The EPA was in a rush to implement these rules and failed to consider the sweeping job loss that would result. There was a complete lack of consideration for the possibility that the information upon which the rule was based may have, in fact, been inaccurate. Now the EPA is citing incorrect assumptions for the “technical corrections.” Well, these “technical corrections” will do little to put to rest the fears of Texans who will potentially be out of work as a result of this rule.

The changes are very minimal, and they have only happened because the EPA was repeatedly called out for faulty calculations. But what is most troubling is that the changes do nothing to reduce the time crunch that Texas is under in order to attempt to comply with the rule by January 2012. With such an unrealistic timeframe to comply, jobs will likely still be lost. Donna Nelson, the Chairman of the Texas Public Utility Commission remarked that she “would be thrilled if they were to change their position or to give Texas the due process they were required to do under law, [but] it looks like they are tinkering around the edges, not making big changes.”

Luminant’s Allan Koenig stated that the CSAPR emission limits and the actual emissions were “so far apart on the allowances that the increase in emission allowances would have to be quite significantly higher for us not to make major changes to the operation in order to comply. This would be in the order of tens of thousands versus thousands of tons more in emission allowances.” The modifications call for nowhere near that scale of adjustment.

I believe it is important to admit when one has made a mistake. But admitting a mistake without taking steps to fix the problem is like a mechanic telling you that your car needs new brakes and sending you off on the road. Without new brakes, your car will inevitably crash. Without significant revisions to this rule, the economy of Texas will falter. The clock is ticking for the 500 employees of Luminant who face unemployment. Though the EPA is now stating that these modifications are a result of incorrect industry-submitted data, in reality the EPA drafted the original rule using data they collected for other regulations, including the acid rain program and the clean air interstate rule. This is further evidence of a larger problem resulting from the Agency’s use of proprietary models and a refusal to disclose its methodology to the public.

Texas Attorney General Greg Abbott said in a statement Thursday, “by making the minor changes announced today, the Obama administration effectively concedes that its rules were flawed — but inexplicably refuses to resolve the real defects. The EPA has effectively eliminated any opportunity for notice and comment that might allow mistakes to be caught that may have been missed during the drafting process.”

I am baffled that an organization as large as the EPA could make such a mistake and fail to notice it until they were called out on it so many times. It makes one wonder how many other mistakes slipped under the table during the regulation-making process. Furthermore, this announcement provides even more justification to re-evaluate the EPA’s other rule-makings and ensure that regulations that will cost jobs are, at a minimum, thoroughly reviewed and held to the highest level of accountability.

While I am suspect of the EPA’s motives behind this revision, at least there is some progress and some admittance of wrongdoing. But this rule is not just about math or calculations. It’s about the livelihood of Texans and hardworking Americans across the country. It’s about whether or not employees like those that work at Luminant’s plants will be able to feed their families.

The last thing this Administration needs is additional job loss resulting from regulations that it has imposed, not to mention a rise in electricity costs for customers. The Administration should promote job growth instead of implementing arbitrary rules that will cut thousands of jobs with little, if any, benefit to the public. It’s time for the EPA and the Administration to stand up and do the right thing for Texans and give our economy the boost it needs

There was once a time when trouble in foreign markets, whether in Asia or as now in Europe, would be good for US stocks.

Sure, our markets can get hammered when news like the 1997 Asian currency crisis hits. But we often make a comeback as investors digest the news and come to the conclusion that the best place to bet for future growth is on the companies at the heart of the US economy.

No longer.

And it’s not just the zero-percent job growth and 9.1 percent unemployment we’ve got now.

The mainstream business media will tell you that the problem lies in the “dysfunction of Washington.” In other words, the economic slump and all the market turbulence, including yesterday’s 100-point drop in the Dow, stem from a bipartisan cause — lawmakers and President Obama can’t manage to craft a sensible plan to grow the economy.

But talk to enough investors, and they’ll tell you this isn’t really a bipartisan problem. Rather, it largely remains at the top, meaning with Obama and his economic advisers — who, when they aren’t threatening to raise the taxes of “millionaires and billionaires” who make just $200,000 a year, are offering up the leftovers of previously failed economic policies, such as this “infrastructure bank” gimmick that the president plans to unveil in what’s being billed as a major economic speech later in the week.

The stock market bounced back after the 1997 Asian crisis because investors had much to look forward to as the Clinton administration, prodded by a Republican-led Congress, embraced a pro-growth agenda of tax cuts and welfare reform.

Contrast that to what we have now: an administration looking to purge high unemployment and slow growth with an “infrastructure bank” — which might put a few construction workers back to work, but can’t come close to reversing the Great Recession.

Put aside the fact that such government-mandated “infrastructure spending” often leads to fraud and waste; the history of such plans actually creating enough new jobs to spur significant economic growth is pretty dismal.

Whether it was FDR’s Works Projects Administration in the 1930s, the stimulus offered by President George W. Bush just before the financial crisis went into high gear, or Obama’s nearly $1 trillion spending spree in his first year, government mandated growth plans fail to deliver and often make a bad situation even worse. The spending has to be paid for — and whether that means higher taxes or new debt, it’s not worth the price.

The markets — that is, investors who are paid to bet on the future of US prosperity — know this history all too well. They also know we now have $14 trillion in debt that Obama’s “infrastructure” gimmick will only add to. And they know that this president is either too economically naá¯ve or too ideologically rigid to reverse course from his failed policies.

Then there’s the other “big idea” expected in his upcoming speech — extending the “payroll tax cut.” First off, the cut that’s already in place hasn’t worked any miracles so far. Plus, everyone knows it’s only temporary — and he’s looking to raise income taxes on a permanent basis.

And that’s why investors are increasingly tuning him out.

“Markets tend to be smart,” says David Ader, a strategist at CRT Capital Group, “or [at least] capable of learning. Thus if we constantly hear the same optimistic plans from politicians and they keep failing, eventually we’ll learn not to pay too much attention.”

We can only hope investors tune out the president’s speech on Thursday. The last time they listened to what he was saying about the economy, when he addressed the country after the S&P downgrade, the Dow dropped more than 600 points.

Original article here.

Illinois accounted for $376.2 million in shallow-water drilling expenditures over the past three years, according to an analysis by 14 oil and gas companies that spend money on vendors and subcontractors. The bulk of that money—$242.2 million—was spent in the Chicago district represented by Representative Danny Davis (D–IL).

It’s fresh evidence that Obama’s anti-drilling agenda is having a ripple effect across America since last year’s oil spill, claiming jobs not just in Louisiana and Texas but also in communities far removed from the shipyards in the Gulf of Mexico.

The study from the Shallow Water Energy Security Coalition paints a picture of the nationwide economic ramifications. Obama can’t even be blamed for playing politics. Five of the states that benefit most from shallow-water drilling backed him as a candidate in 2008. And Democrats represent many of the congressional districts that stand to lose millions.

The cost in jobs is startling. A new analysis by Louisiana State University professor Joseph Mason projects national job losses at 19,000 from the drilling moratorium, with wage losses at $1.1 billion. About one-third of those jobs are located outside the Gulf region.

Nearly a year after imposing his anti-drilling agenda, it’s quite clear that Obama is carrying out misguided policies causing widespread harm.

And job losses aren’t the only consequence. The Obama Administration’s deliberate delay in issuing permits for both deepwater and shallow-water drilling has led to a sharp decline in oil production for the Gulf of Mexico this year. The U.S. Energy Information Administration puts the figure at 240,000 fewer barrels every day.

With gas prices hovering around $3.56 per gallon nationwide, now is not the time to lower production. The only way to reduce America’s dependence on foreign oil is to produce more of it here at home.

The recent approval of new drilling permits for the Gulf of Mexico is a welcome and long overdue move by the Administration, but it’s nothing to celebrate. The pace of permitting is far below the historical average, and there’s no indication that the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) has any desire to return production to a pre-spill level.

Until that happens, expect more grim news like the unfortunate circumstances facing Seahawk Drilling, which was forced to declare Chapter 11 bankruptcy, a direct result of the bureaucratic delays at BOEMRE. Seahawk’s president and chief executive Randy Stilley, writing in The Washington Post, painted a dire picture:

The government’s drastic slowdown in the issuance of permits for shallow-water drilling operations—in which companies work in familiar geological formations, typically in less than 500 feet of water, mostly seeking to produce natural gas—has all but crippled the industry. The survivors (for now) like Hercules are staying afloat largely thanks to revenue from operations outside U.S. waters. Put another way, a once-proud industry born in the gulf during the Truman administration can no longer survive on operations in its own back yard.

Unless things change soon, Seahawk Drilling won’t be alone. Businesses located in Illinois, Pennsylvania, Wisconsin, California, and New York—top recipients of shallow-water drilling spending—will all face economic consequences as well.

It’s time for lawmakers to take notice. Representative John Sullivan (R–OK), who represents a district with $87.2 million in shallow-water expenditures over the past three years, recognizes the impact. He told us: “Continuing to keep American sources of energy under lock and key by failing to issue drilling permits only serves to place American jobs at risk, drives up costs at the pump and deepens our dependence on foreign oil.”

Things don’t have to be this way. The House of Representatives must continue to conduct rigorous oversight of the Obama Administration, challenging the Administration’s excuses and applying pressure when necessary. America’s energy future depends on it.

Apologies for our technical difficulties — about 5,000 of you tried to download this podcast at once, and our server couldn’t handle it.

In today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by the one and only Michael Barone to discuss next week’s election. We’ll also touch on job losses from Obamacare.

We’re brought to you as always by BigGovernment.com and Stephen Clouse and Associates. You can subscribe to the podcast by following the links above, and if you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Congressional Report: Obamacare Costs America Nearly 800,000 Jobs
Michael Barone: The Trouble With Big, Bossy Government
Michael Barone: Our Country, The Shaping of America
Real Clear Politics Latest Election Polls

Without question, the jobs picture is going to remain cloudy. There’s just too much uncertainty over the economy and the tax-and-regulatory threats coming out of Washington. Businesses can’t be sure about the costs of hiring. Meanwhile, over in housing — our other weakest sector — an inventory glut threatens further price declines.

But make no mistake about this: Businesses, at least the publically owned ones, are in very good shape. U.S. firms scored a record $1.2 trillion in profits during the second quarter and are sitting on roughly $2 trillion in cash. Our private-sector companies are resilient, and they have recovered significantly from the economic plunge.

And while their hiring is still behind schedule, they have begun the process of investing in equipment, software, and other capital goods. Business investment in the June quarter rose 16 percent above year-ago levels. This is all to the good. Healthy businesses are crucial to the stock market as well as the overall economic outlook.

In fact, since 2001, business profits have doubled, even while the stock market dial has hardly moved. If Washington can just keep its paws off of business and let market processes work, firms will continue to prosper domestically and internationally and will eventually pick up their hiring.

I hate to sound too much like Calvin Coolidge, who after Reagan is my favorite 20th century president, but the business of America is business.

Yes, when second-quarter GDP came out last week, the revised 1.6 percent growth number was universally derided as a step on the road to a new recession. But not so fast.

In a blog titled “What Everyone Missed in the Revised GDP Data,” brilliant Washington economist Alan Reynolds noted that real gross domestic purchases, which are purchases by U.S. residents of goods and services wherever produced, actually increased 4.9 percent annually — a full percentage-point stronger than the first-quarter results. Reynolds blamed a government accounting miscue over falling import prices for a misread on the trade deficit that subtracted about 4 percentage points from GDP.

So import prices actually increased in the second quarter, which lends credence to the idea that the economy is doing better than folks think. And by the way, the bulk of those imports are being used for capital-goods investment, which is a good thing, not a bad one.

Smoothing out the quarterly ups and downs, the real economy is growing about 3 percent year-on-year, with the domestic economy rising by 3.7 percent. This is a tribute to the resilient and durable free-market system in America.

It’s a pity that Team Obama and the Democratic Congress had to waste nearly $1 trillion on ineffectual spending stimulus, temporary tax rebates, cash for clunkers, and temporary homeowner tax credits — all of which have probably slowed recovery and prevented equilibrium in key sectors. And that’s not to speak of our huge and burdensome future debt.

Which brings me to the regime change coming in the midterm elections. That’s another bullish factor. As we speed toward November, the Republican party looks set to publish an agenda of limited spending, regulatory restraint, and low taxes, while momentum is gathering to at least temporarily extend the Bush tax cuts of 2003.

And lo and behold, President Obama and his economic team apparently are talking about additional tax cuts of one kind or another. I’m not holding my breath. They are likely to go for temporary and targeted tax relief, the most ineffectual kind there is. They should go Reagan, by reducing marginal tax rates across-the-board for personal, business, and investor incomes. That’s what they ought to do — strengthen incentives to reignite risk-taking. But the Republican tide is rolling in so strong right now, we just might see Democrats turn to lower taxes.

All this is good for stocks. Using conservative earnings estimates, the S&P 500 looks to be valued at a historically low 11.5 times earnings. That comes to an 8.7 percent yield on shares, compared with only a 2.5 percent rate on 10-year Treasuries.

In other words, profits up, rates down, tax cuts may be coming. In the new political environment, year-end tax-selling by investors may no longer be necessary in 2010 to beat the Obama IRS in 2011.

Let’s have a little optimism for change.

Let’s start with the Treasury bond market. Yields have fallen to 2.6 percent today from 4.1 percent last April. Decomposing this Treasury rally shows that real yields have dropped 79 basis points, which is a signal of lower economic expectations.

Meanwhile, inflation break-even TIPS (Treasury inflation-protected securities) have fallen 64 basis points, showing that price expectations also have dropped. The consumer price index is only rising 1 percent over the past year. And long-term inflation fears have fallen all the way to 1.7 percent. It’s not deflation. It’s disinflation.

The corporate-bond market shows a similar decline of economic-growth and profits expectations. Credit-risk spreads are widening. The spread between investment-grade corporate bonds and risk-free Treasuries have widened 62 basis points, while higher-yielding junk-bond spreads have increased 138 basis points.

Now, all these bond-market indicators don’t tell us a whole lot about the future. But they are corroborating the summer slump in the present. Lower inflation is a good thing, but lower growth is not.

And here’s another hitch in the story. Using the break-even TIPS, the Federal Reserve’s zero target rate is really minus-1.7 percent, which is the same sort of negative real interest rate we had in the early and mid-2000s. This is undoubtedly why Kansas City Fed president Thomas Hoenig is worried about a new boom-bust cycle.

Hoenig calls the Fed’s latest decision to maintain the zero-interest-rate target a “dangerous gamble.” Those are strong words of criticism leveled at Ben Bernanke and the other Fed bigwigs. Hoenig says the financial emergency is over and predicts a modest economic recovery that requires small increases in the Fed’s target rate — still accommodative, but slightly less so.

Hoeing also echoes the fears of Stanford economist and former Treasury official John Taylor, who argues that the Fed is keeping its target rate too low for too long, just as it did between 2002 and 2005.

Are we doomed to repeat the boom-bust cycle? Very few people agree with Hoenig and Taylor. But one market that does is gold. While bond rates have been declining this summer, gold has jumped $100, and it is hovering near its all-time nominal high. That’s food for thought.

And let me repeat my own mantra: The Fed can produce new money, but it cannot produce new jobs. Fiscal policy — and its threat of overtaxing, over-regulating, and overspending — is what’s ailing the economy. And that threat is reverberating through stock and bond markets. (The stock market, by the way, is still about 11 percent below its late-April peak.)

So the long-run message of the gold rally may be this: The Fed may print too much money, but taxes and regulations may hold back the production of goods and services. And if too much money chasing too few goods is inflationary, then lower taxes and regulations to encourage more goods would promote stronger prosperity and domestic price stability.

Free-market supply-side father Robert Mundell argued for lower tax rates and stable money. Is anyone listening?

Remember Pelosi promised this:

Speaker Nancy Pelosi at the health summit: “It’s about jobs. In it’s life, it [the health bill] will create 4 million jobs — 400,000 jobs almost immediately.”

Well, it’s almost November and the economy still hasn’t gotten any better and we have no evidence of those jobs being created.  I can only assume that she didn’t mean this either:

The irony of accountability indeed.  Americans are still asking and the rhetoric is not resonating.  So, Speaker Pelosi, where are the jobs?

It’s not a matter of rhetoric, it’s a matter of the American dream being shattered for so many hard-working Americans as a direct result of Obama’s entitlement-laden, job-killing policies.  Such a boastful result when the Democrats fight for “working Americans” as they say–specifically referencing unions.

Time to decode the Democrat narrative:  Democrats standing up for working families, those that want to work, workers, labor. OK, unions.  It’s any wonder so many think know that Obama’s policies are anti-business.