I have made no secret of my objections to a proposed cap-and-trade energy tax that will result in increased costs for every single American. The tax would require energy producers and businesses to pay to emit carbon emissions in the hope of reducing greenhouse gases.  You, the consumer, would be footing the bill.

I published an op-ed in the Star Tribune earlier this month highlighting the dangers of this piece of legislation and what it means for Americans. In the piece, I cited an MIT study that found the average American household would experience increased bills of $3,128 per year if this legislation became law.

This statistic has drawn much criticism in the local news and around the nation because the MIT professor involved with the study, John Reilly, questioned the validity of the interpretation used by myself and many Republicans.

But in an interview with the Weekly Standard, Professor Reilly clarified his critique and accepted the Republican use of the statistic. 

As reported in the Weekly Standard, “MIT professor John Reilly admitted that his original estimate of cap and trade’s cost was inaccurate…’I made a boneheaded mistake in an excel spread sheet.  I have sent a new letter to Republicans correcting my error.’”

Interestingly, Professor Reilly also assumes that Washington’s better angels will prevail over its need for revenue to pay for its expensive spending habits. 

"Reilly assumes that the $3,128 will be 'returned' to each household. Without that assumption, Reilly wrote, 'the cost would then be the Republican estimate [$3,128] plus the cost I estimate [$800].'"

Reilly continued, "If the Republicans were to focus on that revenue, and their message was to rally the public to make sure all this money was returned in a check to each household rather than spent on other public services then I would have no problem with their use of our number.'"

I am more skeptical of Washington’s intentions and I believe that the Democrats have no intention of using a cap-and-trade system to deliver rebates to consumers; they want the tax revenue to fund more government spending.  Key Democrats – including President Obama and Senators Reid & Conrad – have even said they want to use cap-and-trade to fund their government-run health care plan.

The reality is, it's anybody's guess as to how the cap-and-trade revenues would end up getting spent. What we do know is that you’ll be paying them but it will be the government spending them -- not you -- and that's the problem.

I hope the press is just as quick and eager to correct the report that the GOP's estimate of cap-and-trade's cost is a "pants on fire" falsehood as they were in claiming it.

(Cross-posted at the Hill's Congress Blog)

At a time when our President is telling us that "we all have to make sacrifices" given the economic hardships, Washington continues to carry on with its misplaced priorities.  Instead of pursuing commonsense legislation to right our economic ship, Congress is pursuing its recklessly irresponsible spending habits.

After a two week recess, Congress returns today, and among the pieces of legislation we will be taking up this evening are:

H.Res. 254 - Recognizing the designation of March 2009 as Irish American Heritage Month (Yes, it is April -- it's not a typo, but I guess Democrat leadership couldn't find the time to fit that one in last month. At least it doesn't cost anything.)

H.R. 388 - Crane Conservation Act of 2009

H.R. 411 - Great Cats and Rare Canids Act of 2009

With regard to the last two, last year I posted on identical legislation passed last Congress, but I guess we still haven't learned our lesson.

The Crane Conservation Act would establish a new grant program to provide money to individuals or groups that work to conserve crane species in Africa, Asia, Europe, or North America. A noble goal, but one that will cost tax payers $25 million over 5 years and focuses largely on overseas programs. Similarly, the Great Cats and Rare Canids Act expands government with your money by creating new grant programs authorizing $25 million over five years to fund rare cat and dog conservation in foreign countries.

With our economy in the condition that it's in, Congress’ time could certainly be better spent than on $50-million legislation like this.

Today, President Obama made his best attempt to date at espousing fiscal responsibility by requesting that his Cabinet secretaries cut $100 million total – that’s government-wide – from their respective agencies. While $100 million is by no means a small number in and of itself, when considering it in relation to President Obama's $3.5 trillion budget outline for 2010 passed by both Chambers of Congress, that number represents a cut of just 0.003%.

While it's certainly a laudable move, it's akin to shooting a giant hole in the side of a cruise ship and then bailing the sinking ship out with a dixie cup. Moreover, trimming millions of dollars means absolutely nothing if Congress and the President continue to add billions to the national debt.

Greg Mankiw, Harvard University professor of economics, broke it down this way:

“To put those numbers in perspective, imagine that the head of a household with annual spending of $100,000 called everyone in the family together to deal with a $34,000 budget shortfall. How much would he or she announce that spending had be cut? By $3 over the course of the year--approximately the cost of one latte at Starbucks. The other $33,997? We can put that on the family credit card and worry about it next year.”

What’s more, according to Associated Press reports,

“Even among budget cuts cited in a newly released White House summary, a considerable proportion of the savings would occur over a period of years.”

When you hear the President talk about cuts to spending and fiscal responsibility, always remember to examine the long-term picture. Saving money today means nothing if your future plans and goals require spending more than you have. It's that simple, and I’m pretty sure the American people understand the difference between real cuts and political sleight of hand.

If what we've heard about cap-and-trade isn't bad enough already, wait until you hear this. Contained within the 600-plus pages of the Waxman-Markey global warming/cap-and-trade bill that was recently introduced in the House is language making it legal to sue the federal government and private companies if you "suffer" from “Global Warming.”

According to the Washington Times, "the measure sets grounds for anyone 'who has suffered, or reasonably expects to suffer, a harm attributable, in whole or in part,' to government inaction to file a 'citizen suit.' The term 'harm' is broadly defined as 'any effect of air pollution (including climate change), currently occurring or at risk of occurring.'

"Under the House bill, if a judge rules against the government, new rules would have to be drafted to alleviate the problems associated with climate change. If a judge rules against a company, the company would have to purchase additional 'carbon emission allowances' through a cap-and-trade program that is to be created by Congress."

You may think that lawsuits like this would be few and far between, but let's consider some past cases that sound a little bit peculiar,  but are unfortunately commonplace:

- A women hit by a New York City subway train while lying on the tracks attempting to commit suicide was awarded $9.9 million dollars.

- A woman who sued McDonalds for gross negligence after spilling hot coffee on herself was initially awarded $3 million in damages before a settlement produced a smaller amount.

-A judge sued a Washington, D.C. dry cleaner for losing his pants to the tune of $67 million.

This cap- and-trade bill "would allow citizens to seek up to $75,000 in damages from the government each year, but would cap the total amount paid out each year at $1.5 million."

Whether the plaintiff wins his case or not, this provision as-is is a trial lawyer’s nirvana. Even if they don't win, they'll tie up the courts and force these companies to disrupt there business, even without merit, and force them to put their time and resources into legal costs.

Just another troubling cog to this cap-and-trade machine that is barreling through Washington.

That's is what non-partisan economists are independently saying and what The Hill newspaper is reporting when crunching the budget numbers in the FY 2010 budget put forth by the White House and Democrat Congressional leaders.

Here are some more of the money quotes from the story:

“You just simply can’t tax the rich enough to make this all up,” said Martin A. Sullivan, a former economic aide in the Reagan administration who said he backed Obama last fall.
“Especially just for getting the budget to a sustainable level, there needs to be a broad-based tax increase,” said Sullivan, now a contributing editor at Tax Analysts publications. “If you want to do healthcare on top of that, almost certainly, it just makes [a middle-class tax increase] all the more certain.”

As we plunge into the debate on cap-and-trade here in Washington and around the country, our nation can learn some lessons from Spain which adopted an energy policy that many in the U.S. point to "as a model for how government subsidies can create "green jobs."

A study directed by Dr. Gabriel Calzada, an economics professor at Juan Carlos University in Madrid, concluded that every "green job" created in Spain resulted in 2.2 other jobs being destroyed.

The study emphasized that only 10% of the "green jobs" created could be considered permanent - such as maintenance of renewable power systems. The remaining jobs consisted of temporary jobs in construction, fabrication and installation jobs; along with administrative positions, marketing, and engineering projects.

The study also finds that:

"If U.S. subsidies to renewable producers achieve the same result -- and President Obama has held Spain up as a model for how to subsidize renewables -- the U.S. could lose 6.6 million to 11 million jobs while it creates three million largely temporary 'green jobs.'"

Furthermore, Dr. Calzada stated that “the loss of jobs could be greater if you account for the amount of lost industry that moves out of the country due to higher energy prices.”

President Obama and his Congressional allies have stated an August goal for passing cap-and-trade legislation.  Our government needs to slow down and think twice about enacting an energy policy that will clearly hurt our already struggling economy and financially impact every single American.

For more information on the study, click here.

To read the study, click here.

It's a little troubling when the U.S. Treasury and the Government Accountability Office (GAO) aren’t on the same page when it comes to how many billions of your tax dollars have been or have yet to be used as part of the federal government’s financial service sector bailout packages.

In an interview with George Stephanopoulos this week, Secretary Geithner told him that there was about $135 billion of uncommitted funds left in the federal government's TARP program. However, GAO reports were in direct contrast to this figure - reporting that there was only $32 billion. The GAO later put that number closer $109 billion after considering the unexpected parameters that the Treasury used in arriving at its figure. However, GAO flat-out refuses to accept the $25 billion estimate that the Treasury expects to come from financial institutions returning TARP money.

We're talking billion of dollars here, yet the folks overseeing it aren't even operating from the same set of guidelines.  A billion here, a billion there-- this is truly frightening.  Talk about fiscal irresponsibility.

The more we get to know about our new Treasury Secretary, the more obvious it's becoming that he has a serious problem with numbers.

Today, the budget battle really begins to heat up on Capitol Hill, and the Republicans are readying to present their alternative budget proposal later today.

But to give you a preview of how the GOP budget stacks up to the President's proposal that spends too much, taxes too much, and borrows too much, take a look at this graph. Without a doubt, there's a very clear and distinct difference.

President Obama's rhetorical spanking of the American auto industry yesterday hit the right chord - "we're not going to reward failure."  While it's the right statement to make, however, it's one that should have been made months ago when the auto industry first came to Washington asking for a bailout from the taxpayers.

President Obama is now threatening bankruptcy as the course of action for those companies who do not conform to his rules and regulations.  Many of my colleagues and I suggested the option of bankruptcy before the government put millions of your tax dollars on the line.

Tom Price, Chairman of the Republican Study Committee, said it best:

"The time for restructuring at General Motors and Chrysler came long before either company received taxpayer money to prop up their failing business plans. Legal restructuring in the courts, rather than through federal bailouts, should have been the first option once Detroit’s insolvency became clear. An organized bankruptcy filing would have allowed GM and Chrysler to restructure and re-emerge as viable, competitive businesses. We can restore freedom and turn our struggling economy around, but we must begin by recommitting ourselves to the market-based economic principles that once paved the way for American prosperity.”

I couldn’t agree more.

President Obama and his allies in Congress have literally inserted government into a role that is best performed by a private board of directors.  The President is hiring and firing CEOs.  The Congress is determining what contracts are worthy of honoring.  Our country has endured recessions in the past, and there has been no greater model for recovery and economic growth and prosperity than market-based principles. But now, all of a sudden, we think we have found a better government-centered model?  What makes Washington think it knows best?

Much has been made of President Obama's recently proposed cap-and-trade, energy-tax policy that he would soon like to see implemented as a means to raise revenue for his health care reform and other big spending plans. The graph below, provided by Ways and Means Ranking Member Dave Camp (R-MI), shows the state-by-state analysis of annual per capita increases in electricity costs that would occur under a 100% auction, as President Obama has called for, to meet his target carbon emission reductions.

Annual Increase in Electricity Costs
(based on the Stern Review's recommended carbon price of $85 per ton)

Source: Committee on Ways & Means Republican Staff analysis

At a Ways and Means hearing today, Congressman Camp questioned Congressional Budget Office Director Dr. Douglas Elmendorf  about the impact of this policy on consumers in other ways as well.  As Dr. Elmendorf said, “at any point in which we are putting a price on carbon emissions, that would be passed through to the cost that consumers face on energy products but also all other products that are made using fossil fuels….I don’t know if there are any goods that use no energy in their production.  It seems to me unlikely.”

The President’s energy tax is a policy we simply can't afford.

It's vital that we ask questions of this Administration as it continues to insert itself into the private sector.  Most recently, it's reported that the Obama Administration is considering asking Congress to give the Treasury Secretary the authority to take over non-bank financial companies, such as large insurers, investment firms and hedge funds.

Giving the Secretary this authority would be an unprecedented transfer of power to the federal government. The current model for regulating the financial markets relies on independent agencies that are independent from the political process.

I have serious concerns regarding the role of government intervening in the private sector, and I expressed as much yesterday in a Financial Services Committee hearing on AIG with Treasury Secretary Geithner and Federal Reserve Chairman Ben Bernanke. Take a look:

President Obama is never at a loss to note that he inherited a trillion-dollar deficit.  But, for a man that's expressed so much outrage towards this deficit, he sure is doing his best to see that it keeps grows higher and higher.

On Friday, the CBO (Congressional Budget Office) released its analysis of President Obama's Fiscal Year 2010 budget, finding that if enacted as is, his big spending proposals would increase the federal deficit by $2.3 trillion more than the President had estimated.

According to the Wall Street Journal , the "President is seeing that $1 trillion [deficit] and raising it again and again, as far as the eye can see."

By 2019, the share of the public debt will double to 82.4% from 40.8% in 2008 - and this is without even considering the estimated $2-trillion toll that the President's health care plans will have on the taxpayers’ economic burdens.

Given the all the promises of "fiscal responsibility" we heard from the majority all last fall, the Democrats’ proposals are coming no where close to financially prudent legislation. The more we see from the White House and the Congressional majority, the more it's obvious that our nation can't afford what they're trying to sell.

It's not everyday that I find myself agreeing with the Huffington Post, but when it comes to the AIG bonuses debacle, I couldn't agree more.

    "Have you noticed how, whenever there is a serious effort to put an end to business-as-usual, we are warned by insiders like Paulson and Summers that the result will be the end of civilization?

    "'This lack of transparency -- and the lack of accountability that results -- is one of the most significant threats to our democracy,' Wyden told me. 'This is not at all how the civics books tell us the system is suppose to work. What we have here is a prime example of Washington deny, defer, delay.'

    "He's right. We deserve better. Let's make this D.C. mystery the cause celebre it deserves to be. Let's demand that the White House live up to its vows of transparency."

What has been lost in all this AIG outrage is the stark reality that this debacle is what should be expected when government moves into the Board Room.  Congress passed the misguided $700-billion bailout in October; Congress approved the second tranche of $350 billion for the bailout in January; and Speaker Pelosi and President Obama pushed through a “stimulus” package that specifically permitted these AIG bonuses on the taxpayer dime.  When Congress and the Administration took these actions they set in motion this necessity that they feign outrage over misuse of hard-working taxpayers’ money.

Congress must engage the same determination they used this week to enact an exit strategy for the American people from bailout-band-aid mania.  The American people deserve our outrage about more than just these $165 million.

After denying involvement on Tuesday, Senator Dodd admitted yesterday he is responsible for airdropping language into the stimulus package that allowed AIG to distribute $165 million in retention bonuses. But Dodd is pointing a finger directly back at the White House, claiming the Obama administration pushed for the language out of fear of potential lawsuits from AIG employees.

“I didn't negotiate with myself.  I wasn't trying to change it on my own…the administration [had] expressed reservations. They asked for modifications.”
                            --Sen. Chris Dodd (D-CT), CNN, March 18, 2009

One of the most startling things about all this is that many of those here in Washington who are expressing shock and outrage that AIG would do something like this are the same ones who accepted the language protecting the AIG bonuses in the stimulus bill and voted it into law.

As I've said in the past: I don’t know how any legislator could vote on a bill that they didn't even have a chance to read, yet the Democrats pushed it through anyway. This is just the latest fallout from a piece of legislation that was rushed through and passed hastily. We really shouldn’t be surprised.

The truth of the matter is:  It was full public knowledge as far back as May 2008 – long before Congress passed the misguided bailout that injected $170 million of taxpayer money into AIG.  And, in November 2008, AIG convened a working group to figure out what to do with about these very bonuses.  The Federal Reserve was a part of that working group.  Let’s not forget who was the President of the New York Fed at the time – our new Treasury Secretary, Timothy Geithner.

Even Democrat Congressman Kanjorski, who ran the Financial Services Committee hearing yesterday with the AIG CEO, Edward Liddy, had this to say:

"I am sick and tired of hearing the administration and the Secretary of the Treasury say, 'I just found out about it.'"
         --Paul Kanjorski (D-Pa), Washington Post, March 19, 2009

Legislators who voted for the bailout and for the stimulus that protected the bonuses are now scrambling to cover their backs by putting forth legislation this morning that will impose a  90% tax for bonuses received by an employee of a company that has received funds in excess of $5 billion from the Troubled Asset Relief Program (TARP)—or an employee of Fannie Mae or Freddie Mac.

Folks, two wrongs don’t make a right. Without the wrong-headed $700-billion bailout, the taxpayers would never have been put in the position of their dollars being doled out for executive bonuses in the first place.  Congress is singularly ill-equipped to be a Board of Directors, and the bailout has put them right in the boardroom.

The bill on the House floor today, while not mentioning AIG by name, is clearly meant to punish a specific group of individuals in response to public outrage over the bonuses. The author of the bill, Rep. Rangel, explains his motivation for the bill by saying that he “had an obligation to respond to the fears and anger of the people.” Given this motivation, a legislative action aimed at punishing individuals, no matter how loathed or despised they may be, is explicitly prohibited by the Constitution in Article I, Section 9, Clause 3.

Larry Summers, President Obama’s top economic advisor, had this to say over the weekend – before he got the memo that the Administration was shocked and outraged by the bonuses they specifically protected:

“We are a country of law.  There are contracts.  The government cannot just abrogate contracts.”
      -- Wall Street Journal, “Obama’s AIG Panic,” March 19, 2009

The government allowed this to happen - no ifs, ands, or buts about it. This feigned attempt by lawmakers to cover up their mistake should not distract from the fact that those responsible for allowing these bonuses thought they could sneak one by the American people and reward their political allies. This is certainly not a proud day for a Democrat White House and Congressional Majority that was elected on openness and honesty.

Given our pattern of bailouts and spending measures over the past several months, it comes as no surprise that our national debt has surpassed $11 trillion, the largest it has ever been in our nation's history.

Hopefully, this absolutely enormous number will temper President Obama's plans to continue his government spend-a-thon. But from what we've been hearing from the White House and among Democrat leaders here in Congress, it appears that we should just buckle in for more business as usual.

In fact, one of President Obama's top legislative priorities seems to be passing a "cap-and-trade" – or cap-and-tax, as I call it – policy for America that makes businesses and energy producers pay to emit carbon emissions.

Originally, the President estimated that this plan would cost $646 billion over eight years to implement. However, Jason Furman, Deputy Director for President Obama’s National Economic Council, recently stated that it could cost up to 3 times that amount - bringing the cost closer to $2 trillion.

Republicans are rightfully wary of a measure of this magnitude, particularly one that will surely mean higher costs for every American - the last thing we need when our country is in a recession. What makes this plan even more mind boggling is how much it will hurt American businesses while their competitors in countries will not be beholden to anything similar.  American businesses will be inclined to move their operations overseas to take advantage of less expensive operating costs.

Last week, I posted on how cap-and-tax legislation will affect every single American through increased costs for everything from groceries to school supplies, not to mention their energy bills. Remember the hit our wallets took last summer with $4 gasoline? If this legislation takes effect, those days will soon be returning.

The financial burden being placed on the shoulders of every taxpayer and on future generations as a result of these reckless spending strategies must be replaced with fiscal responsibility.  The spending spree has to stop.