Chavez Furiously Backtracking As Venezuela Petro-Economy Deteriorates
by Gus Lubin BusinessInsider.com
January 26, 2010

In anticipation of Thursday’s Carabobo oil field auction, outspoken Marxist president Hugo Chavez quietly pleaded for foreign investment.

“Investment and experience from foreign oil firms is necessary in Venezuela. We need it,” Chavez said, according to Dow Jones.

The statement is a serious turnaround for a government that has nationalized dozens of foreign oil companies in recent years. But they ‘need’ foreign investment because mismanagement is turning the country into just another failed petro-state.

This is also the second instance of Chavez backtracking today.

Chavez reversed a six-year ban on the sale of U.S. dollars by Venezuela’s central bank, in an effort to control the vast amount of money that was leaving the country through unregulated exchange, according to Bloomberg.

He had previously threatened to “burn the hands” of speculators who speculated against the bolivar, Venezuela’s currency.

Tens of Thousands of Venezuelans Protest Hugo Chavez
Saturday, January 23, 2010
(AP)

CARACAS, Venezuela — Tens of thousands of Venezuelans opposed to President Hugo Chavez took to the streets Saturday, blaming him for rolling blackouts, water rationing, widespread crime and other problems they say are making daily life increasingly difficult.

Chavez backers flooded the capital’s avenues with an equally impressive demonstration as the socialist leader confronts mounting criticism and an emboldened opposition ahead of upcoming congressional elections.

Waving Venezuelan flags, protesters accused Chavez of dragging the politically divided South American country into a severe crisis as he accelerates his drive to transform it into a socialist state.

“Chavez is leading the country to ruin,” said 79-year-old Olga Damjanovich at the opposition protest. “He’s controlled all the country’s institutions for more than a decade, so how could it be possible that he’s not responsible for the problems weighing down on us?”

Many wore T-shirts that read: “3 Strikes: Blackouts, Water Rationing and Crime. Chavez, You’ve Struck Out!”

Chavez backers rebutted the criticism, accusing opponents of exaggeration.

“Things aren’t all as we would like them to be, but we know that El Comandante (Chavez) is doing what he can to help us, the poor,” said Yorbert Rodriguez, a 39-year-old bricklayer.

Political rivals organized Saturday’s demonstrations to coincide with the 52nd anniversary of an uprising that toppled Venezuela’s last dictator, Gen. Marcos Perez Jimenez. Chavez allies argued that democracy is growing stronger, while government foes said their liberties are slipping away.

Opposition parties hope to make a strong showing in September’s elections by holding Chavez responsible for rampant crime, a recent currency devaluation widely expected to boost inflation — which ended 2009 at 25 percent — and electricity rationing.

Chavez, a tireless campaigner who remains popular, has overcome bigger obstacles during his 11-year presidency. The former paratroop commander emerged unscathed from a botched 2002 coup and devastating two-month strike the following year.

Margarita Lopez Maya, a political science professor at the Central University of Venezuela, believes increasing numbers of Venezuelans are “putting the president’s capacity to resolve problems in doubt,” but they haven’t embraced the opposition as a result.

“There may be doubts — even disapproval, but there’s no alternative these people believe in,” she said.

Obama Seen as Anti-Business by 77% of U.S. Investors
The Drudge Report-Bloomberg.com Reuters News Agency
January 23, 2010

Ok class, there is a real big lesson to be learned here. If you elect a socialist to manage the nation’s economy, do not be surprised if everything falls apart. This is kiddie economics 101; fourth-grade.

(Bloomberg) — U.S. investors overwhelmingly see President Barack Obama as anti-business and question his ability to manage a financial crisis, according to a Bloomberg survey.

The global quarterly poll of investors and analysts who are Bloomberg subscribers finds that 77 percent of U.S. respondents believe Obama is too anti-business and four-out-of-five are only somewhat confident or not confident of his ability to handle a financial emergency.

The poll also finds a decline in Obama’s overall favorability rating one year after taking office. He is viewed favorably by 27 percent of U.S. investors. In an October poll, 32 percent in the U.S. held a positive impression.

“Investors no longer feel they can trust their instincts to take risks,” said poll respondent David Young, a managing director for a broker dealer in New York. Young cited Obama’s efforts to trim bonuses and earnings, make health care his top priority over jobs and plans to tax “the rich or advantaged.”

Carlos Vadillo, a fixed-income analyst at Wells Fargo Securities LLC in San Francisco, said Obama has been in a “constant war” with the banking system, using “fat-cat bankers and other misnomers to describe a business model which supports a large portion of America.”

Europe, Asia

Outside the U.S., Obama continues to get high marks with three-quarters or more of investors in Europe and Asia viewing him favorably. These rankings bring his global favorability rating to 60 percent among all poll respondents.

When it comes to his ability to manage a financial crisis, 55 percent of Europeans say they are either mostly or very confident; Among Asian respondents, 59 percent say they are somewhat confident or not confident; 38 percent expressed confidence.

Unlike other recent presidents, Obama hasn’t selected a leading business executive for his cabinet or a top advisory role. One year after taking office, he is coping with a jobless rate hovering around 10 percent and a federal deficit that rose to $1.4 trillion last year. In response, he has proposed a fee on as many as 50 large financial firms and yesterday called for limiting the size and trading activities of financial institutions as a way to reduce risk-taking.

‘Near Collapse’

“While the financial system is far stronger today than it was one year ago, it’s still operating under the same rules that led to its near collapse,” Obama said yesterday at the White House after meeting with former Federal Reserve Chairman Paul Volcker, who has been an advocate of taking such steps.

The poll was conducted Jan. 19, before Obama unveiled the plan. Yesterday, after the announcement, the Standard & Poor’s 500 Index fell 1.9 percent, its biggest loss since Oct. 30. The S&P 500 has risen 39 percent since Obama’s Jan. 20, 2009, inauguration.

The U.S. investors’ perceptions of Obama stand in contrast to those of their European counterparts, most of whom say the president strikes the right balance when it comes to managing business interests. Europeans, however, are more confident in Obama’s leadership on financial matters than Asians.

The quarterly Bloomberg Global Poll of investors, traders and analysts in six continents was conducted by Selzer & Co., a Des Moines, Iowa-based firm. It is based on interviews with a random sample of 873 Bloomberg subscribers, representing decision makers in markets, finance and economics. The poll has a margin of error of plus or minus 3.3 percentage points.

Geithner, Summers

Obama’s 71 percent unfavorable rating among U.S. investors is almost matched by two members of his economic team. Both Treasury Secretary Timothy F. Geithner and Lawrence Summers, president of the National Economic Council. U.S. respondents give Geithner a 63 percent unfavorable rating and Summers 67 percent. In October, 57 percent held a negative view of Geithner and 66 percent said the same of Summers.

Like Obama, both men do better with Asian and European investors.

One financial figure to find favor among U.S. respondents is Federal Reserve Board Chairman Ben S. Bernanke, who garners a 68 percent approval rating, which is in line with his marks from non-U.S. investors and the rating U.S. investors gave him in the October poll.

There is one other figure U.S. and international investors agree on: former Republican vice presidential candidate Sarah Palin, a potential candidate for her party’s nomination in 2012.

Palin Rating

With a net favorability rating of 15 percent among all investors, Palin does best in the U.S., where she has the support of 27 percent of respondents. In Asia, it’s 14 percent, and in Europe just 5 percent of investors view her favorably.

“She revealed a complete lack of any global awareness,” said Anthony Gibbs, an agency broker at Vantage Capital Markets in London.

Investors outside the U.S. are more unified about Obama’s approach to business, with 67 percent of Europeans saying he strikes the right balance and 56 percent of Asians who agree.

“He is managing well a position he took over under great uncertainty,” said Sivanesan Muthusamy, senior vice president of funding and investments at Alliance Bank in Kuala Lumpur. “American leadership is again guiding the global financial markets into stability.”

The U.S. investors’ overwhelming characterization of Obama as anti-business stands in sharp contrast to the results of a Bloomberg National Poll in December, when 52 percent of U.S. adults said the president had the right balance in his approach.

Geographic Divide

The January poll shows an especially dramatic divide between U.S. and global investors when it comes to Obama’s overall favorability rating.

In Europe, 81 percent of respondents have a favorable opinion of Obama. In Asia, that number is 73 percent. The polarization is far greater by geography than by occupation, the survey found. Sales executives gave Obama his highest unfavorable rating, at 53 percent, compared with 28 percent of researchers and analysts and 35 percent of traders.

Globally, other central bankers are slightly less popular than Bernanke. Jean-Claude Trichet, president of the European Central Bank, has a 60 percent favorable rating globally, with 45 percent in the U.S. and 78 percent in Europe.

Zhou Xiaochuan, governor of the People’s Bank of China, who gets a 42 percent favorable rating overall, gets 39 percent in the U.S. and Europe and 51 percent in Asia.

To see methodology and exact question wording, click on the attachment tab at the top of the story.

To contact the reporter on this story: Heidi Przybyla at hprzybyla@bloomberg.net

2010 Index of Economic Freedom: America, No Longer the Land of the Free
by heritage.org
Fact Sheet #49
Unprecedented Decline For United States

Should this be a surprise to anybody? Of course not. We are now in the enlightened age of socialism. Buddy, can you spare a dime?

•U.S. Drops from “Free” to “Mostly Free”: For the first time in the history of the Index for Economic Freedom, the United States is no longer in the top category of economically free countries and is even second in the North American region (behind Canada). This year’s score of 78, though high in global standards, is 2.7 points lower than last year and bumps it to a second-tier country of freedom.

•What Is Economic Freedom? Economic freedom refers to the ability of individuals to control their own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state. Governments allow labor, capital, and goods to move freely and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.

•Why the Index of Economic Freedom Is Important: Studies in the Index of Economic Freedom demonstrate important relationships between economic freedom and job creation, per capita income, economic growth rates, human development, democracy, the elimination of poverty, and environmental protection. The Index is annually released by The Heritage Foundation and The Wall Street Journal.
What Changed in 2009?

•U.S. Interventionism: The U.S. government’s interventionist responses to the economic and financial crisis that began in 2008 have significantly undermined economic freedom and long-term prospects for economic growth.

•Great Uncertainty: Uncertainties caused by ongoing regulatory changes and politically influenced stimulus spending have discouraged entrepreneurship and job creation, slowing recovery.

•Tax Rates, Bailouts, and Stimulus: Tax rates are increasingly uncompetitive and massive. Stimulus spending is creating unprecedented deficits. Bailouts of financial and automotive firms have generated concerns about property rights.

•Other Factors: There are multiple factors that affect a country’s economic freedom–government size and regulation, trade restrictions, inflation and price controls, and labor policies, to name a few. Economic freedom has declined in seven of the 10 categories measured.

Why Is Economic Freedom Important?

•Jobs, Jobs, Jobs: Economic freedom is crucial to increasing prosperity and creating jobs. Overregulation, taxes, and uncertainty in the market discourage investment–the key factor in creating jobs. The solution to creating more jobs and delivering economic growth sits with entrepreneurs and businesses, not with government decision-makers.

•Public Sector Is No Match for Private Sector: Put simply, the public sector can’t match the vitality of the private sector in promoting growth. Governments, even those that promise change, are primarily agents of the status quo. Real change happens when those outside the mainstream have the freedom to try new things: new production processes, new technologies, and new methods of organizing workers and capital.

•A Higher Standard of Living: Furthermore, greater economic freedom has a positive correlation to higher standards of living and GDP growth, less poverty, and good governance. Citizens in economically free nations enjoy greater access to ideas and resources, forces that let all of us exchange, interact, and participate in an increasingly interconnected world.

•Access to the American Dream: The best way to help those in poverty is to give them access to the pursuit of their own dreams and goals and a stake in their own success.

For more information, please visit: www.JobsAndFreedom.com.

January 23, 2010
Dems Reportedly Eyeing Companion Health Care Legislation to Win Approval
FOXNews.com

The way to defeat the liberal-agenda is to keep making phone calls, sending faxes and e-mails. Remind your elected officials from Congress that if they cooperate with Nancy Pelosi and Harry Reid they will not again be elected to Congress. Fight the good fight and defeat the socialist agenda.

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid reportedly are considering a new list of changes to the Senate health care reform bill that could be passed separately as a way to advance the suddenly stalled overhaul of the health care system.

If such changes are passed in a separate piece of legislation, it could make the current Senate health care bill acceptable to enough liberal House members to pass it, allowing Democrats to achieve their goal of sweeping health care reform, Politico reported.

But the move also could spark resentment toward the party for pushing through the same health plan that some have argued voters in Massachusetts rejected in the closely watched election of Republican Senate candidate Scott Brown, who had pledged to block the Senate bill.

The House and Senate already have passed separate versions of President Obama’s reform package, but the differences would need to be reconciled and voted on again for joint legislation to become law. Brown’s victory cost Senate Democrats the 60-vote majority needed to approve changes, and Pelosi said Thursday she did not have the votes in the House to pass the Senate bill as is.

Neither Reid nor Pelosi know if their members will support the separate legislation strategy, but Pelosi plans to present the list of changes to her caucus next week, sources told Politico.

Democratic Sen. Chris Dodd of Connecticut, who got health legislation through the Senate’s health committee last year after the death of his friend, Sen. Edward M. Kennedy, said Obama and lawmakers could “maybe take a breather for a month, six weeks.”

Despite Dodd’s comments, both Pelosi and Reid insist the health care legislation will go forward but haven’t publicly said how.

House Republican leader John Boehner said Brown’s victory has sent a loud warning to Democrats.

“For the better part of those nine months, Democrats in Washington have been focused on this government takeover of health care that working families just can’t afford and want nothing to do with,” Boehner said in his party’s radio and Internet address Saturday.

Just a week ago the health legislation had appeared on the cusp of passage after Obama threw himself into marathon negotiations with congressional leaders to work out differences between the separate health care reform bills passed by the House and Senate.

“There are things that have to get done. This is our best chance to do it. We can’t keep on putting this off,” Obama said Friday at a town hall meeting in Elyria, Ohio. “I am not going to walk away just because it’s hard.”

Obama seemed to pull back from a suggestion he made Wednesday that lawmakers unite behind the elements of the legislation everyone can agree on. Obama said that approach presented problems because some of the popular ideas, such as new requirements on insurance companies, couldn’t be done without getting many more people insured.

Obama put fixing a broken health care system at the top of his agenda in the 2008 campaign for the presidency, and once elected made it the top priority of his first term. He has faced solid opposition from the Republican minority, which has rolled over into his fellow Democrats in Congress and to growing numbers of voters.

Despite assurances from Obama and his administration, opposition to his plans have grown among people who bought into allegations of higher taxes, unbearable government deficits and serious government meddling in health care.

Reid spokesman Jim Manley told Politico that no decisions have been made but the office is “confident” they will pass health reform legislation this year.

“We are working with the White House and the House to identify our options for doing so. We anticipate further conversations with the administration, the House and our caucus,” he said.

Pelosi spokesman Nadeam Elshami had a similar response.

“Discussions are ongoing and options are being examined on the best way to move ahead on health insurance reform, but no final decisions have been made,” Elshami told Politico. “It is premature to conclude anything except that staff is continuing to work on various options.”

Job Hunt: Veterans Honoring Veterans
January 22, 2010
by Claudia Cowan FoxNews.com

Headstones honoring America’s war dead now offer a chance at a better life for dozens of veterans. Many who’ve had a hard time adapting to civilian life, or have been unable to find steady work, are learning the tombstone trade: everything from designing the stencils to inscribing the words and images. The gravemarkers are then sent to national cemetaries across the county.

The training is part of a unique jobs program run by the Veterans Employment Agency in Menlo Park, California. For many, learning these skills has brought steady work, and re-newed self respect. After serving in the Navy for 11 years, Penny Rowlan ended up homeless, and lived on the streets for 13 years. She says everything changed after she got help through the VEA. For two years now, she’s earned a good wage from making headstones, and equally important, takes pride in what she calls “the supurb quality control” of her work. We saw her create a stencil, and carefully check the inscription to make sure it matched the information she’d received from the National Cemetary Office in Quantico, Virgina.

The program allows Penny and other homeless vets stay connected to their military lives. It’s clear there’s a bond among those who’ve served our country, both on the battlefield and off. Navy veteran David Miller, who operates the sandblaster, says he’s humbled every time he reads the inscriptions he helps create.

“I come out here and see my brothers and sisters at arms, the ones that were before me, and the ones that were after me. It’s an honor for me to cut their stones,” says Miller. It’s also an honor for the families of the deceased.

At the Sacramento Valley National Cemetary, Jo Ellen Parish says her late husband loved the military, where he served for 20 years in the Air Force. She said he would be pleased, and impressed, to know his headstone was made by fellow veterans. More than 40 homeless vets have found employment since the program began 3 years ago. Along with the job and the self-esteem that comes with it, they get temporary housing, a good monthly wage, and another chance to serve in a deeply meaningful way.

January 14, 2010
New Weekly Jobless Claims Rise, Ongoing Claims Slow
(AP)

New claims for unemployment insurance rose by 11,000 last week, more than economists had expected.

WASHINGTON — The number of newly laid-off workers requesting unemployment benefits rose more than expected last week as jobs remain scarce amid a sluggish economic recovery.

The Labor Department said Thursday new claims for unemployment insurance rose by 11,000 to a seasonally adjusted 444,000. Wall Street economists polled by Thomson Reuters expected an increase of only 3,000.

The rise was partly a result of large seasonal layoffs in the retail, manufacturing and construction industries, a Labor Department analyst said. The second week of January usually sees the largest increase in claims, unadjusted for seasonal trends, during the year, the analyst said.

Still, the increase didn’t disrupt the longer-term downward trend in claims. The four-week average dropped to 440,750, its 19th straight drop and lowest level since August 2008.

Initial claims are considered a gauge of the pace of layoffs and an indication of companies’ willingness to hire new workers.

Claims have dropped steadily since last fall, as companies cut fewer jobs, raising hopes that hiring may increase soon. Initial claims have dropped by nearly 90,000, or 17 percent, since late October. Two weeks ago, new claims dropped to their lowest level since July 2008.

Despite the recent drop, the economy is not yet consistently generating net increases in jobs. The Labor Department said last week that employers cut 85,000 jobs in December, after adding only 4,000 in November. November’s increase was the first in nearly two years. The unemployment rate was unchanged at 10 percent.

Many economists say the four week average of claims will need to fall to below 425,000 to signal that the economy is close to generating net job gains.

Meanwhile, the number of people continuing to claim benefits dropped sharply to 4.6 million from 4.8 million the previous week. The continuing claims data lags initial claims by a week.

But the so-called continuing claims do not include millions of people who have used up the regular 26 weeks of benefits customarily provided by states, and are receiving extended benefits for up to 73 additional weeks, paid for by the federal government.

More than 5.3 million people were receiving extended benefits in the week ended Dec. 26, the latest data available. That’s a drop of about 135,000 from the previous week.

Venezuela Announces Nationwide Energy Rationing
January 12, 2010
FoxNews.com

CARACAS, Venezuela — Venezuela’s government imposed rolling blackouts of four hours every other day throughout the country on Tuesday to combat an energy crisis.

President Hugo Chavez has said rationing is necessary to prevent water levels in Guri Dam — the cornerstone of Venezuela’s energy system — from falling to critical lows and causing a widespread power collapse. Drought has cut the flow of water into the dam, which feeds three hydroelectric plants that supply 73 percent of Venezuela’s electricity.

Rolling blackouts will begin in the capital of Caracas on Wednesday, said Javier Alvarado, president of the city’s state electric utility.

“With these measures, we’re trying to keep Guri from taking us to a very critical situation at the end of February, from creating let’s say a total shutdown of the country,” Electricity Minister Angel Rodriguez told state television Monday night as he announced the nationwide rationing plan.

Government officials had already imposed some cuts to help the country get through the dry season until May, when seasonal rains are predicted to return.

The government recently reduced the hours of electricity supply for shopping centers and required businesses and large residential complexes to cut energy use by 20 percent or face fines.

Chavez’s government has also partially shut down state-run steel and aluminum plants. The president announced last week that many public employees will have shorter workdays — from 8 a.m. to 1 p.m. — except those in offices that tend to the public.

Some parts of the country have already been enduring unplanned blackouts for months, as demand has outstripped the electrical supply. The energy output from the Guri Dam’s three hydroelectric plants has also declined below its normal capacity.

The increased rationing will help cover a 12 percent energy shortage created by the situation at Guri, Alvarado said.

He said water levels at the dam in southeastern Venezuela have dropped drastically as a result of the El Nino weather phenomenon in the Pacific Ocean, saying “it’s a global phenomenon and it’s affected us in recent months.” He noted there has been particularly little rain in southeastern Venezuela, where the watershed that feeds Guri is located.

Chavez’s critics say his government is to blame because it has failed to complete enough power upgrades to keep up with increasing demand despite Venezuela’s bountiful oil earnings.

Morning Bell:
$787 Billion in Stimulus, Zero Jobs “Created or Saved”
January 12, 2010
The Heritage Foundation

On February 11th, President Barack Obama stood on a windy hilltop in front of a dusty construction site in Fairfax County, Virginia, and promised the American people: “Here in Virginia, my plan will create or save almost 100,000 jobs, doing work at sites just like this one.” Standing alongside current Democratic National Committee Chairman and former-Gov. Tim Kaine, the President continued: “Where we’re standing, that could mean hundreds of construction jobs. And the benefits of jobs we create directly will multiply across the economy.” Eleven months later, none of those promised jobs have been “created or saved.” In fact, the Obama administration quietly announced last week that they were dropping the fraudulent “saved or created” terminology altogether.

The failure of Obama’s $787 billion stimulus is particularly acute in Virginia where, as Heritage fellow Ron Utt has documented, despite $695 million in allocated infrastructure funding, only 16% of designated projects had begun. House Transportation and Infrastructure Committee Chairman James Oberstar (D-MN) even publicly complained about Virginia’s slow transportation spending, writing to Gov. Kaine: “your state ranks last among all states [51 out of 51, including the District of Columbia], based on an analysis of the percentage of Recovery Act highway formula funds put out to bid, under contract and under way.”

But even where infrastructure spending has been spent, the hard evidence shows that there has not been any positive effect on unemployment. According to an Associated Press analysis reviewed by independent economists at five universities, the $20 billion spent nationwide on infrastructure so far “has had no effect on local unemployment rates.” And this was just the most recent embarrassing headline for the White House’s signature economic policy. Since the first reporting deadline in October, newspapers and other media outlets across the country have identified 94,341 fake jobs reported by the Obama administration as jobs “created or saved” by the stimulus. After the Government Accountability Office issued a report finding “significant reporting and processing problems that need to be addressed,” Obama administration spokesman Ed Pound offered this defense of the Obama administration’s jobs numbers: “Who knows, man, who really knows.”

Now Office of Management and Budget Director Peter Orszag issued a little-noticed memo last month ending the “saved or created” metric and instead directing agencies to count only jobs “funded” by stimulus dollars. But as Harvard University labor economist Lawrence Katz tells ProPublica, this is not really an improvement: “I just think it’s a silly exercise.” Instead Katz says a more accurate way to account for the effect of the stimulus is to look at the unemployment numbers put out by the Bureau of Labor Statistics.

That is a great idea. The latest BLS report issued last Friday found that the U.S. economy dropped 85,000 jobs in December, bringing the jobs lost total to 2.7 million since the stimulus was passed and 3.4 million since Obama became President. In contrast, the President’s White House Council of Economic Advisers had promised total employment of at least 138.6 million by 2010. Actual employment as of December was reported to be 130.9 million, leaving the Obama jobs deficit at 7.7 million.

The problem with infrastructure spending as stimulus, and really government spending as stimulus, is that Congress does not have a vault of money waiting to be distributed. Every dollar Congress injects into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It is merely redistributed from one group of people to another. Businesses are telling pollsters that among the biggest reasons they are not creating jobs is the prospect of new tax and regulatory burdens. A better solution to reduce unemployment is to simplify and reduce the barriers to business success.

Road Projects Don’t Help Unemployment.
By MATT APUZZO and BRETT J. BLACKLEDGE, Associated Press Writers
January 11, 2010

WASHINGTON – Ten months into President Barack Obama’s first economic stimulus plan, a surge in spending on roads and bridges has had no effect on local unemployment and only barely helped the beleaguered construction industry, an Associated Press analysis has found.

Spend a lot or spend nothing at all, it didn’t matter, the AP analysis showed: Local unemployment rates rose and fell regardless of how much stimulus money Washington poured out for transportation, raising questions about Obama’s argument that more road money would address an “urgent need to accelerate job growth.”

Obama wants a second stimulus bill from Congress that relies in part on more road and bridge spending, projects the president said are “at the heart of our effort to accelerate job growth.”

Construction spending would be a key part of the Jobs for Main Street Act, a $75 billion second stimulus to revive the nation’s lethargic unemployment rate and improve the dismal job market for construction workers. The House approved the bill 217-212 last month after House Speaker Nancy Pelosi, D-Calif., worked the floor for an hour; the Senate is expected to consider it later in January.

AP’s analysis, which was reviewed by independent economists at five universities, showed that strategy hasn’t affected unemployment rates so far. And there’s concern it won’t work the second time. For its analysis, the AP examined the effects of road and bridge spending in communities on local unemployment; it did not try to measure results of the broader aid that also was in the first stimulus like tax cuts, unemployment benefits or money for states.

“My bottom line is, I’d be skeptical about putting too much more money into a second stimulus until we’ve seen broader effects from the first stimulus,” said Aaron Jackson, a Bentley University economist who reviewed AP’s analysis.

Even within the construction industry, which stood to benefit most from transportation money, the AP’s analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.

“As a policy tool for creating jobs, this doesn’t seem to have much bite,” said Emory University economist Thomas Smith, who supported the stimulus and reviewed AP’s analysis. “In terms of creating jobs, it doesn’t seem like it’s created very many. It may well be employing lots of people but those two things are very different.”

Transportation spending is too small of a pebble to quickly create waves in the nation’s $14 trillion economy. And starting a road project, even one considered “shovel ready,” can take many months, meaning any modest effects of a second burst of transportation spending are unlikely to be felt for some time.

“It would be unlikely that even $20 billion spent all at once would be enough to move the needle of the huge decline we’ve seen, even in construction, much less the economy. The job destruction is way too big,” said Kenneth D. Simonson, chief economist for the Associated General Contractors of America.

Few counties, for example, received more road money per capita than Marshall County, Tenn., about 90 minutes south of Nashville.

Obama’s stimulus is paying the salaries of dozens of workers, but local officials said the unemployment rate continues to rise and is expected to top 20 percent soon. The new money for road projects isn’t enough to offset the thousands of local jobs lost from the closing of manufacturing plants and automotive parts suppliers.

“The stimulus has not benefited the working-class people of Marshall County at all,” said Isaac Zimmerle, a local contractor who has seen his construction business slowly dry up since 2008. That year, he built 30 homes. But prospects this year look grim.

Construction contractors like Zimmerle would seem to be in line to benefit from the stimulus spending. But money for road construction offers little relief to most contractors who don’t work on transportation projects, a niche that requires expensive, heavy equipment that most residential and commercial builders don’t own. Residential and commercial building make up the bulk of the nation’s construction industry.

“The problem we’re seeing is, unfortunately, when they put those projects out to bid, there are only a handful of companies able to compete for it,” Zimmerle said.

The Obama administration has argued that it’s unfair to count construction jobs in any one county because workers travel between counties for jobs. So, the AP looked at a much larger universe: The more than 700 counties that got the most stimulus money per capita for road construction, and the more than 700 counties that received no money at all.

For its analysis, the AP reviewed Transportation Department data on more than $21 billion in stimulus projects in every state and Washington, D.C., and the Labor Department’s monthly unemployment data. Working with economists and statisticians, the AP performed statistical tests to gauge the effect of transportation spending on employment activity.

There was no difference in unemployment trends between the group of counties that received the most stimulus money and the group that received none, the analysis found.

Despite the disconnect, Congress is moving quickly to give Obama the road money he requested. The Senate will soon consider a proposal that would direct nearly $28 billion more on roads and bridges, programs that are popular with politicians, lobbyists and voters. The overall price tag on the bill, which also would pay for water projects, school repairs and jobs for teachers, firefighters and police officers, would be $75 billion.

“We have a ton of need for repairing our national infrastructure and a ton of unemployed workers to do it. Marrying those two concepts strikes me as good stimulus and good policy,” White House economic adviser Jared Bernstein said. “When you invest in this kind of infrastructure, you’re creating good jobs for people who need them.”

Highway projects have been the public face of the president’s recovery efforts, providing the backdrop for news conferences with workers who owe their paychecks to the stimulus. But those anecdotes have not added up to a national trend and have not markedly improved the country’s broad employment picture.

The stimulus has produced jobs. A growing body of economic evidence suggests that government programs, including a $700 billion bank bailout program and the $787 billion stimulus, have helped ease the recession. A Rutgers University study on Friday, for instance, found that all stimulus efforts have slowed the rise in unemployment in many states.

But the 400-page stimulus law contains so many provisions — tax cuts, unemployment benefits, food stamps, state aid, military spending — economists agree that it’s nearly impossible to determine what worked best and replicate it. It’s also impossible to quantify exactly what effect the stimulus has had on job creation, although Obama points to estimates that credit the recovery program for creating or saving 1.6 million jobs.

Politically, singling out transportation for another round of spending is an easier sell than many of the other programs in the stimulus. The money can be spent quickly and provides a tangible payoff. Even some Republicans who have criticized the stimulus have said they want more transportation spending.

Spending money on roads also ripples through the economy better than other spending because it improves the nation’s infrastructure, said Bernstein, the White House economist.

But that’s a policy argument, not a stimulus argument, said Daniel Seiver, an economist at San Diego State University who reviewed AP’s analysis.

“Infrastructure spending does have a long-term payoff, but in terms of an immediate impact on construction jobs it doesn’t seem to be showing up,” Seiver said. “A program like this may be justified but it’s not going to have an immediate effect of putting people back to work.”

Venezuela Slipping Into Socialist/Statist Darkness, Figuratively and Literally
By Tom Blumer NewsBusters.org
January 10, 2010

Four recent stories out of Venezuela each give readers a brief glimpse at how Hugo Chavez’s brand of authoritarian socialism is critically wounding what could be resource-rich, financially prosperous country:

1.January 9, Associated Press — “Venezuela weakens currency for 1st time in 5 years.”
2.January 10, Bloomberg — “Chavez Says He’ll Seize Businesses That Raise Prices.”
3.December 22, AFP — “Chavez announces new discount ’socialist’ stores.”
4.January 9, AP — “Venezuela faces risk of devastating power collapse.”
Collectively, however, they depict a country in the early stages of a headlong free-fall into Cuban-style financial ruin. No U.S. establishment media enterprise appears interested in making the accelerating decays in financial well-being and personal freedom in that country understandable to the average person.

AP’s headline at the first item noted seems designed to avoid attention. This isn’t a mere “weakening” of the currency; instead, it’s a bizarre bi-level devaluation of up to 50%

Read more: http://www.newsbusters.org/#ixzz0cGAr01P9

January 10, 2010
White House Economic Adviser: Jobs Picture is ‘Still Terrible’
FOXNews.com (AP)

A top White House economic adviser said Sunday “you’ll get no argument from” her on the need to improve the miserable jobs picture.

Council of Economic Advisers chief Christina Romer said it’s devastating that some workers have been unemployed for two years and that job losses were continuing nearly a year after passage of the so-called stimulus bill.

The jobless rate remained at 10 percent in December as 660,000 people said they had left the workforce. But Romer couched the news by saying the siphoning of jobs from the market has slowed.

“In the first quarter of 2009, when we first came in, we were losing on average 691,000 jobs per month. With these new numbers in the fourth quarter, we were losing 69,000 jobs,” she said. “It’s still terrible. We’re still losing jobs, and we absolutely have to go from losing any jobs at all to adding them at a robust rate.”

Romer wouldn’t predict what the unemployment rate will be in the fall, when members of Congress face re-election, but said it is “still a very realistic estimate” that job growth could begin in the spring.

She added that she wants to work on convincing firms that are considering hiring to take the plunge.

Romer also appeared to back a House effort to pump an additional $75 billion in federal spending into the struggling economy and pointed to targeted programs like longer COBRA health insurance coverage and “cash for caulkers” — energy saving retrofits — as ways to expand growth.

“The sense that we need to do more is overwhelming,” she said.

States Seek Federal Bailout to Replenish Empty Jobless Funds
By Stephen Clark
FOXNews.com
December 25, 2009

WASHINGTON — With the front line of defense for unemployed Americans crumbling, the jobless are facing potentially reduced benefits, and businesses — possibly higher taxes.

So far, 25 states, including California, New York, Texas and Michigan, have run out of unemployment insurance money and have borrowed $24 billion from the federal government — loans that are interest free.

By 2011, 15 more states will have exhausted their jobless trust funds and need $90 billion in loans to keep handing out benefit checks, according to federal projections.

The federal government, however, is already up to its eyeballs in red ink, finishing fiscal year 2009 with an all-time high $1.42 trillion deficit and likely to top that this fiscal year as it extends unemployment benefits.

In November, President Obama signed legislation to extend jobless benefits by 14 weeks nationally and by an additional six weeks after that for states with unemployment rates of 8.5 percent or higher. The bill would pay nearly 1 million workers an average $300 per week in extra benefits, according to the White House, and would allow businesses to recoup past tax payments for recent losses.

Some analysts say in the long term, the bailout won’t have a lasting impact on state coffers. That’s because typically employers pay into a state insurance fund through a payroll tax and eventually businesses will replenish the trust funds.

In the short run, though, state governments are under pressure either to hike taxes or to reduce unemployment benefits at a time when the U.S. economy has been weakened by the longest recession since World War II.

“Everyone agrees that’s not a good thing to do when the unemployment rate is 10 percent,” said Gary Burtless, a senior fellow in economic studies at the Brookings Institution and an expert on labor policy.

Burtless said payroll taxes, which on average nationally is about 0.6 percent, are too low and states should have been imposing higher taxes to avoid running out of money.

“States are supposed to build up reserves to withstand severe recessions that they have experienced in the past,” he said. “But instead, what happens, once employers in a state see there’s a positive balance in the trust fund, they begin urging state legislators to cut back taxes.”

The states with the lowest average payroll taxes are Virginia, (0.23), New Hampshire (0.25), South Dakota (0.26), Hawaii (0.27), and Texas (0.27). By contrast, the states with the highest average payroll taxes are Alaska (1.29), Rhode Island, (1.17), Michigan (1.08) and Oregon, (1.02).

According to November unemployment rates from the Bureau of Labor Statistics, Virginia had 6.6 percent unemployment, New Hampshire’s was 6.7 percent, South Dakota saw 5 percent unemployment, Hawaii had 7 percent and Texas 8 percent — all below the national average of 10 percent.

Alaska’s unemployment rate in November was 8.7 percent, Rhode Island’s was 12.7 percent, Michigan, 14.7 percent and Oregon, 11.1 percent.

Analysts dismiss any correlation between a state’s payroll tax and its unemployment rate, saying the payroll tax is very minimal compared to taxes for Social Security or Medicare.

Richard Hobbie, executive director of the National Association of State Workforce Agencies, said he expects states to raise payroll taxes and cut unemployment benefits as a result of the recession.

“History shows it’s a combination of the two” that is required to overcome the trust fund deficit, Hobbie said.

Hobbie said some states, like Texas, would rather keep employer taxes low to stimulate the local economy and borrow money when reserves aren’t sufficient to weather a recession.

“There are competing philosophies about reserves,” he said, adding that it is unknown which one is most effective.

But Burtless said raising taxes would solve the imbalance.

“I imagine that if they raise the payroll tax by .1 or .2 percent in the next five or 10 years, it will be enough to eliminate the insufficiency of the funds,” Burtless said.

Borrowing money from Uncle Sam won’t remain free for states forever. If a state doesn’t repay the government within a few years, it faces interest and penalties.

Still, borrowing by states is not unusual.

“The bottom line, the system has been through serious recession before but the system has survived,” Hobbie said, adding that recoveries from the major recession in the 1970s and 1980s was bolstered by strong economic growth. “The real question is will we have the steady economic growth to recover the way we did before?”

Your Taxes: Bringing Home the Bacon
December 23, 2009
FOXNews.com

When it comes to bringing home the bacon, America’s last frontier has long been first in line for government handouts, as sparsely populated Alaska continues to draw in hundreds of millions in pork-barrel payouts.

Looking for a great recipe for pork? Some states with small populations are getting hundreds of millions of dollars in earmarks as veteran legislators carry back massive pork-barrel projects to their states and districts.

When it comes to bringing home the bacon, America’s last frontier has long been first in line for government handouts, as sparsely populated Alaska continues to draw in hundreds of millions in pork-barrel payouts.

Over in Hawaii, lawmakers have been saying aloha to political pork, as their tiny population — smaller than that of the Bronx — pulls in about the same amount each year as all of New York State.

“When you look at the per capita analysis, it’s all states who are … relatively low-population but (have) powerful senators,” said Steve Ellis, vice president of Taxpayers for Common Sense.

Alaskans get $322.34 per resident, absolutely dwarfing the competition, according to a study prepared by Taxpayers for Common Sense. Hawaiians, rolling in at No. 2, get $234.96 per person. And North Dakota comes in a close third place with $222.22. The national average is a relatively paltry $29.60 per person.

“There isn’t much fair about the way that earmarks are allocated and … it’s pretty easy to see that,” said Ellis.

But it’s not just the expenses themselves have some watchdogs in a bind: many of the pork projects serve dubious ends. Just take a look at some of the nation’s two largest offenders:

Alaska:
-$200,000 for research on depleted king crab stocks in Alaska
-$1,187,500 for “airport improvement on a small island with 800 seasonal residents
-$714,000 to fund the a rural Alaska youth fitness initiative

Hawaii:
-$1.6 million to study marine mammal hearing and echolocation
-$3.2 million for an unmanned helicopter even the military didn’t want
-$469,000 to build a facility to study fruit fly activity

Some Hawaiian believe that however questionable, the projects are in the interest of their state.

“If it serves Hawaii’s economy and people, I believe it would be a useful expenditure,” said Hawaii resident Catherine Ralston.

Others say giving out taxpayer cash to projects based on seniority, not merit, isn’t useful but wasteful.

“When you can’t account where all that money is going, it’s not in our pockets, it’s not helping out everybody,” said Hawaii resident Nacia Blom.

Arizona is at the other end of the spectrum, and its residens are the recipients of less than $12 in pork per person.

“The scale of pork and the scale of waste is stunning, and quite frankly I think it’s indefensible,” said John Shadegg, R-Ariz.

Other states including California and Georgia have joined Arizona at the bottom of the barrel and get about $15 per person. Cutting down on the massive spending has become a leading charge for some lawmakers, who are urging voters to do the same.

“The American people need to rise up and say, ‘Quit taking money out of my paycheck to buy yourselves back into office,’” said Shadegg, a member of the House Committee on Energy and Commerce.

“This is a time when we really need to be watching how money is spent and I think I’d rather see them on the conservative side.”

December 23, 2009
NewsBusters.org

On December 8, Susan Gustafson at MLive.com proclaimed that “GM’s announcement of no more layoffs is good news after years of hemorrhaging jobs”:

General Motors’ announcement this morning that it plans no further layoffs in the immediate future is huge news for both the automaker and Michigan as a whole after years of steady erosion in the ranks of hourly and salaried workers.

…. the company doesn’t expect the numbers of hourly workers on indefinite layoff to increase.

That same day, Robert Snell at the Detroit News reported the same thing:

General Motors Co. does not plan any job cuts in the immediate future, the company’s new president of North America said this morning.

Eight days later, GM laid off additional workers indefinitely in Bowling Green, Kentucky:

As 75 more workers were indefinitely laid off from General Motors’ Corvette assembly plant in this western Kentucky city, those who remain say 2009 has been one tough year.

No one has asked how this move doesn’t break the company’s promise made eight days earlier. Does it not count because it’s “only” 75? Or because it’s “only” in Kentucky?

Though their relevance to the accuracy of the company’s promise is less clear, about 100 more GM workers lost their jobs last week:

TONAWANDA, N.Y. (WIVB) ….. As of Friday, December 18th, the GM Plant in Tonawanda rolled out its last V-8 engine. Workers were told the engine line was coming to an end back in June.

…. the company’s plan was to lay off 150 employees, but it turns out some of them will continue working.

Local 774 Chairman Bob Coleman explained, “We absorbed a lot of people in the other lines. We’d seen where the need was for the bodies probably about 50 people.”

Well, GM said that the number of people on indefinite layoff would not increase on December 8, but it obviously has in both Bowling Green and Tonawanda.

According to NPR on the day of the “no more layoffs” announcement, recently fired CEO Fritz Henderson had previously said that further layoffs might be necessary:

The (no more layoff) news is a turnaround from comments made last month by former President and CEO Fritz Henderson who said GM still had too many hourly workers and could slash some of the 6,000 to 7,000 workers currently on layoff.

It turns out that Fritz Henderson was right. Perhaps saying so contributed to why he was fired.

It look like GM, which was not exactly a model of corporate clarity before it went bankrupt and became a government- and union-controlled entity, has learned a lot about government-speak in a very short time.

It also looks like the press has learned not to look for contradictions or falsehoods in anything Government Motors says or does.

Tom Blumer is president of a training and development company in Mason, Ohio, and is a contributing editor to NewsBusters

Copenhagen Chaos Could Imperil Senate Climate Bill

FOXNews.com
December 18, 2009

The chaotic conclusion of the two-week international conference on climate change could imperil, or at least water down, climate legislation stuck in the U.S. Senate.

Sen. John Kerry, D-Mass., warned about that possibility two days ago when he first arrived in Copenhagen, saying that without a solid deal it would be “exceedingly difficult” to persuade fence-sitting lawmakers to get on board with the kind of emissions-curbing legislation that passed the House months ago.

Copenhagen didn’t make that task any easier, observers said. The Obama administration announced a “meaningful agreement” late Friday following a marathon day of talks, but the deal is non-binding and far from the comprehensive agreement sought by Obama and other leaders. And with China resisting the kind of verification standards the United States was pushing for, concerns linger that China would not be making a shared sacrifice and that U.S. reductions would be meaningless without enforceable cuts from the developing world.

Add to that the fact that the Senate would be considering the so-called “cap-and-trade” climate bill during an election year and at a time when lawmakers are set to tackle sweeping financial industry regulation. The stomach for advancing legislation that critics call “cap-and-tax” might not be there, even though leading Democrats have been pressing the Senate to take action once health care reform is dealt with.

President Obama was visibly frustrated as he addressed the conference earlier Friday.

“As the world watches us today, I think our ability to take collective action is in doubt right now, and it hangs in the balance,” Obama said. After announcing the “breakthrough,” he conceded that progress toward a binding deal would “take some time.”

William Yeatman, energy policy analyst with the Competitive Enterprise Institute, said the Denmark conference will unquestionably be a “boost” to opponents of the climate legislation and a ready excuse for moderates unsure about the package in the first place.

“It makes it easier for certain senators to say, ‘Well if this can’t occur globally, why should this proceed domestically?’” Yeatman said. “Absent a multilateral treaty, unilateral action is futile.”

But with world leaders set to meet again next year, Kerry said in a written statement released late Friday that Copenhagen “can be a catalyzing moment” for the U.S. Congress.

“President Obama’s hands-on engagement broke through the bickering and sets the stage for a final deal and for Senate passage this spring of major legislation at home,” Kerry said. “With this in hand, we can work to pass domestic legislation early next year to bring us across the finish line.”

GOP lawmakers have long declared that the cap-and-trade bill that passed the House has no future in the Senate. That view was strengthened in light of Copenhagen, with representatives attending the conference continuing to warn about the economic damage they say the bill would do.

It will be “difficult to get 60 votes needed in the Senate to pass it,” Rep. James Sensenbrenner, R-Wis., said.

Sen. James Inhofe, R-Okla., the leading global warming skeptic in the Senate who declared Thursday in Denmark that the climate bill would not pass, said Friday that Obama’s goal of cutting emissions by 17 percent from 2005 levels by 2020 faces “significant bipartisan opposition in the Senate.”

Sen. Lamar Alexander, R-Tenn., the No. 3 Senate Republican and member of the Environment and Public Works Committee, said Copenhagen certainly didn’t make it any more likely that such a program would win support in the Senate.

“I think the prospects for an economy-wide cap-and-trade are poor next year,” he told FoxNews.com.

But key senators have been trying to work up the framework for a new version of climate change legislation that can attract broader support. Sen. Lindsey Graham, R-S.C.; Sen. Joe Lieberman, I-Conn., and Kerry have been at the helm of that effort. It’s not clear whether that bill would include the kind of cap-and-trade system approved on the House side — that system would set a cap on emissions for U.S. companies, but allow those that pollute more to buy credits from those that pollute less.

Alexander said the Kerry-Graham-Lieberman effort is a “good beginning” so long as it steers away from a cap-and-trade system. He said the United States can still take the lead on alternative energy research, only with a less-sweeping, lower-cost energy bill.

Alaska Sen. Lisa Murkowski said in a written statement that whatever legislation is considered next year must be sensitive to the economy. The ranking Republican on the Senate Energy and Natural Resources Committee touted a more “incremental” bill out of her panel.

“The state of negotiations in Copenhagen reflect the difficulty of finding agreement on climate change in the face of a major global economic recession,” Murkowski said. “But addressing environmental concerns in a way that endangers the economy is a non-starter at this point.”

December 19, 2009
Fraud in Europe’s Cap and Trade System a ‘Red Flag,’ Critics Say
By Joshua Rhett Miller
FOXNews.com

The top cops in Europe say carbon-trading has fallen prey to an organized crime scheme that has robbed the continent of $7.4 billion — a massive fraud that lawmakers and energy experts say should send a “red flag” to the U.S., where the House approved cap-and-trade legislation over the summer amid stiff opposition.

In a statement released last week, the Europol police agency said Europe’s cap-and-trade system has been the victim of organized crime during the past 18 months, resulting in losses of roughly $7.4 billion. The agency, headquartered in the Netherlands, estimated that in some countries up to 90 percent of the entire market volume was caused by fraudulent activities.

“These criminal activities endanger the credibility of the European Union Emission Trading System and lead to the loss of significant tax revenue for governments,” Rob Wainwright, Europol’s director, said in a statement.

Launched in 2005, the Emission Trading System seeks to reduce greenhouse gas emissions — which many scientists believe contribute to global warming — by allocating carbon pollution allowances to member states to fulfill its obligations under the U.N.’s Kyoto Protocol. Companies that emit less than their allowance can sell the difference on the trading market to firms that exceed their established limits.

But, according to a diagram of the scheme provided by Europol officials, the accused traders would open an account in a national carbon registry and then purchased emission allowances without value added taxes from other companies in other countries. Those allowances were then transferred to the country where they were registered before the accused trader moves them to an unregulated broker, selling the allowances on a trading exchange, often through various buffer companies. Finally, the accused trader charges the value added tax on the transaction but does not submit that money to authorities.

France has reportedly launched a criminal probe into four men who allegedly took part in the scheme, two of whom have been jailed.

It’s a lesson to be learned, critics of cap-and-trade say. Creating such a system in the United States would invite “corruption, illegality and criminal activity,” much as it has in Europe, said Max Schulz, senior fellow at the Manhattan Institute.

“This is the problem with politicians trying to create a market for something that the free market otherwise doesn’t value,” Schulz said. “An emissions trading market is an artificially, politically-created market….

“If we pass a system like Europe has, we’re going to get all the problems Europe has experienced,” he said. “You’re asking for a lot of problems.”

U.S. Rep. Joe Barton, R-Texas, ranking member of the House Energy and Commerce Committee, said it’s no surprise cap-and-trade systems are vulnerable to corruption.

Barton said he recently asked the U.S. District Court for the Central District of California to unseal the court file of Anne Sholtz, a former environmental executive who co-created the Regional Clean Air Incentives Market (RECLAIM) in 1999. Sholtz’s company, Automated Credit Exchange, provided a market for companies to buy and sell pollution credits under RECLAIM. In 2005, Sholtz pleaded guilty to wire fraud for using counterfeit credits to pocket more than $12 million. Sholtz was later sentenced to one year of house arrest. (Barton wrote about Sholtz earlier this year for TheHill.com.)

“We already know from an example in California that cap-and-trade systems are vulnerable to fraud, so the discovery of potential fraud in Europe shouldn’t surprise anyone in America,” Barton said in a statement. “What happened in California is that not much thought was given to the possibility that people with questionable intentions could manipulate the system. The case has drawn fresh attention because it looks like the Environmental Protection Agency and the Department of Justice still may not understand how to stop a vastly more destructive, Bernie Madoff-like scheme from taking advantage if the nationwide cap-and-trade system is approved by Congress.”

Diana Furchtgott-Roth, the former chief economist for the U.S. Department of Labor and now a senior fellow at the Hudson Institute, said she was concerned with political favoritism as much as outright fraud if a cap-and-trade system is implemented.

“Depending on how many emission allowances you have to purchase and how many emission allowances you are given, you can be a winner or a loser,” she said. “It’ll be an opportunity for corruption, not by tax avoidance but by political corruption, both on the state level and the national level.”

Furchtogott-Roth said the fraud allegations are a “real example” of why any carbon-trading system in the U.S. should not include a value added tax (VAT).

But such a scheme won’t happen stateside, namely because a value added tax won’t be part of any carbon-trading system in the United States, said William Whitesell, director of policy research at the Center for Clean Air Policy, a Washington-based nonprofit think tank.

“We don’t have a value added tax in this country, but there will be attempts [to defraud a carbon-trading system], so we have to have a robust regulatory framework around a carbon market,” Whitesell told FoxNews.com. “But we don’t want to throw out the baby with the bath water.”

Whitesell cited the massive fraud of disgraced trader Bernie Madoff as evidence that potential fraud doesn’t negate the potential benefits of a cap-and-trade system, which would “reduce the cost of controlling carbon,” he said.

“You don’t close the stock market because of fraud,” he said. “You increase regulations.”

FOXNews.com

Senate OKs $1.1 Trillion Spending Bill

The United States Senate passed on Sunday a massive spending bill that wraps up $1.1 trillion of the $3.6 trillion annual budget for fiscal year 2010, which started Oct. 1.

The House has already passed identical legislation, and President Obama has indicated that he’ll sign it.

The 1,000-plus-page bill covers spending for the Departments of Education, State, Health and Human Services, Transportation and Housing and Urban Development, among others. In all, six of the 12 spending bills Congress is required to pass each year is folded into one measure that raises spending for its designated programs by an average of about 10 percent, or well above the inflation rate.

The bill puts the government on track to create a $1.5 trillion deficit in annual spending projected by the Office of Management and Budget this past summer. Defense spending is the only appropriations bill remaining and is likely to get bipartisan support if it doesn’t include an amendment attached by Democrats to raise the debt ceiling by nearly $2 trillion.

The Senate voted Sunday 57-35 on the legislation. Democrats Evan Bayh of Indiana, Russ Feingold of Wisconsin and Claire McCaskill of Missouri voted against the bill. Republican Sens. Thad Cochran of Missouri, Susan Collins and Olympia Snowe of Maine and Richard Shelby of Alabama voted for it.

The measure includes $447 billion in operating budgets with about $650 billion in entitlement spending for federal benefits programs like Medicare and Medicaid. It pays for veterans’ programs, the NASA space agency and the FBI. It provides a pay raise for federal workers and help for car dealers. It does not include Social Security and other Medicare health insurance entitlements

An estimated $3.9 billion goes to more than 5,000 home-state projects sought by individual lawmakers in both parties.

Republican Sen. John McCain issued a list of pork projects included in the bill and urged Obama to veto it.

Spending for the programs that didn’t go through the regular channels includes millions for music and arts, fisheries and botanical gardens and transportation and medical research studies.

McCain noted $2.7 million goes to supporting surgical operations in Outer Space, a program studied at the University of Nebraska Medical Center.

“Maybe we need to support surgical operations in outer space. Do we need it at the University of Nebraska? No,” said McCain, who then added really only “Trekkies,” or Star Trek fans, actually think the U.S. should pay for surgeries in outer space.

Sen. Richard Burr, R-N.C., said the spending vote marked “a black day for our nation.”

But the second-ranking Senate Democrat, Dick Durbin of Illinois, said the measure restores money for programs cut under former President George W. Bush such as popular grant programs for local police departments to purchase equipment and put more officers on the beat.

The legislation also:

– Includes an improved binding arbitration process to challenge the decision by General Motors Corp. and Chrysler LLC to close more than 2,000 dealerships.

– Renews a federal loan guarantee program for steel companies.

– Permits detainees held at Guantanamo Bay, Cuba, to be transferred to the U.S. for trial, but not to be released.

– Calls for federal worker pay increases averaging 2 percent.

Fox News’ Trish Turner and The Associated Press contributed to this report.

FOXNews.com

GOP Senator Willing to Let Dems Off Voters’ Hook in Exchange for Debt Reduction

A Republican senator said Sunday he has no problem letting Democrats “off the hook” of voter anger over the deficit if it means passage of a commission to come up with ways to reduce long-term debt.

Sen. Judd Gregg, R-N.H., who is retiring in January 2011, said the United States is on an “unsustainable path” toward being unable to repay the debt ever, and the “regular order” of politics isn’t going to take care of the problem.

“We’re going to pass on to our kids a country which is less prosperous than we received from our parents, which is totally inexcusable,” Gregg told “Fox News Sunday.”

Congress is preparing to pass legislation to raise the debt ceiling to $14 trillion. That’s nearly equal to the country’s annual economic output.

Gregg has co-sponsored a bill with Sen. Kent Conrad, D-N.D., the chairman of the Senate Budget Committee, to create a commission to study ways to reduce the debt. The group — composed of 10 Democrat and eight Republican lawmakers and administration officials — would need 14 members to agree on cutting spending or raising taxes, and its recommendations would have to be approved by a supermajority of Congress by the end of 2011.

Gregg said he can live with some Democrats getting a reprieve from voters if they approve the panel’s work.

“Yes, it is going to insulate some people by taking a vote which says that they can say, ‘Well, I did this vote, so therefore I was responsible.’ OK. But if it reduces the out-year debt, we’ll have accomplished the goal of putting us on a reasonable path toward solvency,” he said.

Gregg said to ignore the problem would mean leading the country to bankruptcy, which would mean the next generations will “confront massive inflation or massive tax increases.”

(AP) FoxNews.com

Summers: Creating Jobs is More Important Than Reducing The Deficit.

White House economic adviser Larry Summers says the economy is starting to expand, but job creation will be slow.

WASHINGTON — The top White House economic adviser said Sunday “everybody agrees the recession is over” even though many experts predict unemployment could climb higher.

Larry Summers said key indicators have shown that the economy is beginning to expand again and that job creation probably will follow. The jobless rate stands at 10 percent.

He acknowledges it will take “substantial time” before the economy recovers entirely. But he says that “what we can take satisfaction from is we’ve walked back from the brink.”

Summers, who appeared on ABC’s “This Week,” spoke days after the House passed a major financial overhaul bill despite GOP objections that it would add to the deficit and hurt businesses.

Summers also told CNN that creating jobs takes priority over reducing the country’s red ink in the next year.

Priority No. 1 must be getting people back to work, he said. Only then can the Obama administration begin working to reduce the deficit — a problem he blames largely on the Bush administration.