Bernanke Calls Ron Pauls “Audit The Fed” Bill a Nightmare Scenario

The House voted Wednesday overwhelmingly to validate Rep. Ron Paul’s (R-TX) legislative decade long battle to get the Government Accountability Office (GAO) to audit the very private inaccurately named Federal Reserve, despite the central bank’s chairman warning that such action could result in a “nightmare scenario.”

Members of the House passed Paul’s “Audit the Fed” bill by a vote of 327-98. Only one Republican, Rep. Bob Turner(NY), voted against the bill. 89 Democrats joined Republicans in passing the bill, including outgoing Rep. Dennis Kucinich (D-OH), who cited recent reporting by The Washington Post that claims the New York Federal Reserve knew but did not tell regulators about manipulation a key inter-bank lending rate known as Libor.

“The Fed creates trillions of dollars out of nothing and gives it to banks, Congress is in the dark,” he said. “The Fed sets the stage for the subprime meltdown, Congress is in the dark. The Fed takes a dive on Libor, Congress is in the dark. The Fed doesn’t tell regulators what is going on, Congress is in the dark.”

Senate Majority Leader Harry Reid (D-NV), must like being in the dark as he has refused to bring the bill up.

Paul supported a Fed audit in 2010 that was incorporated into the Dodd-Frank Wall Street Reform and Consumer Protection Act. That audit required the Fed to disclose its lending practices during the 2008 financial crisis, revealing that the bank doled out more than $16 trillion in loans and assets swaps to financial institutions all over the world in an effort to stabilize global markets. Paul was not satisfied as he said ultimately the Dodd-Frank audit was a stripped-down version of his original proposal because it did not examine Fed monetary policy negotiations as well.

Speaking last week to the House Financial Services Committee, which is chaired by Paul, Bernanke warned that any effort by Congress to undermine the independence of the Fed would weaken its ability to stabilize the economy in the event of a crisis like the near-collapse of 2008.

“The nightmare scenario that I have is one in which some future Fed chairman would decide to say, raise the federal funds rate by 25 basis points, and somebody in this room would say, ‘I don’t like this decision and I want the [Government Accountability Office] to go in… and give us an independent opinion of whether or not that would be the right decision,’” he said.

The real nightmare scenario would be the American public actually seeing how the Fed’s manipulative and deceitful actions benefit the few at the expense of the many.


Congress Aims to Enact Internet Sales Tax

Senate Majority Leader Harry Reid (D-Nev.) says lawmakers are close to enacting an online sales tax and predicted it may even pass Congress this year.

Reid has long been a supporter of the type of proposal being pushed by Majority Whip Dick Durbin (D-Ill.) and Sen. Mike Enzi (R-Wyo.), and noted that Internet retailer Amazon is behind it.

Reid describes the proposal as “very fair” and said that it would “help these little strip malls we have all over America,”.

Retail groups and other supporters have lobbied for online sales tax measures in both the House and the Senate, saying the current law favors Internet retailers over brick-and-mortar stores.

As it stands, companies only have to collect sales taxes on Internet purchases from customers in states where they have a physical plant or location. Reports suggest that states could bring in billions of dollars in extra revenue with an online sales tax law. Opponents of the measure, including prominent conservatives like Sen. Jim DeMint (R-S.C.), say lawmakers should be finding ways to lower Americans’ tax bills, not devising more ways for people to pay.

Durbin believes support for the measure is solid on the Democratic side, though he said he wasn’t sure Enzi and another prominent GOP supporter, Sen. Lamar Alexander (Tenn.), have rounded up the 15 or 20 Republicans needed to pass it through the Senate.

Enzi has also expressed confidence that a measure could get passed this year, and Alexander has said he expects the bill to go through in either 2012 or 2013.

Senate Democrats Drop Key Estate Tax Proposal

In an attempt to shore up support for President Obama tax plan, Senate Democratic leaders are eliminating a key provision to tax wealthy estates.

Democrats could not reach a consensus in the Senate Democratic Caucus over how much to tax estates transferred after a person’s death, prompting Senate Majority Leader Harry Reid to inform senators Thursday that he’d drop that provision. The bill would now cost $250 billion, down from the $272 billion, one-year cost of the original proposal, aides said.

“The majority leader wanted to focus on the middle-class tax relief,” Sen. Dick Durbin (D-Ill.) told reporters.

While the Obama tax bill has no chance of winning the 60 votes needed for passage, Democrats want to build at least a simple majority so they can point fingers at Republicans for protecting wealthy families at the expense of tax breaks for the middle class. Anything less than 50 votes would reflect poorly on the president.

Obama says he wants to let the Bush tax cuts expire for households with income over $250,000, and extend the rest of the rates for one year. Republicans want to extend all of the tax rates for everyone for one year, warning that any tax increase would have a negative effect on an already anemic economic recovery, a notion the president himself agreed with when extended the Bush tax cuts back in 2010.

A vote is expected next week on the Democratic plan, and Reid is confident Democrats will muster at least 50 votes, especially after dropping the estate tax provision. Sens. Jim Webb (D-Va.) and Joe Lieberman (I-Conn.) both have announced they would oppose the Obama plan.

The original version of the Senate Democrats’ tax legislation would have set the maximum tax rate of an estate valued at more than $3.5 million at 45 percent. Right now, there’s a 35 percent rate for estates worth more than $5.12 million. If Congress doesn’t act, estates worth $1 million will be hit with a 55 percent tax rate next year. Republicans have labelled the estate tax, the “death tax.”

To strengthen their arguments for extending all the current rates, Senate Republicans on Thursday circulated a study by the nonpartisan Joint Committee on Taxation that showed there was a mere $28 billion difference between the GOP proposal and the Democratic plan, which would end the current rates for household income of above $250,000. That difference, Republicans noted, equaled how much the government spends in a mere three days.

“The American people deserve better than to have the president and his allies threaten to melt down our economy for what amounts to less than three days of federal spending,” said Utah Sen. Orrin Hatch, the top Republican on the Finance Committee.

Sen. Chuck Schumer (D-N.Y.) dismissed the report as a “smokescreen” by Republicans.

“The truth is, if we decouple the tax cuts for those earning above $250,000, that means they will be gone for good,” Schumer said in a statement. “Over 10 years, that will reduce the deficit by $800 billion compared to what Republicans want to do.”


Pelosi’s Brother-in-Law Got $737 Million Dollar Taxpayer Loan to Build Solar Power Plant

Nancy Pelosi is facing accusations of cronyism over a solar energy project being headed up by her brother-in-law. The project got a $737 million dollar taxpayer backed loan guarantee from the Department of Energy amid the growing scandal of at least a dozen other energy companies having received similar loans going bankrupt and/or experiencing financial troubles.

The SolarReserve project is backed by an energy investment fund in which the Minority Leader’s brother-in-law Ronald Pelosi is second in charge.

PCG Clean Energy & Technology Fund (East) LLC is listed as one of the investors in the project that has been given the massive loan, which is even bigger than the one given to Solyndra.

Steve Mitchell served on the board of directors at the now bankrupt Solyndra, and not surprisingly is managing director of Argonaut Private Equity which has also invested in The SolarReserve Project.

Since Solyndra has filed for bankruptcy and laid off 1,100 workers, Mitchell has been asked to testify about the goings on at the firm by two members of the House and asked to provide documents to Congress.

The SolarReserve project is the construction of  a massive ‘solar tower’ in the middle of Tonopah, Nevada. It will stand taller than the Washington Monument, is the first of its kind and is supposed to be able to generate enough power for 43,000 homes. Energy Secretary Steven Chu said the project along with Solyndra would create about 900 construction jobs and at least 52 permanent jobs. 52 jobs!? The economy is saved.

He added: ‘If we want to be a player in the global clean energy race, we must continue to invest in innovative technologies that enable commercial-scale deployment of clean, renewable power like solar.’

The 110-megawatt tower will use the sun’s heat to create steam that drives a turbine, which is based in Santa Monica, California.

Senate Majority Leader Harry Reid is, of course, a strong supporter of the Nevada project, which he says will help his state’s economy recover.

NV Energy, the state’s largest electric utility, has agreed to buy power from the Tonopah tower, which will connect to NV Energy’s power grid. NV Energy will then sell the energy created from the taxpayer funded tower back to taxpayers, BRILLIANT!

Republican critics of the President Obama’s solar energy program have voiced their outrage at the new loans being handed out while the Solyndra scandal is still being investigated.

They have raised concerns about the Department of Energy fast tracking approval of loans to beat the expiration deadline for stimulus funds last September.

While the departments insists projects are being properly vetted, some lawmakers have written to express concern that the vast loans are not being adequately scrutinized.

“Solyndra was the administration’s flagship project and is now being investigated by the FBI, the promised jobs never materialized, and now the Department of Energy is preparing to rush out nearly $5 billion in loans in the final 48 hours before stimulus funds expire — that’s nearly $105 million every hour that must be finalized until the deadline” said Florida representative Cliff Stearns back in September, who is chairman of the investigations subcommittee of the House Committee on Energy and Commerce.

Tom Schatz, president of Washington-based advocacy group Citizens Against Government Waste, said “It is time for a full audit of their activities, their management and their results.”












Update: Congress goes on vacation while 4,000 FAA employees get laid off…

Congress has gone into recess while the Federal Aviation Administration has been shutdown, indefinitely delaying airport construction projects, causing the government to lose more than $1 billion in uncollected ticket taxes.

Senate Majority Leader Harry Reid, D-Nev., initially told reporters that he was open to a House Republican bill to restore the FAA’s operating authority along with cuts in subsidies for rural air service. But he later reversed course after a possible deal with House Republicans fell through.

“Republicans are playing reckless games with airline safety,” Reid said in a statement. “We should not let ideology interfere with making sure that Americans’ air travel runs as smoothly and safely as possible.”

Nearly 4,000 FAA employees have been laid off and stop work orders issued for more than 200 construction projects. Air traffic controllers have remained on the job, and Transportation Secretary Ray LaHood has vowed that safety won’t be compromised and travelers won’t be inconvenienced.

Republicans say the shutdown is the Democrats fault for not accepting minor cuts to a rural air services program deemed to be wasteful spending.  Democrats said the air services cuts were being used as leverage to force them to give in to the House on a labor provision in a separate, long-term FAA funding bill that would make it more difficult for airline workers to unionize.

The FAA’s operating authority expired on July 23, as well as the authority of airlines to collect about $30 million a day in ticket taxes, meaning the government will be unable to collect an estimated $1.2 billion in taxes if the shutdown continues until lawmakers return to work next month.

Obama implored Congress to settle the dispute before lawmakers leave Washington for the August recess, describing the situation as “another Washington-inflicted wound on America.”

With House Republicans gone, the only way Senate Democrats could end the shutdown was to accept a previously passed House bill that includes a provision eliminating $16.5 million in air service subsidies for 13 rural communities.

The extension bill was necessary because the FAA’s long-term operating authority expired in 2007. Since then, Congress has been unable to agree on a long-term funding plan. The agency has continued to operate under a series of 20 short-term extensions.

The labor provision would overturn a National Mediation Board rule approved last year that allows airline and railroad employees to form a union by a simple majority of those voting. Under the old rule, workers who didn’t vote were treated as “no” votes.

Republicans are complaining that the new rule favors labor unions. Democrats and union officials say the change puts airline and railroad elections under the same democratic rules required for unionizing all other companies.

Obama said he would veto an FAA bill containing the labor provision.

Update: Congress ended the shut down of the FAA, for the time being, get ready for this to happen all over again come September.