Monday, July 13, 2009

Washington Post Op-ed: The 'Cap And Tax' Dead End

By Governor Sarah Palin (R-AK)

There is no shortage of threats to our economy. America's unemployment rate recently hit its highest mark in more than 25 years and is expected to continue climbing. Worries are widespread that even when the economy finally rebounds, the recovery won't bring jobs. Our nation's debt is unsustainable, and the federal government's reach into the private sector is unprecedented.

Unfortunately, many in the national media would rather focus on the personality-driven political gossip of the day than on the gravity of these challenges. So, at risk of disappointing the chattering class, let me make clear what is foremost on my mind and where my focus will be:

I am deeply concerned about President Obama's cap-and-trade energy plan, and I believe it is an enormous threat to our economy. It would undermine our recovery over the short term and would inflict permanent damage.

American prosperity has always been driven by the steady supply of abundant, affordable energy. Particularly in Alaska, we understand the inherent link between energy and prosperity, energy and opportunity, and energy and security. Consequently, many of us in this huge, energy-rich state recognize that the president's cap-and-trade energy tax would adversely affect every aspect of the U.S. economy.

There is no denying that as the world becomes more industrialized, we need to reform our energy policy and become less dependent on foreign energy sources. But the answer doesn't lie in making energy scarcer and more expensive! Those who understand the issue know we can meet our energy needs and environmental challenges without destroying America's economy.

Job losses are so certain under this new cap-and-tax plan that it includes a provision accommodating newly unemployed workers from the resulting dried-up energy sector, to the tune of $4.2 billion over eight years. So much for creating jobs.

In addition to immediately increasing unemployment in the energy sector, even more American jobs will be threatened by the rising cost of doing business under the cap-and-tax plan. For example, the cost of farming will certainly increase, driving down farm incomes while driving up grocery prices. The costs of manufacturing, warehousing and transportation will also increase.

The ironic beauty in this plan? Soon, even the most ardent liberal will understand supply-side economics.

The Americans hit hardest will be those already struggling to make ends meet. As the president eloquently puts it, their electricity bills will "necessarily skyrocket." So much for not raising taxes on anyone making less than $250,000 a year.

Even Warren Buffett, an ardent Obama supporter, admitted that under the cap-and-tax scheme, "poor people are going to pay a lot more for electricity."

We must move in a new direction. We are ripe for economic growth and energy independence if we responsibly tap the resources that God created right underfoot on American soil. Just as important, we have more desire and ability to protect the environment than any foreign nation from which we purchase energy today.

In Alaska, we are progressing on the largest private-sector energy project in history. Our 3,000-mile natural gas pipeline will transport hundreds of trillions of cubic feet of our clean natural gas to hungry markets across America. We can safely drill for U.S. oil offshore and in a tiny, 2,000-acre corner of the Arctic National Wildlife Refuge if ever given the go-ahead by Washington bureaucrats.

Of course, Alaska is not the sole source of American energy. Many states have abundant coal, whose technology is continuously making it into a cleaner energy source. Westerners literally sit on mountains of oil and gas, and every state can consider the possibility of nuclear energy.

We have an important choice to make. Do we want to control our energy supply and its environmental impact? Or, do we want to outsource it to China, Russia and Saudi Arabia? Make no mistake: President Obama's plan will result in the latter.

For so many reasons, we can't afford to kill responsible domestic energy production or clobber every American consumer with higher prices.

Can America produce more of its own energy through strategic investments that protect the environment, revive our economy and secure our nation?

Yes, we can. Just not with Barack Obama's energy cap-and-tax plan.

Locking Up Our Energy Resources

Posted by: Michele Bachmann at 9:20 AM
As Americans hit the road for their family vacations this summer, they're undoubtedly noticing the money they leave at the gas pump. AAA's Fuel Gauge Report has the national average at $2.58 for regular gas. That's a far cry from the $4.11 we were paying a year ago. But, the need for an all-of-the-above strategy for energy independence remains just as great now as it did then.

So, it's puzzling that the Obama Administration is trying to restrict our ability to tap into American oil and natural gas resources.

Robert Bryce, Managing Editor for Energy Tribune, wrote in the Wall Street Journal on July 7, 2009 that President Obama is calling for the elimination of two tax incentives that encourage oil and natural gas exploration. President Obama calls them "unjustifiable loopholes" for big, bad oil and gas. The facts show that these two tax provisions more than pay their way all the while opening up American supplies that make us more energy independent.

One allows for the expensing of "intangible drilling costs," which are things like wages, fuel, and pipe. The other provides an allowance for percentage depletion, so well owners can deduct a portion of the value of the production of their wells. Together, these two provisions make up the bulk of the total $1.92 billion in federal oil and gas subsidies. An investment banking firm, Tudor, Pickering, Holt & Co., analyzed the impact of eliminating the intangible drilling cost tax incentive and found that it alone could lead to an increase in the cost of U.S. natural gas by 50 cents per thousand cubic feet.

But, together, these tax provisions helped us to make advances in energy technology and to tap into natural gas reserves in Texas and Pennsylvania that were previously thought to be too expensive to reach. A report by the Department of Energy this April found that these newly available resources total 649 trillion cubic feet of gas. That is the equivalent of 118.3 billion barrels of oil, which is more than the proven oil reserves of Iraq.

As Bryce points out, "Simple arithmetic shows that eliminating the drilling subsidies that cost taxpayers less than $2 billion per year could result in an increased cost to consumers of $11.5 billion per year in the form of higher natural gas prices."

When you're gassing up the car for your next family outing, think about what it will take to make energy more affordable and energy independence more attainable. It's got to be an all-of-the-above strategy.

Some People Have a Strange Definition of 'Stimulus'

Posted by Bobby Eberle
July 13, 2009 at 7:07 am

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When someone's heart rhythm is out of whack, what do medical personnel do to get it back on the beat? Do they massage it for twenty to thirty minutes? Do they talk to it, trying to coax it back to beat normally? No. They zap it. In other words, they provide it with a "stimulus" that is designed for one purpose: get the heart beating properly... now!

This concept seems to be foreign to Barack Obama and the Democrats. During the last recession when the country was gripped with not only an economic downturn but a massive terrorist attack, President Bush moved to cut taxes and inject money back into the system... money spent by the taxpayers in the manner they saw fit. It worked. Now, we have nearly a trillion dollars in big-government spending, and it's not doing the job. What do Obama and the Democrats think about it? They think another "stimulus" might be in order. Are they crazy???

In an op-ed in the Washington Post, Obama wrote about the need for patience as he and the Democrats work to "fix" the economy.

Of course, he starts the column by noting, "Nearly six months ago, my administration took office amid the most severe economic downturn since the Great Depression." It seems to be that this is the worst economic situation since the last time we had a Democrat in office who didn't know what he was doing (Jimmy Carter).

The swift and aggressive action we took in those first few months has helped pull our financial system and our economy back from the brink. We took steps to restart lending to families and businesses, stabilize our major financial institutions, and help homeowners stay in their homes and pay their mortgages. We also passed the most sweeping economic recovery plan in our nation's history.

Where to begin? First, Obama said that because of his nearly trillion dollar spending plan, unemployment would not top 8 percent. Now, it is nearly 10 percent. People keep losing jobs. In addition, a true stimulus is made to get things going NOW. The vast majority of the funds approved by Congress have not even been spent, and when they are, it will be toward a laundry list of liberal programs designed to take money from productive Americans and give it to others.

The American Recovery and Reinvestment Act was not expected to restore the economy to full health on its own but to provide the boost necessary to stop the free fall. So far, it has done that. It was, from the start, a two-year program, and it will steadily save and create jobs as it ramps up over this summer and fall. We must let it work the way it's supposed to, with the understanding that in any recession, unemployment tends to recover more slowly than other measures of economic activity.

Question... Had the federal government done nothing, where would the country be now? Next question... What if the federal government passed a bill the size of the stimulus but directed toward cutting taxes? What do you think that would do to hiring and to spending by the American people? Isn't that what a stimulus is all about?

I am confident that the United States of America will weather this economic storm. But once we clear away the wreckage, the real question is what we will build in its place. Even as we rescue this economy from a full-blown crisis, I have insisted that we must rebuild it better than before. For if we do not seize this moment to confront the weaknesses that have plagued our economy for decades, we will consign ourselves and our children to future crises, sluggish growth, or both.

Rebuild it better than before? Let's see... right now, in order to pay for the government-run health care plan that Obama is proposing, the Democrats want to raise taxes even higher. First, they will let the Bush tax cuts expire. This will not only push the top rate from 35% to nearly 40%, but it will push other rates higher as well. Then, the Democrats want to put a surtax on top of the tax rate. This will effectively put the top rate somewhere around 43-45%. Thus, the people that America counts on to expand business and hire people will be paying almost half of their income in taxes to the federal government. How is that supposed to help in hiring?

Obama talks about the "jobs of the future." Clearly those must all be government jobs, because the private sector will be taxed into oblivion in order to pay the increasing costs of government. Americans deserve to keep what they make and spend it how they see fit. The more that is spent by the private sector means that more goods will need to be produced and more services will be rendered. This means manufacturing. This means jobs.