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March 15, 2009 Sunday

Late Edition - Final

Finding Messages In a Blueprint

N. Gregory Mankiw is a professor of economics at Harvard. He was an adviser to President George W. Bush.

SECTION: Section BU; Column 0; Money and Business/Financial Desk; ECONOMIC VIEW; Pg. 6

LENGTH: 935 words
PRESIDENTIAL candidates campaign with soaring rhetoric, but presidents and their advisers make actual policy with spreadsheets. So for policy wonks like me, there is no better place to learn what President Obama really believes than the budget proposal released late last month.

Here are four lessons we can learn from the budget documents about the president and his economic team:

THEY ARE ECONOMIC OPTIMISTS Like everyone else, the president's economists expect 2009 to be a grim year of falling national income and rising unemployment. But despite all the talk about the worst crisis since the Great Depression, they expect their policies to bring the recession to a swift conclusion. For the next four years, they forecast an average growth rate of 4 percent. The unemployment rate is projected to fall to 5.2 percent in 2013.

Not everyone is so sanguine. The administration forecast is ''way too optimistic,'' said Nariman Behravesh, chief economist at IHS Global Insight and author of the excellent primer ''Spin-Free Economics.''

Let's hope that the administration is right. But if I had to bet, I'd put my money on Mr. Behravesh.

THEY LIKE TO SPEND In light of the economic downturn, the stimulus package and all the bailouts coming out of Washington, it is no surprise government spending is skyrocketing. According to the president's budget, federal outlays will be 27.7 percent of gross domestic product in 2009 and 24.1 percent in 2010 -- levels not reached since World War II.

But more telling about the president's priorities is what happens to spending after the crisis is well behind us, at least according to the administration's forecast. In a second term for Mr. Obama, with the economy recovered and unemployment stabilized at 5 percent, federal outlays would be 22.2 percent of G.D.P. -- well above the average of 20.2 percent over the last 50 years.

It is also well above levels in recent history. Before the financial crisis hit in 2008, federal outlays under President George W. Bush never exceeded 20.4 percent of G.D.P. That includes spending from the Iraq war. President Obama is counting on that conflict being over, and no new money-draining military commitment taking its place. Yet federal spending still remains high.

To be sure, part of the increase in government spending is driven by the aging of the population. As more baby boomers retire and become eligible for Social Security and Medicare, spending rises automatically. But President Obama's focus on universal health insurance suggests that he is more interested in expanding the benefits that Americans can claim than in reining in the unfunded entitlements already on the books.

THEY ARE SERIOUS ABOUT CLIMATE CHANGE President Obama's budget makes clear that he wants to address the problem of global climate change. This commitment stands in stark contrast to policy during the previous two administrations.

President Bill Clinton offered the Kyoto Protocol, but the policy ended up more symbolic than real. The treaty was overwhelmingly rejected by both parties in Congress, in part because it left out China, now the world's largest emitter of carbon. President Bush rejected the Kyoto principles as well, but he never made finding an alternative approach to climate change a major priority.

For the new administration, climate change is not only an environmental issue but a budgetary one as well. Under the proposed cap-and-trade system, the government would auction off a limited number of carbon allowances. The cost would be passed on to consumers as higher energy prices, encouraging conservation. According to President Obama's budget projections, the system would also raise more government revenue than his much-discussed tax increases on upper-income households.

The thrust of the policy makes sense, but several questions remain. First, why not instead impose a more transparent and administratively simpler tax on carbon emissions? Is it merely because the phrase ''climate revenues'' used in the budget is more politically palatable than the word ''tax''? More important, how will the president get China on board? Without China's participation, any climate policy, along with the associated revenue, may be a political nonstarter.

THEY ARE DEFICIT DOVES Few economists would blame either the Bush administration or the Obama administration for running budget deficits during an economic downturn. What is more telling is what happens to the deficit during normal economic times. From that perspective, the Obama budget policy looks surprisingly similar to the Bush version.

From 2005 to 2007, before the current crisis, unemployment in the United States hovered around 5 percent. During those years, the budget deficit averaged just under 2 percent of G.D.P.

In the Obama administration's forecast, unemployment again reaches 5 percent in 2014 and remains at that level thereafter. But despite that rosy prediction, the budget does not get close to balance. The Obama team calculates that under its proposed policies, the budget deficit will average a bit over 3 percent of G.D.P.

So if you are a deficit hawk who lamented the Bush budget deficits, the new president's budget should not make you feel much better. President Obama offers different fiscal priorities than President Bush did: less military spending, more domestic spending and higher marginal tax rates to ''spread the wealth around.'' But the borrowing and debt imposed on future generations will not be very different, at least if the numbers in the Obama administration's own budget document can be trusted.
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The New York Times
March 15, 2009 Sunday

Late Edition - Final

Harnessing The Sun, With Help From Cities

SECTION: Section A; Column 0; National Desk; Pg. 16

LENGTH: 1184 words

Rick Clark's garage is loaded with fast toys for playing in the sun. He has a buggy for racing on sand dunes, two sleek power boats for pulling water skiers, and a new favorite: 48 solar panels that send his energy meter whirring backward.

Bronzed and deeply lined from decades of life in the desert sun, Mr. Clark is not one to worry about global warming. He suspects that if the planet's climate is getting hotter, it is part of a natural cycle and will probably correct itself. ''Experts have been wrong before,'' he said.

But late last year, Mr. Clark decided to install a $62,000 solar power system because of a new municipal financing program that lent him the money and allows him to pay it back with interest over 20 years as part of his property taxes. In so doing, he joined the vanguard of a social experiment that is blossoming in California and a dozen other states.

The goal behind municipal financing is to eliminate perhaps the largest disincentive to installing solar power systems: the enormous initial cost. Although private financing is available through solar companies, homeowners often balk because they worry that they will not stay in the house long enough to have the investment -- which runs about $48,000 for an average home and tens of thousands of dollars more for a larger home in a hot climate -- pay off.

But cities like Palm Desert lobbied to change state laws so that solar power systems could be financed like gas lines or water lines, covered by a loan from the city and secured by property taxes. The advantage of this system over private borrowing is that any local homeowners are eligible (not just those with good credit), and the obligation to pay the loan attaches to the house and would pass to any future buyers.

The idea of public financing for home solar systems began two years ago in Berkeley. While it took months to untangle the legislative knots at the state level and get banks lined up to back the project, the concept took on a life of it own.

Cisco DeVries, who developed the program for Berkeley but has since moved on to a company that administers and finances similar programs for many towns, said: ''I've never been part of something like this where the power of an idea has grabbed so many people so quickly. It is viral.''

In California, about a half-dozen cities including San Francisco and San Diego are already committed to their own solar programs. And outside of California, at least a half-dozen states, including Arizona, Texas and Virginia, have introduced bills to allow municipal financing. Colorado has already passed a version of the law, and the City of Boulder is on the verge of beginning a program.

Municipal financing comes on top of other government supports. California residents receive a straight rebate for about 20 percent of the cost of a solar power system. In addition, a federal income tax credit for 30 percent of the cost of installing solar panels was extended to participants in the municipal loan programs as part of the economic stimulus bill passed by Congress. And there are efforts to change the federal tax code further so that cities can borrow the money to lend tax free.

But public financing of solar power also has critics, who say government is essentially subsidizing and encouraging a form of energy production that would otherwise not be cost effective. Severin Borenstein, director of the University of California Energy Institute in Berkeley, who is concerned about the proliferation of the programs, said, ''It would be better for local governments to do energy efficiency and skip the solar panels.

''If you count the full-interest cost without the tax subsidy, residential solar panels never pay for themselves,'' he said. ''We shouldn't be making it a major public priority.''

However, cities, which are charging 7 percent for the guaranteed loans, do not have the same financial risk as the consumers. And for cities like those in California that are required by state laws to reduce their carbon emissions, officials have to make calculations other than costs and are going ahead anyway.

No city is as far along as Palm Desert.

Instead of waiting to get financing through third parties as other cities have done, Palm Desert tapped into $7.5 million of its own reserves to run a pilot program. In what is widely seen as a measure of public demand, the program was almost immediately fully subscribed. Already, nearly 100 households have been approved for solar panels, and about half of those have already installed them and have a system up and running, according to Patrick Conlon, director of the city office of energy management.

From its arid climate to its conservative politics, Palm Desert could not be more different from Berkeley. But with 350 days of sun, the city is making a calculation that has nothing to do with saving the Earth.

''We live in a severe climate,'' Mr. Conlon said. ''To cool our buildings, we have to be energy gluttons. So renewable energy is important here as an economic choice. It's bigger than politics.''

For Mr. Clark, that is certainly the case. His monthly energy bill for a 3,400-square-foot home and a guest house routinely surpassed $1,400 in summer months when the air conditioning ran all the time. Now his solar panels are producing more than enough energy in the daytime to power his home. The additional power is sent back to the grid and is credited on his utility bill against night and summer hours, when he might consume more power than he produces.

Mr. Clark estimates that at the rate he is going, his power bill will be at most $500 for this year. The savings will be great enough that, taking into account his investment, he will still save $3,000 a year or more.

The blue panels above his garage and his meter -- which also tells him how much of the heat-trapping gas carbon dioxide he has avoided creating since the panels were installed (over 2,200 pounds) -- have in fact had a kind of viral marketing effect in his upper-middle-class neighborhood. Homes here run well above $1 million, yet solar power was a rarity until the city program started.

''It can seem like a large and intimidating task,'' said Valerie Van Winkle, a bank manager and a friend of Mr. Clark, who persuaded him and three other neighbors to take the solar plunge.

Ms. Van Winkle said the environmental cachet has also been fun. ''I don't even know anybody who voted for Obama,'' she said.

Still she has become a proselytizer for solar power. ''It just makes so much sense,'' she said. ''And, you know, I am happy it's also good for the environment.''

Down the street, Debbie and Chris McNicol have a different take. Mr. McNicol used to be part of a professional drag racing crew and still races as a hobby on weekends. Their garage houses its own set of speed mobiles, including a 24-foot-long purple-and-yellow gas-guzzling dragster that goes up to 180 miles an hour. After installing solar panels, their first monthly energy bill dropped to $1.89. Mr. McNicol is elated: ''We can use the money we've saved to race new toys.''

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The New York Times
March 11, 2009 Wednesday

Late Edition - Final

E.P.A. Proposes Tracking Industry Emissions

SECTION: Section A; Column 0; National Desk; Pg. 16

LENGTH: 388 words
The Environmental Protection Agency proposed a rule on Tuesday that would require a broad range of industries to tally and report their greenhouse gas emissions.

The proposal, which could establish an accounting basis for federal regulation of heat-trapping gases, would require about 13,000 factories, power plants and other facilities to report their emissions of carbon dioxide, methane, nitrous oxide and other gases that climate scientists link to global warming.

Oil refineries, cement makers, utilities and pulp and paper manufacturers and the automotive sector are among the industries covered by the proposal. The E.P.A. says that the rule, promulgated under the Clean Air Act, would account for 85 percent to 90 percent of the country's emissions of heat-trapping gases, although small manufacturers would be exempt.

''We do not expect to have a significant impact on small businesses,'' said Dina Kruger, the director of the agency's climate change division.

A 60-day comment period and two public hearings will soon take place. Ms. Kruger said the agency hoped to make the rule final this fall. If that happens, reporting could begin in 2011, after the monitoring of 2010 emissions.

''This is the foundation of any serious program to cap and reduce global warming pollution,'' said David Doniger, the policy director for the climate center at the Natural Resources Defense Council. ''You have to have source-by-source data on how much of global warming pollution is emitted and from where.''

The E.P.A. estimated that the cost to industry would be $160 million in the first year, then fall to $127 million a year.

Bill Kovacs, the vice president for environment, technology and regulatory affairs for the United States Chamber of Commerce, noted that some manufacturers already volunteered the data.

Manufacturers would be required to report emissions from the vehicles they make. Charles Territo, a spokesman for the Alliance of Automobile Manufacturers, said that his organization was still reviewing the proposal, but that the reporting requirement was not new for the automobile industry.

''E.P.A. already knows the carbon dioxide emissions from automobiles,'' Mr. Territo said, ''because E.P.A. measures grams per mile of CO2 from automobiles.''

Experts said the proposal had been expected in September.
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The New York Times
March 10, 2009 Tuesday

Late Edition - Final

In Environmental Push, Looking to Add Diversity

SECTION: Section A; Column 0; National Desk; Pg. 13

LENGTH: 1133 words
When Jerome C. Ringo joined the board of the National Wildlife Federation in 1995, he was the only African-American at the meetings.

Mr. Ringo, now president of the Apollo Alliance, a coalition of environmental, labor and business groups, says that even today, he is often the only environmentalist in the room who is not white.

''We're not where we were, but we're not where we want to be,'' Mr. Ringo said of the environmental movement's efforts to diversify.

National environmental organizations have traditionally drawn their membership from the white and affluent, and have faced criticism for focusing more on protecting resources than protecting people.

But with a black president committed to environmental issues in the White House and a need to achieve broader public support for initiatives like federal legislation to address global warming, many environmentalists say they feel pressure to diversify the movement further, both in membership and at higher levels of leadership.

''Our groups are not as diverse as we'd like, but every one of the major groups has diversity as a top priority,'' said Frances Beinecke, president of the Natural Resources Defense Council. ''There's great commitment to making the environmental movement representative of what the country is.''

The effort to broaden support comes as the groups find themselves competing with industries that oppose environmental measures, sometimes claiming that they will result in higher energy bills or the loss of jobs.

''The organization has to be able to credibly build trust with communities of color who are going to be targeted by the opponents of change,'' said Sanjay Ranchod, a member of the Sierra Club board who is leading efforts to attract more minorities.

The need for racial diversity has been a persistent issue in the environmental movement: In 1990, leaders of civil rights and minority groups wrote an open letter that accused the 10 biggest environmental organizations of ''racist'' hiring practices.

Richard Moore, one of the letter's signers, said the public indictment was set off by several cases in which the groups had pushed for protection of lands at the expense of minority rural communities.

Over the years, organizations like the Natural Resources Defense Council have formed partnerships with smaller environmental groups that emerged in the 1980s and '90s to represent the interests of low-income and minority constituencies.

But more substantial change, Mr. Moore said, has been slow to come.

''If you're going to be impacted by an issue, you bring the impacted people to the table,'' said Mr. Moore, who is now executive director of the Southwest Network for Environmental and Economic Justice, a coalition of 60 groups.

Cara Pike, the author of a 2007 study commissioned by the environmental law group Earthjustice, said the research found that the ''greenest Americans,'' many of them members of environmental groups, were overwhelmingly white, over 45 and college-educated. ''The focus of green groups has been to target the greenest Americans,'' Ms. Pike said, ''and as a result, we've left other people out of the equation.''

National polls show high environmental concern among minorities. A post-election poll for the National Wildlife Federation in November, for example, found increasing support among blacks and Latinos for candidates keen on addressing global warming. And surveys by the Public Policy Institute of California have found that minorities are sometimes even more concerned than white respondents about environmental issues like air pollution.

But until recently, social concerns did not appear to be ''on the radar'' of many large environmental organizations, said Julian Agyeman, chairman of the department of urban and environmental policy and planning at Tufts University and author of the 2005 book ''Sustainable Communities and the Challenge of Environmental Justice.''

Even organizations like the Sierra Club, which has incorporated social justice work since the 1990s, concede that their diversity efforts have failed to gain traction. The organization's executive director, Carl Pope, points at ''cultural barriers'' that in effect shut the door to nonwhites regardless of good intentions.

''If you go to a Sierra Club meeting, the people are mostly white, largely over 40, almost all college-educated, whose style is to argue with each other,'' Mr. Pope said. ''That may not be a welcoming environment.''

Those who join such groups sometimes do not stay long. Marcelo Bonta, 35, who worked for four environmental groups before becoming a diversity consultant in Portland, Ore., five years ago, said he found ''a need to conform,'' down to the way to dress.

''It's the tyranny of fleece,'' Mr. Bonta said. ''I always felt I had to dress down.''

Some larger environmental groups are taking steps to make up for the past.

Roger Rivera, president of the National Hispanic Environmental Council, an advocacy group in Washington that promotes environmental careers among Latino students, said that for more than a year he had been attending meetings of the Green Group, a loose association of about three dozen environmental organizations, as ''an observer.''

Mr. Rivera, who served on President Obama's transition team for the Interior Department, said the Green Group formally invited his organization to join in January -- soon after the election of the first black president, he pointed out.

Larry Schweiger, who is chairman of the association and president of the National Wildlife Federation, said the invitation to groups like Mr. Rivera's was ''part of an overall effort to get more engagement in the climate issue.''

Lisa P. Jackson, whom Mr. Obama appointed as administrator of the Environmental Protection Agency, emphasized inclusion at a recent conference of environmental justice groups in New York City. Ms. Jackson told the audience that she hoped to bring more diversity to the agency -- its staff of about 1,700 is 69 percent non-Hispanic white -- ''so we look like the people we serve.''

(In addition to Ms. Jackson, who is black, Mr. Obama's environment team includes an Asian, Steven Chu, as energy secretary; a Latino, Ken Salazar, as interior secretary; and Carol M. Browner, who is white, as the coordinator of energy and climate policy.)

Van Jones, whose national organization, Green for All, was also invited to join the Green Group, said that while environmental justice groups were focused on ''equal protection from bad stuff,'' groups like his wanted ''equal access to good stuff'' and to use green jobs to lift urban youths and others out of poverty.

''The more the green movement transforms into a movement for economic opportunity,'' Mr. Jones said, ''the more it will look like America.''

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The New York Times
March 10, 2009 Tuesday

Correction Appended

Late Edition - Final
Obama Puts His Own Spin on the Mix of Science With Politics

SECTION: Section A; Column 0; National Desk; Pg. 18

LENGTH: 1002 words

President Obama's directive on Monday to ''guarantee scientific integrity'' in federal policy making could have a far-reaching impact, affecting issues as varied as climate change, national security, protection of endangered species and children's health.

But it will not divorce science from politics, or strip ideology from presidential decisions.

Mr. Obama delighted many scientists and patients by formally announcing that he was overturning the Bush administration's limits on embryonic stem cell research. But the president also went one step further, issuing a memorandum that sets forth broad parameters for how his administration would choose expert advisers and use scientific data.

The document orders Mr. Obama's top science adviser to help draft guidelines that will apply to every federal agency. Agencies will be expected to pick science advisers based on expertise, not political ideology, the memorandum said, and will offer whistle-blower protections to employees who expose the misuse or suppression of scientific information.

The idea, the president said in remarks before an audience of lawmakers, scientists, patients advocates and patients in the East Room, is to ensure that ''we make scientific decisions based on facts, not ideology'': a line that drew more applause than any other. Irv Weissman, who directs an institute at Stanford University devoted to studying stem cells, called the declaration ''of even greater importance'' than the stem cell announcement itself.

It was also another in a long string of rebukes by Mr. Obama toward his predecessor, President George W. Bush. Mr. Bush was often accused of trying to shade or even suppress the findings of government scientists on climate change, sex education, contraceptives and other issues, as well as stem cells. But Mr. Obama's announcement does not elevate science to some new and exalted place in his administration.

''Scientists should have no illusions about whether they make policy -- they don't,'' said Harold Varmus, president of the Memorial Sloan-Kettering Cancer Center and co-chairman of a panel that advises Mr. Obama on science matters.

The directive, Dr. Varmus said, was simply intended ''to provide the best available scientific information'' to those who make policy decisions.

Scientists said they were thrilled by the announcement, as were advocates for patients, including Nancy Reagan, the former first lady who has made embryonic stem cell research a personal cause.

Mr. Obama said in his Inaugural Address that he intended to ''restore science to its rightful place,'' and researchers said he had already made good on that promise by naming Nobel laureates like Dr. Varmus and Steven Chu, the energy secretary, to advise him.

''We're not dumb -- we know that policy is made on the basis of facts and values,'' said Alan I. Lesher, chief executive of the American Association for the Advancement of Science and a former director of the National Institute on Drug Abuse under President Bill Clinton and, briefly, Mr. Bush.

But by asserting ''the centrality of science to every issue of modern life,'' Dr. Lesher said, Mr. Obama is suggesting that science rather than ideology will be the foundation for his decision making. ''What you are seeing now is both a response to the last eight years, and a genuine reaction to President Obama's enthusiasm for science,'' he said.

During the Bush years, Congressional Democrats and scientists themselves issued report after report asserting that the White House had distorted or suppressed scientific information: including efforts to strip information about condoms from a government Web site and the editing of air quality reports issued by the Environmental Protection Agency.

The Union of Concerned Scientists, for example, maintains an ''A to Z'' list on its Web site of ''case studies'' in what it calls the politicization of science under Mr. Bush, like his decision to devote federal money to programs promoting abstinence education despite studies showing that such programs have limited effectiveness.

The House Committee on Oversight and Government Reform spent 16 months examining the Bush administration's use of scientific data on climate change; it issued a lengthy report in 2007 documenting ''a systematic White House effort to censor climate scientists by controlling their access to the press and editing testimony to Congress.'' Representative Henry A. Waxman, Democrat of California, who led the committee at the time, said Monday that Mr. Bush had ''exhibited a willingness to undermine science in order to further a conservative agenda.''

But Mr. Bush's defenders see Mr. Obama as just imposing an ideology of his own. They say Mr. Bush did not ignore scientific facts; rather, he took the counsel of scientists and used it to make a policy determination that reflected his values, just as Mr. Obama is doing in lifting Mr. Bush's restrictions on stem cell research.

''Those who suggest that the Bush administration did not rigorously apply science are themselves ignoring the facts,'' said Karl Rove, the former president's political strategist.

Mr. Rove called Mr. Obama's declaration on restoring scientific integrity ''simply hyperbole and hyperventilation,'' and he disputed Mr. Waxman's accusation on climate change, saying the Bush White House ''put more money into global climate research than any administration in history, by a significant factor.''

In the end, said Ed Gillespie, the former counselor to Mr. Bush, all administrations use science in service of a political agenda.

''Administrations come into office with a point of view,'' Mr. Gillespie said. ''The people in office tend to highlight those facts that support their point of view -- not because they're quashing dissent or not being scientific, but because this is what helps inform their thinking. A lot of scientific data can't be refuted, but a lot of science is subjective. And even irrefutable science can be value-laden.''

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The New York Times

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