirement to buy a certain product, while the tax is the means of enforcement. This is not a true income or even excise tax. Congress cannot, merely by invoking a tax, blow up the Framers' attempt to restrain government under Article I.

The states also have a strong case with their claim that ObamaCare upsets the Constitution's federalist framework by converting the states into arms of the federal government. The bill requires states to spend billions of dollars to rearrange their health-care markets and vastly expands who can enroll in Medicaid, whether or not states can afford it.

Florida already spends a little over a quarter of its budget on Medicaid, and under ObamaCare that will expand by at least 50% as some 1.3 million new people enroll. Those benefits, and the burden of setting up the new exchanges, will cost Florida $149 million in 2014 and $1.05 billion annually by 2018. The state will either have to cut other priorities or raise taxes. In legal essence, ObamaCare infringes on state sovereignty and unconstitutionally conscripts state officials.

Democrats may have been able to trample the rules of the Senate to pass their unpopular bill on a narrow partisan vote, but they shouldn't be able to trample the Constitution as well.

April 2, 2010 at 12:31 PM
William R. Barker said...

http://online.wsj.com/article/SB10001424052702304252704575156052852906506.html

Perhaps a measure of its threat to the liberal agenda, the tea party movement is being accused - with little or no supporting evidence - of using threats, insults and violence to intimidate the political process.

Rep. John Lewis, (D-GA) claimed that when he and other members of the Congressional Black Caucus walked through a tea party protest last week in Washington, they heard the N-word hurled at them 15 times. No video or audio recording - in an age when such recorders are ubiquitous - has surfaced to back up the claim. No one was arrested.

* AND BTW, THOSE OF YOU WHO HAVE SEEN THE VIDEO... WELL... NOTICE THE FEMALE POLICE OFFICER WHO WAS RIGHT THERE AT THE CONGRESSMAN'S ELBOW... (*SHRUG*)

In fact the only person arrested in recent days for threatening violence against a politician was held for threatening Eric Cantor, the No. 2 Republican in the House.

A spent bullet also hit the window of Mr. Cantor's district headquarters recently.

(*SHRUG*)

* OH... AND THEN THERE'S http://www.youtube.com/watch?v=-t7IHaHJamE ET AL.

Political violence in this country in recent years has been largely on the left. Dozens of right-leaning speakers have been prevented from speaking on college campuses in the last 30 years by the threat or actuality of violence. But if there has been an instance when a left-leaning speaker was similarly treated...

(*SHRUG*) (*SMIRK*)

* SERIOUSLY, FOLKS... WHEREVER YOUR POLICY SYMPATHIES LAY... IS TURNING AWAY FROM THE FACTS AND INDEED LYING ALL WE SHOULD EXPECT FROM THE DEMOCRATS AND THEIR MEDIA ALLIES...???

* CALL ME AN OLD FUDDY DUDDY... BUT I STILL SAY "HONESTY IS THE BEST POLICY." YOU CAN'T HAVE INTEGRITY WITHOUT HONESTY.

April 2, 2010 at 12:48 PM
William R. Barker said...

http://online.wsj.com/article/SB10001424052702303960604575157703702712526.html?mod=WSJ_Opinion_LEFTTopOpinion

'If the nation went to war today in a cyberwar, we would lose.

"We're the most vulnerable. We're the most connected. We have the most to lose."

Former Director of National Intelligence Mike McConnell delivered that bracing statement at a recent Senate hearing on cybersecurity.

The information networks that nearly every American relies on are under constant attack by sophisticated cyber adversaries. These adversaries target our identities, our money, our businesses, our intellectual property, and our national security secrets. They often succeed. What's more, they have the potential to disrupt or disable vital information networks, which could cause catastrophic economic loss and social havoc. We are not prepared.

* THE AUTHORS OF THIS OP-ED - SENATORS JAY ROCKEFELLER (D-WV) AND OLYMPIA SNOWE (R-ME) LAY OUT THEIR "BI-PARTISAN" PROPOSALS IN THE OP-ED. I FAVOR CERTAIN PROPOSALS AND OPPOSE OTHERS. BOTTOM LINE, THOUGH, THIS IS AN ISSUE THAT MUST BE MADE A NATIONAL PRIORITY AND DEALT WITH SOONER RATHER THAN LATER.

April 2, 2010 at 1:21 PM
William R. Barker said...

http://online.wsj.com/article/SB10001424052702304252704575156154196626406.html?mod=WSJ_Opinion_LEFTTopOpinion

Jaime Escalante, the brilliant public school teacher immortalized in the 1988 film, "Stand and Deliver," died this week at the age of 79.

* OH...! BUMMER...! SERIOUSLY... THAT SUCKS.

With the help of a few dedicated colleagues at Garfield High in East Los Angeles, he shattered the myth that poor inner-city kids couldn't handle advanced math. At the peak of its success, Garfield produced more students who passed Advanced Placement calculus than Beverly Hills High.

In any other field, his methods would have been widely copied. Instead, Escalante's success was resented. And while the teachers union contract limited class sizes to 35, Escalante could not bring himself to turn students away, packing 50 or more into a room and still helping them to excel. This weakened the union's bargaining position, so it complained.

By 1990, Escalante was stripped of his chairmanship of the math department he'd painstakingly built up over a decade.

Exasperated, he left in 1991, eventually returning to his native Bolivia. Garfield's math program went into a decline from which it has never recovered.

The best tribute America can offer Jaime Escalante is to understand why our education system destroyed rather than amplified his success - and then fix it.

April 2, 2010 at 1:21 PM
William R. Barker said...

http://www.statesman.com/opinion/perry-obamas-health-care-plan-is-a-disaster-505072.html

[By Governor Rick Perry of Texas]

President Barack Obama's signature on Congress's disastrous health care plan was a disappointment to everyone who values limited government...[not to mention]...and quality and affordable health care.

We've known for a while that the Obama administration and congressional leaders might eventually twist enough arms, broker enough backroom deals and bend enough procedural rules to pass the bill. Still, it's surprising that it's come to this, with the federal government unconstitutionally mandating the purchase of a specific product, and threatening those who don't abide with government fines. The bill represents a federal overreach unprecedented in scope, reaching into the lives of each and every person in America, with the staggering costs handed down to generations yet unborn.

We can't afford to accept this situation, and I mean that literally. [T]he Texas Health and Human Services Commission estimates that the bill will double the number of Medicaid recipients in the Lone Star state. The burden that would place on Texas taxpayers could be as much as $26 billion over the next 10 years. Despite that increased cost to our taxpayers, there will be no improvement to either the cost of health care or its quality.

It's vital we fight this on every front available to us, because mandates are painful to rank-and-file Texans and extremely ineffective. Look at Massachusetts. In the Bay State, where a mandate is already a fact of life, premiums are 40% more expensive than elsewhere in the country, and it's becoming harder and harder to find a doctor to see even if you are covered. 9By the way, the number of uninsured people in Massachusetts is about the same as it was when the mandates were passed in 2006.)

We must send the message that opposition to the bill is not generated by angry mobs, as media portrayals might suggest, but by everyday people legitimately concerned to see the federal government so quickly expanding its control over all of our lives.

Here in Texas, we also face the specter of cap-and-trade legislation and EPA regulation that will cripple our state's energy sector and cause the price of most goods and services to skyrocket for no environmental benefit. Texas had led the charge against that federal overreach, and 16 other states have joined us in that effort. We've also refused to be bribed into joining ongoing efforts to establish a federal educational standard that will let Washington decide what your children learn rather than leaving those decisions up to our state and communities.

It's getting harder to find areas of life the Obama administration doesn't want to place under federal control as a mountain of escalating debt grows to blot out our future.

Texas will continue to push back against Washington's big government intrusion into individual liberty, and continue to champion the rights of states to enact measures that best protect citizens, employers and communities.

April 2, 2010 at 6:19 PM
William R. Barker said...

http://taxvox.taxpolicycenter.org/blog/_archives/2010/4/1/4495107.html

Extreme complexity is not just annoying and somewhat costly. It also makes the tax system more opaque. Voters don’t know who is getting special deals and who is not. For the most part, I believe most of us don’t even know how much we pay in taxes.

Don’t believe me? Try this experiment: Next time you go to a party, ask people how much they paid last year. They may remember their refund, but I’ll bet they won’t know what their total income tax bill was.

Here a bit of more scientific evidence: A CBS/New York Times poll taken in February shows that 77 percent of respondents thought President Obama either raised taxes or kept them the same in his first year in office. In fact, the 2009 stimulus bill (the President’s major tax initiative) cut taxes for 89% of tax units and slashed overall taxes by $200 billion dollars in 2009 and 2010.

* OF COURSE IN TANDEM SPENDING WENT UP MEANING DEFICITS WENT UP MEANING DEBT WENT UP MEANING INTEREST PAYMENTS WENT UP...

(*HEADING BACK TO MY BAR FOR A REFILL*)

This ignorance matters.

For one, tax rates tend to go up when people are unaware of what they are paying.

Amy Finkelstein at MIT did a nice paper on this back in 2007. It can’t be a good thing when we have no idea what we pay in taxes. Uninformed voters are not good for democracy. How can they evaluate tax laws if they can't understand them? And complexity is a major reason why they can't.

April 2, 2010 at 6:19 PM
William R. Barker said...

http://www.foreignpolicy.com/articles/2010/04/01/obama_s_foolish_settlements_ultimatum?page=0,2

The record is clear and consistent: The United States has never liked Israeli construction in East Jerusalem, and frequently stated that it complicated the peace process.

But until Obama, no U.S. president had made its cancelation a precondition for negotiations, and until Obama, Palestinian leaders including Abbas did not make it a precondition either.

For 19 years - from the Madrid conference of October 1991 through the Olmert/Abbas negotiations that ended in 2008, negotiations moved forward while Jerusalem construction continued. Madrid, Oslo I, Oslo II, the Hebron Protocol, the Wye River Memorandum, Camp David, Taba, the disengagement from Gaza, and the Olmert offer to Abbas - all these events over the course of two decades were made possible by a continuing agreement to disagree about Israeli construction of Jewish homes in Jewish neighborhoods outside the pre-1967 line in East Jerusalem.

Today, for the first time in 19 years, we have an [American] administration unable to produce Israeli-Palestinian negotiations.

Abbas is following Obama's lead in demanding an unprecedented precondition that Israel cannot satisfy. (This is the same Abbas who negotiated with seven previous Israeli prime ministers - Shamir, Rabin, Peres, Netanyahu (in his first term), Barak, Sharon, and Olmert, without the precondition that he now demands of Netanyahu.)

We have a crisis. Netanyahu is doing something that every past Israeli prime minister of the left and right has done, but Obama is doing something that past American leaders considered unwise. It is the U.S. behavior that has changed.

At this moment, Obama's decision to confront Netanyahu about construction in Jerusalem wins wide praise. Whether Obama's policy will still look good in six months, when people realize he has mired the negotiations in quicksand, remains to be seen.

(*PURSED LIPS*)

April 2, 2010 at 6:20 PM
William R. Barker said...

http://www.realclearworld.com/articles/2010/04/02/obamas_policy_of_slapping_allies_98897.html

What is it like to be a foreign ally of Barack Obama's America?

If you're a Brit, your head is spinning. It's not just the personal slights to Prime Minister Gordon Brown - the ridiculous 25-DVD gift, the five refusals before Brown was granted a one-on-one with "The One." Nor is it just the symbolism of Obama returning the Churchill bust that was in the Oval Office.

(Query: If it absolutely had to be out of Obama's sight, could it not have been housed somewhere else on U.S. soil rather than ostentatiously repatriated?)

Perhaps it was the State Department official who last year denied there even was a special relationship between the U.S. and Britain, a relationship cultivated by every U.S. president since Franklin Roosevelt.

(*HUGE MOTHER-F--KING MIGRAINE HEADACHE JUST THINKING ABOUT IT*)

And then there was Hillary Clinton's astonishing, nearly unreported (in the U.S.) performance in Argentina last month. She called for Britain to negotiate with Argentina over the Falklands.

* HELP! SOMEONE CALL A DOCTOR! I THINK READING THIS HAS EXPLODED A PREVIOUSLY UNDIAGNOSED ANEURYSM!

Of course, given how the administration has treated other allies, perhaps we shouldn't be so surprised.

Obama visits China and soon Indonesia, skipping India, our natural and rising ally in the region - common language, common heritage, common democracy, common jihadist enemy. Indeed, in his enthusiasm for China, Obama suggests a Chinese interest in peace and stability in South Asia, a gratuitous denigration of Indian power and legitimacy in favor of a regional rival with hegemonic ambitions.

Poland and the Czech Republic have their legs cut out from under them when Obama unilaterally revokes a missile defense agreement, acquiescing to pressure from Russia with its dreams of regional hegemony over Eastern Europe.

* ACTUALLY... ON THAT ONE... ON THE POLICY... I SUPPORT OBAMA. (BUT THE WAY HE DID IT...) (*SIGH*)

The Hondurans still can't figure out why the United States supported a Hugo Chavez ally seeking illegal extension of his presidency against the pillars of civil society - its Congress, Supreme Court, church and army - that had deposed him consistent with Article 239 of their own constitution.

But the Brits, our most venerable, most reliable ally, are the most disoriented. "We British not only speak the same language. We tend to think in the same way. We are more likely than anyone else to provide tea, sympathy and troops," writes Bruce Anderson in London's Independent, summarizing with admirable concision the fundamental basis of the U.S.-British special relationship.

April 2, 2010 at 6:20 PM
William R. Barker said...

http://taxpayer.net/resources.php?category=&type=Project&proj_id=3406&action=Headlines%20About%20TCS

New Orleans Rep. Anh "Joseph" Cao is one of only three Republicans to defy the House GOP's self-imposed one-year moratorium on earmark requests.

* HMM... NOW WHERE DO I KNOW THAT NAME FROM...??? (*SCRATCHING MY HEAD*) OH, YEAH...! CAO IS THE CLOWN WHO VOTED FOR OBAMACARE THE FIRST TIME AROUND... (*SMIRK*)

[In fact,] three Republicans refused to go along [with the GOP caucus' self-imposed one-year moratorium on earmark requests]: Cao and Reps. Don Young of Alaska and Ron Paul of Texas.

[For what it's worth] Paul spokeswoman Rachel Mills said he thinks Washington already extracts too much money from his constituents, and "part of his job is to work hard in Washington, D.C., to get that money back to those constituents in any form that he can." She said Paul also believes that earmarking is more transparent than the regular budget process because you know exactly where the money goes and that it doesn't affect the total amount appropriated by one dime.

* AND YOU KNOW WHAT, FOLKS...? I ACTUALLY AGREE WITH DR. PAUL. OH... I'D SUPPORT THE MORATORIUM IF I WERE IN CONGRESS, BUT I HEAR WHAT DR. PAUL IS SAYING AND RESPECT THE LOGIC - AND INTELLECTUAL CONSISTENCY - OF HIS POSITION.

* ON THE OTHER HAND (AND IN LINE WITH WHAT MY POSITION WOULD BE TODAY AS A MEMBER OF CONGRESS)...

Rodney Alexander, R-Quitman, the only member of the Louisiana delegation on the House Appropriations Committee, sounded a bit rueful about forsaking a process he has used to good advantage in the past. "I am a firm believer that federal bureaucrats making up the budget do not know the needs of the 5th Congressional District -- most have probably never stepped foot in this area of the state," Alexander said. "However, I have joined my Republican colleagues in the House in calling for a one-year moratorium of congressional earmarks. This is an important step to show the American public that some in Washington are serious about reducing all facets of the federal budget." But, he said, "in order to win the larger battle, the administration and congressional leadership must finally rein in the reckless spending spree that has continued for far too long."

* AMEN.

April 2, 2010 at 6:21 PM
William R. Barker said...

http://taxpayer.net/resources.php?category=&type=Project&proj_id=3405&action=Headlines%20By%20TCS

Over the years the face of mining in New Mexico has changed dramatically, from the pick and axe, to heavily mechanized large-scale operations. Yet despite these changes, the laws that govern mining operations have not changed in more than a century. ... New Mexico has a long history of selling mineral patents to mining companies for little or nothing, and failing to collect fair royalties for minerals mined on public lands.

Under the 138 year old Mining Law of 1872, valuable taxpayer lands and minerals are virtually given away to international mining conglomerates that then amass enormous profits from mining, or simply turn around and sell taxpayer owned land to the highest bidder. To add insult to injury, these same mining companies often abandon their mines once they are no longer profitable, or declare bankruptcy, sticking taxpayers with the costly tab for mine cleanup.

The Congressional Budget Office (CBO) estimates the value of hardrock minerals produced from our country’s public lands is more than $1 billion annually. Despite the high value of minerals produced from New Mexico’s and other western states’ public lands, more than 161,000 mines are currently left abandoned by mining companies, leaving the government to pay for cleanup after minerals have been extracted. The Environmental Protection Agency (EPA) estimates that some of these mines will cost taxpayers more than $50 million each to cleanup, and the total cost of remediating abandoned mines nationwide could cost upwards of $70 billion.

New Mexico is one of the most heavily mined states in the country, producing large amounts of perlite, copper, and other hardrock minerals. Much of this mining has and continues to occur on federally-owned public lands.

The General Mining Law may have made sense 138 years ago, but continuing to uphold these outdated provisions for mining companies is bad fiscal policy and is causing costly damage to our nation’s public lands and waters. ... The failure to modernize this law continues to allow billions of dollars worth of minerals on federal land to be claimed by mining corporations for no more than $5 per acre, and sticks New Mexicans and all U.S. taxpayers with the expense of costly mine cleanup. Congress must act now to bring this archaic law into the 21st century, by charging fair market value for public lands and minerals, and holding mining companies responsible for their own reclamation costs.

* BEYOND THAT, STATES MUST RECLAIM THEIR OWN "PUBLIC" LANDS FROM THE FEDERAL GOVERNMENT.

April 2, 2010 at 6:21 PM
William R. Barker said...

http://taxpayer.net/resources.php?category=&type=Project&proj_id=3407&action=Headlines%20By%20TCS

Ethanol has never been economical to turn into a commercial product, and ethanol subsidies have significant economic, agricultural and environmental implications. Because subsidies to ethanol blenders create demand for corn from farmers, the Congressional Budget Office (CBO) estimates that subsidies are responsible for a 28-47% rise in the price of corn. Since corn is a main ingredient in livestock feed and many consumer food products, ethanol subsidies raise the price of food to consumers. The inflated value of corn also encourages large-scale agriculture that may not be environmentally sustainable. In addition, ethanol refineries use large amounts of fossil fuels to distill ethanol and turn it into a usable product, making ethanol’s ability to reduce greenhouse gas emissions questionable.

Despite its significant financial and environmental drawbacks, the government has mandated the purchase of more corn ethanol. Under the recently enacted Renewable Fuels Standard (RFS), the US is required to blend 36 billion gallons of biofuels with gasoline by 2022, up to 15 billion gallons of which can come from conventional corn ethanol. In order to meet this goal, the corn ethanol industry has been lobbying to raise the amount of ethanol that can legally be blended with gasoline from 10% (E10) to 15% (E15) and increase available subsidies.

* SO IN OTHER WORDS... INCREASE THE DEGREE OF DAMAGE GOVERNMENT POLICY IS DOING RATHER THAN REVERSE IT. (*SIGH*)

The Volumetric Ethanol Excise Tax Credit (VEETC) is the largest subsidy to corn ethanol, the most common biofuel in the U.S. The tax credit is worth 45 cents per gallon of ethanol blended with gasoline, costing U.S. taxpayers $4 billion in 2008. Congress began subsidizing ethanol during a fuel shortage in the late 1970s by exempting gasoline blended with ethanol from gasoline excise taxes and establishing a tax credit for ethanol use. In 2004, the American Jobs Creation Act implemented the VEETC to replace these two historical subsidies as a combined excise tax exemption and tax credit.

This subsidy does not go to corn farmers or ethanol refiners, but to fuel blenders. Blenders, often large oil and gas companies such as Shell Oil, count the tax credit against income tax payments to the U.S. Treasury, costing U.S. taxpayers $21.29 billion in forgone tax revenues over the last five years.

(*MIGRAINE HEADACHE*)

* FOLKS... I KNOW THAT MOST (PERHAPS EVEN ALL) OF YOU READING THIS ARE ALREADY AWARE OF WHAT A TOTAL CLUSTERF--K OUR NATION'S ETHANOL POLICY IS... BUT WE'RE THE MINORITY, KIDS; ASK YOUR AVERAGE FAIRLY BRIGHT HIGH SCHOOL STUDENT OR BETTER YET A DIVERSE SOCIAL-ECONOMIC MIX OF FRIENDS AND AQUANTANCES WHAT THEY THINK ABOUT THE PROPOSAL TO USE MORE RATHER THAN LESS ETHANOL...

(*SIGH*) (*HEADING FOR THE LIQUOR CABINET*)

April 2, 2010 at 6:21 PM

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