The Government Is About to Pull $3,000 Out of Your Pocket

By Matt Badiali

On Friday, the House of Representatives passed H.R. 2454, (Cap & Trade) the American Clean Energy and Security Act of 2009, by a vote of 33 to 25.

According to the bill's sponsors, it is "a comprehensive approach to America's energy policy that will create millions of new clean energy jobs, save consumers hundreds of billions of dollars in energy costs, enhance America's energy independence, and cut global warming pollution."

If you believe that, I hear Bernie Madoff is starting a new fund.

The bill will actually levy financial penalties against companies that produce carbon dioxide and other gases. Carbon dioxide is a byproduct of burning stuff – leaves, coal, gasoline, etc.

Coal and natural gas are the two cheapest sources of power at 1¢ per kilowatt hour and 1.4¢ per kilowatt hour, respectively.

Wind power is seven times more expensive than coal; solar is 35 times more expensive. You might as well try to generate the nation's electricity with a bunch of little Honda generators.

The law would require greenhouse gas emissions cut to 97% of 2005 levels, approximately 6.98 billion tons, in 2012. We produced 7.28 billion tons in 2007, the latest data available. It's a miniscule change, and it won't help the climate in the least.

By 2050, the figure jumps to an insane 17% of 2005 levels. There's no way that will work... In 2007, burning oil contributed 2.6 billion tons of carbon (35%). Burning coal contributed 2.2 billion tons (30%). And burning natural gas contributed 1.2 billion tons (17%). Those three sources contributed 70% of our electricity and all of our transport fuel. Where the hell are we going to come up with a replacement... even in 40 years?

Let's be clear: This 1,200-page bill isn't about saving the environment over the next few decades. This bill is about dollars – yours and mine – right now.

As soon as it's enacted, it will increase our electric bills by 32%. The costs will climb to an extra 62% within the first 18 to 24 months. Here's why:

Coal power plants that produce more carbon dioxide than they're allowed will have to buy the right to produce more. That additional cost will be passed on to consumers. According to the Congressional Budget Office, we'll pay about $846 billion to the federal government from 2010 to 2019.

That's not the only cost we're going to shoulder. Any energy-intensive business is going to get clobbered by this bill. In 2012, when the rules go into affect, oil refiners will be forced to add $0.77 per gallon of gasoline, $0.83 per gallon of jet fuel, and $0.88 per gallon of diesel fuel, according to the American Petroleum Institute.

Companies buying that fuel are going to pass that cost directly along to you and me. We'll remember 2012 as the year of $6 gasoline. Rex Tillerson, CEO of ExxonMobil, thinks it will actually increase imports of finished fuels, because foreign refined products will be cheaper.

U.S.-based steelmakers will also get crushed. Foreign steelmakers won't have to worry about the onerous energy taxes, and steel imports will remain cheap. So, unlike refiners, U.S. steelmakers won't be able to pass along energy costs. That will be the story for other U.S. metal industries like zinc, aluminum, silver, and gold.

But the worst-hit industry will be coal. Portrayed as the villain in the war on climate change, many coal companies (particularly on the East Coast) will go out of business.

According to analysis by the Heritage Foundation (a conservative think-tank), the combined cost of the bill would be $3,000 per family in 2012 and $20,000 per household by 2035. If you make $50,000, you're looking at an after-tax 7% paycut as soon as the legislation hits.

How can a family be expected to carry a $20,000-per-year burden, no matter how far in the future it's placed? When you add all the costs up, direct and indirect, it spells a major decline in our standard of living.

We have one more chance to stop this legislation, when the Senate takes up the bill. The problem is, few Democrats bucked the party in the House. On a party-line vote, this passes the Senate, too. Then we're in real trouble.

Media coverage of the trivial is crowding out coverage of important issues.

artwork by Barry MaGuire

Have you had enough of the one-sided BAMA FEST in the network news coverage? Well, according to this compilation of media bias, your instincts are correct!

(Click on bold headline for complete story)

"Carbongate" is a great term for it

Seems Congress is hellbent on foisting this Cap and Trade bill on all of us unsuspecting citizens. And, true to form, the IBD informs us that the EPA has suppressed key information regarding recent findings which would damage their agenda.

May we all rally to inform every member of the Senate to kill this legislative disaster.

(Click on bold headline for complete story)

About Barry's healthcare Plan...

What We Would Ask: Questions about Obama's health care plan
Conservative and free market experts supply questions for the upcoming ABC special 'Prescription for America.'

By Julia A. Seymour
Business & Media Institute

The Business & Media Institute asked several conservatives and free market health care proponents to offer questions they’d like to see asked of President Obama at the ABC "Prescription for America" town hall June 24.

The experts were concerned with people being forced onto the public plan by employers, potential tax increases, individual or employer mandates for health insurance and enforcement of those mandates, cost containment measures and the flaws of current government-run programs like Medicare.

Here are their questions:

120 million would lose private coverage

“Mr. President, How do you justify the fact that you keep telling people they can keep the health coverage they have now if they like it but studies prove that 120 million Americans would lose the private coverage they have today, many of them involuntarily, if a public plan were introduced?”

Federal regulation might impinge on doctor/patient relationship

“You say people will have a right to their relationship with their doctor. Will there be any kind of practice guidelines from the federal government accompanied by either regulations or reimbursement reductions? And if there are how does that not interfere with the doctor patient relationship?”

Tax increases?

“You have said that typical Americans will receive a reduction on average of $2,500. Can you guarantee that that $2,500 reduction in their health care will not be offset by any tax increases?”

Against individual mandates before he was for them

“You’ve said you’re open to the idea of an individual mandate. You’ve reversed your position (since you opposed Hillary Clinton’s proposal for a mandate during the campaign). Why would a mandate be enforceable now when it wasn’t when you were running against Mrs. Clinton?”

Fines for not purchasing insurance?

“What kind of penalties should Americans be subjected to if they do not comply with an individual mandate to buy insurance?”

Taxing employers for not providing insurance

“If we have a pay or play (employer mandate) what should be the right level of taxation that will be imposed on employers who do not offer health insurance to their employees?”

Job losses from insurance mandates

“Has OMB [Office of Management and Budget] done any estimation of what the additional unemployment would follow from the imposition of an employer mandate?”

Government-run health care no matter what you call it

“If the federal government runs an insurance plan, runs a national health insurance exchange, designs the benefits that Americans will have and imposes penalties on Americans that do not comply with federal health policy why is this not government-run health care?”

Falling costs

“President Obama, can you name one example of the government taking over an industry and costs falling as a result?”

Medicare is going bankrupt

“President Obama, the best example we have of a government option in health care is Medicare. Medicare is projected to bankrupt the federal budget in the 21^st century so why are we to believe that another government health care plan with do any better?”

Cost containment means rationing

“President Obama, in Europe and Canada cost containment has often taken the form of rationing of health care. In the United Kingdom, government bureaucrats decide whether or not a person is worthy of receiving certain medical procedures based on their value to society. Is that the type of cost containment you would envision in your type of health care?”

Rigged competition

“President Obama, you say that a public plan will merely compete with existing public sector private health plans. What steps will be taken to ensure that the system is not rigged in favor of the public plan winning these competitions?”

Runaway Medicare

“Presumably this thing is going to be run like Medicare so how does that actually keep costs down? Medicare has runaway costs. The federal government doesn’t deal with fraud. In 2007, Medicaid had $32 billion in improper payments which is giving out reimbursements for services that didn’t happen. Both Medicare and Medicaid are fee for service programs.”

A free-market solution

“Why wouldn’t it be better for a program of tax credits or tax deductions be better than a public plan option at getting care to the people who need it?”

Fix the tax code

“Why don’t we address the inequities in the tax code that favor employer-based health care?”

Forced out of private insurance

“Studies show 120 million Americans would be switched onto a government plan by their employers, not of their own choosing. In light of that, why do you keep telling people nothing has to change regarding their health coverage?”

Cost of non-compliance

“How much do you think Americans should have to pay if they don’t comply with a health insurance mandate?”

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Near a Ranch in Montana...

Montana rancher displaying helpful signage.
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Despite all the negative news, our general lot is getting better, not worse.

As Greg Easterbrook of the Brookings Institution recently wrote in The Wall Street Journal, "Living standards are the highest they have ever been, including the living standards for the middle class and the poor. All forms of pollution other than greenhouse gases are in decline; cancer, heart disease and stroke incidence are declining; crime is in a long-term cycle of significant decline, education levels are at all-time highs."

Our ancestors just a few generations removed would marvel at life today. In the first half of the 20th century, for instance, most people earned a subsistence living through long hours of backbreaking work in forestry, mining, farms or factories.

Today we work roughly half as many hours, physical toil has ended for most wage earners, and we have more purchasing power with far more leisure.

In the first half of our nation's history, most Americans lived and died within a few miles of where they were born. Nothing - neither people nor news - traveled faster than a horse. And, as far as we knew, nothing ever would. Today we have instantaneous global communication, 24-hour broadband Internet access and same-day travel to distant cities.

Formal discrimination against women and minorities has ended. There is mass home ownership, with central heat and air-conditioning - and endless labor-saving devices: stoves, ovens, refrigerators, dishwashers, microwaves, cell phones and computers.

Medicine was almost non-existent 80 years ago. In 1927, for example, President Calvin Coolidge's sixteen-year old son Calvin Jr. developed a blister playing tennis without socks. It became infected. Five days later, he died. Before the advent of antibiotics, tragedies like this were routine.

Advances in drugs and technology have eliminated most of history's plagues. There has been a stunning reduction in infectious diseases.

We complain about the rising cost of health care. But that's only because we live long enough to need more of it. The average American lifespan has almost doubled over the past century.

We have low-cost access to information, art and literature. We have almost every imaginable political and economic freedom.

True, the federal government is a sprawling, metastasizing leviathan that needs to be beat back with a stick. But compare it to most governments in most countries down through the ages.

In short, we enjoy economic and political freedoms that millions throughout history have risked theirs lives for. We live a long time, in comfortable circumstances, and enjoy goods and services in almost limitless supply. By almost any measure, we are living better than 99% of the people who have come before us.

Yet Americans routinely tell pollsters that life is hard and things are getting worse. In short, we risk becoming the moping caricature that comedian Steve Martin creates when he grumbles, "the only joy I know is a dishwashing liquid."

Seldom do we take a moment to appreciate our incredible good fortune being alive.

As Oxford biologist Richard Dawkins writes:

We are going to die, and that makes us the lucky ones. Most people are never going to die because they are never going to be born. The potential people who could have been here in my place but who will in fact never see the light of day outnumber the sand grains of Sahara. Certainly those unborn ghosts include greater poets than Keats, scientists greater than Newton. We know this because the set of possible people allowed by our DNA so massively outnumbers the set of actual people. In the teeth of these stupefying odds it is you and I, in our ordinariness, that are here...

And none of us knows how long he's going to be here.

Take Eugene O'Kelly, former Chairman and CEO of accounting giant KPMG, for example.

Four years ago, he was diagnosed with inoperable, late-stage brain cancer. He was told he had three to six months to live. He was 53.

Suddenly, the life of this rich, powerful and privileged man, whose days were filled with executive meetings and business appointments, became something very different.

He was left with less than 100 days to live.

"No more living in the future," he wrote in his memoir. "(Or the past, for that matter - a problem for many people, although a lesser one for me.) I needed to stop living two months, a week, even a few hours ahead. Even a few minutes ahead. Sixty seconds from now is, in its way, as elusive as sixty years from now, and always will be. It is - was - exhausting to live in a world that never exists. Also kind of silly, since we happen to be blessed with such a fascinating one right here, right now. I felt that if I could learn to stay in the present moment, to be fully conscious of my surroundings, I would buy myself lots of time that had never been available to me, not in all the years I was healthy..."

With the clock counting down, O'Kelly made a list of his closest friends and colleagues and planned a final encounter with each one:

"I stopped at each name and made myself recall, in the closest detail possible, all the moments the two of us had enjoyed together. How we met. What made us become friends in the first place. The qualities in them I particularly appreciated. The lessons I learned by knowing them. The ways in which having met him or her had made me a better person."

His friends were touched - usually overwhelmed - to know how much they had meant to him. "Enjoy every sandwich," he writes.

Most of us promise ourselves that one day - not too long from now - we'll slow down. We'll spend more time with our family. Enjoy a lazy day out with friends. Or just take a walk alone in the woods or on the seashore. Some day...

If - like me - you're one of the millions who has often deluded himself this way, O'Kelly has three words of advice: "Move it up."

Eugene O'Kelly died on September 10th, 2005.

Regards,

Alexander Green
for The Daily Reckoning

Editor's Note: Alexander Green is Investment Director of The Oxford Club. He also writes Spiritual Wealth, an e-letter about the pursuit of the good life and what it means to be truly wealthy. Just this week, Wiley & Sons published a new collection of his essays, The Secret of Shelter Island: Money and What Matters.

Guessing Game...

Visual Evidence Barry's Team Completely Misjudged the Stimulus Impact

This chart, contrasting the Obama administration's January projections of what the unemployment rate would be with and without the stimulus package against the actual numbers of recent months, is popping up everywhere, from Newsweek to FactCheck.org to Ace of Spades. It deserves widespread attention.

To get the stimulus passed, the Obama administration promised the moon, and had no idea whether it would work. One hundred and twenty-one days since the stimulus passed, there is still no sign that it is doing what it was designed to do — mitigate the recession and put Americans back to work.

And, amazingly enough, folks got paid to come up with this infallible plan!

(Click on bold headline for complete story)

Lest Anyone Forget...

Wading ashore June 6, 1944, on the coast of France under heavy Nazi machine-gun fire, were these American soldiers, shown just as they left the ramp of a Coast Guard Higgins landing boat. The operation at Omaha Beach involved 50,000 men and was part of the largest single-day amphibious invasion in history. D-Day casualties at Omaha numbered around 5,000, most in the first few hours.

This entire impactful episode miraculously slipped our President's mind when he vainly tired to recall what America has contributed to our world today during an Islam-praising speech in Cairo.

May you spare a moment today to remember the sacrifices of those who have gone before us, this 65th anniversary of Operation Overlord, the allied invasion on the beaches at Normandy, June 6th, 1944.

lil' barry and the Muslims

Wesley Pruden, editor emeritus of The Washington Times, writes in his column appearing in today's featured story, 'Mr. Obama's revelation of his "inner Muslim" in Cairo reveals much about who he is. He is our first president without an instinctive appreciation of the culture, history, tradition, common law and literature whence America sprang.'

To which I would reply, "Well, this is understandable because lil' barry's a Kenyan, and a muslim. The USA is anathema to both he and his wife. I would also ad that barry simply does not like our country. That's become obvious. Not illegal, mind you, but clearly obvious."

(Click on bold headline for complete story)

Andrew Breitbart and the Hollywood "Right."

Perhaps you've seen Breitbart videos, or have occasionally read "Big Hollywood." Well, the man behind all of that is right-leaning Andrew Breitbart and he's providing an outlet for, believe it or not, conservative thought from Hollywood.

(Click on bold headline for complete story)