Conservatives in Congress are resting their objections to effective green economy legislation on a bogus stat. Conservative leaders like Rep. John Boehner (R-OH) and Sen. Mitch McConnell (R-KY) are attacking the cap-and-trade proposal before Congress by claiming that it would “cost every American family up to $3,100 per year in higher energy prices.”

This is a deliberate lie.

They seem to be getting this number from an intentional misinterpretation of a 2007 study performed by a group of researchers at the MIT.

In an interview with PolitiFact, John Reilly, an MIT professor and one of the authors of the study, explained about this $3,100 claim:

“It’s just wrong. It’s wrong in so many ways it’s hard to begin.”” [...]

“Someone from the House Republicans had called me (March 20) and asked about this,” Reilly said. “I had explained why the estimate they had was probably incorrect and what they should do to correct it, but I think this wrong number was already floating around by that time.”

House Republicans apparently took the total revenues from the hypothetical cap and trade system that MIT analyzed and crudely divided it by the number of households in America, getting approximately $3,100 per family.

What they don’t mention, however, is that not only did John Reilly explicitly tell them that this was an inappropriate way to do this calculation, but that MIT had determined the net welfare effect on a typical family and the burden would be less than 1/40th what they claim, and wouldn’t occur until 2015.

As PolitiFact explains: “The report did include an estimate of the net cost to individuals, called the “welfare” cost. It would be $30.89 per person in 2015, or $79 per family if you use the same average household size the Republicans used of 2.56 people.” In exchange, we’d get a clean & renewable energy economy, decreased reliance on oil, and a safer climate for the world.

The reason Boehner’s methodology is totally inappropriate?

“That’s just not how economists calculate the cost of a tax proposal, Reilly said. The tax might push the price of carbon-based fuels up a bit, but other results of a cap-and-trade program, such as increased conservation and more competition from other fuel sources, would put downward pressure on prices. Moreover, consumers would get some of the tax back from the government in some form. [In this case,President Obama wants to use revenues from cap-and-trade to fund a tax cut for 95% of working families]“

When conservatives tell you you’d see your energy bills go up $3,100 every year, it’s not distortion or spin, it’s just a lie.

Cross-posted at ThinkProgress.

As debate on the 2010 budget began in the Senate today, Sen. Jeff Sessions (R-AL) appeared on CNBC to explain an amendment to the bill that he is proposing. Sessions’ plan is to implement a two year federal spending freeze, to be followed by three years with no more than one percent spending growth. Sessions characterized the amendment as “perfectly responsible.”

Noting that “it’s very easy to throw rocks and shoot spitballs,” CNBC’s Donny Deutsch then asked Sessions three times where in the budget he would cut spending. Sessions refused to answer each time, finally claiming that he can’t specify cuts because he doesn’t “have access” to the same information that President Barack Obama does. Watch it:

Of course, a spending freeze is only “perfectly responsible” if you find it perfectly responsible to endanger the economic recovery with anti-stimulus. Sessions doesn’t seem to grasp this at all, as his justification for the freeze is that the stimulus was enacted.

And Deutsch, who is emerging as the occasional voice of reason at CNBC, was spot-on in pressing Sessions as to where he would make cuts. As Hilzoy noted, Republicans have essentially “proposed a whole raft of new tax cuts and only one specific spending cut, ‘ending the bailouts.’” Indeed, there are legitimate debates to be had about priorities in the budget — and there are probably woefully inefficient and fraud-ridden programs that can be pared back — but the Republican position has been to advocate the “dramatic effect” of a spending freeze. Given the economic climate that we’re in, that’s simply not productive.

Today, Neil Barofsky, the Special Inspector General for the TARP, appeared before the Senate Finance Committee to lay out his efforts to track TARP money. Barofsky explained that his office has asked for and received responses from all of the TARP recipients regarding their use of the funds, which he claimed directly rebuts the Treasury Department’s charge that tracking the money is “challenging at best.” As Barofsky said:

One thing, however, was apparent from the responses – complaints that it was impractical or impossible for banks to detail how they used TARP funds were unfounded. While some banks indicated that they had procedures for monitoring their use of TARP money, others did not but were still able to give information on their use of funds.

This is a big improvement over where we were just a few months ago, when the banks simply refused to provide information about where their TARP funds were going. Whether they’ve broken down and provided answers because someone is actually putting some effort into getting them, or because of the bad PR connected to all the secrecy is anyone’s guess, but this is a promising development.

So where is the money going? Last week, JP Morgan CEO Jamie Dimon said that banks were using “some” TARP money appropriately. In a report he provided to the committee, Barofsky fleshed this out a bit more:

Respondents provided diverse answers to how funds received have been used such as to strengthen the capital base of individual banks providing a foundation for lending activities; retiring debt, purchasing mortgage backed securities, increasing credit lines, making loans, etc.

Now, its not immediately worrisome that banks are buying mortgage backed securities, but as we noted last week, some bailed-out banks may be speculating on toxic assets with TARP money. This is something worth keeping an eye on.

Barofsky said that his report “makes an even stronger case for a recommendation we made back in December and which up until now has not been adopted — Treasury should require TARP recipients to monitor their use of funds and be required to provided certified reports to Treasury on how they are using taxpayer money.”

Elizabeth Warren, chair of the TARP’s Congressional Oversight Panel, reiterated this, and told the committee that “we do not seem to be a priority for the Treasury Department.” Indeed, while oversight seems to have improved slightly, the TARP is still not transparent enough to prevent the banks from gambling with taxpayer money.

Today, President Barack Obama issued an ultimatum to the American auto industry, “laying out strict standards that the carmakers must meet to get more government aid.”

This comes one day after General Motors CEO Rick Wagoner resigned at the White House’s request. As the Washington Post reported, “the administration effectively rejected as untenable the business plans that GM and Chrysler had submitted to restructure their companies,”a failure for which Wagoner was the casualty.

Wagoner’s ouster does bring up an interesting question, though: why is the administration okay with dismissing the head of an auto company, while going to great lengths not to get involved with personnel decisions at federally bailed-out financial institutions (aside from AIG)? As Rep. Thaddeus McCotter (R-MI) put it, “when will the Wall Street CEOs receiving [bailout] funds summon the honor to resign? Will this White House ever bother to raise the issue? I doubt it.”

There does seem to be a bit of a double standard when it comes to the respective rescues of the financial system and the auto industry, even beyond management decisions. Ali Frick at ThinkProgress noted that during the AIG bonus debacle, AIG’s contracts were considered sacrosanct, while United Auto Workers has repeatedly agreed to “make major concessions in its contracts,” in an attempt to make the auto companies viable.

So what’s the difference? Tim Fernholz posited that “it’s not a problem of political clout that allows bankers to be more insulated from political pressure, it’s a problem of knowledge“:

Though the auto industry has a lot of problems that will be difficult to solve, those problems are easier to understand and chart, because at the end of the day, manufacturing is a comprehensible industry. Meanwhile, the banks aren’t making anything but bets, and they’re making insanely complicated bets that are not clearly understood.

Fernholz added that he believes that “the administration is much more likely to make bolder moves” once the banks’ stress tests are complete. And maybe this will be true, if the stress tests confirm that the banks are in far worse shape than previously thought.

But that doesn’t change the fact that the government has expected the auto companies to profoundly change the way in which they do business, while not asking for the same level of change from the financial giants. Even within AIG, executives called the Credit Risk Committee, who “oversaw some of the company’s biggest bets,” are still plying their trade.

So as Paul Kedrosky put it, if you want to make catastrophic mistakes and keep your job, “you need to do it in a place where your errors nearly take down global capitalism.” Otherwise, “keep your resume up-to-date.”

Last week, we noted that NPR let Rep. Paul Ryan (R-WI) trash the spending in the Obama administration’s proposed budget, without having to answer for the deficit effects of his own proposal to slash taxes for the wealthy and corporations. In an appearance on C-Span yesterday, Ryan did not get off so easily, and his meandering answer about small businesses and the stimulus made it abundantly clear that he has no idea what his tax cuts would mean for the deficit:

Q: What is it going to mean for the deficit? You made a lot of hay about deficit spending with the Democrats’ budget. It seems like a tax cut is only going to add to that deficit.

RYAN: We think we need to make up that difference on spending. We think we need to grow out the economy with pro-growth tax policy…Look, we have a massive deficit right now, you can’t balance the budget tomorrow because it’s out of control, but we need to show the economy and the American people that we have a plan and a glide path to get our fiscal house in order and to grow our economy by helping entrepreneurs and small business people, not by raising their taxes, but by lowering their taxes.

Watch it:

Kudos to Politico’s Patrick O’Connor for asking Ryan this question, even if Ryan artfully dodged the answer. Fortunately, Citizens for Tax Justice ran the numbers on Ryan’s income tax proposals. Here’s what they found:

- Over a fourth of taxpayers, mostly low-income families, would pay more in taxes under the House GOP plan than they would under the President’s plan.

- The richest one percent of taxpayers would pay $100,000 less, on average, under the House GOP plan than they would under the President’s plan.

- The income tax proposals in the House GOP plan…would cost over $300 billion more than the Obama income tax cuts in 2011 alone.

That’s $300 billion more annually, without factoring in the cost of cutting the corporate tax and eliminating the capitals gains tax, both of which Ryan also proposed. As Lee Fang pointed out on ThinkProgress, Ryan conceded that his budget would increase the deficit “a lot.” It might behoove him to figure out how much of that comes from his radical, regressive tax plan.

According to Congress Daily, Sen. Harry Reid (D-NV) said that he is willing to “drop a cram-down provision from a House-passed banking bill if the language threatened to keep the Senate from passing the overall bill”:

If we can’t get the votes for that, and I am hopeful we can — I am semiconfident we can — then what I’ll do is take that off [the bill] and do the other banking provisions.

Reid’s move “seemed to acknowledge assertions by Sen. Evan Bayh, D-Ind., and others that the cram-down bill cannot pass due to opposition from Republicans and some Democratic moderates.” It also acknowledges that Reid is willing to pass a bankruptcy bill that has nothing to do with bankruptcy.

Of course, the Republican opposition has come in the form of a steady stream of misinformation, fueled by the Mortgage Bankers Association’s talking points. As Congress Daily noted, “eliminating or watering down the cram-down provision would be a win for the banking industry.”

Our guest blogger is Lisa Gilbert, a Democracy Advocate with U.S. PIRG.

President Obama and congressional leaders responded quickly to the latest AIG scandal. But here’s the problem: the financial hijinks of AIG, mortgage bankers, and others had already triggered our economic woes. Part of the reason better regulations were not put in place years ago is that AIG and others in the financial sector have contributed $1.3 billion dollars to congressional candidates since 2000. To make sure this can never happen again we need a clean system of campaign financing, one where politicians listen to regular people.

How do we make this a reality? The bipartisan bicameral Fair Elections Now Act, which will be introduced tomorrow in the Senate Press Gallery by Senators Dick Durbin (D-IL) and Arlen Specter (R-PA), and Reps. John Larson (D-CT),Walter Jones (R-NC), Jim Cooper (D-TN), and Todd Platts (R-PA).

Under this bill, a candidate must demonstrate a broad base of community support by collecting a set number of small dollar donations from their constituencies at home. Once qualified, candidates receive a grant to help kick off their campaigns, and receive matching funds at a 4:1 rate for small dollar donations between $5 and $100.

Our nation’s current campaign system forces elected officials onto a never-ending fundraising treadmill — the day after they take office, politicians must turn an eye towards raising enough money for their reelection. This climate often leads to legislators spending more time talking to influential big donors and deep-pocketed interest groups, than focused on the vital issues of the day.

In a recent bipartisan poll by the Tarrence Group and Lake Research, nearly four in five voters thought that large contributions and their influence would prevent Congress from tackling big hot button issues like the mortgage melt down, our out of control health care costs, and the fragile national economy. Voters in six states this past November also expressed their strong support for state candidates who used Fair Elections-style systems. In both Connecticut and Maine, more than 80 percent of the seats in their incoming legislatures will be held by those who ran using Fair Elections programs.

Every major demographic group solidly favors the Fair Elections proposal. This includes remarkable support across party lines and virtually no difference by region. Nationwide people understand that in order to actually usher in the change administration that President Obama promised, we need to change the “business as usual,” mentality in Washington, and help politicians get off the treadmill and “on” tackling the real issues of the day.

Today, President Barack Obama met with the CEOs of the nation’s largest banks, in order to discuss his plans for economic recovery and revamping financial regulation. The CEOs emerged from the meeting affirming that they are committed to doing what’s right for the country. “We’re all in this together,” John Stumpf, CEO of Wells Fargo, said. “We’re trying to do the right thing for America.”

This theme was echoed by JP Morgan Chase CEO Jamie Dimon during an interview with CNBC. However, Dimon stated that the way in which the banks are “doing the right thing for the country” is by using just “some” TARP money appropriately:

Everyone in the room came from the standpoint they’re going to do what’s right for the United States of America and not their institutions. And that some of the TARP money is being used to finance businesses and to do what we were asked to do with it. [...] But I think most people were common that the point of the TARP was to use it for the country. There was a lot of criticism about it, but that shouldn’t stop you from doing the right thing for the country.

Watch it:

If only “some” of the money is being used “doing what’s right for the country,” then where is the rest going? As Yves Smith at Naked Capitalism picked up on, it may be going to game Treasury Secretary Timothy Geithner’s public-private investment fund:

As Treasury Secretary Tim Geithner orchestrated a plan to help the nation’s largest banks purge themselves of toxic mortgage assets, Citigroup and Bank of America have been aggressively scooping up those same securities in the secondary market…While some observers concur that the buying helps revive a frozen market, others argue the banks are gambling away taxpayer funds instead of lending.

Citi and BofA have taken heavy losses on toxic assets, and will likely take billions of dollars more. They were given TARP money to offset these losses and to lend, but instead they are using it to speculate on even more toxic assets. They seem to be hoping that Geithner’s plan will drive the assets’ values up. But whatever the rationale, this is essentially doubling-down on toxic assets with taxpayer money. So much for doing what’s right for the country.

Yesterday, House Republicans released their “alternative” to the Obama administration’s budget, which was roundly panned by the press because it included so few numbers or details. The Associated Press called it “a glossy pamphlet short on detail,” while MSNBC’s Contessa Brewer noted that “they sent us some paperwork. It’s got no numbers attached.”

One of the plan’s architects is Rep. Paul Ryan (R-WI), who is crafting the actual budget legislation that Republicans plan to bring to the House floor next week. We’ve noted before that Ryan’s vision for the budget is lots of tax cuts for the wealthy, and little else. NPR interviewed Ryan yesterday, and he predictably launched into a tirade against the Obama administration’s plans:

We think we need to focus on controlling spending and reforming government. We don’t think the answer is to borrow and spend our way to prosperity, so we’re not going to propose all this new spending they’re proposing and that’s going to help us save money and reduce our borrowing costs.

Here’s a golden opportunity for NPR! Having let Ryan air his grievances about Obama’s spending, they could have asked him: “You propose lowering the tax rate on the top three income tax brackets to 25 percent, and having everyone who makes up to $100,000 — and is currently paying 25 percent — pay just 10. You also want to completely eliminate the capital gains tax. Won’t that cost a lot in terms of lost revenue, while making the tax code much more regressive?”

Alas, NPR didn’t bring up any of the radical tax policies that Ryan has put forth, or ask him to defend any part of the Republicans’ plan, including their threat to undo the stimulus. As Rep. Mike Pence (R-IN) demonstrated yesterday, Republicans really have no idea how much their tax cut bonanza will cost. NPR should have at least pushed Ryan a little on this, instead of allowing him to wax poetic about the “need to focus on controlling spending.”

NYU professor Nouriel Roubini — who earlier this week expressed some lukewarm support for Treasury Secretary Timothy Geithner’s bank rescue — said today that even if the plan is successful, it won’t solve our banking problem or dispel the need to nationalize insolvent institutions:

In my view you can apply the Geithner plans to the banks that are solvent, but illiquid and undercapitalized. But you can not apply them to banks that are insolvent. So first you have to do a stress test, and then figure out through a triage the banks that you should rescue and those you should take over. So I’m still of the view that some banks are going to have to be nationalized, and for them the plan does not apply.

Watch it:

As The Economist put it, “if America wants to avoid the fate of Japan in the 1990s…it is vital that its banks face reality“:

Done rigorously, the stress tests could force the banks to come clean about their balance-sheets and lead to the forced sale of assets into the government’s toxic-asset programme. If a bank cannot raise the capital to offset its losses, it should be deemed insolvent and temporarily nationalised. Mr Geithner’s proposal is part of a process that could lead to more certainty — even healing — in America’s banking system. But only if he has the gumption to turn his half-plan into a whole one.

Today, House Republicans released their budget plan, entitled “The Republican Road To Recovery.” They claim the plan “curbs spending, creates jobs and lowers taxes, and controls the debt; and it will soon have our economy growing again.”

For an “alternative budget,” however, it is very short on numbers, including no mention of deficit implications. And the plan for creating jobs and sparking economic growth is actually undoing the stimulus and then cutting additional spending:

Republicans propose to undo the recent reckless and wasteful Democrat spending binge included in the so-called “stimulus” and omnibus bills. In addition, Republicans would cut overall nondefense spending by reforming or eliminating a host of wasteful programs deemed ineffective by various government entities.

Of course, stimulus dollars are already on their way out the door, so it’s difficult to envision how one would “undo” the bill. But even if it could be done, it would be an act of neo-Hooverism that would make Sen. Chuck Grassley’s (R-IA) insane three-year spending freeze look wise and prudent. In any case, this plan shows that Republicans are wedded to the notion that the country needs to “[limit] the federal budget from growing faster than family budgets,” when what it needs is the federal government to provide the demand that households can’t.

And while expressing great concern for the spending that goes along with stimulating the economy, Republicans express very little concern for the deficit effect of massive tax cuts for the rich. Their plan calls for lowering the 35 percent, 33 percent and 28 percent income tax brackets to 25 percent, which are hugely regressive cuts that would gut government revenue. (They also sweep into the 10 percent bracket everyone making up to $100,000, a level which currently falls into the 25 percent bracket.)

As Matthew Yglesias noted, “It’s strange that the Republicans railing about long-term deficits seem to love long-term deficits when the point of the deficits is to further enrich the rich.” Indeed, the plan shows that Republicans are very concerned with preserving the wealth inequality of the Bush era, while dismissing the need to substantively address health care, climate change, or job creation.

Today, both the House and Senate budget committees are marking up their respective budget documents. In advance of the House meeting, Rep. Paul Ryan (R-WI) appeared on CNBC to talk up his “alternative budget,” which he has previewed in the Wall Street Journal and plans to release next week. CNBC guest-host Fred Malek said that Ryan’s plan “gives me a lot of confidence,” and is “going in the right direction”:

RYAN: We’re not going to do cap and trade, we’re not going to do any tax increases. [...] We’re going to go in a completely different direction and show the American people how we would do things much much differently to restore growth and confidence to our economy, keep the American economy growing, and not switch over to a Europeanized type of economy.

MALEK: Paul that gives me a lot of confidence what you just said. I think you’re absolutely going in the right direction.

Watch it:

Ryan never explained on-air what his budget entailed, but a look at the details explains CNBC’s wholehearted support. Ryan’s plan, as it is, consists almost entirely of massive tax cuts for corporations and the rich, including:

- Lowering the top marginal tax rate to 25 percent

- Lowering the corporate tax rate to 25 percent

- Completely eliminating the capital gains tax

As Ben Furnas pointed out yesterday, this budget plan gives the average CEO a $1.5 million tax break, while doing precisely nothing for minimum wage workers. As Office of Management and Budget Director Peter Orszag said during a conference call today, “in terms of an alternative vision, and to my understanding that’s the only thing out there, the flaws in it are pretty clear.”

Lacking from Ryan’s budget is any effort to deal with the pressing issues that Obama’s budget tackles: health care, energy independence, and education reform. Essentially, CNBC is confident that the “right direction” is further enriching the rich while ignoring all of the problems that are crippling the economy.

Earlier this month, Rep. Paul Ryan (R-WI), ranking Republican on the House budget committee, published an alternative proposal to the Obama budget in a Wall Street Journal op-ed. The plan: doubling down on Bush-style economics.

Like the Bush tax cuts, Congressman Ryan and his allies in Congress would cut taxes for the wealthiest Americans and reject public investment or a fairer tax code that would ensure broadly shared prosperity.

The Center for American Progress Action Fund finds that Congressman Ryan’s proposals would cut taxes for the average CEO by $1.5 million per year and do nothing at all for a minimum wage worker.

Ryan calls for lowering the 35%, 33% and 28% income tax brackets to 25%, eliminating the capital gains tax, and cutting the top corporate tax rate from 35% to 25%. These hugely regressive tax cuts would extend the Bush economic strategy of massive tax cuts for the wealthy and gutted government revenue.

In 2008, the average CEO of one of America’s largest 800 companies made $3.3 million in salary and bonuses, $6.3 million in stock gains, and $3.2 million in “other compensation” for a total of $12.8 million. Under Ryan’s plan, the average CEO’s $6.5 million in paid income would drop from a marginal tax rate of 35% to 25% and his $6.3 million in stock gains would go from being taxed at 15% to being totally tax free. This tax change would save these CEO’s over $1.5 million every year.

A minimum wage worker, however, making around $15,000/year, would see no benefit at all from these proposed tax changes. They already only pay federal income taxes in the 10% marginal tax bracket, are unlikely to have any capital gains, and would thus see no change under the conservative budget plan.

The Bush tax cuts ushered in almost a decade of tepid economic growth and stagnant wages for American families. Ryan says he and his fellow conservatives are offering to be “part of the solution, not part of the problem.” Why, then, are they only offering more of the same?

Methodology notes after the jump. Read more

Today, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner testified before Congress regarding the AIG bonus debacle. In his opening statement, Bernanke expressed remorse that AIG has not been nationalized:

If a federal agency had had such tools on September 16, they could have been used to put AIG into conservatorship or receivership, unwind it slowly, protect policyholders, and impose haircuts on creditors and counterparties as appropriate. That outcome would have been far preferable to the situation we find ourselves in now.

Indeed, a lot of the AIG mess could have been prevented if it was just nationalized at the beginning. Instead, it’s been kept alive by infusion after infusion of federal funds, without the government ever exercising any of the control that should come from an 80 percent ownership stake. As Kansas City Fed President Thomas Hoenig pointed out, we’ve simply nationalized institutions “piecemeal, with no resolution of the crisis.”

Bernanke’s wider point, though, is that there is no formal process that currently exists for nationalizing huge, complex financial institutions. According to a Washington Post report, the administration is well aware of this, and is considering a plan that would grant Treasury such authority:

Besides seizing a company outright, the document states, the Treasury Secretary could use a range of tools to prevent its collapse, such as guaranteeing losses, buying assets or taking a partial ownership stake. Such authority also would allow the government to break contracts, such as the agreements to pay $165 million in bonuses to employees of AIG’s most troubled unit. The Treasury secretary could act only after consulting with the president and getting a recommendation from two-thirds of the Federal Reserve Board, according to the plan.

According to Reuters, the FDIC has also “hinted it could take on that job, with Chairman Sheila Bair saying recently that the agency’s model for failed banks works well.” Either way, the change would have to be passed through Congress.

Nationalizing these giant firms would not be easy or inexpensive. But, there is not much else that can feasibly be done with giants like AIG or Citigroup — they’re too-big-to-fail and in no shape to carry on as they once did. If nationalized, AIG and firms like it could be wound down and broken up, and hopefully a new regulatory framework will be implemented to keep firms from growing so large in the future.