By Charles Payne, CEO & Principal Analyst
This Cash for Caulkers deal outlined yesterday was greeted with a yawn by Wall Street in part because $6.0 billion isn’t going to cure economic ills and also because these kinds of deals haven’t worked in the past. There is the moral issue of once again taking money from homeowners that may not need, or want, to weatherize their homes and giving that cash to other homeowners. I’m not sure where this deal puts renters. This plan is part of that moral slippery slope that has already been a disaster in current projects with the same goals. I’ve read many stories and all of them horrific about the current weatherization program. One piece written a week ago stated as of last month only 5.2%, or 30,297, homes out of a pool of 578,124 have been weatherized. Another piece puts the tally at 91,000 out of 593,000 on 10% of the funds set aside.
What is clear is the current program is costing taxpayers about $50,000+ per home. Heck in California the state got $93.0 million in stimulus for weatherization and by February 16 of this year had just retrofitted 12 out of 43,400 homes.
Here’s the way the next program will work.
* There is an on the spot rebate of $1,000 for insulation, sealing, leaky ducts, replacing water heaters and HVAC units. Additional financial incentives for fixing doors and roofs.
* If a homeowner goes further and gets an energy audit that cuts their home energy use by 20% they will qualify for a $3,000 rebate (a brief google search showed that an energy audit costs between $250 and $400).
Here’s the rub, according to the Natural Resources Defense Council the homeowner that spends $24,000 to cut energy use in half will earn back $100.00 a month. Toss in a $10,000 tax break and the homeowner will break even on this investment in ten years. I bring this up because President Obama talked about this plan in the same vein as the government making investments that will bear fruit in the future. We can’t afford investments that payoff a decade from now. Of course considering implementation of the current plan it could be a decade before the $6.0 billion set aside for the new program is even deployed.
This can’t be the centerpiece of economic revival. There is no urgency and there isn’t evidence it would even increase the value of the home.
I would say this whole thing is a shot in the dark, but the main driver is clear. The Administration is determined to redistribute wealth and pick winners and losers within certain industries. While there was a cheer over General Motors’ improving fortunes, the billions of dollars it got and the $98.0 billion in taxpayer money used to bailout failed automakers could have been applied in a different way (and from the look of it, the government backed the wrong horse). But this is old hat stuff, what caught my ear yesterday were a couple of comments that struck at my worst fears about the fundamental changes being made above and below the surface. I think the ideology of Voltaire is at work and the goal is to spread the wealth from those that earned it to those that haven’t.
Excerpts:
“The same is true when it comes to reforming our education system. The same is true when it comes to trying to make our health care system more affordable. The same is true when it comes to energy. Each of these things are hard; some of them have some costs on the front end, and working stuff through Congress is more than a notion. (Laughter and applause.) But by taking these steps we’ll help foster the kind of broadly shared growth that will serve us in the years and the decades to come.”
“That’s how we’ll create the conditions for businesses to expand and hire. That’s how we’ll truly grow our middle class again. That’s how we’ll not only rebuild our economy but we’ll rebuild it stronger than it was before this crisis.” – President Obama
I hear the buzzword “shared” a lot and yet all the plans from the White House have been lopsided with massive financial rewards for unions and people in certain tax brackets at the expense of the shirking pool of income taxpayers and future income taxpayers. I get the feeling the goal is to close the gap on future incomes so overall prosperity will be divvied up equally. I must say while I believe 95% of people can do 95% of the jobs there are reasons some people make the big bucks and others do not. It boils down to a number of factors, including:
> Work ethic (do you really work hard when nobody’s watching)
> Sacrifice (you can’t go home and pop a brew while watching TV all night)
> Bravery (do you take chances by stepping out of your comfort zone)
> Smarts (you have to read more than the milk carton)
> Beliefs (give God thanks and never stop believing)
> Talent (not something you are born with but something you nurture)
As for building the middle class it’s not going to happen with minimum wage jobs. I continue to wonder when will there be a plan that gives taxpayers a serious tax break….all taxpayers along with businesses. People with the work ethic that have made the sacrifices and were brave enough to take chances are the very people demonized every day. Yet, these are the people that have the ability to lead the nation out of its current malaise. I say embrace smart people that have the talent and have actually created jobs…real jobs. In that way everyone would benefit as the same tide would lift all ships.
Mr. Bunning Goes to Washington
It looks like Jim Bunning’s one-man filibuster is over and we are all winners from his crusade to make politicians do the right thing. Demanding the Senate pay for $10.0 billion to be used to extend unemployment benefits another 30-days, Senator Bunning has been crucified. It looks like Democrats found the money in the form of a program that paid a bio-fuel tax credit for black liquor, a byproduct from the paper making process. This could save $24.0 billion over $10.0 years. He may be a lame duck but a lesson in principles was applied to a group of hypocrites that needed a wakeup call.
Charles Payne is the CEO and Principal Analyst of Wall Street Strategies . This post was republished from his company’s column, WStreet Market Commentary.
