New York City -- This past Friday, Princeton University's PRIOR Center and the NYU's Rudin Center convened a conference on what's next in transportation. The speakers, who included Mort Downey, former Deputy Secretary of Transportation and leader of the Obama transition team for transportation, Tony Shorris, former head of the New York and New Jersey Port Authority, current PA chairman Anthony Coscia, and others agreed that we are at a crossroads in transportation policy.
On the one hand, there has never been more enthusiasm for new modes of transportation such as high-speed rail and new approaches such as vehicle mileage tolling and congestion pricing. Billions in the stimulus bill and the Obama budget for rail have set off a frenzy of excitement about building high-speed rail in the United States. At the same time, however, the old system of funding infrastructure, the Highway Trust Fund, fed by gas taxes, has never been under greater stress. With a new transportation authorization bill likely to move this year, we stand at a key juncture in U.S. transportation policy.
Transportation reform is vital to building a clean economy. Not surprisingly, therefore, much of the discussion at Princeton focused on the irony of trying to fund the reinvention of transportation out of a five-cents-per gallon gas tax -- at a time when reducing gas consumption has emerged as a national security, economic and environmental priority.
Currently, the Highway Trust Fund, built on nickel-a-gallon gas tax accounts for the lion's share of infrastructure funding in the United States -- not only for roads, but for mass transit as well. But the fund essentially depleted (having required a bailout last fall to stay solvent). Additionally, with construction prices higher but gas usage falling, the gas tax now provides only about half the purchasing power needed to sustain our current system, let alone make improvements.
As a result, many people have been talking about switching to a Vehicle Mileage Tax or VMT as an alternative to the gas tax. A VMT would toll mileage, not gas, enabling the country to reduce gas consumption without starving its infrastructure. However, the "t word," as Mort Downey has described it, whether that refers to taxes or tolls, is highly controversial and recently White House Press Secretary Robert Gibbs struck down a suggestion by new Transportation Secretary Ray LaHood that switching to a VMT is on the table.
One alternative that would sustain historic levels of funding but would not provide funds for much new investment would be a dime-a-gallon tax. That would be the easiest -- if least imaginative -- fix.
A bolder idea is to create a national infrastructure bank as proposed by U.S. Sens. Chris Dodd and Chuck Hagel to tap private money for infrastructure investment, an idea endorsed by NDN. Indeed, the Obama budget would fund such a bank. However, in the current environment, private money is not as available as it was.
Last week, U.S. Rep. Earl Blumenauer, who spoke at NDN's clean infrastructure event in January, introduced Clean Tea legislation to tap 10 percent of revenues from a cap-and-trade system of the type contemplated by the Administration's budget for transportation. Given the key role of transportation in emissions and cleaner transportation in reducing emissions, this makes a great deal of sense.
Everyone recognizes that the old system of a nickel-a-gallon tax combined with earmarks isn't working. There is a great appetite to reform the basis for funding infrastructure and this year, a real opportunity.
President Obama's Weekly YouTube address today focuses on the budget outline he released earlier this week. In breaking down the various elements of his budget, Obama explains how the specifics correspond to commitment to change he made on the campaign trail.
The most memorable line comes after he discusses the changes from the Washington status quo that his budget represents:
I know these steps won’t sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they’re gearing up for a fight as we speak. My message to them is this:
So am I.
Take a look at the whole address:
This very much feels like the President is governing with the large mandate he won on election day, and rightly so. It's amazing to think how much there is to do, after so much of this - energy, infrastructure, healthcare - has gone undone for the last 8 years or longer.
With news today that last year's fourth quarter was even worse than expected, take a look at some of NDN's lastest and important thinking on the economy, from thoughts on the President's budget and housing, and financial stability plans to visions for creating a 21st century economy:
The Economic Logic in President Obama's Speech to Congress by Dr. Robert Shapiro, 2/27/2009 - Shapiro breaks down President Obama's address to Congress, pointing out that the underlying logic of the President's agenda springs from the fierce new challenges Americans face under globalization to their jobs and incomes.
Financial Stability: Plan Z by Michael Moynihan 2/23/2009 - Moynihan lays out a plan of last resort for financial stability, noting that it might not be pretty, but it could be necessary.
A Stimulus for the Long Run by Simon Rosenberg and Dr. Robert Shapiro, 11/14/2008 – This important essay lays out the now widely agreed-upon argument that the upcoming economic stimulus package must include investments in the basic elements of growth for the next decade, including elements that create a low-carbon, energy-efficient economy.
Back to Basics: The Treasury Plan Won't Work by Dr. Robert Shapiro, 9/24/2008 - As the financial crisis unfolded and the Bush Administration offered its response, Shapiro argued that, while major action was needed, the Treasury's plan would be ineffective.
Keep People in Their Homes by Simon Rosenberg and Dr. Robert Shapiro, 9/23/2008 – At the beginning of the financial collapse, NDN offered this narrative-shaping essay and campaign on the economic need to stabilize the housing market.
New York City--The indication over the weekend from Carol Browner that the EPA plans to move forward on regulating greenhouse gases, though not unexpected, provides indication that we are likely to see real action on climate change this year. The possibility of EPA regulation of CO2 emissions makes a cap and trade system look like the more appealing alternative. Thus, despite the conventional wisdom that you cannot impose taxes or new costs on business during a recession, it is increasingly looking like we will see action on climate change in time for the US to have a meaningful position and thus play a leadership role in Copenhagen.
Obviously as far as the climate is concerned, this is good news. However, as far as the declining economy is concerned it may not be bad news either for several reasons. First, stability and clarity with respect to the pricing and potential regulation of carbon is an improvement over uncertainty since it lets companies plan ahead. Companies that make carbon reduction technologies, alternative energy companies, and companies exploring clean coal, will have clear rules if action moves forward. And even utilities and heavy industry will benefit from clarity as opposed to uncertainty. Done right, the higher cost of some energy that will result from pricing carbon will be largely recaptured by the government through auctions in a cap and trade system or taxes in a carbon tax regime. In the current atmosphere of huge deficits and economic uncertainty, the resolution of regulatory uncertainty combined with a potential revenue source may offset the economic effects of higher energy prices.
Moreover, at this critical point in economic history, there is another reason that meaningful action and leadership by the United States is welcome. At this critical juncture, global cooperation is paramount to managing the economic crisis. The global economy has survived and even thrived cleaning up the environment. It has not survived the breakdown of global cooperation on key issues. When the history of the current crisis is written, the breakdown of global cooperation earlier in the decade--due to the go-it-alone philosophy of the Bush Administration--will be assigned a part. On the other hand, successful cooperation leading up to Copenhagen and beyond, by restoring global trust, can be part of the solution.
And of course there is the inconvenient issue of the climate. The indication that the Administration and Congress are moving forward on climate change is thus good news.
President Barack Obama, on his first official trip abroad, is in Canada today, meeting with Prime Minister Stephen Harper and other high level Canadian government officials. Talks have been wide-ranging, but have reportedly focused on trade and energy.
Both these relationships are incredibly important: Canada and America are each others' largest trading partners – indeed, it is the largest trade relationship at the world, and the Canadian-American energy relationship is vast. Among other notable items, the United States imports more oil from Canada than anywhere else, and the American and Canadian electrical grids are integrated.
Reuters reports that everyone seems to have left pretty happy, with an agreement on energy and Obama having calmed Canada about the "Buy American" provisions of the economic recovery legislation:
The United States and Canada, two significant greenhouse gas emitters, agreed on Thursday to work together on new energy technologies to fight climate change, saying it was key to recovery from global recession.
Obama calmed Canadian fears about a "Buy American" clause in the $787 billion U.S. economic recovery plan agreed last week. Canadians fear it will hurt commerce between the two countries, which have the world's largest trading partnership.
"Now is a time where we have to be very careful about any signals of protectionism," Obama told a joint news conference after several hours of talks with Harper. He stressed the United States would meet its international trade obligations.
"I'm quite confident that the United States will respect those obligations and continue to be a leader on the need for globalized trade," Harper said.
New York City -- The recovery bill that President Barack Obama will sign today, on schedule and less than one month into his presidency, is an important milestone in the effort to get America's economy back on track. Coming on the heels of tough economic news around the world last week, it is a welcome positive development. Its green initiatives, many of which began as NDN proposals suggested to the Obama team last year, include credits for solar and wind energy, money to green the federal government, smart meters, and other investments in our future. All of these are good things that pave the way for future prosperity.
But to make the most of this stimulus, President Obama has to keep our eyes focused on the bill's benefits and our future. A piece by Ahmar Bhidhe in today's Wall Street Journal, points out that a key element of the bill is how it is presented and, in turn, perceived by the public. The money will begin trickling out immediately but will not show up in a big way in the economy for some time. Much of the bill's initial impact will therefore rest on its "signaling" effect, as game theorists say. In other words, what it says to people about what our leaders believe about the future and are committed to do.
The President has an opportunity to shape this signaling effect later today. If he emphasizes the dark clouds -- in effect amplifying the criticism of the bill from his opponents -- he may reduce the signaling effect. On the other hand, if he emphasizes hope and possibility --assuring Americans about our future, he will maximize the bill's positive economic impact.
History shows that many slumps have served to incubate new ideas that then bear fruit when the slump is over. This was certainly true in the 1970s, when entrepreneurs like Jobs, Wozniak, Gates and Allen, ignoring high gas prices, low stock prices and stagflation, were working away in their garages on revolutionary new technologies. It was true in the early 1980s when Ronald Reagan's optimism stirred enthusiasm about entrepreneurship, whatever one thinks of Reagan's social policies. And just last week, Twitter raised money for its software, while a host of clean technology companies will use money from the recovery bill to invent game-changing technologies to build the clean economy of the future.
However, the President's opponents have unleashed a withering barrage of attacks on the recovery bill. And economic news has plenty to suggest hunkering down. When President Obama signs the bill in Denver -- a location chosen to highlight the clean technology elements of the bill -- he will do well to talk about the potential of the future, rather than give credence to the naysayers.
Along the same lines, Simon was quoted in the Spanish-language paper Terra on immigration reform, and was the lone voice of reason in a Los Angeles Times op-ed by Ira Mehlman on the same topic. His recent essay about the Republican party and race, "Steele, the GOP and Confronting the Southern Strategy," was also featured on the front page of the Huffington Post. Finally, Simon was also quoted in AFPand Red Orbit about how President Obama will use his Web-based campaign organization moving forward. From the AFP piece, entitled "Obama Retools Campaign Machine":
Simon Rosenberg, president of NDN, a progressive think tank here, likened Organizing for America to former president Bill Clinton's attempt to build a grass roots pressure group on health care reform but agreed that "there really hasn't ever been anything like it before."
"Barack is not like any other candidate," he said. "He comes to Washington with more supporters and more modern tools than anyone in history. Barack is going to reinvent the presidency the way he reinvented the campaign."
Economist Rob Shapiro, a top Commerce Department official in the Clinton administration who was on Obama's transition advisory team, questioned the effectiveness of the $275 billion in tax cuts in the measure now before the House. "These tax cuts are not only not stimulative, but we're going to have to pay for them eventually."
Still, Shapiro, now an official with NDN, a think tank formerly known as the New Democratic Network, said it is more important not to let the debate over the stimulus package "degenerate into politics as usual. If the country believes this has turned into a package of special-interest spending and tax provisions, then the efforts to restore confidence will be damaged."
Finally, Morley and Mike had an op-ed published in Roll Call entitled "Obama Typifies Spirit of Civic Engagement." For those of you who don't subscribe to Roll Call, you can view an earlier version of this essay posted on the NDN blog here.
New York City -- A little over six months ago, I proposed to the economic team within the Obama campaign and, subsequently, to the world at large, a green stimulus bill that would stimulate the economy in the short term, but also work for the long term to include tax credits and money for renewable energy, weatherization, mass transit, retrofitting buildings and building workforce housing. All of these proposals and more passed an important milestone yesterday on their way into becoming law with the House passage of what has become an $820 billion bill solidly weighted toward green investments. We are very happy to see the President and Congress working to create the foundation for a low-carbon future, independence from foreign oil and the next great wave of economic growth. The action now moves to the Senate where we expect these proposals will be incorporated into similar legislation.
At the same time, however, the nature of the stimulus bill process, in particular, the need to move the money out quickly through previously authorized law, means that this bill represents, as the President has said, only a downpayment on needed investments. It does not, nor could it, given the short time frame, create all the new investments that will be needed to bring the American economy fully into the 21st century. More work is needed to reform our funding process, for example, and update regulation to make the long-term investments in clean infrastructure needed to update our infrastructure for a more productive 21st century.
Nonetheless, the action by the House represents an important milestone. We are hopeful the Senate will move rapidly in due course to pass similar legislation that meets the President's goal of signing the American Recovery and Reinvestment Act into law in the next few weeks.
Within one week of taking office, President Obama has dispelled any doubts on whether he’s serious about tackling climate change. His stimulus plan will direct greater tax and spending subsidies to climate-friendly technologies and fuels over the next 18 months than the Bush administration did over the last eight years, and the federal government will offer itself as a model by bringing federal facilities up to the “Gold Leeds” energy-efficiency standard. Moreover, his EPA will let states that as yet are politically more climate-sensitive than Washington, including California and a dozen others, set more stringent CO2 emissions standards than the federal versions. And other climate-friendly laws and regulations are on their way, including higher federal fuel-efficiency standards for automobiles and trucks.
Sound as these steps generally are, they leave undone the hard work that climate scientists agree must be done – namely, to put in place a policy to embed the cost of carbon in the price of everything our businesses and households use, especially that electrical power which mostly still depends on the most carbon-intensive fuel we have, coal. And there’s a good reason why President Obama isn’t starting with this step, even though it’s the most important one: Making people pay more for carbon-intensive energy and the products and services produced with it means that, well, people have to pay more – and people don’t like that, especially in very hard economic times. And the inconvenient truth is, those are only the beginning of the costs to contain climate change, since retrofitting our factories, offices, homes and our power systems for less carbon-intensive and energy-intensive technologies and materials will cost everyone, well, a lot more than the stimulus package. To his credit, President Obama corrected one of his rivals for the nomination who tried to claim that we could beat climate change at little cost. And there is some other good news here: The costs to redo our lives around more climate-friendly fuels and technologies can be spread over two generations – and paying those costs will save much of planet for our grandchildren.
The current hard economic times hopefully will focus more of the climate change debate on how to contain those costs, both the direct costs to people and businesses and the indirect ones through the larger effects of these policies on the economy. And if we don’t figure that out, any systemic reform that doesn’t contain those costs may not survive long enough to make a difference. Here is where a real divide opens between the two main options for embedding the price of carbon, a cap-and-trade system and carbon-based taxes. On the direct costs, a tax-based system has the advantage: You can tax energy based on its carbon content, and then turn around and return the revenues to everybody through payroll tax cuts or simple disbursement to every household. Cap and trade could do something of the same thing by auctioning off its permits to generate greenhouse gases and then using those proceeds for tax cuts. But so far, every cap-and-trade plan either gives away its permits (businesses wouldn’t have it any other way) or uses the auction revenues to pay for other climate-friendly initiatives. In either case, cap-and-trade leaves everyone’s incomes lower, a pretty nasty outcome for most of us.
Another inconvenient truth here is that carbon-based taxes also have the advantage on indirect costs. The great asset of cap and trade is that it applies an actual cap to CO2 emissions. But whenever demand for the energy that produces those emissions is greater than had been expected when the cap was set – for example, because the summer is hotter than expected, the winter is colder, or the economy grows faster than anticipated – demand will hit the cap, and prices will spike for both the permits and the energy that underlies them. Adding a new layer of national price volatility in energy prices, on top of what we already have to bear from international forces, would be another nasty outcome.
Carbon-based taxes have their own problems. They don’t involve a set, annual cap on greenhouse gases, so keeping us on a safe emissions path would probably entail adjusting the level of the tax on a pretty regular basis. And the prospect of enacting a large, new tax and then choosing what offsetting taxes to cut could itself easily turn into a nasty piece of political business. It’s no wonder that President Obama isn’t eager to referee this fight. Of course, the public’s faith that of all of our national leaders, he alone is best equipped to drive and guide our responses to daunting challenges is also the main reason he’s the president today.