In Northern Virginia today, President-elect Barack Obama addressed the nation, introducing a few basic goals and guidelines for an economic stimulus package that could cost as much as a trillion dollars.

Well aware that the large price tag on the stimulus, referred to as the "American Recovery and Reinvestment Plan," Obama included language about setting a foundation for economic growth now in order to return to a place of fiscal responsibility as the economy gets back on its feet. However, Obama was not shy about the need for the government to step in and spend, now:

"It is true that we cannot depend on government alone to create jobs or long-term growth, but at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe. Only government can break the vicious cycles that are crippling our economy - where a lack of spending leads to lost jobs which leads to even less spending; where an inability to lend and borrow stops growth and leads to even less credit."

Continue reading "Obama's Stimulus Plan: A Foundation for Growth?" »

On January 21st, immediately after assuming office, Barack Obama's first priority will be passing an economic stimulus package that will provide the economic kick-in-the-pants necessary to avoid the next Great Depression. There's nearly unanimous consensus that a major stimulus investment is needed to stave off economic disaster. How the next administration plans to fit this stimulus into a larger economic revitalization plan, however, is still unclear.

So far, there's plenty of focus on traditional methods of stimulus: tax cuts to spur consumer spending and traditional infrastructure investments to rebuild roads and bridges. Unfortunately, a short-term focus on roads and rebates won't be enough to stave off a new depression or put our economy back on track. Instead, we must focus on investments that can both act as short-term stimulus and improve the long-term productivity of the US economy. And that means investing in innovation.

As Janet Rae-Dupree wrote in the New York Times on Saturday:

Continue reading "Forget Roads and Rebates: Why the Stimulus Should Invest in Innovation and Productivity" »

An efficiency stimulus plan seems at first glance to be an unadulterated good: it puts Americans to work, saves energy and money, and cuts greenhouse gas emissions, all with investments that should pay for themselves. But there are reasons to be nervous about the overwhelming focus on energy efficiency by green leaders and Obama's top energy and climate advisors. This narrow focus threatens to distract from the critical work ahead: overcoming the technology gap that exists between the current state (and cost) of today's clean energy technologies and fossil fuels.

An efficiency program will not create the new industries that the American economy needs to increase employment and productivity in the long term. An efficiency program will not create new exports that will bring global capital in to the American economy. And, equally as important as short term stimulus, America needs to have a plan to achieve those objectives as quickly as possible as well.

Obama's primary focus must be on making clean energy cheap -- what Google calls RE<C, renewable energy cheaper than coal -- not on reducing energy consumption.

Continue reading "Will Energy Efficiency Stimulus Distract America from the Real Task at Hand?" »

The New York Times editorial board, including respected environmental writer Bob Semple, broke from its past focus on carbon pricing as the primary solution to climate change in an editorial about Obama's newly announced energy and climate team. The piece praised Energy Secretary-designate Dr. Steven Chu for his views on the climate challenge:

"What sets [Chu] apart is his fierce conviction that innovation is just as important as regulation, and that big energy problems, like climate change and the world's dependency on fossil fuels, will not be solved without major private and public investment in the development and deployment of nonpolluting technologies."

Continue reading "The Times, it is a-Changin'" »

Last week in response to Michael and Ted's piece in The American Prospect, Bradford Plumer at The New Republic's "The Vine" wrote a piece called "Should We Forget About Carbon Pricing? (No.)" The post, which mischaracterizes the stances Michael and Ted take in the Prospect piece, also propagates the myth of successful emissions reductions in Europe.

Plumer writes:

"Ted Nordhaus and Michael Shellenberger have yet another essay arguing that environmentalists should abandon all hope of trying to cap or tax carbon emissions, and instead focus solely on subsidizing clean-energy sources if they want to avert drastic global warming.

...Simply having the Energy Department dole out $50 billion per year to clean-energy producers (as Nordhaus and Shellenberger suggest) will pale beside the amount of private-sector money that will flow to alternative energy and efficiency improvements if carbon is priced properly."

This characterization of S&N's positions in The American Prospect and the Breakthrough Institute in general is a strawman.

Continue reading "In "Vine" Veritas? (No.)" »

Gwin Pryns, author of "The Wrong Trousers: Radically Rethinking Climate Policy (pdf)," recently published "Time to Ditch Kyoto: the Sequel." The short pamphlet was handed out at the United Nations Climate Change Conference in Poznan, Poland.

Towards the end (pdf), Prins summarizes his point about a new direction for an international agreement on climate change:

"Poznan has an opportunity to... put in place the foundations and essential architecture for a radically re-engineered climate policy for adoption at the Copenhagen meeting next...That architecture will not depend upon carbon trading in the present form; it will not lead with emissions targets tied to specific dates (although benchmarks are part of the sectoral strategy for reducing energy intensity); it will not focus upon international legal agreements that are dubiously enforceable, if at all."

Continue reading "Prins to Poznan: Seriously, Time to Ditch Kyoto" »

Last week a coalition of the big green groups released a 400 page report recommending the actions that President Obama should take in regard to climate change. It is the first time that greens have all truly embraced investing in a clean energy economy, which is a positive step; but there is also a lot in the report that gives reason for pause.

Although the report's first recommendation is for a carbon cap and auction, it states that the revenue from this system should be used for investment and not for rebates. At the same time, the report names cutting pollution as a higher priority than the two other goals of the President's economic recovery strategy: "repowering America with clean energy" and "ending our dependence on oil ."

Continue reading "Green Group Report Mixed Bag On Climate and Energy" »

The executives of General Motors, Ford and Chrysler made yet another trek to Washington DC this week - this time ditching the corporate jets to drive hybrid cars - and once again pled for a federal bailout to prop up their struggling companies. Up to $34 billion taxpayer dollars are apparently all that stands between at least two of the "Big Three" automakers and bankruptcy.

GM's executives told Congress the company will fail very, very soon unless it receives at least $12 billion in loans in the coming months. Chrysler warned they could go belly up by year's end without $7 billion in government aid. Even Ford, which is doing a bit better than its two Detroit brethren, is asking for an open, taxpayer-funded line of credit of up to $9 billion dollars.

All this means its time for Congress and the American public to face two basic facts.

Continue reading "Too Big To Fail? Too Big, Period." »

At home over Thanksgiving, the state of the economy was on everybody's mind. It's always interesting hearing people express thoughts about economics. Everyone participates in the economy and deals with mortgages and credit scores and student loans, but very few have had formal training in economics. This leads to a distorted or incomplete view of how the economy functions beyond the individual level. For example, when I was talking with some friends on Friday night, they told me they had spent the day "stimulating the economy."

At first I thought this meant they had spent their Friday passing federal spending projects that created jobs and suspended PAYGO provisions in order to inject capital into the economy. Clearly, this wasn't what had happened. I quickly realized that they were talking about their Black Friday shopping.

Continue reading "Black Friday Stimulus?" »

President-elect Barack Obama's incoming Chief of Staff, Rahm Emanuel, called for major reforms to our nation's health care, financial, and energy systems at the Wall Street Journal's CEO Council today, challenging CEOs to embrace an ambitious reform agenda.

"When it gets rough out there, a lot of business leaders get out of the car and say, 'We're OK with minor reform.' I'm challenging you today, we're going to have to do big, serious things," Rahm Emanuel said, speaking at a forum convened to elicit corporate opinion on the challenges facing the new president.

The soon-to-be White House Chief of Staff said the Obama Administration sees the economic crisis as an opportunity to advance a suite of bold solutions that would put America back on track. "You never want a crisis to go to waste," Mr Emanuel said, before continuing, "and what I mean by that is it's an opportunity to do things you couldn't do before."

Mr Emanuel said the incoming administration would "throw long and deep," taking advantage of the economic crisis to advance wholesale changes in health care, taxes, financial re-regulation and energy. "The American people in two successive elections have voted for change, and change cannot be allowed to die on the doorsteps of Washington," he said.

Continue reading "Obama's Chief of Staff Says to Prepare for Major Reforms in Energy, Health Care, Economy" »

With a new bailout for Detroit on the table, there's a lot of talk about getting some "grand bargain" with automakers out of the deal: automakers will agree to some terms, like producing more efficient vehicles, in exchange for the loans.

In fact, the direct loans approved by the 2007 Energy Bill require auto companies to use the funds to retool factories that produce vehicles that get 25% better fuel economy than the average vehicle in it's class. That's a start.

But the real grand bargain, in my opinion, is to bust out of this incremental improvements mentality for fuel economy. We don't need incremental improvements, we need exponential improvements in fuel economy. Here's how it could work...

Continue reading "A Real Grand Bargain: Radically Re-invent the American Automobile" »

In 2005, with GM and Ford teetering perilously close to bankruptcy, the Breakthrough Institute created the Healthcare for Hybrids proposal with Senator Barack Obama, Representative Jay Inslee, and the Center for American Progress, a plan which would have linked fuel-economy increases to relieving health care costs for U.S. automakers. Today, with the industry again on the brink of collapse, we invite you to join us is exploring a new question for the new era:

What will it take to reinvent the American auto industry?

We will publish the best responses on our home page, www.thebreakthrough.org. Please submit your op-eds to oped@thebreakthrough.org and paste or type your content into the body of the message; please do not send attachments.

Continue reading "Can America Reinvent the Auto Industry?" »

This is the second post in a continuing series delving into Barack Obama's opportunity to capture this political moment and provide a direction for energy policy and economic growth in the 21st century. Part 1 is here.

As Barack Obama assumes the mantle of President-elect of the United States of America, we are witnessing an historic realignment of the American political landscape. With the election of our nation's first African-American president, record voter turnout, and a dramatically redrawn electoral map, it seems that anything is possible now.

However, while Obama clearly has a new mandate to lead our nation, electoral mandates are fickle and even this one could fade in time. President-elect Obama has just 76 days to prepare for his inauguration. Then the real work of governing will begin, and what Obama decides to do in his first 100 days will either cement or erase the wave of popular support the President-elect rides today.

His job won't be easy. On January 20th, President-elect Obama will inherit the White House along with a plethora of pressing challenges all competing for his attention. There will be no time for baby steps, and President Obama must show bold and effective leadership right out of the gate. Furthermore, while the economic crisis will remain his top concern in the short-run, Obama cannot afford to ignore longer-term challenges and must develop synergistic solutions that can tackle multiple problems at once.

Thankfully, Barack Obama has stated that building a new energy economy will be his top priority upon assuming office. If he fully integrates this effort with his shorter-term economic stimulus plans, Obama could effectively tackle several priorities - economy recovery, energy security, and global warming - simultaneously. And getting this job done right could cement Obama's electoral mandate and pave the way for a truly transcendent presidency.

Continue reading "President-elect Barack Obama's New Energy Mandate, Part 2" »

By Jesse Jenkins and Adam Zemel

The election of Barack Obama, an African American liberal with a Muslim middle name, will be remembered for generations as a historic moment in American history. Made possible by the financial crisis and economic recession, President-elect Obama will enter the White House in January of next year with a mandate to take bold action to revive the global economy and put American on the path to economic greatness.

It's hard to believe today, but back in early September, it looked like Barack Obama would lose. Senator John McCain was pulling away in national tracking polls as the chant, "Drill, Baby, Drill!" echoed across the nation. Record high gas prices were the top issue of the campaign, and as Republicans' united around a clear, powerful (yet disingenuous) call for expanded oil drilling, Democrats, including Obama, fumbled for a response.

Continue reading "The Obama Mandate and the 21st Century" »

Writing political and socioeconomic commentary for a legally non-partisan blog on the day of a presidential election is difficult. The election has been the bottom line for almost every political or socioeconomic story in the country for more than a few months. This is natural, as it is current events, along with our personal dispositions, political leanings and ideological commitments that inform how we will vote. But for the past few months, as it happens every four years, America has been looking at the world through an election-tinted lens.

But just as current events have shaped the course of the campaign for the White House and the 111th Congress, so has this election season shaped those events. Nowhere is that more apparent than the financial crisis, which, almost from the day Henry Paulson publicly announced his bailout plan, has been affected by the campaign almost as much as it has affected the campaign.

Continue reading "How did the Election Affect the Financial Crisis?" »

The recent bailout package passed by Congress, the Troubled Assets Recovery Program (TARP), was meant to restore confidence in the financial system and get money back in to hands of those who need it. Congress meant for the capital injections provided to the banks by the Treasury to be used for lending while these banks untangled toxic assets that were affecting their ability to gauge their own worth.

Continue reading "Will it Never Lend?" »

In a move that may not be seen as surprising to many critics of the reigning financial oligarchy, a recent New York Times piece divulges that many banks are using the initial injections of capital from the Treasury not to buck up the ailing small business sector, but to purchase their stumbling competitors.

For those with the biggest appetites, the free lunch continues! And why should we as taxpayers be surprised by this?

From the New York Times:

"On Thursday, at a hearing of the Senate Banking Committee, the chairman, Christopher J. Dodd, a Connecticut Democrat, pushed Neel Kashkari, the young Treasury official who is Mr. Paulson's point man on the bailout plan, on the subject of banks' continuing reluctance to make loans. How, Senator Dodd asked, was Treasury going to ensure that banks used their new government capital to make loans -- "besides rhetorically begging them?"

"We share your view," Mr. Kashkari replied. "We want our banks to be lending in our communities."

Senator Dodd: "Are you insisting upon it?"

Mr. Kashkari: "We are insisting upon it in all our actions."

And yet, the article continues, unlike Great Britain, which has mandated lending requirements in return for the cash, our own government has stipulated no such return. Instead, they have merely requested it. As a favor.

Continue reading "No Loans for the Little Guy" »

Over at CAP, Matthew Yglesias has coined the term neo-Hooverite to describe politicians like incumbent Senators Saxby Chambliss and Norm Coleman, or GOP candidate John McCain, who are proponents of reducing the deficit and cutting spending in a time of economic downturn. I completely agree with Yglesias' argument that focusing on a balanced budget in this economic climate is almost completely wrong headed. He captures the argument here:

"But if consumers cut spending at the same time businesses are reducing investment and state and local government are cutting spending and then the federal government also reduces spending well, then, everyone is going to be spending less and less. Which means everyone is going to be earning less and less. And things are just going to get worse and worse."

Continue reading "Cognitive Dissonance Among Progressives and Greens" »

The financial crisis has caused many economists to reconsider their ideas regarding financial markets and the economy. Megan McArdle at the Atlantic puts it best:

"Economists all over the ideological spectrum are rethinking the lessons we thought we had learned from the Great Depression and the Japanese experience. As it unfolds, we will no doubt be seriously rethinking our model of the relationship between the financial markets and the real economy."

Continue reading "The Ideology of Economics" »

On October 4th, when Congress passed the bailout, they also passed the clean energy production tax credit and investment tax credit (known collectively as the PTC/ITC) as a sweetener to secure the necessary votes for the bailout. This was a boon for the clean energy industry and its advocates, as the credits had been left for dead just weeks previously.

Keith, a Breakthrough Generation intern, wrote about the importance of these tax credits when the bailout passed:

Continue reading "How has the Financial Crisis Affected the Clean Energy Industry?" »

It has taken astoundingly little time for elite consensus to build around the federal deficit. Those who don't actively advocate deficit spending like Robert Reich have at least agreed that now is not the time to try and shrink the deficit. With the financial sector close to collapse, unemployment rising and credit frozen, it has become increasingly important for the government to continue to spend, not only to extend unemployment insurance, but also for things like the bailout and a second round of economic stimulus.

In fact, some organizations whose core principle is to advocate for a balanced federal budget have even ceded the point:

Continue reading "Will Consensus for Deficit Spending Include the Technology 16?" »

I know it's hard to remember, given the events of the past weeks, but back before Wall Street was burning, Main Street was already feeling the heat from another very real economic crisis: the soaring price of oil.

The credit crisis and our slowing economy have driven oil prices down from historic highs. As stocks plummeted in the past two weeks, so to did the price of crude, falling by more than half, down from it's July record of over $140 to under $70 this week. That's the lowest price in fourteen months, but it's still three times higher than it was just six years ago, and prices are still over $3.00 a gallon across the nation.

Still, as prices at the pump have receded and the focus on the banking bailout bumped "Drill Baby, Drill!" out of the presidential election spotlight, the energy crisis is now out of most of our minds. Unfortunately, that doesn't mean the threat - to our economy and our quality of life - is gone. Oil prices will rise again - they are already inching up again amidst news of a likely OPEC cutback in production - and when they do, they'll continue to drag down our struggling economy. If we ever hope to see real economic recovery, we would be wise not to forget the other crisis that contributed to today's ailing economy.

I'll delve into this more next week, but for now, enjoy the new article in this weekend's New York Times Magazine (online here) by Roger Lowenstein, entitled "What's Really Wrong With the Price of Oil," which takes a close look at the temporarily forgotten but very real threat oil prices pose to our economic wellbeing. Excerpts below the fold...

Continue reading "Remember That Other Economic Crisis?" »

The current financial crisis has ended the chapter of Greenspanomics in American history with a resounding boom. With it go many assumptions about the benefits of deregulated financial trading, government inaction in markets, and an overall free trade mentality that has dominated economic policies on the left and the right since Ronald Reagan.

One democratic economic advisor who worked closely with Greenspan was Robert Rubin, who served as Treasury Secretary during both Clinton Administrations. Rubin was a proponent of the power of markets, and helped Greenspan engineer the deregulation of derivative markets in the 90s.

Continue reading "Dr. Reich or: How I Learned to Stop Worrying and Love Deficit Spending" »

I've spent the past few weeks learning about the financial crisis, but it has felt more like a crash-course in economics and society. One thing that stands out to me is that depending on who you read, and his or her ideological leanings, you will get a different explanation for what caused this crisis. But more often than not, the people writing for "typical-slightly-right-of-center-libertarian.blogspot" and the people writing for "left-wing-trending-socialist-progressive.wordpress" write about all the same causes, but then point to this one thing that made the crisis really bad. Everyone is more than ready to recognize the confluence of variables that caused our current problems, but depending on ideology, one of these variables was obviously wrong and a mistake.

Well, I am taking a stand here and now. As a self-proclaimed progressive (or according to facebook, "pragmatic progressive"), I am choosing to write about one of the causes of our financial crisis that I take the least issue with: trying to create pathways to homeownership for people lower down on the economic ladder who wouldn't be able to otherwise.

Continue reading "Will the Financial Crisis Make America Rethink Social Policy for the 21st Century?" »