Catching up on the day’s news, we see the House passed H.R. 5351, the Renewable Energy and Energy Conservation Tax, by a vote of 236-182. Eight Democrats voted no, 17 Republicans voted aye. Roll call here.

House Republican Whip Roy Blunt issued a statement:

As oil settles in above $100 a barrel, and natural gas makes its way toward $10 a thousand, the only thing the bill on the floor tonight would do is ensure today’s prices turn into tomorrow’s bargains.

Majority Leader Steny Hoyer also had a statement:

Last year alone, the five largest oil companies had a combined profit of $123 billion – which only provokes this question: Do these companies need and deserve these taxpayer subsidies? The answer, of course, is no.

From the Statement of Administration Policy on H.R. 5351, the Renewable Energy and Energy Conservation Tax Act.

[The] bill would use the tax code to target tax increases on a specific industry in a way that will lead to higher energy costs to U.S. consumers and businesses. If this legislation is presented to the President in its current form, his senior advisors would recommend that he veto the bill.

Specifically, the Administration strongly opposes the bill’s repeal of the manufacturing deduction for a segment of a single industry. This targeted tax increase would reduce the Nation’s energy security rather than improve it. Industries should be taxed on a level playing field, and that field should be leveled by lowering rates, not by raising them; such increases would create an even greater disadvantage with respect to foreign competitors.

Changes to tax rules on foreign operations would also damage the ability of U.S. companies to compete on major energy projects while possiblity violating international trade rules, the Administration says.

From The National Review Online:

William F. Buckley Jr. (1925-2008) [Kathryn Jean Lopez]

I’m devastated to report that our dear friend, mentor, leader, and founder William F. Buckley Jr., died this morning in his study in Stamford, Connecticut.

He died while at work; if he had been given a choice on how to depart this world, I suspect that would have been exactly it. At home, still devoted to the war of ideas.

As you might expect, we’ll have much more to say here and in NR in the coming days and weeks and months. For now: Thank you, Bill. God bless you, now with your dear Pat. Our deepest condolences to Christopher and the rest of the Buckley family. And our fervent prayer that we continue to do WFB’s life’s work justice.

02/27 11:13 AM

Our favorite WFB book: “The Unmaking of a Mayor.”

From The New York Times obituary, recalling President Ronald Reagan’s tribute at the magazine’s 30th anniversary celebrations:

“You didn’t just part the Red Sea — you rolled it back, dried it up and left exposed, for all the world to see, the naked desert that is statism,” Mr. Reagan said.

“And then, as if that weren’t enough,” the president continued, “you gave the world something different, something in its weariness it desperately needed, the sound of laughter and the sight of the rich, green uplands of freedom.”

UPDATE (2 p.m.): A statement from the editors of The National Review.

Officials in East Tennessee are proud the region is expected to come into compliance with the Environmental Protection Agency’s current smog standard by early next year. It took a lot of hard work, including installing power plant scrubbers.

Then they found out EPA is about to issue a tougher ozone rule in March that critics contend is probably unattainable in most of the country and wouldn’t improve public health. Plus, it could cause economic hardship and job losses as communities grapple to enact regulations to meet the new standard.

Here’s what Lynne Liddington, director of air quality management for Tennessee’s Knox County, had to say about the new rule in today’s Knoxville News Sentinel.

“They are coming in with a whole new standard before we have had sufficient time to meet this one. That’s like saying I plan to lose 20 pounds, and I lost 12, and now you tell me that I need to lose 30.”

Tennessee officials said EPA should let communities meet the current smog standard and then decide whether the bar should be raised. Officials project 53 of Tennessee’s 95 counties could be in violation under the new rule.

To read the story in full click here.

The Wall Street Journal reported today on the question of whether extended Daylight Saving Time saves energy. The story, “Daylight Saving Wastes Energy, Study Says” (subscription required) An economist studied Indiana’s experience with Daylight Saving Time, and found:

Having the entire state switch to daylight-saving time each year, rather than stay on standard time, costs Indiana households an additional $8.6 million in electricity bills. They conclude that the reduced cost of lighting in afternoons during daylight-saving time is more than offset by the higher air-conditioning costs on hot afternoons and increased heating costs on cool mornings.

We note, again, that the 2005 Energy Policy Act, which lengthened DST by three weeks, required a study of the effect. From the PL109-58:

SEC. 110. DAYLIGHT SAVINGS.
(a) AMENDMENT.—Section 3(a) of the Uniform Time Act of 1966
(15 U.S.C. 260a(a)) is amended—
(1) by striking ‘‘first Sunday of April’’ and inserting ‘‘second
Sunday of March’’; and
(2) by striking ‘‘last Sunday of October’’ and inserting ‘‘first
Sunday of November’’.
(b) EFFECTIVE DATE.—Subsection (a) shall take effect 1 year
after the date of enactment of this Act or March 1, 2007, whichever
is later.
(c) REPORT TO CONGRESS.—Not later than 9 months after the
effective date stated in subsection (b), the Secretary shall report
to Congress on the impact of this section on energy consumption
in the United States.
(d) RIGHT TO REVERT.—Congress retains the right to revert
the Daylight Saving Time back to the 2005 time schedules once
the Department study is complete.

The Secretary in this case is the Secretary of Transportation, who overseas time zones in the United States.

We ask again: Nine months after March 1, 2007, is December 1, 2007, right? It’s now almost March, 2008. So where’s the report?

After all, we switch again on March 9th this year. It would sure be nice to know if there’s any particular reason why.

The Supreme Court considers oral arguments today in the case of Exxon Shipping Co. v. Baker, with the issue being whether the $2.5 billion in punitive damages levied against the company for the 1989 Exxon Valdez oil spill is excessive. The NAM has filed an amicus brief in the case, which, among other things, questions whether such a huge, disproportionate punishment — on top of more than $3.4 billion Exxon has already spent in penalties, claims, clean-up, etc. — serves a legitimate deterrent factor. (The NAM news release and brief are available here.)

The counterargument is that it’s not that big of a settlement considering Exxon’s huge, huge profits. Local fisherman Andrew Wills says: “We lost everything, but they’ve seen record profits.” We appreciate the pain and dislocation, but the accident was an ACCIDENT — and certainly not caused by the desire to maximize profits. It’s been extremely costly for Exxon.

And again, we question this mindset that profits are bad or worthy of suspicion. By a scheduling coincidence (it IS a coincidence, right?) the House today considers H.R. 5351, the Renewable Energy and Energy Conservation Tax Act, which would raise taxes on oil and natural gas production by $18 billion. Debates of this sort invite a flood of anti-oil-company, anti-profit populism. “Oil companies make too much money! We must punish them!”

A recent paper by the Heritage Foundation on the House tax plan provides some context:

The suggestion that the domestic oil and gas sector is currently undertaxed may be a popular sound byte, but it is not supported by the evidence. By many measures, energy companies face tax rates comparable to, or higher than, those of other industrial sectors. For example, the average effective tax rate for major integrated oil and natural gas companies is actually higher then the average rate of 32.3 percent for the market as a whole, according to the Tax Foundation.

Also, record profits for oil companies have been accompanied by record tax bills. According to the Energy Information Administration, gross revenues from the 27 biggest energy companies hit a record high of $220 billion in 2006 (the most recent information available), well above the $188 billion in 2005 and $129 billion in 2004. But total income taxes also rose to a record high of $81 billion in 2006, compared to $67 billion in 2005 and $45 billion in 2004. This effective tax rate of 37 percent in 2006 is in line with (and actually a bit higher than) large corporations in general.

Those are facts and figures, we know, not an emotionally satisfying response to those Alaskans angered by a disrupted life or motorists ticked at $3.39 a gallon gas.

But our elected representatives — or if not them, at least our Supreme Court — should be able to base decisions on something more than populist passions and anti-wealth anger. Right?

The National Association of Manufacturers today sent a “key vote” letter to members of the House of Representatives, expressing NAM’s opposition to H.R. 5351, the Renewable Energy and Energy Conservation Tax Act. There’s much to like in the way of incentives for alternative fuels and energy efficiency, but the bill’s tax increases make the entire legislation unacceptable. From the letter:

In particular, we are concerned about provisions that would make certain oil and gas firms ineligible for the Sec. 199 deduction for domestic manufacturing activity and limit the benefit for other energy companies. The NAM believes that the energy debate should focus on increased production of all types of energy, improved conservation and efficiency, more research on technology and alternative energy, increased access to domestic sources with continued environmental protections, and improved distribution – not on new taxes on one particular industry.

Unfortunately, we have little choice but to oppose the bill because of these tax provisions.

“Key votes” are those the NAM uses to determine a member of Congress’ voting records on issues the association deems important to the manufacturing economy.

From our perspective here at the NAM, U.S. corporations are true patriots. They play an integral role in our society and are major contributors to our country’s economic growth and strong democratic government. Corporate America provides well-paying jobs for employees, investment opportunities for shareholders and high-quality products and services for consumers both here and abroad.

That’s why we are more than a little concerned about the Patriot Employers Act (S. 1945) that includes a laundry list of requirements for a company to qualify as a “patriot.” The Wall Street Journal today does a good job of explaining why this legislation would actually destroy jobs and make U.S. companies less competitive.

We agree wholeheartedly with the Journal that “what’s really unpatriotic is the 35% U.S. corporate tax rate.”

Floated last night in the Democratic presidential campaign debate in Cleveland, the idea of “opting out” of the North America Free Trade Agreement if our trade partners, Canada and Mexico, refuse to renegotiate the agreement as we demand.

Not a serious idea.

Theoretically, yes, it’s possible, but who not running for high office could possibly think that it’s a good idea? You’d have 14 years of U.S. business contracts, arrangements, supply chains, personal relationships, on and on and on, simply tossed out the window. Picture the effect on U.S. companies who have factored Canada materials and Mexican parts assembly into their product, companies perhaps just squeaking by. It’s cutting off the nose of your face to toss into the Pyrrhic victory.

The implausability of such an “opting out” also explains why the campaign vows to reopen NAFTA “or else” are just politics. The governments of Mexico or Canada would simply reject such negotiations as an economic disaster.

This kind of anti-trade pandering detracts the real issues — including manufacturing employment — involved with trade and the global economy. Moderator Tim Russert asked exactly the right question last night, positing a multitude of factors for the decline of manufacturing jobs in Ohio. As Russert characterized the study:

“MR. RUSSERT: Senator, two journalists here in Ohio wrote a piece called “Business as Usual,” which is very well known, suggesting it wasn’t trade or manufacturing jobs that were being lost because of it, but rather business as usual: lack of patents, lack of innovation, lack of investment, 70 percent of the Ph.D.s in biology, chemistry, engineering leaving the state.

The fact is, exports now have the highest share of our national income ever. Ohio ranks fourth in terms of exports to Canada and Mexico. Are you sure this has not been better for Ohio than you’re suggesting?”

The Toledo Blade Series, published in 2006, is available here: “‘Business as Usual.”

Lots of good articles on tax policy in the February/March issue of The Ripon Forum, the magazine of the Ripon Society. Featured is a piece by National Association of Manufacturers President John Engler on the R&D tax credit, “Incentive and Inventive: Smart Tax Policy Needed to Promote U.S. Manufacturing.”

It’s a comment many of us heard in our early years on the job, delivered by a demanding boss or exasperated coworker: “Work smarter, not harder!”

Manufacturers in the United States take those words to heart. They have to.

Although no strangers to hard work, America’s manufacturers know that their competitive advantage in the hard-fought global marketplace lies in the ability to work smarter. Other countries will boast lower costs of labor or raw materials, so it’s skilled and creative people who ensure America’s competitive edge – the edge that builds on research, development, investment and innovation.

For many years, a bipartisan consensus in Congress has helped maintain that American edge. Republicans and Democrats both have supported smart policies that encouraged the R&D and innovation that lead to new products, technologies and manufacturing processes. Yet year after year, Congress still does a dumb thing: It allows the federal research and development tax credit to expire, throwing U.S.-based business into a world of uncertainty and frustration.

The NAM has a recent ManuFacts summary of the R&D tax credit available here.