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President-elect Obama recently gave a speech detailing his plan to spend nearly $1 trillion on a stimulus package that would add 600,000 new employees to the government payroll while doing nothing to provide for America’s energy future.

Yesterday, Congressional Democrats followed the President elect’s lead and released their own $825 billion plan to juice the economy. Like the President-elect’s plan, the Congressional plan does nothing to lower energy prices or provide real long-term prosperity.

The road back to economic recovery and long-term prosperity will be built by an active, job-creating private-sector, paved by reliable, affordable energy, and financed by the revenues and royalties generated as a result of it. Expanding the government’s payroll in times of unemployment is no different than printing out more money in times of recession—both may change the short-term perception of the economy, but neither will improve the actual performance of it.

You can create all the new government jobs you want, but if those jobs can’t survive the night without the constant nourishment of subsidies, mandates and distorted tax treatment, you haven’t created any new wealth—only re-distributed it. A national policy that requires consumers to pay more for their energy will only price American goods above foreign ones, and contribute to economic decline.

Instead of working to create real prosperity, the President-elect and Congressional Democrats want to increase government spending, subsidies, and increased mandates. This will harm, not help the economy in the long run.

The Institute for Energy Research, AEA’s sister organization, has been hard at work debunking the studies upon which the Obama stimulus plan relies:

• Green Jobs: Fact or Fiction–An Assessment of the Literature
• Job Mirage: Obama “Green Jobs” Plan Requires Expanding Government Payroll with 600K Bureaucrats
• Green Jobs: Robbing Peter to Subsidize Paul
• It Takes a Lot of Government Green to Create a Green Job
• “Stealth Stimulus” Shouldn’t Fly Under Congress’ Radar
• The Obama Energy Agenda

AEA knows that the real solutions to America’s economic challenges will come from real Americans, not from Washington.

How would you stimulate the economy? Join the conversation and comment down below in our comment section.

President-electObama recently announced a 21st Century New Deal. He plans to quicklyspend billions on make-work projects in an effort to stimulate theeconomy. As we have reported earlier, his nominee for Director of theOffice of Management and Budget apparently disagrees with this kind ofattempt to stimulate the economy. But Obama is undaunted in recklesslyspending taxpayer dollars. For example, here’s what he said aboutenergy:

Do you feel replacing light bulbs in federal buildings is theright kind of stimulus the economy needs right now? 

Thefederal government should spend money to "replace old heating systemsand install efficient light bulbs" only if the projects make economicsense and not merely as make-work projects. When families andsuccessful companies consider upgrading heating and lighting systems,they are forced to compare the costs to the energy-savings benefits.This cost-benefit analysis is key to funding these projects. Before anObama administration spends money on make-work projects, it should makesure that there are net benefits.

If the Obama Administration spends billions of dollars replacing lightbulbs in federal buildings, this will certainly create jobs inparticular sectors, especially for fluorescent light bulb producers andthe workers who install them.

Butat the same time, Obama’s proposals would destroy jobs in otherindustries because the money has to come from somewhere. Obama’s "NewDeal" will raise its money through one ofthree methods: (a) increased taxes, (b) increased deficit spending,and/or (c) printing new money through the Federal Reserve. No matterwhich method is used, the result will be reduced output and fewer jobsin the private sector.

Do you feel replacing light bulbs in federal buildings is theright kind of stimulus the economy needs right now?  What should the newadministration be concentrating on?

Let us know what you think by commenting down below.

California’s Air Resources Board (ARB) is voting today on their plan to reduce California’s greenhouse gas emissions to 1990 levels by 2020 (about a 25% reduction). Sadly, ARB is ignoring the glaring flaws in its economic analysis.

One thing that is obvious about California’s plan is that it will be very expensive. The only way to reduce greenhouse gas emissions is either to use less coal, oil, and natural gas, or to switch to more expensive and less reliable technologies. Any plan to reduce emissions will be very expensive.

But in their zeal to push this plan, ARB released an “economic analysis” that argued that their plan to reduce carbon dioxide emissions will actually save California’s money. As soon as people outside of the ARB looked at the analysis the flaws were obvious.

First, the California’s non-partisan Legislative Analyst’s Office looked at the report. Unsurprisingly they found that ARB “failed to demonstrate the analytical rigor of its findings” and that “economic analysis played a limited role in development of the scoping plan.”

Then a peer review group of respected economists examined ARB’s economic analysis. Their report also found ARB’s report to be severely lacking. For example, Robert Stavins, the Director of Harvard’s Environmental Economics Program wrote, “I have come to the inescapable conclusion that the economic analysis is terribly deficient in critical ways and should not be used by the state government or the public for the purpose of assessing the likely costs of CARB’s plans.”

Further adding evidence of the large net costs of California’s plan is a recent report commissioned by the Electric Power Research Institute. They estimate that California’s greenhouse gas regulations will cost between 0.2 and 1.2% gross state product.

It is beyond doubt that California’s plan is costly and ARB’s economic analysis is severely flawed. But ARB has a few backers. One is the Environmental Defense Fund. EDF argues that economic analyses do not matter. This is amazing given that EDF, unlike most environmental groups, promote economic incentives to achieve conservation. But in this case, EDF merely tells us that “it’s the right thing to do” and cap and trade takes on a near religious quality because it transcends economic analysis. According to Climate Wire:

EDF’s report concedes that the state’s analysis was flawed, but makes the case that it shouldn’t have been expected to be accurate. Carbon cap-and-trade programs are so overarching that they transcend economic analyses, economist Jamie Fine said in an interview.”

"What ARB [the state Air Resources Board] has done with their economic analysis has been appropriate, to get some sense of the magnitude," Fine said. "We’re confident it’s not going to be a big effect on the economy."

"We don’t have to keep returning to these models to see whether we should be going forward with A.B. 32, because we should," Fine added. "It was a rigorous analysis that got us beyond analysis paralysis."

According to EDF, who cares that people will lose their jobs? Who cares that California’s scheme will make life more difficult in California? EDF takes it as an article of faith, without evidence, that the regulations will not “have a big effect on the economy.”

Professor Stavins of Harvard is perplexed by EDF’s analysis. He writes, “The EDF analysis seems to be saying the state’s economic analysis is limited and flawed, and hence that the state ought to go forward with its proposed policies and simply ignore its flawed analysis.”

Economic analysis matters because jobs matter. People’s livelihoods matter. But the economic livelihood of Californians does not matter to California’s Air Resources Board or the Environmental Defense Fund. If the economic livelihood of Californians matter, ARB and EDF would support real economic analyses instead of living in the land of make believe.

All across America, motorists are rejoicing as gasoline prices plummet. Low gasoline prices are a bright spot in an otherwise dismal economic picture.  But amazingly, the out-of-touch editors of the Washington Post think that the masses should not have access to affordable gasoline or inexpensive go-anywhere transportation options.

The editors opine :

[Higher gas taxes] would stimulate the market for new fuel-efficient cars; defund mischief-making petro-states; and cut carbon emissions. Not only that, it would reduce traffic, curb urban sprawl and, by giving drivers an incentive to drive more slowly, improve highway safety.

At the most basic level, the editors of the Washington Post want to drive up the costs of automobility and limit Americans’ transportation options. The Post‘s editors are apparently not happy that we have the freedom to go where they want, when we want, using the mode of transportation we find most convenient. Inexpensive personal transportation allows us to do more with our lives-it gives us greater employment options, greater schooling options for our children, greater shopping options, and greater options for recreation. In short, the editors of the Washington Post want to limit Americans’ options.

High Gasoline Prices Limit Transportation Options

The Post‘s editors note that high gasoline price stimulate the demand for fuel-efficient cars. This is true. But the editors fail to note that higher gasoline price limit Americans’ automobile options. Smaller, more fuel-efficient vehicles are not always the best. For example, a moped gets better fuel economy than a Honda Accord, but it’s easier to take the family to Grandma’s house in an Accord than a moped.
The Post‘s editors note that high gasoline prices reduce traffic. This is true because fewer people can afford to drive. The Post’s editors apparently think that pricing poor people out of the market is a good thing. In reality, reducing people’s transportation options is harmful because it limits employment opportunities.

The Post‘s editors also claim that high gasoline prices will "defund mischief-making petro-states" and "improve highway safety." Unsurprisingly they provide no evidence that either of these statements is true. If high taxes on gasoline could defund petro-states, we should have already seen that occur as a result of Europe’s exorbitantly high gasoline taxes. But even in Europe, more and more people continue to drive and dictators are still in control in Iran and Venezuela.

Transportation is a Good Thing, Not Something to be Discouraged

The editors of the Washington Post do not understand that affordable and efficient transportation is a good thing. Improved transportation is a wonderful part of modern life, allowing us to do more with less time.

The reality of modern life is that the majority of people and jobs are located in the suburbs. People have voluntarily chosen to live in the suburbs, not clustered near subway stations. For most people, automobility is necessary to more easily take care of their families. In most cases, automobility is the quickest and most affordable mode of transportation available.

High Gasoline Prices Harm Our Quality of Life

High gasoline prices and high gasoline taxes harm the quality-of-life of Americans. Contrary to the desires of the Washington Post’s editorial board, the Federal government should facilitate transportation options, not limit them. Gas taxes should pay for road improvements, not increased in an attempt to manipulate American society.

The American Energy Alliance recently sent comments to EPA on EPA’s plan to regulate greenhouse gases. We will continue to fight against ideological fringe groups to who are working to dramatically increase the cost of energy in America.

This past summer, EPA released an "Advance Notice of Proposed Rulemaking" (ANPR) that outlined how it might go about shoehorning the ability to regulate carbon, at best (outright criminalize it, at worst) into the authority already assigned to the EPA by the Clean Air Act. The comment period for these proposed regulations ended on Friday.

AEA was instrumental in building an aggressive coalition aimed at exposing the folly of allowing an army of federal bureaucrats to unilaterally regulate 85 percent of the output of America’s economy. We used our grassroots network to generate more than 6,600 comments from individuals to EPA, and produced a series of detailed comments explaining some of the many ways in which theANPR was flawed. 

The following represent some of the highlights of our analysis:

Author Michael Crichton passed away last week. His books were focused on controversial issues including medical malpractice, airline safety, biotechnology, nanotechnology, and Japan’s economic dominance. His most controversial book was State of Fear , a book about global warming where environmentalists are the bad guys. The book was controversial because Crichton challenged conventional wisdom about global warming.

But Crichton was not ignorant of global warming science and policy. He spent a lot of time studying the issues and have some important insights. As he was working on State of Fear, he gave provocative lecture at the California Institute of Technology titled "Aliens Cause Global Warming." To commemorate Crichton’s passing, the Wall Street Journal has republished his lecture here . Crichton’s critiques of the global warming models are still valid today.