Clean Infrastructure

It was a banner week for NDN fellows Morley Winograd and Mike Hais: their book, Millennial Makeover: MySpace, YouTube & the Future of American Politics, was named one of the top 10 books of 2008 by New York Times' Michiko Kakutani. From the Times feature:

In what turns out to have been a highly prescient book, the two authors predicted that 2008 would be a “change” election, informed by new technology and by the outlook of a new generation of millennial voters, who tend to be more inclusive, optimistic and tech-savvy than their elders.

Their work on Millennials was also featured in MarketWatch, the Toledo Blade, and the National Journal. The National Journal piece, "Where are the New Voters?", also features NDN's work on Hispanic issues:

"It's another indication that America went through a civic realignment in 2008," said Morley Winograd, a fellow with the progressive think tank and activist group NDN, and co-author of Millennial Makeover: MySpace, YouTube and the Future of American Politics. Hispanic voters, too, have swung decisively to Democrats, NDN experts note, and increased their share of the electorate by 62 percent in Colorado, 50 percent in Nevada, and 28 percent in New Mexico.

Michael's recent essay, "Building the Electron Superhighway," was featured in the Huffington Post and Grist.

Rob was quoted in Forbes on President-elect Obama's economic team:

Rob Shapiro, an economist who was a top official in Clinton's Commerce Department, said Obama's selection of Geithner and Summers, as well as his wooing of Hillary Rodham Clinton as secretary of state, reflect Obama's interest in attracting expertise and people of strong will.

"It tells you that not only does President-elect Obama have respect for expertise, but that he is very comfortable in an administration with very major figures," said Shapiro, now an official with NDN, a think tank formerly known as the New Democratic Network.

Rob also was featured in the Huffington Post, Carbon Tax Center, and Computer Weekly.

President Elect Obama's comments at the press conference yesterday announcing Peter Orszag as head of OMB, following his announcement on Monday of other key economic appointments – Tim Geithner as Secretary of the Treasury, Larry Summers as director of the NEC and Christina Romer as head of the CEA – illustrates the tightrope that the new Administration will have to walk in addressing the economic crisis.

On the one hand, on Monday the President Elect highlighted the immense economic challenges facing the country that will require a stimulus package that Larry Summers has said "must be speedy, substantial and sustained."  On the other, however, it is important that the stimulus not be perceived as wasteful spending.  And thus it was appropriate for President Elect Obama to highlight his cost cutting challenge to Orszag, namely to eliminate waste from the federal budget.
 
By it very nature, a rapidly implemented stimulus cannot be as focused as ordinary elective spending.  To accomplish its goal, the stimulus must be broad, get the money out on the street quickly, and be large enough to do its job.  However, if the money is perceived as being dropped from a helicopter (in the metaphor popularized by Fed Chairman Bernanke), it may undermine faith in the government and hence confidence in markets.

As the stimulus package is developed and released, all eyes will be on whether it appears to be thoughtful or wasteful of the public's money.  President Elect Obama's comments yesterday were thus encouraging in suggesting he recognizes this requirement and that his team will work to ensure that the stimulus meets this crucial test.

As we at NDN have argued, investments in infrastructure not only have a short lead time in getting money where it is needed, they also are not wasteful because they will continue to pay dividends for years to come.  We need new, up to date roads, bridges, rail lines, water mains, fiber and power lines to undergird our future prosperity.  However, as we have also argued, a key part of infrastructure investments being up to date is that they acknowledge our energy and environmental challenges.  Retrofitting older buildings, requiring that every new government facility meet green standards and making transportation investments based on their energy and environmental implications is investing in the future. 

Placing a gigawatt of renewable solar power on government buildings over the next 5 years, for example, is not only desirable but is also cost effective.  Investing in our electricity grid can not only create jobs today but stimulate the economy down the road.  And funding a clean infrastructure bank to make energy smart infrastructure investments will not just stimulate the economy but raise productivity in the future.

In short, energy and environmentally smart represents a responsible use of the public's money.  And making these sorts of investments is one way to meet the challenge of stimulating the economy responsibly.  In coming weeks, we look forward to working with the Administration's new team, Congress, and stakeholders on a stimulus package that addresses both our short and long term economic challenges.

New York City - Should the federal government build or incent others to build a new electron superhighway? In other words, a backbone for a 21st century electrical grid?  At NDN's recent event on clean infrastructure, U.S. Rep. Jay Inslee asked precisely that question and it's one more and more energy leaders are asking.  

Our current grid, as former CIA Director Jim Woolsey has noted, resembles nothing so much as the road system before interstates were built. Had President Eisenhower not built the interstate system after observing the autobahns in Germany and fretting over the difficulty of moving an army from one end of America to the other, our roads would be a network of streets, shopping boulevards and country roads, slowed by trucks as well as tolls.  There would be no easy way to travel between one large city and another and trade and distribution of goods would be drastically hampered.  

This is precisely the situation we have today in the world of electricity, where mid-20th century wires are now tasked with carrying 21st century loads and tolls are collected by dozens of utilities along the way. As a result, instead of a national market in electricity, we have a balkanized patchwork of local fiefdoms each with vastly different prices. Electricity producers face obstacles in moving their electrons to market -- hardly an ideal solution.

How would an electron superhighway work? One proposal by the Energy Department would build major high voltage (765KV) trunk lines traveling East to West and North to South, particularly in the underserved center of the country. Like Interstates 10, 40, 80 and 90 which link the East and West and Interstates 5, 55 and 95 (as well as those in between) which link the North and South, these large roads would facilitate long distance movement of power.  Relieved of this burden, utilities could focus their resources on localized distribution. While the proposal might cost $60 billion to $100 billion (a weekend's worth of bailout money), the long-term benefits would be tremendous. In fact, the proposal could be financed through a miniscule tax of less than a penny on the average monthly utility bill.

A particularly interesting approach to building an electron superhighway would be to run the cables underground. No one wants a high voltage transmission line running anywhere near their home, leading to complex obstacles to siting new lines. Additionally, underground lines are far more expensive than overhead ones and it is harder to identify problems when they occur. However, new superconducting wire (eliminating almost all the resistance in a wire by cooling it down using liquid nitrogen) that can be laid in a three-foot trench and is already being implemented in Long Island could be run underneath bike paths, along roads and in other unobtrusive places. While this technology, proven in pilot projects and now being tested at scale is new, it could revolutionize long-distance power transmission.

The interstate highway system is not the only model for moving goods. The Internet backbone, though jumpstarted by federal investment, is run privately for profit. Similarly, private companies own the long distance natural gas pipes. And private companies own the railroads.  

Of these, the Internet system is probably least illustrative because it remains unregulated.  Natural gas is produced at a comparatively limited number of points, simplifying its long distance transportation requirements.  America's rail system, a relic of the 19th century, is probably not a model for a ubiquitous electricity network.

It may be that federal ownership is not necessary. However, a national tax on electricity would certainly be easier to implement than hundreds of individual rate cases -- the traditional method for funding investment. Important obstacles to greater federal involvement in electricity remain, however, in the form of state regulators and some utilities that have traditionally opposed a larger federal role.

As America confronts its 21st century challenges, in particular, developing a grid that can facilitate a national electricity market and also accommodate decentralized generation of renewable power, the idea of an electron superhighway merits serious attention. At a very minimum, work should accelerate on how to implement an electricity backbone. As FERC Commissioner Jon Wellinghoff, quoting Albert Einstein, remarked at NDN's clean infrastructure event, "physics is easy, politics is hard."

On Wednesday, the Wall Street Journal reported that President-elect Barack Obama’s Chief of Staff-designee Rahm Emanuel "promised that a major economic stimulus would be 'the first order of business’ for Mr. Obama when he takes office Jan. 20. The focus of spending will be on infrastructure, specifically 'green infrastructure.'"  

According to Congressman Emanuel's statement, this green infrastructure will include mass transit, modernizing the electrical grid, and universal broadband Internet access, all of which NDN has been arguing should be included in the next Administration's agenda. NDN strongly supports this policy direction and will work with Members of Congress in support of this agenda.  

NDN has long been a strong and vocal advocate of a clean infrastructure stimulus because of its ability to create jobs and stimulate the economy in the short term while also creating a basis for future prosperity.

NDN Green Project Director Michael Moynihan first articulated the vision of clean and green infrastructure in his 2007 paper, Investing in Our Common Future: U.S. Infrastructure.

As Moynihan wrote more than a year ago, America needs "a GREEN Act requiring that federal infrastructure and buildings...not only address issues like global warming but also establish American leadership in green technologies of the future." Wrote Moynihan, "Only by working together can Americans reverse the decline in infrastructure that is eroding our present economy and make the forward-looking public investments needed to ensure future prosperity." To that end, NDN has proposed a number of green stimulus measures including a clean infrastructure bank, modernization of the electrical grid, support for mass transportation, and greater broadband access.

Recently, Moynihan, NDN Globalization Initiative Chair Dr. Robert Shapiro, and NDN President Simon Rosenberg have authored a number of essays and analyses on clean infrastructure and clean technology:

• Clean Infrastructure Stimulus to Be the Obama Administration's "First Order of Business"
• A Stimulus for the Long Run
• Accelerating the Development of a 21st Century Economy: Investing in Clean Infrastructure
• Solar Energy: The Case for Action

Additionally, earlier this week, NDN hosted a Capitol Hill forum entitled, "A Vision for a Modernized Electric Grid: Clean Infrastructure for a 21st Century Economy," with U.S. Reps. Jay Inslee and Earl Blumenauer, FERC Commissioner Wellinghoff, and other energy experts. Click here for video and photos of the event.

New York City -- At NDN, we have been arguing for many months that a stimulus package is needed to jump start this difficult economy. We need a proposal that works for the long term as well as the short term. Absent real stimulus, there is a possibility, as Rob Shapiro argues, that the economy may lapse into a "sub-optimal equilibrium" in which people spend and produce far less than they can. However, we have also argued that the form the stimulus takes is as important as the amount. Invesments in clean infrastructure have the ability not only to get money onto the street quickly but also to address our long-term economic challenges such as stagnant wages, rising energy costs and the threat of climate change.

Yesterday, President-elect Obama and his Chief of Staff Rahm Emanuel said that a clean energy and infrastructure stimulus package literally will be the first order of business for the new Administration come January. What a difference a new President can make!

This is good news for the American economy and the American people. Clean infrastructure investments have the ability to create high-paying domestic jobs, lower energy costs and raise productivity all while stimulating the economy in the short term.

Here are some of the stimulus measures proposed yesterday by the President-elect's new chief of staff: mass transit, upgraded electricity transmission lines, "smart" electrical meters that allow consumers to save money by using electricity at off-peak hours, and universal broadband Internet access. 

All not only make sense but are critical to our future.

As the new Administration takes shape and a new Congress prepares to take office, we look forward to working with stakeholders and policy makers to make these critical investments and get America moving again!

New York City -- On October 3, the day President Bush signed the $700 billion bailout package that Hank Paulson called vital to saving American capitalism, the Dow closed at 10,325. Yesterday it closed at 8,424. In the six unhappy weeks of the bailout fund's life, the Dow has shed close to 2,000 points or about 20% of its value. Almost as soon as the fund was authorized, the Treasury and the Fed shifted gears and followed Gordon Brown in using the first slice to invest in banks. Capitulating last week to the fund's dubious impact on markets, Secretary Paulson announced that the Troubled Assets fund would not be used, after all, to buy troubled assets. Yesterday, he announced he does not plan to use the unspent funds of about $410 billion at all but will instead leave it as dry powder for the Obama Administration. Some have unkindly called this fund a slush fund. However, launched by a former Goldman star, levered at close to 100% and with the goal of making opportunistic investments, it really resembles nothing so much as a Hedge Fund.

So what's wrong with a government hedge fund?

The advantage of a Hedge Fund over a more constrained capital allocation process is that the fund manager can make the decisions quickly. If the manager is a genius, the fund does well. However, a genius one year can turn out to be not so smart the next. And as the limited partners in this hedge fund, the public should have the right to withdraw its money if the fund manager does not have a strategy.
 
In a world of constrained debt, one cost of the public's commitment to this hedge fund is that it has used up a healthy amount of the public's credit -- something that has not gone unnoticed by markets. As an article in the current Barrons observes, the yield curve, or the premium for borrowing for a longer period, has stiffened, recalling the famous inflation premium on long-term debt that drove the Clinton Administration's fiscal restraint. That premium disappeared during the Bush years, thanks to supercharged global liquidity from the Asian savings glut and expansion that followed the Asian financial crisis. Its reappearance, however, bears noting. More ominously, perhaps, a little known derivative, the credit default swap for long-term U.S. government bonds -- a derivative that should not exist since it represents insurance against a Treasury default -- has risen in price. In other words, some are now betting against the full faith and credit of the U.S. government. 

However, this hedge fund poses another problem for the economy and government policy that is impacting the proposed government stimulus, its opportunity cost. Any focused stimulus package now pales in comparison with the TARP hedge fund. Of what stimulative impact is $2 billion for weatherization or $10 billion to extend unemployment benefits when the Treasury is giving out chunks of $30 billion or $50 billion at a time to AIG? 

The hedge fund -- while it may have served a purpose in helping the banks stay solvent --threatens to interfere with needed stimulus.

As we have argued at NDN, the unbridled use of monetary tools last year left the Fed empty handed as we enter a recession and a fiscal stimulus is now the primary tool left to policy makers with which to address the slowdown. But we have also argued this fiscal stimulus should work for the long term as well as the short term.

We suggested a substantial share go into clean infrastructure projects that get money out onto the street but also address our long-term energy, environmental and economic challenges. Clean infrastructure projects can not only can create jobs and exert a large multiplier effect, but also pave the way for future prosperity. As President-elect Obama said over the weekend and again yesterday, clean energy is his top priority next year because it has the ability to address so many of our challenges at once. 

However, as long as the Hedge Fund overshadows any proposed stimulus, it will be difficult for Congress to make these needed investments.  What, then, is the answer?

Now that the immediate challenge of stabilizing the banks has been met, Congress and the incoming Administration should reassert their authority over the second half of the hedge fund. A portion of this money might be better allocated to stimulus than loans to banks.  In any case, it should not stand in the way of a meaningful stimulus package. 

The hedge fund may have served a short term purpose, but it is no way over the long term to allocate public funds. The sooner we begin making real investments, not just backstopping financial institutions, the sooner we will get America's economy moving again.

As a new president prepares to take office amidst a receding economy, infrastructure investments are gaining attention as a way to create jobs and stimulate the economy in the short term while also creating the basis for future prosperity. However, U.S. infrastructure, already outdated, has come under new pressure from the combined challenges of climate change and volatile energy prices. As we face up to the competitive demands of the 21st century, it is clear that old, energy-inefficient infrastructure must be repaired, upgraded, or retired and replaced with a new, clean infrastructure to meet the needs of the coming low-carbon economy, the creation of which President-elect Obama has already made a top priority. NDN has long argued that any economic stimulus proposal must be heavily weighted toward clean infrastructure investment.

In that light, NDN is hosting the first in a series of events on clean infrastructure, beginning with a powerful discussion on modernizing the electrical grid tomorrow, Tuesday, November 18 on Capitol Hill.

A Vision for a Modernized Electric Grid: Clean Infrastructure for a 21st Century Economy
Rayburn House Office Building, Room 2322
Tuesday, November 18
12 p.m. – 1:30 p.m.
Click here to RSVP

Featured Speakers include:

Congressman Jay Inslee, Member, House Committee on Energy and Commerce, the Committee on Natural Resources, and the Select Committee on Energy Independence and Global Warming and co-chair of the New Democrat Coalition’s Energy Task Force

Congressman Earl Blumenauer, Member, House Committee on the Budget, the Commitee on Ways and Means, and the Select Committee on Energy Independence and Global Warming

Commissioner Jon Wellinghoff, Federal Energy Regulatory Commission (FERC)

Kurt Yeager, Executive Director of the Galvin Electricity Initiative

Moderated by:

Michael Moynihan, NDN Green Project Director

To attend or for further information about the event, please click here or contact Courtney Markey at cmarkey@ndn.org or (202) 384-1214.

As policy makers reach consensus on the need for an economic stimulus package, NDN Globalization Initiative Chair Dr. Robert Shapiro and NDN President Simon Rosenberg have posted an essay on the Huffington Post on the need for a Stimulus for the Long Run. In this piece, Shapiro and Rosenberg argue that any proposal should help determine the shape and strength of the economy for the next decade, rather than simply affecting the timing of the next recovery, through investing in the basic elements of growth for the 21st century to create a low-carbon, innovation-driven economy. The full essay follows:

When Congress goes back to work next week, its first job should be another stimulus package for the sinking economy. President-elect Obama also has said he wants another stimulus of his own design after he is sworn in. We know that more stimulus is necessary, because the ongoing financial and housing market crises will very likely produce an unusually long and deep recession. We also need additional stimulus as insurance against the possibility of another economic shock that would worsen the downturn, such as a run on the dollar that drives up interest rates, or worsening housing foreclosures that trigger more failures in financial institutions and further drive down consumer and business confidence.

The path of least resistance to deliver that stimulus is another round of tax rebates for American families, which in theory families would spend to jumpstart demand and, ultimately, the business investments and jobs to meet that demand. However, the catch is that approach is very unlikely to work this time. Most of the rebates from the spring 2008 stimulus were saved rather than spent; and given the recent, sharp decline in confidence, even a greater share of another round would be saved and so provide little stimulus. Moreover, President Obama and Congress can put those billions of dollars to uses that will stimulate long-term growth and income gains much more effectively.

Instead of tax rebates, congressional leaders and President-to-be Obama should look to targeted tax changes and targeted spending increases, with the lion's share going in a new direction: investments in the basic elements of growth for a 21st century economy. The stimulus should and will include traditional measures such as aid to the states facing serious revenue shortfalls and an extension of unemployment insurance. But for its major thrust, President-elect Obama should use the stimulus to drive policy reforms that will affect the shape and strength of the economy for the next decade, rather than simply affecting the timing of the next recovery. The stimulus should be first steps toward delivering on the change that President-elect Obama has pledged to bring to America.

This change should be directed toward creating a 21st century, low-carbon, innovation-driven economy, as the development, spread and efficient use of economic innovations will continue to be the most important factors driving all our future progress in growth, productivity, and incomes. For example, productivity gains are increasingly tied to an employee's capacity to operate effectively in workplaces dense with information and telecommunications technologies. Within a decade, workers who cannot perform in such work environments will be marginalized economically. Therefore, the stimulus should help businesses and workers prepare for the ideas-based economy, through grants to community colleges to keep their computer labs open and staffed in the evenings and on weekends for any adult to walk in and receive free computer training, a plan Obama endorsed as Senator. The stimulus also could include an innovative program to provide inexpensive laptops to every sixth-grader in America and spread broadband installation to schools, local libraries, and human services offices that currently lack it.

There is already a broad consensus on the need to include infrastructure investment in the stimulus, but instead of addressing only roads and bridges, America can also take this opportunity to invest in a new generation of clean infrastructure. The federal government can lead the way, through greening its buildings and vehicle fleets and putting 1,000 megawatts of solar power on its roofs. It also can provide funding to help modernize the electrical grid and build a new generation of light rail systems for urban areas, as well as greater support for research and deployment in renewable energy and energy efficiency technologies, and tax credits and other incentives for greening America's homes and private buildings.

Aside from energy, the other rapidly rising business cost squeezing wages and jobs is health care. To help hold down these costs for the long haul, the stimulus can provide support for hospitals, clinics and physicians to purchase and install the hardware and software for standardized electronic medical records systems. This will serve as a first down payment for 21st century health care reform, and will ultimately reduce costs and promote best-practices at the nation's hospitals.

These are all investments we know we have to make if we intend to make the U.S. economy more efficient, innovative and sustainable. They also are all investments that will ultimate pay for themselves several times over. Congress and President-elect Obama can use this opportunity not only to create more jobs, but to do so in ways that will help drive the development of a real, 21st century workforce and genuine 21st century economic infrastructure. And taking this course by passing a stimulus for change could be an early and important opportunity for him to practice both his new politics and a new form of economic leadership.

For more of NDN's thinking on creating a 21st century economy, please read NDN Green Project Director Michael Moynihan's essay, Accelerating the Development of a 21st Century Economy: Investing in Clean Infrastructure

NDN is pleased to announce that Federal Energy Regulatory Commission (FERC) Commissioner Jon Wellinghoff will join Congressman Jay Inslee, Google’s Dan Reicher, the Galvin Electricity Institute’s Kurt Yeager, and NDN Green Project Director Michael Moynihan on Tuesday, November 18 for:

Developing the 21st Century Economy: Investing in Clean Infrastructure:
Rayburn House Office Building, Room 2322
Tuesday, November 18
12 p.m. – 1:30 p.m.
Click here to RSVP

This event should be an excellent and powerful conversation on clean infrastructure investment and grid modernization. For more information on the event or to RSVP, please click here or contact Courtney Markey.

On Wednesday, I posted some of the influential election stories that featured NDN - if you haven't seen these, be sure to check them out, there are some really exellent pieces by some of the best journalists in the country. Since Wednesday, in addition to Simon's winning The Hill's election prediction contest, NDN has appeared in another big round of press:

First, Simon was quoted in a must-read piece by Ron Brownstein in the National Journal:

Barack Obama on Tuesday won the most decisive Democratic presidential victory in a generation largely by tapping into growing elements of American society: young people, Hispanics and other minorities, and white upper-middle-class professionals. That coalition of the ascendant—combined with unprecedented margins among African-Americans—powered Obama to a commanding victory over Republican John McCain, even though Obama achieved only modest and intermittent gains with the working-class white voters who provided the foundation of the Democratic coalition from Franklin D. Roosevelt’s election in 1932 to Humphrey’s defeat 36 years later.

“Obama is reimagining a Democratic coalition for the 21st century,” says Simon Rosenberg, president of NDN, a Democratic group that studies electoral trend and tactics. “Democrats [are] … surging with all the ascending and growing parts of the electorate. He is building a coalition that Democrats could ride for 30 or 40 years, the way they rode the FDR coalition of the 1930s.”

Simon was also quoted in USA Today about about the changing demography of America and its significance for the future of politics:

Dramatic rises in Hispanic participation, support or both put Obama over the top in Florida, Nevada, New Mexico and Colorado. The trends were similar in Arizona and Texas, though the two states went for Republican John McCain. The group also made its presence felt in Indiana, Virginia and North Carolina.

"If the Republicans don't make their peace with Hispanic voters, they're not going to win presidential elections anymore. The math just isn't there," says Simon Rosenberg, head of the NDN, a Democratic group that studies Hispanic voters.

In addition, Simon discussed the importance of the Hispanic vote in Newsroom America, and Andres' analysis of Hispanics in this election was covered on NPR, in a DNC release, in the Las Vegas Review-Journal, the Latino Journal (and again here), Hispanic Trending, and the Latino Politics Blog.  

Simon also weighed in on "Obama, Race and the End of the Southern Strategy" in a featured post on Huffington Post which was also picked up by OpenLeft.

In addition to the new demographics, Simon also talked about the use of new technology and media. He spoke to both how Obama used technology to win, and how he will use it to govern. From a piece in the Washington Times:

The campaign won't say whether the BarackTV and live-streamed events will continue after the inauguration, but all signs point to a revolutionized way of White House communication with America and the world.

"The most interesting thing to watch will be what do they and how do they reinvent the way a president speaks to the American people," said Simon Rosenberg of the liberal think tank NDN and a veteran of the Clinton White House.

"There's no doubt this is going to be more of a YouTube presidency than a fireside chat presidency," he said. "President Obama will be reinventing the relationship between the president and the American people using these new tools."

Simon gave similar analysis in the National Journal's Daily Tech Dose, Wired, and Digital Graffiti.

In terms of general election analysis, Simon talked about the likely governing philosophy of an Obama administration in the San Francisco Chronicle and the Washington Times. 

New NDN Fellows Michael Hais and Morley Winograd were featured in the Post-Bulletin about the Millennial vote. Michael had an essay in Grist about the opportunities for the new administration to invest in clean infrastructure and clean energy. Finally, Rob talks about the economic challenges facing the new administration in the AP, Accountancy Age, and the Irish Left Review.