There's Bankrupt And Then There's Bankrupt

It was practically the same scene at the White House today, the same anxious tableau behind a President making the claim that the bankruptcy of an American auto giant actually signals a new beginning and a road to profitability and respectability.

General Motors filed for bankruptcy on Monday morning, submitting its reorganization papers to a federal clerk in Lower Manhattan in a move that President Obama said marked “the end of an old General Motors and the beginning of a new General Motors.”The bankruptcy of a once-proud auto giant that helped to define the nation’s car culture and played a part in creating the American middle class immediately rippled across the country, part of a process that the president said would take “a painful toll on many Americans” but lead ultimately to a strong company ready to compete in the 21st century.

Then comes the fine print. General Motors apparently had $82.3 billion in assets and $172.8 billion in debts. $172.8 billion! I don't know how you rack up that much debt without it carrying over through years if not decades.

We're still talking about the closing of over a dozen plants and factories, which will ripple through the supplier market. 21,000 union workers will lose their jobs. 40% of the dealers will close. The retiree health care fund will now be partially composed of stock that right now is trading for pennies.

The government will drop another $30 billion into the car company on top of the $20 billion already dropped, winding up owning 60-70% of the company, and while officials predict a recoup of that investment within five years, I don't think anyone would stake their life on that. With a collapse in wages and wealth, and no more home equity ATM, new car sales just won't rebound without serious prodding from government (like a cash for clunkers deal).

This has been coming for a long time, of course. Michael Moore, who owes a lot of his prominence to GM, in a weird way, with his first major film Roger & Me about the shuttering of a plant in Flint, warned about this 20 years ago.

It is with sad irony that the company which invented "planned obsolescence" -- the decision to build cars that would fall apart after a few years so that the customer would then have to buy a new one -- has now made itself obsolete. It refused to build automobiles that the public wanted, cars that got great gas mileage, were as safe as they could be, and were exceedingly comfortable to drive. Oh -- and that wouldn't start falling apart after two years. GM stubbornly fought environmental and safety regulations. Its executives arrogantly ignored the "inferior" Japanese and German cars, cars which would become the gold standard for automobile buyers. And it was hell-bent on punishing its unionized workforce, lopping off thousands of workers for no good reason other than to "improve" the short-term bottom line of the corporation. Beginning in the 1980s, when GM was posting record profits, it moved countless jobs to Mexico and elsewhere, thus destroying the lives of tens of thousands of hard-working Americans. The glaring stupidity of this policy was that, when they eliminated the income of so many middle class families, who did they think was going to be able to afford to buy their cars? History will record this blunder in the same way it now writes about the French building the Maginot Line or how the Romans cluelessly poisoned their own water system with lethal lead in its pipes [...]

Let's be clear about this: The only way to save GM is to kill GM. Saving our precious industrial infrastructure, though, is another matter and must be a top priority. If we allow the shutting down and tearing down of our auto plants, we will sorely wish we still had them when we realize that those factories could have built the alternative energy systems we now desperately need. And when we realize that the best way to transport ourselves is on light rail and bullet trains and cleaner buses, how will we do this if we've allowed our industrial capacity and its skilled workforce to disappear?

Moore has some very smart suggestions, including one I've made for a while - converting the auto production lines to create clean mass transit vehicles and high speed rail cars, fighting climate change while funding a real economic recovery that is tangible and creates infrastructure. Other factories could be retooled to produce wind turbines and solar panels. He wants a massive increase in the gas tax to pay for it, but we could do just as well using the $30 billion we're about to dump into GM and profiting from the economic growth of added production and jobs.

To the extent that there's any hope from this bankruptcy, it's that we can at least start to move away from the obsessive car culture that has poisoned our planet and cannot sustain itself. Any increase in economic activity will be accompanied by a spike in oil prices - heck, we're already seeing a spike because of less bad economic news. We need to start adjusting away from the oil-based economy, and the collapse of two major car companies can provide at least an impetus.

SUPERTRAINS!

The President made some remarks about high speed rail today, and released a strategic plan for the development of high speed rail in America. Here, the President makes the case for rail:

But if we want to move from recovery to prosperity, then we have to do a little bit more. We also have to build a new foundation for our future growth. Today, our aging system of highways and byways, air routes and rail lines is hindering that growth. Our highways are clogged with traffic, costing us $80 billion a year in lost productivity and wasted fuel. Our airports are choked with increased loads. Some of you flew down here and you know what that was about. We're at the mercy of fluctuating gas prices all too often; we pump too many greenhouse gases into the air.

What we need, then, is a smart transportation system equal to the needs of the 21st century. A system that reduces travel times and increases mobility. A system that reduces congestion and boosts productivity. A system that reduces destructive emissions and creates jobs.

What we're talking about is a vision for high-speed rail in America. Imagine boarding a train in the center of a city. No racing to an airport and across a terminal, no delays, no sitting on the tarmac, no lost luggage, no taking off your shoes. (Laughter.) Imagine whisking through towns at speeds over 100 miles an hour, walking only a few steps to public transportation, and ending up just blocks from your destination. Imagine what a great project that would be to rebuild America.

Now, all of you know this is not some fanciful, pie-in-the-sky vision of the future. It is now. It is happening right now. It's been happening for decades. The problem is it's been happening elsewhere, not here.

The President clearly pushed for including HSR in the stimulus because he understands how important it is to bring some forward-looking infrastructure to America, a tangible show of what positive developments we can make with our tax dollars, a way to lower emissions, increase productivity, and improve quality of life.

It looks like there are two elements to the plan - improving existing infrastructure to increase speed on current rail lines, and building out new HSR lines throughout the country. And the President has committed $8 billion in the stimulus and an additional $1 billion per year to jump-start those efforts. If enough money can cover start-up costs, state governments and private investors would be more inclined to participate in the program, as their payoffs would potentially come quicker. Here's the map of the 10 major corridors that will be eligible for funding, along with the already-existent Northeast corridor:



I like that a key element of this in the strategic plan supports interconnected, livable communities. In a high-density area, a workable HSR system can bring new livable development in areas where it has not been, with new communities springing up around the rail line. This could happen anywhere along the 600 mile corridors seen as best for HSR.

Interconnected livable communities. Rail transport has generally been associated with “smart growth” because
it can foster higher-density development than has typically been associated with highways and airports. Rail is uniquely capable of providing both high-speed intercity transportation and its own efficient local access and egress system. For example, in the Boston region, Amtrak’s Acela serves two downtown stations connected to public transit – South Station and Back Bay – as well as a suburban station at Route 128. Yet just a few miles down the line to the west, Acela achieves speeds up to 130 miles per hour, and then 150 miles per hour.

Matthew Yglesias seems to think that upgrading the Northeast corridor would be the most promising use of the federal dollars, though as someone who's from that corridor, I can't see how upgrading what is already decent service can further these expansive goals more than bringing new corridors into play. Yes, these other lines will take time, but there is much that is already shovel-ready, at least in California, which is something that gets discounted a bit. Surveying and environmental studies employ people too, even without shovels.

We have spent a pitiful amount on rail over the last century, while Europe and Asia have built up their rail lines to the benefit of travelers, residents, businesses, and overall productivity. This is a green, clean solution to traffic and transportation that would really revolutionalize the way we get from point A to point B in America. I agree with President Obama's closing words:

"Make no little plans." That's what Daniel Burnham said in Chicago. I believe that about America: Make no little plans. So let's get to work. Thank you, everybody.

Going Electric

I'm tired of even thinking about the lunatic political leaders in this state, so I'm going to take a short break and focus on the innovators, those who have the ability to drag us out of recession and toward a new economic future.

For starters, Tesla Motors, which last year was thought to be in a fair bit of trouble, has come out of that and has begun to receive orders for their new $50,000 sedan model.

San Carlos, California-based Tesla Motors said it has received 711 reservations for its new Model S, an all-electric family sedan that carries up to seven people and can travel up to 300 miles per charge.

Tesla said reservations - which include a refundable $5,000 fee - started coming in after the car was formally unveiled on March 26. Mass production of the Model S is expected to begin in late 2011.

The company said the Model S will go from zero to 60 miles per hour in 5.6 seconds, with an electronically limited top speed of 130 mph. Three battery pack choices will offer a range of 160, 230 or 300 miles per charge. The company has not released pricing options on the higher-mileage battery packs.

The anticipated base price of the Model S is $49,900, after a federal tax credit of $7,500.

One high-profile buyer is Governor Schwarzenegger himself, who will turn in the Tesla roadster he had previously purchased in exchange for the sedan. The goal of Tesla is to bring a model into the $35,000 and under market, essentially on par with a Lexus, within the next couple years, and with the federal tax credits and complete lack of gas costs, that would be an attractive option for a pretty broad section of the upper and upper-middle class. Tesla reminds me of the Wild West early days of the auto industry, when lots of small manufacturers competed for business and the competition drove innovation.

Outside of the auto realm, the California high speed rail Authority hopes for up to $4 billion in federal dollars to jump-start production.

The American Recovery and Reinvestment Act approved by Congress in February contains $8 billion to be doled out to states for development of high-speed rail service and passenger rail service among cities.

California wants half.

"As of now, we have close to $4 billion worth of things we can show can be done within the time limit" of the act, said Mehdi Morshed, executive director of the California High-Speed Rail Authority, the agency charged with building a speedy rail line connecting Northern and Southern California through the Central Valley.

Morshed and other California boosters are trying to make the case with federal transportation officials that when it comes to high-speed rail in the United States, the Golden State is king.

"All factors considered, we are at the top," Morshed said. "We are the only ones with a real high-speed rail project. Everyone else is just improving their current (conventional) rail service."

While the $10 billion in bonds authorized by last November's Prop. 1A (the good one) have yet to be sold on the open market, federal stimulus dollars would really help get HSR off the ground. And such an investment would get some of the preliminary work out of the way and spur private investment, which would be looking toward a shorter lead time for their payoff. Our friends at the CA HSR blog, including some guy named Robert, have more. You can quibble with the strength of the SacBee article, but you cannot deny that the President has made high speed rail a priority and California's entity is clearly the furthest along, suggesting that we will be in line for a good portion of those stimulus dollars.

Despite political dysfunction, innovators will allow California to move to a new economy based on clean energy and efficiency. Hopefully the political leaders will follow, having failed to lead.

The Renewable Electric Agenda

The President clearly has an electrification strategy as part of his agenda to transform our energy policy. At the last minute he snuck $8 billion dollars for high speed rail into the stimulus package. And while he showed tough love toward the carmakers by denying them bailout money, he (and I'm assuming that he is speaking through the newly installed GM chairman) exempted the plug-in hybrid Chevy Volt from the otherwise stringent requirements of other vehicles in the fleet:

Rick Wagoner's replacement as GM CEO, Fritz Henderson, might have recently said that all of GM's car models will need to "pay the rent" (unlike the previous business model, which was to make huge margins on ginormous SUVs and trucks, and to build unprofitable small cars as an afterthought), but there was some fine print on that claim. This new rule won't apply to the GM Volt plug-in hybrid car, and that's probably a good thing.

GM needs some long-term vision. It put all its eggs into big SUVs, and now changing direction will take much effort (as is pretty obvious from recent headlines). I can't imagine how much inertia had to be fought to even get the Volt project started after the demise of the EV1.

In other words, with such a heavy lift to actually get the Volt to market, we cannot abandon this first forward-thinking effort by American car manufacturers in decades. And there's no question in my mind that Obama's behind that. In fact, I wouldn't be surprised to see whatever reconstructed GM coming out of any potential bankruptcy process have the Volt as its flagship vehicle, perhaps even with some backing (and I'd like to see the same for Tesla).

A broad shift to electric, as opposed to flex fuels and ethanol, makes lots of sense, because renewables can be rapidly scaled up to accommodate major carbon reductions in ways that alternative fuels can never reach. A new study shows that offshore wind turbines could meet current electricity demand TODAY.

Reporting from Arlington, Va. -- Wind turbines off U.S. coastlines could potentially supply more than enough electricity to meet the nation's current demand, the Interior Department reported Thursday.

Simply harnessing the wind in relatively shallow waters -- the most accessible and technically feasible sites for offshore turbines -- could produce at least 20% of the power demand for most coastal states, Interior Secretary Ken Salazar said, unveiling a report by the Minerals Management Service that details the potential for oil, gas and renewable development on the outer continental shelf.

The biggest wind potential lies off the nation's Atlantic coast, which the Interior report estimates could produce 1,000 gigawatts of electricity -- enough to meet a quarter of the national demand.

We don't have to wonder about a world without coal - we have that ability now. The only resource that needs to be tapped is political will.

Yeah, California Is Still Well And Truly Screwed

There's a very pernicious habit in California of turning away from budget issues once a crisis is averted, in a show of relief that we will at least get a small reprieve from having to deal with the contentious battles for a period of time. This false sense of security is bad enough in regular years, when the budget is cobbled together through borrowing against the future and no long-term solutions are implemented. In this dynamic economic crisis, when rosy outlooks can darken in a matter of days, it's downright foolhardy.

Greg Lucas at California's Capitol has been one of the louder voices in insisting that the budget crisis is not at all over. According to Controller John Chiang, revenue in February was $900 million dollars below estimates. Now, if you extrapolate that out, we'll be in a $10-$12 billion dollar budget hole by the end of the year just if things remain at the same level. This is of course unlikely, as the February national job numbers showed. So much of the tax increases passed in the February 19 budget solution are tied to employment - an increase in the income tax, and sales tax increases that of course rely on residents having purchasing power. In addition, these lean economic times will push more people into needing state services, like unemployment and Medi-Cal. Then there are the counter-cyclical increases and cuts that are working against what the economic recovery is attempting at the federal level.

In addition, many of the spending and taxation decisions made in the recent budget cancel out some of the benefits to California of the American Recovery and Reinvestment Act.

The federal package provides an estimated $13.1 billion in refundable income tax credits for middle to low-income Californians at the same time the state budget includes $12.2 billion in tax increases, only some of which are deductible. And only half of taxpayers deduct.

The federal bill includes a one-time $250 payment to the state’s aged, blind and disabled poor at the same time the state is reducing the maximum grant for an individual by $37 a month, $444 annually.

“California is roughly an eighth of the nation. The impact of this is sufficiently large that it could affect the prospects of recovery for the nation as a whole,” said Jean Ross, director of the California Budget Project, who has been examining how the state’s budget interacts with the federal stimulus package.

The biggest short-term issue is cash. Lucas did an interview with John Chiang where he admitted that we will still need to borrow against the anticipation of future revenue as early as April, to the probable tune of $1.5 billion. Because the budget deal was completed too late to include changes to the income tax code, those revenues will not come in until the following tax year. The sales tax will go up April 1, but that will not be enough to cover expenses.

CC: Is February a big month for obligations?

JC: No. April is the real difficult month. If we don’t get that RAN, we’re $636 million in the red. But then the bigger issue is July. When we walk into the next fiscal year we will need a massive cash infusion.

CC: How come?

JC: We always borrow at the beginning of the year, 25 out of the last 26 anyway and then in April we make up the difference. But this year we walk in with weakness into the next fiscal year. There are less tools in the tool kit. We’ll need a massive RAN or RAW (Revenue Anticipation Warrant).

Remember these last budgets borrow $16.5 billion from (state) special funds to backfill the general fund. So if we have any emergency in the state requiring aid from one of those special fund departments, the state is in trouble. Over 1,100 special funds in the state and we borrowed from over 650 of them. Part of this last budget solution gives us the ability to borrow another $2 billion more. The governor’s budget has us borrowing $11 billion from special funds over the next 18 months.

So we’re going to have to do some outside borrowing for the next fiscal year. Period.

And of course, there's very little anticipation of the worsening economic picture in the budget, meaning that we'll be in unquestionably worse shape by summer. And the cash crisis, forcing short-term borrowing, really impacts selected projects that go out into the bond market, for example infrastructure like the high speed rail project, which will basically have to shut down if there isn't a quick infusion of cash. Keep in mind that California has the worst bond rating in the country and the credit markets are still not that friendly to the state.

Another pressing matter is the determination of how much money from the federal stimulus will be available to the state to fill budget holes. There is a "trigger" in the state budget that would actually reduce some cuts - most of them the worst of the worst, particularly in health care for the needy - as well as reverse increases to the income tax, if at least $10 billion dollars in federal money hits the state budget. It's not just that money comes in, it's that it has to go toward general fund relief in order to contribute to the trigger. And Mike Genest, the Governor's finance director, has a preliminary estimate up showing that the state will come up short. This is insanity. As the California Budget Project noted on a conference call today, there will be many billions above the trigger number available to the state, the legislature need only craft the receipt of that money in such a way to hit the trigger. Otherwise, they are raising taxes and cutting services, and needlessly so. One such bill would change Medi-Cal eligibility requirements to free up as much as $11.23 billion over 27 months. That should happen ASAP. Democrats are trying to write this as a special session bill and ensure that it requires only a majority vote.

The main point here is that we remain in crisis mode with the state budget, and will continue for years upon years until we stop putting off the fundamental, structural solutions the way we constantly do. For example, the prison system remained virtually untouched during the budget crisis, despite being both crippling to the bottom line and unconstitutional in its overcrowding and inability to provide health care. We desperately need structural changes with how the state budgets, and those will only be accomplished by demolishing the conservative veto over the process and repealing the 2/3 rule.

SUPERTRAIN FTW

This is a boom time for one sector of the economy - public transportation. With gas prices stabilizing, I don't think there was an expectation that ridership would continue to increase. Furthermore, transit is used 60% of the time for work, and with so much job loss, you would expect ridership to go down. But it's expensive to maintain a car, and often cheaper just to take the bus.

Despite job losses and falling gasoline prices, record numbers of Americans rode subways, buses and commuter rail last year, boosting public transportation ridership to its highest level in 52 years, according to a survey to be released today by the American Public Transportation Association.

Advocates say the ridership figures show growing support for public transportation. They hope to use that support to push for federal funding beyond the $8.4 billion in stimulus money set aside for transit. More investment in transit not only helps the economy, advocacy groups say, but also helps the environment and fosters energy independence.

"Now, more than ever, the value of public transportation is evident, and the public has clearly demonstrated that they want and need more public transit services," said APTA President William W. Millar.

The looming problem is that tight state and municipal budgets may not be able to keep up with demand. Even successful transit operations aren't exactly money generators. Which is why federal money for operational costs, not just the $8.4 billion set aside for new capital spending, is needed.

In addition, this should convince everyone that high speed rail would be a massive success. Ridership is growing on transit even in the downturn, and by the time any HSR lines are built we should be out of the woods. It's a good time to start funding this now, when labor and material costs are relatively low. And of course, the savings in energy costs and greenhouse gas emissions would be tremendous. If Republicans are worrying about the Europeanization of America, maybe they're talking about the imclusion of actually decent rail services. They eschew convenience.

Budget Musings

The President's budget for FY2010 is online. This is a pretty remarkable leap forward, and offers the ability for geeks and wonks of all stripes to dig into the line-by-line appropriations and see what the President is offering. While Congress will almost certainly change some of these terms, a lot of what's here is promising while not totally sufficient. Bill Scher has a good overview of two of the major concerns, energy and health care.

Over the course of the 10-year budget window, President Barack Obama envisions a $634 billion fund for health care reform that would provide coverage for all Americans, paid for by higher taxes on the wealthy and various budget savings -- a dramatic gesture that confirms the deep commitment from the White House to solve the health care crisis.

But as the White House acknowledges and The Treatment's Jonathan Cohn observes, $634 billion is but a healthy down payment. More will be needed [...]

On energy and climate, I wrote yesterday about the stunning news that the White House expects to have revenue from a carbon cap and emissions trading system to combat global warming and transition to a clean energy economy.

Such a plan would raise significant revenue, particularly in the early years of the plan while the carbon cap would be looser (it would gradually tighten over time). However, the White House understandably wants to return the vast majority of revenue from polluters to consumers, to reduce the impact of short-term price spikes and refute charges that the plan amounts to a tax hike.

But that means the White House only expects to use $15 billion to invest in clean energy. The Apollo Alliance concludes we need to invest $50 billion a year for 10 years to transition to a clean energy economy. Again, a good down payment, but not all we need.

The other big funding tranche, education, is getting a pretty good deal, more than even a lot of optimistic education advocates expected. It looks like Obama will reauthorize No Child Left Behind but with the actual funding to make it work. There is a definite effort to split the difference between reformers and teacher's unions on things like charter schools, where I think he can get significant Republican buy-in. And this is great:

Recognizing that the push for college access for low-income and minority students must be complemented by a new focus on college completion, the administration is proposing a $2.5 billion Access and Completion Incentive Fund, "to support innovative State efforts to help low-income students succeed and complete their college education."

The administration wants to originate all student loans in the direct lending program, cutting out wasteful middle-men. This is a very good thing, as it will save the federal government billions of dollars that can be funneled back to students.

There is just no need for the government to invent a secondary student-loan market, adding an unnecessary layer of inefficiency. Good thinking.

There's also a dedicated state grant program for high speed rail of about a billion dollars a year. Again, great, but somewhat insufficient. And there is a provision to speed the development of generic drugs into the market and tear down attempts by drugmakers to block them, which would save the government and consumers billions.

Still, there are concerns. First of all, while most of the fuzzy math is gone, the budget depends on pretty robust growth in 2011 and 2012. Obviously Obama feels that the results of his policies will return us to better times, and that may be true, but he's using pretty optimistic numbers. The other issue is the military budget. Again, Bill Scher:

Congressman Barney Frank argues we can and should cut our $670 billion military budget by 25 percent. That includes spending for our wars in Iraq and Afghanistan.

Disregarding the President's budgeting for Iraq and Afghanistan (because I don't believe we can discern too much on his strategy from the budget numbers), Obama's basic defense budget is scheduled for a slight increase in 2009: from $513 billion to $534 billion.

The WSJ reports that there is likely to be major weapons reductions in the future, as a result of putting the wars in Iraq and Afghanistan back on budget.

President Barack Obama has talked about the need to prune some high-end Pentagon acquisitions programs and withdraw most U.S. combat troops from Iraq by mid-2010, both of which should result in significant defense-spending reductions. But the president plans to direct additional financial and military resources into Afghanistan, so much of the savings may be offset by new spending on the troubled war effort there.

That could force the military to cut back its spending on its most-advanced weapons, and the Pentagon plans to overhaul its weapons-purchasing system.

I'll have more as I keep reading.

...One thing I'm noticing, reading over the President's budget, is that it is a starkly ideological document. Almost shockingly so. For example, read pages 5-17, describing what got us into this mess. And many of the backpedal steps that Obama made on domestic issues during the campaign are not in here at all. Nothing on nuclear power in the energy section. Nothing on offshore drilling - in fact, the only thing is an excise tax starting in 2011 to stop oil companies from getting excessive royalty relief. I'm not sure if all the numbers line up, but rhetorically it's really on point.

Oh My Jindal

These responses to State of the Unions are very, very hard to make work. The President talks from a rostrum in front of a live and raucous audience, basking in the glory of every politician in Washington, and then out trots the responder, in a state house or some crappy looking set, in a canned environment, with no drama at all. It's like watching The Dark Knight and downshifting into Antiques Roadshow. Democrat after Democrat tried them and failed miserably (Kathleen Sebelius, Harry Reid, Gary Locke, Tim Kaine), and Jim Webb's success is a testament to his oratorical skills.

So that's the preamble. All that said, Bobby Jindal just ended his career for national office tonight. And not just because of the necessary downshift in rhetoric - although yes, the Kenneth from 30 Rock jokes are completely accurate - but because of the terrible, terrible content. I agree with Ezra Klein:

On MSNBC, Matthews said that "the only space Obama has left open in America is on the far-right." And Jindal's speech is proving it: It's like a time capsule. "Dangerous enemies still seek our destruction." "The strength of America is not found in our government." "Democratic leaders in Washington place their hope in the federal government. We place our hope in you."

Beyond that, it's a speech that Boehner could have given in 2007 and that Frist could have given in 2005 and that Lott could have given in 1998 and that Gingrich could have given in 1993. Jindal made a mistake accepting the GOP's invitation to give this response. Yesterday, he seemed like a different kind of Republican. Today, he doesn't.

It's almost too easy for Obama to compete against these guys. For example, did Jindal really invoke Hurricane Katrina as an example of governmental mismanagement? I know we've collectively as Americans have decided to forget George Bush, but does Jindal really not think we have a long-term memory? Worse, the second half of his Katrina story - yes, a Republican REPEATEDLY brought up Katrina, is actually a brazen lie:

Let me tell you a story.

During Katrina, I visited Sheriff Harry Lee, a Democrat and a good friend of mine. When I walked into his makeshift office I’d never seen him so angry. He was yelling into the phone: ‘Well, I’m the Sheriff and if you don’t like it you can come and arrest me!’ I asked him: ‘Sheriff, what’s got you so mad?’ He told me that he had put out a call for volunteers to come with their boats to rescue people who were trapped on their rooftops by the floodwaters. The boats were all lined up ready to go - when some bureaucrat showed up and told them they couldn’t go out on the water unless they had proof of insurance and registration. I told him, ‘Sheriff, that’s ridiculous.’ And before I knew it, he was yelling into the phone: ‘Congressman Jindal is here, and he says you can come and arrest him too!’ Harry just told the boaters to ignore the bureaucrats and start rescuing people.

There is a lesson in this experience: The strength of America is not found in our government. It is found in the compassionate hearts and enterprising spirit of our citizens.

Read the whole story at the link. He completely made this up. He also lied about the mythical "Las Vegas to Disneyland" HSR line. He lied about how the public "has never even seen" the stimulus bill, when it's up on a public website. He lied about how Democrats want to "dismantle our defenses." He criticized "something called volcano monitoring," which consists of, you know, monitoring volcanoes, which is a simple action to try to prevent natural disasters. And he tried to cast Obama as a pessimist moments after he gave one of the most optimistic, opportunity-in-chaos speeches I've seen in at least 20 years. This guy is a Rhodes scholar and by all accounts a policy wonk. To appeal to conservatives, he has determined that his only chance is to sound like a lying, blithering idiot.

In short, he offered the same tired conservative tropes which were almost unanimously rejected at the polls last November and have been even more rejected in the weeks and months since. And key conservatives know this. David Brooks read Jindal the riot act tonight.

JIM LEHRER: Now that, of course, was Gov. Bobby Jindal, the governor of Louisiana, making the Republican response. David, how well do you think he did?

DAVID BROOKS: Uh, not so well. You know, I think Bobby Jindal is a very promising politician, and I oppose the stimulus because I thought it was poorly drafted. But to come up at this moment in history with a stale "government is the problem," "we can't trust the federal government" - it's just a disaster for the Republican Party. The country is in a panic right now. They may not like the way the Democrats have passed the stimulus bill, but that idea that we're just gonna - that government is going to have no role, the federal government has no role in this, that - In a moment when only the federal government is actually big enough to do stuff, to just ignore all that and just say "government is the problem, corruption, earmarks, wasteful spending," it's just a form of nihilism. It's just not where the country is, it's not where the future of the country is. There's an intra-Republican debate. Some people say the Republican Party lost its way because they got too moderate. Some people say they got too weird or too conservative. He thinks they got too moderate, and so he's making that case. I think it's insane, and I just think it's a disaster for the party. I just think it's unfortunate right now.

Put it this way - when Fox News is slamming your performance, and you're a Republican, you've laid an egg.

...question: did the Washington Post go ahead and remove this Michael Gerson mash note to Jindal from their morning edition, out of embarrassment?

Issa Schooled For HSR Lies

Darrell Issa has had an interesting position in the 111th Congress as one of the chief yarn-spinners on the Republican side. I guess it's because he's immune to any charge of hypocrisy. First he demanded White House compliance with necessary Presidential Records Act laws regarding email, after playing down the Bush Administration's major failings in this regard. Yesterday, he appeared on MSNBC with David Shuster to parrot the latest RNC talking point, that the stimulus earmarked construction of an LA-to-Las Vegas high speed rail train. Now, I'm not sure what's so horrible about this - LA to Vegas is a busy corridor, especially on the weekends, and the route essentially goes through desert so construction will be disruptive to almost no communities. But the fact is that it's completely untrue - LA to Vegas is not on the current DOT high speed rail lists and no money expressly goes toward construction of that corridor. A fact that David Shuster inconveniently pointed out. I particularly enjoy the smile after he knows he's been caught.



This zombie lie isn't going away, but at least some reporters aren't taking the bait.

The Coming SUPERTRAIN Domination

High speed rail got a big boost in the final stimulus bill.

And while many initiatives were scaled back as Congress and the White House sought to cut the overall cost, there were some surprise increases, including a quadrupling of money for high-speed rail projects to $8 billion.

The White House pushed for the added money in the final rapid-fire negotiations, seeing it as a tangible way to create jobs and benefit different parts of the country. It also added a futuristic element to legislation that has been criticized as lacking forward vision.

That could be just the author trying to wrap its head around it. In fact, high speed rail will dramatically reduce greenhouse gas emissions, create thousands of jobs and offer a tangible benefit to the American public, finally bringing our transit infrastructure in line with Europe and Asia. While the California HSR blog is perturbed that this boost appeared to come from funding for existing mass transit and intercity rail systems, which is distressing, hopefully the normal budget process can fill in the gaps on public transit. You would never see high speed rail get this kind of money from a regular appropriation. This will restart some projects that needed to be chilled because of a lack of private investment.

Nevertheless, the wingnut brigade is going apeshit over an off-handed comment attributed to Harry Reid:

The madness continues on the right-wing’s crusade against a mythical high-speed rail to Las Vegas project that Harry Reid is alleged to have snuck into the stimulus bill. “Tell me how spending $8 billion,” asked House Minority Leader John Boehner (R-OH) on the floor, “in this bill to have a high-speed rail line between Los Angeles and Las Vegas is going to help the construction worker in my district.”

For one thing, if we stuck by the standard that members of congress should only agree to fund infrastructure projects located in their own districts, then obviously we’d have no infrastructure at all. This is a debate that I thought we settled in the days of Henry Clay. But beyond that there is no such provision in the bill.

There are millions of people who would gladly use that Vegas line - I've been in that traffic - and it's a reasonable project, but it is not currently on the list of federally designated HSR corridors.



Hilariously, one of the big areas for HSR in that map is Ohio, despite the fact that Ohio's John Boehner is a ringleader in slamming the made-up LA-to-Vegas line. High speed rail can be an economic engine for the Midwest, spurring growth and productivity, but these Republicans don't even know a good thing when it hits them in the face.

The Rise Of Big Rail

Elena Schor reports that mass transit got lowballed in the Senate markup of the stimulus as well.

The House's stimulus bill, which is slated for a final vote on Wednesday, included only $10 billion for rail and other public transportation projects, compared with $30 billion for roads. (According to House transportation committee chairman Jim Oberstar (D-MN), the decision was made to leave enough room for tax cuts.)

But what about the Senate, where the second- and third-tanked leaders are blue-state mass-transit boosters Dick Durbin (D-IL) and Chuck Schumer (D-NY)? As it turns out, the upper chamber of Congress is doing even worse.

The Senate Appropriations Committee's draft stimulus includes just $9.5 billion for mass transit projects -- "very frustrating," in the words of Adam Terando, who's done great work on this issue.

This is really frustrating. While I don't think progress on mass transit and rail ends with the stimulus, clearly the outer edges of those tax cuts could be scaled back to accommodate for spending which would simultaneously create jobs, improve quality of life and reduce greenhouse gas emissions. As Atrios rightly notes, these spending priorities often come down to who yells more in the halls of Congress, and passenger rail doesn't have an effective set of town criers, otherwise known as lobbyists. That may change:

The newly minted OneRail coalition markets itself as a first time assembly of disparate groups representing commuter rail lines, freight rail lines, public transportation and the environment.

The goal, according to Anne Canby, a spokeswoman for the group, is to “make sure people are aware of the benefits of rail.”

Trains “are not always part of the public dialogue,” Canby, a former Delaware transportation secretary, said.

The group has yet to settle on specific policy goals other than the shared belief that more federal dollars should be spent on things like inner city rail lines that encourage people to get out of their cars or to pay for construction to ease freight choke points around cities.

Several trade and issue advocacy groups are part of OneRail, including the Natural Resources Defense Council, Amtrak, the American Short Line & Regional Railroad Association, the Association of American Railroads, and the Surface Transportation Policy Partnership.

Notice the inclusion of the NRDC. We've seen blue-green alliances in California pushing through the Clean Trucks Program at the Port of Los Angeles. This kind of alliance has the potential to be very powerful, and I'm glad to see both sides stepping out of their issue silos to work together. It may be too late for the stimulus, but there will be other fights down the road.

Robert Cruickshank has more on the stimulus package fight in the House.

Shovel-Ready Isn't Enough

In the transition report on job creation and the economic recovery package, Christina Romer and Jared Bernstein admit that tax cuts are ineffective relative to public spending relative to jobs, but that there aren't enough "shovel-ready" projects out there to provide immediate stimulus, so tax cuts are a good alternative because they can be delivered quickly and efficiently. I'm not sure that's entirely true, and it's based upon what you consider "shovel-ready." Urban planning on infrastructure still requires jobs, after all. And there is an urgent need to think big and invest in industries which will have a long-term impact on productivity and future job creation, particularly by reviving America's manufacturing base. This John Judis opinion piece is really good.

One area that is ripe for such investment--and that is not, from what I have seen, a declared priority of the Obama administration--is high-speed rail. Amtrak's Acela trains--the closest thing we have to one--average less than 100 mph between Washington D.C. and Boston, whereas trains in Western Europe and Japan go more than twice as fast. Many of them also run on electricity. They would be the most energy-efficient and quickest means of getting between places like Boston and New York, or Los Angeles and San Francisco. But they would require a massive investment. For instance, installing high-speed rail in the Northeast corridor could cost about $32 billion, while California's high-speed rail system would require up to $40 billion. A system that would address the other areas of the country could easily raise the cost to the hundreds of billions. The House transportation and infrastructure committee has currently proposed $5 billion in stimulus funds for intercity rail--not even a down payment on what it would cost to convert the U.S. to high-speed rail.

Investing in high-speed rails would be very expensive, but unlike tax cuts--the benefits of which can be siphoned off in the purchase of imported goods--the money spent would go directly to reviving American industry and improving the country's trade balance. That doesn't just mean jobs creating dedicated tracks or new rail stations: Though the U.S. abandoned train manufacturing decades ago to the French, Germans, Canadians, and Japanese, this kind of production could be undertaken by our ailing auto companies or aircraft companies--if the federal and state governments were to place orders. And building trains that would run on electricity would be a paradigmatic example of the "green jobs" that Obama often touts.

Though a massive investment in high-speed rail brings its own set of complications, it's worth keeping these kind of examples in mind when one hears from the Obama people that they can't find sufficient infrastructure projects to fund. The question I would pose is this: Are we not at some point going to have to go beyond repairing roads and bridges in our conception of public spending and public works, and contemplate the kind of ambitious industrial expenditures that the country made on war production in 1941?

It's simply not the case that high-speed rail doesn't require quick up-front spending - the California HSR system approved by voters in November is struggling to survive because they can't secure any funding from the bond markets. That money funds environmental impact studies, surveying, assessments from architects and planners - it may not be bricks and mortar, but that would create non-trivial amount of white-collar jobs.

The problem here is well-described by Ezra Klein. There are "shovel-ready" projects that relate to infrastructure, and there are long-term infrastructure projects that cannot begin construction in a year. But the Obama stimulus will only satisfy those short-term infrastructure needs. This sustains the economy of sprawl, and does not serve our long-term infrastructure needs.

That would all be fine if forward-thinking infrastructure investment were a regular priority of the government. But it's not. And though deficits don't matter at this moment in time, in three or four years, after we've finished with all this spending, they're likely to matter quite a lot. Spending new money will become harder, not easier. We may end up with an investment program that, particularly on transportation, entrenched a lot of our bad habits, did fairly little to modernize, and made it harder to fund infrastructure investment qua infrastructure investment down the line.

It's a serious problem, and I hope some money is carved out in the recovery package as well as the next highway bill for longer-term investment. Otherwise, we will fail to create a culture of sustainability and continue to fall behind the rest of the world, not to mention eliminating a key area of green jobs and manufacturing in the future.

Ride The Ride

When gas prices shot up over $4 a gallon this summer, people turned to mass transit out of necessity. The conventional wisdom was that the plummeting of prices over the last few months would lead to a return to the same old habits. That may be in the future, but the latest numbers show that no, people actually LIKED riding the train or the bus or the subway, and they've kept at it.

Americans rode subways, buses and commuter railroads in record numbers in the third quarter of this year, even as gas prices dropped and unemployment rose. The 6.5 percent jump in transit ridership over the same period last year marks the largest quarterly increase in public transportation ridership in 25 years, according to a survey to be released today by the American Public Transportation Association.

Ridership growth began hitting record levels last year and continued through the first and second quarters of this year, spurred in large part by gasoline prices that topped $4 a gallon in July, the industry group said. But the third-quarter increase is notable, it said, because gas prices began falling and unemployment rose, trends that tend to drive ridership down.

Part of this is the increased urbanization of America, as more and more people move into metro areas. Part of it is the increased recognition of carbon footprints and reducing greenhouse gas emissions. But a big part of it is that riding mass transit can improve quality of life. I took the bus quite a bit this summer, and I read more, I walked more to the bus station, and I generally felt a bit more productive. My workplace has changed and is a little further off the bus line, but I took it just last Friday.

The combination of increased demand for transit and the need for government to be the spender of last resort creates a unique moment, if done right, to really make major investments that would change the lifestyle of Americans in positive ways. So many suburbs are built on streetcar lines that have long since been dismantled, it would be easy, in theory, to resuscitate them. And we can build the light rail and high-speed rail corridors that have made Europe much easier to get around than this country. Perversely, however, state and local governments are shedding so much revenue right now that they may face cutting back on transportation services. It is essential that the Obama Administration makes a particular focus on backstopping state transit systems with budget problems. It's a tangible benefit to communities to bolster the transportation sector. And people want it.

Prop Watch

Welcome to a probably not-so-regular feature, offering the latest news on the ballot propositions. The Calitics Editorial Board will be out with their endorsements on these initiatives sometime next week.

• Prop. 1A: A lot of good stuff on this race at Robert Cruickshank's California High Speed Rail blog. For instance, Arnold has come forward with his support:

There is far more economic opportunity in fighting global warming than economic risk....We shouldn't let the budget crisis hold back good things for the future. 20 years from now you can't look back and say "well they had a budget crisis so we didn't do it." Just because we had a problem with the budget does not mean that people should vote "no" on high speed rail. Our rail system in America is so old, we're driving the same speed as 100 years ago, the same system as 100 years ago. We should modernize, we should do what other countries do...We should start in this state, we should show leadership.

Absolutely, especially when you consider that initiatives which reduce emissions routinely save money and improve quality of life. A recent study showed that HSR would be a tremendous economic benefit to the Central Valley, with $3 billion in direct benefits and the creation of over 40,000 new construction jobs. You can add that to the reduction of billions of pounds of CO2 annually, which would be significant in that region at a time where interest groups are successfully suing the city of Fresno for its failure to curb pollution and protect the environment.

In other news, The LA Times has come out in favor, and check out this neat little graphic anticipating the train route.

• Prop. 2: You can see it by clicking on the ad on the side, but, you know, Piggy Wonder deserves some main-page love. Joe Trippi is apparently involved in the Prop. 2 campaign, which would help stop animal cruelty; I got an email from him promoting this video.

• Prop. 5: The LA Times has a series of profiles on all the propositions, and here's their edition on Prop. 5, which would finally increase treatment for nonviolent offenders like drug users instead of warehousing them at our overstuffed prisons. Opponents are smearing this by saying its true intent is to legalize drugs, but the failed Drug War is the great unmentionable sinkhole in state and national budgets, and a smart policy emphasizing rehabilitation is desperately needed, especially in California. The No on 5 people must have better spinmeisters, however, as most of the newspapers in the state have come out against the measure. Right, because the policymakers have done such a stellar job in sentencing law, we should just leave it to them.

• Prop. 8: An update on those million yard signs that were "in route" from China to the Yes on 8 campaign: they're still not here.

It seems that the signs, some of them outsourced overseas, didn't all arrive in time for the September event. And many still haven't reached supporters of the measure that would amend the state Constitution to ban gay marriage.

"It takes longer to get a million than we thought," said Sonja Eddings Brown, deputy communications director for the Protect Marriage coalition [...]

Brown tried to spin the production glitch as a positive thing for the campaign -- a sign, so to speak, of the overwhelming demand for lawn signs by voters who wanted to participate in "the most unprecedented and largest grass-roots effort ever attempted in California."

Oh that's just a FAIL.

Meanwhile, when the most reactionary editorial board in the state, the Orange County Register, comes out against your proposition, you know you're having a tough time selling it. As for the right-wing boycott of Google for opposing Prop. 8, the website orchestrating it advises its supporters to follow the fate of the proposition - on Google News.

I think I'm going to miss this initiative, it's been hilarious so far.

Rail Now!

Good news for California high-speed rail in the latest Field Poll. Though very few people know about Prop. 1 at this stage, it gets the support of 56% of the voters, with only 30% opposed. The thing is that I doubt it will EVER get a lot of coverage, between the more high-profile initiatives (gay marriage, redistricting) and the Presidential race. So between the favorable response to the ballot language and Governor Schwarzenegger's support, I can see a path to getting this bond passed. And while I'm not always partial to bonds, getting high-speed rail up and running would improve the environment, quality of life, traffic congestion, air quality, and business productivity, so I'm right there. My colleague Robert Cruickshank runs a great High Speed Rail blog, so check there for the latest updates.

...Just to put all California initiative information in the same place, this is great news for Prop. 8, the gay marriage ban. 42% yes/51% no at this stage is deadly. I'm very excited by this.

The Low-CARB Diet

Building on Bob's report about the San Francisco Clean Energy Act, the California Air Resources Board has released its draft blueprint designed to fall in line with the mandate of AB 32, the Global Warming Solutions Act, by cutting emissions 30% by 2020.

The 75+ page plan includes a range of policy recommendations. Chief among them is increasing the state's renewable electricity standard. The plan also contains provisions for a regional cap-and-trade program that could work in harmony with other more specific policies to reduce pollution economywide. The plan also says CARB will consider a vehicle "feebate" program that would provide incentives to consumers to buy cleaner cars.

In addition, the proposal includes plans to reduce emissions from heavy-duty trucks with hybrid engine technology and better fuel economy. Like many of CARB's proposals, the heavy-duty truck provisions would improve public health by also reducing smog-forming pollution. The plan also advocates for a high-speed train system in California.

Jim Downing at the SacBee has more here.

There's no question that California needs to do what is within its control to act immediately. Climate change is already imperiling two-thirds of the state's unique plants, and Los Angeles is trying dubious ideas like seeding the clouds with silver iodide particles to force it to rain. The only sustainable solution is to demand mandatory emissions caps to fight a runaway climate.

Some of their ideas are top-notch. Robert in Monterey, as his High Speed Rail blog, notes that CARB endorsed HSR to reach their targets:

Transportation is one of the capped sectors of the economy - meaning we can no longer just fly around or drive around endlessly; there will be increasing limits and at the same time rising costs as the cost of the credit purchase is passed on to consumers. To achieve the required lower emissions, and to provide sustainable and cleaner forms of transportation CARB endorsed high speed rail as one of its recommendations.

Their explanation was not particularly detailed - basically an endorsement of the concept of HSR and a projection that it would save around 1 million metric tons of CO2 in 2020. That's around 22 billion pounds per year, close to the figure of 17.6 billion pounds that Quentin Kopp has been quoting.

I also really like the feebate idea that is part of the plan:

CARB also identified a feebate program as one avenue for reducing vehicle pollution. Such a program would establish one-time rebates and surcharges on new passenger cars and light trucks based on the amount of global warming pollution they emit. This program would deliver benefits on its own, but also would complement California's tailpipe standards if both were implemented. According to a University of Michigan study, implementing a clean car discount program would deliver an additional 21 percent reduction in global warming pollution beyond the tailpipe standards.

The worry, of course, is that by the time the lobbyists and special interests get through with these targets, they'll blow loopholes in them so wide that their impact will be meaningless. But since the hard target of a 30 percent reduction is state law, I think there will be more backbone to actually reach those targets. Builders and design specialists have already seen this coming and are producing innovative solutions to reduce emissions and save money. At its best, carbon reduction is both efficient and cleaner, so really nobody loses except giant polluters. They're going to use the state's budget problems to raise all kinds of fears about cost, but they're really separate issues. Plus, as the Bee article notes:

The air board's mission may already have been made easier by changes in the economy. Today's high energy prices are driving many of the sorts of emissions-cutting changes called for under the plan.

Sales of fuel-efficient cars are up, transit ridership is breaking records and businesses are investing in ways to save fuel and electricity.

Many have raised concerns about the cap and trade system, but CARB chair Mary Nichols is clearly invested in it, having presided over the most successful cap and trade system in history while in the Clinton Administration, the one that virtually eliminated acid rain. It may be insufficient to have a few states in the West implement a trading system, but some industries, like energy production, aren't likely to up and leave California - the market of 38 million people is too lucrative. Anyway this gives momentum and support for a national system.

What I would like to see is a progressive cap and trade setup, which recognizes that higher energy costs disproportionately impact the poor, and seeks to balance that. This is easier said than done:

Two things are worth noting. First, utility costs are a bigger problem than gasoline. On a percentage basis, the poor pay 7x as much for utilities as the well off, while they pay only 4x as much for gasoline. What's more, unlike gasoline, there are seldom any reasonable alternatives for utility expenditures.

Second, there are always tradeoffs. Using the money from permit auctions (or carbon taxes) to rebate other taxes is indeed progressive if the rebate is fairly flat, but only if you pay taxes in the first place — which many of the poor don't. For the very poorest, then, a tax rebate scheme would still be regressive: you'd essentially be hitting them with a big new energy tax without any offset at all. Conversely, a more targeted approach, like expanding funding for the Low Income Home Energy Assistance Program, helps the poor more directly but removes the incentive to use less energy.

The answer, then, is almost certainly a bit of this and a bit of that. No single solution targets assistance to the poor ideally, but a basket of solutions (payroll tax rebates, energy assistance, more funding for mass transit, etc.) can do a pretty good job. It won't be perfect, but a well-designed program can make a cap-and-trade program pretty progressive.

Hopefully this will guide the CARB as they seek to work through the policy grinder and implement their reductions. Right now the board is considering auctioning off few permits and giving away the rest, gradually eliminating the giveaway over time. This kind of hair-splitting is wrong, and I hope they come to understand that.

McCain vs. Obama on Energy and Transportation

The Jeddah conference began and ended with nary a word of hope for anyone suffering through high gas prices, and it's clear that they will continue in the near term. In the medium term, the Republican robots calling for more domestic drilling are trying to play the country for suckers. Everyone knows (and I'm including the Republican Speaker of the Florida House on this list) that snapping your fingers and yelling "Drill!" won't immediately alter the price of oil. Moreover, Big Oil already has millions of acres of leased fields that they refuse to bring online, and industry analysts have finally figured out this shell game. Plus, talk of "environmentally safe" drilling is disingenuous, especially considering that the Interior Department - George Bush's Interior Department - is right now suing a company for damaging the environment on a field in Wyoming.

Now, John McCain did something right today. He advocated for an X-Prize type of solution: $300 million dollars for any company that can build a superior car battery. In general I think these are well-spent endeavors; the company that receives the prize can plow that money into assembly and distribution, and they have an incentive to deliver the goods quickly. He also called for bigger fines on any carmaker who violates current fuel efficiency laws, and a large tax credits for purchasers of zero-emission vehicles.

Of course, this is completely askew with his call for more offshore drilling, and maybe that's because he's taken more money from Big Oil than any other Presidential candidate. But it's also because McCain has become the Sybil of this Presidential election, with a sop to moderates one day and the hard right the next. Of course, on the important issues, he's going to stay with the Bush-Cheney agenda.

But what I really notice about McCain's proposals, even the decent ones, is that they exist on a narrow field where the car-based economy remains prominent. All of his ideas have to do with making cars more efficient, stretching the gallon of gas out of existing structures of transportation using technological advancement and market forces. That's maybe a part of the solution, but if we're going to reduce the cost of transportation and mitigate global warming, we have to find different ways to commute. And those solutions are readily available; in fact, people are already taking advantage of them:

Record prices for gasoline and jet fuel should be good news for Amtrak, as travelers look for alternatives to cut the cost of driving and flying.

And they are good news, up to a point.

Amtrak set records in May, both for the number of passengers it carried and for ticket revenues — all the more remarkable because May is not usually a strong travel month.

But the railroad, and its suppliers, have shrunk so much, largely because of financial constraints, that they would have difficulty growing quickly to meet the demand.

Many of the long-distance trains are already sold out for some days this summer. Want to take Amtrak’s daily Crescent train from New York to New Orleans? It is sold out on July 5, 6, 7 and 8. Seattle to Vancouver, British Columbia, on July 5? The train is sold out, but Amtrak will sell you a bus ticket.

“We’re starting to bump up against our own capacity constraints,” said R. Clifford Black, a spokesman for Amtrak.

I rode the bus to work twice last week. There's a public meeting about light rail coming into my town this week. People are ready for mass transit solutions that improve stress, quality of life, their personal budgets and environmental damage. The problem is the investment in rail and bus and subway lines is just not there. It won't surprise you to know that John McCain is a longtime opponent of Amtrak.

Barack Obama, however, has lived in a city, has served constituents who mostly commute by train and bus, and understands the external benefits to mass transit. His speech at the US Conference of Mayors stressed all kinds of innovative transit solutions.

Let’s invest that money in a world-class transit system. Let’s re-commit federal dollars to strengthen mass transit and reform our tax code to give folks a reason to take the bus instead of driving to work – because investing in mass transit helps make metro areas more livable and can help our regional economies grow. And while we’re at it, we’ll partner with our mayors to invest in green energy technology and ensure that your buses and buildings are energy efficient. And we’ll also invest in our ports, roads, and high-speed rails – because I don’t want to see the fastest train in the world built halfway around the world in Shanghai, I want to see it built right here in the United States of America.

The entire heading of the speech was a "Metropolitan Strategy" for America. I don't think there's been one before, and it's important that the connections between cities and their outlying metropolitan areas are made. By allowing those who live outside the city center a transportation option outside their cars, we can reduce oil dependence, clean the air and water, mitigate global warming and most importantly improve people's outlook.

Now, Obama isn't perfect on this front. As Ezra Klein noted he mentioned filling the Federal Highway Fund before investing in intercity rail, and his position on ethanol is dispiriting, although inevitable given that winning Iowa was the difference between his winning or losing the nomination. But clearly, the fact that he's at least THINKING about high-speed rail and metro development and mass transit puts him light years ahead of McCain. Then there's the answer to this question.

What do you see as the gravest long-term threat to the U.S. economy?

Obama: If we don't get a handle on our energy policy, it is possible that the kinds of trends we've seen over the last year will just continue. Demand is clearly outstripping supply. It's not a problem we can drill our way out of. It can be a drag on our economy for a very long time unless we take steps to innovate and invest in the research and development that's required to find alternative fuels. I think it's very important for the federal government to have a role in that process.

McCain: Well, I would think that the absolute gravest threat is the struggle that we're in against Islamic extremism, which can affect, if they prevail, our very existence. Another successful attack on the United States of America could have devastating consequences.

McCain is a caricature about anything outside of his military comfort zone. Obama understands how energy issues threaten our long-term survival, and is going to be aggressive in coming up with alternatives.

Obama And The Energy Future

Friends of the Earth, the newest and most forward-thinking environmental group, endorsed Barack Obama today, mainly because of his stance on the gas tax suspension.

“We endorse Senator Obama because we believe he is the best candidate for the environment,” said Friends of the Earth Action President Brent Blackwelder. “The ‘gas tax holiday’ debate is a defining moment in the presidential race. The two other candidates responded with sham solutions that won’t ease pain at the pump, but Senator Obama refused to play that typical Washington game. Instead, Obama called for real solutions that would make transportation more affordable and curb global warming. He showed the courage and candor we expect from a president.”

Experts agree that gas prices are likely to decline only slightly under a Clinton-McCain “gas tax holiday”—if they decline all. Instead of signing onto this gimmick, Obama has called for long-term solutions that would limit oil consumption by requiring cars to be more fuel efficient and expanding transportation options including passenger rail.

So Hillary Clinton is not only content to call for pointless proposals that would potentially eliminate hundreds of thousands of highway construction jobs and do next to nothing for working people, she's happy to lose all of her allies in the environmental movement over it. Obama is right - this is a function of status quo political thinking:

He used the tax holiday — an idea that Sen. John McCain, the presumptive Republican nominee, also supports — to illustrate the Democratic Party's need to set itself apart. "When we're offering the same things that John McCain is offering on the cheap, that means we are not presenting a truthful response to the challenges we face in America," Obama said. "We can do better than that this time."

Now, Clinton's team is countering with the fact that Obama voted to suspend the gas tax in Illinois a few years ago. Right, and he LEARNED from it that the oil companies do not pass that relief on to the customer. He also knows that George Bush isn't going to impose any tax burden on oil companies.

"At best, this is a plan that would save you pennies a day for the summer months - that is, unless gas prices are raised to fill in the gap, which is just what happened in Illinois when we tried this a few years ago," Obama said.

"Meanwhile, unless you can magically impose a windfall-profits tax on oil companies overnight to pay for the holiday, it could imperil federal highway funding and cost Indiana more than 6,000 jobs," Obama said.

In the short-term gas prices are going to be high; it's a fact of life in a country where the fuel efficiency is too low and the driving distance is too long. There are plenty of things you can do in the long-term to reduce people's expenses, help save the planet from the ravages of global warming, kickstart the economy and enhance quality of life. It's steps like investing in high-speed rail and mass transit, improving the fuel economy of the national fleet of cars (which was in last year's energy bill, much to the dismay of lawmakers who like their SUVs), eliminating coal-burning power plants (good for Kathleen Sebelius) and investing in wind, solar and biomass, and eventually spurring those investments with money from a tax on carbon that will actually be an economic engine:

If there's a paradise for environmentalists, this Nordic nation of 9.2 million people must be it. In 2007 Sweden topped the list of countries that did the most to save the planet - for the second year running - according to German environmental group, Germanwatch. Between 1990 and 2006 Sweden cut its carbon emissions by 9%, largely exceeding the target set by the Kyoto Protocol, while enjoying economic growth of 44% in fixed prices [...]

The main reason for this success, say experts, is the introduction of a carbon tax in 1991. Swedes today pay an extra 2.34 kronor (20p) per litre when they fill the tank (although many key industries receive tax relief or are exempted). "Our carbon emissions would have been 20% higher without the carbon tax," says the Swedish environment minister, Andreas Carlgren.

"It was the one major reason that steered society towards climate-friendly solutions," reckons Lindberg. "It made polluting more expensive and focused people on finding energy-efficient solutions."

"It increased the use of bioenergy," concurs Professor Thomas B Johansson from the University of Lund, a former director of energy and climate at the UN Development Programme. "It had a major impact in particular on heating. Every city in Sweden uses district heating [where steam and hot water are piped to a building in a particular area]. Before, coal or oil were used for district heating. Now biomass is used, usually waste from forests and forest industries." [...]

Today, environmental measures are common throughout the country. Take Linköping, Sweden's fifth biggest city, which is running its fleet of buses and rubbish lorries, a train line and some private taxis on biogas, from methane produced from the entrails of slaughtered cows.

Similarly, Stockholm's central station is planning to harness the body warmth of 250,000 daily commuters to produce heating for a nearby office block. The body heat would warm up water that would in turn be pumped through pipes over to a new office block. And King Carl Gustaf XVI last month had all the lights at royal castles turned off for an hour to back an energy efficiency campaign.

While our gas tax pays for highway construction, it's structured essentially the same way as the carbon tax. This is what Hillary Clinton wants to eliminate for the sake of a few votes in Indiana.

I believe that Obama's base of support among young people will spur him to fiercely confront climate change in his first term, for environmental, economic and national security reasons. We aren't going to get off fossil fuels overnight but we can make a difference. But not if conventional Washington thinking rules the day.

Bargaining For One More Positive Balance Sheet

We have a combination energy/environmental crisis going on. Gas prices are so high that people are working to fill up the fuel tank, paying as much as a quarter of their income on transportation. The Antarctic ice sheets are collapsing and falling into the ocean on what seems like a daily basis. The current energy infrastructure is unsustainable from a financial, military and environmental perspective. And yet we're seeing freshman Democratic members of Congress quite literally being bribed to maintain the status quo.

Moderate House Democrats -- even freshmen with little obvious influence -- have seen a surge of campaign contributions from the energy industry, whose giving patterns have long favored Republicans.

Data compiled by the nonpartisan Center for Responsive Politics show the overall industry and individual energy companies giving a larger percentage now to Democrats than they have in a decade. Though powerful committee chairman are seeing a major share of those new industry dollars, a large portion is also flowing to rank-and-file lawmakers who have agreed with the industry on some key issues [...]

[T]here is no denying the importance of moderate Democrats. They have already left their marks on pivotal debates, forcing party leaders to scale back legislative proposals on the renewable electricity standard, fuel economy and oil leasing [...]

Last year, Blue Dog PAC -- which distributes money to group members and other moderate candidates -- received $96,000 from electric utilities, oil-and-gas companies and energy industry groups, according to Federal Election Commission figures.

As long as the energy industry can pick off enough Bush Dogs, they can keep a working conservative majority on these issues and defer the eventual breakdown of their profit margins. Obama and Clinton both have decent enough energy plans but even they have been touting "clean coal" as they hit a series of coal-producing states in the primaries. And even potential incoming members of Congress are being bought off by big energy interests during their stays in state legislatures. Here's a report from someone who's unbought and unbossed, US Senate candidate from North Carolina Jim Neal:

I was surprised and frankly shocked while reading Greensboro’s Yes Weekly article about State Senator Kay Hagan.

Kay points to Senate Bill 3 (SB 3) as an example of how “we do things right in Raleigh.” The legislation adopted by the state senate last year gives away the store to Duke Energy, one of the top contributors to Kay’s state senate campaigns .

You may not know about SB 3. And the problem is I don’t think you’re supposed to. The Raleigh News-Observer says SB 3 was “an insiders' deal from the get-go,” passed with “virtually nonexistent” public debate and no “serious financial analysis of its total impact on consumers.” http://www.newsobserver.com/opinion/martinez/story/626147.html

SB 3 shifts the cost of building new power plants from industry to consumers. Duke will be allowed to bill consumers for the costs of building new power plants - before the plants produce even a single watt of electricity. Instead of borrowing money to build power plants, Duke Energy and Progress will charge you more on next month’s bill. This fundamentally changes the law and how the utilities do business in North Carolina.

Only by strengthening and growing the progressive movement and winning primary races such as this one in North Carolina are we going to break this stranglehold that's choking off our ability to move meaningfully on mitigating the impact of climate change. Public mass transit has to be a part of that solution. Here in California it looks like high speed rail will finally get an opportunity on the state ballot. Private investors will be involved, but if they want to be part of the solution rather than the problem I'm OK with it. We're not going to stop industry from bargaining for one more positive balance sheet, but if they're incentivized to work toward solutions that are profitable and sensible for our energy and environmental future, there can be a pleasant compromise that expands the economy as a side benefit.

Hey, At Least We Had a Satan-Free Convention

I know there was a lot of bad blood coming out of how the CDP Convention wrapped up, but consider this: that controversy was over how we passed one resolution on Iraq and not another. It's not like it was about something like this:

Don Larsen, chairman of legislative District 65 for the Utah County Republican Party, had submitted a resolution warning that Satan’s minions want to eliminate national borders and do away with sovereignty.

In a speech at the convention, Larsen told those gathered that illegal immigrants “hate American people” and “are determined to destroy this country, and there is nothing they won’t do.”

Illegal aliens are in control of the media, and working in tandem with Democrats, are trying to “destroy Christian America” and replace it with “a godless new world order — and that is not extremism, that is fact,” Larsen said. […]

Republican officials then allowed speakers to defend and refute the resolution. One speaker, who was identified as “Joe,” said illegal immigrants were Marxist and under the influence of the devil. Another, who declined to give her name to the Daily Herald, said illegal immigrants should not be allowed because “they are not going to become Republicans….”

No matter what the intra-party squabbles are, let's understand that the real whackadoos are in that other party. We can resolve differences between ourselves as reasonable people. We don't think Satan is an undocumented immigrant.

Another thing to consider: one of the resolutions that the CDP passed yesterday was in support of high-speed rail, which we learned yesterday that the governor may be trying to defund and effectively stop. One of the resolutions we DIDN'T pass was in support of Clean Money, which actually is moving through the legislative process, with a hearing in the Assembly Appropriations Committee on Wednesday. So resolutions pale in comparison to what's really happening in Sacramento. Just a little perspective.