Third Way Perspectives

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Archive for August, 2012

Tough love: Why Democrats must cut entitlements

August 9th, 2012

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This piece was originally featured on Politico.

It’s brother against brother.

Democrats launched two great economic initiatives in the 1960s that would change the country. President Lyndon B. Johnson’s Great Society declared a war on poverty and ushered in two of the nation’s most crucial entitlement programs – Medicare and Medicaid. A few years earlier, President John F. Kennedy embarked on the New Frontier, an investment agenda to make the United States the world leader in space, communications, science, education and infrastructure.

Fifty years later, these two children of Democratic presidents have taken radically different paths. The younger child, the Great Society, has grown to be fat and happy. Counting Social Security, the three major entitlements grew from 15 percent of federal spending in the ‘60s to nearly 50 percent today. The older child, investments, is starved. NASA, the New Frontier’s crown jewel, is a shell. Total spending over all federal investments, from highways to space stations to defense, has declined from one-third of our budget to one-seventh today. Is it any wonder our schools are average, our roads clogged and our scientists mostly imported? Read the rest of this entry »

By the numbers: Why the PTC should be extended

August 7th, 2012

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By: Jeremy Twitchell

The prospect of renewing the wind production tax credit is already stirring debate. Given the strong, bipartisan support for the credit’s extension, this debate is more of a reflection of how polarized our energy debate has become than the merits of the credit.

But beneath all of the back-and-forth, there are three simple numbers that create the narrative of a tax credit that has been singularly successful in its purpose, but must remain in place in order for wind power to reach equal footing.

123%. That’s how much wind’s share of the U.S. energy mix grew from 2008 to 2011. Wind now provides about 3% of our energy, and is second only to natural gas in terms of how fast it has grown in the last four years. The current production tax credit, which has been uninterrupted since 2005, has allowed wind to thrive in the U.S. Installations have grown in seven out of the eight years since, and costs have dropped to the point that analysts are forecasting all-time lows as soon as next year. Read the rest of this entry »

Hmm? Entitlements aren’t crowding out investments??

August 3rd, 2012

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Dylan Matthews posted on our paper this afternoon, and we appreciate the opportunity to continue the dialogue. So let’s get started.

Should Social Security be left out of this discussion, as Mr. Matthews suggests? Is it really only the health care entitlements we need to contain?

He is correct, and we showed in our paper, that over the past 50 years, all of Social Security’s growth relative to GDP has occurred in the first 20 years and has stayed roughly static since. But five percent of the economy is a lot. It’s roughly equal to Medicare, Medicaid and CHIP combined. And it’s not going to stay static – that is a certainly. In less than two decades, Social Security is poised to jump from 5.0% to 6.0% of GDP, according to CBO. One point may not seem like a big deal, but it represents a 20% rise in the cost of Social Security relative to the size of the economy. That’s not peanuts, especially since (as Mr. Matthews rightly points out and we also show in our paper) our health care entitlements will sprint ahead much faster. Read the rest of this entry »

Cliff Diving

August 3rd, 2012

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This piece was originally featured on the Huffington Post.

Jump! Run for your lives! We’re about to go over the fiscal cliff!

That just about sums up the message coming out of Washington these days. Is there reason to panic? Not really, because brinkmanship has become an essential part of the political process. It’s the answer to gridlock.

American government is set up to fail. The Founders created a complex and ungainly system with two houses of Congress, three branches of government and competing centers of power in the federal government and the states. The idea was to limit power. The result is a constitutional system that works exactly as intended. Which is to say, it doesn’t work very well at all. As President after President has discovered, there are many ways opponents can stop measures from getting passed, even if the President’s party holds a majority in Congress. Read the rest of this entry »

Investing in the Grid: When the Going Gets Tough, the Tough get … Creative

August 2nd, 2012

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The unexpected storms that knocked out power to millions in the Midwest and Mid-Atlantic earlier this month highlighted how fragile America’s electric grid is. But while front page photos of fallen trees and utility repair trucks capture people’s attention, there’s a much more grave and fundamental threat to our electric grid.

The U.S. grid system was born in the 1920s, and has seen few major upgrades since the 1960s. With America’s growing population and exploding demand—bigger houses, A/C units, TVs, iThings—we have serious congestion and inadequate capacity on our nation’s power lines. This has led to more frequent power outages, which cost the American economy well over $100 billion each year. The inefficiency of our old-fashioned grid also leads to enormous waste through “line loss.” In 2010, 6.6% of the electricity generated in the U.S. simply disappeared before it could reach consumers. That’s $25.7 billion worth of electrons, lost into thin air. Read the rest of this entry »