How the CCC Blazed a Trail for Conservation and Education

Dec 22, 2011David B. Woolner

A new book details the history of a program that educated and employed millions of Americans and established one of our most precious resources.

A new book details the history of a program that educated and employed millions of Americans and established one of our most precious resources.

In a remarkable new book entitled Our Mark on this Land: A Guide to the Legacy of the CCC in America's Parks, Ren and Helen Davis remind us of just how powerful and long lasting visionary leadership can be. The book details the enormous impact that Franklin Roosevelt's Civilian Conservation Corps (CCC) had on our country, not only through the massive reforestation programs that resulted in the planting of over 3 billion trees, but also through the restoration and expansion of one our nation's most treasured public resources: our state and national parks.

Over the course of its 10-year history, the CCC employed over 3 million men in what the authors describe as the largest peacetime mobilization of manpower in U.S. history. What is perhaps even more remarkable is that this mobilization began within the first 100 days of FDR's administration, in the midst of the worst economic crisis in American history and at a time when there was little to no state apparatus to launch such a program. Moreover, like many of the New Deal programs, the CCC was multifaceted. It was designed to accomplish multiple goals simultaneously and was in fact much more than a conservation program. It was also a youth unemployment program, an urban assistance program, and -- as is largely unknown -- an educational program.

Within months of its inception, CCC administrations discovered that there was a critical need for technical training and, above all, basic literacy instruction. As such, CCC workers were also tasked with building their own classrooms where CCC employees could take remedial classes. As the CCC program progressed, more advanced instruction was offered in a variety of subjects, including mathematics and history, along with more basic technical and vocational training. These programs also helped to employ many jobless teachers. Over time, the educational mission of the CCC became extremely popular and by the late 1930s more than 90 percent of the CCC workers were enrolled in some sort of educational program.

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But it is the more tangible work of the CCC that is so magnificently catalogued in this book. As the Davises note, the legacy of the CCC lives on in hundreds of parks across the country. Here, CCC workers cut thousands of miles of trails, built innumerable bridges and roads, designed and constructed thousands of rustic cottages and other buildings, and helped transform the National Parks Service into a truly national agency. Most important, however, was the effect that the CCC had on the ethos of the nation. For in sponsoring what the authors call a "second golden age" of conservation, and by providing through their labor unprecedented access to our nation's wild places, the CCC fostered greater appreciation for the preservation and enhancement of our nation's natural resources. And as more recent scholarship reveals, it also helped sow the seeds of the modern environmental movement.

At a time when the United States is once again struggling with high unemployment and growing level of poverty, especially among the urban poor, launching a program like the CCC to help restore our nation's blighted and impoverished inner cities makes sense. Such a program could do much to help restore both the physical and ethical challenges we face as nation. It would also provide the millions of young people trapped in the despair of poverty with meaningful employment, a chance to further education, and the one thing that FDR was determined to provide above all else: hope for the future.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938. He is also the co-author with Henry Henderson of FDR and the Environment.

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Powering Forward: The Case for Renewable Energy Incentives

Dec 20, 2011Cory Connolly

To create jobs, encourage economic growth, and ensure a sustainable future, Congress must continue to support clean energy.

To create jobs, encourage economic growth, and ensure a sustainable future, Congress must continue to support clean energy.

Since the recession began, renewable energy, the environment, and climate change have taken a back seat in political discussions. However, the development of the renewable energy industry has been a rare bright spot during tough economic times. The clean energy economy continues to grow, creating jobs, mitigating carbon emissions, improving energy security, and carving out a place in the international market. For this progress to be sustained and even accelerated, federal tax incentives need to be extended.

Clean energy industries, like wind, solar, and biodiesel, have taken advantage of federal tax incentives like the Production Tax Credit (PTC), Investment Tax Credit (ITC), and the Treasury Cash Grant to carve out an important and growing sector of the U.S. economy. However, many of those incentives are now in danger. The PTC, which provides 2.2 cents per kilowatt-hour of wind energy produced for the first 10 years of a project, is set to expire at the end of 2012. Its extension is currently being debated in Congress and is critical to the continued viability and progress of the wind industry. With 54,000 new or saved jobs at stake in wind, industry leaders are also advocating for a four-year extension of the PTC. The cash grant, also known as program 1603 of the American Recovery and Reinvestment Act, is slated to expire at the end of 2011. According to an SEIA report released last week, this will spell trouble for the solar industry.

With calls for austerity measures and government cutbacks on basic social services, these incentives may not seem affordable, but what many aren't aware of is the progress and innovation that these policies have stimulated. Solar energy is expected to reach grid parity in the short term, wind energy is becoming more competitive, and in a few regions of the U.S. both technologies are now claimed to be competitive with traditional sources. In the last four years, wind generation has accounted for 35 percent of all new generating capacity, and at the current rate the wind industry alone is expected to create 500,000 jobs by 2030.

The SEIA report also showed that installed generation capacity from solar has increased 10-fold since 2005 and that the third quarter of 2011 saw 140 percent growth in capacity installed compared to the same quarter in the previous year. In 2011, federal incentives helped the industry reach a total of over 100,000 solar-related jobs in the U.S. The cash grant has made 3,600 grants, totaling $1.5 billion, and, according to Milbank's Alan Marks, has leveraged over $22 billion in private investment. Having funded 22,000 projects in 47 states, the cash grant's impact has been remarkable and its ability to support a still developing industry is proven.

As these incentives have stimulated progress in clean energy industries, they have clearly had an economic impact at the state level. As of early 2011, clean energy technology was the fastest growing sector in Michigan, the auto capital of the world. California is home to 25,575 solar-related jobs alone. Combined with state renewable portfolio standards (RPS), which set a target percentage of renewable generation by a specific year, and other state and municipal incentives, the federal tax incentive programs have had amplified success in numerous states.

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Not only have the tax incentives accelerated the adoption of clean energy and driven the creation of manufacturing jobs, but they have also helped stimulate innovative and entrepreneurial activity in the energy sector -- something that has rarely been done in an industry that is traditionally centralized, concentrated, and unaccommodating to entrepreneurs. Innovative business models have been developed by companies like SunRun and Sungevity. These companies utilize incentives to help make solar affordable and accessible for consumers in the short term and are helping build the foundation for distributed energy generation in the long term. While nonprofit ventures like Solar Mosaic are not necessarily qualifying for federal incentives, they are also infiltrating the energy generation sector with models for community ownership of clean energy generation, thanks to the continued advancement of the industry. As new business models develop and this industry "booms," the only thing less desirable than the current uncertainty is the actual expiration of federal tax incentives.

Some might balk at or criticize subsidies for clean energy, and Congress clearly doesn't want to be seen as "picking favorites," particularly in light of the recent Solyndra controversy. Given these likely talking points, there are a couple of factors that need to be kept in mind when talking about subsidies for clean energy. First, the extension of the federal tax incentives is not indefinite -- federal incentives will be removed as soon as the technologies and the sector have matured enough to compete and thrive. That is to say, they will be removed when they have done their job. Second, subsidies and tax incentives are pervasive but unbalanced in the energy industry. According to the 2011 IEA World Energy Outlook, global fossil-fuel subsidies amounted to $409 billion in 2010, while global renewable energy subsidies totaled a mere $66 billion. Renewable energy technologies are advancing rapidly but need support to compete with established carbon emitting fossil fuels and the already existing subsidies.

While monetary support is clearly lopsided internationally, it is important to note that from 2007 to 2010 renewable energy subsidies increased from $39 billion to $66 billion globally. This indicates that, despite the global economic downturn, governments are seeing an upside to increased investment in renewable energy. As Steven Cohen pointed out in a Huffington Post piece supporting the extension of 1603, "Destroying solar energy in America will not kill the industry worldwide, it will simply eliminate America's prominent role in a very promising, emerging industry." With volatile oil markets, continued climate concerns, and the electrification of developing countries, it is clear that there is an important place for clean energy in the international market -- it is just a matter of America's ability to capture it.

A clean energy economy is in sight, but if we don't embrace its successes and support its growth, we'll lose its economic and environmental benefits. We need to find better ways to advertise and communicate the progress of clean energy and the important role of incentives in these and future successes. The wind and solar industries have seen unprecedented success in recent years thanks in large part to the Production Tax Credit and the section 1603 cash grant. These industries aren't yet prepared to stand on their own, but given enough time and support they may become strong enough to fuel a rejuvenated U.S. economy.

Cory Connolly is a Roosevelt Institute | Pipeline Fellow focusing on the development of the clean energy economy.

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Seven Reasons Climate Change is a Fact, Not a Belief

Dec 14, 2011Nick Santos

Information is most trusted when it comes from a credible source, so there's no time like the present to talk to family and friends about the science behind climate change.

Information is most trusted when it comes from a credible source, so there's no time like the present to talk to family and friends about the science behind climate change.

Anyone paying attention to the debate around climate change understands how difficult it is to even talk about it. People feel the need to reject the credible science on climate change in order to reject policies they disagree with -- often with valid concerns that must be addressed. The U.S. public understands that climate change is a hot topic, but the knowledge mostly doesn't go deeper than that due to misinformation and "belief." One of the primary changes we need in order for our polluting country to take action on climate change is to foster the knowledge that climate change is a fact -- not a belief. This requires credible information to be delivered by the credible sources.

Here are seven reasons that climate change is a fact and not a belief:

1. Over 98 percent of the most respected scientists studying climate change say that it is occurring and it is caused by human activities like burning of fossil fuels and deforestation.

2. The increase in carbon dioxide in the atmosphere is attributable to human sources such as fossil fuel burning. Across multiple studies, the ratio of different isotopes of carbon in the atmosphere -- slightly different versions of the same element -- has changed in a direction consistent with burning more fossil fuels. (1,2)

3. Far from being something that "might" happen, hundreds of studies have shown that climate change is already occurring and damaging our economy and ecosystems.

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4. Satellite data verifies that as we increase concentrations of carbon in the atmosphere, less heat escapes to space (and thus, more is trapped in our atmosphere, warming the planet).

5. While energy output from the sun has decreased over the past few decades, the climate has warmed significantly.

6. Temperatures today are significantly warmer than at any time over the last 100 years -- or even the last 1,000 years.

7. Models of the Earth's climate that don't include greenhouse gases such as carbon dioxide fail to align with experienced temperature, but once greenhouse gas emissions from human sources are factored in models match known temperatures.

Ultimately, it matters who delivers this information. Research has continually shown that it matters more who says something than what they say, and the best messengers are family, friends, and trusted organizations. We need those messengers now more than ever. In a 2010 Yale study, 52 percent of Americans sampled would have failed a climate change exam, with another 40 percent receiving a C or D. So, if you know someone who disagrees with climate science, ask them to talk to you about their specific concerns so that we can move this debate into the realm of viable solutions.

Nick Santos is a Roosevelt Institute | Pipeline Fellow working on climate change education. He runs Environmental Consumer, a nonprofit, and works with the UC Davis Center for Watershed Sciences.

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We Need a World War II Effort to Tackle Global Warming and the Great Recession

Dec 12, 2011Jon Rynn

earth-150If the government doesn't go bold on the environment, the economy and the earth will continue to suffer.

earth-150If the government doesn't go bold on the environment, the economy and the earth will continue to suffer.

The news from the world of global warming science is grim. We need to keep the planet from warming by more than 2 degrees centigrade or the climate could become extremely dangerous. To stay below that level would require a drastic decrease in greenhouse gas emissions in the next several years. Many commentators, from Al Gore to Thomas Friedman to Lester Brown, have argued that we need a World War II type effort to prevent the worst of global warming. Such an effort would have the bonus effect of reviving the economy. When FDR was confronted with a world war, he converted as much as one third of the economy to that effort, with the federal government in the lead. The result: fascism was defeated along with what was left of the Great Depression. Can we do something similar today?

When World War II started, the federal government converted several industries, including the automobile industry, to make tanks, planes, and other military goods. A planning department was set up, and all resources that were necessary for the war effort were carefully counted and controlled. At the peak of the war, about one third of all output (GDP) in the United States went into the military. One third of today's economy would be about $5 trillion dollars.

While there is a debate about whether the war actually ended the Great Depression, it certainly finished off the scourge of high unemployment. The construction of new machinery for the factories laid the groundwork for the post-war boom, as well as enlightened policies like the G.I. Bill, which paid for college for returning soldiers and made housing loans available through the government.

Today we have a different problem, but it could become just as deadly as a world war. Modern global civilization will become difficult if not impossible to maintain if the planet overheats, according to a new report. Our society is not designed to deal with increasing sea levels, indefinite droughts in some areas and unpredictable deluges in others, forests destroyed by warm weather pests, dead oceans, and disappearing glaciers that lead to the destruction of many of the world's most important rivers.

So what would a World War II-type program to prevent global warming and end the Great Recession look like? As I argued in my book, Manufacturing Green Prosperity, we would need to spend on the order of one trillion dollars per year, for 20 years, in order to build the necessary transportation, energy, urban, and agricultural infrastructure. And by "we" I mean "we the people" -- that is, the federal government.

I recently completed a chapter for a book about a green energy economy that should come out in 2012, and I proposed that with a budget of $1.2 trillion dollars per year we could employ about 24 million people, of which over 5 million would be manufacturing jobs. A revival of manufacturing sparked by this program is vital to ending the Great Recession.

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Here are the federal programs needed to create a full-employment green economy, along with the annual budget required:

1. An Interstate Wind System that would generate all of our electricity, which is currently provided mostly by coal and natural gas plants at $150 billion

2. An Interstate Electricity Grid that would be able to carry all of this electricity throughout the continent at $85 billion

3. Solar photovoltaic panels that would generate a quarter of our current electricity needs, which would make up for the electricity that the wind system would require at $150 billion

4. Geothermal heat pumps under all residential buildings that would provide all heating and cooling needs at $50 billion

5. Weatherizing half of the homes in the country at $25 billion

6. A 17,000 mile Interstate High-Speed Rail System at $30 billion

7. An expanded freight, medium-speed, and commuter rail system at $25 billion

8. A vastly larger transit system at $60 billion

9. A 100 percent organic agricultural system at $10 billion

10. Recycling/reusing almost everything at $100 billion

11. Last but not least, housing half of the population in dense, walkable neighborhoods, which would cost $500 billion per year if 100,000 250 unit apartment buildings were constructed

At the end of this 20-year program of economic reconstruction, the United States would emit virtually no greenhouse gases. As added benefits, it would not use petroleum, whose supply is shrinking and on which the U.S. is very dependent, nor would it destroy the water, soil, and forests of its ecosystems. We could also implement a "government as employer of last resort" system so that everyone who wanted a job could have one.

Even this program would not actually be at the level of a World War II-type effort, since $1.2 trillion constitutes less than one tenth of the economy, whereas the real WWII effort required one third. We could double the rate by doubling the budget to $2.4 trillion, which might be required to avoid out-of-control global warming -- particularly if, as I suspect, it took 10 years to accumulate the "political will" to implement such a program (assuming it could happen at all).

The good news: it is technologically feasible to create a thriving civilization without emitting greenhouse gases. The bad news: there will have to be major shifts in economic, and therefore political, power in order to build a sustainable civilization.  We have a much different political constellation than in FDR's era. In 1941, the top 1 percent constituted a much smaller portion of national income and thus had less power. There was an 81 percent top tax rate in place, which peaked at 94 percent in 1944-5 (and was still 91% in 1963).The Democrats, a significant percentage of whom were truly progressive, were dominant in Congress, and FDR sat in the White House. This was all accompanied by a very strong set of left-wing movements and institutions, including strong trade unions.

And how would all of this be paid for? There are several ways to come up with $1.2 trillion. First, we can do it the same way that the government did for the Iraq war or the financial bailout: we could simply go into debt (preferably through a public infrastructure bank). World War II was paid for with debt -- which was brought down very quickly because of the post-war boom. Second, the top 1 percent makes about 24 percent of national income, which in 2009 was about $12 trillion. So we could obtain, say, half of the needed $1.2 trillion by imposing a 25 percent tax on that income bracket. We could pay for the whole thing with a 50 percent tax. Third, we currently spend almost $1 trillion on the military. The Defense Department keeps its budget high not because we need such a large military, but because it has created a "military-industry-congressional complex" that doles out money to almost every congressional district in the country -- and creates good factory jobs. Most of the 6 million people either employed directly by the Department of Defense or indirectly through the industrial complex could be converted to working on our number one national security issue: creating an economy that will not implode.

Ultimately, an economy cannot thrive if the ecological foundations on which it rests are collapsing. That is where we are heading, and unless the government steps in directly, and in a big way, there will be no nation to secure.

Jon Rynn is the author of the book Manufacturing Green Prosperity: The power to rebuild the American middle class, available from Praeger Press. He holds a Ph.D. in political science and is a Visiting Scholar at the CUNY Institute for Urban Systems.

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John Deutch's Four Steps Toward a Functioning U.S. Energy Policy

Nov 21, 2011

Roosevelt Institute Senior Fellow Bo Cutter has brought a lot of top thinkers together to discuss what the Next American Economy should look like. But it's hard to imagine future economic policy without also figuring out energy policy. As Bo's latest guest points out, American energy policy has largely failed. John Deutch, professor at MIT and former Director of Central Intelligence, explains how "we have not had an energy policy for 40 years" and why "it is a hard slog to improve this." In this excerpt, he lays out four key steps to making real progress:

John Deutch :: [excerpt] from Roosevelt Institute on Vimeo.

Roosevelt Institute Senior Fellow Bo Cutter has brought a lot of top thinkers together to discuss what the Next American Economy should look like. But it's hard to imagine future economic policy without also figuring out energy policy. As Bo's latest guest points out, American energy policy has largely failed. John Deutch, professor at MIT and former Director of Central Intelligence, explains how "we have not had an energy policy for 40 years" and why "it is a hard slog to improve this." In this excerpt, he lays out four key steps to making real progress:

John Deutch :: [excerpt] from Roosevelt Institute on Vimeo.

His imperatives to get us on the right track:

1. Something must be done to "integrat[e] domestic and international policy in the White House." Energy issues can't be fixed solely within our own borders.

2. In order to have a "coherent voice following energy" at the federal level, we must "establish a single energy commission between the House and the Senate in the place of the dozens and dozens who fool around in it."

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3. "There should be a rule adopted both by Congress and the [OMB]... to say no proposal goes in unless you attach to it a serious analysis of its projected costs and benefits." Without this, he says, "you don't have the basis for a discussion with Congress."

4. "You have to do something about personnel to get good people" working on these policies, he concludes.

Above all, he says, "You have to make people understand that if we don't change this system, things are not going to get better." And that could be disastrous for the economy and the planet.

Watch the full discussion:

John Deutch :: lecture from Roosevelt Institute on Vimeo.

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How Occupy Wall Street Can Help Revitalize Environmental Justice

Nov 16, 2011David Weinberger

earth-150By sparking a national dialogue about inequality, Occupy Wall Street is highlighting the link between economic and environmental justice.

earth-150By sparking a national dialogue about inequality, Occupy Wall Street is highlighting the link between economic and environmental justice.

It would seem that progressives have finally found in the Occupy movement the kind of populist momentum for which they have long hungered. Health Care for America Now, Green for All, MoveOn.org, and a number of unions have come out in support of Occupy Wall Street, fashioning different narratives that would tie their organizations' various missions to the values espoused by the protesters.

No sector of the progressive movement has yearned for this change more than the environmental movement, whose claims to populist underpinnings have long been met with skepticism. The arrival of populism on the left and the attention that is now being paid to institutionalized inequality align well with the heightened priority that environmentalists in and out of Washington are now placing on environmental justice issues.

Environmental justice is premised on a simple notion: that everyone, regardless of race, ethnicity, or socioeconomic background, is entitled to a healthy environment. In the United States, the majority of hazardous waste sites, power plants, and truck depots are sited in low-income neighborhoods, where the land is cheap and the communities' political capital is weak. As a result, these communities are subject to heightened frequencies of chronic illnesses, including asthma and obesity, that most often preclude long-term economic mobility. Environmentalists, seeing these historical inequities that have come with traditional, market-based patterns of infrastructure distribution, advocate for land-use solutions that account for externalities in the host communities and ensure equality of opportunity across class lines.

Though there is still much more to be done, the environmental justice movement has made strides. Environmental justice assessments, through which the federal government evaluates particular policies' impacts on equal access to clean air, clean water, and green space, are now commonplace. At the same time, there is a growing understanding that access to ecological services and natural resources is directly related to the populist notions of economic mobility and opportunity.

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Despite this progress, neither the 112th Congress nor the Obama administration has given environmentalists many victories. Election promises of a climate bill and renewed focus on alternative energy have gone unfulfilled. The State Department's decision on the Keystone XL tar sands oil project was delayed, but plans to reroute the pipeline are imminent. Yet with the world's attention turned to Zuccotti Park and the hundreds of tent cities across the country, environmentalists are now perfectly poised to have their agenda items thrust onto the map.

Occupy Wall Street presents a perfect opportunity for proponents of environmental justice. In fact, the General Assembly at Occupy Wall Street held a Climate Justice Day last Sunday to explore opportunities for injecting environmental justice concerns into the policy conversations taking place in Zuccotti Park every day. The event, titled "Capitalism and the Roots of the Ecological Crisis," was one of many interest-specific conversations, including a number of series on financial reform and access to health care.

Occupy Wall Street protesters come from a variety of backgrounds and carry a number of different "pet" interests. Environmental justice is simply one of the concerns on the minds of the protesters. Yet the overarching concerns of Occupy Wall Street -- economic inequality, exploitation of the masses, and economic immobility -- are epitomized by the environmental justice movement. As such, the environmental community should do everything in its power to ensure that environmental justice remains a significant part of the protesters' agenda.

The legacy of Occupy Wall Street, more than a list of concrete policy demands, will likely be a shift in decision-making paradigms of governments and businesses. It was just this summer that national political discourse centered on deficits and the risk of government default. In the two months since protesters took Zuccotti Park, policymakers at all levels and in both parties have been forced to confront the frustrations of the 99%. Civic dialogue is being altered and the battle for economic opportunity is taking center stage. It is now up to environmentalists to seize on this new populist momentum and finally give environmental justice the attention it deserves.

David Weinberger is the Senior Fellow for Energy and Environment at the Roosevelt Institute | Campus Network and a senior at Hunter College of the City University of New York.

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Left and Right are Both Dead Ends for Tax Policy

Oct 18, 2011Bo Cutter

 

The tax debate can be about values without devolving into a battle between good and evil.

 

The tax debate can be about values without devolving into a battle between good and evil.

Some day, but certainly not until after the 2012 presidential election, we will have to arrive at an economic policy that supports our economy in the short run and brings fiscal deficits and the growth of federal debt way down in the middle to long run. When we do this, we cannot accomplish much without raising tax revenues -- and actually improving economic performance while we change our tax structure would be a fine thing. While this set of thoughts may be complicated, it is not particularly hard to understand, nor should it be impossible for a functioning political system to accomplish.

But given our current political structure, we won't. One reason is that both the left and the right in America see tax issues entirely through ideological lenses. The right sees any effort to raise tax revenues as either an attempt by socialist leftists to further impose the nanny state on an unwilling America or a drive to destroy entrepreneurship and free enterprise. The left sees taxes virtually entirely as a redistributive mechanism and an opportunity to whack the undeserving rich, and so tax policy is reduced to the Buffett Rule and a millionaires tax. Thus, virtually any tax debate is instantly transformed by both sides into an epic Manichean battle between good and evil, between those who are really trying to destroy free enterprise and those whose incomes, and perhaps existence, are an indication of evil at work in the world. Tax issues are hard enough to contend with, but the battle between good and evil will never, ever, be resolved.

But there is another, simpler, more pragmatic perspective. Tax policy right now ought to be about raising revenue in ways that are fair and that help, rather than hurt, the economy. How do you accomplish this while no one, with the exception of Warren Buffett, wants to pay higher taxes?

I've never understood why it is constantly pointed out that Americans favor taxing the rich as though this were some startling revelation. Of course they do. Most Americans do not think they, themselves, are rich. This opinion is simply a special case of the truest and most profound words ever spoken about tax policy, which consist of a poem often recited by Senator Russell Long of Louisiana: "Don't tax you; don't tax me. Tax that fellow behind the tree." This is as close as you get to absolute truth in politics.

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I believe that the tax policy that comes closest to accomplishing the more simple goal of raising revenues without doing too much damage and maybe actually improving the economy a bit is, as I've suggested before, the following:

1. End as many as possible of the current endless list of tax deductions from both personal and corporate income taxes and make the ones we keep more progressive.

2. Use much of the revenue this set of actions would free up to lower marginal tax rates for all classes of individuals and corporations. Reasonable top marginal rates would be around 25 percent to 28 percent. To reach these numbers, we would probably have to end special capital gains tax rates but lower overall rates. The argument that slightly higher capital gains rates would lower economic growth is hard to sustain.

3. Create a consumption tax of about 10 percent. If we really wanted to do some good, tax the consumption of "bads" -- carbon, pollution, green house gases. Bill Nordhaus calculates in the New York Review of Books this month that taxing "bads" could yield $300 million per year in additional federal revenue, or $3 trillion over a decade (three times the amount the Super Committee is trying to find in total). After the necessary exclusions, a progressive consumption tax would yield roughly 4 percent of GDP as net new revenue -- which, viewed over a long period of time, is about what we need.

This tax system, created as an integrated whole, would be much more progressive than our current system, encourage more investment, make America a bit less of a consumer economy, improve the environment, drive more economic growth, and raise the revenues we need. By any standard, this integrated tax system would represent radical change and an improvement over the present. And the seeds of this tax system were included in both the Simpson-Bowles and the Rivlin-Domenici budget proposals of last fall -- the ones the entire political establishment, including the Obama administration, rejected well before they were written. (Within the next year, that decision will be seen as one of the two biggest strategic mistakes of the Obama administration.)

However, this system does not meet the psychological needs of the left or right. Who cares if a pragmatic balancing of interests might solve a major issue, when instead you can have an interminable and unresolvable ideological debate? Nothing even remotely resembling an actual tax policy will be debated until after 2012, if ever. (Herman Cain's "9-9-9" plan has many of these elements, but its numbers don't make sense.)

All of which brings me to David Brooks's New York Times column on Friday. In a wonderful piece that is largely an appreciation of prosaic, dull efforts to recognize the real world and do something sensible, Brooks says about our politics, "nearly every practical question becomes a values question... It would be nice if there were more leaders...inclined to disenchant problems and stare at specific contexts. Sometimes circumstances compel you to raise taxes; sometimes circumstances allow you to cut them."

Values are always going to be, and should be, an intrinsic part of political debate -- nothing is ever just pragmatic. But there is a question of balance and of what we need right now. I believe, and it is reasonably clear there is a vast middle in the American electorate that also believes, that right now much more pragmatic movement toward actual decisions and real progress is desperately needed. Ask yourself how likely it is that we will get that pragmatic movement from either party over the next year.

Roosevelt Institute Senior Fellow Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team. He has also served in senior roles in the White Houses of two Democratic presidents.

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The Hidden Costs and Blatant Danger of Keystone XL

Sep 29, 2011David Weinberger

oil-rig-150TransCanada's tar sands oil pipeline poses a threat not just to the health and reliability of local ecosystems, but to investment and productivity in rural America.

oil-rig-150TransCanada's tar sands oil pipeline poses a threat not just to the health and reliability of local ecosystems, but to investment and productivity in rural America.

On September 12, hundreds of low-income residents in Nairobi spotted a leak in the pipeline that runs adjacent to their slum. Hoping that they might be able to cash in, many began to pack close to the pipeline to collect the spewing gasoline. A stray spark ignited the fuel and generated an inferno strong enough to kill over 75 people and injure many more. Homes were destroyed, families were torn apart, and livelihoods were decimated. This tragedy is an illustration of the risks associated with long-distance fossil fuel transport.

Of course, this is an extreme example. Regulatory oversight and accountability are not exactly the same in developing countries in Kenya as they are in the United States. Still, there is a high degree of risk and exploitation in fuel transport programs here at home. Earlier this year, for instance, a pipeline owned by Exxon Mobil sprung a leak, sending 42,000 gallons of crude oil directly into the Yellowstone River. (Incidentally, Exxon is reporting that it will resume operations along the Yellowstone.)

If scenarios like these seem isolated or unimaginable in your backyard, think again. TransCanada’s Keystone XL project is a risky $13 billion capital investment program that will connect crude, tar sands-derived oil from Canada to the American energy market. By bringing oil from tar sands in Alberta to refineries in Texas and Oklahoma, the pipeline poses a direct threat to the many ecosystems and communities that it will traverse.

There is no doubt that the oil sands extraction, delivery, and processing mechanisms are extraordinarily injurious to the environment and to public health. High-profile protests have sprung up across the U.S. and Canada to fight the project’s execution, which environmentalists like Bill McKibben claim would pose a threat to potable water supply, Canadian boreal forests, and global climate.

TransCanada, which has recorded liabilities of approximately $84 million for remediation obligations and compliance costs associated with environmental regulations, estimates that its pipeline could reasonably leak 11 times within its first 50 years in existence. Others argue that this number is very conservative, especially given the existing infrastructure’s track record, and that a more honest estimate would be to say that the new stretch could leak more than 50 barrels close to 91 times within 50 years. But as TransCanada rightly admits on its website, “it is not possible for the Company to estimate the amount and timing of all future expenditures related to environmental matters.” With such immeasurable environmental and economic externalities to consider, risk assessment is more of a defensive posture than a display of corporate ethics.

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Risk to an ecosystem is not a factor for which advance remedial funds are sufficient. Instead, given that the economy of a locality is so deeply rooted in its ecology, environmental risk should be integrated with economic risk in upfront cost-benefit analysis. A program’s potential effect on ecosystem services, such as potable water supply, waste detoxification, crop pollination, disease control, game and seafood supply, and carbon sequestration and climate regulation should be internalized in calculating its lifetime cost.

After the oil spill in the Yellowstone, ranchers in the region reported a loss in biodiversity, a decrease in productivity, significant damage to their land, and contamination of their water supplies that will no doubt affect output. These long-term effects on land, a crucial factor of production for local farmers, must be considered when planning for risk.

Indeed, the EPA expects that several hundreds of acres of wetlands will be affected by the new stretch of pipeline, which will carry 830,000 barrels of oil from tar sands each day. A leak would also threaten water quality in the Missouri River, which provides for more than half of all Missourians’ drinking water, as well as services related to “recreation, power generation, water supply, river commerce, and fish and wildlife.”

Water quality is in fact key to a number of ecosystem services, and with potable water supplies at heightened risk with the new project, local economies in these areas could suffer exorbitantly in the event of a leak. Moreover, a leak that affects water supply in otherwise productive rural regions of the country could prove disastrous to the entire country’s economy, which depends in part on agricultural markets.

Beyond the environmental risks, theres is investor uncertainty. Development in the states that will be cut by the pipeline is already scarce. Montana, South Dakota, and Nebraska contain extreme pockets of rural poverty, the conditions of which will likely be worsened with the introduction of a volatile fuel pipeline. According to the EPA, Keystone XL will put low-income, tribal, and minority communities at particular risk. With the threat of a spill looming over these areas, one can be sure that any business will need a hefty incentive to build or grow there.

Still, these externalities have only begun to be internalized. Much of the cost to communities along the pipeline will be paid in uncertainty, not only for the ecosystems at risk, but for the prospect of development surrounding the pipelines. If TransCanada and the Canadian and U.S. governments viewed environmental costs as part of a larger picture--one that accounts for the relationship between ecosystem services’ reliability and private sector confidence in the surrounding region--there is no doubt that the company would have had a great deal more trouble proving that Keystone XL would be in the economic interest of the United States.

David Weinberger is the Senior Fellow for Energy and Environment at the Roosevelt Institute | Campus Network and a senior at Hunter College of the City University of New York.

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There Went the Sun: Renewable Energy Needs Patient Capital

Sep 23, 2011William LazonickMatt Hopkins

electric-tower-150Solyndra's bankruptcy is a lesson in the need for more than political points and investors out to turn a profit.

electric-tower-150Solyndra's bankruptcy is a lesson in the need for more than political points and investors out to turn a profit.

Solyndra, a venture-backed solar panel maker founded in 2005, was the poster child of the Obama administration's American Recovery and Reinvestment Act (ARRA). It was the first company to receive federal loan guarantees under the already existing Energy Policy Act of 2005. A hefty $535 million in government-backed loans was going to provide 73 percent of the funds to build Solyndra's second manufacturing plant in Fremont, California, with the rest of the financing coming from private equity. It was said that 3,000 workers would find employment in the plant's construction and 1,000 workers in its ongoing operation.

The factory was built, but, overburdened with capacity, Solyndra went bankrupt in August 2011. The company's 2010 sales of 65 megawatts of power were not even 60 percent of the capacity of its first factory, making the 500-megawatt capacity of the second factory totally redundant. As Yuliya Chernova has written in the Wall Street Journal, some investors with knowledge of Solyndra's operations see the government-backed loan as the source of the company's downfall.

There is little doubt that Obama's team could not resist the opportunity to score political points through a deal that promised to stimulate the economy while investing in our renewables future. As President Obama put it when he visited Solyndra in May 2010, "Before the Recovery Act, we could build just 5 percent of the world's solar panels. In the next few years, we're going to double our share to more than 10 percent. Here at this site, Solyndra expects to make enough solar panels each year to generate 500 megawatts of electricity."

But Solyndra was not the only U.S. solar company to go bankrupt last August. Seventeen-year-old Evergreen Solar Inc., a Massachusetts-based company that had received $58 million in state subsidies, closed its factory last March, and then in August entered Chapter 11 with almost $500 million in debt. Also in August -- in between the bankruptcies of Evergreen and Solyndra -- another solar manufacturer, SpectraWatt, called it quits. These three failures resulted in the loss of 2,000 U.S. jobs. As it was, Evergreen had already moved some of its manufacturing to China in an effort to remain competitive.

The global market for solar power was over $71 billion in 2010, double what it was in 2009. Yet there is no question that the future is bleak for solar manufacturing in the United States. According to the Poughkeepsie Journal, in late August SpectraWatt asked the bankruptcy court to permit it to auction off its plant and equipment quickly because "within six months, used solar cell manufacturing equipment and related assets could flood the market and lower its auction bids."

The manufacture of solar panels is a capital-intensive business that requires huge plant-level economies of scale for competitive success. The Chinese have become the leading producers of solar panels for both their home and global markets. Allegations of corruption aside, is it possible for a high-wage economy such as the United States to compete as a global manufacturer in the solar industry?

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In the case of Solyndra, besides its government-backed loans the company raised over $1 billion in venture capital from 11 major sources. Beyond government subsidies, it is these financiers upon whom we rely for the committed finance required to sustain the operations of a solar manufacturing plant until it can achieve sufficient scale to be profitable. If a venture like Solyndra had not promised eventual success, why would this "smart" business money have flowed so abundantly into it?

The answer is the stock market. The holders of private equity were betting that they could recoup their investments and make a handsome profit for themselves when Solyndra did its initial public offering (IPO) on NASDAQ, even if at that point Solyndra itself might be a long way from attaining profitability. In 2005, when Solyndra was founded, the IPO market was heating up after a sharp slump with the Internet bust at the beginning of the decade, and 2007 was the strongest year for IPOs since 2000. Then the financial meltdown of 2008 killed the IPO market. In December 2009, with the economy in recovery and with its $535 in government-guaranteed loans in hand, Solyndra registered its IPO.

At the time, however, the company had accumulated $558 million in losses since its founding, and in a filing to the Securities and Exchange Commission in April 2010 Solyndra's accountant, PriceWaterhouseCoopers, wrote that its financial condition raised "substantial doubt about its ability to a continue as a going concern." That nixed the possibility of an IPO. Now, with Solyndra in bankruptcy, the investors have lost their money and U.S. taxpayers are on the hook as the company's largest creditor.

For solar manufacturing in the United States to be profitable, it will need committed finance that the U.S. venture capital community -- still by far the world's richest -- is unwilling to provide. They have learned that solar companies require more capital and a longer incubation period than they are willing to endure. If we want advanced solar research to go forward in the United States, we need to engage in advanced manufacturing here as well. In renewable energy, as in other high-tech fields, government and business both need to be involved in providing the "patient" capital required to develop and utilize productive resources. At present, however, notwithstanding its massive wealth, the United States lacks the financial institutions that can cope with the 21st century world of high-technology and global competition.

Matt Hopkins is a research fellow at the UMass Center for Industrial Competitiveness, focusing on issues of clean technology and economic development. He has written a soon-to-be-released report on the U.S. wind turbine industry.

William Lazonick is director of the UMass Center for Industrial Competitiveness and president of The Academic-Industry Research Network. His book, Sustainable Prosperity in the New Economy? Business Organization and High-Tech Employment in the United States was awarded the 2010 Schumpeter Prize.

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Funding Cities’ Efforts to Beat Back the Tide of Climate Change

Sep 16, 2011David Weinberger

earth-150While some have started preparing for rising sea levels, it will take a global effort to pay for adaptation.

earth-150While some have started preparing for rising sea levels, it will take a global effort to pay for adaptation.

City policymakers constitute the frontline in cities' battles to secure funding from their parent states. But as the world experiences the largest urbanization trend in human history -- the UN projects that by 2050, 70 percent of the global population will live in cities -- issues of public health, energy independence, food production, security, and poverty alleviation will increasingly have to be dealt with at the city level. This growing burden on city policymakers is only exacerbated by the urgency of the effects of global climate change. Cities will also be on the frontlines of dealing with climate change, an expensive undertaking that will require resources beyond local budgets. The global community will need to chip in to their battles against rising tides.

Commercial city centers have historically been located along bodies of water. Trade, transport, food systems, and public health are all sustained by a city's water supply and access to ports. There is no doubt that rising sea levels will have a disproportionate impact on these cities, virtually all of which lack adequate infrastructure to account for the kind of catastrophic flooding that the Intergovernmental Panel on Climate Change (IPCC) projects (assuming minimal policy intermediation).

In that event, potable water reserves could potentially be flooded and contaminated, essentially cutting off the city's supply of safe drinking water. Moreover, sea level rise in a city that employs a combined sewer overflow model will be all the more catastrophic to water quality. Surrounding bodies of water will be instantly and severely contaminated, as wastewater treatment plants fail to keep their "heads above water," so to speak.

These familiar doomsday scenarios, while terrifying, can be prevented. "Climate change adaptation" is a phrase thrown around a great deal in development and smart growth circles. According to the IPCC, adaptation amounts to an "adjustment in natural or human systems in response to actual or expected climatic stimuli or their effects, which moderates harm or exploits beneficial opportunities"Cities around the world are working to adapt to the coming rise, acting quickly to secure their low-lying coastal settlements, protect their drinking water from the threat of encroaching saltwater, and rework their wastewater management systems to allow greater and speedier treatment capacity. From New York City to Ho Chi Minh City, from Miami to Durban, cities recognize the urgency and immediacy of the threat that rising sea levels pose and are in a mad rush to secure funds to prepare.

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Still, as the cities of the world start to hit the ground running, their parent states struggle to reach consensus in climate talks. Recent UN Climate Change Conventions in Copenhagen and Cancun have given way to very little added momentum among member states, even as the stakes continue to grow. With the U.S. far from reaching domestic consensus on whether to formally commit to combating and adapting to climate change, prospects for these talks remain grim.

But there is hope. In June of next year, nations of the world will gather in Rio de Janeiro as a part of the so-called "Rio+20"   UN Conference on Sustainable Development (UNCSD). Included among the agreed-upon themes of the convention is a commitment to building an "institutional framework for sustainable development" on a global scale.

For any UNCSD institutional framework to successfully engage in climate change adaptation at a global scale, it must employ the financial and diplomatic resources of the UN to support and share the progress already being made by cities. The existing UN Adaptation Fund is targeted specifically at developing countries that are parties to the Kyoto Protocol. The Adaptation Fund employs a traditional grantor-grantee flow of funds, without regard to the utility of best practice sharing and open dialogue between city policymakers and planners, who will shoulder most of the burden of the adaptation crisis.

At the same time, the diplomatic architecture of the UNCSD, with its hefty funding contributions and wide array of state representation, positions it very well to establish mechanisms to support urban climate change adaptation programs around the world.

A centralized host of "urban diplomacy," this adaptation facility would inject funds into mentor city partnerships, coordinate city-to-city direct aid, and help to attract private foreign direct investment in adaptation programs. By sparking and maintaining an ongoing dialogue between cities and facilitating investment in adaptation projects, the UNCSD can have a profound impact on the number of cities in both the developing and developed world that are well prepared for the effects of climate change.

Adapting to the coming tide is a herculean feat, and cities will require access to the full resources of their parent states in executing these projects. One can only hope that states will put their money where their people are.

David Weinberger is the Senior Fellow for Energy and Environment at the Roosevelt Institute | Campus Network and a senior at Hunter College of the City University of New York.

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