AmbassadorBlog

A Green Future - Cash or Climate?

As we enter the season of Presidential politics, we can expect the discourse to become more partisan, less objective and at times downright silly.  There are very serious and far reaching issues that the country must come to grips with and there are arguments that should be heard on both sides. It is not productive, therefore, to hide the issues in an avalanche of rhetoric, misinformation and ignorance. One particularly important and divisive element of the debate is one of the oldest in our country, the role of the States and the role of the Federal Government.  It is a legitimate question.  Certainly, there are grounds to be concerned about the intrusion of the Federal Government into our daily lives and to worry about excessive regulation and its impact on economic growth.  But, to carry on this debate, as if we were still living in the 18th century, is not very productive for dealing with today's global problems. 

Some of the problems we will have to deal with over the next fifty years will not stop at our borders, either those of our home states or of our nation.  States acting on their own or even in coordination with one another are not sufficient to the task.  Similarly, the United States cannot hope to meet some potential and actual foreseeable threats to the well being of our people without international cooperation that involves US leadership.  It is a pipe dream to think we can go it alone, and it is a nightmare to contemplate the results if we try to do so.  Not only does it not make sense in these circumstances to speak of “states rights,” it also makes no sense to speak of “fortress America.”

Governor Perry of Texas questioned whether human activity is causing global warming even though up to 98% of climate scientists believe that the linkage is clear.  But, for the sake of argument, let’s say he is right: human activity is not causing global warming.  However, even he cannot deny that ice caps are melting and temperature measurements over time seem to indicate a warming trend.  Whatever the cause of this trend, whether it is human activity or cyclical patterns, the effect of warming on us will be the same.  If the world is getting warmer, that will have an impact on growing seasons, food supply, disease transmission, flooding, weather patterns, and so on.  Furthermore, the impact will be unevenly distributed within our country and globally. 

There are at least three ways to deal with this: 1. Kick the can down the road, ignore it, stick our heads in the sand - the Perry solution - and hope it all turns out OK; 2. try to slow the process down by adjusting human behavior so that we are not adding to the problem by speeding up and intensifying the cyclical process of warming – the EPA solution of curtailing CO2 among other steps (Now taken off the table by President Obama in the face of industry opposition.); or 3. Start planning and acting now to prepare ourselves to live with a warmer world and begin to take steps toward environmental remediation.

Steps to adjust current behavior was the direction the EPA and the President were taking, but it was blocked by well funded business and political interests who beat the drums of jobs and recession leading Obama to cave in.   Realistically, so long as adjustment will lead to reduced profitability, nothing will happen, at least until after the 2012 election and only with difficulty thereafter given the composition of our Congress, the Supreme Court, and our campaign financing laws (or lack thereof).

Steps toward remediation will also incur costs now, and while it might well actually create jobs in the short term, it would be pilloried by the Tea Party as yet another government hand out and expansion of Federal encroachment on our American way of life.  Thus, the temptation at all levels of government and certainly among the bulk of conservative voters, will be to put off today what can be done tomorrow.  It is easier to question the science and to blame the scientists for feathering their own nest than the wealthy who have feathers in abundance.  The easy path is the Perry path. 

Given our annual budget process based on annual expenditures, and in the absence of a separate national investment budget for the long term, it does not appear that our two party system will be able to embrace short term sacrifice to gain long term benefits.  Look at how wrenching and inconclusive our recent debt debate was.  There was a plethora of rhetoric about saddling future generations with our present debt.  But, God forbid we should equalize the current burden to solve the longer term problem.  Tax the wealthy, cut farm subsidies, extend the age of social security? Or none of the above.  The effects of the debt burden on future generations seems to be a concept that people can understand only in terms of placing the burden of sacrifice on others. So we do nothing and hope for the best.  The Perry solution is the easiest. And, guess who will have to pay the ultimate price?

US Energy Policy: "What Me Worry"

 

It may come as a surprise to many but this is National Energy Awareness Month. President Bush, in connection with an energy speech in St. Louis, on October 12 proclaimed October as the month we should all be aware of energy and he suggested a number of programs his administration was either implementing or proposing, to increase energy resources in the future. As the President said “energy is going to help determine whether or not this nation remains the economic leader in the world.” He’s got that right. The President pointed out that his administration had committed nearly $10 billion since 2001 on the development of cleaner, less expensive, and more reliable energy sources. I have done that kind of counting before in government when the word goes out to the bureaucracy to add up all the money, which is already committed to existing programs, that could conceivably be construed as being devoted to the particular challenge at hand and then cumulate it into a nice big impressive number and pretend it is a new initiative. Of course, the $10 billion, you will notice, was “committed” not spent and could be counting expenditures on programs that have already been in place and are projected to continue well into the future.

 

The President said we should reward people for investing in research and development and noted that there was already a tax credit on the books which has to be renewed annually by Congress. His initiative is to make it a permanent tax credit – no new incentive, no new money, just more of the same. He also highlighted another tax credit that is on the books for purchasers of hybrid cars. Unfortunately, since the tax credit does little more than equalize the price (hybrids cost more), the credit has not led to a massive upsurge in the number of hybrids on the road.

 

The President, with a month to go before the mid term elections, gave due emphasis to ethanol which subsidizes the corn growers in the Mid West. This is a technology that may offer promise for the future some ten years from now but is not likely to help very much in the short term, except, of course, for that voting block of Mid West corn growers. The President stressed investment in nuclear technology, but he hasn’t overcome the local opposition to building new plants. He talked about wind energy, which is fine until they want to build a wind turbine in your back yard. And while he talked about research into vehicles that can go the first 40 miles on electricity and tax breaks on hybrids he has not done anything like the Republican governor in California, Arnold Schwarzenegger, who has actually taken concrete steps to reduce energy use and green house gasses in his state.

 

The President talked about energy efficient windows and light bulbs. It sounds like warmed over Jimmy Carter. I remember when President Carter, or rather his relative in the White House whom we knew as “Cousin Cheap,” turned off half the lights at the State Department as an energy saving initiative. At around that time I also profited from the tax break home owners used to get for installing storm doors and insulation. So if I sound a little cynical, it is because we have known about the energy problem and reliance on foreign oil for a long time and what we have gotten from our Presidents and Congress is half measures and promises that may be better than nothing but are not even keeping pace with the increase in American demand.

 

What was surprising about the recent spike in oil prices was that even at $70 a barrel, there was very little dent in our driving habits. Demand, it seems, is inelastic. If you want an example of how tax policy can affect driving habits, all you have to do is go to Europe where gas at $3.50 a gallon would be considered a windfall. There, the emphasis is on low gas mileage and “Smart” cars. That, of course, makes sense when a US gallon of gas in Amsterdam cost $6.48 back in March of 2005 before the run up in the price of crude.  According to CNNMoney.com, in Europe, taxes make up as much as 75% of the cost of gasoline.

 

A few days after the president spoke, on October 21, AP ran an article by Seth Borenstein entitled “Future Forecast: Extreme Weather.” The article points out that a new study by the National Center for Atmospheric Research, done with the aid of nine of the world’s top computer models, predicts a “lurching of climate at its most extremes” over the next century. The study identifies the Western United States, Mediterranean nations, and Brazil as the world’s hot spots that will get the worst of the extremes. “We’re in for a bad future” the scientists say.

 

In short, we have an energy policy that is big on promise and has very little delivery in the real world. In his speech in St. Louis the President said: “I talked to a fellow from Auburn, he's a Ph.D. -- just reminded me the difference between a Ph.D. and a C student; the C student is the President, and the Ph.D. is the advisor.” That was supposed to be a joke. I guess university professors are not a Republican demographic. Frankly, given the shape we are in, it didn’t seem very funny to me. Maybe it’s getting time to change these roles around and have a Ph.D. as President and the C student as the advisor.