This PPI series will guide you through the main issues that are likely to arise in the coming weeks as the Senate takes on climate change. Some of the issues that come up will be essential to a good climate bill. Others might get a lot of play but are in fact trivial for climate policy. The “cheat sheets” below will help you make sense of the climate bill that eventually emerges from Congress:
How to tell a good climate bill from a bad one? This series will guide you through the main issues that are likely to arise in the coming weeks as the Senate takes on climate change. In previous posts, we looked at the crucial, the merely important and the negotiable elements in a climate bill. In this post, the last in the series, we highlight issues that might be popular or politicallyimportant, but which actually don’t matter that much for climate results. (To see all the posts in the series, click here.)
As with any big issue in Washington, climate policy has its share of sideshows and special-interest pet projects. If somebody’s favorite policy can be plausibly (or even implausibly) tied to climate, it’s a good bet they’ll attempt to do so. Conversely, if someone wants to hijack the climate debate, they may try to attach an unpopular issue to it. There are also a good number of perfectly well-intentioned ideas that, in reality, won’t make much difference in terms of climate policy.
Our goal in this post is to identify these issues: those that we feel are just political distractions, and those that won’t make much difference. If you’ve followed climate policy, you might find some surprises here — we include some issues that are often trumpeted as important. Not all of the policy proposals we mention are necessarily bad. Some are, but others are just not that important and will not have much effect on emissions reductions or the cost to the economy.
Category IV Issues: The Bad, the Irrelevant and the Trivial
#1: Renewable portfolio standards
A renewable portfolio standard (RPS) is a requirement that a certain percentage of electricity supplied by power companies come from renewable sources: wind, solar, geothermal and sometimes hydro or nuclear. A majority of states have an RPS in place, but there is no current federal standard. Many climate proposals, including Waxman-Markey, include an RPS.
Superficially, the idea is appealing: by forcing power suppliers to use renewables, an RPS expands the market for them. This will obviously increase their use, reduce emissions and encourage innovation in renewable techs.
The problem is that once you have a carbon price, moves to renewable energy sources should happen anyway, making an RPS redundant. Since burning fossil fuels becomes more expensive, power suppliers will shift to cleaner technologies. Some of this switching will be to renewables, while others will be to cleaner fossil fuels like natural gas – a fuel that is excluded in most renewable portfolio standards.
If the standard is set at a level lower than the amount of renewables that power companies would shift to anyway under a carbon price, then an RPS is totally irrelevant: companies would meet the standard just by acting in response to the price. But if the standard is set at a level higher than the amount of renewables utilities would use, an RPS imposes additional costs. Power companies that would like to switch to cheaper and clean(er) technology — like natural gas or nuclear (if it’s not included in the RPS) — would be limited in their ability to do so by an RPS. Instead, an RPS would force them to use more expensive renewables in their efforts to make their emissions targets. Those costs get passed on to consumers, making climate policy more expensive.
And here’s the thing: it would be costlier without providing any additional emissions benefits than what we would get under a cap. An RPS is often favored by environmental groups (and, of course, firms with investments in renewables) presumably because they think a carbon price will be too low to achieve the level of clean energy use they prefer. But this doesn’t make much sense. The cap set by a climate policy determines the environmental outcome; all an RPS would do is restrict the ability of power companies to decide how to meet that cap. In other words, an RPS doesn’t result in lower emissions. If you want that, you need to go back to Category I — set a tighter cap (or a higher carbon tax).
Note that the fact that an RPS is a bad idea doesn’t necessarily mean that government investment in R&D for renewables is unwise — such investments are responses to identifiable market failures. But an RPS would be a poor remedy for those failures.
If Congress does pass a new law, how should that law deal with the existing EPA authority? The majority (though not consensus) view on the Hill appears to be that new legislation should preempt this authority. Waxman-Markey would explicitly remove the EPA’s authority under the Clean Air Act to regulate greenhouse gases from stationary sources (but would leave regulation of vehicles intact). Preliminary indications are that the Senate bill would do the same.
Many environmental groups oppose this preemption, claiming that EPA authority is needed in case the climate law does not go far enough. Again, this doesn’t make sense. First, EPA authority isn’t a kind of reserve power, to be used only when a new law appears inadequate. If Congress passes a new climate law but leaves existing EPA authority intact, the EPA will still be legally required to regulate greenhouse gases. Waiting to see if the new climate bill is “good enough” before taking action won’t work: the Bush EPA advanced similar arguments in Massachusetts v. EPA and lost. In other words, preempting the EPA isn’t like discarding a useful tool — it’s like turning off a machine. New climate legislation is a better machine.
Second, where the EPA does have discretion, it needs the political will to act. The moves that the EPA is currently making to regulate greenhouse gases are highly controversial. It has taken years (arguably decades) of congressional inaction on climate for the EPA to use its exisiting authority to regulate greenhouse gases. If there is a new climate law, it will likely sap the agency’s will to act further on climate even if authority is not preempted. In that environment, it is hard to see the administration devoting resources and political capital to additional regulations (beyond the minimum that is legally required) for the foreseeable future.
In short, there are some things the EPA must do, and a new climate bill cannot change that without preempting agency authority. There are other things the EPA has control over, but action on those areas will be unlikely for political reasons once a climate law has been passed. If environmental groups feel that the climate proposals under consideration don’t go far enough, they should make an effort to convince legislators — and their constituents — of that. The move to preserve the EPA as an alternative venue for their arguments is understandable, but a little cynical. The time for the climate policy debate is now (we hope), and the venue is Capitol Hill.
#3 Preempting the states
Like the EPA, states have made moves to regulate greenhouse gases in the absence of action from Congress. California’s AB32 law (which commits California to reducing emissions to 1990 levels by 2020) and the creation of a Regional Greenhouse Gas Initiative, a regional carbon market by some states in the Northeast, are the most notable examples.
How should a federal climate law treat these regional and state efforts? Should they be allowed to continue, or should federal law preempt them?
The basic answer is similar to that for renewable portfolio standards: state-level regulation makes sense now, but is mostly useless or even counterproductive if there is a national carbon price. As Robert Stavins recently explained, state-level greenhouse gas regulation that is stricter than the national cap doesn’t reduce overall U.S. emissions — it just forces emissions out of the regulating state into one without climate regulation. This drives up prices in the regulating state without any climate benefit.
Preemption of state greenhouse gas regulations therefore probably won’t have any negative impacts for emissions and climate. Stavins points out that there still may be benefits for smaller state-level regulations in situations where a low federal carbon price fails to push beneficial changes. That’s true, but so long as the new federal law has a serious emissions cap, preempting major regulations like AB32 and regional carbon markets is fine. Industry wants this preemption since they’d rather have a single set of rules to comply with. It’s a concession that policy-makers can make at little or no environmental cost.
#4 Wall Street
Wall Street does not have a very good reputation right now. Creating a new market for carbon allowances means new opportunities for brokering trades between emitters — and with that market, possibilities for speculation, new financial instruments such as derivatives and possible opportunities for abuse. Some on Wall Street certainly see carbon as just another commodity and carbon markets as a big opportunity.
But while derivatives have been called financial weapons of mass destruction, they can play an important role in future carbon markets. Firms will need some kind of mechanism to protect against the risk of unforeseen events that cause them to be out of compliance with the cap, such as emergency fuel-switching or inaccurate emissions accounting. Since regulated firms are exposed to such risks, they will look to reduce that exposure through insurance in the form of carbon derivatives. The market must be properly regulated (the rules can be written directly into climate legislation), but assuming it is, the benefits of reduced transaction costs and improvements in liquidity that financial expertise can bring seem likely to exceed the costs of possible fraud or abuse.
Some of the criticism may arise not from a fear that the government will be unable to prevent criminal or undesired activity, but from opposition to creating a new market (and new profit opportunity) for Wall Street. As Michael Levi points out, however, somebody has to run a carbon market, and they had better have expertise. For all its recent failings, Wall Street firms have world-class market-making expertise. Oversight is necessary, but keeping the best financial minds away from carbon simply because they’re unpopular right now is likely to be costly.
#5 Drilling and energy security
One touted benefit of a climate policy that reduces reliance on fossil fuels is that it improves American energy security. This is easy to understand: oil comes from somewhere else, and if we use less oil, we won’t import as much. This improves our trade deficit and reduces reliance on unstable parts of the world for energy.
All of that is a good thing, but it’s a side benefit — it has nothing to do with climate. Indeed, policies that improve energy security might or might not have climate benefits. Putting a price on carbon certainly will, but increasing domestic oil supplies by expanding drilling won’t — it will either replace imports and have no overall effect on emissions or it may drive down (ever so slightly) the price of oil, which will increase consumption and emissions. If domestic drilling does not result in increased emissions, it is not necessarily a bad idea, but it can’t be justified on climate policy grounds.
Drilling is an energy issue, not a climate one. But climate legislation itself has been framed as being about energy (and, specifically, energy security) as much as it is about climate change. That’s not unexpected, and it will similarly be no surprise if climate legislation includes provisions to expand drilling, though how the political dynamics of the Gulf Coast oil spill play out over the next few weeks will determine what, if anything, is included. The point is that these provisions are political — they are in there to attract support for the bill or placate opponents, not for any climate benefits.
The Bottom Line
As the Senate tackles climate legislation, numerous provisions and elements are likely to be raised. Be wary if the conversation begins to get bogged down around the following questions:
Does the bill have renewable portfolio standards?
Does it preempt EPA authority?
Does it preempt state regulations?
How does Wall Street come out?
Does the bill tackle our energy security problems?
These questions are largely distractions to the ultimate objective of a climate bill: reducing greenhouse gas emissions as much as possible at the lowest possible cost. If you care about climate change, keeping your eyes on that end goal will be crucial if there is to be any hope of untangling the legislative thicket and passing a meaningful climate bill this year.
It was the Pakistani Taliban! Yes, yes, of course. They sat in their evil lair and activated one of their top sleeper agents to infiltrate American territory with a devilish plan to thwack hundreds of unsuspecting victims. And they monitored it all from their giant TV screens in real time, having tapped into NYPD’s closed-circuit television. Should visual monitoring fail, robo-operative Faisal Shahzad would simply activate the GPS tracking system linked to the Pakistani Taliban’s satellite via the computer chip inserted behind his ear.
Or not.
As Eric Holder and Hillary Clinton all took to the Sunday shows yesterday to proclaim Faisal Shahzad’s “connection” to the Pakistani Taliban, it struck me that such rhetoric often conveys, falsely, the sense of an ironclad connection between the operative and his terrorist mentors.
Secretary Clinton deserves credit for her answer on 60 Minutes yesterday, when she said, “There are connections. Exactly what they are, how deep they are, how long they’ve lasted, whether this was an operation encouraged or directed … those are questions still in the process of being sorted out.”
She’s right, of course. But my worry is that people stop paying attention after that first sentence.
I think I have a pretty good idea of Faisal Shahzad’s relationship to the Pakistani Taliban. My inkling is based on not a single piece of intelligence reporting as it pertains to this case, but rather my experience investigating the bombings in Madrid (2004) and London (2005). Both those operations featured “home-grown” operatives — locals who were “clean” (i.e., had all the proper paperwork to access the target country) and who had explicit or nebulous associations with al Qaeda in Afghanistan or Pakistan. The Madrid bomber’s connection to AQ has always been slightly murkier, but the London bombers were known to have traveled to Pakistan on prior occasions.
The Metamorphosis
Based on London and Madrid, here’s an attempted reconstruction of how Faisal Shahzad went from being a nice young father in the Connecticut ‘burbs to an attempted mass murderer:
First, the part we don’t exactly know: What made him travel to Pakistan with the intent to hook up with the Taliban? While a lot of bad stuff had happened to Shahzad over the course of the previous months — quitting his job and losing his house among them — we don’t know what mechanism drove him from “depressed” to “seeking revenge.” It could have been a chat room; it could have been secret meetings at a mosque; it could have been one influential mentor, as was the case with the first London cell in the north of England (the cell met regularly with an Islamic extremist in the backroom of a bookstore before traveling to Pakistan).
However, we do know that it was one of these (or something like it). Faisal went from having a bad run in life to actively seeking revenge. We know that someone — whom we’ll call his “mentor” — got him to translate his frustration into action and was well-connected enough to link up Shahzad with Taliban elements in Pakistan.
Next, as he’d done several times, Shahzad traveled to Pakistan. Most of his previous trips were likely family-related. This one might have been, as well. But at some point, Shahzad’s mentor told his contacts in the Pakistani Taliban that he had an American passport-holding recruit who was open to learning more. What’s more, Shahzad’s mentor must have been highly trusted in Pakistan because Taliban elements view U.S.-based operative as spies. That the mentor could vouch for Shahzad’s legitimacy would have been critical.
The mentor would have given Shahzad contact information in Pakistan, but it would have likely been up to Shahzad to initiate contact with Pakistani Taliban.
Upon traveling to Pakistan, Shahzad obviously decided that he was interested in learning more. He got in touch with his mentor’s network, and agreed to spend a certain period of time — as few as a couple weeks, but up to several months — in the Pakistani wilderness with Taliban members. Travel records indicate that Faisal went to Karachi and then Peshawar, the Taliban hotbed where Shahzad likely jumped off the grid.
During his time in the Taliban camp, Faisal would have gone through Terrorism 101. He’d have been given physical training, religious indoctrination (which is critical to sustaining his commitment), bomb-making classes and likely small-arms instruction. If there was a group of students, they would have bonded and shored up their commitment to jihad in small group sessions where they solidified their hatred of America.
A Freelance Terrorist
Faisal would have received all of this training, but would likely not have been given a specific plan of attack. This is the changing model of terrorism today. No longer do al Qaeda masterminds sit deep in caves and dream up logistically complex plots akin to 9/11. Instead, it’s more likely that the Taliban would have provided him training, possibly some cash, and given Shahzad the autonomy to imagine and execute his own plot. That’s right — the Pakistani Taliban likely would have taught him, paid him, and told him, “Good luck with whatever you end up doing. Just do something.”
In today’s world of increasing counterterrorism capabilities, this model stands a significantly higher degree of success. By not weighing Faisal down with the who’s, what’s and when’s of an operation, logistics are simplified dramatically, thus decreasing the chances of intercepted communications or arrested operatives that could scuttle the whole shebang. Cost drops, too. And since the Taliban has been isolated, they wouldn’t have on-the-spot access to scout a potential attack site, and are therefore almost forced to cede control to local operatives.
Of course many of these operatives, Shahzad and the Underwear Bomber included, aren’t “professional terrorists” with years and years of extensive training and indoctrination. But the Pakistani Taliban now seems willing to give up operational control and experience in order to increase the chances of a successful attack, even if that attack is significantly smaller than before. And since politicians are ready to use terrorism to score political points, a small attack could potentially carry as great a weight as another 9/11.
Even before the president’s announcement of Elena Kagan as his second nominee for the Supreme Court, progressives were beginning to rethink their position of skepticism (often assumed in the cause of encouraging a different nominee, typically Judge Diane Wood), and conservatives were beginning to gird up their loins for a confirmation fight.
There will be some progressives (probably Glenn Greenwald, but perhaps others) who may never reconcile themselves to support for a Justice with Kagan’s record as Solicitor General on civil liberties issues related to executive power and treatment of terrorism suspects.
But as SCOTUSblog’s Tom Goldstein suggested at The New Republic this weekend, the confirmation debate in the Senate is very likely to fall into familiar partisan/ideological patterns, with the final vote representing a mirror image of the Alito confirmation.
One major argument for her nomination all along has been her recent confirmation as solicitor general with significant Republican support. But some GOP senators will quickly argue that a different standard altogether will be used for a lifetime appointment to the High Court, and find reasons to vote against her (one senator, Arlen Specter, is in a particularly embarrassing situation, having voted against Kagan for solicitor general back when he was struggling to placate conservatives; he must now support her for the Court in the midst of a tough Democratic primary battle).
A summary of immediate conservative reaction to Kagan’s nomination by CBS’ Jan Crawford indicates that her enforcement of Harvard Law School’s ban on military recruitment on campus on grounds that DADT violated the university’s non-discrimination policies will be the lightning rod for the campaign against her. That makes sense, because the issue simultaneously strikes chords with cultural conservatives spoiling for a Court fight, and with conservative “populists” generally who will depict Kagan as an New York/Ivy League elitist out of touch with mainstream patriotical values.
But as I’ve argued earlier, the real question is whether the newly radicalized conservative/Tea Party faction of the GOP will insist on making the confirmation fight a showcase for their own distinctive views on the Constitution, which would make any Obama nominee, and most Republican nominees, categorically unacceptable. Kagan’s notoriously short public record of pronouncements on constitutional issues may, in fact, feed conspiracy theories that she represents a carefully planned leftist plot to move the Court in a totalitarian direction.
So even as Republicans search (almost certainly in vain, given the scrutiny she’s already received as a likely Court nominee) for some smoking gun in Kagan’s background, keep an eye on the tone of conservative rhetoric about this nomination. If it gets as shrill as I suspect it will, then progressives need to be prepared for a counter-offensive that exposes the radicalism of the increasingly dominant faction of the GOP.
Over the weekend the extreme peril faced by Republican Sen. Bob Bennett turned into abject defeat at the Utah GOP Convention. By finishing third on the penultimate convention ballot, the incumbent was excluded from the June 22 primary. Indeed, on the final ballot the primary nearly got canceled, as businessman Tim Bridgewater came close to the 60 percent necessary to be proclaimed the party nominee. Instead, he will face former Samuel Alito law clerk Mike Lee, a favorite of national hard-core conservatives such as Jim DeMint and the RedState crowd. Bennett could run in the primary (or even in the general election) as a write-in candidate, but given his dismal performance at the convention despite many weeks of dire warnings that he was in trouble, he’ll probably hang it up at the age of 76 after three Senate terms.
Bennett’s non-Utah enemies are unsurprisingly crowing over this event, which they view as an object lesson in what happens to RINOs (though Bennett is probably the most conservative elected official to earn that term of opprobrium) who don’t recant such sins as a vote for TARP and support for some sort of bipartisan health care reform initiative. As 538.com’s Nate Silver pointed out, Utah’s extremely unusual nominating process limits the predictive value of Bennett’s fall (you could also add that Utah’s overwhelmingly Republican electorate made the risk of dumping an incumbent lower than in more competitive states). Still, the shock waves among Bennett’s Republican colleagues in Washington over this development are worth their weight in gold to those fighting to move the GOP ever faster to the right. Bennett’s fate will certainly cross the mind of the rare Republican considering a vote for any major legislation backed by the Obama administration.
But the other bit of fallout from Bennett’s defeat may not play out for a good while: the exceptionally unsuccessful personal effort by Mitt Romney to save Bennett’s bacon. Romney endorsed Bennett many months ago and cut ads for him, but more importantly, he was present at the convention to introduce the incumbent in a speech that drew as many catcalls as cheers. While it’s unlikely that Mitt did too much damage to his status as an adopted favorite son of Utah, it did show the limits of his personal clout in a state where he’s considered an icon thanks both to his LDS faith and his 2002 Olympics effort. If he can’t move a small number of delegates in Utah, how well will he do in an arena like the Iowa caucuses, where he was trounced by Mike Huckabee in 2008?
As it happens, Romney isn’t the only potential 2012 presidential candidate who’s gotten into hot water with conservatives during the last few days. The other is none other than Sarah Palin, as Andy Barr of Politico explains:
Former Alaska GOP Gov. Sarah Palin’s endorsement of Carly Fiorina in California’s Senate race has prompted a fervent blowback on her Facebook page, long Palin’s safe haven for delivering her message.
The revolt is coming from Palin supporters who also back Chuck DeVore — a Tea Party favorite who is campaigning against Fiorina in the Republican primary.
Palin’s Facebook page is littered with comments opposing her endorsement of Fiorina, the former CEO of Hewlett-Packard.
Palin had earlier made many of her followers unhappy by endorsing John McCain over J.D. Hayworth in Arizona, but most had probably written that off to personal gratitude to her former running mate. And while Palin’s endorsement of Fiorina was easy to understand — she’s a fellow female conservative who played a visible role in the McCain-Palin campaign, and also has the bulk of national anti-abortion endorsements — the atmosphere in hard-right circles is clearly becoming less tolerant to those who don’t follow the conservative zeitgeist towards ideological rigorists like DeVore. That may be the enduring impact of the Utah Republican rejection of Bennett.
Poll Watch
In polling news, both Rasmussen and Muhlenberg now show Joe Sestak moving ahead of Arlen Specter in the Pennsylvania Democratic Senate primary, on tap for May 18. And at pollster.com, Harry Enten marshals the evidence that Sestak would be stronger than Specter in the general election contest with Republican Pat Toomey.
According to Calbuzz, private polling is showing Steve Poizner beginning to seriously erode Meg Whitman’s once-vast lead in the California Republican gubernatorial primary. And in a sign that eMeg could indeed be panicking a bit, she’s running a radio ad that features none other than Pete Wilson vouching for her tough attitude towards illegal immigrants — a gesture that could cost her dearly among Latino voters in a general election.
How to tell a good climate bill from a bad one? This series will guide you through the main issues that are likely to arise in the coming weeks as the Senate takes on climate change. In previous posts, we looked at the crucial and the merely important issues that factor in the climate debate. In this post we highlight issues that matter for climate policy, but will not necessarily make or break it. (To read the other posts in the series, click here.)
So far, we’ve established the absolutely critical aspects needed to make credible climate policy and identified the important features that would make that policy effective. Now we will focus on issues that aren’t quite on the same level, negotiable elements that could still have a meaningful role in determining the long-term viability and effectiveness of a domestic emissions mitigation program. These issues — specifically, price controls and the international implications of U.S. legislation — could become a big part of the political discussion.
Category III Issues: Negotiable Elements of Climate Policy
#1: Price controls: offsets and collars
An uncontrollably rising carbon price is a nightmare scenario for regulated firms and consumers, so industry groups have made a priority of getting robust price controls into climate legislation. Price controls generally take three different forms: banking and borrowing, offsets and price collars. Because banking and borrowing has such a strong effect on the emissions reduction path, we included them in our last post. Here we’ll focus on the two other strong cost containment mechanisms.
a) Offsets
If you’ve been paying attention to the debate over the past two years, you’ve likely heard something about offsets. They are one of the most controversial aspects of climate legislation. Environmentalists are suspicious of them and industry can’t live without them.
What exactly are offsets? As we mentioned in a previous post, carbon is a stock pollutant, meaning that we only care about its total accumulation in the atmosphere. If you keep adding carbon to the system, but remove an equal amount at the same time, it is just as good as no longer adding carbon at all. This is the underlying principle of offsets — firms that pay to remove greenhouse gases from the atmosphere (or keep them from entering in the first place) can receive the same credit they would get if they reduced their own emissions.
For example, with offsets in a cap-and-trade system, a utility that needs to reduce its carbon emissions by 20 million tons need not do so only through emissions cuts from its operations. It could reduce its own emissions by 15 million tons, then receive offset credits through financing a reforestation project and an agricultural methane reduction project that combined would lead to emissions reductions of five million tons, allowing the company to meet its target.
Here is a quick list of different kinds of offsets that might count under climate legislation:
Forestry: Forests absorb CO2 through natural respiration processes and store it in plant tissue and soil. When deforestation occurs, that stored carbon is released into the atmosphere, contributing to emissions. Deforestation and forest degradation count for around 15 percent of global CO2 emissions. Projects that reforest — increasing carbon sequestration — or reduce deforestation and forest degradation are growing increasingly popular in voluntary carbon markets and may facilitate significant savings. Some models have speculated that international forest offsets can account for 25 percent of emissions mitigation by 2020.
Agriculture: The agricultural sector accounts for six percent of U.S. emissions, but agricultural emissions will probably not be covered by a carbon price due to the complexity of measuring emissions from agricultural practices and the power of the farm lobby in Washington. The important gases from agriculture are methane emissions from large-scale cattle operations and manure management, and nitrous oxide emissions from fertilizer applications and soil management. Offset projects that capture renegade methane emissions or reduce nitrous oxide releases through better soil management will likely be the most widespread offsets available from the agriculture sector.
Renewable energy/energy efficiency: Projects that supplant dirty energy sources with cleaner sources or improve efficiency in energy production or end-use can also be eligible for offset credit. For example, a firm looking for cheap reductions could finance the development of a renewable energy project and receive credit for the emissions reduced when the renewable energy displaces conventional dirty energy. Additionally, projects that increase the efficiency of energy usage in buildings or facilities can count as offsets. These projects are a major component of the Clean Development Mechanism (CDM), which was established by the Kyoto Protocol. Using the CDM, developed countries can sponsor projects in developing countries and receive emissions reduction credit.
Waste management: The decay of garbage in the nation’s thousands of landfills represents the second largest source of U.S. methane emissions behind cattle operations. Methane flaring, a process that captures and burns these emissions, converting methane into CO2, is considered an offset, as CO2 has a lower global warming potential than methane. Combusting methane for energy generation may also generate offset credits.
Fugitive mine emissions: As with landfills, capturing fugitive methane emissions from coal mines presents an opportunity for offsets and may also have benefits in terms of miner safety.
While all of these offsets options are currently available in voluntary offset markets and allowed by regional cap-and-trade schemes like RGGI, they may not all be eligible for credit under federal regulation. Waxman-Markey does not count renewable energy, energy efficiency, waste management and coal emissions as offsets. Cantwell-Collins does not allow offsets in its trading system, but it does permit such projects to be paid for from its Clean Energy Reinvestment Trust.
Many offsets will be cheaper than actual emissions reductions, making them an important means of price control. This is especially true for international forest offsets — the EPA analysis of Waxman-Markey contended that allowance prices would be 96 percent higher without them. That said, Greenpeace and other environmental groups have firmly planted their flag in the anti-offset camp, and there are a number of issues that would need some serious policy attention in order to make forest offsets credible in the U.S. market.
There are four major requirements to making offsets a robust tool. First, they must be additional — that is, projects should only be considered offsets if the specific practice would not have happened anyway. Second, offsets should have permanence — projects are only useful if they are not quickly undone (an offset for planting a tree is of little value if it is rapidly cut down). Third, offsets should be verifiable — there must be some way to confirm that projects are doing what they claim (for forests, this can be very difficult). Finally, offset programs should address leakage — they should not simply shift emission-generating activities somewhere else. These are all valid concerns, and all four will have to be addressed for offsets to be a credible part of climate policy.
Potential hang-ups for offsets will likely involve politicians’ hesitations to send large sums of money overseas, the reliability and veracity of offset credits, the number of offsets allowed for use by regulated firms and the type of offsets available from domestic sources. Despite the misgivings of some policymakers and commentators, offsets will figure prominently in domestic legislation. Waxman-Markey included two billion tons worth of offsets annually, a significant proportion of overall U.S. emissions, the same amount as in the Kerry-Boxer bill introduced in the Senate last fall. Instead of spending time and energy railing against them, policy discussions should instead focus on setting up institutions to fix the problems listed above.
b) Price collars
More than anything else, firms want some certainty when it comes to climate regulations. Planning capital investments over the long-term will be significantly affected by carbon prices, and the more predictable the changes over time, the better firms can plan ahead. Moreover, sudden system shocks in the form of extreme drops or increases in prices can be very expensive and detract from the efficacy of cap-and-trade markets.
To protect the system and reduce price uncertainty, policy-makers are looking to use a price collar in the allowance market. A price collar is a way to define a general price path by restricting how much the price can rise or fall. Price collars work by establishing a price floor — under which the allowance price can never drop — and a price ceiling — above which the price will not rise. It is a simple mechanism in concept, and can provide a lot of certainty for regulated parties and market participants. The price floor and ceiling should be spaced far enough apart to accommodate market dynamics and rise at some rate to match the general rise in allowance prices.
When allowance prices hit the floor, they simply remain at that price until trading forces the price to rise again. Things get more complicated when they hit the ceiling, however. There are two options to bring down the price, depending on if you employ a hard collar or a soft collar. A hard collar releases additional allowances into the system until the price drops, regardless of how many it takes to do so. By contrast, a soft collar uses a strategic reserve of set-aside allowances to reduce the price below the ceiling. The difference between the two is a matter of emissions certainty. A soft collar maintains the overall emissions cap by taking some out of the system at the beginning, much like a rainy day fund, whereas a hard collar just dumps allowances into the market until the price changes. Firms may favor a hard collar because it provides more price certainty, but people concerned about overall emissions will prefer a soft collar.
#2: International aspects
If and when Congress does pass climate legislation, its impact will reach far beyond our borders. The international implications of domestic climate policy are extensive, and while they do not play a huge role in the political discourse, they have sway over some notable policy choices.
a) International negotiations
The Conference of Parties (COP) 15 in Copenhagen in December 2009 was advertised as a chance for the U.S. to reclaim its place at the world leader and innovator on environmental issues. The U.S. was able to do that only partially, and that was due largely to the extraordinary personal diplomacy of President Obama. U.S. negotiators had little to work with, bringing with them no official legislation to show other nations while trying to broker a deal that could pass Senate muster. Without a signed bill, the 2010 COP in Cancun this coming November will probably turn out similarly; nations will bicker and haggle and eventually end up not making any kind of serious commitment sans U.S. leadership. The EU does not have the sway to move a global climate deal forward, while other major emitters like China and India don’t have the incentive to act.
That’s not to say international negotiations will not have some influence on the shape of U.S. legislation. At Copenhagen, the U.S. committed to provide $30 billion from 2010 to 2012 to developing countries for mitigation, adaptation, technology transfer and other assistance. Additionally, the conference agreed to establish an annual $100 billion fund — of which the U.S. is expected to give roughly $20 billion — for developing countries for the same uses. Some of this funding will likely be partitioned from current programs, but it will certainly not be enough. Revenues from carbon markets established by climate legislation — as well as allowance allocations — will likely provide the most reliable source of international funds. The tradeoff is that every dollar spent on helping other nations adjust to climate change is one that can’t be used domestically. Though it won’t dominate the debate over any climate bill, the use of carbon revenues for international financing could end up having a real impact.
b) Competitiveness and leakage
Certain industries with intrinsically large carbon footprints, such as cement, steel and paper pulp, are particularly sensitive to carbon prices. These industries are concerned that paying for their sizable emissions will reduce their overall output, leading to job cuts and smaller profit margins. Moreover, they worry that a U.S. carbon price will lead to a shift in production to other countries that do not have similar regulatory burdens. When firms leave for other countries that don’t have a climate policy, it could lead to higher overall global emissions, a phenomenon known as leakage.
There are a couple of solutions to these problems. First, to help protect industries at home, climate policy can include rebates to industries — either in the form of cash or extra tradeable allowances — based on their output to help them adjust to the new reality of a price on carbon. Second (and more controversial), the federal government can establish border adjustments, slapping taxes on imports competing with vulnerable domestic industries. Essentially tariffs, such levies would put goods from countries without a climate policy on the same level as those from the U.S. Border adjustments can make for tricky politics, though. When the Waxman-Markey bill passed the House in 2009, President Obama openly criticized the inclusion of such measures. When the debate picked up in the Senate, however, 10 Midwestern senators stated they would not back any climate legislation that did not support manufacturing interests with some kind of border provision. Even if some compromise allows border adjustment to find its way into climate legislation, there’s a chance it would not be allowed under WTO agreements.
The Bottom Line
Last post, we reviewed important aspects of climate policy. In this post, we surveyed two areas that have value in generating good policy, but are negotiable in terms of their importance:
Is there a price collar? Are offsets allowed?
What is the effect of the proposal on international climate issues? How will it affect negotiations and commitments? How does it attempt to protect trade-vulnerable industries?
In our next and final post, we will focus on the issues that make little contribution to good climate policy — or might even be counterproductive.
Unless the White House acts forcefully and decisively to advance its transportation agenda in Congress, the president’s vision for high-speed rail may get sidetracked by the looming federal deficit.
That’s the growing perception on Capitol Hill as Congress grapples with an infrastructure program that could cost between $22 million and $132 million a mile if developed along the lines of 200-mile-per-hour bullet trains now running in Europe and Asia.
Unlike the health care debate, President Obama has been conspicuously unengaged from the details of how to move his high-speed-rail (HSR) plan from a one-off award program using Recovery Act stimulus funds to a dedicated multi-year program akin to the scope and ambition of the Interstate Highway System.
The House Transportation and Infrastructure Committee has raised concerns about the program’s lack of a solid revenue source. In a letter addressed to the president, Chairman James L. Oberstar (D-MN) and Railroad Subcommittee Chair Corrine Brown (D-FL) wrote:
We stand ready to help move your vision of high-speed rail closer to reality. But given budget constraints, we cannot continue to rely on general authorizations and appropriations to finance high-speed rail. We need to identify a dedicated revenue source for high-speed rail, and we need your help to do that.
More than 100 House members signed the letter.
What has especially upset HSR supporters is that, in the wake of $8 billion awarded to states last January under the American Recovery and Reinvestment Act, there is precious little additional funding earmarked for the program.
Congress authorized $2.5 billion for HSR projects in the current fiscal year, but HSR funding then drops to just $1 billion under the administration’s proposed FY 2011 budget.
That’s not enough to complete the 85-mile corridor proposed between Tampa and Orlando, not to speak of helping underwrite such ambitious projects as California’s proposed 800-mile HSR network connecting the state’s largest cities.
A coalition of transportation advocacy groups is calling on Congress to appropriate $4 billion for high-speed rail in 2011. Tomorrow the coalition will hold a press conference at Washington’s Union Station to present their case, with Rep. Brown among those scheduled to speak.
Last summer, Oberstar’s committee introduced a draft bill that would place $50 billion in the reauthorized surface transportation program to fund HSR development over the next six years. The actual method of funding the program was left open “in hopes that the administration would help Congress identify a dedicated revenue source for high-speed rail,” according to Oberstar.
The establishment of a national infrastructure bank, which would leverage private capital, has been discussed as a possible source for rail funding. Oberstar has embraced this idea in principle.
Another idea is to raise the federal tax on gasoline (which was last raised 28 years ago during the Reagan administration) to increase the revenue stream to the Highway Trust Fund. Some portion of the trust fund would then go to HSR development.
For its part, the administration opposes a gas tax increase and has proposed a more modest transportation infrastructure fund. Financed with $4 billion in public money, the bank would help bankroll transportation projects of national significance, presumably including HSR. This proposal has yet to be taken up by Congress.
Like any political vacuum in Washington, the absence of a strategy to pay for high-speed rail has emboldened critics of the program.
Sen. Kit Bond (R-MO), the ranking minority member of the Senate transportation appropriations subcommittee, last month lambasted the administration for spending funds on expensive trains during a budget crunch. “With a $12 trillion and growing [federal] deficit, we can’t just throw funds at projects willy-nilly,” he said.
Patty Murray (D-WA), chair of the Senate panel, also questioned the absence of a long-term plan by the administration.
While some of this criticism is ill-founded – the administration is on target for completing a National Rail Plan by the date requested by Congress — what the carping on Capitol Hill makes clear is that both sides of the aisle recognize that a modern rail infrastructure will be very expensive to build.
Neither Democrats nor Republicans are willing to commit to a potentially unpopular funding mechanism — such as an increase in the gas tax — that could jumpstart HSR development and allow states, manufacturers and potential rail operators to make long-term investments in infrastructure and manpower.
The need for administration leadership is clear. Lest he watch his vision dissolve in drift and delay, the president must make the case that a national program of rail construction will not only unsnarl our highways, but stimulate economic growth (with new jobs and emerging technologies) and protect our national security (by breaking our dependence on foreign oil). The time to start is now.
PPI National Security Director Jim Arkedis argues that selective cuts on military benefits will not solve the defense personnel cost:
A November report prepared by Jim Arkedis of the Washington-based Progressive Policy Institute (PPI) put projected 2010 costs at $59.7 billion: defense health program ($28 billion); military health care ($21 billion); and retiree health benefits ($10.7 billion).
Arkedis of the PPI said the recent wars have helped push costs skyward.
“You can’t nit-pick the problem away through selective cuts to benefit programs because, first, there’s a core constituency of hard-working military members, families and retirees who depend on them,” he said. “And second, frankly, it wouldn’t solve enough of the problem anyway. The key cost drivers are large-scale military deployments abroad.”
To Arkedis, “The moral of the story is that if you want to control personnel costs, you have to be really careful about which wars you fight – they better be the right ones.”
In a little-covered address this week at the Navy League Sea-Air-Space Exposition in Maryland, Secretary of Defense Bob Gates stopped just short of ripping defense contractors a new one. Of course, Gates was diplomatic in his admonishment, but the message was clear: we have to be smarter about defense spending, particularly when it comes to the Navy:
These [spending] issues invariably bring up debates over so-called “gaps” between stated requirements and current platforms — be they ships, aircraft, or anything else. More often than not, the solution offered is either more of what we already have or modernized versions of preexisting capabilities. This approach ignores the fact that we face diverse adversaries with finite resources that consequently force them to come at the U.S. in unconventional and innovative ways. The more relevant gap we risk creating is one between capabilities we are pursuing and those that are actually needed in the real world of tomorrow.
Considering that, the Department must continually adjust its future plans as the strategic environment evolves. …
[W]e have to accept some hard realities. American taxpayers and the Congress are rightfully worried about the deficit. At the same time, the Department of Defense’s track record as a steward of taxpayer dollars leaves much to be desired. …
[I]t is important to remember that, as the wars recede, money will be required to reset the Army and Marine Corps, which have borne the brunt of the conflicts. And there will continue to be long-term – and inviolable – costs associated with taking care of our troops and their families. In other words, I do not foresee any significant increases in top-line of the shipbuilding budget beyond current assumptions. At the end of the day, we have to ask whether the nation can really afford a Navy that relies on $3 to 6 billion destroyers, $7 billion submarines, and $11 billion carriers.
Talking tough on spending has been a theme for Gates. While much of the problems he identifies will continue to exist for years, beginning this conversation is a critical signal that will eventually — think decades — change the way the Pentagon does business. He knows this, and he also knows that this idea won’t be solved on his watch. But if he doesn’t start talking about it, who will?
If you’re looking for a good suggestion about how to buy weapons more sensibly, read Jordan Tama’s excellent Memo to the New President, where he calls for a BRAC-style commission to propose a weapons budget each year.
This week three actual state primaries were held, and the results were mainly upsetting to those who strongly anticipated a bunch of upsets and the wholesale defeat of incumbents. You can read my earlier report for the results, but the bottom line is that the needle between the two parties did not move much in the three states holding Senate primaries.
Republicans will still be favored to take Evan Bayh’s seat in Indiana, though in nominating Dan Coats they are setting up the ripe target of a man with a very public record during many years in Congress and then a decade of controversial lobbying activities and out-of-state residence. Incumbent Republican Richard Burr will still be favored for re-election in North Carolina, but the two Democrats facing a runoff to become the nominee against him are probably happy for the exposure. And the Lee Fisher/Rob Portman fight in Ohio is probably one that will go right down to the wire.
There’s been a fair amount of anxiety in Democratic circles about the partisan turnout disparaties in Tuesday’s primaries. Reid Wilson of HotlineOn Call had the numbers:
Just 663K OH voters cast ballots in the competitive primary between LG Lee Fisher (D) and Sec/State Jennifer Brunner (D). That number is lower than the 872K voters who turned out in ’06, when neither Gov. Ted Strickland (D) nor Sen. Sherrod Brown (D) faced serious primary opponents.
Only 425K voters turned out to pick a nominee against Sen. Richard Burr (R-NC). The 14.4% turnout was smaller than the 444K voters — or 18% of all registered Dem voters — who turned out in ’04, when Gov. Mike Easley (D) faced only a gadfly candidate in his bid to be renominated for a second term.
And in IN, just 204K Hoosiers voted for Dem House candidates, far fewer than the 357K who turned out in ’02 and the 304K who turned out in ’06.
By contrast, GOP turnout was up almost across the board. 373K people voted in Burr’s uncompetitive primary, nearly 9% higher than the 343K who voted in the equally non-competitive primary in ’04. Turnout in House races in IN rose 14.6% from ’06, fueled by the competitive Senate primary, which attracted 550K voters. And 728K voters cast ballots for a GOP Sec/State nominee in Ohio, the highest-ranking statewide election with a primary; in ’06, just 444K voters cast ballots in that race.
This is yet another sign that Democrats need to be concerned about voter mobilization in November. On the other hand, in Indiana at least, I’m not sure a lot of those conservatives who were excited about the highly competitive GOP Senate primary were very excited about the actual outcome, since 61 percent of them voted against Dan Coats. Runoff requirements are in many ways a pain in the butt for both voters and for candidates, but they do tend to produce reasonably popular nominees.
The next contest on the calendar is Utah’s State Republican Convention, which controls access to the actual party primaries. Three-term incumbent Republican senator Bob Bennett is in very deep trouble, and could be excluded from the primary altogether by running third at the convention, or, in an alternative scenario, a convention determined to snuff his career could give front-running challenger Mike Lee the nomination without a primary. Jonathan Martin and Manu Raju have a Politico piece today about the shock waves that Bennett’s impending demise is sending through the ranks of Republican senators. If you don’t count Charlie Crist being chased right out of the GOP, or the defeat of Kay Bailey Hutchison in Texas, this is the first major scalp to be claimed by right-wing insurgents this year, with others on the near horizon. Expect a lot of howling at the moon tomorrow.
Poll Watch
On the public opinion front, two new polls in Washington State (one by Rasmussen, the other by the local Elway firm) showed Sen. Patty Murray in reasonably good shape, even against conservative heart-throb Dino Rossi, who hasn’t decided whether to run. A new R2K poll in Kentucky (whose primaries are on May 18) shows Rand Paul and Dan Mongiardo still leading their respective party primaries, though Mongiardo’s lead over Jack Conway remains in the single digits. And in another May 18 primary state, Pennsylvania, the growing sense that Joe Sestak is finally catching up with Arlen Specter was reinforced by a new Muhlenberg poll showing them dead even.
It wasn’t a big shock, but still, citizens of the United Kingdom woke up today to a very unsettled political situation, having rebuffed Labour and the Liberal Democrats in yesterday’s election, but without giving the Tories the majority necessary to immediately govern.
With votes still out from two seats, the Conservatives have 305 seats, Labour has 258, the Lib Dems 57, and other parties 28. The popular vote split 36 percent Tory, 29 percent Labour, and 23 percent Lib Dem. The major surprise was that the “Cleggmania” that seemed to grip the electorate during the campaign did not translate into a much better showing for the Lib Dems, who actually lost seats. But they certainly retained some influence as the party holding the balance of power, and today Nick Clegg is entertaining semi-public overtures from both the big parties to form a coalition government, while hoping to secure some sort of agreement to move the electoral system away from the first-past-the-post method that has so long frustrated the Lib Dems (most notably yesterday).
The most likely outcome is a minority Tory government under David Cameron with a short-term mandate to deal with the country’s immediate economic and financial problems and then hold another election, possibly even this year. Given the brevity of British campaigns, that’s not quite the nightmare scenario it sounds like to American ears.
James Kwak, coauthor of the new financial crisis book 13 Bankers, recently sought to explain his thesis “in 4 pictures.” And impressive pictures they are. But I’ve been particularly struck by one of them — this chart, from a paper by economists Thomas Philippon and Ariell Reshef, showing the close correspondence between deregulation trends on the one hand and the ratio of financial sector wages to private sector wages on the other. My reaction to the chart was essentially, Huh. Those trend lines look like the basic income inequality trend line.
But to my knowledge, no one has really made this point since the chart has circulated widely. Certainly no one has tried to illustrate it.
Maybe people just lack my whiz-bang PowerPoint and Excel skills, or maybe I’ve actually had an Original Thought. But take a look at the chart I created, which overlays a trend line showing the share of income received by the top one percent (the black line) on top of the Philippon-Reshef chart. The trend line comes from the widely cited work of economists Thomas Piketty and Emmanuel Saez, who used IRS data to look at the incomes of the very rich:
I’ve argued before that I think the Piketty-Saez top-share trend line overstates the recent rise in income inequality, but I don’t see much reason to doubt the basic U-shape of the trend since the Great Depression. For all of the consensus around the basic inequality trend, there’s surprisingly little agreement or understanding as to why it looks the way it does (a major theme of Paul Krugman’s Conscience of a Liberal). Could it really be as simple as the extent of financial regulation? Every analyst bone in my body says this is too easy, but…but….
Of course, saying it’s all financial regulation trends isn’t necessarily inconsistent with Krugman-esque arguments that it’s all about changes in cultural acceptance of inequality. Maybe financial regulation flows from public attitudes about inequality.
When you read as much stuff on politics as I do, there’s an odd sort of exultation when you spot something so very poorly reasoned that you can spend many pleasurable hours tearing it apart. It helps when the author of such a “pinata” (i.e., it can be hit from just about any direction) is arrogantly or angrily wrong, stamping his or her feet at the very necessity of having to explain obvious truths that are anything but obvious or true. That’s why, on doctor’s orders, I only allow myself to read Peggy Noonan’s columns, so predictably full of rich manure, now and then.
Today the famous pollster and sometimes-Democratic, sometimes-strategist, Mark Penn, has published an op-ed in the Washington Post that is Noonan-esque in its strongly held folly. You can read the whole thing, but basically, Penn is saying that the vast uptick in independent voter sentiment in this country is creating a good environment for a centrist third party that’s socially liberal and economically conservative, and Penn points to the rise of the UK’s Liberal Democrats as an example of what could happen here.
As Jon Chait notes in his own demolition of Penn’s column, the first contention is demonstrably wrong, though it appears it will take wooden stakes to kill it:
In fact, pollsters and public opinion experts — a group that apparently excludes Penn — understand that independent self-identification largely reflects a desire not to be seen as a closed-minded, automatic vote. It does not, however, reflect actual voting independence. Most self-identified independents are at least as partisan in their voting behavior as self-identified Democrats or Republicans. It’s largely a class phenomenon, with wealthier and more educated voters being more likely to call themselves independent, but not more likely to go astray in the voting both. The rise of independent self-identification has little to do with voters moving toward the center or the parties moving toward the extremes. Plenty of those self-identified Democrats in the 1950s voted for Ike.
In other words, actual as opposed to professed independent political behavior — i.e., ticket-splitting — has regularly declined now for decades, as has the percentage of the electorate made up of “true” independents. So there is no ripe uncaptured constituency out there, and to the extent that it even exists, it’s ideologically polyglot, not a “centrist” coalition ready for the taking. Many self-professed “independents,” as we’ve seen once again in the Tea Party Movement and in elements of the Left disgruntled with Obama and before him with Bill Clinton, are more ideological than self-professed partisans. Maybe they’ll vote, and maybe they won’t, but they are not combinable in some sort of third-party impulse.
More importantly, as Penn does acknowledge, there are powerful institutional barriers to the rise of third parties. But in noting the failure of the last two major efforts (John Anderson’s in 1980, and Ross Perot’s in 1992 and 1996), Penn simply says they failed because neither leader was “dynamic” enough. Perhaps, as some observers will undoubtedly conclude, Penn’s column is really a public valentine to some very rich person (e.g., Michael Bloomberg) who might look in the mirror and see the leader “dynamic” enough to succeed where so many others, including reasonably dynamic people like Teddy Roosevelt, have failed. But in any event, Penn’s case for the viability of a third party totally depends on his analysis of the “centrist” and “independent” electorate, which is bogus to begin with.
Perhaps sensing the weakness of his case, Penn then hauls in the Liberal Democrats in an effort to divine some sort of transatlantic movement. You wouldn’t know if from his account, but far from being a “new” phenomenon, the LibDems represent a centuries-old political tradition (technically, the party represents a merger of the ancient Liberals with the Social Democrats, a splinter party that left Labour for many of the same reasons that Tony Blair and his associates found for reforming it a few years later). And it’s not exactly easy to match the Lib Dems to Penn’s template of “socially liberal and fiscally conservative” voters. Aside from “change,” they are for tax increases to reduce public debt, legalized same-sex marriages, major reductions in defense spending, liberalized immigration laws and more aggressive participation in Europe. Their opposition to British entry in the Iraq War is probably the recent position with which they were most identified. Does this agenda sound “nonpartisan centrist” in any context that is transferable to America, or to Penn’s own agenda? Or more like the left wing of the Democratic Party, which Penn despises?
Moreover, “Cleggmania” aside, it’s very unlikely that the LibDems will make gains in their parliamentary representation that are in any way comparable to the share of the popular vote they receive today. And that’s in a country where the barriers to third parties are considerably lower than in the U.S.
I am not, as it happens, among the vast ranks of Penn-haters in the progressive blogosphere. I gave his last book one of its more favorable reviews. But the reality is that Mark Penn is largely frozen out of today’s Democratic Party elites thanks to years of intra-party combat and particularly his abrasive role in Hillary Clinton’s 2008 presidential campaign. Yes, he’s very wealthy and still has the juice, it appears, to command the op-ed pages of the Washington Post when he feels like it. The third party he describes as just over the horizon, however, is pretty much a party of one.
I am going to ever so slightly step out of my comfort zone to relay what I think is a brilliant policy frame for progressives in 2010 and beyond.
Fiscal hawks, like your hosts here at the PPI, have been clear about the stark choices future generations of Americans face. It’s simply not possible to have one of the lowest marginal tax rates in the world along with massive government spending on entitlements programs and defense. If the country is to emerge from the current economic crisis with its financial house in order, something has to give.
Will Marshall took a scalpel to the problem in a post a few weeks ago:
Here’s the blunt truth: the federal government faces a huge revenue hole – too big to be closed by spending cuts alone. Spending last year reached an astonishing 26 percent of national output, while revenues fell to 15 percent. Full economic recovery is expected to cut that yawning tax gap of 11 percent roughly in half.
Getting federal deficits down to a sustainable level – say three percent a year – will require both spending cuts and tax hikes. The president’s deficit-reduction commission will have to look hard at entitlement spending, but we will also need a sweeping overhaul of our tax system to solve our fiscal crisis.
Extending all the Bush tax cuts, of course, will only dig us in deeper. The Congressional Budget Office estimates that extending them through 2017 would cost $1.9 trillion. That doesn’t include the costs of servicing a bigger national debt, or the cost of adjusting the alternative minimum tax so it doesn’t offset the cuts.
So where does the national security guy get off talking about fiscal responsibility? Allow me to explain. There I was last Saturday night, sitting in a bar in Stockholm talking to two Swedes. One was my long-time buddy Eric Sundstrom, political junkie, ex-PPI fellow and current editor of the Social Democrats’ party newspaper. The other was Eric’s pal Torbjorn, who serves as a policy adviser to the Social Dems’ financial team and whose last name was erased from my memory by the time Scotch #3 rolled around.
I was complaining about America’s fiscal imbalance and national allergy to taxes, when Eric piped up and said, “It’s not just an American problem. Torbjorn concocted a brilliant message on it for Sweden, too.”
Smiling, Torbjorn looked up an uttered what could be the defining policy frame on taxes and spending for progressives this year — or any year:
“We can’t keep borrowing money to cut taxes.”
In that form, it’s brilliant in the American context. It puts Tea Partiers on notice that their tunnel vision for lower taxes is costing America dearly. But I’d make one modification to show exactly what’s at stake and where the money comes from:
“We can’t keep borrowing from China to cut taxes.”
Bill Clinton would probably agree. At the Peterson Institute last week, the former president said, “I think this is a national sovereignty issue,” noting that foreign creditors hold 48 percent of America’s debt. China alone holds more than $877 billion of U.S. debt.
So there you go, progressives — a talking point straight from Stockholm on why the right-wing obsession with cutting taxes is so irresponsible.
While the Obama administration has been busy deflating expectations for rail passenger service above 110 miles per hour, Florida is improving the design of its corridor between Tampa and Orlando so trains can run above 180 mph.*
This nugget of good news came within the confines of testimony given Monday by Florida Transportation Secretary Stephanie Kopelousos at a hearing in Miami before a congressional panel reviewing the $8 billion in rail grants awarded in January.
Florida’s decision to speed up its trains amounts to a subtle rebuke of the Obama administration’s rail strategy. Joseph Szabo, chief of the Federal Railroad Administration (FRA), has argued before the same congressional panel that trains running at 150-200 mph, as is common in Europe and Asia, aren’t necessary on most intercity corridors.
Outside of Florida and California, the Obama administration has set 110 mph as the top speed for passenger trains that would use existing upgraded track owned by freight railroads. Rep. John Mica (R-FL), the ranking minority member of the House Transportation and Infrastructure Committee, has denounced the administration’s plans as fake high-speed rail.
While Florida originally projected maximum speeds of 168 mph for the Tampa-Orlando route, “our engineering team is designing this system to international standards and is evaluating design options to increase speed and decrease travel time,” Kopelousos said.
The redesign is expected to whisk passengers from downtown Tampa to Orlando International Airport (85 miles) in “under 45 minutes,” Kopelousos said, compared to 56-59 minutes under the previous design.
This places the Florida system in line with the speed performance of most European trains, such as France’s famous TGV network. The accelerated trip represents a significant time savings over highway travel, which typically takes 80-90 minutes between Tampa and Orlando.
Kopelousos pledged to seek more federal funds to complete the Tampa-Orlando line. Florida sought $2.65 billion, but the FRA granted only $1.25 billion from the pot of high-speed rail funds awarded in January.
The shortfall has brought jitters to state transportation planners. But given Florida’s position as a battleground state in national elections, it seems unlikely that the Obama administration would forsake the project. A more plausible scenario is that additional federal money will come in spurts as the state completes phases of the corridor.
Florida also wants to build a high-speed line between Orlando and Miami. The FRA rejected Florida’s application for $30 million to start planning this leg of the railway, but Kopelousos said the state is funding its own planning work and will reapply for federal aid.
The Florida legislature has established the Florida Rail Enterprise, modeled on the Florida Turnpike Authority, to oversee the building of the railway, which is initially projected to carry two million passengers a year and earn a small profit that will grow once the Orlando-Miami segment is completed.
The Tampa-Orlando line will have a station stop at Disney World. About half of the passengers are expected to be tourists headed to Disney or to other tourism and recreational destinations in the region.
Building the railway along the median strip of I-4, rather than using private land or mixing the route with existing freight train lines, has reduced overall costs. When the state widened I-4 some years ago, it spent an extra $600 million reconfiguring the roadway and building overpasses with enough clearance for trains.
If all goes on schedule, the first trains will be running in 2015, making Tampa and Orlando the first metropolitan areas in the country connected by a railway dedicated to high-speed passenger service.
Graphic: Florida Department of Transportation
*Correction: This item originally stated that Florida is improving the Tampa-Orlando corridor design so trains can run up to 200 mph.
The Progressive Policy Institute today hosted an event at Foggy Bottom FreshFarm Market featuring Joel Berg, author of the PPI Policy Report “Good Food, Good Jobs,” and Tom Colicchio, “Top Chef” judge and 2010 James Beard Outstanding Chef. For event details, click here.
Tens of millions of Americans need more nutritious, more affordable food. Tens of millions need better jobs. Just as the Obama administration and Congress have supported a “green jobs” initiative to simultaneously fight unemployment and protect the environment, they should launch a “Good Food, Good Jobs” initiative. Given that large numbers of food jobs could be created rapidly and with relatively limited capital investments, their creation should become a consideration in any jobs bill that Congress and the president enact.
Our hunger, malnutrition, obesity, and poverty problems are closely linked. Low-income areas across America that lack access to nutritious foods at affordable prices — the so-called “food deserts” — tend to be the same communities and neighborhoods that, even in better economic times, are also “job deserts” that lack sufficient living-wage employment. A concurrent problem has been the growing concentration of our food supply in a handful of food companies that are now “too big to fail.” A Good Food, Good Jobs program can address these intertwined economic and social problems.
In partnership with state, local, and tribal governments, nonprofit organizations, and the private sector, the federal initiative would bolster employment, foster economic growth, fight hunger, cut obesity, improve nutrition, and reduce spending on diet-related health problems. By doing so, not only could government help solve a number of very tangible problems, but it could fuse the growing public interest in food issues with the ongoing efforts, usually underfunded and underreported, to fight poverty at the grassroots level.
A Good Food, Good Jobs program could provide the first serious national test of the effectiveness of such efforts in boosting the economy and improving public health. The new initiative should:
Provide more and better-targeted seed money to food jobs projects. The federal government should expand and more carefully target its existing grants and loans to start new and expand existing community food projects: city and rooftop gardens; urban farms; food co-ops; farm stands; community-supported agriculture (CSA) projects; farmers’ markets; community kitchens; and projects that hire unemployed youth to grow, market, sell, and deliver nutritious foods while teaching them entrepreneurial skills.
Bolster food processing. Since there is far more profit in processing food than in simply growing it (and since farming is only a seasonal occupation), the initiative should focus on supporting food businesses that add value year-round, such as neighborhood food processing/freezing/canning plants; businesses that turn raw produce into ready-to-eat salads, salad dressings, sandwiches, and other products; healthy vending-machine companies; and affordable and nutritious restaurants and catering businesses.
Expand community-based technical assistance. Federal, state, and local governments should dramatically expand technical assistance to such efforts and support them by buying their products for school meals and other government nutrition assistance programs, as well as for jails, military facilities, hospitals, and concession stands in public parks, among other venues. Additionally, the AmeriCorps program — significantly increased recently by the bipartisan passage of the Edward Kennedy Serve America Act — should provide large numbers of national-service participants to implement nonprofit food jobs efforts.
Develop a better way of measuring success. The U.S. Department of Agriculture (USDA) should develop a “food access index,” a new measure that would take into account both the physical availability and economic affordability of nutritious foods, and use this measure as another tool to judge the success of food projects. All such efforts should be subject to strict performance-based outcome measures, and programs should not be expanded or re-funded unless they can prove their worth.
Invest in urban fish farming. Given that fish is the category of food most likely to be imported, and given growing environmental concerns over both wild and farm-raised fish, the initiative should provide significant investment into the research and development of environmentally sustainable, urban, fish-production facilities.
Implement a focused research agenda. The government should enact a focused research agenda to answer the following questions: Can community food enterprises that pay their workers sufficient wages also make products that are affordable? Can these projects become economically self-sufficient over the long run, particularly if they are ramped up to benefit from economies of scale? Could increased government revenues due to economic growth and decreased spending on health care and social services offset long-term subsidies? How would the cost and benefits of government spending on community food security compare to the cost and benefits of the up to $20 billion that the U.S. government now spends on traditional farm programs, much of which goes to large agribusinesses?
For a community to have good nutrition, three conditions are necessary: food must be affordable; food must be available; and individuals and families must have enough education to know how to eat better. This comprehensive proposal accomplishes those objectives. Moreover, in the best-case scenario, it could create large numbers of living-wage jobs in self-sustaining businesses even as it addresses our food, health, and nutrition problems. But even in a worst-case scenario, the plan would create short-term subsidized jobs that would provide an economic stimulus, and at least give low-income consumers the choice to obtain more nutritious foods — a choice so often denied to them.
As with any big issue in Washington, climate policy has its share of sideshows and special-interest pet projects. If somebody’s favorite policy can be plausibly (or even implausibly) tied to climate, it’s a good bet they’ll attempt to do so. Conversely, if someone wants to hijack the climate debate, they may try to attach an unpopular issue to it. There are also a good number of perfectly well-intentioned ideas that, in reality, won’t make much difference in terms of climate policy.
It was the Pakistani Taliban! Yes, yes, of course. They sat in their evil lair and activated one of their top sleeper agents to infiltrate American territory with a devilish plan to thwack hundreds of unsuspecting victims. And they monitored it all from their giant TV screens in real time, having tapped into NYPD’s closed-circuit television. Should visual monitoring fail, robo-operative Faisal Shahzad would simply activate the GPS tracking system linked to the Pakistani Taliban’s satellite via the computer chip inserted behind his ear.
So far, we’ve established the absolutely 
Unless the White House acts forcefully and decisively to advance its transportation agenda in Congress, the president’s vision for high-speed rail may get sidetracked by the looming federal deficit.
In a 
I am going to ever so slightly step out of my comfort zone to relay what I think is a brilliant policy frame for progressives in 2010 and beyond.
This places the Florida system in line with the speed performance of most European trains, such as France’s famous TGV network. The accelerated trip represents a significant time savings over highway travel, which typically takes 80-90 minutes between Tampa and Orlando.