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This needs to be read by more people, so more people can contact congress to let them know what they think of it.  I’ll post the reasons for my own thoughts later (I think it sucks!) but for now, here’s the text of the proposed plan according to the NY TImes.  Please read it and let congress know what you think!

gk

LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY

TO PURCHASE MORTGAGE-RELATED ASSETS

Section 1. Short Title.

This Act may be cited as ____________________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.–The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.–The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for–

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.–The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets.–The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.–The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets.–The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.–The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.–The term “Secretary” means the Secretary of the Treasury.

(3) United States.–The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.

I received some rather heated emails in response to a post I made on a wind energy forum.   In the post, I gave my response to a (rather lengthy) post calling for government mandated alternative energy goals, subsidies for alternative energy, mandatory replacement projects, and in general complaining that their pet project/business wasn’t being paid for with tax money - or government mandated private spending.

Most were of the “we’re subsidizing Big Oil, why not (insert pet project here) too?” variety, along with a couple of ”Big Oil/utility companies/automotive industry/government are suppressing alternative energy development” type conspiracy types mixed in.

Anyway, it got me to thinking about “big oil subsidies”, so I decided to do a bit of research to see just how much tax money is spent on “big oil subsidies.”

To summarize about 8 hours or research - I can’t find any.  Zip, nadda, zilch.  If anyone can point me to an example of a direct subsidy to the oil industry, I would appreciate it.

Note: I’ve read arguments where the federal and state gas taxes are a subsidy to big oil - because without state and federal highways, the oil industry couldn’t sell as much oil.  In a word, bullshit.  If all cars were running on hydrogen fuel cells (with the hydrogen being generated by solar power) we’d still need highways - where would the money come from without gas taxes?  I won’t belabor the point - think about it.

Some claim that “big oil gets special tax breaks” so I also looked at Exxon’s (the biggest of “big oil”) 2007 annual earnings statement.  Go to page 38 to see these numbers.

While it’s true that Exxon made over $70 billion in 2007, what’s often not reported is that they paid almost $30 billion ($29.864 billion to be precise) in taxes on that $70 billion of income.   That’s a 42% tax rate! 

Chevron made $32 billion in 2007, and they paid $18.6 billion in taxes.  That’s a 58% tax rate!

For comparison, GE made $26.6 billion in 2007, and paid $4.1 billion in taxes. That’s a 15% tax rate. 

IBM made $14.4 billion in 2007, and paid $4 billion in taxes.  That’s a 27% tax rate.

Google made $5.6 billion in 2007, and they paid $1.4 billion in taxes.  That’s a 25% tax rate.

Would someone please explain how “big oil” is getting a tax break in comparison with other “big” companies/industries?  Anyone? 

As to the argument that the oil companies are making too much money while we’re suffering at the pump and at home with huge heating bills - you need to remember that the oil companies have purchased rights to the oil they’re selling at market prices.  It’s the same as a farmer making triple the profit of the previous year because corn or soybeans have tripled in value.  Crap, now I’m gonna rant….

You want to talk about subsidies, look out your window the next time you’re flying across the country.  See those amber waves of grain?  Did you know that those farmers received over $5 billion in DIRECT payments in 2007?

I emphasised DIRECT because that’s tax dollars straight to the pockets of farmers as subsidies.  That’s not counting the $1.8 billion that we (via the federal government) are paying farmers NOT to farm almost 37 million acres under the CRP program in 2008 - despite record corn, soybean, and wheat prices. 

Meanwhile, despite the high cost of fossil fuel, alternative sources of energy still aren’t competitive without tax dollars.  There are thousands of websites dedicated to showing you how to collect subsidies for solar power, and over 80% of the wind energy generated is MANDATED to be purchased.  In addition, the federal government alone (not counting state and local subsidies) spent $745 million in DIRECT subsidies for wind power.

I want someone, anyone, to show me how we do the same with “big oil”.  Please. 

Is the government directly paying oil companies NOT to produce oil - like they do with farmers?  Is the government directly making  payments to oil companies to support the price of their product - despite record commodity prices - like they do with farmers?  Is the government directly paying oil companies for every barrel of oil they produce - like they do with wind and solar power?

If so, I’m sorry, I can’t find it.   Show me.

All that being said, I don’t think we should pay subsidies to anyone, for anything.  To those who have emailed me saying “nuclear/hydro/solar/hydrogen is subsidized, why shouldn’t (insert pet project) be subsided too?” I say tough shit sherlock.

I don’t want tax dollars to be spent on ANY pet projects.  No tax breaks for anyone, in any industry.  Everyone should pay the same tax rate - you make more, you pay more.   Any questions?

If no subsidies means that wind and solar (or biomass or hydrogen or whatever your pet project is) isn’t competitive with traditional energy sources at the current price levels, so be it.  Maybe it will be competitive when oil is $200/barrel, or $400/barrel. 

I don’t have time left to get into the whole ethanol issue tonight, but suffice it to say that I don’t think ethanol subsidies (or special tax breaks!) are a good idea either.

Here’s the really weird part - I fully support alternative energy sources.  Until about a year ago, I lived in a marginal wind resource area in MO, and I REALLY tried to make the numbers work so I could install a wind turbine on my property.  I even seriously looked into buying some land in Northwest MO where I could lease it to utility scale operations.  Because of my job,  I now live in Knoxville TN, and the wind resource here isn’t even close to making the numbers work.

If I had a chunk of change socked away, I’d be buying land in good wind resource areas like Texas and western Oklahoma and North Dakota right now, because I think wind will eventually be competitive with traditional energy sources, and I’d like a piece of that economy.  But I’m still paying off my house in Knoxville, and I won’t speculate with my money until I’m personally secure financially.

One email response I received to the post (remember the post above that started all of this?) suggested that this discussion didn’t belong on the message board, because “this is a small wind discussion list, not a forum on government policies.” 

If that’s the case, why are messages supporting wind subsidies (even urging members to write their congressmen about particular bills) deemed perfectly fine, but any message opposing that socialist point of view deemed unfit?

I’m been a member of the AWEA Wind Home forum on Yahoo for a couple of years, and I’ve learned a lot.  I guess I’ll go back to lurking quietly since my preferred methods differ from those expressed by some alternative energy nazis.

gk