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Could Obama Be the First Steady-State President?

by Brian Czech

Could President Obama be the one who leads Americans to recognize the ever-growing conflict between GDP and the health of the nation? Could Obama be the first to hearken the steady state economy — stabilized levels of production and consumption — as the sustainable alternative? Could Obama be the “steady-state president” we’ve all (well not all, but many of us) been waiting for?

Alas, probably not. The time is not quite ripe enough. Yet it is not quite out of the question, either. Obama shows clear signs of steady statesmanship, and citizens show signs of wanting it.

In “Obama’s New Square Deal,” Washington Post columnist E. J. Dionne Jr. described how “President Obama has decided that he is more likely to win if the election is about big things rather than small ones. He hopes to turn the 2012 campaign from a plebiscite about the current state of the economy into a referendum about the broader progressive tradition that made us a middle-class nation. For the second time, he intends to stake his fate on a battle for the future.”

That’s exactly the type of leadership needed to advance the steady state economy as a policy goal with widespread public support. In particular, we need a focus on “big things,” such as the long-run sustainability of the American and global economies. We need a president who will “battle for the future,” not for another percentage point in next year’s GDP growth.

The progressive tradition Dionne sees Obama adhering to is also conducive to the steady state economy, which is roughly indicated by stabilized GDP and a stable standard of living. Dionne rightly points to Theodore Roosevelt and Franklin D. Roosevelt as primary purveyors of the progressive movement, and sees signs that Obama could channel the Roosevelts into a 21st century New Deal for the middle class. TR and FDR were concerned with the middle class, for sure, but they were concerned with much more as well. They were concerned with truly “big things” such as the long-run sustainability of the nation.

Theodore Roosevelt was the father of the American conservation estate, establishing national forests and parks left and right, as well as establishing the first national wildlife refuge at Pelican Island, Florida in 1903. This original icon of the Republican Party would be seen as an iconoclast today, as the Grand Old Party is the last in line to protect our great natural heritage. “Drill baby drill” is the iconic rhetoric of today’s Republicans. TR made an early escape from Big Money with his Bull Moose Party.

Meanwhile, FDR was the leader in establishing the broad sweep of progressive, professional natural resources agencies and programs we have today. The Soil Conservation Service, Fish and Wildlife Service, and Bureau of Land Management, among many others, were brainchildren of Roosevelt and his savvy secretaries of Agriculture and Interior. FDR and his Cabinet knew all about trade-offs, sacrifice, and “opportunity costs.” They knew you couldn’t have your cake and eat it too. They knew well the trade-off between economic growth and environmental protection. By contrast, today’s Democrats are more likely to muddy the conservation waters with the rhetoric that “there is no conflict between growing the economy and protecting the environment.”

But that brings us back to Obama. He is an exception, at least by today’s standards. He is a throwback to the heyday of smart, progressive politics. He doesn’t insult our intelligence with win-win rhetoric. In fact, Obama hardly even uttered the phrase “economic growth” until the recession made it politically impossible not to. He knows we need a paradigm shift in economic thinking and that sustainability is the watchword for the 21st century.

So perhaps the recession has Obama biding his time, waiting until the coast is clear enough for steady statesmanship. He needs some cover, political cover, in order to talk truthfully about the trade-off between economic growth and environmental protection, economic sustainability, and national security. He needs academics, think tanks, bureaucrats, and a growing base of citizens, national and global, to describe the trade-off between economic growth and national wellbeing.

Otherwise, how can we expect Obama to be the first steady-state president?

The New Congressional Debt Panel: An Opportunity for an Essential Economic Debate

by Brent Blackwelder

The debt ceiling debacle was temporarily resolved in early August with a deal that included the creation of a 12-member Congressional debt panel (officially labeled the Joint Select Committee on Deficit Reduction).  This panel is charged with producing recommendations by this November to reduce federal budget deficits by at least $1.5 trillion over 10 years.

The Congressional debt panel will be under huge pressure from the corporate-driven Tea Party to limit its consideration only to cuts in federal government spending to achieve deficit reduction. This means average Americans, the poor, and minorities are the ones who will lose important programs designed for their benefit, while the tax giveaways for transnational corporations will continue. This is a recipe for social upheaval.

Some progressives argue that this panel of six Republicans and six Democrats, along with a President who cannot drive a hard bargain, guarantees gridlock and mounting frustration; however, now is a teachable moment for steady staters and other reformers to get on the offensive and present a larger economic vision. Those concerned with a sustainable economy should seize this opportunity to demand meaningful changes, such as basic reforms of the Tax Code.  But make no mistake — it will be a big fight.  The corporate-run Tea Party is intent on forcing the Republican Party to resist increases in anyone’s taxes, especially those of the well-to-do.

Three revenue changes are urgently needed: (1) cutting government handouts to polluters; (2) instituting revenue-raising measures that move us toward sustainability, such as a carbon tax and a transactions tax on international currency trading, and (3) cracking down on tax dodgers and offshore tax havens, which cost the Treasury an estimated $100 billion a year and which undermine the ability of governments to function.

Cutting Polluter Subsidies

Both state and federal tax codes provide enormous subsidies to polluters, thereby sending the wrong ecological price signal to the consumer. After reviewing more than $100 billion in subsidies to old energy technologies, Michelle Chan, director of international programs at Friends of the Earth, notes: “We are not going to get past reliance on yesterday’s technologies if we continue to subsidize them as if they were brand new.” But a bill in the Senate this spring to cut $20 billion in oil and gas subsidies was vigorously opposed by oil companies like Conoco Phillips who labeled the legislation “un-American.” Since when did subsidies to bloated corporations become the definition of “American?”

Fossil fuel barons, like the Koch brothers who underwrite the Tea Party, understand the enormous potential of solar, wind, geothermal, and conservation efforts to undermine their polluting industries. Thus, they seek to portray the removal of these special fossil fuel subsidies as a “tax increase.” Such flim-flam must be exposed.

Raising Money through Carbon Prices and Fees on Currency Transactions

Putting a price on carbon through a carbon tax or a fuel tax, could provide major revenue. The Carbon Tax Center provides details on such taxes. In addition to fundraising potential, a strong carbon price signal would decrease pollution from fossil fuel usage.

Two huge new revenue raisers could come from the financial sector and involve modest surcharges on groups that not only could readily pay them, but also richly deserve to pay them: major banks and their superrich, often tax-dodging global corporate and individual clients (James Henry and I have suggested these measures before).

The first is a version of the Tobin tax that would apply to wholesale foreign exchange transactions (not to retail customers). Given the astonishing $4 trillion per day of such transactions, a tax of less than a dime per $1,000 of transactions would yield at least $50 billion per year. A similar low marginal tax rate on all international financial transactions, including stocks, bonds, options, and derivatives, could readily collect at least twice that amount.

The second new revenue stream is an “anonymous wealth” tax: a modest 0.5% annual withholding tax on the estimated $15 to $22 trillion of liquid private financial assets — bank deposits, money-market funds, mutual funds, public securities, and precious metals — now sitting, almost entirely untaxed, in anonymous offshore accounts, trusts, and foundations.

This tax could raise between $25 billion to $50 billion per year. Such a tax is easy administratively because these “private banking” assets are heavily concentrated in the hands of a small number of leading banks and the largest recipients of “too big to fail” assistance.

Cracking Down on Tax Dodgers and Closing Loopholes

The unwillingness of Republicans to look at revenues lost as a result of tax dodging is astonishing since the $100 billion they sought to cut is the figure estimated to be lost as a result of offshore tax havens. Fortunately Senator Levin has introduced legislation (endorsed by the Tax Justice Network) to close tax loopholes.

Many objectionable loopholes could be closed and thereby yield revenue. For example, obscenely wealthy hedge fund managers pay a lower rate on their income than regular wage earners.

Rallying for a Just Cause

Now is the time to put grassroots pressure on the media, especially in the states and districts of the 12 Senators and Representatives on the debt panel. Let’s seize the offensive and move the discussion of tax code changes under the framework of responsibility.  Below are the members of the panel, in case you’re feeling motivated to start a conversation.

Democratic Senators: Patty Murray (Washington), Max Baucus (Montana), and John Kerry (Massachusetts).
Republican Senators: Jon Kyl (Arizona), Rob Portman (Ohio), and Patrick Toomey (Pennsylvania).

Democratic Representatives: James Clyburn (South Carolina), Xavier Becerra (California), and Chris Van Hollen (Maryland).
Republican Representatives: Jeb Hensarling (Texas), Dave Camp (Michigan), and Fred Upton (Michigan).

Economic and Environmental Perspective on President Reagan on the Occasion of the 100th Anniversary of His Birth

by Brent Blackwelder

Amid all the celebration of the 100th anniversary of the birth of Ronald Reagan, it is important to note that his two-term presidency kindled a philosophy that has undermined governance in the United States, run in the opposite direction from a sustainable economy, and exhibited hostility toward a clean energy basis for the global economy. This was not, however, a strategy shared broadly by the Republican Party at that time.

The bipartisanship in Congress in the 1970s, under both Republican and Democrat presidents, enabled the passage of 30 major environmental laws – laws that established the United States as the world leader in the quest for clean air and clean water.  Congress set a framework of decision making in the federal government to ensure that long-range and short-range environmental impacts were integrated into economic decision making and that alternatives to proposed governmental actions were evaluated.  Other nations looked up to America as a pace-setter on energy and the environmental policy, and they adopted a number of our new laws for their own use.

President Nixon signed the keystone law for environmental protection, the National Environmental Policy Act (NEPA), and he appointed as heads of the  Environmental Protection Agency (EPA) and the Council on Environmental Quality two highly qualified Republicans, Bill Ruckelshaus and Russell Train, who believed in the mission of these agencies.

Had the 1980 election turned out differently, the United States might have become a clean energy pioneer.  And the emerging field of ecological economics might have taken center stage as the producer of policies for a sustainable economy. With the election of President Reagan, however, these hopes were dashed.

America had experienced the oil crisis of 1973, memorable for its long gasoline lines.  As a result of that experience, citizens across the nation were moving forward with innovative measures to save energy and develop renewable energy technologies.  In this spirit, President Carter had placed solar panels on the White House roof.  America, many of us thought, was poised to lead the world in a clean energy revolution.  Reagan had other ideas.  He had the solar collectors removed from the White House and gave the green light for all-out exploitation of fossil fuels.  Reagan’s idea of environmental stewardship was clearing brush and picking up fallen branches.

When Reagan took office in 1981, he appointed anti-environment zealots James Watt as Secretary of the Interior and Ann Gorsuch as Administrator of EPA.  Ann Gorsuch carried out a Machiavellian plan to prevent much from happening at EPA as she repeatedly rearranged the office spaces at the agency.  During her 22 months as agency head, she cut the budget of the EPA by over 20%, reduced the number of cases filed against polluters, relaxed Clean Air Act regulations, and facilitated the spraying of restricted-use pesticides. She cut the total number of agency employees just as its responsibilities were doubling and hired staff from the very industries they were supposed to be regulating.  Rita Lavelle, an Assistant Administrator of EPA, was convicted on federal charges of perjury related to irregularities and the misuse of federal cleanup money at a big hazardous waste dump, the Stringfellow Acid Pits.

But the greatest damage of all came from Reagan’s repeated message to the American people that government is the problem, that government is not good but evil, that government hinders the free enterprise system.  By appointing people who didn’t really believe in government or in the constitutionality of the agencies they were running, he produced a self-fulfilling prophecy.

Reagan fully embraced the economics of Milton Friedman, the antithesis of Herman Daly’s  steady state economics.  Friedman’s economics of deregulation sought to undo the safeguards put in place following the Great Depression, and in so doing, paved the way for the global financial scandal that precipitated the crisis of 2008 and governmental bailouts of the private sector.

Looking to the future, the U.S. government is being confronted by the ironic (for a so-called conservative) legacy of George W. Bush – a massive and growing deficit.  The Tea Party freshmen legislators are fighting to hold the Republican leadership to its promise to cut $100 billion from the federal budget; however, getting there is proving elusive for them.  Coming to the rescue in this dire situation is the Green Scissors plan of Friends of the Earth and Taxpayers for Common Sense.  The Green Scissors plan shows how to obtain  $200 billion in savings between 2011 and 2015 by getting rid of government subsidies to the oil, coal, gas, and nuclear industries, and by scrapping some boondoggle water development schemes of the Army Corps of Engineers and a handful of absurd highway projects.  In contrast to the outrage over some of the proposed Republican budget cuts, the Green Scissors cuts command popular support, because they save money while preventing environmental damage at the same time.  It’s a plan that anyone, except maybe Ronald Reagan and his anti-environment appointees, would support.