It's Still the Economy, Congress

By Steve Kopperud, Policy Directions, Inc.

There’s talk as I write this that President Barack Obama may shift the date of the State of the Union address from the third week in January to a date sometime after Congress passes health care reform legislation. His incentive would be so he can proudly look the American public in the eye and, like a child showing his parents a straight “A” report card, demonstrate he made good on his campaign promise. If Obama postpones the State of the Union, it will be only the second time a president has ever done so – the first being President Ronald Reagan, who waited a week after the Challenger space shuttle disaster.

There’s such an odd lack of priority within Congress and the administration as we enter the Obama administration’s second year in office. This Congress and this White House keep ricocheting from issue to issue with little or no explanation why on Monday jobs creation is the number one priority, but on Tuesday, it’s global warming or smog control or Afghanistan. While every poll and pundit continually hammers home the number one priority for the voting public is the economy and jobs – remember “It’s the economy, stupid” slogan during the 1992 presidential campaign – congressional leadership and the White House remain stuck on health care reform and its trillion dollar price tag.

And while the race to reinvent U.S. health care continues, other issues have fallen by the wayside. In some cases, this is a good thing, and in others, not so much.

One big disappointment as Congress rushed to leave for Christmas break was failure of the Senate to pass a federal tax extenders package so that literally thousands of federal tax breaks for business and individuals were allowed to expire, including the $1 per gallon blenders tax credit on all forms of biodiesel. Also allowed to lapse was the 50-cent per gallon alternative fuels mixture tax credit.

The House has passed its version of an extenders package, but the Senate, caught up in the rush to complete health care reform and trying against all odds to come up with some form of climate change legislation that would pass the laugh test, simply ran out of time and inclination. The Senate could have relatively easily taken the House package, tacked on its priorities, and through a series of informal discussions, blended the two bills so that research and development, bioenergy, child care, and various other tax breaks expiring December 31, 2009, would have been made whole at least for another year.

But the Senate also could not figure out how to fix the never-ending battle over revamping the federal estate tax, which, while it technically expired at the end of December, will automatically return on January 1, 2011, having reverted to its 2000 form, percentages, and tax rates. Apparently, the Senate must do all tax-related issues in one package, so until the estate tax tug-of-war is resolved, the tax extenders package will languish.

Senator Charles Grassley (R-IA), ranking member of the Senate Finance Committee and the avenging white knight of all federal programs ethanol and biodiesel, said in mid-December that if allowed to expire, the absence of bioenergy tax breaks would mean the alternative energy industry would “grind to a halt.” The congressional pat on the head to those who make business decisions based on these tax breaks is essentially a “don’t worry; we’ll get around to it during the first quarter. Oh, and we’ll make it retroactive to January 1, so you won’t lose any money.” This, in an era when the public’s trust of Congress is at an all-time low and bank credit is almost non-existent, just doesn’t feed the bulldog for a lot of businesses out there.

The Obama administration’s public statements about the importance of alternative energy and its support for the tax credits notwithstanding, the White House has been silent about the fate of the tax extenders package. Perhaps the powers that be simply assume, as Democrat leadership has said, that all will be made whole before March. Perhaps the issue lottery simply hasn’t bounced the bioenergy tax credit ball to the top of the game.

The good news is that as the nation slogs through what every overly excited meteorologist predicts will be the worst winter in 25 years – just this morning, the radio reported weather experts predicting the planet has entered a 30-year cooling phase – climate change/cap and trade legislation is for all intents and purposes, dead.

Even Secretary of Agriculture Tom Vilsack, Obama’s climate change acolyte in Copenhagen, Denmark, has retreated from his nearly blind support of the House-passed climate change bill. While he spent a good chunk of his hearing time in both the House and Senate promising farmers and ranchers they’d make out like bandits during the out years of the climate change scheme, when the U.S. Department of Agriculture’s own analysis demonstrated about 60 million acres of crop and pastureland would likely switch to “afforestation” – that’s what you and I call tree planting – he ordered his economists to sit down with the Environmental Protection Agency (EPA) to rework the economic models they used in predicting the cornucopia of benefits and federal checks predicted to ensue from the climate change bills. Why?

Because it dawned on someone that to take 60 million acres out of production – on top of arable cropland already locked up in the Conservation Reserve Program – means a serious challenge to U.S. farmers’ and ranchers’ ability to produce enough food to feed this country, maintain export markets, and meet industrial/fuel demand.

There doesn’t seem to be any gnashing of teeth or rending of garments at the other end of Pennsylvania Avenue over the fate of the much-touted climate change/cap and trade bill in the Senate, likely because the media opportunity that was the December United Nations climate change summit in Copenhagen has passed. The United States was able to attend the meeting, relate our collective political epiphany over greenhouse gas emissions – that being the EPA “endangerment” finding and subsequent rulemaking in the absence of new law – stake claim to our new-found “global leadership” role in controlling said emissions, sign the essentially meaningless document that emerged from Copenhagen, and gear up for the next global “leadership” issue.

That EPA rulemaking, however, is causing serious administration worry as it was never supposed to be the silver bullet on global warming, but rather a political sword to hang over the collective head of the Senate to inspire quick action in that chamber to complete the climate change legislation.

Even climate change’s biggest Senate supporters say the EPA rulemaking to control greenhouse gas emissions is at best ill-advised. Said Senator Jeff Bingaman (D-NM), chair of the Senate Energy and Natural Resources Committee, as he recently reported climate change legislation won’t happen this year, “[the EPA rulemaking] just means everyone’s utility bill is going to go up.”

While the EPA bureaucrats in charge of writing the greenhouse gas rule scurry about, the EPA lawyers are packing their briefcases and getting ready to head over to the Department of Justice so the federal defense teams can begin their preparation for what’s predicted to be a flood of citizen lawsuits against the government over the incredible reach of a rulemaking that can only be described as enshrining a serious double standard over emissions regulation, with no clear legal authority for doing so in the first place.

All of this happened or didn’t happen during 2009, an “off year,” meaning there was no federal election – presidential or congressional – looming large for the entire House and one-third of the Senate. This fall’s election is shaping up to be a major game-changer, meaning if you figure the historic trend that the party in power loses seats during an off year, not only has the election prospect already begun the traditional process of sucking the backbone out of most of Congress, the reality has led to 12 retirement announcements in the Senate alone, evenly split between the Rs and the Ds. That means fully one-third of Senate seats up for grabs are open races. I think it’s fair to say Senate Majority Leader Harry Reid’s filibuster-proof 60-vote majority is history.

If you’re Democrat leadership in either the House or Senate, you’re scrambling to find some kind of economic Easter basket to hand voters come May or June, with a mid-to-late summer reinjection of federal largesse, in hopes whatever euphoria you create will last until November. You’re also crossing digits in hopes the special elections around the country to replace retired or expired members of Congress between now and November go your way, that nothing seriously ugly happens in any theater of war, that energy prices stabilize, and that voters lose their distaste for the cost of health care reform. In other words, you’re hoping the old political axiom about the voters having a short memory is true.

I’m guessing this November, that ain’t gonna happen.

View from Washington – February 2010 RENDER | back