I am not a big fan of outrageous salaries. 99.99% of Americans will never get the opportunity to earn fat-cat paychecks of 8 or 9 figures (that’s $10 to $100 million a year or more), and at first blush, some of these compensation packages seem downright un-American.

However, this is America is it not? This is the land of opportunity where anybody who works hard and is fortunate and honest can achieve their highest aspirations whether it be President of the United States or just plain old filthy rich. Last time I checked being rich and successful is not in and of itself illegal or even un-American.

I must admit I have found myself even pondering the notion that I could run a major bank, or a telecommunications firm, or an insurance company. Yeah, two years at $10 million or more ought to do it. Then I could retire without a care or worry in the world.

But, do I really want to be responsible for thousands of employees and millions of customers, or answer to the stockholders and regulators, or fend off con artists and groupies, or work 18 hour days without a day off, or feel like everyone around you only likes you for your money? No, the money sounds nice, but that is where the appeal ends.

So, what is it with America’s fascination with corporate salaries? Why is it that we all feel that nobody in business should be making that kind of money? And it is big money. According to the AFL-CIO, Americas 100 highest paid CEOs start at over $17 million per year and top out at more than $133 million per year. By any measure, those are outlandish compensation packages even if much of the pay is based on performance and paid in stock options.

But, there should be equal outrage at the top-20 highest paid baseball players whose 2007 salaries, according to ESPN, range from almost $14 million per year to $26 million per year. Ninety eight players in MLB made $8 million or more in 2007, and to my knowledge none of them could even hit a baseball 4 out of 10 times at bat.

The liberal pundits also should be talking about the top-20 NFL players who earn from $12 million to nearly $28 million per year for throwing, catching or running with a pig skin. Will any professional athlete ever discover the cure to cancer, or invent the next piece of technology that will make life better for people all over the world, or create jobs that bring people out of poverty and into prosperity? Probably not.

But, America wanted “change” in Washington, DC, and now we have it. We have dozens of newly created Presidential appointed positions called “czars.” Well paid czars I might add. In a strange twist of irony, one of these new positions is called the “pay czar.” Under the Troubled Asset Relief Program (TARP), pay czar Kenneth Feinberg has explicit legal authority to cut the salaries of, even “claw back” payments already paid out to, executives at seven companies: American International Group, Bank of America Corp, Citigroup, General Motors, Chrysler, GMAC, and Chrysler Financial. Even more striking is the power the pay czar claims to have to cut and/or claw back the pay of executives at any company that received federal bailout money under TARP.

No matter how much I dislike ridiculously high salaries, it seems to me to be abhorrent that any government official would take it upon themselves to unilaterally decide whose paycheck is too big or what an individual ought to earn. I agree that nobody should get an exorbitant paycheck for running a business into bankruptcy, but the decision to hire and fire or to cut a CEO’s pay and by how much is appropriately within the purview of that company’s Board of Directors, not the government.

Some say that because a company received federal bailout money, it is appropriate for government to decide what the CEO gets paid. Really? Next I suppose we will be hearing that government should set the wages for the workers too, or set production levels and the price of the products. This is the slippery slope some people warned us about when we started all this government bailout spending.

It would be different if the companies who took assistance from the federal government were told ahead of time that the government may come back and retroactively set salaries and even take back money already paid out to executives. But, that was not part of the deal. George W. Bush supported TARP because he felt that the financial industry was too important to the rest of the economy to let the big financial institutions fail, but he did not want nor intend to dictate how those businesses were to be operated. President Obama, on the other hand, wants to control businesses and make day-to-day decisions for corporate offices and officers. Reading this writing on the wall is probably why Goldman Sachs and Bank of America wanted to pay back the TARP money last spring and why Obama would not let them pay back the money “early.” President Obama wanted control and nothing controls like the purse strings.

It used to be in America that a deal was a deal. People could be taken at their word and that contracts meant something. In the case of the TARP, there are only provisions for the government to control the salaries of executives at seven companies (American International Group, Bank of America Corp, Citigroup, General Motors, Chrysler, GMAC, and Chrysler Financial). But, this Administration has assumed authority to go beyond those seven companies and has even “fired” one CEO. They have exerted authority where they have none. They have changed the terms of the deal unilaterally. They are making value judgments about business practices about which they have little experience or knowledge.

I will not defend what certainly appear to be excessive salaries for CEOs who run companies into the ground and then step into the government trough with all four feet. Somehow though I am equally offended at the notion of some bureaucrat deciding on a whim what constitutes fair compensation and taking back salaries and bonuses after the fact. In my view, the recent actions of the Obama Administration are indeed as unscrupulous as the very CEOs they wish to demonize.

This is the last of a three part series about the cap and trade legislation under consideration by Congress. Part 1 postulated the important question that everyone should be asking themselves, “Why do I care if the average temperature of the earth rises a few degrees Celsius over the next 100 years?” In Part 2, I addressed the reason why cap and trade on carbon dioxide emissions in the United States will not achieve the desired outcomes and that alternative and sustainable energy sources are not an environmental panacea.

It is time now to look at the potential economic impacts of the cap and trade proposal or, as some call it, the energy tax. There is no faster or more comprehensive way to adversely impact every sector of the United States economy than to implement policies that effectively and artificially increase the cost of energy. And if you believe that cap and trade will only affect the carbon-based part of the energy industry, then I have a bridge over the Hudson River I’d like to sell you.

There has always been a strong correlation between rising energy prices and a slowing of the economy. It is really rather elementary when you think about it. Rising energy prices drive up the cost of nearly everything that Americans buy on a regular basis. Whether it is the manufacturing of durable goods, producing food, transporting goods and services, running your household heating and air conditioning, commuting, or your family vacation, the cost of all of these go up when energy prices increase.

Cap and trade on carbon dioxide emissions will do little to reduce the demand for energy in the United States, but it will most definitely increase the cost of using carbon-based energy and the generation and delivery of electricity. It is estimated that 85% of the total energy supply for the United States comes from carbon-based energy sources. Every single form of transportation in the United States—ships. planes, trains, and automobiles–burns some form of refined oil. 45% of the current United States electrical supply comes from coal-fired power plants.

It has been calculated that cap and trade will increase the cost of running an average household by as much as 29% after adjusting for inflation and after taking into account the greater efficiencies consumers will gain by switching to public transit, higher mileage vehicles, and more efficient homes. The Heritage Society has conducted analysis of the cap and trade proposal and they estimate that the average American household will be paying $1,200 per year in increased energy costs. Many dispute this figure, but there is no disagreement that cap and trade will increase the cost of energy for all Americans. And the higher energy prices would come at a time when people are already struggling with a recession, reduced income, and higher unemployment.

The increased cost of energy will have a disproportionately greater impact on the unemployed and the working poor of this nation. Because it is a much higher percentage of a lower income, this is effectively one of the most regressive kinds of pseudo-taxation policies. In fact, like taxation, cap and trade will transfer somewhere on the order of $250 to $300 billion per year out of the private sector (consumers and manufacturers). Cap and trade has the potential to be one of the largest tax-like programs in the history of this nation.

And as though Congress considering a cap on carbon dioxide emissions is not enough, the Environmental Protection Agency is proposing a new rule that will impose a penalty on all livestock producers who don’t—and they cannot—control the carbon dioxide emissions from all that livestock flatulence. At about $125 per year per cow, less for smaller animals, this carbon tax will effectively increase in the cost of eggs, milk, cheese, poultry, pork, and beef by nearly 10%. And we have not even added the cap and trade impacts of increased cost of producing feed for these critters or the higher cost of getting them to processors and then on to your local grocery store.

And all this increase in the cost of energy is being foisted on us at a time when the country is still in a recession, unemployment is still climbing, the Stimulus package is flagging, the national debt is skyrocketing, and Congress is looking for a way to pay for a trillion dollar health care plan. When the credit card company asks, “What’s in your wallet?” you will soon be saying, “Not much!”

Remember, cap and trade is supposed to reduce carbon dioxide emissions over the next 50 years in order to delay by 10 years the global warming that is projected to occur 100 years from now. I find it fascinating that even though we have been studying economics for a lot longer than the climate, our best economic models cannot project economic impacts much beyond 20 years. Nonetheless, the 20 year estimates of cap and trade impacts on the United States economy are stunning. By 2030, cap and trade could cost $4.8 trillion in reduced gross domestic product and is projected to result in the loss of 3 million jobs in the manufacturing sector alone. And these job losses are after all the new “Green Energy” jobs have been added and all the jobs created to make homes and cars more efficient have been created.

In review, we are told by some of the same climatologists who usually cannot accurately predict the weather 10 days from now, that in 100 years the average temperature of the earth may rise 2-3 degrees Celsius. The warmists insist that cause of this increase is not attributable to natural climate cycles, even though historic and natural swings in the earth’s average temperature are well documented. Instead, fear mongers contend that mankind’s excessive burning of carbon-based fuels is the major reason for the warming trend that started 160 years ago. And even though much of the world either cannot afford it or chooses not to play in the high risk carbon dioxide emissions game, a few in Congress want American families to ante up first and big even though most climate experts would bet that reducing human-caused emissions to zero tomorrow would only delay the inevitable by 10 years.

Did I tell you about that bridge I have for sale? I bet you won’t buy it either.

Last week I wrote about the cap and trade legislation under consideration by Congress. In Part 1, I postulated the important question that everyone should be asking themselves, “Why do I care if the average temperature of the earth rises a few degrees Celsius over the next 100 years?” In that column I pointed out that the science is not conclusive or unanimous that humans are the cause of global warming despite the overwhelming media and political support for this hypothesis.

In this column, I will be discussing the policy implications of trying to reduce carbon dioxide emission through this cap and trade bill. The intended outcome of this legislation is presumably to stop, or at least slow the rate of global warming by reducing the amount of, or at least stopping the growth in annual emissions of carbon dioxide in the United States. I will also be looking at the potential secondary environmental impacts of reducing carbon dioxide emissions through the proposed cap and trade legislation.

One of the biggest challenges facing environmental policy makers today is that they first must come to the realization that there are no solutions, only trade offs. We do not live in Utopia and there is no perpetual motion machine out there that will allow us to ignore the most basic laws of physics.

Let’s take fuel cells as an example. In these engines, hydrogen and oxygen are burned to release energy and the only emission coming out of the tail pipe is water. If we ignore the fact that water vapor and clouds account for 90% of greenhouse gases, then fuel cells could replace carbon burning internal combustion engines and reduce carbon dioxide emissions significantly. But, hydrogen in its pure form is not an abundant resource, therefore, hydrogen fuel must be derived from sources such as water and natural gas. The fact of the matter is that it takes more energy to make hydrogen fuel than one gets from burning hydrogen. Because making hydrogen fuel is a net negative energy transaction, the only way to reduce carbon dioxide emissions with fuels cells is to make hydrogen fuel using energy that has been generated from non-carbon-based sources. I once read an analysis that suggested that using only solar and wind power to produce the hydrogen fuel required to run all the cars in California would impact half of that state with solar and wind power generation facilities! I can imagine the hue and the cry from environmentalists at that proposal.

And that gets us to one of the fundamental policy problems with the cap and trade bill. It attempts to create incentives for alternative or sustainable energy sources, but incentives are not enough, so it actually goes so far as to underwrite development of alternative or sustainable energy by taxing carbon-based power. “Alternative” and “sustainable” are buzzwords for any source of energy other than coal, oil, gas, nuclear, and hydroelectric. If the goal is to reduce carbon dioxide emissions, we should be encouraging the development of zero-emission electric generating facilities such as nuclear or hydroelectric plants. The term “sustainable” implies that these resources are unlimited or that there are no environmental impacts associated with these power sources. The most favored forms of alternative and sustainable energy, wind and solar, ignore the fact that many parts of the country do not have enough sunshine to make solar effective and other parts of the country do not have the kind of winds necessary to make wind power efficient.

As has been amply demonstrated by the permitting process for the Cape Winds Project in the Nantuckett Sound off the coast of Massachusetts, everybody wants wind energy. They just do not want it in their back yard. Indeed, it appears we have transcended from the “not in my back yard” (NIMBY) phenomena to “build absolutely nothing anywhere near anything” (BANANA)! The same people who do not want wind towers in their viewshed will also oppose the power transmission lines necessary to transport electricity from where wind and solar will work and be tolerated.

And consider this. The highest demand for electricity occurs when there is a heat wave, and during heat waves, the wind is often very calm. In order to meet peak demand in the new alternative/sustainable powered electric grid, power companies will have to build more peak demand generators that usually run on natural gas and emit carbon dioxide. Some analysts have suggested there might not be any net gain there.

Lastly, I am waiting for the climatologists to clue in to the fact that solar and wind power works on the principle of converting wind energy and the heat of solar radiation to electricity. What will be the long term effects on our climate from the human-caused alteration of these two very significant contributing factors to weather patterns around the world?

Other attempts to impose policies to reduce carbon dioxide around the world have failed. The European Union has imposed cap and trade on its carbon dioxide emissions, yet their total annual carbon dioxide emissions continue to increase. The Kyoto Protocol was intended to slow the growth in carbon dioxide emissions, and though some would blame the United States for not obligating itself to this treaty, the fact is that nearly every country that did sign on to the carbon dioxide reduction plan has failed to meet its obligations. These policies do not work because people will always find the loophole or a work around. More importantly, the people of the world are not curbing their appetite for electricity; the demand is increasing everyday.

Most egregious of all, a cap and trade bill in the United States will do nothing to address carbon dioxide emission from other countries. Yes, the United States may be the largest single source of human-caused carbon dioxide, but China (150% increase from 1992-2007) and India (103% increase from 1992-2007) are coming on fast. These two population giants have made it clear they will not deny their people the opportunity to prosper economically, improve their health, and enjoy the creature comforts of light and air conditioning.

By unilaterally and artificially making electricity less abundant and less affordable in the United States, we will create a huge incentive for American industry to take its business overseas. To address this contingency, the bill proposes tariffs on goods that come from countries that are not limiting their carbon dioxide emissions. In the current world economy and even with our trade deficit, the United States is still the largest exporting nation in the world. It would not be good policy for the United States to initiate a trade war, especially with the countries that are bank rolling our National Debt.

For better or for worse, the United States has built the most sophisticated and efficient infrastructure to explore for and produce oil and gas, process it, and distribute its byproducts to consumers across the nation. And we are finding more oil and gas all the time; these resources are not nearly as finite as some people would have you believe. We have domestic sources of clean burning, low sulfur coal that can meet the current US demand for centuries. At present about 45% of the electricity generated in the United States comes from coal and new coal fired power plants can be extremely clean. Our nation runs on energy and our life style, jobs, and the economy are dependent on a stable and affordable supply of it. We need new technology and we need more diversified forms of energy. We need more efficient transmission and improved battery technology. But, we should not be shooting ourselves in the foot by penalizing our most abundant and affordable energy sources. The United States in a prospering economy has shown itself to be incredibly resourceful at solving complex problems and meeting challenges. Conversely, if people cannot meet their basic needs of food, shelter, and security, then their willingness to expend time and resources to address the other issues decreases.

If global warming is indeed principally caused by human sources of carbon dioxide, then this problem began about 150 years ago with the industrial revolution. The most pessimistic projections are not expected to manifest themselves for 50 to 100 years. Even the scientists who believe humans are responsible for global warming agree that nothing done in the short term is likely to significantly impact the long term projections.

The policies of the United States should facilitate improving our understanding of climate science, promote and support expanded research and development on greater efficiencies and energy generation, transmission technology, and energy storage mechanisms. In the mean time, the United States should continue using the cleanest forms of carbon-based energy to fuel the economic engine that will improve our understanding and adequately develop the new technology and infrastructure necessary to fully address all the issues of the future.

You don’t have to work hard these days to hear plenty of thoughts about Health Care Reform. Opinions abound. And the anecdotes to back up these opinions are coming out faster than cars off the assembly line in Detroit.

I am from Wyoming and we have a saying out there, “Everything in Wyoming is political, except politics, that is personal.” Because everyone needs health care at some point in their life, it is personal too. Mix health care and politics, stir in a little economics and your pocketbook, and you have achieved the kind of social critical mass that makes nuclear warfare look like child’s play.

I have also heard it said that, “Everyone is entitled to their own opinion, just not their own set of facts.” But which facts are true and which ones are just cooked up to make someone’s case? It pays to looking deeper into the facts. What was the methodology that led to the stated conclusion? What was asked and who gave the answers? We all need to exercise some due diligence before we embrace the things we hear today.

So, by now, you are wondering what my angle is. Am I for health care reform, or am I against it?

First, like everyone else, including Congress and the President, I have no idea what “it” is. And that may be the most troubling part of the debate. We are all fighting windmills.

Secondly, if you are asking me if I think we need health care reform, then the answer is “Yes.” If you ask me if I am supporting what we all think is working its way through Congress, then at this point in time, I would have to say “No.”

Let me point out a few things that everyone should be factoring into this debate:
• With all its challenges and problems, I firmly believe the health care delivery system and technology in America is among the best in the world, bar none.
• It has been said that somewhere around 45.7 million people in this country do not have health insurance. The reasons vary including: they can’t afford it, they have been declined, some refuse to buy it, others do not use available public health care, or they are here illegally. That said, nobody in America goes without health care. We are already paying for the uninsured every time we pay for health care or our health insurance premiums. A recent CNN story estimated the cost of providing health care to the uninsured at about $1,200 per household per year.
• A government run health care system would be unfair competition. You may have the right to choose your plan and your doctor, but sooner or later, only the government plan and doctors will be left standing on that uneven playing field.
• The question of how can the US economy (personal and corporate taxpayers) finance health care reform is the single most important question in this debate. When you consider that 61.6% of the President’s 2009 Budget ($2.9 trillion) is non-discretionary spending (add another 12.1% if you consider Defense spending non-discretionary), then one has to ask “How can we afford to tack another trillion dollars a year of non-discretionary funding on to that?”
• If you don’t have tort reform as part of health care reform to reduce the number of frivolous malpractice lawsuits, then you will not contain the escalating cost of health care.
• Let’s stop calling it “health insurance.” Insurance is the pooling of money to pay for an event that has less than a 100% likelihood of occurring. The fees you pay are based on mathematical analyses of the risk of a certain event occurring, factoring in the cost of remedying the event and the number of payees into the system. Insurance is for things like fires, tornadoes, hurricanes, earthquakes, etc. Because everyone needs health care at some time in their lives, what we buy when we pay for health insurance is really a pre-paid medical expense plan.

There is every reason in the world for Congress to proceed cautiously. And the American people should be wary of any new government program of this magnitude. If you think Congress will tax the rich and provide the poor with health care at no cost to the poor, the middle class, and the rich, then think again. Having majored in economics in college, there is only one thing I can say about the economy with absolutely certainty, “There is no such thing as a free lunch.” Like Newton’s Laws of Physics, the no-free-lunch principle is an unavoidable fact of life.

What we need is more portability of health care insurance (HIPAA provides some portability now), a way to insure those with pre-existing conditions, tax incentives to offset the cost of employer and individual health insurance premiums, and tort reform.

What we don’t need is another government run mega-program. History has shown government programs to be inefficient, ineffective, ripe for fraud and abuse, and much more costly than anticipated.

The subject matter is complex. The health care industry makes up 20% of our national economy, so the impact could be huge. The current proposal could add a trillion dollars to a $3 trillion budget. The wrong move by Congress could cost us jobs when we can least afford to lose them. In the end, health care reform deserves much more than a passing interest and a gloss over by our leadership.

On March 1, 2009, one foot of snow fell on top of a freezing rain here in the Southside of Virginia. At our house, the power was out for three days and the low one morning was zero degrees Fahrenheit.

After the power was restored, my family concluded that we do not want to freeze to death in the dark, but that is the slippery slope Congress may take us down if they pass a cap and trade bill.

I don’t care what Al Gore says. I don’t care what some Federal Judge says. I don’t care what the EPA says. Carbon Dioxide is not a pollutant! For crying out loud, we breath it in and out every day with no harmful side effects. Our bodies produce it and plants thrive on it. To treat it the same as dioxin or DDT or Sulphur Dioxide is absolutely ridiculous.

Will a cap and trade reduce greenhouse gases and thus stop global warming? An emphatic “No” is the answer. Even the International Panel on Climate Change (IPCC) reports that if all human-caused CO2 emissions went to zero tomorrow, it would only delay by 10 years the projected rise in global average temperature supposed to occur 100 years from now.

Global Warming or Climate Change is voodoo science. Read what a joint National Science Foundation and U.S. Geological Survey brochure about the National Ice Core Laboratory in Denver says about past data and projections (emphasis added).

“Information from ice studies represents pieces of the puzzle of understanding climate. It complements data from study of pollen, tree rings, coral, and lake and sea floor sediments. Through studies of ice, extreme climate swings have been identified in Earth’s past; some have occurred remarkably quickly (in less than a decade).”

“Mathematicians and modelers use the ice core data to create Global Climate Models, which are theoretical extensions of Earth’s past climate conditions to what could happen in the future. Once the past can be explained, possible future events may be identified and their rapidity and effects predicted with at least some confidence and accuracy.”

There are an awful lot of qualifying modifiers and less than certain language is used in this statement. If a “Warmist” heard someone recite this statement verbatim, they would call the reader a “Holocaust Denier.”

Cap and trade will not reduce carbon emissions. It will be a regressive tax on ordinary citizens. It will cost jobs at a time when we can least afford to impair our economy. And, it will result in more American jobs going offshore. Global Warming and greenhouse gas reductions are to modern elitist what “Let them eat cake” was to Joan of Arc. I don’t know about you, but I don’t look forward to eating their cake or freezing in the dark.

Let’s get real about the underlying causes of and the way to cure our economic woes.

“It’s the economy stupid.” That is the line that sunk George H. W. Bush’s reelection hopes in 1992 and ushered in eight years of Bill Clinton. In 2008, a similar refrain dashed John McCain’s hope to be the come-back kid once again. Barack Obama won the Oval Office on a campaign of platitudes—hope, change, and a chicken in every pot.

Yes, Obama inherited this economic crisis, but not from George W. Bush. This problem is not the result of greed on Wall Street. Greed on Wall Street is not new; heck, Wall Street is greed incarnate. I am not a big proponent of greed and excess, but if you can’t be greedy on Wall Street, then where can you? Let’s get real about Wall Street. All of us pay those folks on Wall Street to use their greed skills to make us all money. And I mean all of us, not just the so-called rich fat cats. If you have an IRA, an employee stock plan, a 401 K, a public school retirement fund, a firefighter’s retirement fund, or any retirement of any kind, then you are likely invested in mutual funds that are managed or traded on Wall Street. In fact, horror of horrors, your mutual fund is probably invested in oil companies, coal mines, and even banks and brokerage firms! But, I digress.

Back to the origins of this economic crisis, in a rather prophetic article published in the New York Times on September 30, 1999, Steven A. Holmes identifies the cause of the subprime mortgage meltdown of 2008. Here are a few of the telling facts Holmes articulates in that article.

“Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.”

“’Fannie Mae has expanded home ownership for millions of families in the 1990’s by reducing down payment requirements,’ said Franklin D. Raines, Fannie Mae’s chairman and chief executive officer. ‘Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.’”

“In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.”

There you have it. The current economic crisis can be directly traced back to the social engineering policies of the Clinton Administration. And now in an attempt to revive the economy, President Obama is proposing even more ill-advised social engineering programs.

Presidents Jefferson and Lincoln admonished America to never forget that you do not benefit the poor by taking from the wealthy (read Obama’s income redistribution plans) and you do not strengthen an economy by punishing those who create jobs (read Obama’s ideas about tax equity).

Whether it is greed or just plain old business sense, Wall Street knows that the most recent bailout legislation won’t begin to address the problem. And the Obama Administration’s propensity for obfuscation and platitudes without details is just like rubbing salt in the economic wound.

President Obama would be wise to understand that “It is the economy stupid.” And if you want to stimulate the economy, reduce tax rates, especially on capital gains, and restore investment tax credits. Do not start a trade war because, as the largest exporting nation in the world, the U.S.A. has the most to lose in that war. And decrease the regulatory burden on domestic businesses if you want to create jobs in America. In pursuing these real economic stimulus policies, the President would be unleashing the awesome and magnificent power of free enterprise, the American economy would once again lead the world in improving the people’s lot in life, and, yes, tax revenues would increase.