The Green Budget: The Heat is On

Now that President-elect Obama has announced his economic team and outline of a "Green Deal" for the economy to create jobs, the pressure is on to go over the federal budget line by line.

Congress spends more than $3 trillion every year on big-ticket items such as Social Security, Medicare and interest on the $11 TRILLION national debt. Is it possible to go into every cost item and see how wasteful spending can be pared and environmental considerations brought into focus?

In the words of Sarah Palin, ``you betcha!" (wink here).

Here's a primer on what could be done courtesy of the Union of Concerned Scientists (of which I'm a member) and several other environmental groups.

WASHINGTON - November 25 - The Union of Concerned Scientists (UCS), the nation's leading science-based policy organization, joined with more than two dozen environmental groups to produce a 340-page prescription detailing the steps the new Obama administration should take to jumpstart the economy, protect the environment, and enhance national security. The organizations, which have a combined membership of millions across the country, delivered the document to the Obama transition team late yesterday afternoon. (For a copy of the document, go to: www.saveourenvironment.org.)

Below is a statement by UCS President Kevin Knobloch:

"President-elect Obama has a popular mandate to move expeditiously to reduce our dependence on oil, curb global warming pollution, and pull the country out of recession. We're encouraged that he has signaled that his first order of business will be developing an economic investment package that will include investments in renewable energy and an upgrade and expansion of the electricity transmission grid, generating millions of new jobs.

"With his strong statement last week, President Obama also communicated his intent to immediately begin working with congressional leaders to craft a strong climate bill. Congress must promptly pass legislation reducing U.S. global warming emissions at least 80 percent by mid-century to give us a chance to avoid the worst consequences of climate change. The president-elect understands this. His leadership will be paramount to pushing the right bill through Congress.

"The new administration also must restore scientific integrity in the federal government. Our policymakers need unfettered, independent science to make the right decisions.

"Science has been under siege during the past eight years. Political appointees have run roughshod over federal scientists, altering or suppressing their findings or skewing them to fit the administration's agenda. We are heartened that President-elect Obama has said that under his administration, government decisions will be based on the best available science, not on ideology.

"Finally, President-elect Obama has pledged to replace the culture of secrecy at federal science agencies with one of openness. When decisions are made in the open, it is much more difficult to suppress or manipulate scientific information to justify predetermined decisions. The president-elect must act quickly to create a thriving federal scientific enterprise."

SUMMARY TALKING POINTS OF THE PLAN

Clean Energy, Climate Change, Economic Stimulus, Environmental Regulation Integrity (remember that?) and Environmental Justice

This is an ambitious document for the Obama Administration to use as a template as they explore ways to revitalize the economy and environmental policy.

Feel free to send the link above to your Congressional representatives and to the Obama transition team at www.change.gov.

Obama's Green Deal

What a sight to see our President-elect on Youtube no less announcing his plan for 2.5 million jobs over 2 years. It's as if he's in the White House now, jumping out of the block as the current occupant dithers and waits for Jan. 20. If GWB and DC aren't going to actually do anything except fill up the executive mansion with carbon dioxide, then why don't they just...leave!

Jobs are needed now. The financial markets are still on life support and aren't getting enough oxygen. The nation's infrastructure is crumbling. As Ernie Banks would say, "it's a great day for a ball game, let's play two!"

First, let's stop talking about the New NEW Deal. Obama is not FDR. He's a centrist Democrat with University of Chicago and Goldman Sachs economists behind him. Let him put a stamp on the "Obama GREEN Deal." Branding is everything in this marketing-driven culture. Right now, he's got it. He's the go-to guy. He's going to make the world forget about the Michael Jordan-Chicago connection.

Here's what I think the Obama brand should stand for in the Green Deal:

* Rebuilding infrastructure. New York's water tunnels are leaking up to 36 million gallons of water a day. Roads, bridges, tunnels, urban transit systems and sanitation plants all over the country need fixing. That will put a lot of people to work and provide a genuine public service over decades. This is not "make work" like the Works Progress Administration.

* Smart Grids. The way we get electricity is pretty much the system set up by Sam Insull in the early part of the 20th Century. It's haphazard, prone to breakdowns and needs to be attuned to our information age. That means delivering power to where it's needed -- automatically.

* Comprehensive Green Cars and Transportation Networks. I'm not one who subscribes to the "magic bullet" concept for fixing Detroit. Before you have plug-in cars populating our roads, you need smart grids, clean power, longer-life/lighter batteries, cheap solar charging stations and some other transportation options. What about fuel-cell buses? What about all-electric/maglev commuter trains? That's all part of the solution and it will take more than a Detroit bailout to rework the current melange of bad choices.

* Green Rehabs. Inner cities are desperate for decent-paying jobs rebuilding homes and apartments. Green housing is energy efficient, durable and costs less. Chicago alone has more than 10,000 vacant lots while leading the nation in murders. You want to break the cycle of gang violence? Give them decent jobs and a future. None of Obama's Green Deal plans will be a success in my book unless school kids can walk down the streets of Chicago unmolested and live to a ripe old age.

So the Green Deal is about more than jobs. It about more than rebuilding. It's a transformation from a country that wages wars to gain the illusion of national security to one that wages peace by making people take care of what we have and needs to preserve for future generations. How did we lose sight of that?

Share Your Ideas With Obama's Team

I got this interesting email yesterday from John Podesta, one of the leaders of president-elect Obama's transition team.

He wanted to know my thoughts on energy and the environment.

I had a few, so I shared them. I also invited more than 100 friends to do the same. What are the chances somebody will read, respond and act upon them? Well, the odds are better than if no one asked at all. In any case, here's your chance.

You say you want a revolution, well, you know...to quote the famous Beatles lyric. You want to put people to work while addressing global warming issues. Make your voice heard!


Here's the Podesta letter. Go to www.change.gov and send them your ideas. The winner gets to help save the planet. Really!


62 days. That's how much time we have left to prepare for the Obama-Biden Administration that will bring the change Americans demanded so strongly in this past election.

President-elect Obama has set a high bar for the Transition team: to execute the most efficient, organized, and transparent transfer of power in American history. As a co-Chair for the Transition, I want to tell you about a few steps we've already taken to achieve this goal.

First, we adopted the strictest ethics guidelines ever applied to any transition team. President-elect Obama pledged to change the way Washington works, and that begins with shifting influence away from special interests and restoring it to the everyday Americans who are passionate about fixing the problems facing our country.

Opening up the Transition means listening to your ideas and stories and providing a window into how the process works.

To give you a look at how we're approaching some of the nation's most pressing issues, we filmed this meeting of our Energy and Environment Policy Transition Team and interviewed team member Heather Zichal.

Watch the video and submit your ideas on energy and the environment:

Watch the video

President-elect Obama and Vice President-elect Biden have set an ambitious agenda, and we are going to make Change.gov a source of information, as well as a place to participate in the decisions being made about your government.

Since the decisions we're making affect all Americans, we're counting on citizens from every walk of life to get involved. You can help us right now by making sure your friends and neighbors know about Change.gov and give their input, too.

We're continuing to develop new ways to open up the process, and we'll keep you posted along the way.

Thanks,

John

John Podesta
Obama-Biden Presidential Transition Team

Obama's Hope

The human energy was palpable approaching the Obama campaign’s epicenter in Chicago on the eve of his election rally.

A dynamism akin to the advent of every religious and secular holiday made my spirit tingle. You could close your eyes and feel it. In the city’s gorgeous front yard set against the splendid lakefront on a perfect November day –- a miracle in itself given Chicago’s nasty weather from Halloween to Memorial Day –- the hopeful gathered, attempting to get into a park that was cordoned off to anyone without Secret Service credentials.

I didn’t obtain clearance in advance and was sent away by security with the long-honored Chicago dismissal ``who sent you?’’

"Nobody sent me, I'm a columnist," I said with a smile. "I did this spontaneously." I was turned away. There wasn't much to see at that point anyway as the nation's first African-American president hadn't been elected quite yet.

Obama’s fete was on hallowed ground in the history of the Republic. Abraham Lincoln was nominated in a long-forgotten place called the WigWam just up the street, an election that fomented the civil war. An even more-forgotten statue of Union general John Logan sits opposite the Obama fest site.

The Chicago police riots of 1968 took place two blocks away when the cops set upon Viet Nam war protestors. Students camped out in the park where Obama’s dais stood and more than one million celebrated on election day. Mayor Richard J. Daley angrily proclaimed ``we are here to preserve disorder, not to create it.’’

Martin Luther King was hit in the head with a brick a short taxi ride from Obama’s home. So much progress has come to the hog butcher to the world and the nation. Segregation came and went in my lifetime. Voting rights came to the South. A president, his brother and Dr. King were assassinated. The economy had many more violent gyrations.

Obama's Identity

Yet who was this man, the first person of color to be elected president? The son of a wayward Kenyan economist and teenage mother. Harvard Law School graduate. University of Chicago law school professor. State and U.S. Senator. Community organizer.

Once a little-known Illinois state senator, he ascended to his U.S. Senate seat when wealthy commodities trader Blair Hull bowed out of the race when details were revealed of an ugly divorce. His Republican opponent also had domestic issues.

With roots in the Midwest and Africa, Hawaii and Indonesia, Obama brings to the job a deep experience of many cultures. Because of his unique background, he may have a greater understanding of economic violence and social dislocation than any modern president.

When I met Obama twice during his Senate campaign almost three years ago, a voice echoed in my head: ``This man can become president. He has the complete package.’’

He spoke to my neighbors and I a few blocks away in my community, situated about 45 miles northwest of Chicago deep in Republican territory. At the time, and in many speeches thereafter, Obama echoed Lincoln when the 16^th president spoke of his central idea of equality ``the principle that clears the path for all –- gives hope to all – and, by consequence, enterprise, and industry.’’

By illucidating this concept of economic equality, I saw something in Obama that had a powerful resonance. In an America where middle class wages were falling behind inflation, pensions were being cut, health care not available to some 40 million and retirement security fractured by numerous market crashes, he reached the core of the troubled American economic experience.

Big Troubles

With the economy a priority, I suspect the man who has been drawing millions to his speeches and ideas, wasn’t about to neglect the streets of Chicago nor the forlorn urban pockets of despair from the Central Valley of California to the Bronx.

His economic revival plans are ambitious. There’s everything from middle-class tax cuts to incentives for minority business owners. Everything seems to be on the table in an effort to promote financial equality.

For those who have called him a socialist, they had best look to his intellectual roots at the University of Chicago, the mother ship of laissez faire market economics. The virtual Nobel Prize factory has cradled or crippled the global economy, depending on your world view. Some of his top advisors are from that Hyde Park enclave, the spiritual home of free-market godfather Milton Friedman.

Will Obama be able to replace the nearly 3 million manufacturing jobs that have been lost since 2000? Or repair the disemboweled financial markets? Like all presidents, he may not have that much direct impact. It took World War II to re-engage the U.S. economy after a decade of FDR’s New Deal programs.

And what of the human misery that is borne of economic despair? Just blocks away from Obama’s celebration were the meanest streets of Chicago, where joblessness and the poisonous power struggles between street gangs have already claimed more than 420 lives. Such an ongoing wholesale waste of human potential needs to end.

Obama’s Insights

Fortunately, Obama is a uniquely qualified expert on economic violence. When he was a community organizer on the South Side, he was trying to restore a measure of dignity to tens of thousands of steel and other manufacturing workers who were impoverished by the brutal recession of the late 1970s and early 1980s.

How ironic and utterly mean-spirited was the fact that he was ridiculed for his community efforts on the floor of the Republican National convention.

We could want for no greater authority on how neighborhoods and families could suffer during a recession than Obama.

I know of his work because I walked the same streets when I was writing about the same people who had gone from decent wages and guaranteed benefits to poverty nearly overnight. Their ranks are legion: Men like Frank Lumpkin, a bare-fisted boxer who came from a Georgia sharecropping family to a decent job in a steel mill, only to end up being a jobless coalition organizer when his mill closed in 1980.

I’m quite sure that Obama has the experience and intellectual rigor to understand today’s economic ills. What of the daunting social issues he faces? Can he stop the murders on the West Side of Chicago, bolster the moribund auto industry or stanch the bleeding in the housing bust? What of the greedy tentacles of K Street lobbyists, who couldn’t care less what happens in Detroit, Chicago, Cleveland or to the migrant workers of California?

The Future

As I watched a gaggle of Chicago school kids march into Grant Park to see the spectacle of history, my heart skipped a beat. As I was walking away from the park, they were walking into it. The future was striding by.

Here was the future of the global economy. They’re weren’t just from Chicago, the inventor of the modern electrical grid, commodities markets, transportation nexuses and countless tons of steel, machine tools and candy.

These children were actors in the worldwide network, connected through aspirations and intelligence to street dealers in Rio, AIDS orphans in Tanzania, souk urchins in Cairo and taxi drivers in Delhi.

Would these future agents of change find room and hope in Obama’s new network of progress, one so remarkable that it linked young and old, rich and poor in raising more than $600 million, a record amount for any campaign?

Obama may not be able to boost incomes, restore sanity to financial markets, nor even make health care affordable and available to all, yet he will provide a new agenda for tackling these problems. At least he has a plan and has the will to transact change.

Genius for Re-invention

America has always possessed this genius for invention and re-invention. It’s been a Valhalla for second chances. Illinois has had its share of makeovers and leaders who were pillars of power and purpose.

Remember other renowned Illinois-bred politicians who reinvented themselves: Adlai Stevenson the intellectual. Ronald Reagan the B actor. Dennis Hastert the wrestling coach. U.S. Grant went from merchant to general to two terms as president.

Lincoln himself was transformed from failed shop owner and railroad lawyer to two short terms in the Illinois legislature and Congress to become our most revered president. He was self-taught and born poor.

Whatever Obama will do, we can hope that he will not be the captive of the efficient and ruthless Chicago political machine. Nor will acquiesce to the powerful overlords of K Street and Wall Street. I trust he will stay true to Lincoln’s dedication to the ideals of universal equality.

It’s no small irony that Obama will be inaugurated during the bi-centennial of both Lincoln and Darwin. America is still on the tortured road to equality and evolves to seek the angels of our better nature. So goes the audacity of hope.

Studs Terkel, RIP

We will all miss Studs. I wanted to share these memories of Studs with you.

When I was writing "Merchant of Power," Studs not only consented to an interview (he had seen Insull and his mother lost $2,000 in Insull stock), he read the book and wrote a blurb for it. Keep in mind that this was during a period in which he fell and broke his neck, wrestled with a home invader and had started work on his memoirs --in his 10th decade no less.

Yet when I was coming back from a Florida vacation about two years ago, I got this call on my cellphone. It was Studs, who by that time hadn't quite gotten an adequate hearing appliance and probably couldn't hear me.

"John, I thought your book was terrific. I'm going to write something about it." Well, to hear this from anyone (it was my first biography) was always welcome, but from Studs Terkel, it was like a papal pronouncement. I certainly didn't expect him to get to it, nor did I expect his generous cover quote.

I had met Studs some 30 years earlier when his "Working" was just made into a Broadway musical. I had a bet with a friend that it wouldn't do well, mostly because I didn't think the Broadway crowd nor the NY critics would truly "get it." It flopped and I talked with Studs after a lecture in Park Forest.

"Studs, I had a feeling your musical wouldn't do well because I don't think New Yorkers were attuned to the message," I told him at the time. "You know, I think you're right." he replied.

As Studs wrote his last books, I noticed that friends were beginning to be profiled. Like many of the folks Studs talked to, they were unheralded saints. Then I thought to myself, we need 100 or 1000 Studs Terkels to give voices to people who need to be heard.

Studs was not only the poet of the tape recorder, but the p.a. system for the voiceless.

Such changes he has seen and personally participated in during almost a century of life! I know he was thrilled at Obama's candidacy.

I've always regarded Studs as a national institution, serving everyone as a bard, illuminator of the human condition and just plain great storyteller. He seemed to embrace everyone with his bon homie, wit, puckish view of the world and his magnificent intelligence and memory. When I grow up -- and hope I never truly do -- Studs is my model for creative aging. Write to the end. Don't let the story stop when you do. Agitate for change by telling stories that few hear.

We should honor him and his work and abide by one of his favorite maxims: "Take it easy, but whatever you do, take it!"

Financial Meltdown: Been There, Done That

Foreclosures and bank failures dominate the headlines. Politicians are in a tizzy over whom to blame. It’s not 2008, but 1932 and the devil du jour is not some Wall Street CEO, but Chicago financier Samuel Insull, whose securities became worthless during the Great Depression, leaving 600,000 investors in the lurch.

Insull, whose utilities empire failure – the largest in American history at the time (more recently eclipsed by the bankruptcy of Lehman Brothers Holdings, Inc.) -- launched a raft of New Deal reforms and is little remembered some 150 years after his birth. Yet his startling rise from Thomas Edison’s factotum to the billionaire mogul of one of the nation’s largest utility combines, holds many lessons for today.

Unlike the CEOs of today, who walk away from corporate shipwrecks with tens of millions of dollars in compensation, Insull died broke after lending his own money and going into debt to save his companies before they fell into receivership in 1932. Having felt he had done all he could to rescue them with his personal capital, he left the country until he was extradited from Turkey to the U.S. to stand trial in 1934. When he returned to the Windy City, he was more infamous than Al Capone and tried in the same courtroom and by the same judge as ``scarface.’’ Insull never went to prison as juries recognized that Insull effectively went down with his ship; the utilities mogul was later acquitted of fraud in three separate trials.

Like today’s hedge funds and even the seized mortgage entities Freddie Mac and Fannie Mae, Insull’s pyramid of holding companies that provided power and light to some 6,000 communities across the Eastern and Midwestern U.S., were little understood and barely regulated. The accounting for his empire was opaque and annual reports from the 1920s told investors little about how his empire was capitalized. Because they were pyramided and cross-financed with other holding company stock, his entities were the collateralized mortgage obligations of that time – and became just as toxic to investors.

Insull’s legacy is a chiaroscuro tablet. While he succeeded in helping to bring electricity into the homes of some 72 million people by 1927, his holding company failures became a touchpoint for the New Deal securities legislation. FDR’s reforms separated investment from commercial banks. Utility holding companies were dismembered and broken up. Stock offering prospectuses became much more detailed in their capital underpinnings and risks.

With the repeal of the Glass-Steagall Act in 1999 and the scrapping of the Public Utility Holding Company Act in 2006, two linchpins of the New Deal investor protection era were severed. The utility industry has re-consolidated somewhat and over the past decade Wall Street investment banks went hurtling into a lightly regulated environment that promoted everything from troubled auction-rate securities to subprime mortgage pools. Eliminating some of the heart of the New Deal protections has changed the entire landscape of high finance.

With the recent tumult on Wall Street, pure investment banks will cease to exist and regulators will have even more oversight over opaque financial vehicles. The rescue legislation recently passed by Congress comes full circle back to FDR’s era as buying mortgage assets, creating new layers of oversight and expanding federal deposit insurance seeks to protect savers and investors.

Unlike the 1930s, the combined forces of the U.S. Treasury, Congress, President, Federal Reserve, foreign central banks and the American taxpayer have been united as strange and often unwilling bedfellows to prevent a global financial system collapse (although we’re not completely out of the woods yet).

As the executives who captained the current debacle beat a hasty retreat, a natural question emerges: How can we best learn from both the Insull and current eras to strengthen the integrity of markets and investments?

One of the answers can be derived from the extensive disclosure and enhanced oversight that emerged from both crises. Once investors have a clear and comprehensive look at what they’re buying, they can better gauge risk and make prudent decisions. While you can never take greed out of the equation in investing, sunlight in the form of transparency is more than a disinfectant, it can illuminate any number of perils.

Mainstream Economy Falters, Solar Economy Shines

I've found a huge pocket of sunshine between the thunderheads dominating the financial news.

Congress actually did something sensible and greenlighted a raft of alternative energy incentives in its latest bailout, oh I'm sorry, RESCUE package last week. The remarkable irony is that this was a separate piece of legislation that some crafty senators attached to the "take or leave it" buffet of banking, mental health parity (a good thing, actually) and sloppy pork offerings passed under duress of market collapse on Friday.

Well, the markets didn't think it was enough and proceeded to wipe out another $1 trillion in equity. Now it's up to central bankers to pump money into the frozen credit markets. Bankers won't lend because they're afraid that borrowers won't pay them back. A lot of this is pure panic, but somebody has got to get the money flowing again. Or else payrolls will be logjammed, companies won't buy supplies and millions will get laid off. A recession is all but certain, the severity of which is open to a heap of speculation.

The bright spot is that the US Federal Reserve and Treasury, Bank of England, European Central Bank, Japanese Central Bank and People's Bank of China are almost on the same page on the core problem. They are flooding the banking system with money, which will help. It's also encouraging that China, Australia, Brazil, Western Europe and the Gulf States are flush. Russia has some reserves, although its stock market is shut down for the moment.

The credit freeze is akin to two boys at the mouth of a cave. They essentially know what's in the cave, but are frozen in space, saying to the other, "you go first, NO, you go first." And so it goes.

As we move toward the light, this may mark the end of the carbon era and the beginning of the solar age. It's about time. Some fairly decent tax incentives came out of Congress, which were obscured by the serious business of fixing the mortgage securities debacle, which will take years to resolve.

In the meantime, though, you can reap a break to put up a small windmill, install geothermal heating systems, buy energy-efficient and solar appliances. Here's a summary of the incentives, courtesy of the American Solar Energy Society (www.ases.org):


Congress passes the most powerful solar legislation in history
Solar provisions will extend the solar investment tax credit
for eight years, removes the $2000 monetary cap


Homeowners battling against soaring energy prices and a struggling economy just gained a powerful new tool to help harness free, renewable energy from the sun, the wind and other sustainable resources.

The U.S. House and Senate just passed historic legislation that will massively increase the use of solar energy all across the America. Renewable energy provisions in H.R.1424 include an eight year extension of the 30% solar tax credit and removal of the monetary cap for residential solar electric installations. The President signed it into law on October 3.


The solar provisions in this bipartisan legislation will help position the U.S. as a global leader in the booming solar marketplace, generating thousands of green-collar jobs, promoting energy independence, and helping to tackle climate change.

"Renewable energy and energy efficiency are our economic drivers,” said Brad Collins, Executive Director of the nonprofit American Solar Energy Society. “I applaud members of Congress for coming together to extend the renewable energy tax credits that will strengthen the new energy economy and generate green jobs at a time when they’re needed most.”

Key provisions of this legislation will:

* Extend the investment tax credit for residential and commercial solar installations for eight years (it was previously set to expire at the end of 2008)

* End the $2,000 cap on the investment tax credit for residential solar electric installations placed into service after December 31, 2008.

* Allows filers of the alternative minimum tax to claim solar investment tax credits

* Allows public utilities to claim the solar investment tax credits

* Authorize $800 million in new clean renewable energy bonds and creates a new category of tax credit bonds called Qualified Energy Conservation Bonds to finance state and local initiatives to reduce carbon emissions

* Extends deductions for energy efficient commercial buildings

* Establishing a new tax credit for purchasers of plug-in electric-drive vehicles

* Extends research and development tax credits


What This Means to You

Given that energy prices (with the probable exception of crude/heating oil) will remain high in the short term, these write-offs will partially offset the cost of solar heating and electric units. There are systems available that provide both heat and hot water, so those are the best deals. They even work efficiently during the frigid winters of the Upper Midwest (I've seen this so I can verify their utility).

If you want to dabble in small wind turbines or geothermal, keep in mind the initial price tags are high and the paybacks much longer. Geothermal makes much more sense if you are building a new home on a site that permits additional excavation. As with any alternative energy appliance, see if your state offers a matching tax break. Most do. See www.dsireusa.org.