FedUpUSA

Archive for July 2nd, 2010

Rep. Henry Waxman (D-CA) just handed the Senate Republicans a great excuse to filibuster any energy bills Harry Reid wants to advance in 2010.  Waxman tells The Hill that any energy bill from the Senate, regardless of whether it has a cap-and-trade component for any industry in it, will allow him to attach his version of cap-and-trade in conference committee:

House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) said he would “absolutely” seek to keep greenhouse gas limits alive in a House-Senate conference if the Senate approves energy legislation this summer that omits carbon provisions.

“It would be open in conference to consider because our bill has it,” Waxman told The Hill Wednesday.

Waxman authored a sweeping climate and energy bill that the House narrowly approved last year that merges an “economy-wide” cap-and-trade system with other provisions to boost alternative energy and energy efficiency.

Greenhouse gas caps face large hurdles in the Senate, and may be left on the cutting-room floor when the Senate debates an energy package that Majority Leader Harry Reid (D-Nev.) wants to bring up next month.

Well, Waxman may certainly try to get the House version of cap-and-trade inserted in the conference report, but that won’t help move it in the Senate.  A conference report is subject to a cloture vote, just as the Senate version authored by John Kerry and Barbara Boxer is.  If Kerry and Boxer can’t move their somewhat less egregious version now, a conference report with Waxman’s version would be dead on arrival in the Senate.  Democrats like Russ Feingold have already objected to the strange allocation of carbon credits that favor California and Massachusetts, not coincidentally the two states represented by the authors of both versions of the bill.

However, that may be Waxman’s point.  He may want to derail any energy package that doesn’t include cap-and-trade, because once such a bill gets passed, it makes it more difficult to get back to C&T.  With the oil spill ongoing in the Gulf, there is some political pressure to do something about America’s direction on energy. Without that component, Congress might not address energy for another few years, and C&T isn’t popular enough to stand on its own.

That’s precisely why Republicans need to remain vigilant regarding energy policy.  Any deal conducted in the Senate between the GOP and Reid will get undone in conference.  Waxman’s practically putting  that on a billboard in Washington, and Republican leadership had better pay attention.

HotAir

By Connie Hair

Last night, as part of a procedural vote on the emergency war supplemental bill, House Democrats attached a document that “deemed as passed” a non-existent $1.12 trillion budget. The execution of the “deeming” document allows Democrats to start spending money for Fiscal Year 2011 without the pesky constraints of a budget.

The procedural vote passed 215-210 with no Republicans voting in favor and 38 Democrats crossing the aisle to vote against deeming the faux budget resolution passed.

Never before — since the creation of the Congressional budget process — has the House failed to pass a budget, failed to propose a budget then deemed the non-existent budget as passed as a means to avoid a direct, recorded vote on a budget, but still allow Congress to spend taxpayer money.

House Budget Committee Ranking Member Paul Ryan (R-Wisc.) warned this was the green light for Democrats to continue their out-of-control spending virtually unchecked.

“Facing a record deficit and a tidal wave of debt, House Democrats decided it was politically inconvenient to put forward a budget and account for their fiscal recklessness.  With no priorities and no restraints, the spending, taxing, and borrowing will continue unchecked for the coming fiscal year,” Ryan said.  “The so-called ‘budget enforcement resolution’ enforces no budget, but instead provides a green light for the Appropriators to continue spending, exacerbating our looming fiscal crisis.”

As we reported on HUMAN EVENTS, CBO issued a dire warning about the long term outlook for the budget.  

“Yesterday, the Congressional Budget Office rang the latest fiscal alarm with the release of The Long-Term Budget Outlook,” Ryan said.  “Today, Congress again hit snooze.  To avert a fiscal and economic calamity, Washington needs to wake up.”

Key points from the House Republican Budget staff on the House Democrats’ deeming resolution:

-       This is not a budget. The measure fails to meet the most basic, commonly understood objectives of any budget. It does not set congressional priorities; it does not align overall spending, tax, deficit, and debt levels; and it does nothing to address the runaway spending of Federal entitlement programs.
-       It is not a ‘congressional budget resolution.’ The measure does not satisfy even the most basic criteria of a budget resolution as set forth in the Congressional Budget Act.
-       It creates a deception of spending ‘restraint.’ While claiming restraint in discretionary spending, the resolution increases non-emergency spending by $30 billion over 2010, and includes a number of gimmicks that give a green light to higher spending.
-       It continues relying on the flawed and over-sold pay-as-you-go [pay-go] procedure. Pay-go – which Democrats have used mainly to raise taxes, and have ignored when it was inconvenient – does nothing to reduce deficits or restrain spending growth in existing law.
-       Outsourcing fiscal responsibilities. The measure is another hand-off by the Democratic Majority of Congress’s power of the purse – this time relying on the Fiscal Commission created by the President to do Congress’s job.

A full Republican Budget Committee staff analysis of the Majority’s Budget Deemer: “An Admission of Fiscal Failure”

See If Your Congresstard Voted For This Fraud – Roll Call

Human Events

Howard Davidowitz is a bear on America.  If you’ve watched any of the recent clips, you know he’s negative on stocks, the economy and the political system. (If you haven’t seen them, check the links below.)

Much of Davidowitz’s frustrations stem from the bailout of our financial system.  “If a bank is bad, you let it go broke,” he says. “The bondholders lose their money, because they should. The stockholders lose their money, because they should. Lots of people get fired job, because they should. That’s the solution to the problem.”

In the 1980s, Davidowitz’s firm worked on the restructuring of then struggling retailer Toys “R” Us. “We kept the good, we cut the bad. That’s how restructuring works,” he says.  The national retail chain was cut down to 13 stores, but was kept alive.  Today, the company is preparing for an IPO, five years after private equity giant KKR purchased the company for $6.6 billion. 

Again, Davidowitz believes the same measures should have been taken with the banks. Sure, bankruptcy is a painful solution in the short-term, but he believes the government’s rescue of some of our biggest financial institutions has had, and will continue to have, catastrophic economic consequences. 

As economist and Carnegie Mellon professor Allan Meltzer once said: “Capitalism without failure is like religion without sin.” 

Howard couldn’t agree more, and you can catch more of Tech Ticker’s recent interview with Davidowitz here:

VIDEO

Tech-Ticker

Day one of the Financial Crisis Inquiry Commission’s two-day hearing on AIG derivatives contracts featured testimony from Joseph Cassano, the former head of AIG’s financial products unit. Goldman Sachs president Gary Cohn was also on the Hill.

Meanwhile, the Democrats are still trying to salvage the regulatory reform bill, with critical support from Senator Scott Brown (R-Mass.) reportedly still uncertain.

According to Howard Davidowitz of Davidowitz & Associates, what connects the hearings and the Reg reform debate is the lack of focus on the real underlying cause of the financial crisis: Fraud.

“It was a massive fraud… a gigantic Ponzi Scheme, a lie and a fraud,” Davidowitz says of Wall Street circa 2007. “The whole thing was a fraud and it gets back to the accountants valuing the assets incorrectly.”

Because accountants and auditors allowed Wall Street firms to carry assets at “completely fraudulent” valuations, he says the industry looked hugely profitable and was able to use borrowed funds to make leveraged bets on all sorts of esoteric instruments. “Their bonuses were based on profits they never made and the leverage they never could have gotten if the numbers were right – no one would’ve given them the money in their right mind,” Davidowitz says.

To date, the accounting and audit firms have escaped any serious repercussions from the credit crisis, a stark difference to the corporate “death sentence” that befell Arthur Anderson for its alleged role in the Enron scandal.

To Davidowitz, that’s perhaps the greatest outrage of all: “Where were the accountants?,” he asks. “They did nothing, checked nothing, agreed to everything” and collected millions in fees while “shaking hands with the CEO.”

VIDEO

Tech-Ticker