“It is just outrageous that the American people don’t know that Congress doesn’t know how much money he (Treasury Secretary Henry Paulson) has given away to anyone,” the Oklahoma Republican told the Tulsa World.

“It could be to his friends. It could be to anybody else. We don’t know. There is no way of knowing.”

Inhofe’s comments, unusually pointed even for a senator known for being blunt, come on the heels of Paulson’s shift in how he thinks the bailout funds should be spent.

Last week the Treasury secretary announced he was abandoning his plan to free up the nation’s credit system by buying up toxic assets from troubled financial institutions. Instead, Paulson wants to take a more direct action on the consumer credit front.

“He was able to get this authority from Congress predicated on what he was going to do, and then he didn’t do it,” Inhofe said.

“So, that’s enough reason right there.”

Inhofe recalled earlier comments opposing Paulson’s plan because the administration’s point man did not have answers for a number of questions. He also recalled questioning the rush to get the bailout passed.

“I have learned a long time ago. When they come up and say this has to be done and has to be done immediately, there is no other way of doing it, you have to sit back and take a deep breath and nine times out of 10 they are not telling the truth,” he said.

“And this is one of those nine times.”

Inhofe has laid out his legislative plans for this week on the bailout package in a letter to his Senate colleagues.

He wants to freeze what is left of the initial $350 billion — reportedly $60 billion, but Inhofe concedes he does not know for sure.

Then he wants a provision requiring an affirmative vote by Congress before Paulson can get his hands on the second $350 billion of bailout money.

Current law lays out a scenario where President Bush submits a plan on the second half of the funding.

Lawmakers have 15 days to disapprove it, but Inhofe questions that wording.

“Congress abdicated its constitutional responsibility by signing a truly blank check over to the Treasury Secretary,” he wrote.

“However, the lame duck session of Congress offers us a tremendous opportunity to change course. We should take it.”

In the interview, the senator said his plans can provide “redemption” for those senators who supported Paulson.

Inhofe’s plan appears to be a long shot at this point. Senators originally approved the bailout plan by a 74-25 vote.

He does not know how much support he has among his Republican colleagues, and he concedes Democratic leaders could block it.

Bush also could veto it if it were to make it out of Congress.

Neither Senate Majority Leader Harry Reid’s office nor the Treasury Department commented.

Reid, D-Nev., wants to use the upcoming lame duck session to push economic issues such as extending unemployment benefits and aid to the nation’s ailing auto industry.

Inhofe opposes both.

“You don’t stimulate the economy by giving away more money,” he said.

In response to concerns expressed by some that allowing even one of the big automakers to fail would be too much of an economic hit for the nation, Inhofe said reality must be accepted.

“If we keep on nursing a broken system, then we can’t expect to have a different result come later on,” he said.

“I just think we have to draw the line someplace, and the time is here.”

On the web: http://www.tulsaworld.com/news/article.aspx?articleID=20081116_16_A1_hHecri880405

Hydrates, crystalline structures consisting of gas and water locked below the permafrost, contain 85.4 trillion cubic feet of natural gas, the Interior Department’s U.S. Geological Survey said in a report released today.

“The hydrates have more potential for energy than all other fossil fuels combined,” Interior Secretary Dirk Kempthorne said in a news conference. “This is a huge resource for energy and one cannot overstate that.”

Natural gas is considered a bridge fuel to cleaner energy because it produces fewer emissions of greenhouse gases, which are blamed for global warming, than coal and involves fewer hazards than nuclear reactors. Coal generates half of the U.S.’s power.

Some environmentalists say hydrate production causes the release of methane, which is a greenhouse gas.

The world currently consumes about 104 trillion cubic feet of natural gas annually and the U.S. uses about 23 trillion cubic feet gas per year, according to the Energy Information Administration.

Hydrates gas could be produced and sold at under $10 per million British thermal unit, and less than that with advancements, said U.S. Geological Survey Director Mark Myers. Natural gas for December delivery cost $6.413 per million Btu at 12:20 p.m. on the New York Mercantile Exchange.

ANWR Drilling

About 4 percent of the estimated gas hydrates lies below the Arctic National Wildlife Refuge, which Congress has placed off limits to drilling.

While Interior Department officials wouldn’t estimate when full scale gas-hydrate production would begin, they said it could be within the next decade if it was proven to be profitable.

Researchers must perform long-term production tests to demonstrate gas hydrates as an economically producible resource, Myers said. “Hydrate accumulation in conventional hydrate reservoirs can be produced with existing technology,” he said.

Much of the promise of Alaskan hydrates depends on whether a pipeline advocated by Alaska Governor Sarah Palin, the former Republican vice presidential candidate, can be built, Myers said. The $27 billion conduit would carry natural gas from Alaska to U.S. markets.

Extraction Methods

Several methods for extracting gas hydrates are under development. One method, depressurization, separates gas and water from the hydrate structure. A second involves injecting carbon dioxide below the permafrost, which releases methane molecules in production.

The Energy Department is spending $12 million on a 27-month study with ConocoPhillips to test the carbon-dioxide injection method. BP Plc also is researching a process using $4.6 million in federal funding. Chevron Corp. is researching in the Gulf of Mexico.

On the web: http://www.bloomberg.com/apps/news?pid=20601103&sid=adQDn6kz2H_I&refer=us

Addressing fellow GOP governors and party leaders at the Republican Governors Association convention in Miami, Florida, Palin criticized the growing list of industries and others seeking federal assistance.

“We’re hearing now more talk of additional taxpayer bailouts … for companies, for corporations, perhaps even states now who may be standing in line with their hands out despite, perhaps, some poor management decisions on their part that helped tank our economy,” she said.

Palin stressed the need for what she called greater economic “accountability and personal responsibility” while urging “conservative solutions to these economic challenges.”

At a press conference earlier Thursday, Palin said that she and her fellow Republican governors were ready to put aside “extreme partisanship” and act if Washington fails to provide the leadership America needs.

She told them not to “let obsessive, extreme partisanship … get in the way of doing what’s right.”

“I think that this group is going to be looked to and looked at for leadership that perhaps had been lacking in Congress and in Washington, D.C.,” she said. “This group is going to be uniquely qualified to provide leadership in this nation.”

Reflecting on the recent campaign, Palin said, “For us, it was not our time. It was not our moment.”

She complimented President-elect Barack Obama, saying she wishes him “well as the 44th president of the United States. If he governs with the skill, and the grace, and the greatness of which he is capable, we’re going to be just fine.” Watch Palin says she’s ready to help Obama »

Palin also criticized the national media for wanting to “dissect the past” and “playing the pundit’s role” for the 2012 presidential campaign.

“As far as we’re concerned, the past is the past,” she said. “We’re focused on the future. [The future] is next year, and our next budgets, and the next reforms in our states.”

Asked why she chose to hold her first formal news conference now, she replied, “The campaign is over.”

The governor’s first post-election appearance was not without controversy.

Some Republican governors told CNN they were not particularly happy with the way the RGA press conference was executed Thursday, saying they agreed to go as a show of GOP governors’ unity, but they ended up feeling like silent Palin supporters, because it was clearly a press conference called for her.

The GOP governors spoke to CNN on condition of anonymity.

One called it awkward: “I’m sure you could see it on some of our faces.”

Another Republican governor eyeing a presidential run in 2012 told CNN the event was “odd” and “weird,” and said it “unfortunately sent a message that she was the de facto leader of the party.”In an interview with CNN, it was suggested to Mississippi Gov. Haley Barbour that there has been a feeling among some GOP governors gathered in Miami that Palin has been sucking up all the media oxygen.

Barbour shrugged off that suggestion.”That’s just somebody running down a rabbit trail. There’s plenty of oxygen here,” he said.

In another shift, Palin, who had been slated to take questions for 20 minutes or so, took just four reporter queries before Texas Gov. Rick Perry ended the news conference.

“We were running behind schedule,” Perry said.

Today, two months before he leaves office, some say Paulson is a reduced figure, damaged by the financial-market meltdown that happened on his watch and by the government’s struggles to respond to it.

Like many others who have served in President George W. Bush’s administration — among them former Secretary of State Colin Powell and former Treasury chief Paul O’Neill — Paulson, 62, will leave office casting a smaller shadow than when he arrived.

“Paulson’s credibility has certainly been substantially diminished,” said Peter Wallison, who was general counsel at the Treasury under former President Ronald Reagan and is now a fellow at the American Enterprise Institute in Washington. “There has been a lot of shifting back and forth and he clearly hasn’t thought through much of these policies. He has lost a lot of confidence from the market from all of this.”

The latest blow was his announcement yesterday that the Treasury is abandoning his plan to buy devalued mortgage assets - - the one he unveiled dramatically just eight weeks ago, and defended against congressional and market skeptics.

`A Flip-Flop’

“This is a flip-flop, but on the other hand, when they first proposed the thing, they didn’t really know what they were doing,” said Bill Fleckenstein, president of Fleckenstein Capital Inc. in Seattle and author of the book “Greenspan’s Bubbles.” Paulson has pushed some “cockamamie schemes,” he said. “So one has to ask, does he have any clue?”

“This is not something he’s going to be proud to put on his resume,” said James Cox, a law professor at Duke University in Durham, North Carolina, who has testified on securities regulation before Congress and served on legal advisory panels for the New York Stock Exchange and National Association of Securities Dealers. “It does tarnish Paulson’s image, because it shows that a lot of political capital was spent on something that most of us thought was not a good idea to begin with.”

Only history will render a final verdict on Paulson’s handling of this year’s cascading economic crises. But he surely couldn’t have wanted to spend his final days in office this way: spearheading the massive government intervention in the banking, insurance and mortgage industries; fielding requests to bail out automakers General Motors Corp., Ford Motor Co., and Chrysler LLC, and even heating-oil retailers.

No Sunset Ride-off

“He’s ended up really in kind of a hair-on-fire thing,” said Stephen Stanley, chief economist at RBS Greenwich Capital. “Particularly in his position, of somebody who was going to be a government official for a very short time and then ride off into the sunset, it’s been very different from what he had in mind.”

The Treasury chief yesterday said he had no regrets over reversing his plans for the bailout program.

“I will never apologize for changing a strategy or an approach if the facts change,” Paulson said at a press briefing in Washington.

When Paulson took office in July 2006, the Dow Jones Industrial Average was near a six-year high and Goldman was selling at $149 a share, making the former CEO’s stake worth about $485 million. Today the Dow is down by more than a third for the year. Goldman, which weathered the crisis far better than Lehman Brothers Holdings Inc., Merrill Lynch & Co., and Bear Stearns Cos., trades more than 70 percent below its October 2007 peak of $250.70.

Original Goals

Paulson came into office determined to use his credibility and reputation to advance an agenda that included easing regulation of Wall Street — citing concern that too-stringent oversight would drive investors to other markets like London and Hong Kong — and an overhaul of Social Security to allow for taxpayer-funded private accounts.

But Bush’s falling political fortunes — anger over the botched response to Hurricane Katrina, voter weariness over the Iraq War, the Republicans’ loss of congressional control — stymied much of that agenda. Then came the credit crisis of summer 2007 — and the subsequent market and economic meltdown that have overtaken the Bush presidency.

Paulson’s defenders say he’s the victim of the worst financial crisis in seven decades, and has helped prevent a deeper collapse by using his knowledge and contacts on Wall Street.

History to Judge

“He’s been in a trial by fire,” said Allan Hubbard, former director of Bush’s White House National Economic Council. “History, looking back” will say Paulson “responded as well as one could hope” under the circumstances, he said.

When Paulson in mid-September unveiled plans for a broad market rescue that went beyond ad-hoc interventions in troubled companies, he was hailed by some, including Democrats, for willingness to take bold action. Former Federal Reserve Vice Chairman Alan Blinder called it a “giant step toward a cure” for the crisis. Paulson’s expertise in finance also distinguished him from his Bush administration predecessors, who had headed industrial companies.

Paulson proposed an unprecedented $700 billion package to purchase distressed mortgage assets, aiming to unfreeze credit markets hobbled by losses stemming from record foreclosures. The Dow soared 7.3 percent in two days as officials prepared their plan Sept. 18-19.

Paulson’s star waned again when he shifted the bailout program’s focus in a matter of weeks.

Debating Lawmakers

At first, Paulson rebuffed calls from some lawmakers to buy stakes in financial companies as a more direct way of getting capital to lenders. He told lawmakers at a Sept. 23 Senate Banking Committee hearing “that’s what you do when you have failures, you know?” Instead, it was better to rely on “market mechanisms,” holding auctions for devalued assets, he said.

Less than a month after his initial plan, he agreed to use the first $250 billion of bailout funds for capital injections. Yesterday he officially abandoned any intention of holding auctions for distressed investments.

The Dow fell as investor confidence weakened. The average yesterday closed 27 percent lower than on Sept. 19, when Paulson unveiled his plan.

“Paulson’s very public and frantic panic of a few short weeks ago, along with his current state of bewilderment and indecisiveness, is most likely the single greatest explanation for the persistent doldrums in the markets,” said Richard Armey, 60, the former House Republican leader who is now a senior policy adviser at the DLA Piper law firm in Washington.

New Focus

Now, the Treasury plans to aid the markets for automobile purchases, student loans and credit-card debt. Consumer financing has been throttled by the crisis, with issuance of student-loan and car-loan securities drying up in October.

The U-turn on the Troubled Asset Relief Program isn’t Paulson’s first. In July, he asked Congress for authority to provide a federal backstop for mortgage financers Fannie Mae and Freddie Mac, saying that granting the power would shore up investor confidence and that he didn’t plan to use it. Less than two months later, he engineered the government seizure of the two companies.

Paulson has also been criticized for ruling out a government rescue of Lehman in September, when he argued that the industry was long aware of the investment bank’s problems and should have been prepared. Lehman’s downfall precipitated a worsening in the credit crisis and contributed to the near-collapse of American International Group Inc. that month.

`Decisive Mistake’

“That was the worst and, in fact, the decisive mistake on the part of the administration,” Mortimer Zuckerman, billionaire chairman of Boston Properties Inc., said in an interview earlier this month, referring to letting Lehman go. “When financial historians write about this, they are going to say that was the disaster.”

So far, taxpayers have provided about $1 trillion for rescues of private companies, which Paulson has called “terribly objectionable” to his belief in free markets.

“The Treasury is advocating things in the name of damage control that one would never have thought a Republican administration, or any administration, would have been actively seeking,” said Alice Rivlin, former vice chairman of the Federal Reserve and former budget director under President Bill Clinton.

New measures are likely under incoming President Barack Obama, who with other Democrats have called for action to stem foreclosures and ease falling home prices.

“If you want to stop this next year of rather terrible pressure on the housing market, you have to intervene in some way,” said Thomas Zimmerman, a UBS AG mortgage market analyst in New York.

On the Web: http://www.bloomberg.com/apps/news?pid=20601109&sid=apwPJfpF6MgU&refer=home

The president-elect meant it when he promised to redistribute income from families earning more than $250,000 (£155,000) a year to those earning $50,000 (£30,000) or less. Taxes on the “richer” families will go up to fund cheques that will be mailed to the lower earners who now pay no income taxes.

Congressional Democrats will try to persuade the new president to lower the $250,000 cut-off point to the $150,000 his vice-president, Joe Biden, favours. Obama’s advisers say he will hold the line at $250,000, and some hint that he won’t risk exacerbating the recession by raising taxes immediately. Instead, he will simply allow the Bush tax cuts to expire at the end of 2010, returning taxes on high earners to the levels prevailing during the Clinton years.

So, too, with inheritance taxes: they will go up after 2010 to preBush levels, perhaps with some forgiveness for those passing on modest inheritances or small businesses. In the end, it will cost high earners more to live and more to die.

But taxes are only one area of concern to the business community. The Bush administration has handed Obama significant control over the commanding heights of the economy. The new president inherits ownership of parts of most big banks, insurance companies and other financial institutions, and has the funds to extend government ownership into other sectors of the economy. There is little doubt that he will use that control to restrict executive salaries, direct funds to homeowners who are behind with their mortgage payments, pressure banks to lend to constituencies he and his congressional allies deem worthy, and otherwise exercise more control over the allocation of the nation’s capital resources than any of his predecessors was able to do, with the exception of Franklin Roosevelt during the second world war.

Some analysts are arguing that Obama will be constrained by the huge budget deficits he will face. Not entirely. Many items on his wish list don’t require government money. He will fulfil his pledge to support legislation to eliminate the secret ballot in union-recognition elections. The Environmental Protection Agency probably does not need new legislation to change the rules on carbon emissions so that Obama can achieve his goal of making new coal-fired power stations totally uneconomic. The Federal Communications Commission can impose “fairness” rules that make it more difficult for conservative talk radio stations to challenge his government’s policies. The Food and Drug Administration can make it difficult if not impossible for pharmaceutical companies to gain permission to market new drugs that the industry’s critics contend are “merely” improvements on existing drugs, or are not sufficiently efficacious in the eyes of regulators.

In short, Obama can impose large portions of his agenda without asking Congress for new funding. Some decisions will undoubtedly be challenged in the courts, but most judges are unlikely to constrain actions that enhance the powers of the government, although they have vetoed many Bush attempts to shrink such powers.

Some sectors are likely to see big changes. Housing will be the first. The government has placed the two giant mortgage writers Freddie Mac and Fannie Mae into “conservatorship” – a form of what in Britain is called administration. There is no chance that Obama will try to privatise these organisations, which back about three out of every four mortgages in America. Even Federal Reserve Board chairman Ben Bernanke, not exactly a raving socialist, says there is a role for government to play in the mortgage and housing markets. The best guess is that Freddie and Fannie will be revived in some form, with a mandate to do what has caused much of the mess we are now in – make loans to homeowners who may have difficulty meeting their mortgage payments.

Then there is the energy sector. Apart from Obama’s opposition to new coal-fired power stations and to funding the waste repository that would make nuclear power feasible, House Speaker Nancy Pelosi is adamantly set against offshore drilling. Renewables, even though heavily subsidised, will add only a tiny bit to supplies. So Obama will do what Democrats since the days of Jimmy Carter have wanted to do: ration the use of energy. Not with coupon books, but by increasing fuel-efficiency standards that will shrink the size of cars to European dimensions; rigidly enforcing rules that mandate the use of unsafe lightbulbs; imposing expensive efficiency standards for new appliances.

So consider this possibility, a nightmare for conservatives. By the end of his first term Obama will be exercising control over the allocation of bank credit, and similar if less overt control over the allocation of the nation’s energy resources. The financial-services sector will be crawling with regulators determined to reduce risk-taking. The rich will be paying higher taxes – no problem for billionaires such as Bill Gates and Warren Buffett, but a big deterrent to the establishment of small businesses. The trade unions will be recovering much of the ground they lost when the muscle-based industries gave way to intelligence-based industries. Americans will be driving smaller, less safe cars, and reading by dimmer bulbs. And – here’s the most important part – an economic recovery will be under way sometime before Obama begins his campaign for reelection.

Will it be as vigorous as it might have been with less intrusive government? Perhaps not. But will voters answer in the affirmative the question Ronald Reagan famously put to Jimmy Carter in 1980 – “Are you better off than you were four years ago?”. As Obama’s likely opponent in 2012, Sarah Palin, might put it in a moment of candour, “You betcha”. Voters will be comparing the economy Obama inherited with the one over which he is then presiding, not with what a McCain presidency might have created. On to 2016, which might be a different story.

On the web: http://business.timesonline.co.uk/tol/business/columnists/article5114069.ece

- Former Massachusetts Gov. Mitt Romney to Fortune Magazine, November 7, 2008 

At the top of labor’s wish list is passage of the Employee Free Choice Act, which would make it harder for companies to fight union-organizing drives. “It is the most important issue that we have,” said John Sweeney, president of the AFL-CIO.

President-elect Barack Obama has promised to fight for the legislation, but whether it is introduced in the first 100 days of his administration could signal how strongly he is aligning himself with the progressive wing of the Democratic Party, say political consultants. Moderate Democrats and those who have just won seats in traditionally Republican states are expected to argue against making the legislation an early priority.

Unions failed to get major labor legislation passed under the Carter and Clinton administrations, and union membership has declined to 7.5% of private-sector workers, from about 20% in 1980, according to U.S. Labor Department data.

After unions spent more than $400 million on the election and mounted massive voter-turnout efforts for Mr. Obama, they’re inclined to push for bringing the Employee Free Choice Act up for a vote early next year, believing they have a narrow window to get it passed. They’re worried other issues could emerge to eclipse the legislation, and that business would have more time to mount opposition the longer action is delayed.

“This is one the business community is united on,” says Dan Yager, spokesman for HR Policy Association, a corporate lobbying group. “Now that it looks like it has a serious possibility of being enacted we think it will galvanize the community even more,” he said.

The U.S. Chamber of Commerce and large employers, especially those that have resisted union organizing like Wal-Mart Stores Inc., vehemently oppose the legislation. Business groups, including the Chamber, spent a combined $50 million this year on advertising against it and say they will ratchet up ads and lobbying.

Some Democrats worry the issue could produce a divisive fight early in the Obama administration, imperiling the new president’s broader agenda.

Paul Blank, a consultant who ran the United Food and Commercial Workers campaign against Wal-Mart before leaving to work for the presidential campaign of former North Carolina Sen. John Edwards, said he expects “political World War III” between labor and business over the issue.

Both sides say the legislation would lead to increased unionization. Unions say that would lift wages and help the middle class, while businesses say it could increase costs and eventually lead to widespread layoffs.

The bill would give unions — rather than companies under current law — the choice of having workers vote for a union by signing cards instead of through a secret-ballot election. Card-signing is preferred by unions because it can be done without an employer’s knowledge. With secret-ballot elections, companies typically have months to mount an opposition.

The bill also authorizes an arbitrator to impose a first contract if a union fails to reach agreement with a company by 120 days following the union’s formation. Under current law, if the two sides don’t reach a contract within a year, the union typically loses its right to be the exclusive bargaining agent for the workers.

“If we’re going to build a stronger labor movement and have a stronger campaign on behalf of workers, we need the passage of the Employee Free Choice Act,” Mr. Sweeney said.

With Democrats failing to win a filibuster-proof 60-seat majority in the Senate, some say a compromise on the controversial card-signing provision is more likely now.

Hal Coxson, a management-side labor lawyer in Washington, said he expects the AFL-CIO to propose shortening the notice before elections to five days, which would give companies less time to campaign against a union, but allow Democrats to say they preserved secret-ballot elections. “If they overreach, they lose,” Mr. Coxson said of the AFL-CIO.

Randel Johnson, vice president of labor policy for the Chamber, said he thinks unions proposed an “outrageous” bill in order to win a lesser compromise that would still be a big victory for labor. But he added, “any combination that still leaves the binding-arbitration in there would still be unacceptable to the business community.”

On the web: http://online.wsj.com/article/SB122592993592603103.html?mod=googlenews_wsj