Posts Tagged ‘national debt’

Vacation and Vacating

August 22, 2010

August is a relatively calm time to reflect before the stormy months ahead. Congress is currently in recess, the president is on vacation. By contrast, the period after Labor Day will be marked with shrill posturing in Washington and heated campaigning throughout the country ahead of the November election.

I recently had my vacation with my family (and still recovering). Besides allowing me to get reacquainted with Carolina BBQ, Krystal burgers and my kids’ uncanny ability to frustrate and amaze me at the same time, it also enabled me to ponder some of the major policy events this year so far. Among them were a very unhealthy debate over health care which resulted in inadequate legislation, a deficit of bipartisanship and truth regarding the federal budget deficit and national debt, and little energy for energy and climate reform in Washington despite of the Gulf oil spill and other developments. All the while the sure-to-be-taxing debate over extending the 2001/2003 tax cuts has been put off, despite the fact that they expire at the end of the year.

Now that it appears that any real action on climate and energy policy was capped along with the BP well, I feel it important to lament the opportunity lost. While our leaders are enjoying vacation, they need to be called on how they vacated their responsibilities on this issue.   

The inability to produce any results stems, aside from the partisanship that is crippling all action in DC, from the unwillingness of policymakers to publicly acknowledge two fundamental realities:

  1. we cannot change how we produce and consume energy overnight;
  2. one way or another, we will have to pay more for energy, at least in the near term.

 Regarding the first point, many advocates of cleaner energy are unrealistic in their demands. Yes, we should have seriously begun transitioning away from fossil fuels more than thirty years ago, but we didn’t. So it will still take time to wean ourselves off of dirtier fuels. We must develop now the comprehensive energy strategy that we have failed to devise and implement for so long. But there will be a transition period between now and a cleaner energy future. A natural and realistic compromise is to expand domestic production of oil and gas in the short term in exchange for support of comprehensive energy reform in the longer term. The Gulf spill took offshore drilling off the table just when it appeared that expanded drilling would help pave the way towards such a compromise.

Secondly, those who vociferously decry that efforts to reform our energy regime will raise the cost of energy are disingenuous since energy prices are sure to rise regardless, for a variety of reasons. First of all, prices are relatively low now because of the global economic slowdown, which is inhibiting demand. Few economists doubt that gas prices will rise significantly once the economy recovers and demand increases. The problem will become exacerbated over the long run as the U.S. competes more with growing economic powers such as China and India for dwindling oil reserves. Furthermore, energy prices will also rise due to increased legal and regulatory burdens in response to recent developments, including the Gulf oil spill and the Upper Big Branch coal mine disaster in April.

The fact is that there are costs to our dependence on fossil fuel that are not reflected in the price we pay at the gas pump or in our monthly electricity bills. All too often the discussion on negative externalities is limited to climate change. This is unfortunate because, although not without merit, the climate change claims engender heated opposition and are difficult for many Americans to fully comprehend. On the other hand, external costs such as U.S. military involvement in the oil-rich Middle East, national security vulnerabilities of relying on oil from countries like Venezuela that are openly hostile to us, environmental damage such as mountaintop removal and oil slicks in the Gulf of Mexico and Alaskan coast, and the deaths of 29 miners in West Virginia and 11 workers on the Deep Horizon oil rig transcend partisan differences and are easier to appreciate.

 All this points to a basic truth that many experts recognize, but that few politicians want to face – putting a price on carbon will be essential to achieving energy reform. Accounting for the true cost of fossil energy will make alternative sources more competitive and spur conservation and efficiency measures. Market-distorting subsidies and mandates will not get us where we need to be.

Another benefit of pricing carbon is that it would help improve the country’s fiscal situation. The increased revenues from pricing carbon could significantly reduce our national debt. While opponents of a cap-and-trade program have quite successfully stalled it in Congress by labeling it as “cap and tax,” with deficits and debt a top issue for voters, such an argument could be very persuasive.

When vacation ends, hopefully also will the vacating of action.

Friday Policy Haiku – Deficits and Debt

March 5, 2010

Deficits and debt

Hard choices delayed, denied

Our children will pay

Of Reality Shows and Facing Reality

November 22, 2009

There is no denying that “reality TV” has ingrained itself into our culture.  A look at recent headlines confirms this.  But the headlines also underscore how reality shows are nothing like the reality most of us face.  As families struggle with finances in this bleak economy, not only do we find our world completely apart from the one inhabited by the Kardashians and the like, but also increasingly adrift from Washington.  The politicians seem oblivious to the situation, even though the federal budget is as dreadful as many family budgets.

The “balloon boy” parents pleaded guilty recently to charges stemming from their now infamous stunt in which the former “Wife Swap” stars reportedly tried to snag a reality show of their own.  Unlike the bizarre episode they concocted that had many Americans riveted to their TV sets for a day, ballooning federal budget deficits are no hoax and demand our sustained attention.  These balloons won’t be coming down any time soon and it is very likely that our children are in for a rough flight.  Unfortunately, it is the would-be rescuers we find hiding in the rafters.

Massive red ink in government will affect significantly the standard of living of future generations.  The mounting disparity between federal receipts and expenditures – a record $1.4 trillion in 2009 – parallels the growing disconnect between Washington and the rest of the country as our elected representatives refuse to constructively address the dilemma and we fail to hold them accountable.  Now that U.S. National Debt reached a record high $12 trillion last week, the matter seems to have President Obama’s attention.  But it is still not clear that Washington has the resolve and farsightedness to seriously address it.

The “Dancing With the Stars” season finale is this week and there is growing anticipation over the upcoming season of “American Idol.”  At a time when too many families across the country have no choice but to face the financial music, it is disheartening to see the same old song and dance emanating from the nation’s capital.  However, we cannot use this as an excuse to tune out Washington.  It is exactly that attitude which has enabled the fiscally reckless behavior.  Instead, we must channel the same energy and ingenuity we are directing towards resolving our personal finances to restoring fiscal responsibility in government.

The resilience and resourcefulness that Americans are exhibiting in these trying times is inspiring.  Take for instance that fact that many people, of their own volition, are sending checks to the federal government to help pay down the national debt.  We must demand the same level of responsibility from our leaders – and ourselves – in tackling the national debt.  Just as we have learned to become more discerning consumers – leery of credit card and mortgage offers that sound too good to be true – so too must we be as voters in rejecting fiscally irresponsible campaign promises. 

Like many Americans, the fundamental need for fiscal responsibility literally hit home for me recently.  When I look at my two young children and ponder the future I can provide for them, I agonize over not only our family finances, but the larger economic picture that they will inherit.  I want to bequeath to them the promise of prosperity, not the obligation of debt.  That will only happen if we all start acting responsibly and face reality.

It is no wonder that the “Real World” and “Real Housewives” franchises are now filming in Washington.  The city is living in a reality of its own.  It is time for more action and less hot air and dancing around the issue.  We must deflate the deficits before they carry away our future.