Obama's Energy bill: A recipe for economic destruction

Excuse me, but isn't this the same old "Chicago School" argument, i.e. lower the taxes of the very rich so that they will then invest and therefore produce jobs and a better standard of living for the working class?  "Trickle down economics."            "A rising tide floats all boats."  

Well, I thought we just got through proving this didn't work.  What happened was that enormous wealth got transferred from lower classes to the very rich. And when the working class does not have enough money to consume as they are taught, then they overspend, charge up their credit cards, refinance their mortgages and spend that, and in general go broke from their enormous debt.  Not totally unlike what our country is doing right now......too much overspending, too much debt....and guess what?  We're bankrupt, as individuals and as a country, by any fair analysis.

The argument about an "avalanche of tax increases"  is really just a resistance to tax increases on the most wealthy.

As far as those whose wealth remains untaxed, it seems to me that we see this regardless of who the puppet president is.

We need to get over what the Repubs do vs. what the Dems do.  Haven't we figured out yet that we really only have one party in this country - the party of the greedy/rich/elite/corporate/financial/government/military complex?  Folks, we're going in the toilet, at faster and faster rates.

Just watch what this so-called "turn around" does, come another six month!  And then some years after that.

Somehow, people come here, presumably after digesting the CC, who still don't get the second "E."

IMHO the "game" is over if this goes thru....it will be just how long it takes.

First, I think it's important to recognize that this isn't about saving energy, it's just another scam.

Goldman Sachs has created a rigged futures market to trade the credits.  Think about that for a minute, the penalties will profit big banks instead of going to a fund that might be used to reduce energy costs.

The insanity is that another, over 2,000 page bill written by lobbyists, was rushed through the House before anyone could read it.  The bill is a nightmare from the parts that I read. 

Our governbank is blowing another bubble...read the following...Cap & Trade - Goldman Sachs creates another ponzi scheme

Larry

I'm going to be one more voice of dissent and play the Devil's advocate. Green_achers made many good points. I'm going to be more blunt - free market economics has utterly failed us and only through government meddling are we going to "motivate" power companies, auto manufacturers, etc. to head in a direction that we NEED them to.

For decades, we heard car manufacturers tell us that higher fuel efficiency standards would kill them. All the while, in countries where energy cost what it should, cars got smaller and much more efficient. Plus, they got better and before long, the American autos were uncompetitive. Unfortunately, the politicians from the auto states had enough power to prevent us from heading in the right direction. Now we use millions more gallons of fuel than we need to, our auto industry is bankrupt, and our conspicuous consumption has helped make peak-oil come sooner than needed.

What about all the subsidized dirty fuels? While we could have been plowing full speed ahead into high efficiency autos, homes, appliances, and alternative energy, we CHOSE to squander the time and resources. Every effort to pursue efficiency and renewable solutions was squashed. Fossil fuels received unfair advantages, making it the drug of choice for the American public. 

Was it all bad? No. Cheap fuel allowed the US to prosper obscenely for the last couple decades. These riches pushed us to further build big and wasteful, building millions of "field mansions". Then, to help things along, we dropped interest rates to near zero and seduced our populace into living way beyond their needs. 

Cap and trade motivates investment in alternative "clean" energy. Germany's build-out in solar happened very quickly. While one can argue that it didn't reduce CO2 emissions, the economic advantages of developing renewables caused the type of disruptive change in the market that we need. We need decisive, forced investment in this direction in order to reduce the impact of peak-oil. If it cost $147 more for energy in 2020, I consider it a bargain. Even if it's $1,000 more, it's still a bargain if it softens the hard landing that we're headed for from peak oil. Plus, it's not just higher energy costs, it's numerous skilled labor jobs created. Yes, people will also lose their jobs. Obsolete jobs that would get lost anyway. Replaced by better jobs in industries with a future. Change is painful.

Regarding the comment about forcing energy efficient housing and keeping the gov't out of our private transactions - I strenuously disagree. I am in the energy efficiency business and can tell you that we NEED to force the testing and improvement of homes. (and not because it will get me more jobs - it won't, I'm not involved in that specific testing).  People  are spending tens of thousands of dollars on granite countertops, master suites the size of homes, separate bathrooms for every bedroom and other extravagances, and yet they go "low bid" on the HVAC, get the lowest efficiency equipment and insulation, and take an already horrendously inefficient home and make it worse. It's not a private transaction, it's a decision that affects our entire society. It's this type of selfishness that caused the mes that we're in now. Each of us is NOT an island. Our decisions are multiplied millions of times, by others in the population who share our views. 20 million people saying "I'm going build this 8000 SF house that uses ten times the amount of energy as a typical house because I CAN" is unconscionable.  I'm not making this up. A friend of mine is an insulator, and one wealthy client was using $6000/month of heating oil.My friend suggested that his attic was uninsulated and most of the heat was going out the roof. The client said, in essence "so what? I can afford it".

Ok, this has been a long rant, and I'm new to these discussions so I don't want to wear out my welcome too fast :-)  I just want to show that this is not a black and white issue. The energy bill should not just be seen as a misguided white elephant. There is tremendous long term good that is likely to come out of it. And while it is unfortunate that it is adding to our already huge deficit, I don't see any option. The so-called "free market" has failed us.

No, you couldn't call what we have a totally free market, it's true.  However, it's the unrealistic religious belief in the mythical free market that keeps a large proportion of the population from backing any kind of rational regulation.  The irony is that the people and corps that are protected by the misguided foolishness of this attitude have absolutely no interest or belief in free markets themselves.  They just use the true believers to help thembuuild their empires.

You've checkmated yourself, probably not for the first time.

Tedsan -- I couldn't agree more. We need $5 or $7 per gallon fuel to be phased in now in a way that the money stays here rather than wait for $5 or $7 per gallon fuel to be imposed by others and the money going to the Saudis etc. The Europeans have had those kind of prices for years now via taxation and use around 1/2 the fuel we do. All we need to do in the near term is drop back to a European level of fuel consumption and we will buy a lot of time to sort out our alternatives - new energy sources, lifestyles, agricultural methods etc, but if we keep doing what we are doing, we will find ourselves cold and in the dark wondering what happened.

OK, no more SUVs, casual air travel and motor homes. Just in time inventory becomes a thing of the past and rail transport is our standard method of sending freight. Homes will need to be heating and cooled much more efficiently via geothermal and other methods -- we must get on it NOW. Instant gratification will take a backseat to patience and planning.

Happy 4th everyone !!!!

Jim

...we NEED to force the testing and improvement of homes.

I have lived in a midwest college town for nearly 40 years,  I am a residential builder and used to be a realtor.  What I have seen in regards to home efficiency is quite startling, especially among rentals.  Improvements to save vast amounts of energy could be done with relatively small cost with a quick return on investment, but because energy costs do not directly affect those responsible for making those improvements - there is no personal incentive to have them done.  When thinking about the wasted energy dollars per year that students pay to heat a 100 year old home with little to no wall or attic insulation, single glazed windows, uninsulated basements, poor weather-stripping, and outdated heating systems, it almost makes me ill.  It literally adds up to thousands of dollars per year, per house, that are wasted.  Some type of home energy-use inspection needs to be implimented, (for the benefit of all), if we are truly serious about saving energy, resources, and curbing pollution.  We already have termite and radon gas mandated inspections, and since most smart home buyers pay for a third party complete home inspection anyway, why not have energy efficiency certifications as part of the mix?  Rentals should be inspected for energy efficency every 5 years or upon complaint of excessive comsumption made by the renters or the power company that can monitor the amount of energy used in comparrison to the square footage of the house.  If you ignore this iceberg, you risk sinking the ship.

Many of the college district rental home owners I know live in huge expansive 3000 to 8000 sq ft homes with 2-3 more bedrooms and bathrooms than inhabitants, 2 - 10 acres of manicured lawn serviced by underground sprinkler systems and professional landscapers (who are the only people you'll ever actually see walking on the grass - or outdoors for that matter), 2-3 furnaces and multiple central air units.  What's wrong with that?  It's the American dream being realized by those with the ability to enjoy it, right?  But as another poster mentioned, all that we do on this earth does have an affect on others in some way or another and being overly piggish in your use of certain consumables has moral implications.  I mean, instead of me fishing a couple hours a day and only catching 10-15 fish per trip, why don't I just use dynamite and grab up every last fish in the lake for myself in one day?

As far as cars go, I'd hate to see the price of gasoline go any higher as it has a crushing effect on those with limited incomes, many of which can't even afford their insurance and plates as it is - but they have to drive to survive.  The Hummer and Mountaineer owners will simply pay the higher cost of gasoline.  The most fair method of collecting road repair costs is to go back to charging plate fees according to the weight of a vehicle, which is in direct proportion to the wear it creates on the roads.  Michigan used to collect it's fees that way, then went to a vehicle value/age scale that has never been enough to cover expenses, even with a high per gallon tax on fuel.  No matter what, the cost of private transportation is going to become more expensive regardless of what you drive.

I think it's just as fair to say that some get lost in the cause of an unrealistic view of free markets.

I agree *in theory* with what you're saying. The problem that I've seen working in this industry, is that without mandates and penalties, people take the path of least resistance. Let me make this concrete.

When someone builds a house, they're trying to meet a specific budget number, so they have to decide "do I get the granite countertops, the pool, custom cabinets, etc. or do I put in insulation that actually works, a high efficiency heating system, proper air sealing?"  The energy efficiency stuff is not sexy and it rarely sells.

In some discussions among us in the energy efficiency business, we've been trying to implement a "carrot" approach, by encouraging the requirement (this has to come from local government) of house energy disclosures. If every homeowner had to disclose their utility bills, then there would be direct consequences to having an efficient or inefficient home - i.e. when you tried to sell your home, the potential buyer would be able to decide for themselves.

Unfortunately, anything like this requires tremendous political involvement to get passed. The "green" realtors whom I've worked with are for this, but all the rest are against it. After all, their bread and butter is selling field mansions and these have horrible energy use. So realtors block anything that gets in the way of them selling these homes.

It's truly a shame. I've done plenty of analysis that show that it's a no brainer to install geothermal heat pumps and other super-efficient systems, insulation, etc. when building a new home. But theseraise the base cost, so few do it. But when you look at the numbers, in many climates, the homeowner saves money the first year due to decreased utility costs that more than offset the increased mortgage.

The point is, if we were all rational, responsible, adults, we wouldn't need nor want government intervention. But, in all frankness, the majority of the population can't see beyond the cash in their wallet. If you ask them to think about future implications, they look at you like you're insane. That's a good part of what got us into this mess in the first place.

If you have any ideas that will actually work on the non-thinking population in general, to encourage them to invest in their homes, I'm all ears. I would love to come up with a way to motivate millions of people to stop spending hundreds of dollars a months on unnecessary items and put that money into their homes. Money that will make their homes more comfortable, energy efficient and safe.

Larry & Ted

The best thing that we could do if we are serious about reducing our energy consumption in a big way, would be to help fund the costs of upgrading every new and existing home in the country.  I suggest 0% loans should be available for qualified energy saving projects to new and existing homes.  We can do this without adding any new taxes, without applying any penalties and without putting the government one penny in debt.

What are we waiting for ? Anyone living in a cold part of the country that is depending on fossil fuel to heat their home is fast coming to the point where it will be impossible to continue staying warm without going broke unless they have access to a wood lot close by. The geothermal concept really does work. A friend in a cold part of Canada put a system in his (large) house that has a couple of thousand feet of workshop on the side and has an electricity bill for all his needs running under $100 average per month total - and heats the whole place to shirtsleeve warmth all winter as well as air conditions in the summer with 95 degree days.

Jim Pitre

jpitre said:   The geothermal concept really does work. A friend in a cold part of Canada put a system in his (large) house that has a couple of thousand feet of workshop on the side and has an electricity bill for all his needs running under $100 average per month total - and heats the whole place to shirtsleeve warmth all winter as well as air conditions in the summer with 95 degree days.

I agree Jim, it really does work and it is an old and mature technology.  That's a pretty good savings and if the $100 monthly rate is in Canadian dollars, that would be around $86 US dollars.  It's important to note that Canada has a ventilation (fresh air introduced into the house) standard unlike the US.  This requires more energy as the outdoor make-air must be heated. 

green_achers said:   Anyone who loans at 0% is going to be losing money as they have to at least support the overhead to service the loans, not to mention the opportunity costs on the loaned money.  So are you asking the government to do that?  Since the government is already in debt, how could incurring those costs not put it more in debt?

Thanks for the question, the US has the power to directly issue money anytime we want.  Just as we issue bonds, we may issue dollars.  This is not a new concept as Lincoln paid for most of the Civil War by simply issuing the required dollars (greenbacks) - both interest and debt free.  Kennedy directly issued money into circulation free from debt and interest through executive order #11110 in 1963.  After his assassination, no other president used the executive order again.

The government may issue money separate from our usurious central bank which may be loaned at 0%.  There would be some processing and approval fees that could also be borrowed under the 0% loan.  I'll write more details about this tomorrow.

Larry

Wouldn't it be a lot easier to mandate a certain level of energy efficiency, and have it enforced as permits are issued or on a periodic basis?

In it's most simple form, a square footage vs energy consumption 'standard'.  Use more than the 'standard' amount of energy to heat and cool your home, and you pay a premium.  Seems like this would be an easy system to automate without on-going high administrative costs, and the premiums would provide incentive.

"This will be a disaster IMHO"

But Doc....  the disaster is already here...  The cap'n'trade won't work, because the polluting companies will all go bust. Too little too late, should've done all that thirty years ago.  There aren't enough resources to build the green infrastructure, the freemarket has completely failed us, here comes Limits to Growth.

Mike