FDA Says Ranbaxy Plant Falsified Data, Results. By Jennifer Corbett Dooren and Jared A Favole
WSJ, Feb 26, 2009
The Food and Drug Administration said a manufacturing plant owned by Ranbaxy Laboratories Ltd. falsified data and test results in approved and pending drug applications.
The agency said it was halting the review of drug applications made at Ranbaxy's Paonta Sahib plant in India. Last September, the FDA banned Ranbaxy from importing more than 30 generic drugs into the U.S. because of manufacturing violations it found at two company plants in India, including Paonta Sahib, making it likely that most products made at that plant are no longer on U.S. shelves. Such drugs include generic versions of the cholesterol-lowering drug Zocor and the heartburn treatment Zantac.
The Justice Department had been investigating whether Ranbaxy made false claims and fabricated data to get FDA approval for generic drugs. It's unclear whether the probe is continuing.
Deborah Autor, the director of the FDA's Office of Compliance, said most of the falsified data involves required tests to prove drugs are stable over a certain time period.
The FDA said it hasn't identified any health problems with drugs made at the Paonta Sahib site and said consumers shouldn't stop taking medications made by Ranbaxy. "To date the FDA has no evidence that these drugs do not meet their quality specifications," the agency said in a statement.
Agency officials said they have tested about 80 drugs made by Ranbaxy and so far haven't found any problems with the drugs themselves. They also said they have conducted more than 20 inspections of four Ranbaxy facilities in India and U.S. facilities since 2005.
In a statement, the company said: "Ranbaxy will continue to co-operate with the USFDA," adding "no effort or action will be spared" to protect some pending drug applications before the agency from the Paonta Sahib plant.
The problems were uncovered during a 2006 inspection of the Paonta Sahib plant. Among other things, FDA inspectors found hundreds of drug samples meant for required stability testing stored in refrigerators even though the samples should have been stored at room temperature.
FDA inspectors found that logbooks didn't identify which samples were in the refrigerator or how long they had been there. The FDA issued a June 15, 2006, warning letter to the company.
The FDA also said it found problems with signatures on records during a March 2008 inspection for a drug. and found that some records submitted to the FDA contained signatures or initials of Ranbaxy employees who weren't present in the facility on the dates mentioned in the records.
Thursday, February 26, 2009
How Geithner Can Price Troubled Bank Assets
How Geithner Can Price Troubled Bank Assets. By Peter J. Wallison
AEI, Thursday, February 26, 2009
After its chilly reception of Treasury Secretary Tim Geithner's bank-rescue plan, the market is now worried about nationalization. As well it should. Because if the Obama administration cannot come up with a viable plan to take troubled assets off their balance sheets, major banks will not recover and nationalization -- a disastrous policy -- might actually become the last resort.
Many observers suggest that the Obama administration, like the Bush administration before it, is unable to solve the problem of how to price the banks' troubled assets. If the assets are bought at their "real" values, it is said, the money the banks would get would not be enough to keep them from insolvency. But if Treasury bought these assets at the supposedly bloated values the banks are carrying them, the taxpayers would be paying too much.
In fact, neither of these statements is likely to be true. Both taxpayers and banks could come out well -- and so would our economy -- if the government were to buy the assets at their "net realizable value," which is based on an assessment of their current cash flows, discounted by their expected credit losses over time. Here's the explanation:
The accounting rules relating to assets such as mortgage-backed securities require that they be marked to market if they are held for trading, or in a category called "available for sale." Most banks hold these assets in one of these two accounts, and so mark-to-market rules apply. What happens, then, when there is virtually no market for these assets -- as has been true for at least a year? In that case, accounting rules require the banks use whatever market indicators are available.
The banks follow two steps. First, they establish the net realizable value for the portfolio. This is simply what the value of the cash flows would bring in a fully functioning market, including discounts for several factors like anticipated future losses. Paradoxically, many of the banks' most troubled assets are flowing cash near their expected rates, and thus their net realizable values are higher than the values to which they have been written down.
The banks' second step, after establishing a net realizable value, is marking the assets to market. And that is where the write-downs occur.
Because there are few if any buyers for these assets, their market value is much reduced. Potential buyers are not interested because there is no assurance they will be able to resell the assets when they need to. In other words, potential buyers are afraid of becoming distressed sellers themselves if their financing should disappear before the market becomes liquid again.
Thus, under mark-to-market rules, the banks must discount their assets' net realizable values. And because of the write-downs, the banks' apparent capital is impaired.
These facts have enormous implications for government policy. If the losses on banks' assets are principally liquidity losses, they are temporary, and the only significant issue is whether the banks have the financing to carry the assets until liquidity returns to the asset-backed market.
And if this is indeed the case, the banks are not in any sense insolvent, and nationalization would be a huge mistake. On the other hand, if the government were to buy the assets at their net realizable values -- rather than their marked-down values -- this would significantly improve the capital positions of the major banks.
A hint of the true situation was contained in a remark by Vikram Pandit, the CEO of Citibank, in testimony before the House Financial Services Committee last week. He noted that Citi marks to market and that "those marks are reflected in the losses we've taken, as well as in our income statements and balance sheets." But Mr. Pandit then went on to point out that the bank has a duty to shareholders: "And the duty is if it turns out [the assets] are marked so far below what our lifetime expected credit losses are" -- i.e., their net realizable value -- "I can't sell [them]."
In other words, Citi has marked some assets below their net realizable value, and selling them at a price lower than that value would be unfair to its shareholders. This opens a key route to a solution for the government -- buying the assets at the value that banks like Citi would be willing to sell them.
Would the taxpayer be hurt if the government buys these troubled assets at these values? Not likely. The banks have already made an assessment of the assets' net realizable values, as Mr. Pandit suggests was done at Citi. The government can quickly verify the accuracy of these valuations, including the rates used for discounting, and can of course come up with its own lower evaluation if it disagrees.
But the important point is that if the banks' net realizable values are even close to correct, taxpayers will not lose much, if anything, if the government bought the assets at those values. Because their cash flows determine their value, the government should be able to sell the assets in the future at roughly what it paid for them.
But the key benefit is the boost in the banks' capital which comes from a sale now. This would eliminate doubts about banks' solvency and free up their ability and willingness to lend again.
If this is a win-win for the banks and the government, why is it that no one has thought about doing this before? Part of the answer is that the question has been phrased incorrectly.
Most of those who recognize the problems created by mark-to-market accounting have asked that the system be suspended. This has run into opposition from the accounting industry and investor groups, who are afraid that it will be a license for banks to manipulate their financial statements.
But no change in mark-to-market accounting is necessary for the government to buy the assets at net realizable value, only a decision to buy the assets at the value they would have if there were a liquid market. Unlike a private buyer, the government does not have to worry about selling at any particular time, since it can hold the assets indefinitely.
Finally, one might ask why Mr. Geithner is claiming he needs more time to do something so simple and seemingly effective. The answer here, unfortunately, is that he seems to be barking up the wrong tree.
Mr. Geithner may believe that the banks have not written their assets down below their net realizable value. Or he may believe that others believe purchasing these troubled assets at net realizable value will be unfair to the taxpayers, and he doesn't want the criticism if he does so. That would explain why he is enlisting the private sector to make the pricing decision.
But Mr. Geithner should check his premises. There's a solution to his problem, the banks' problem and the economy's problem right in front of him.
Mr. Wallison is a senior fellow at the American Enterprise Institute.
AEI, Thursday, February 26, 2009
After its chilly reception of Treasury Secretary Tim Geithner's bank-rescue plan, the market is now worried about nationalization. As well it should. Because if the Obama administration cannot come up with a viable plan to take troubled assets off their balance sheets, major banks will not recover and nationalization -- a disastrous policy -- might actually become the last resort.
Many observers suggest that the Obama administration, like the Bush administration before it, is unable to solve the problem of how to price the banks' troubled assets. If the assets are bought at their "real" values, it is said, the money the banks would get would not be enough to keep them from insolvency. But if Treasury bought these assets at the supposedly bloated values the banks are carrying them, the taxpayers would be paying too much.
In fact, neither of these statements is likely to be true. Both taxpayers and banks could come out well -- and so would our economy -- if the government were to buy the assets at their "net realizable value," which is based on an assessment of their current cash flows, discounted by their expected credit losses over time. Here's the explanation:
The accounting rules relating to assets such as mortgage-backed securities require that they be marked to market if they are held for trading, or in a category called "available for sale." Most banks hold these assets in one of these two accounts, and so mark-to-market rules apply. What happens, then, when there is virtually no market for these assets -- as has been true for at least a year? In that case, accounting rules require the banks use whatever market indicators are available.
The banks follow two steps. First, they establish the net realizable value for the portfolio. This is simply what the value of the cash flows would bring in a fully functioning market, including discounts for several factors like anticipated future losses. Paradoxically, many of the banks' most troubled assets are flowing cash near their expected rates, and thus their net realizable values are higher than the values to which they have been written down.
The banks' second step, after establishing a net realizable value, is marking the assets to market. And that is where the write-downs occur.
Because there are few if any buyers for these assets, their market value is much reduced. Potential buyers are not interested because there is no assurance they will be able to resell the assets when they need to. In other words, potential buyers are afraid of becoming distressed sellers themselves if their financing should disappear before the market becomes liquid again.
Thus, under mark-to-market rules, the banks must discount their assets' net realizable values. And because of the write-downs, the banks' apparent capital is impaired.
These facts have enormous implications for government policy. If the losses on banks' assets are principally liquidity losses, they are temporary, and the only significant issue is whether the banks have the financing to carry the assets until liquidity returns to the asset-backed market.
And if this is indeed the case, the banks are not in any sense insolvent, and nationalization would be a huge mistake. On the other hand, if the government were to buy the assets at their net realizable values -- rather than their marked-down values -- this would significantly improve the capital positions of the major banks.
A hint of the true situation was contained in a remark by Vikram Pandit, the CEO of Citibank, in testimony before the House Financial Services Committee last week. He noted that Citi marks to market and that "those marks are reflected in the losses we've taken, as well as in our income statements and balance sheets." But Mr. Pandit then went on to point out that the bank has a duty to shareholders: "And the duty is if it turns out [the assets] are marked so far below what our lifetime expected credit losses are" -- i.e., their net realizable value -- "I can't sell [them]."
In other words, Citi has marked some assets below their net realizable value, and selling them at a price lower than that value would be unfair to its shareholders. This opens a key route to a solution for the government -- buying the assets at the value that banks like Citi would be willing to sell them.
Would the taxpayer be hurt if the government buys these troubled assets at these values? Not likely. The banks have already made an assessment of the assets' net realizable values, as Mr. Pandit suggests was done at Citi. The government can quickly verify the accuracy of these valuations, including the rates used for discounting, and can of course come up with its own lower evaluation if it disagrees.
But the important point is that if the banks' net realizable values are even close to correct, taxpayers will not lose much, if anything, if the government bought the assets at those values. Because their cash flows determine their value, the government should be able to sell the assets in the future at roughly what it paid for them.
But the key benefit is the boost in the banks' capital which comes from a sale now. This would eliminate doubts about banks' solvency and free up their ability and willingness to lend again.
If this is a win-win for the banks and the government, why is it that no one has thought about doing this before? Part of the answer is that the question has been phrased incorrectly.
Most of those who recognize the problems created by mark-to-market accounting have asked that the system be suspended. This has run into opposition from the accounting industry and investor groups, who are afraid that it will be a license for banks to manipulate their financial statements.
But no change in mark-to-market accounting is necessary for the government to buy the assets at net realizable value, only a decision to buy the assets at the value they would have if there were a liquid market. Unlike a private buyer, the government does not have to worry about selling at any particular time, since it can hold the assets indefinitely.
Finally, one might ask why Mr. Geithner is claiming he needs more time to do something so simple and seemingly effective. The answer here, unfortunately, is that he seems to be barking up the wrong tree.
Mr. Geithner may believe that the banks have not written their assets down below their net realizable value. Or he may believe that others believe purchasing these troubled assets at net realizable value will be unfair to the taxpayers, and he doesn't want the criticism if he does so. That would explain why he is enlisting the private sector to make the pricing decision.
But Mr. Geithner should check his premises. There's a solution to his problem, the banks' problem and the economy's problem right in front of him.
Mr. Wallison is a senior fellow at the American Enterprise Institute.
A Radical Presidency
A Radical Presidency, by Daniel Henninger
WSJ, Feb 26, 2009
When Barack Obama delivered his 44-minute acceptance speech in August among the majestic columns of Denver, it was apparent his would be an expansive presidency. Some wondered whether his solutions for a very long list of problems was too ambitious. On Tuesday, before Congress, he made clear across 52 minutes that the economic downturn would not deflect him from his Denver vision.
Instead, the economic crisis, as it did for Franklin D. Roosevelt, will serve as a stepping stone to a radical shift in the relationship between the people and their government. It will bind Americans to their government in ways not experienced since the New Deal. This tectonic shift, if successful, will be equal to the forces of public authority set in motion by Lyndon Johnson's Great Society. The Obama presidency is going to be a radical presidency.
Barack Obama is proposing that the U.S. alter the relationship between the national government and private sector that was put in place by Ronald Reagan and largely continued by the presidencies of Bill Clinton and the Bushes. Then, the private sector led the economy. Now Washington will chart its course.
Mr. Obama was clear about his intention. "Our economy did not fall into this decline overnight," he said. Instead, an "era" has "failed" to think about the nation's long-term future. With the urgency of a prophet, he says the "day of reckoning has arrived." The president said his purpose is not to "only revive this economy."
In fact, people would probably coronate Mr. Obama if he merely revived the Dow Jones Industrial Average. The Dow's fall since the Sept. 14 collapse of Lehman Brothers and sale of Merrill Lynch to Bank of America has eviscerated the net wealth of Americans across all incomes. Many are in the most dispirited state in their lifetimes.
Yesterday, the post-Obama Dow lost another percentage point. No matter. In his worldview, "short-term gains were prized over long-term prosperity." His speech did include a plan to address the market crisis. It consists of a program to support consumer and small-business loans; a mortgage refinancing mechanism; and the "full force of the government" to restart bank lending. Mr. Obama delivered that last element with a rather crude pistol-whipping of the nation's bankers and CEOs, thousands of whom have been operating their companies in a responsible, productive way.
This was just the prelude. Notwithstanding the daily nightmares of the economic crisis, now is the time to "boldly" rebuild the nation's "foundation." The U.S. budget he released today isn't just a budget. "I see it as a vision for America -- as a blueprint for our future." With it, Mr. Obama becomes the economy's Architect-in-Chief.
This blueprint will reshape energy and health. With energy, it proposes a gradual tear-down of the existing energy sector and its replacement with renewables. This vision has foundered before on the price disadvantage of noncarbon energy. Mr. Obama says he will "make" renewable energy profitable. He'll do this with a cap-and-trade system for carbon. The goal here is to "make" renewables economic by driving up the price of carbon.
The once-private auto industry, now run by federal "car czar" Steve Rattner, a reformed investment banker, is about to be ordered to produce "more efficient cars and trucks." Americans, like it or not, will buy these government-designed vehicles with government-supported car loans.
Mr. Obama believes health-care costs cause a bankruptcy "every 30 seconds" and will drive 1.5 million Americans from their homes this year. Therefore, the budget's vision on health is "historic" and a "downpayment" toward comprehensive health insurance. This "will not wait another year," he said.
He announced "tax-free universal savings accounts" as a solution to Social Security's crisis. This is a savings plan supported by federal matching contributions automatically deposited in individual accounts.
Mr. Obama acknowledged that this spending -- which in the public sector's new vocabulary is always "investment" -- will be costly. His read-my-lips moment was that no family with an income under $250,000 will pay a "single dime" in new taxes to support the construction of this new federal skyscraper. If that's still true in 2015, Mr. Obama will be walking back and forth across the Potomac River.
He told Congress he does not believe in bigger government. I don't believe that. It's becoming clear that the private sector is going to be demoted into a secondary role in the U.S. system. This isn't socialism, but it is not the system we've had since the early 1980s. It would be a reordered economic system, its direction chosen and guided by Mr. Obama and his inner circle.
Gov. Bobby Jindal's postspeech reply did not come close to recognizing the gauntlet Mr. Obama has thrown down to the opposition. Unless the GOP can discover a radical message of its own to distinguish it from the president's, it should prepare to live under Mr. Obama's radicalism for at least a generation.
WSJ, Feb 26, 2009
When Barack Obama delivered his 44-minute acceptance speech in August among the majestic columns of Denver, it was apparent his would be an expansive presidency. Some wondered whether his solutions for a very long list of problems was too ambitious. On Tuesday, before Congress, he made clear across 52 minutes that the economic downturn would not deflect him from his Denver vision.
Instead, the economic crisis, as it did for Franklin D. Roosevelt, will serve as a stepping stone to a radical shift in the relationship between the people and their government. It will bind Americans to their government in ways not experienced since the New Deal. This tectonic shift, if successful, will be equal to the forces of public authority set in motion by Lyndon Johnson's Great Society. The Obama presidency is going to be a radical presidency.
Barack Obama is proposing that the U.S. alter the relationship between the national government and private sector that was put in place by Ronald Reagan and largely continued by the presidencies of Bill Clinton and the Bushes. Then, the private sector led the economy. Now Washington will chart its course.
Mr. Obama was clear about his intention. "Our economy did not fall into this decline overnight," he said. Instead, an "era" has "failed" to think about the nation's long-term future. With the urgency of a prophet, he says the "day of reckoning has arrived." The president said his purpose is not to "only revive this economy."
In fact, people would probably coronate Mr. Obama if he merely revived the Dow Jones Industrial Average. The Dow's fall since the Sept. 14 collapse of Lehman Brothers and sale of Merrill Lynch to Bank of America has eviscerated the net wealth of Americans across all incomes. Many are in the most dispirited state in their lifetimes.
Yesterday, the post-Obama Dow lost another percentage point. No matter. In his worldview, "short-term gains were prized over long-term prosperity." His speech did include a plan to address the market crisis. It consists of a program to support consumer and small-business loans; a mortgage refinancing mechanism; and the "full force of the government" to restart bank lending. Mr. Obama delivered that last element with a rather crude pistol-whipping of the nation's bankers and CEOs, thousands of whom have been operating their companies in a responsible, productive way.
This was just the prelude. Notwithstanding the daily nightmares of the economic crisis, now is the time to "boldly" rebuild the nation's "foundation." The U.S. budget he released today isn't just a budget. "I see it as a vision for America -- as a blueprint for our future." With it, Mr. Obama becomes the economy's Architect-in-Chief.
This blueprint will reshape energy and health. With energy, it proposes a gradual tear-down of the existing energy sector and its replacement with renewables. This vision has foundered before on the price disadvantage of noncarbon energy. Mr. Obama says he will "make" renewable energy profitable. He'll do this with a cap-and-trade system for carbon. The goal here is to "make" renewables economic by driving up the price of carbon.
The once-private auto industry, now run by federal "car czar" Steve Rattner, a reformed investment banker, is about to be ordered to produce "more efficient cars and trucks." Americans, like it or not, will buy these government-designed vehicles with government-supported car loans.
Mr. Obama believes health-care costs cause a bankruptcy "every 30 seconds" and will drive 1.5 million Americans from their homes this year. Therefore, the budget's vision on health is "historic" and a "downpayment" toward comprehensive health insurance. This "will not wait another year," he said.
He announced "tax-free universal savings accounts" as a solution to Social Security's crisis. This is a savings plan supported by federal matching contributions automatically deposited in individual accounts.
Mr. Obama acknowledged that this spending -- which in the public sector's new vocabulary is always "investment" -- will be costly. His read-my-lips moment was that no family with an income under $250,000 will pay a "single dime" in new taxes to support the construction of this new federal skyscraper. If that's still true in 2015, Mr. Obama will be walking back and forth across the Potomac River.
He told Congress he does not believe in bigger government. I don't believe that. It's becoming clear that the private sector is going to be demoted into a secondary role in the U.S. system. This isn't socialism, but it is not the system we've had since the early 1980s. It would be a reordered economic system, its direction chosen and guided by Mr. Obama and his inner circle.
Gov. Bobby Jindal's postspeech reply did not come close to recognizing the gauntlet Mr. Obama has thrown down to the opposition. Unless the GOP can discover a radical message of its own to distinguish it from the president's, it should prepare to live under Mr. Obama's radicalism for at least a generation.
Are Executives Paid Too Much?
Are Executives Paid Too Much? By Judith F. Samuelson and Lynn A. Stout
Congress asks the wrong question and comes up with the wrong answer.
A last-minute provision added to the stimulus bill President Barack Obama signed into law on Feb. 17 restricts companies that accept federal bailout funds from paying performance bonuses that exceed one-third of an executive's total annual compensation. This punitive measure may be understandable as a reflection of populist fury over bonuses being paid to heads of failing companies that received billions in taxpayer money. But it utterly fails to fix the real problem with executive compensation: short-termism.
Our economy didn't get into this mess because executives were paid too much. Rather, they were paid too much for doing the wrong things.
There have been nearly as many reasons proposed for the current crisis as there are experts to propose them. But if we had to pick one overarching cause, it would be business leaders taking on excessive risk in the quest to increase next quarter's profits. This short-term thinking, in turn, was driven by two trends in the business world: shareholders' increasingly clamorous demands for higher earnings, and compensation plans that paid managers handsomely for taking on risks today that would only be realized later.
In the summer of 2006, well before most economists had any inkling of the calamity that was about to unfold, the Aspen Institute brought together a diverse mix of high-level business leaders, investment bankers, governance experts, pension fund managers, and union representatives. When you put successful people with such disparate and conflicting backgrounds and loyalties together in the same room, the result can be a shouting match. But the members of the newly formed Aspen Corporate Values Strategy Group found they shared an unprecedented consensus: Short-term thinking had become endemic in business and investment, and it posed a grave threat to the U.S. economy.
People in all walks of life need months or years to master a significant new project, whether it be getting a graduate degree or perfecting a 75 mph minor-league pitch into a 90 mph major-league fastball. Large corporations operate on a time scale that can be even longer. They pursue complex, uncertain projects that take years or decades to reach fruition: developing brand names, building specialized manufacturing facilities, exploring and drilling for oil and gas fields, or developing new drugs, products and technologies.
Yet over the past decade, corporations in general -- and banks and finance companies in particular -- have become increasingly focused on a single, short-term goal: raising share price. Rather than focusing on producing quality products and services, they have become consumed with earnings management, "financial engineering," and moving risks off their balance sheets.
This collective myopia had many causes. One cause, the Aspen Group concluded, was the demands of the very shareholders who are now suffering most from the stock market's collapse. It is extremely difficult for an outside investor to gauge whether a company is making sound, long-term investments by training employees, improving customer service, or developing promising new products. By comparison, it's easy to see whether the stock price went up today. As a result, institutional and individual investors alike became preoccupied with quarterly earnings forecasts and short-term share price changes, and were quick to challenge the management of any bank or corporation that failed to "maximize shareholder value."
Meanwhile, inside the firm, executives were being encouraged to adopt a similarly short-term focus through the widespread use of stock options. The value of a stock option depends entirely on the market price of the company's stock on the date the option is exercised. As a result, managers were incentivized to focus their efforts not on planning for the long term, but instead on making sure that share price was as high as possible on their option exercise date (usually only a year or two in the future), through whatever means possible.
Executives eager to maximize the value of stock options began adopting massive stock-buyback programs that drained much-needed capital out of firms; jumping into risky "proprietary trading" strategies with credit default swaps and other derivatives; cutting payroll and research-and-development budgets; and even resorting to outright accounting fraud, as Enron's options-fueled and stock-price obsessed executives did.
The system was perfectly designed to produce the results we have now. To get different results, we need a different system.
Simply cutting executive pay is not going to get either executives or investors to pay more attention to companies' long-term health. To get business back on track, the Aspen Group concluded, it is essential to focus on not just one but three strategies: designing new corporate performance metrics, changing the nature of investor communications, and reforming compensation structures.
Starting with metrics, we need new ways to measure long-run corporate performance, rather than simply relying on stock price. In terms of investor communications, companies need to ensure corporate officers and directors communicate with shareholders not about next quarter's expected profits, but about next year's and even next decade's.
Finally, and perhaps most importantly, companies must change the ways they reward not only CEOs and midlevel executives, but also institutional portfolio managers at hedge funds, mutual funds, and pension funds. Executives and managers should be rewarded for the actions and decisions within their control, not general market movements. Incentive-based pay should be based on long-term metrics, not one year's profits. Top executives who receive equity-based compensation should be prohibited from using derivatives and other hedging techniques to offload the risk that goes along with equity compensation, and instead be required to continue holding a significant portion of their equity for a period beyond their tenure.
It's always tempting in the midst of a crisis to look for a quick fix. But that's the kind of short-term focus that got the business world into trouble in the first place. So long as our metrics, disclosures and compensation systems encourage executives and institutional fund managers to look only a year or two ahead, we have to expect that that is what they'll continue to do. It's time for a long-term investment in promoting long-term business thinking.
Ms. Samuelson is the founder and executive director of the Aspen Institute Business and Society Program. Ms. Stout is professor of corporate and securities law at the UCLA School of Law and director of the UCLA-Sloan Research Program on Business Organizations.
Congress asks the wrong question and comes up with the wrong answer.
A last-minute provision added to the stimulus bill President Barack Obama signed into law on Feb. 17 restricts companies that accept federal bailout funds from paying performance bonuses that exceed one-third of an executive's total annual compensation. This punitive measure may be understandable as a reflection of populist fury over bonuses being paid to heads of failing companies that received billions in taxpayer money. But it utterly fails to fix the real problem with executive compensation: short-termism.
Our economy didn't get into this mess because executives were paid too much. Rather, they were paid too much for doing the wrong things.
There have been nearly as many reasons proposed for the current crisis as there are experts to propose them. But if we had to pick one overarching cause, it would be business leaders taking on excessive risk in the quest to increase next quarter's profits. This short-term thinking, in turn, was driven by two trends in the business world: shareholders' increasingly clamorous demands for higher earnings, and compensation plans that paid managers handsomely for taking on risks today that would only be realized later.
In the summer of 2006, well before most economists had any inkling of the calamity that was about to unfold, the Aspen Institute brought together a diverse mix of high-level business leaders, investment bankers, governance experts, pension fund managers, and union representatives. When you put successful people with such disparate and conflicting backgrounds and loyalties together in the same room, the result can be a shouting match. But the members of the newly formed Aspen Corporate Values Strategy Group found they shared an unprecedented consensus: Short-term thinking had become endemic in business and investment, and it posed a grave threat to the U.S. economy.
People in all walks of life need months or years to master a significant new project, whether it be getting a graduate degree or perfecting a 75 mph minor-league pitch into a 90 mph major-league fastball. Large corporations operate on a time scale that can be even longer. They pursue complex, uncertain projects that take years or decades to reach fruition: developing brand names, building specialized manufacturing facilities, exploring and drilling for oil and gas fields, or developing new drugs, products and technologies.
Yet over the past decade, corporations in general -- and banks and finance companies in particular -- have become increasingly focused on a single, short-term goal: raising share price. Rather than focusing on producing quality products and services, they have become consumed with earnings management, "financial engineering," and moving risks off their balance sheets.
This collective myopia had many causes. One cause, the Aspen Group concluded, was the demands of the very shareholders who are now suffering most from the stock market's collapse. It is extremely difficult for an outside investor to gauge whether a company is making sound, long-term investments by training employees, improving customer service, or developing promising new products. By comparison, it's easy to see whether the stock price went up today. As a result, institutional and individual investors alike became preoccupied with quarterly earnings forecasts and short-term share price changes, and were quick to challenge the management of any bank or corporation that failed to "maximize shareholder value."
Meanwhile, inside the firm, executives were being encouraged to adopt a similarly short-term focus through the widespread use of stock options. The value of a stock option depends entirely on the market price of the company's stock on the date the option is exercised. As a result, managers were incentivized to focus their efforts not on planning for the long term, but instead on making sure that share price was as high as possible on their option exercise date (usually only a year or two in the future), through whatever means possible.
Executives eager to maximize the value of stock options began adopting massive stock-buyback programs that drained much-needed capital out of firms; jumping into risky "proprietary trading" strategies with credit default swaps and other derivatives; cutting payroll and research-and-development budgets; and even resorting to outright accounting fraud, as Enron's options-fueled and stock-price obsessed executives did.
The system was perfectly designed to produce the results we have now. To get different results, we need a different system.
Simply cutting executive pay is not going to get either executives or investors to pay more attention to companies' long-term health. To get business back on track, the Aspen Group concluded, it is essential to focus on not just one but three strategies: designing new corporate performance metrics, changing the nature of investor communications, and reforming compensation structures.
Starting with metrics, we need new ways to measure long-run corporate performance, rather than simply relying on stock price. In terms of investor communications, companies need to ensure corporate officers and directors communicate with shareholders not about next quarter's expected profits, but about next year's and even next decade's.
Finally, and perhaps most importantly, companies must change the ways they reward not only CEOs and midlevel executives, but also institutional portfolio managers at hedge funds, mutual funds, and pension funds. Executives and managers should be rewarded for the actions and decisions within their control, not general market movements. Incentive-based pay should be based on long-term metrics, not one year's profits. Top executives who receive equity-based compensation should be prohibited from using derivatives and other hedging techniques to offload the risk that goes along with equity compensation, and instead be required to continue holding a significant portion of their equity for a period beyond their tenure.
It's always tempting in the midst of a crisis to look for a quick fix. But that's the kind of short-term focus that got the business world into trouble in the first place. So long as our metrics, disclosures and compensation systems encourage executives and institutional fund managers to look only a year or two ahead, we have to expect that that is what they'll continue to do. It's time for a long-term investment in promoting long-term business thinking.
Ms. Samuelson is the founder and executive director of the Aspen Institute Business and Society Program. Ms. Stout is professor of corporate and securities law at the UCLA School of Law and director of the UCLA-Sloan Research Program on Business Organizations.
On WaPo's article "Climate Fears Are Driving 'Ecomigration' Across Globe"
Swimming Against the Tide
World Climate Report, Feb 25, 2009
http://www.worldclimatereport.com/index.php/2009/02/25/swimming-against-the-tide/
The Washington Post ran a front page story on Monday, February 23, describing ecomigration—in this case, people moving to avoid the impacts of global warming. The story was odd because in the starring role was a fellow moving his family from Montgomery County, Maryland, to New Zealand! When we think of reasons people want to leave Montgomery County, global warming doesn’t jump to the top of list—perhaps moving to try to get away from all the traffic produced by the large influx of all the other people moving into the region is a more likely candidate.
Another potential ecomigrant highlighted in the Post article who was considering fleeing from global warming’s way was a guy who was thinking of moving back to Michigan from his home in Florida. Again, someone who is apparently swimming against the tide of domestic (and otherwise) migrants into the state of Florida—one the fastest growing places in the U.S.
Now maybe these examples were selected by Washington Post staffwriter Shankar Vedantam to show that people in places other than the Pacific atolls of Tuvalu or Kiribati are concerned about the coming climate, but the choices were strange.
[As an aside, for an amusing and enlightening glimpse into what kind of earthly paradises Tuvalu or Kiribati are (not), we recommend J. Maarten Troost’s descriptions of his time spent there as chronicled in his book The Sex Lives of Cannibals: Adrift in the Equatorial Pacific (hint: Chapter 7 is titled “In which the Author settles into the theme of Absence, in particular the paucity of food options, and offers an account of the Great Beer Crisis, when the island’s shipment of Ale was, inexcusably, misdirected to Kiritimati Island, far, far away from those who need it most”)]
For one thing, you’ve got to wonder just how on earth the Post writer managed to find someone in Montgomery Co. moving to New Zealand because of global warming? Is there a national registry of ecomigrants somewhere?
For another, while these folks are moving out (or at least thinking about it) many tens of thousands of people are moving in. Figure 1 shows recent population growth across the U.S., and the DC area and Florida are leading the way. Apparently, these intrepid souls are throwing caution to the wind and moving (voluntarily) into places that will increase their climate risk.
Obviously, in their minds the rewards won out over the risks.
[Figure 1. Typical example of U.S. population trends, in this case, the trend from 2000 to 2003 (source: http://academic.marion.ohio-state.edu/schul/400/0003popchg.png)]
Which brings us to a question that has been nagging us for some time, and that maybe someone would be interested in helping us figure out the answer (if so let us know!)—are Americans assuming more climate risk voluntarily (by moving around) than they would be assuming involuntarily from climate change (by staying put)? If it is the case (and we would guess it is), then clearly the impacts of climate change are something that are not a major factor in our ultimate choice of our places of residence (with a few exceptions that Shankar Vedantam managed to ferret out).
That a recent poll by the Pew Research Center for the People and the Press that found that climate change was last on our list of top rpiorities for the new Administration to deal with seems to further support this contention.
Basically, Shankar Vedantam’s article in Monday’s Post completely missed the mark, or at least did not set the proper context. In the U.S., at least, ecomigration is most likely driven to a far larger degree by “climate” rather than “climate change” (and many of our choices are made despite assuming a greater climate risk).
World Climate Report, Feb 25, 2009
http://www.worldclimatereport.com/index.php/2009/02/25/swimming-against-the-tide/
The Washington Post ran a front page story on Monday, February 23, describing ecomigration—in this case, people moving to avoid the impacts of global warming. The story was odd because in the starring role was a fellow moving his family from Montgomery County, Maryland, to New Zealand! When we think of reasons people want to leave Montgomery County, global warming doesn’t jump to the top of list—perhaps moving to try to get away from all the traffic produced by the large influx of all the other people moving into the region is a more likely candidate.
Another potential ecomigrant highlighted in the Post article who was considering fleeing from global warming’s way was a guy who was thinking of moving back to Michigan from his home in Florida. Again, someone who is apparently swimming against the tide of domestic (and otherwise) migrants into the state of Florida—one the fastest growing places in the U.S.
Now maybe these examples were selected by Washington Post staffwriter Shankar Vedantam to show that people in places other than the Pacific atolls of Tuvalu or Kiribati are concerned about the coming climate, but the choices were strange.
[As an aside, for an amusing and enlightening glimpse into what kind of earthly paradises Tuvalu or Kiribati are (not), we recommend J. Maarten Troost’s descriptions of his time spent there as chronicled in his book The Sex Lives of Cannibals: Adrift in the Equatorial Pacific (hint: Chapter 7 is titled “In which the Author settles into the theme of Absence, in particular the paucity of food options, and offers an account of the Great Beer Crisis, when the island’s shipment of Ale was, inexcusably, misdirected to Kiritimati Island, far, far away from those who need it most”)]
For one thing, you’ve got to wonder just how on earth the Post writer managed to find someone in Montgomery Co. moving to New Zealand because of global warming? Is there a national registry of ecomigrants somewhere?
For another, while these folks are moving out (or at least thinking about it) many tens of thousands of people are moving in. Figure 1 shows recent population growth across the U.S., and the DC area and Florida are leading the way. Apparently, these intrepid souls are throwing caution to the wind and moving (voluntarily) into places that will increase their climate risk.
Obviously, in their minds the rewards won out over the risks.
[Figure 1. Typical example of U.S. population trends, in this case, the trend from 2000 to 2003 (source: http://academic.marion.ohio-state.edu/schul/400/0003popchg.png)]
Which brings us to a question that has been nagging us for some time, and that maybe someone would be interested in helping us figure out the answer (if so let us know!)—are Americans assuming more climate risk voluntarily (by moving around) than they would be assuming involuntarily from climate change (by staying put)? If it is the case (and we would guess it is), then clearly the impacts of climate change are something that are not a major factor in our ultimate choice of our places of residence (with a few exceptions that Shankar Vedantam managed to ferret out).
That a recent poll by the Pew Research Center for the People and the Press that found that climate change was last on our list of top rpiorities for the new Administration to deal with seems to further support this contention.
Basically, Shankar Vedantam’s article in Monday’s Post completely missed the mark, or at least did not set the proper context. In the U.S., at least, ecomigration is most likely driven to a far larger degree by “climate” rather than “climate change” (and many of our choices are made despite assuming a greater climate risk).
Wednesday, February 25, 2009
Greens, population policies, global warming and liberal democracy
All the Leaves are Brown, by Steven F Hayward
Claremont Review of Books, Winter 2008
http://www.claremont.org/publications/crb/id.1588/article_detail.asp
Full article w/correct format here.
Books discussed in this essay:
The World Without Us, by Alan Weisman
American Earth: Environmental Writing Since Thoreau, edited by Bill McKibben, Foreword by Al Gore
How We Can Save the Planet: Preventing Global Climate Catastrophe, by Mayer Hillman, Tina Fawcett, and Sudhir Chella Rajan
The Climate Change Challenge and the Failure of Democracy, by David Shearman and Joseph Wayne Smith
The Green State: Rethinking Democracy and Sovereignty, by Robyn Eckersley
Fatal Misconception: The Struggle to Control World Population, by Matthew Connelly
Break Through: From the Death of Environmentalism to the Politics of Possibility, by Ted Nordhaus and Michael Shellenberger
Where We Stand: A Surprising Look at the Real State of Our Planet, by Seymour Garte
Useless Arithmetic: Why Environmental Scientists Can't Predict the Future, by Orrin H. Pilkey and Linda Pilkey-Jarvis
"On what principle is it," wondered Thomas Babington Macaulay in 1830, "that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?" Environmentalism didn't exist in its current form in Macaulay's time, or he would easily have discerned its essential pessimism bordering at times on a loathing of humanity. A trip down the environment and earth sciences aisle of any larger bookstore is usually a tour of titles that cover the narrow range from dismay to despair.
On the surface this is not exceptional. Titles predicting decline, decay, and disaster are just as numerous in the real estate, economics, and social science shelves, though, ironically, not so much in the religion book racks, where one would expect to find apocalypticism well represented. This is an important distinction: unlike the eschatology of all major religions, the eco-apocalypse is utterly without hope of redemption for man or nature. The greens turn purple at the suggestion that most environmental conditions in rich nations are actually improving, and they bemoan the lack of "progress" toward the transformation of the human soul that is thought necessary for the planet's salvation. Yet some cracks are starting to appear in their dreary and repetitive story line. Although extreme green ideology won't go away any time soon—the political and legal institutions of the environmental movement are too well established—there are signs that the public and a few next-generation environmentalists are ready to say goodbye to all that. There are even some liberal authors with environmentalist sympathies who are turning against the environmental establishment. But it is necessary to claw our way through the deepening slough of green despondency to see this potential turning point.
More than 30 years ago political scientist Anthony Downs wrote in the Public Interest of a five-step "issue-attention cycle" through which public enthusiasm for an issue gradually diminishes as we come to recognize the high cost of drastic action, and that the nature of the problem was exaggerated or misconceived. The environment, he wrote, would have a longer cycle than most issues because of its diffuse nature, but it appears that the public is finally arriving at the late stages of Downs's cycle. Opinion surveys show that the public isn't jumping on the global warming bandwagon despite a multi-million dollar marketing campaign and full-scale media hysteria. More broadly there are signs that "green fatigue" is setting in. Magazine publishers recently reported that their special Earth Day "green" issues generated the lowest newsstand sales of all issues published in 2008. "Suddenly Being Green Is Not Cool Any More," read a London Times headline in August.
This has been building for a long time. Three years ago New York Times green-leaning columnist Nicholas Kristof lamented that the environmental movement was losing credibility because of its doomsaying monomania, with the result that "environmental alarms have been screeching for so long that, like car alarms, they are now just an irritating background noise." Environmental leaders did not take well to his wandering from the reservation. In response to the popular indifference to green alarms, conventional environmentalists have ratcheted up their level of vitriol against humanity and democratic institutions. One of the most popular books of 2007 among environmentalists was The World Without Us by Alan Weisman, which projects a "thought experiment" about what would occur if human beings were suddenly removed entirely from the planet. Answer: nature would reassert herself, and ultimately remove nearly all traces of human civilization within several millennia—a mere blink of an eye in the planetary timescale. Environmentalists cheered Weisman's vivid depiction of the resilience of nature, but what thrilled them was the scenario of a humanless earth. Weisman made sure to stroke his audience's self-loathing with plenty of boilerplate about resource exhaustion and overpopulation. The book rocketed up the best-seller list, the latest in a familiar genre stretching back at least to Fairfield Osborn's Our Plundered Planet in 1948, arguably the first neo-Malthusian doomsday tract of modern environmentalism. Time magazine named The World Without Us the number one non-fiction book of 2007.
Rethinking Democracy
The same view of environmentalism is on display in the Library of America's American Earth: Environmental Writing Since Thoreau. This collection, though worthy in some respects, has to be judged a disappointment compared to many other fine Library of America offerings—a shortcoming entirely attributable to the selection of Bill McKibben as editor. (The easier clue is the Foreword by Al Gore.) McKibben is another in the sad line of environmentalists who became bores by endlessly reprising the one-hit wonders of their youth (in McKibben's case, his mildly interesting 1989 book, The End of Nature). He begins and ends with Henry David Thoreau—"a Buddha with a receipt from the hardware store"—because he thinks environmental writing is to be distinguished from nature writing. Environmental writing, McKibben explains, "takes as its subject the collision between people and the rest of the world."
It was probably too much to expect that McKibben would balance the usual suspects such as Rachel Carson, Lynn White, Paul Ehrlich, and Garrett Hardin with such intelligent dissenters as Julian Simon, Terry Anderson, Frederick Jackson Turner, and R.J. Smith. But McKibben's adherence to environmental correctness is so narrowly conceived that he excludes a number of American authors who offer worthy reflections on man and nature. His tacit premise that man is not part of nature, or is opposed to the rest of nature, necessarily constricts the range of perspectives that can be brought to bear on the broad idea of "the environment." So though his collection includes Theodore Roosevelt, by representing American environmental writing as beginning with Thoreau, it excludes worthy earlier reflections such as Thomas Jefferson's Notes on the State of Virginia (or any of Jefferson's other agrarian reflections that can be read as precursors to Wendell Berry, who is included in McKibben's reader), or Tocqueville's prescient observations on American wilderness, our emerging attitudes toward it, and its relation to our democratic character.
McKibben and many other environmental writers affect an indifference toward, or transcendence of, politics in the ordinary sense, but ultimately cannot conceal their rejection of the liberal tradition. Here we observe the irony of modern environmentalism: the concern for the preservation of unchanged nature has grown in tandem with the steady erosion in our belief in unchanging human nature; the concern for the "rights of nature" has come to embrace a rejection of natural rights for humans. McKibben is one of many current voices (Gore is another) who like to express their environmentalism by decrying "individualism" (McKibben calls it "hyperindividualism"). Finding that individualism is "the sole ideology of a continent," he explains:
Fighting the ideology that was laying waste to so much of the planet demanded going beyond that individualism. Many found the means to do that in the notion of ‘community'—a word almost as fuzzy and hard to pin down as ‘wild,' but one that has emerged as an even more compelling source of motive energy for the environmental movement.
This is not a new theme for McKibben. Al Gore employed the same "communitarian" trope in his first and most famous environmental book, Earth in the Balance (1992), where, in the course of arguing that the environment should be the "central organizing principle" of civilization, he suggested that the problem with individual liberty is that we have too much of it. This preference for soft despotism has become more concrete with the increasing panic over global warming in the past few years. Several environmental authors now argue openly that democracy itself is the obstacle and needs to be abandoned. A year ago a senior fellow emeritus at Britain's Policy Studies Institute, Mayer Hillman, author of How We Can Save the Planet, told a reporter, "When the chips are down I think democracy is a less important goal than is the protection of the planet from the death of life, the end of life on it. This [rationing] has got to be imposed on people whether they like it or not." (Hillman openly advocates resource rationing.) Another recent self-explanatory book is The Climate Change Challenge and the Failure of Democracy by Australians David Shearman and Joseph Wayne Smith. Shearman argued recently that
[l]iberal democracy is sweet and addictive and indeed in the most extreme case, the U.S.A., unbridled individual liberty overwhelms many of the collective needs of the citizens.... There must be open minds to look critically at liberal democracy. Reform must involve the adoption of structures to act quickly regardless of some perceived liberties.
Whom does Shearman admire as an example of environmental governance to be emulated? China, precisely because of its authoritarian government: "[T]he savvy Chinese rulers may be first out of the blocks to assuage greenhouse emissions and they will succeed by delivering orders.... We are going to have to look at how authoritarian decisions based on consensus science can be implemented to contain greenhouse emissions." Separately, Shearman has written:
To retain an inhabitable earth we may have to compromise the eternal vicissitudes of democracy for an informed leadership that directs. There are countries that fall within this requirement and we should use them to initiate more active mitigation.... The People's Republic of China may hold the key to innovative measures that can both arrest the expected surge in emissions from developing countries and provide developed nations with the means to alternative energy. China curbs individual freedom in favour of communal need. The State will implement those measures seen to be in the common good.
Perhaps the film version will be called An Inconvenient Democracy.
Academic political theorists who take up what might be called "green constitutionalism" understand that Lockean liberalism has to be overturned and replaced. In The Green State: Rethinking Democracy and Sovereignty, Australian political scientist Robyn Eckersley offers up an approach that, despite being swathed in postmodern jargon, is readily transparent. The "ecocentric," transnational "green state" Eckersley envisions is represented as an explicit alternative to "the classical liberal state, the indiscriminate growth-dependent welfare state, and the increasingly ascendant neoliberal competition state." Achieving a post-liberal state requires rethinking the entire Enlightenment project:
By framing the problem as one of rescuing and reinterpreting the Enlightenment goals of autonomy and critique, it is possible to identify what might be called a mutually informing set of "liberal dogmas" that have for too long been the subject of unthinking faith rather than critical scrutiny by liberals. The most significant of these dogmas are a muscular individualism and an understanding of the self-interested rational actor as natural and eternal; a dualistic conception of humanity and nature that denies human dependency on the biological world and gives rise to the notion of human exceptionalism from, and instrumentalism and chauvinism toward, the natural world; the sanctity of private property rights; the notion that freedom can only be acquired through material plenitude; and overconfidence in the rational mastery of nature through further scientific and technological progress.
Every traditional liberal or "progressive" understanding is up for grabs in this framework. This passage does not require much "parsing" to grasp its practical implications—the establishment of institutions and governing regimes that are not answerable to popular will, or that depend on transforming popular will in a specified direction. Eckersley makes this clear in a passage about the "social learning" function of "deliberative democracy," which she describes as "the requirement that participants be open and flexible in their thinking, that they enter a public dialogue with a preparedness to have their preferences transformed through reasoned argument." (Emphasis added.) In practice, of course, Eckersley's "reasoned argument" would resemble nothing so much as the infamous "ideology struggle" sessions of Mao's Cultural Revolution. This outlook gives new meaning to the old cliché about rulers selecting the people, rather than vice versa.
Yesterday's Crisis Mongers
Is there any respite from this dreary despotic nonsense? Here and there, a few authors of sufficient independence of mind can be found who have broken with green orthodoxy in significant ways. The first of note is Matthew Connelly of Columbia University, whose brilliant new history of the population control movement, Fatal Misconception: The Struggle to Control World Population, is useful not simply on its theme but for the light it sheds on the political corruption that inevitably accompanies these world-saving enthusiasms. The "population bomb" can be seen as a precursor to the global warming crisis of today: as far back as the early decades of the 20th century the population crisis was put forward as the justification for global governance and coercive, non-consensual rule.
Connelly recounts one of the first major international conferences on world population, held in Geneva in 1927, where Albert Thomas, a French trade unionist, asked, "Has the moment yet arrived for considering the possibility of establishing some sort of supreme supranational authority which would regulate the distribution of population on rational and impartial lines, by controlling and directing migration movements and deciding on the opening-up or closing of countries to particular streams of immigration?" Connelly also describes the 1974 World Population Conference, which "witnessed an epic battle between starkly different versions of history and the future: one premised on the preservation of order, if necessary by radical new forms of global governance; the other inspired by the pursuit of justice, beginning with unfettered sovereignty for newly independent nations." (Emphasis added.)
The Intergovernmental Panel on Climate Change (IPCC), the U.N.-sponsored body that is the juggernaut of today's climate campaign, finds its precedent in the International Union for the Scientific Investigation of Population Problems (IUSIPP), spawned at the 1927 World Population Conference. A bevy of NGOs, most prominently the International Planned Parenthood Federation (IPPF) and Zero Population Growth (ZPG), later sprang into being, working hand-in-glove with the same private foundations (especially Ford and Rockefeller) and global financial institutions, such as the World Bank, that today are in the forefront of the climate campaign.
As Connelly lays out in painstaking detail, population control programs, aimed chiefly at developing nations, proliferated despite clear human rights abuses and, more importantly, new data and information that called into question many of the fundamental assumptions of the crisis mongers. Connelly recalls computer projections and economic models that offered precise and "scientifically grounded" projections of future global ruin from population growth, all of which were quickly falsified. The mass famines and food riots that were predicted never occurred; fertility rates began to fall everywhere, even in nations that lacked "family planning" programs.
The coercive nature of the population control programs in the field was appalling. India, in particular, became "a vast laboratory for the ultimate population control campaign," the chilling practices of which Connelly recounts:
Sterilizations were performed on 80-year-old men, uncomprehending subjects with mental problems, and others who died from untreated complications. There was no incentive to follow up patients. The Planning Commission found that the quality of postoperative care was "the weakest link." In Maharashtra, 52 percent of men complained of pain, and 16 percent had sepsis or unhealed wounds. Over 40 percent were unable to see a doctor. Almost 58 percent of women surveyed experienced pain after IUD insertion, 24 percent severe pain, and 43 percent had severe and excessive bleeding. Considering that iron deficiency was endemic in India, one can only imagine the toll the IUD program took on the health of Indian women.
These events Connelly describes took place in 1967, but instead of backing off, the Indian government—under constant pressure and lavish financial backing from the international population control organizations—intensified these coercive programs in the 1970s. Among other measures India required that families with three or more children had to be sterilized to be eligible for new housing (which the government, not the private market, controlled). "This war against the poor also swept across the countryside," Connelly notes:
In one case, the village of Uttawar in Haryana was surrounded by police, hundreds were taken into custody, and every eligible male was sterilized. Hearing what had happened, thousands gathered to defend another village named Pipli. Four were killed when police fired upon the crowd. Protesters gave up only when, according to one report, a senior government official threatened aerial bombardment. The director of family planning in Maharashtra, D.N. Pai, considered it a problem of "people pollution" and defended the government: "If some excesses appear, don't blame me.... You must consider it something like a war. There could be a certain amount of misfiring out of enthusiasm. There has been pressure to show results. Whether you like it or not, there will be a few dead people."
In all, over 8 million sterilizations, many of them forced, were conducted in India in 1976—"draconian population control," Connelly writes, "practiced on an unprecedented scale.... There is no way to count the number who were being hauled away to sterilization camps against their will." Nearly 2,000 died from botched surgical procedures. The people of India finally put the brakes on this coercive utopianism, at the ballot box: the Congress Party, which had championed the family planning program as one of its main policies, was swept from office in a landslide, losing 141 of 142 contested seats in the areas with the highest rate of sterilizations. At least the people of India had recourse to the ballot box; the new environmental constitutionalism will surely aim to eliminate this remedy.
A System without a Brain
One reason why enthusiasms and programs maintain their forward momentum in the face of changing facts and circumstances is the culture of corruption that inevitably comes to envelope self-selecting leadership groups organized around a crisis. Connelly ably captures this seamy side of the story:
Divided from within and besieged from without, leaders created a "system without a brain," setting in motion agencies and processes that could not be stopped. The idea of a "population crisis" provided the catalyst. But this was a system that ran on money. Earmarked appropriations greased the wheels of balky bureaucracies, and lavish funding was the fuel that drove it forward. But so much poured in so fast that spending became an end unto itself. The pressure to scale up and show results transformed organizations ostensibly dedicated to helping people plan their families into tools for social engineering.... Rather than accept constraints or accountability, they preferred to let population control go out of control. (Emphasis added.)
Corruption extended on a personal level to the New Class directing these world-saving crusades, what Connelly calls "the new jet set of population experts."
The lifestyle of the leaders of the population control establishment reflected the power of an idea whose time had come as well as the influence of the institutions that were now backing it.... Alan Guttmacher was in the habit of beginning letters to the Planned Parenthood membership with comments like "This is written 31,000 feet aloft as I fly from Rio to New York." He insisted on traveling with his wife, first class, with the IPPF picking up the tab. Ford [Foundation] officials flew first class with their spouses as a matter of policy. One wonders why Douglas Ensminger [the Ford Foundation's India officer] ever left his residence in Dehli—he was served by a household staff of nine, including maids, cooks, gardeners, and chauffeurs. He titled this part of his oral history "The ‘Little People' of India." Ensminger insisted on the need to pay top dollar and provide a plush lifestyle to attract the best talent, even if the consultants he recruited seemed preoccupied with their perks. One of these strivers ran his two-year old American sedan without oil just so that the Ford Foundation would have to replace it with the latest model....
For population experts this was the beginning of constantly expanding opportunities. The budgets, the staff, the access were all increasing even more quickly than the population growth their programs were meant to stop. There was "something in it for everyone," Population Association of America President John Kantner later recalled: "the activist, the scholar, the foundation officer, the globe-circling consultant, the wait-listed government official. World Conferences, a Population Year, commissions, select committees, new centers for research and training, a growing supply of experts, pronouncements by world leaders, and, most of all, money—lots of it."
Sounds rather like the moveable feast that is the IPCC's annual meetings, often held in hardship locales such as Bali, to press ahead with anti-global warming efforts. The magnitude of the traveling circus of the climate campaign has come to dwarf the population crusade. Prior to the arrival of climate change as a crisis issue, the largest single U.S. government science research project was the acid rain study of the 1980s (the National Acid Precipitation Assessment Project, or NAPAP for short), which cost about $500 million, and concluded that the acid rain problem had been vastly overestimated. (Public opinion polls in the late 1970s rated acid rain the most significant environmental problem of the time.) Today the U.S. government is spending multiple billions each year on climate research—so much through so many different agencies and budget sources that it is impossible to estimate the total reliably.
With so much money at stake, and with so many careers staked to the catastrophic climate scenario, one could predict that the entire apparatus would be resistant to new information and reasonable criticism. This is exactly what happened in the population crusade. When compelling critics of the population bomb thesis arose—people who might be called "skeptics," such as Julian Simon—the population campaign reacted by circling the wagons and demonizing its critics, just as global warming skeptics today are subjected to relentless ad hominem attacks. Connelly again:
Leaders of the population control movement responded...by defending their record and fighting back. They lined up heads of state, major corporations, and international organizations behind a global strategy to slow population growth. But they also worked more quietly to insulate their projects from political opposition by co-opting or marginalizing critics, strengthening transnational networks, and establishing more free-standing institutions exempt from normal government oversight.
This is exactly the playbook of the climate campaign today. Nevertheless, it is likely to follow the same trajectory as the population control movement—gradual decline in salience to the point that even the United Nations, in the early 1990s, officially downgraded the priority of the issue. This is likely to happen to climate change even if dramatic predictions of climate change turn out to be true.
Liberal Environmentalists
A few environmentalists on the left understand the profound defects of the radical green approach to politics, along with the conventional green approach to global warming. Ted Nordhaus and Michael Shellenberger, self-described "progressives" and authors of one of the most challenging recent books on the environment, Break Through: From the Death of Environmentalism to the Politics of Possibility, recognize and lament the authoritarianism of conventional environmentalism. "Environmental tales of tragedy begin with Nature in harmony and almost always end in quasi-authoritarian politics," Nordhaus and Shellenberger observe. While environmentalists like Eckersley embrace the postmodern language of "privilege" to denigrate traditional individual rights, Nordhaus and Shellenberger point up the obvious irony that it is environmentalism that is making the boldest claim to be given the most privileged position in politics: "The problem is not simply that it is difficult to answer the question ‘Who speaks for nature?' but rather that there is something profoundly wrong with the question itself. It rests on the premise that some people are better able to speak for nature, the environment, or a particular place than others. This assumption is profoundly authoritarian."
Above all, they reject the "limits to growth" mentality that has been near the center of environmental thought for two generations:
Environmentalists...have tended to view economic growth as the cause but not the solution to ecological crisis. Environmentalists like to emphasize the ways in which the economy depends on ecology, but they often miss the ways in which thinking ecologically depends on prospering economically.... Few things have hampered environmentalism more than its longstanding position that limits to growth are the remedy for ecological crises.
For this very reason, Nordhaus and Shellenberger insist that constraints on greenhouse gas emissions as contemplated by the Kyoto process will never work and should be abandoned. Instead they advocate massive research (with government paying for the largest share) into post-carbon energy systems. With due caveats about government-funded research, this seems a better approach than Gore's hair-shirt agenda. They may underestimate the sheer technical and economic difficulties of energy technology, but Break Through is not primarily a policy tome—it is intended to reorient our general thinking about the environment. In the second half of their book it becomes clear that Nordhaus and Shellenberger aren't just trying to save environmentalism; they are trying to save contemporary liberalism, which they regard as nearly as intellectually dead as environmentalism. "[E]nvironmentalism is hobbled by its resentment of human strength and our desire to control nature, and liberalism by its resentment of wealth and power," they write. This part of the book is less successful though no less serious and thoughtful. In arguing that liberals need to be more philosophical (hear, hear!), Nordhaus and Shellenberger deploy a number of philosophical categories that are problematic, at the very least, and embrace the core principles of postmodernism—though, happily, that overused term does not appear in their generally clear, direct prose. The duo are against Platonic essentialism when it comes to conceiving nature (including, it would seem, human nature), and for a revival of Deweyite pragmatism as well as empowering individual "authenticity." The reader gets dizzy at times following the back and forth between Richard Rorty, Thomas Kuhn, Francis Fukuyama, the "metaphysics of becoming," and more down-to-earth wonkish discussions of gas mileage standards for automobiles.
But despite these flaws, Break Through is still a refreshing departure from most environmental discourse, and the young authors probably aren't done, either, rethinking fundamental aspects of political life and man's relation to nature. Their rude treatment from fellow "progressives" (the American Prospect dismissed the book as containing "a lot of wasted ink") will surely encourage more reflection.
A Green Reformation?
Even in academia there are a few lonely voices who've noticed that the conventional green outlook is badly defective and in need of revision. Seymour Garte, professor of environmental and occupational health at the University of Pittsburgh's School of Public Health, makes his bid to become the next "skeptical environmentalist" (after Bjorn Lomborg) with his book Where We Stand: A Surprising Look at the Real State of Our Planet. Garte recalls his surprise, and the surprise of fellow experts attending a professional conference in Europe, when presented with data from a speaker showing steadily declining air pollution trends along with the claim, "everyone knows that air pollution levels are continually decreasing everywhere." "I looked around the room," Garte writes:
I was not the only nonexpert there. Most of my other colleagues were also not atmospheric or air pollution scientists. Later I asked one of them, a close friend, if he had known that air pollution levels were constantly decreasing throughout Europe and the United States on a yearly basis. "I had no idea," he said. It was certainly news to me. Even though I was a professor of environmental health and had been actively involved in many aspects of pollution research for many years, that simple fact had somehow escaped me.... I had certainly never seen it published in the media.
Garte goes on to argue that excessive pessimism about the environment undermines good scientific investigation and distorts our understanding of important environmental challenges. He displays the frequent naïveté of a scientist observing the political world: "I have never understood why pessimism has for so long been associated with a liberal or progressive political world view." He criticizes anti-technological biases prevalent among environmentalists, but is also skeptical that market forces alone will suffice to continue our environmental progress in the future. He is guardedly optimistic that the creativity and adaptability of the human species will enable us to confront surprises and new problems. "We should pay attention to our successes as much as to our failures," Garte writes, "because in order to know where to go next, it is just as important to know where (and how) we went right as it is to know where we have gone wrong."
One of the persistent problems with environmentalism is its bait-and-switch character. The essentially political character of the movement cloaks itself with the seemingly objective authority of modern science, as though science were immune from politicization, or led to self-evident political or policy conclusions. Laying aside the value-laden premises of the ways science is used and misused in environmental controversies, it is startling to discover how limited our scientific grasp of many environmental conditions really is. The worst abuse of science comes in the almost daily predictions of future environmental conditions based on sophisticated computer models that often lack a solid empirical grounding for their assumptions and are seldom validated or back-tested with any rigor. Orrin Pilkey of Duke University and his daughter Linda Pilkey-Jarvis, a government geologist, note these failings in Useless Arithmetic: Why
Environmental Scientists Can't Predict the Future.
The most famous prediction racket these days is climate modeling, but Useless Arithmetic mostly avoids the Super Bowl of enviro-modeling in favor of tackling more limited prediction modeling exercises, such as fishery management or forecasting coastal erosion, invasive species, and nuclear waste at Yucca Mountain. Environmental forecasting is a classic case of being hoist by one's own petard. The inherent weakness of most exercises stems precisely from the core principle of modern pop environmentalism—that everything is connected to everything else. As the Pilkeys point out,
[p]erhaps the single most important reason that quantitative predictive mathematical models of natural processes on earth don't work and can't work has to do with ordering complexity. Interactions among the numerous components of a complex system occur in unpredictable and unexpected sequences.
Contrary to the usual process of science in which defects and errors become the platform for refinement and new approaches to the problem, environmental science finds itself caught in the grip of "politically correct modeling" (the authors' emphasis) in which there is enormous pressure on scientists, many of whom discover "that modeling results are easier to live with if they follow preconceived or politically correct notions." The models take on a life of their own, and become obstacles to conducting serious field studies that might strengthen our empirical grasp of ecosystem dynamics. "Applied mathematical modeling has become a science that has advanced without the usual broad-based, vigorous debate, criticism, and constant attempts at falsification that characterize good science," the Pilkeys conclude.
Neither Garte nor the Pilkeys are full-blown green skeptics; to the contrary—they are global warming believers who lean slightly left-of-center in their politics. But they represent a gathering backlash among academic scientists against the straightjacket of orthodox environmentalism. There are a number of others like them whose names never appear in the media or before congressional hearings. The prospect that a new generation of environmentalists such as Nordhaus and Shellenberger, along with academic dissenters such as Garte and the Pilkeys, can work a reformation of the movement may not seem very bright. But such voices were virtually unheard of even ten years ago. Stay tuned: a new shade of green might yet emerge.
This essay is part of the Taube American Values Series, made possible by the Taube Family Foundation.
Claremont Review of Books, Winter 2008
http://www.claremont.org/publications/crb/id.1588/article_detail.asp
Full article w/correct format here.
Books discussed in this essay:
The World Without Us, by Alan Weisman
American Earth: Environmental Writing Since Thoreau, edited by Bill McKibben, Foreword by Al Gore
How We Can Save the Planet: Preventing Global Climate Catastrophe, by Mayer Hillman, Tina Fawcett, and Sudhir Chella Rajan
The Climate Change Challenge and the Failure of Democracy, by David Shearman and Joseph Wayne Smith
The Green State: Rethinking Democracy and Sovereignty, by Robyn Eckersley
Fatal Misconception: The Struggle to Control World Population, by Matthew Connelly
Break Through: From the Death of Environmentalism to the Politics of Possibility, by Ted Nordhaus and Michael Shellenberger
Where We Stand: A Surprising Look at the Real State of Our Planet, by Seymour Garte
Useless Arithmetic: Why Environmental Scientists Can't Predict the Future, by Orrin H. Pilkey and Linda Pilkey-Jarvis
"On what principle is it," wondered Thomas Babington Macaulay in 1830, "that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?" Environmentalism didn't exist in its current form in Macaulay's time, or he would easily have discerned its essential pessimism bordering at times on a loathing of humanity. A trip down the environment and earth sciences aisle of any larger bookstore is usually a tour of titles that cover the narrow range from dismay to despair.
On the surface this is not exceptional. Titles predicting decline, decay, and disaster are just as numerous in the real estate, economics, and social science shelves, though, ironically, not so much in the religion book racks, where one would expect to find apocalypticism well represented. This is an important distinction: unlike the eschatology of all major religions, the eco-apocalypse is utterly without hope of redemption for man or nature. The greens turn purple at the suggestion that most environmental conditions in rich nations are actually improving, and they bemoan the lack of "progress" toward the transformation of the human soul that is thought necessary for the planet's salvation. Yet some cracks are starting to appear in their dreary and repetitive story line. Although extreme green ideology won't go away any time soon—the political and legal institutions of the environmental movement are too well established—there are signs that the public and a few next-generation environmentalists are ready to say goodbye to all that. There are even some liberal authors with environmentalist sympathies who are turning against the environmental establishment. But it is necessary to claw our way through the deepening slough of green despondency to see this potential turning point.
More than 30 years ago political scientist Anthony Downs wrote in the Public Interest of a five-step "issue-attention cycle" through which public enthusiasm for an issue gradually diminishes as we come to recognize the high cost of drastic action, and that the nature of the problem was exaggerated or misconceived. The environment, he wrote, would have a longer cycle than most issues because of its diffuse nature, but it appears that the public is finally arriving at the late stages of Downs's cycle. Opinion surveys show that the public isn't jumping on the global warming bandwagon despite a multi-million dollar marketing campaign and full-scale media hysteria. More broadly there are signs that "green fatigue" is setting in. Magazine publishers recently reported that their special Earth Day "green" issues generated the lowest newsstand sales of all issues published in 2008. "Suddenly Being Green Is Not Cool Any More," read a London Times headline in August.
This has been building for a long time. Three years ago New York Times green-leaning columnist Nicholas Kristof lamented that the environmental movement was losing credibility because of its doomsaying monomania, with the result that "environmental alarms have been screeching for so long that, like car alarms, they are now just an irritating background noise." Environmental leaders did not take well to his wandering from the reservation. In response to the popular indifference to green alarms, conventional environmentalists have ratcheted up their level of vitriol against humanity and democratic institutions. One of the most popular books of 2007 among environmentalists was The World Without Us by Alan Weisman, which projects a "thought experiment" about what would occur if human beings were suddenly removed entirely from the planet. Answer: nature would reassert herself, and ultimately remove nearly all traces of human civilization within several millennia—a mere blink of an eye in the planetary timescale. Environmentalists cheered Weisman's vivid depiction of the resilience of nature, but what thrilled them was the scenario of a humanless earth. Weisman made sure to stroke his audience's self-loathing with plenty of boilerplate about resource exhaustion and overpopulation. The book rocketed up the best-seller list, the latest in a familiar genre stretching back at least to Fairfield Osborn's Our Plundered Planet in 1948, arguably the first neo-Malthusian doomsday tract of modern environmentalism. Time magazine named The World Without Us the number one non-fiction book of 2007.
Rethinking Democracy
The same view of environmentalism is on display in the Library of America's American Earth: Environmental Writing Since Thoreau. This collection, though worthy in some respects, has to be judged a disappointment compared to many other fine Library of America offerings—a shortcoming entirely attributable to the selection of Bill McKibben as editor. (The easier clue is the Foreword by Al Gore.) McKibben is another in the sad line of environmentalists who became bores by endlessly reprising the one-hit wonders of their youth (in McKibben's case, his mildly interesting 1989 book, The End of Nature). He begins and ends with Henry David Thoreau—"a Buddha with a receipt from the hardware store"—because he thinks environmental writing is to be distinguished from nature writing. Environmental writing, McKibben explains, "takes as its subject the collision between people and the rest of the world."
It was probably too much to expect that McKibben would balance the usual suspects such as Rachel Carson, Lynn White, Paul Ehrlich, and Garrett Hardin with such intelligent dissenters as Julian Simon, Terry Anderson, Frederick Jackson Turner, and R.J. Smith. But McKibben's adherence to environmental correctness is so narrowly conceived that he excludes a number of American authors who offer worthy reflections on man and nature. His tacit premise that man is not part of nature, or is opposed to the rest of nature, necessarily constricts the range of perspectives that can be brought to bear on the broad idea of "the environment." So though his collection includes Theodore Roosevelt, by representing American environmental writing as beginning with Thoreau, it excludes worthy earlier reflections such as Thomas Jefferson's Notes on the State of Virginia (or any of Jefferson's other agrarian reflections that can be read as precursors to Wendell Berry, who is included in McKibben's reader), or Tocqueville's prescient observations on American wilderness, our emerging attitudes toward it, and its relation to our democratic character.
McKibben and many other environmental writers affect an indifference toward, or transcendence of, politics in the ordinary sense, but ultimately cannot conceal their rejection of the liberal tradition. Here we observe the irony of modern environmentalism: the concern for the preservation of unchanged nature has grown in tandem with the steady erosion in our belief in unchanging human nature; the concern for the "rights of nature" has come to embrace a rejection of natural rights for humans. McKibben is one of many current voices (Gore is another) who like to express their environmentalism by decrying "individualism" (McKibben calls it "hyperindividualism"). Finding that individualism is "the sole ideology of a continent," he explains:
Fighting the ideology that was laying waste to so much of the planet demanded going beyond that individualism. Many found the means to do that in the notion of ‘community'—a word almost as fuzzy and hard to pin down as ‘wild,' but one that has emerged as an even more compelling source of motive energy for the environmental movement.
This is not a new theme for McKibben. Al Gore employed the same "communitarian" trope in his first and most famous environmental book, Earth in the Balance (1992), where, in the course of arguing that the environment should be the "central organizing principle" of civilization, he suggested that the problem with individual liberty is that we have too much of it. This preference for soft despotism has become more concrete with the increasing panic over global warming in the past few years. Several environmental authors now argue openly that democracy itself is the obstacle and needs to be abandoned. A year ago a senior fellow emeritus at Britain's Policy Studies Institute, Mayer Hillman, author of How We Can Save the Planet, told a reporter, "When the chips are down I think democracy is a less important goal than is the protection of the planet from the death of life, the end of life on it. This [rationing] has got to be imposed on people whether they like it or not." (Hillman openly advocates resource rationing.) Another recent self-explanatory book is The Climate Change Challenge and the Failure of Democracy by Australians David Shearman and Joseph Wayne Smith. Shearman argued recently that
[l]iberal democracy is sweet and addictive and indeed in the most extreme case, the U.S.A., unbridled individual liberty overwhelms many of the collective needs of the citizens.... There must be open minds to look critically at liberal democracy. Reform must involve the adoption of structures to act quickly regardless of some perceived liberties.
Whom does Shearman admire as an example of environmental governance to be emulated? China, precisely because of its authoritarian government: "[T]he savvy Chinese rulers may be first out of the blocks to assuage greenhouse emissions and they will succeed by delivering orders.... We are going to have to look at how authoritarian decisions based on consensus science can be implemented to contain greenhouse emissions." Separately, Shearman has written:
To retain an inhabitable earth we may have to compromise the eternal vicissitudes of democracy for an informed leadership that directs. There are countries that fall within this requirement and we should use them to initiate more active mitigation.... The People's Republic of China may hold the key to innovative measures that can both arrest the expected surge in emissions from developing countries and provide developed nations with the means to alternative energy. China curbs individual freedom in favour of communal need. The State will implement those measures seen to be in the common good.
Perhaps the film version will be called An Inconvenient Democracy.
Academic political theorists who take up what might be called "green constitutionalism" understand that Lockean liberalism has to be overturned and replaced. In The Green State: Rethinking Democracy and Sovereignty, Australian political scientist Robyn Eckersley offers up an approach that, despite being swathed in postmodern jargon, is readily transparent. The "ecocentric," transnational "green state" Eckersley envisions is represented as an explicit alternative to "the classical liberal state, the indiscriminate growth-dependent welfare state, and the increasingly ascendant neoliberal competition state." Achieving a post-liberal state requires rethinking the entire Enlightenment project:
By framing the problem as one of rescuing and reinterpreting the Enlightenment goals of autonomy and critique, it is possible to identify what might be called a mutually informing set of "liberal dogmas" that have for too long been the subject of unthinking faith rather than critical scrutiny by liberals. The most significant of these dogmas are a muscular individualism and an understanding of the self-interested rational actor as natural and eternal; a dualistic conception of humanity and nature that denies human dependency on the biological world and gives rise to the notion of human exceptionalism from, and instrumentalism and chauvinism toward, the natural world; the sanctity of private property rights; the notion that freedom can only be acquired through material plenitude; and overconfidence in the rational mastery of nature through further scientific and technological progress.
Every traditional liberal or "progressive" understanding is up for grabs in this framework. This passage does not require much "parsing" to grasp its practical implications—the establishment of institutions and governing regimes that are not answerable to popular will, or that depend on transforming popular will in a specified direction. Eckersley makes this clear in a passage about the "social learning" function of "deliberative democracy," which she describes as "the requirement that participants be open and flexible in their thinking, that they enter a public dialogue with a preparedness to have their preferences transformed through reasoned argument." (Emphasis added.) In practice, of course, Eckersley's "reasoned argument" would resemble nothing so much as the infamous "ideology struggle" sessions of Mao's Cultural Revolution. This outlook gives new meaning to the old cliché about rulers selecting the people, rather than vice versa.
Yesterday's Crisis Mongers
Is there any respite from this dreary despotic nonsense? Here and there, a few authors of sufficient independence of mind can be found who have broken with green orthodoxy in significant ways. The first of note is Matthew Connelly of Columbia University, whose brilliant new history of the population control movement, Fatal Misconception: The Struggle to Control World Population, is useful not simply on its theme but for the light it sheds on the political corruption that inevitably accompanies these world-saving enthusiasms. The "population bomb" can be seen as a precursor to the global warming crisis of today: as far back as the early decades of the 20th century the population crisis was put forward as the justification for global governance and coercive, non-consensual rule.
Connelly recounts one of the first major international conferences on world population, held in Geneva in 1927, where Albert Thomas, a French trade unionist, asked, "Has the moment yet arrived for considering the possibility of establishing some sort of supreme supranational authority which would regulate the distribution of population on rational and impartial lines, by controlling and directing migration movements and deciding on the opening-up or closing of countries to particular streams of immigration?" Connelly also describes the 1974 World Population Conference, which "witnessed an epic battle between starkly different versions of history and the future: one premised on the preservation of order, if necessary by radical new forms of global governance; the other inspired by the pursuit of justice, beginning with unfettered sovereignty for newly independent nations." (Emphasis added.)
The Intergovernmental Panel on Climate Change (IPCC), the U.N.-sponsored body that is the juggernaut of today's climate campaign, finds its precedent in the International Union for the Scientific Investigation of Population Problems (IUSIPP), spawned at the 1927 World Population Conference. A bevy of NGOs, most prominently the International Planned Parenthood Federation (IPPF) and Zero Population Growth (ZPG), later sprang into being, working hand-in-glove with the same private foundations (especially Ford and Rockefeller) and global financial institutions, such as the World Bank, that today are in the forefront of the climate campaign.
As Connelly lays out in painstaking detail, population control programs, aimed chiefly at developing nations, proliferated despite clear human rights abuses and, more importantly, new data and information that called into question many of the fundamental assumptions of the crisis mongers. Connelly recalls computer projections and economic models that offered precise and "scientifically grounded" projections of future global ruin from population growth, all of which were quickly falsified. The mass famines and food riots that were predicted never occurred; fertility rates began to fall everywhere, even in nations that lacked "family planning" programs.
The coercive nature of the population control programs in the field was appalling. India, in particular, became "a vast laboratory for the ultimate population control campaign," the chilling practices of which Connelly recounts:
Sterilizations were performed on 80-year-old men, uncomprehending subjects with mental problems, and others who died from untreated complications. There was no incentive to follow up patients. The Planning Commission found that the quality of postoperative care was "the weakest link." In Maharashtra, 52 percent of men complained of pain, and 16 percent had sepsis or unhealed wounds. Over 40 percent were unable to see a doctor. Almost 58 percent of women surveyed experienced pain after IUD insertion, 24 percent severe pain, and 43 percent had severe and excessive bleeding. Considering that iron deficiency was endemic in India, one can only imagine the toll the IUD program took on the health of Indian women.
These events Connelly describes took place in 1967, but instead of backing off, the Indian government—under constant pressure and lavish financial backing from the international population control organizations—intensified these coercive programs in the 1970s. Among other measures India required that families with three or more children had to be sterilized to be eligible for new housing (which the government, not the private market, controlled). "This war against the poor also swept across the countryside," Connelly notes:
In one case, the village of Uttawar in Haryana was surrounded by police, hundreds were taken into custody, and every eligible male was sterilized. Hearing what had happened, thousands gathered to defend another village named Pipli. Four were killed when police fired upon the crowd. Protesters gave up only when, according to one report, a senior government official threatened aerial bombardment. The director of family planning in Maharashtra, D.N. Pai, considered it a problem of "people pollution" and defended the government: "If some excesses appear, don't blame me.... You must consider it something like a war. There could be a certain amount of misfiring out of enthusiasm. There has been pressure to show results. Whether you like it or not, there will be a few dead people."
In all, over 8 million sterilizations, many of them forced, were conducted in India in 1976—"draconian population control," Connelly writes, "practiced on an unprecedented scale.... There is no way to count the number who were being hauled away to sterilization camps against their will." Nearly 2,000 died from botched surgical procedures. The people of India finally put the brakes on this coercive utopianism, at the ballot box: the Congress Party, which had championed the family planning program as one of its main policies, was swept from office in a landslide, losing 141 of 142 contested seats in the areas with the highest rate of sterilizations. At least the people of India had recourse to the ballot box; the new environmental constitutionalism will surely aim to eliminate this remedy.
A System without a Brain
One reason why enthusiasms and programs maintain their forward momentum in the face of changing facts and circumstances is the culture of corruption that inevitably comes to envelope self-selecting leadership groups organized around a crisis. Connelly ably captures this seamy side of the story:
Divided from within and besieged from without, leaders created a "system without a brain," setting in motion agencies and processes that could not be stopped. The idea of a "population crisis" provided the catalyst. But this was a system that ran on money. Earmarked appropriations greased the wheels of balky bureaucracies, and lavish funding was the fuel that drove it forward. But so much poured in so fast that spending became an end unto itself. The pressure to scale up and show results transformed organizations ostensibly dedicated to helping people plan their families into tools for social engineering.... Rather than accept constraints or accountability, they preferred to let population control go out of control. (Emphasis added.)
Corruption extended on a personal level to the New Class directing these world-saving crusades, what Connelly calls "the new jet set of population experts."
The lifestyle of the leaders of the population control establishment reflected the power of an idea whose time had come as well as the influence of the institutions that were now backing it.... Alan Guttmacher was in the habit of beginning letters to the Planned Parenthood membership with comments like "This is written 31,000 feet aloft as I fly from Rio to New York." He insisted on traveling with his wife, first class, with the IPPF picking up the tab. Ford [Foundation] officials flew first class with their spouses as a matter of policy. One wonders why Douglas Ensminger [the Ford Foundation's India officer] ever left his residence in Dehli—he was served by a household staff of nine, including maids, cooks, gardeners, and chauffeurs. He titled this part of his oral history "The ‘Little People' of India." Ensminger insisted on the need to pay top dollar and provide a plush lifestyle to attract the best talent, even if the consultants he recruited seemed preoccupied with their perks. One of these strivers ran his two-year old American sedan without oil just so that the Ford Foundation would have to replace it with the latest model....
For population experts this was the beginning of constantly expanding opportunities. The budgets, the staff, the access were all increasing even more quickly than the population growth their programs were meant to stop. There was "something in it for everyone," Population Association of America President John Kantner later recalled: "the activist, the scholar, the foundation officer, the globe-circling consultant, the wait-listed government official. World Conferences, a Population Year, commissions, select committees, new centers for research and training, a growing supply of experts, pronouncements by world leaders, and, most of all, money—lots of it."
Sounds rather like the moveable feast that is the IPCC's annual meetings, often held in hardship locales such as Bali, to press ahead with anti-global warming efforts. The magnitude of the traveling circus of the climate campaign has come to dwarf the population crusade. Prior to the arrival of climate change as a crisis issue, the largest single U.S. government science research project was the acid rain study of the 1980s (the National Acid Precipitation Assessment Project, or NAPAP for short), which cost about $500 million, and concluded that the acid rain problem had been vastly overestimated. (Public opinion polls in the late 1970s rated acid rain the most significant environmental problem of the time.) Today the U.S. government is spending multiple billions each year on climate research—so much through so many different agencies and budget sources that it is impossible to estimate the total reliably.
With so much money at stake, and with so many careers staked to the catastrophic climate scenario, one could predict that the entire apparatus would be resistant to new information and reasonable criticism. This is exactly what happened in the population crusade. When compelling critics of the population bomb thesis arose—people who might be called "skeptics," such as Julian Simon—the population campaign reacted by circling the wagons and demonizing its critics, just as global warming skeptics today are subjected to relentless ad hominem attacks. Connelly again:
Leaders of the population control movement responded...by defending their record and fighting back. They lined up heads of state, major corporations, and international organizations behind a global strategy to slow population growth. But they also worked more quietly to insulate their projects from political opposition by co-opting or marginalizing critics, strengthening transnational networks, and establishing more free-standing institutions exempt from normal government oversight.
This is exactly the playbook of the climate campaign today. Nevertheless, it is likely to follow the same trajectory as the population control movement—gradual decline in salience to the point that even the United Nations, in the early 1990s, officially downgraded the priority of the issue. This is likely to happen to climate change even if dramatic predictions of climate change turn out to be true.
Liberal Environmentalists
A few environmentalists on the left understand the profound defects of the radical green approach to politics, along with the conventional green approach to global warming. Ted Nordhaus and Michael Shellenberger, self-described "progressives" and authors of one of the most challenging recent books on the environment, Break Through: From the Death of Environmentalism to the Politics of Possibility, recognize and lament the authoritarianism of conventional environmentalism. "Environmental tales of tragedy begin with Nature in harmony and almost always end in quasi-authoritarian politics," Nordhaus and Shellenberger observe. While environmentalists like Eckersley embrace the postmodern language of "privilege" to denigrate traditional individual rights, Nordhaus and Shellenberger point up the obvious irony that it is environmentalism that is making the boldest claim to be given the most privileged position in politics: "The problem is not simply that it is difficult to answer the question ‘Who speaks for nature?' but rather that there is something profoundly wrong with the question itself. It rests on the premise that some people are better able to speak for nature, the environment, or a particular place than others. This assumption is profoundly authoritarian."
Above all, they reject the "limits to growth" mentality that has been near the center of environmental thought for two generations:
Environmentalists...have tended to view economic growth as the cause but not the solution to ecological crisis. Environmentalists like to emphasize the ways in which the economy depends on ecology, but they often miss the ways in which thinking ecologically depends on prospering economically.... Few things have hampered environmentalism more than its longstanding position that limits to growth are the remedy for ecological crises.
For this very reason, Nordhaus and Shellenberger insist that constraints on greenhouse gas emissions as contemplated by the Kyoto process will never work and should be abandoned. Instead they advocate massive research (with government paying for the largest share) into post-carbon energy systems. With due caveats about government-funded research, this seems a better approach than Gore's hair-shirt agenda. They may underestimate the sheer technical and economic difficulties of energy technology, but Break Through is not primarily a policy tome—it is intended to reorient our general thinking about the environment. In the second half of their book it becomes clear that Nordhaus and Shellenberger aren't just trying to save environmentalism; they are trying to save contemporary liberalism, which they regard as nearly as intellectually dead as environmentalism. "[E]nvironmentalism is hobbled by its resentment of human strength and our desire to control nature, and liberalism by its resentment of wealth and power," they write. This part of the book is less successful though no less serious and thoughtful. In arguing that liberals need to be more philosophical (hear, hear!), Nordhaus and Shellenberger deploy a number of philosophical categories that are problematic, at the very least, and embrace the core principles of postmodernism—though, happily, that overused term does not appear in their generally clear, direct prose. The duo are against Platonic essentialism when it comes to conceiving nature (including, it would seem, human nature), and for a revival of Deweyite pragmatism as well as empowering individual "authenticity." The reader gets dizzy at times following the back and forth between Richard Rorty, Thomas Kuhn, Francis Fukuyama, the "metaphysics of becoming," and more down-to-earth wonkish discussions of gas mileage standards for automobiles.
But despite these flaws, Break Through is still a refreshing departure from most environmental discourse, and the young authors probably aren't done, either, rethinking fundamental aspects of political life and man's relation to nature. Their rude treatment from fellow "progressives" (the American Prospect dismissed the book as containing "a lot of wasted ink") will surely encourage more reflection.
A Green Reformation?
Even in academia there are a few lonely voices who've noticed that the conventional green outlook is badly defective and in need of revision. Seymour Garte, professor of environmental and occupational health at the University of Pittsburgh's School of Public Health, makes his bid to become the next "skeptical environmentalist" (after Bjorn Lomborg) with his book Where We Stand: A Surprising Look at the Real State of Our Planet. Garte recalls his surprise, and the surprise of fellow experts attending a professional conference in Europe, when presented with data from a speaker showing steadily declining air pollution trends along with the claim, "everyone knows that air pollution levels are continually decreasing everywhere." "I looked around the room," Garte writes:
I was not the only nonexpert there. Most of my other colleagues were also not atmospheric or air pollution scientists. Later I asked one of them, a close friend, if he had known that air pollution levels were constantly decreasing throughout Europe and the United States on a yearly basis. "I had no idea," he said. It was certainly news to me. Even though I was a professor of environmental health and had been actively involved in many aspects of pollution research for many years, that simple fact had somehow escaped me.... I had certainly never seen it published in the media.
Garte goes on to argue that excessive pessimism about the environment undermines good scientific investigation and distorts our understanding of important environmental challenges. He displays the frequent naïveté of a scientist observing the political world: "I have never understood why pessimism has for so long been associated with a liberal or progressive political world view." He criticizes anti-technological biases prevalent among environmentalists, but is also skeptical that market forces alone will suffice to continue our environmental progress in the future. He is guardedly optimistic that the creativity and adaptability of the human species will enable us to confront surprises and new problems. "We should pay attention to our successes as much as to our failures," Garte writes, "because in order to know where to go next, it is just as important to know where (and how) we went right as it is to know where we have gone wrong."
One of the persistent problems with environmentalism is its bait-and-switch character. The essentially political character of the movement cloaks itself with the seemingly objective authority of modern science, as though science were immune from politicization, or led to self-evident political or policy conclusions. Laying aside the value-laden premises of the ways science is used and misused in environmental controversies, it is startling to discover how limited our scientific grasp of many environmental conditions really is. The worst abuse of science comes in the almost daily predictions of future environmental conditions based on sophisticated computer models that often lack a solid empirical grounding for their assumptions and are seldom validated or back-tested with any rigor. Orrin Pilkey of Duke University and his daughter Linda Pilkey-Jarvis, a government geologist, note these failings in Useless Arithmetic: Why
Environmental Scientists Can't Predict the Future.
The most famous prediction racket these days is climate modeling, but Useless Arithmetic mostly avoids the Super Bowl of enviro-modeling in favor of tackling more limited prediction modeling exercises, such as fishery management or forecasting coastal erosion, invasive species, and nuclear waste at Yucca Mountain. Environmental forecasting is a classic case of being hoist by one's own petard. The inherent weakness of most exercises stems precisely from the core principle of modern pop environmentalism—that everything is connected to everything else. As the Pilkeys point out,
[p]erhaps the single most important reason that quantitative predictive mathematical models of natural processes on earth don't work and can't work has to do with ordering complexity. Interactions among the numerous components of a complex system occur in unpredictable and unexpected sequences.
Contrary to the usual process of science in which defects and errors become the platform for refinement and new approaches to the problem, environmental science finds itself caught in the grip of "politically correct modeling" (the authors' emphasis) in which there is enormous pressure on scientists, many of whom discover "that modeling results are easier to live with if they follow preconceived or politically correct notions." The models take on a life of their own, and become obstacles to conducting serious field studies that might strengthen our empirical grasp of ecosystem dynamics. "Applied mathematical modeling has become a science that has advanced without the usual broad-based, vigorous debate, criticism, and constant attempts at falsification that characterize good science," the Pilkeys conclude.
Neither Garte nor the Pilkeys are full-blown green skeptics; to the contrary—they are global warming believers who lean slightly left-of-center in their politics. But they represent a gathering backlash among academic scientists against the straightjacket of orthodox environmentalism. There are a number of others like them whose names never appear in the media or before congressional hearings. The prospect that a new generation of environmentalists such as Nordhaus and Shellenberger, along with academic dissenters such as Garte and the Pilkeys, can work a reformation of the movement may not seem very bright. But such voices were virtually unheard of even ten years ago. Stay tuned: a new shade of green might yet emerge.
This essay is part of the Taube American Values Series, made possible by the Taube Family Foundation.
20th Anniversary of the Alar Scare
20th Anniversary of the (Scientifically Baseless) Alar Scare
The American Council on Science and Health, February 25, 2009
Twenty years ago tomorrow, a combination of environmentalists, public interest lawyers, publicists, and members of the news media foisted a bogus health scare on the American public -- the fear that apples being sprayed with Alar were exposing children to a cancer-causing chemical. The Great Apple Scare: Alar 20 Years Later , a new publication by the American Council on Science and Health (ACSH), depicts how this plant growth-regulating chemical was successfully demonized and provides a template for the many baseless health scares that followed.
Authored by William P. Kucewicz, formerly on the editorial board of the Wall Street Journal, The Great Apple Scare provides a succinct history of Alar's use, as well as the generation of anxiety and fear among American consumers. "Of course, those most concerned were parents of young children," notes Dr. Elizabeth Whelan, ACSH president. "One woman became so anxious that she chased a school bus in order to remove the apple from her child's lunchbox."
In 1968 the Food and Drug Administration (FDA) approved the use of Alar on apples after two years of carcinogenicity testing had shown it was safe. Additional studies were conducted after that approval. While the great majority also found no problems with Alar, studies done by one researcher supposedly did not. Evaluation by numerous experts found many scientific problems with this research.
But before this welcome news could be publicized, the CBS show "60 Minutes" termed Alar one of the most dangerous chemicals in the American food supply. Subsequently, actress Meryl Streep donned a toxicologist's mantle and helped spread the accusations against Alar.
Unfortunately, science was no match for the fear trumped up by environmental activists and associated public relations firm Fenton Communications, and in 1989 Alar was removed from the market."
The Alar saga provided a roadmap for activists to attack numerous other chemicals that never harmed anyone," stated ACSH medical director Dr. Gilbert Ross. "It should leave readers with some understanding of how baseless most of these health scares really are," he continued.
See a video commentary about the Alar scare by ACSH's Dr. Whelan here.
The American Council on Science and Health, February 25, 2009
Twenty years ago tomorrow, a combination of environmentalists, public interest lawyers, publicists, and members of the news media foisted a bogus health scare on the American public -- the fear that apples being sprayed with Alar were exposing children to a cancer-causing chemical. The Great Apple Scare: Alar 20 Years Later , a new publication by the American Council on Science and Health (ACSH), depicts how this plant growth-regulating chemical was successfully demonized and provides a template for the many baseless health scares that followed.
Authored by William P. Kucewicz, formerly on the editorial board of the Wall Street Journal, The Great Apple Scare provides a succinct history of Alar's use, as well as the generation of anxiety and fear among American consumers. "Of course, those most concerned were parents of young children," notes Dr. Elizabeth Whelan, ACSH president. "One woman became so anxious that she chased a school bus in order to remove the apple from her child's lunchbox."
In 1968 the Food and Drug Administration (FDA) approved the use of Alar on apples after two years of carcinogenicity testing had shown it was safe. Additional studies were conducted after that approval. While the great majority also found no problems with Alar, studies done by one researcher supposedly did not. Evaluation by numerous experts found many scientific problems with this research.
But before this welcome news could be publicized, the CBS show "60 Minutes" termed Alar one of the most dangerous chemicals in the American food supply. Subsequently, actress Meryl Streep donned a toxicologist's mantle and helped spread the accusations against Alar.
Unfortunately, science was no match for the fear trumped up by environmental activists and associated public relations firm Fenton Communications, and in 1989 Alar was removed from the market."
The Alar saga provided a roadmap for activists to attack numerous other chemicals that never harmed anyone," stated ACSH medical director Dr. Gilbert Ross. "It should leave readers with some understanding of how baseless most of these health scares really are," he continued.
See a video commentary about the Alar scare by ACSH's Dr. Whelan here.
Obama’s Oddly Conservative Codas
Obama’s Oddly Conservative Codas. By Matthew Rothschild
The Progressive, February 25, 2009
Did Obama really have to say that he didn’t believe in bigger government? He’s in the midst of a tough ideological battle with the Republicans, and he just surrendered an enormous amount of territory.
I watched Obama’s speech, and I was impressed with his performance and his command, and with some—but only some—of what he had to say.
I liked his call to bold action, but his defense of government intervention in the economy was neither as fulsome nor as persuasive as the one offered at his first press conference.
In his speech, he gave a quick tour of previous positive public interventions, and concluded, “Government didn’t supplant private enterprise; it catalyzed private enterprise.”
Well, that’s not exactly true. During World War II, it basically ran the economy. And, anyway, should government’s only role be to catalyze capitalism?
Plus, did Obama really have to say that he didn’t believe in bigger government?
He’s in the midst of a tough ideological battle with the Republicans, and he just surrendered an enormous amount of territory.
Likewise, he didn’t need to propose, in his recovery plan, and then stress, in his speech, that 90 percent of the jobs he creates will be “in the private sector.” Those will be largely nonunion jobs, and less secure ones, at that.
Nor did he have to reiterate his pledge to cut the deficit in half by the end of his first term. That’s precisely the wrong thing to do in the Great Recession. He will either accomplish this goal and kill off the recovery, or fail to meet the goal he foolishly set for himself.
And while he had the cutting knife in his hand, he menaced Social Security with it.
He sang some populist notes, like talking tough with bankers, though he didn’t propose the obvious solution, nationalization. How could he, with his paeans to the private sector?
He also put as much blame on the American people for overspending and overbuying, as he did on the banks for swindling them and then gambling on their securitized mortgages.
He played to the stands when he repeated his lecture to parents to turn off the TV and read to their children. In a line that Ronald Reagan could have uttered, he said, “There is no program or policy that can substitute for a mother or father” who is involved with their kids.
Though his agenda was liberal and ambitious in some places, his coda was too often oddly conservative.
The Progressive, February 25, 2009
Did Obama really have to say that he didn’t believe in bigger government? He’s in the midst of a tough ideological battle with the Republicans, and he just surrendered an enormous amount of territory.
I watched Obama’s speech, and I was impressed with his performance and his command, and with some—but only some—of what he had to say.
I liked his call to bold action, but his defense of government intervention in the economy was neither as fulsome nor as persuasive as the one offered at his first press conference.
In his speech, he gave a quick tour of previous positive public interventions, and concluded, “Government didn’t supplant private enterprise; it catalyzed private enterprise.”
Well, that’s not exactly true. During World War II, it basically ran the economy. And, anyway, should government’s only role be to catalyze capitalism?
Plus, did Obama really have to say that he didn’t believe in bigger government?
He’s in the midst of a tough ideological battle with the Republicans, and he just surrendered an enormous amount of territory.
Likewise, he didn’t need to propose, in his recovery plan, and then stress, in his speech, that 90 percent of the jobs he creates will be “in the private sector.” Those will be largely nonunion jobs, and less secure ones, at that.
Nor did he have to reiterate his pledge to cut the deficit in half by the end of his first term. That’s precisely the wrong thing to do in the Great Recession. He will either accomplish this goal and kill off the recovery, or fail to meet the goal he foolishly set for himself.
And while he had the cutting knife in his hand, he menaced Social Security with it.
He sang some populist notes, like talking tough with bankers, though he didn’t propose the obvious solution, nationalization. How could he, with his paeans to the private sector?
He also put as much blame on the American people for overspending and overbuying, as he did on the banks for swindling them and then gambling on their securitized mortgages.
He played to the stands when he repeated his lecture to parents to turn off the TV and read to their children. In a line that Ronald Reagan could have uttered, he said, “There is no program or policy that can substitute for a mother or father” who is involved with their kids.
Though his agenda was liberal and ambitious in some places, his coda was too often oddly conservative.
US Energy Dept Project Promotes Low-Impact Drilling
DOE Project Leads to New Alliance to Promote Low-Impact Drilling
Alliance to Fund, Transfer Technologies to Minimize Environmental Impact of Drilling for Oil and Natural Gas
Washington, DC — A project supported by the Office of Fossil Energy’s National Energy Technology Laboratory (NETL) has given rise to a major new research consortium to promote advanced technology for low-impact oil and gas drilling. Announced earlier this month by the Houston Advanced Research Center (HARC) and Texas A&M University, the University/National Laboratory Alliance will fund and transfer advanced technologies to accelerate development of domestic oil and natural gas resources with minimal environmental impact.
The alliance has its roots in a project funded through the Office of Fossil Energy’s Oil and Natural Gas Environmental Program. The goal of the 3½-year project, which is drawing to a close, has been to identify and develop low-impact drilling systems for use in environmentally sensitive areas such as desert ecosystems and coastal margins. Among other accomplishments, the project has led to the creation of the Environmentally Friendly Drilling Program (EFD), which will continue with support from the energy industry and other government organizations after NETL sponsorship ends on March 31, 2009. The new alliance is part of the EFD.
"This is an excellent example of how the government’s investment in advanced, environmentally friendly technologies to develop domestic energy resources has encouraged industry interest and leveraged the taxpayer dollar," said Victor Der, Principal Deputy Assistant Secretary for Fossil Energy. "Technology advancement is the key to simultaneously addressing issues of energy security, supply, affordability, and environmental quality."
According to Rich Haut, manager of the new alliance, its goal is "to fund the development of low-impact systems that can be used in environmentally sensitive regions and share the latest research findings concerning these systems with leaders of energy, academia, environmental organizations, and government. . . . We will consider all aspects of energy resource recovery, not only traditional oil and natural gas production methods but also unconventional production, such as natural gas from shale or coal-bed methane."
In addition to HARC and Texas A&M, founding members of the alliance include:
Alliance to Fund, Transfer Technologies to Minimize Environmental Impact of Drilling for Oil and Natural Gas
Washington, DC — A project supported by the Office of Fossil Energy’s National Energy Technology Laboratory (NETL) has given rise to a major new research consortium to promote advanced technology for low-impact oil and gas drilling. Announced earlier this month by the Houston Advanced Research Center (HARC) and Texas A&M University, the University/National Laboratory Alliance will fund and transfer advanced technologies to accelerate development of domestic oil and natural gas resources with minimal environmental impact.
The alliance has its roots in a project funded through the Office of Fossil Energy’s Oil and Natural Gas Environmental Program. The goal of the 3½-year project, which is drawing to a close, has been to identify and develop low-impact drilling systems for use in environmentally sensitive areas such as desert ecosystems and coastal margins. Among other accomplishments, the project has led to the creation of the Environmentally Friendly Drilling Program (EFD), which will continue with support from the energy industry and other government organizations after NETL sponsorship ends on March 31, 2009. The new alliance is part of the EFD.
"This is an excellent example of how the government’s investment in advanced, environmentally friendly technologies to develop domestic energy resources has encouraged industry interest and leveraged the taxpayer dollar," said Victor Der, Principal Deputy Assistant Secretary for Fossil Energy. "Technology advancement is the key to simultaneously addressing issues of energy security, supply, affordability, and environmental quality."
According to Rich Haut, manager of the new alliance, its goal is "to fund the development of low-impact systems that can be used in environmentally sensitive regions and share the latest research findings concerning these systems with leaders of energy, academia, environmental organizations, and government. . . . We will consider all aspects of energy resource recovery, not only traditional oil and natural gas production methods but also unconventional production, such as natural gas from shale or coal-bed methane."
In addition to HARC and Texas A&M, founding members of the alliance include:
- Argonne National Laboratory
- Los Alamos National Laboratory
- Sam Houston State University
- The University of Arkansas
- The University of Colorado
- The University of Wyoming
- Utah State University
- West Virginia University
- Identifying more than 90 specific technologies related to the footprint of oil and natural gas operations that, if widely commercialized and applied, could help industry achieve more than a 90 percent reduction in environmental impact.
- Creating more than 20 jobs that lasted for the duration of the project, and contributing to future job growth by developing technologies to make oil and gas resources that are environmentally restricted today producible tomorrow.
- Establishing an Oil & Gas Desert Test Center near Pecos, Texas, on the edge of the Chihuahua desert, to evaluate low-impact drilling technology in desert ecosystems such as those found in the Western United States.
- Establishing a systems approach to optimize drilling decisions and ensure that the activities selected satisfy chosen criteria; the approach has been successfully used in the EFD program to determine the optimum system for a given site.
- Developing a small footprint, low-impact process based on sound engineering and biological principles to convert drilling wastes to a useable product.
Conservative views on Charles "Chas" Freeman Jr
Obama's Intelligence Choice. By Gabriel Schoenfeld
The president picks a China apologist and Israel basher to write his intelligence summaries.
The Wall Street Journal, Feb 25, 2009
During the presidential campaign, a constant refrain of Barack Obama and other Democratic candidates was that the Bush administration had severely politicized intelligence, resulting in such disasters as the war in Iraq.
The irony of course is that, if anything, President Bush badly failed at depoliticizing a CIA that was often hostile to his agenda. Witness the repeated leaks of classified information that undercut his policies. It now appears Mr. Obama has appointed a highly controversial figure to head the National Intelligence Council, which is responsible for producing National Intelligence Estimates. The news Web site Politico.com yesterday reported that it could confirm rumors that a former Ambassador to Saudi Arabia, Charles "Chas" Freeman Jr., has been appointed chairman. (My calls to the White House and the Office of the Director of National Intelligence produced neither confirmation nor denial.)
Without question, Mr. Freeman has a distinguished résumé, having served in a long list of State and Defense Department slots. But also without question, he has distinctive political views and affiliations, some of which are more than eyebrow-raising.
In 1997, Mr. Freeman succeeded George McGovern to become the president of the Middle East Policy Council. The MEPC purports to be a nonpartisan, public-affairs group that "strives to ensure that a full range of U.S. interests and views are considered by policy makers" dealing with the Middle East. In fact, its original name until 1991 was the American-Arab Affairs Council, and it is an influential Washington mouthpiece for Saudi Arabia.
As Mr. Freeman acknowledged in a 2006 interview with an outfit called the Saudi-US Relations Information Service, MEPC owes its endowment to the "generosity" of King Abdullah bin Abdul Aziz of Saudi Arabia. Asked in the same interview about his organization's current mission, Mr. Freeman responded, in a revealing non sequitur, that he was "delighted that the Kingdom of Saudi Arabia has, after a long delay, begun to make serious public relations efforts."
Among MEPC's recent activities in the public relations realm, it has published what it calls an "unabridged" version of "The Israel Lobby and U.S. Foreign Policy" by professors John J. Mearsheimer and Stephen M. Walt. This controversial 2006 essay argued that American Jews have a "stranglehold" on the U.S. Congress, which they employ to tilt the U.S. toward Israel at the expense of broader American interests. Mr. Freeman has both endorsed the paper's thesis and boasted of MEPC's intrepid stance: "No one else in the United States has dared to publish this article, given the political penalties that the Lobby imposes on those who criticize it."
Unsurprisingly, Mr. Freeman has views about Middle East policy that differ rather sharply from those held by supporters of the state of Israel. More surprisingly, they also differ rather sharply from the views -- or at least the views stated during the campaign -- of the president who has invited him to serve.
While President Obama speaks of helping the people of Israel "search for credible partners with whom they can make peace," Mr. Freeman believes, as he said in a 2007 address to the Washington Institute of Foreign Affairs, that "Israel no longer even pretends to seek peace with the Palestinians; it strives instead to pacify them." The primary reason America confronts a terrorism problem today, he continued, is "the brutal oppression of the Palestinians by an Israeli occupation that is about to mark its fortieth anniversary and shows no sign of ending."
Although initial reaction to Mr. Freeman's selection has focused on his views of the Middle East, that region is by no means Mr. Freeman's only area of interest. He has pronounced on a wide variety of other subjects, including China, where he has attempted to explain away the scale and scope of the starkly intensive buildup of the People's Liberation Army. The specter of a Chinese threat, he remarked during a China forum at the Johns Hopkins University School of Advanced International Studies in October 2006, is nothing more than "a great fund-raiser for the hyper-expensive advanced weaponry our military-industrial complex prefers to make and our armed forces love to employ."
On the massacre at Tiananmen Square in 1989, Mr. Freeman unabashedly sides with the Chinese government, a remarkable position for an appointee of an administration that has pledged to advance the cause of human rights. Mr. Freeman has been a participant in ChinaSec, a confidential Internet discussion group of China specialists. A copy of one of his postings was provided to me by a former member. "The truly unforgivable mistake of the Chinese authorities," he wrote there in 2006, "was the failure to intervene on a timely basis to nip the demonstrations in the bud." Moreover, "the Politburo's response to the mob scene at 'Tiananmen' stands as a monument to overly cautious behavior on the part of the leadership, not as an example of rash action." Indeed, continued Mr. Freeman, "I do not believe it is acceptable for any country to allow the heart of its national capital to be occupied by dissidents intent on disrupting the normal functions of government, however appealing to foreigners their propaganda may be."
We have already seen a string of poorly vetted appointments from the Obama White House, like those of Tom Daschle and Bill Richardson, that after public scrutiny were tossed under the bus. The chairmanship of the National Intelligence Council differs from those cases, for it does not require Senate confirmation. If someone with such extreme views has been appointed to such a sensitive position, is this a reflection of Mr. Obama's true predilections, or is it proof positive that the Obama White House has never gotten around to vetting its own vetters?
Either way, if those complaining loudest about politicized intelligence have indeed placed a China-coddling Israel basher in charge of drafting the most important analyses prepared by the U.S. government, it is quite a spectacle. The problem is not that Mr. Freeman will shade National Intelligence Estimates to suit the administration's political views. The far more serious danger is that he will steer them to reflect his own outlandish perspectives and prejudices.
Mr. Schoenfeld, a resident scholar at the Witherspoon Institute in Princeton, N.J., is writing a book about secrecy and national security.
The president picks a China apologist and Israel basher to write his intelligence summaries.
The Wall Street Journal, Feb 25, 2009
During the presidential campaign, a constant refrain of Barack Obama and other Democratic candidates was that the Bush administration had severely politicized intelligence, resulting in such disasters as the war in Iraq.
The irony of course is that, if anything, President Bush badly failed at depoliticizing a CIA that was often hostile to his agenda. Witness the repeated leaks of classified information that undercut his policies. It now appears Mr. Obama has appointed a highly controversial figure to head the National Intelligence Council, which is responsible for producing National Intelligence Estimates. The news Web site Politico.com yesterday reported that it could confirm rumors that a former Ambassador to Saudi Arabia, Charles "Chas" Freeman Jr., has been appointed chairman. (My calls to the White House and the Office of the Director of National Intelligence produced neither confirmation nor denial.)
Without question, Mr. Freeman has a distinguished résumé, having served in a long list of State and Defense Department slots. But also without question, he has distinctive political views and affiliations, some of which are more than eyebrow-raising.
In 1997, Mr. Freeman succeeded George McGovern to become the president of the Middle East Policy Council. The MEPC purports to be a nonpartisan, public-affairs group that "strives to ensure that a full range of U.S. interests and views are considered by policy makers" dealing with the Middle East. In fact, its original name until 1991 was the American-Arab Affairs Council, and it is an influential Washington mouthpiece for Saudi Arabia.
As Mr. Freeman acknowledged in a 2006 interview with an outfit called the Saudi-US Relations Information Service, MEPC owes its endowment to the "generosity" of King Abdullah bin Abdul Aziz of Saudi Arabia. Asked in the same interview about his organization's current mission, Mr. Freeman responded, in a revealing non sequitur, that he was "delighted that the Kingdom of Saudi Arabia has, after a long delay, begun to make serious public relations efforts."
Among MEPC's recent activities in the public relations realm, it has published what it calls an "unabridged" version of "The Israel Lobby and U.S. Foreign Policy" by professors John J. Mearsheimer and Stephen M. Walt. This controversial 2006 essay argued that American Jews have a "stranglehold" on the U.S. Congress, which they employ to tilt the U.S. toward Israel at the expense of broader American interests. Mr. Freeman has both endorsed the paper's thesis and boasted of MEPC's intrepid stance: "No one else in the United States has dared to publish this article, given the political penalties that the Lobby imposes on those who criticize it."
Unsurprisingly, Mr. Freeman has views about Middle East policy that differ rather sharply from those held by supporters of the state of Israel. More surprisingly, they also differ rather sharply from the views -- or at least the views stated during the campaign -- of the president who has invited him to serve.
While President Obama speaks of helping the people of Israel "search for credible partners with whom they can make peace," Mr. Freeman believes, as he said in a 2007 address to the Washington Institute of Foreign Affairs, that "Israel no longer even pretends to seek peace with the Palestinians; it strives instead to pacify them." The primary reason America confronts a terrorism problem today, he continued, is "the brutal oppression of the Palestinians by an Israeli occupation that is about to mark its fortieth anniversary and shows no sign of ending."
Although initial reaction to Mr. Freeman's selection has focused on his views of the Middle East, that region is by no means Mr. Freeman's only area of interest. He has pronounced on a wide variety of other subjects, including China, where he has attempted to explain away the scale and scope of the starkly intensive buildup of the People's Liberation Army. The specter of a Chinese threat, he remarked during a China forum at the Johns Hopkins University School of Advanced International Studies in October 2006, is nothing more than "a great fund-raiser for the hyper-expensive advanced weaponry our military-industrial complex prefers to make and our armed forces love to employ."
On the massacre at Tiananmen Square in 1989, Mr. Freeman unabashedly sides with the Chinese government, a remarkable position for an appointee of an administration that has pledged to advance the cause of human rights. Mr. Freeman has been a participant in ChinaSec, a confidential Internet discussion group of China specialists. A copy of one of his postings was provided to me by a former member. "The truly unforgivable mistake of the Chinese authorities," he wrote there in 2006, "was the failure to intervene on a timely basis to nip the demonstrations in the bud." Moreover, "the Politburo's response to the mob scene at 'Tiananmen' stands as a monument to overly cautious behavior on the part of the leadership, not as an example of rash action." Indeed, continued Mr. Freeman, "I do not believe it is acceptable for any country to allow the heart of its national capital to be occupied by dissidents intent on disrupting the normal functions of government, however appealing to foreigners their propaganda may be."
We have already seen a string of poorly vetted appointments from the Obama White House, like those of Tom Daschle and Bill Richardson, that after public scrutiny were tossed under the bus. The chairmanship of the National Intelligence Council differs from those cases, for it does not require Senate confirmation. If someone with such extreme views has been appointed to such a sensitive position, is this a reflection of Mr. Obama's true predilections, or is it proof positive that the Obama White House has never gotten around to vetting its own vetters?
Either way, if those complaining loudest about politicized intelligence have indeed placed a China-coddling Israel basher in charge of drafting the most important analyses prepared by the U.S. government, it is quite a spectacle. The problem is not that Mr. Freeman will shade National Intelligence Estimates to suit the administration's political views. The far more serious danger is that he will steer them to reflect his own outlandish perspectives and prejudices.
Mr. Schoenfeld, a resident scholar at the Witherspoon Institute in Princeton, N.J., is writing a book about secrecy and national security.
Justice Department's request last week for the names of 52,000 account-holders at Swiss banking giant UBS
Swiss Bank Miss. WSJ Editorial
Look who's bullying America's friends in Old Europe now.
The Wall Street Journal, Feb 25, 2009
Even in normal times, Swiss bankers are hard to love -- with their image of numbered accounts, high-security safe deposit boxes, and allegations of tax evasion.
So there's been very little sympathy for the Swiss in the wake of the Justice Department's request last week for the names of 52,000 account-holders at Swiss banking giant UBS. John A. DiCicco, the acting assistant attorney general of Justice's Tax Division, crowed that the "veil of secrecy has been pulled aside" from Swiss banking, while other officials emphasized the injustice of evading one's tax obligations while others pay their fair share -- presumably, cabinet nominees included.
All of this may make for good press, but that doesn't mean it's good law enforcement. Tax evasion is wrong and tax evaders should be pursued within the limits of the law. Justice's recent request for 52,000 names and accounts, however, looks like prosecutorial overreach.
It's also turning out to be lousy -- dare we say, unilateral -- foreign policy. The Swiss government withdrew its representative from a Senate hearing chaired by Michigan Democrat Carl Levin in protest over the Justice Department demands. Originally scheduled for yesterday, the hearing has been postponed. Switzerland says the subpoena violates a decades-old treaty on legal assistance between the two countries, and it has a case. Under that treaty, the Swiss agreed to cooperate on specific requests on a case-by-case basis, provided that there was evidence of a crime and that the client had an opportunity to present his side to Swiss authorities.
The Justice Department has been frustrated with the slow pace of that process on the Swiss side. But then again, the number of accounts involved is unprecedented, and frustration with previously agreed rules of due process isn't an excuse for abrogating a bilateral treaty of long standing. When they were in the minority, we seem to recall both Senator Levin and President Obama opining that the U.S. must show respect for its allies, the rule of law, and so on.
This is not to exonerate UBS, which admitted to misdeeds in its deferred prosecution agreement and is paying a $780 million fine. It has also turned over the account information of some 250 UBS account holders as part of the settlement.
But bank secrecy isn't merely a quaint Swiss tradition. It's the law of the land there. And if UBS acceded to the Justice Department's demands without adhering to Switzerland's standards of due process, the bank could find itself on the wrong side of Swiss law. Last Friday, a Swiss court ordered the Swiss banking regulator not to turn over some of the information requested by Justice.
It was in part to avoid this sort of dilemma that the two countries came to a mutual understanding about how to handle tax cases some 30 years ago. But in its zealous pursuit of suspected tax evaders, the Obama Administration is trampling that treaty and undermining its relationship with a country that has long represented our interests in places like Cuba and Iran. The Swiss are aghast that an Administration that has promised to be punctilious about the rule of law for terrorists has no time for a friend when it comes to tax-evasion suspects.
If Carl Levin wants to do something about evasion, he'd do better to examine the perverse incentives in the U.S. tax code for people to take their money overseas -- such as the extraordinary requirement that Americans, almost alone in the world, pay taxes on their world-wide income no matter where they live. Those and other punitive provisions of our tax code don't excuse evasion. But when they create incentives for more of it, they're also driving capital and tax revenue away from our shores.
Speaking of capital, Switzerland is the fourth-largest foreign investor in the United States. Threatening its sovereignty and ignoring the treaties we have with the mountain republic seems like a bad way to keep that money flowing our way at a time when we need it.
Look who's bullying America's friends in Old Europe now.
The Wall Street Journal, Feb 25, 2009
Even in normal times, Swiss bankers are hard to love -- with their image of numbered accounts, high-security safe deposit boxes, and allegations of tax evasion.
So there's been very little sympathy for the Swiss in the wake of the Justice Department's request last week for the names of 52,000 account-holders at Swiss banking giant UBS. John A. DiCicco, the acting assistant attorney general of Justice's Tax Division, crowed that the "veil of secrecy has been pulled aside" from Swiss banking, while other officials emphasized the injustice of evading one's tax obligations while others pay their fair share -- presumably, cabinet nominees included.
All of this may make for good press, but that doesn't mean it's good law enforcement. Tax evasion is wrong and tax evaders should be pursued within the limits of the law. Justice's recent request for 52,000 names and accounts, however, looks like prosecutorial overreach.
It's also turning out to be lousy -- dare we say, unilateral -- foreign policy. The Swiss government withdrew its representative from a Senate hearing chaired by Michigan Democrat Carl Levin in protest over the Justice Department demands. Originally scheduled for yesterday, the hearing has been postponed. Switzerland says the subpoena violates a decades-old treaty on legal assistance between the two countries, and it has a case. Under that treaty, the Swiss agreed to cooperate on specific requests on a case-by-case basis, provided that there was evidence of a crime and that the client had an opportunity to present his side to Swiss authorities.
The Justice Department has been frustrated with the slow pace of that process on the Swiss side. But then again, the number of accounts involved is unprecedented, and frustration with previously agreed rules of due process isn't an excuse for abrogating a bilateral treaty of long standing. When they were in the minority, we seem to recall both Senator Levin and President Obama opining that the U.S. must show respect for its allies, the rule of law, and so on.
This is not to exonerate UBS, which admitted to misdeeds in its deferred prosecution agreement and is paying a $780 million fine. It has also turned over the account information of some 250 UBS account holders as part of the settlement.
But bank secrecy isn't merely a quaint Swiss tradition. It's the law of the land there. And if UBS acceded to the Justice Department's demands without adhering to Switzerland's standards of due process, the bank could find itself on the wrong side of Swiss law. Last Friday, a Swiss court ordered the Swiss banking regulator not to turn over some of the information requested by Justice.
It was in part to avoid this sort of dilemma that the two countries came to a mutual understanding about how to handle tax cases some 30 years ago. But in its zealous pursuit of suspected tax evaders, the Obama Administration is trampling that treaty and undermining its relationship with a country that has long represented our interests in places like Cuba and Iran. The Swiss are aghast that an Administration that has promised to be punctilious about the rule of law for terrorists has no time for a friend when it comes to tax-evasion suspects.
If Carl Levin wants to do something about evasion, he'd do better to examine the perverse incentives in the U.S. tax code for people to take their money overseas -- such as the extraordinary requirement that Americans, almost alone in the world, pay taxes on their world-wide income no matter where they live. Those and other punitive provisions of our tax code don't excuse evasion. But when they create incentives for more of it, they're also driving capital and tax revenue away from our shores.
Speaking of capital, Switzerland is the fourth-largest foreign investor in the United States. Threatening its sovereignty and ignoring the treaties we have with the mountain republic seems like a bad way to keep that money flowing our way at a time when we need it.
Remarks of President Barack Obama -- Address to Joint Session of Congress
Remarks of President Barack Obama -- Address to Joint Session of Congress
Remarks of President Barack Obama – As Prepared for Delivery
Address to Joint Session of Congress
Tuesday, February 24th, 2009 at 9:01 pm
Madame Speaker, Mr. Vice President, Members of Congress, and the First Lady of the United States:
I’ve come here tonight not only to address the distinguished men and women in this great chamber, but to speak frankly and directly to the men and women who sent us here.
I know that for many Americans watching right now, the state of our economy is a concern that rises above all others. And rightly so. If you haven’t been personally affected by this recession, you probably know someone who has – a friend; a neighbor; a member of your family. You don’t need to hear another list of statistics to know that our economy is in crisis, because you live it every day. It’s the worry you wake up with and the source of sleepless nights. It’s the job you thought you’d retire from but now have lost; the business you built your dreams upon that’s now hanging by a thread; the college acceptance letter your child had to put back in the envelope. The impact of this recession is real, and it is everywhere.
But while our economy may be weakened and our confidence shaken; though we are living through difficult and uncertain times, tonight I want every American to know this:
We will rebuild, we will recover, and the United States of America will emerge stronger than before.
The weight of this crisis will not determine the destiny of this nation. The answers to our problems don’t lie beyond our reach. They exist in our laboratories and universities; in our fields and our factories; in the imaginations of our entrepreneurs and the pride of the hardest-working people on Earth. Those qualities that have made America the greatest force of progress and prosperity in human history we still possess in ample measure. What is required now is for this country to pull together, confront boldly the challenges we face, and take responsibility for our future once more.
Now, if we’re honest with ourselves, we’ll admit that for too long, we have not always met these responsibilities – as a government or as a people. I say this not to lay blame or look backwards, but because it is only by understanding how we arrived at this moment that we’ll be able to lift ourselves out of this predicament.
The fact is, our economy did not fall into decline overnight. Nor did all of our problems begin when the housing market collapsed or the stock market sank. We have known for decades that our survival depends on finding new sources of energy. Yet we import more oil today than ever before. The cost of health care eats up more and more of our savings each year, yet we keep delaying reform. Our children will compete for jobs in a global economy that too many of our schools do not prepare them for. And though all these challenges went unsolved, we still managed to spend more money and pile up more debt, both as individuals and through our government, than ever before.
In other words, we have lived through an era where too often, short-term gains were prized over long-term prosperity; where we failed to look beyond the next payment, the next quarter, or the next election. A surplus became an excuse to transfer wealth to the wealthy instead of an opportunity to invest in our future. Regulations were gutted for the sake of a quick profit at the expense of a healthy market. People bought homes they knew they couldn’t afford from banks and lenders who pushed those bad loans anyway. And all the while, critical debates and difficult decisions were put off for some other time on some other day.
Well that day of reckoning has arrived, and the time to take charge of our future is here.
Now is the time to act boldly and wisely – to not only revive this economy, but to build a new foundation for lasting prosperity. Now is the time to jumpstart job creation, re-start lending, and invest in areas like energy, health care, and education that will grow our economy, even as we make hard choices to bring our deficit down. That is what my economic agenda is designed to do, and that’s what I’d like to talk to you about tonight.
It’s an agenda that begins with jobs.
As soon as I took office, I asked this Congress to send me a recovery plan by President’s Day that would put people back to work and put money in their pockets. Not because I believe in bigger government – I don’t. Not because I’m not mindful of the massive debt we’ve inherited – I am. I called for action because the failure to do so would have cost more jobs and caused more hardships. In fact, a failure to act would have worsened our long-term deficit by assuring weak economic growth for years. That’s why I pushed for quick action. And tonight, I am grateful that this Congress delivered, and pleased to say that the American Recovery and Reinvestment Act is now law.
Over the next two years, this plan will save or create 3.5 million jobs. More than 90% of these jobs will be in the private sector – jobs rebuilding our roads and bridges; constructing wind turbines and solar panels; laying broadband and expanding mass transit.
Because of this plan, there are teachers who can now keep their jobs and educate our kids. Health care professionals can continue caring for our sick. There are 57 police officers who are still on the streets of Minneapolis tonight because this plan prevented the layoffs their department was about to make.
Because of this plan, 95% of the working households in America will receive a tax cut – a tax cut that you will see in your paychecks beginning on April 1st.
Because of this plan, families who are struggling to pay tuition costs will receive a $2,500 tax credit for all four years of college. And Americans who have lost their jobs in this recession will be able to receive extended unemployment benefits and continued health care coverage to help them weather this storm.
I know there are some in this chamber and watching at home who are skeptical of whether this plan will work. I understand that skepticism. Here in Washington, we’ve all seen how quickly good intentions can turn into broken promises and wasteful spending. And with a plan of this scale comes enormous responsibility to get it right.
That is why I have asked Vice President Biden to lead a tough, unprecedented oversight effort – because nobody messes with Joe. I have told each member of my Cabinet as well as mayors and governors across the country that they will be held accountable by me and the American people for every dollar they spend. I have appointed a proven and aggressive Inspector General to ferret out any and all cases of waste and fraud. And we have created a new website called recovery.gov so that every American can find out how and where their money is being spent.
So the recovery plan we passed is the first step in getting our economy back on track. But it is just the first step. Because even if we manage this plan flawlessly, there will be no real recovery unless we clean up the credit crisis that has severely weakened our financial system.
I want to speak plainly and candidly about this issue tonight, because every American should know that it directly affects you and your family’s well-being. You should also know that the money you’ve deposited in banks across the country is safe; your insurance is secure; and you can rely on the continued operation of our financial system. That is not the source of concern.
The concern is that if we do not re-start lending in this country, our recovery will be choked off before it even begins.
You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education; how stores stock their shelves, farms buy equipment, and businesses make payroll.
But credit has stopped flowing the way it should. Too many bad loans from the housing crisis have made their way onto the books of too many banks. With so much debt and so little confidence, these banks are now fearful of lending out any more money to households, to businesses, or to each other. When there is no lending, families can’t afford to buy homes or cars. So businesses are forced to make layoffs. Our economy suffers even more, and credit dries up even further.
That is why this administration is moving swiftly and aggressively to break this destructive cycle, restore confidence, and re-start lending.
We will do so in several ways. First, we are creating a new lending fund that represents the largest effort ever to help provide auto loans, college loans, and small business loans to the consumers and entrepreneurs who keep this economy running.
Second, we have launched a housing plan that will help responsible families facing the threat of foreclosure lower their monthly payments and re-finance their mortgages. It’s a plan that won’t help speculators or that neighbor down the street who bought a house he could never hope to afford, but it will help millions of Americans who are struggling with declining home values – Americans who will now be able to take advantage of the lower interest rates that this plan has already helped bring about. In fact, the average family who re-finances today can save nearly $2000 per year on their mortgage.
Third, we will act with the full force of the federal government to ensure that the major banks that Americans depend on have enough confidence and enough money to lend even in more difficult times. And when we learn that a major bank has serious problems, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.
I understand that on any given day, Wall Street may be more comforted by an approach that gives banks bailouts with no strings attached, and that holds nobody accountable for their reckless decisions. But such an approach won’t solve the problem. And our goal is to quicken the day when we re-start lending to the American people and American business and end this crisis once and for all.
I intend to hold these banks fully accountable for the assistance they receive, and this time, they will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer. This time, CEOs won’t be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet. Those days are over.
Still, this plan will require significant resources from the federal government – and yes, probably more than we’ve already set aside. But while the cost of action will be great, I can assure you that the cost of inaction will be far greater, for it could result in an economy that sputters along for not months or years, but perhaps a decade. That would be worse for our deficit, worse for business, worse for you, and worse for the next generation. And I refuse to let that happen.
I understand that when the last administration asked this Congress to provide assistance for struggling banks, Democrats and Republicans alike were infuriated by the mismanagement and results that followed. So were the American taxpayers. So was I.
So I know how unpopular it is to be seen as helping banks right now, especially when everyone is suffering in part from their bad decisions. I promise you – I get it.
But I also know that in a time of crisis, we cannot afford to govern out of anger, or yield to the politics of the moment. My job – our job – is to solve the problem. Our job is to govern with a sense of responsibility. I will not spend a single penny for the purpose of rewarding a single Wall Street executive, but I will do whatever it takes to help the small business that can’t pay its workers or the family that has saved and still can’t get a mortgage.
That’s what this is about. It’s not about helping banks – it’s about helping people. Because when credit is available again, that young family can finally buy a new home. And then some company will hire workers to build it. And then those workers will have money to spend, and if they can get a loan too, maybe they’ll finally buy that car, or open their own business. Investors will return to the market, and American families will see their retirement secured once more. Slowly, but surely, confidence will return, and our economy will recover.
So I ask this Congress to join me in doing whatever proves necessary. Because we cannot consign our nation to an open-ended recession. And to ensure that a crisis of this magnitude never happens again, I ask Congress to move quickly on legislation that will finally reform our outdated regulatory system. It is time to put in place tough, new common-sense rules of the road so that our financial market rewards drive and innovation, and punishes short-cuts and abuse.
The recovery plan and the financial stability plan are the immediate steps we’re taking to revive our economy in the short-term. But the only way to fully restore America’s economic strength is to make the long-term investments that will lead to new jobs, new industries, and a renewed ability to compete with the rest of the world. The only way this century will be another American century is if we confront at last the price of our dependence on oil and the high cost of health care; the schools that aren’t preparing our children and the mountain of debt they stand to inherit. That is our responsibility.
In the next few days, I will submit a budget to Congress. So often, we have come to view these documents as simply numbers on a page or laundry lists of programs. I see this document differently. I see it as a vision for America – as a blueprint for our future.
My budget does not attempt to solve every problem or address every issue. It reflects the stark reality of what we’ve inherited – a trillion dollar deficit, a financial crisis, and a costly recession.
Given these realities, everyone in this chamber – Democrats and Republicans – will have to sacrifice some worthy priorities for which there are no dollars. And that includes me.
But that does not mean we can afford to ignore our long-term challenges. I reject the view that says our problems will simply take care of themselves; that says government has no role in laying the foundation for our common prosperity.
For history tells a different story. History reminds us that at every moment of economic upheaval and transformation, this nation has responded with bold action and big ideas. In the midst of civil war, we laid railroad tracks from one coast to another that spurred commerce and industry. From the turmoil of the Industrial Revolution came a system of public high schools that prepared our citizens for a new age. In the wake of war and depression, the GI Bill sent a generation to college and created the largest middle-class in history. And a twilight struggle for freedom led to a nation of highways, an American on the moon, and an explosion of technology that still shapes our world.
In each case, government didn’t supplant private enterprise; it catalyzed private enterprise. It created the conditions for thousands of entrepreneurs and new businesses to adapt and to thrive.
We are a nation that has seen promise amid peril, and claimed opportunity from ordeal. Now we must be that nation again. That is why, even as it cuts back on the programs we don’t need, the budget I submit will invest in the three areas that are absolutely critical to our economic future: energy, health care, and education.
It begins with energy.
We know the country that harnesses the power of clean, renewable energy will lead the 21st century. And yet, it is China that has launched the largest effort in history to make their economy energy efficient. We invented solar technology, but we’ve fallen behind countries like Germany and Japan in producing it. New plug-in hybrids roll off our assembly lines, but they will run on batteries made in Korea.
Well I do not accept a future where the jobs and industries of tomorrow take root beyond our borders – and I know you don’t either. It is time for America to lead again.
Thanks to our recovery plan, we will double this nation’s supply of renewable energy in the next three years. We have also made the largest investment in basic research funding in American history – an investment that will spur not only new discoveries in energy, but breakthroughs in medicine, science, and technology.
We will soon lay down thousands of miles of power lines that can carry new energy to cities and towns across this country. And we will put Americans to work making our homes and buildings more efficient so that we can save billions of dollars on our energy bills.
But to truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy. So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America. And to support that innovation, we will invest fifteen billion dollars a year to develop technologies like wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient cars and trucks built right here in America.
As for our auto industry, everyone recognizes that years of bad decision-making and a global recession have pushed our automakers to the brink. We should not, and will not, protect them from their own bad practices. But we are committed to the goal of a re-tooled, re-imagined auto industry that can compete and win. Millions of jobs depend on it. Scores of communities depend on it. And I believe the nation that invented the automobile cannot walk away from it.
None of this will come without cost, nor will it be easy. But this is America. We don’t do what’s easy. We do what is necessary to move this country forward.
For that same reason, we must also address the crushing cost of health care.
This is a cost that now causes a bankruptcy in America every thirty seconds. By the end of the year, it could cause 1.5 million Americans to lose their homes. In the last eight years, premiums have grown four times faster than wages. And in each of these years, one million more Americans have lost their health insurance. It is one of the major reasons why small businesses close their doors and corporations ship jobs overseas. And it’s one of the largest and fastest-growing parts of our budget.
Given these facts, we can no longer afford to put health care reform on hold.
Already, we have done more to advance the cause of health care reform in the last thirty days than we have in the last decade. When it was days old, this Congress passed a law to provide and protect health insurance for eleven million American children whose parents work full-time. Our recovery plan will invest in electronic health records and new technology that will reduce errors, bring down costs, ensure privacy, and save lives. It will launch a new effort to conquer a disease that has touched the life of nearly every American by seeking a cure for cancer in our time. And it makes the largest investment ever in preventive care, because that is one of the best ways to keep our people healthy and our costs under control.
This budget builds on these reforms. It includes an historic commitment to comprehensive health care reform – a down-payment on the principle that we must have quality, affordable health care for every American. It’s a commitment that’s paid for in part by efficiencies in our system that are long overdue. And it’s a step we must take if we hope to bring down our deficit in the years to come.
Now, there will be many different opinions and ideas about how to achieve reform, and that is why I’m bringing together businesses and workers, doctors and health care providers, Democrats and Republicans to begin work on this issue next week.
I suffer no illusions that this will be an easy process. It will be hard. But I also know that nearly a century after Teddy Roosevelt first called for reform, the cost of our health care has weighed down our economy and the conscience of our nation long enough. So let there be no doubt: health care reform cannot wait, it must not wait, and it will not wait another year.
The third challenge we must address is the urgent need to expand the promise of education in America.
In a global economy where the most valuable skill you can sell is your knowledge, a good education is no longer just a pathway to opportunity – it is a pre-requisite.
Right now, three-quarters of the fastest-growing occupations require more than a high school diploma. And yet, just over half of our citizens have that level of education. We have one of the highest high school dropout rates of any industrialized nation. And half of the students who begin college never finish.
This is a prescription for economic decline, because we know the countries that out-teach us today will out-compete us tomorrow. That is why it will be the goal of this administration to ensure that every child has access to a complete and competitive education – from the day they are born to the day they begin a career.
Already, we have made an historic investment in education through the economic recovery plan. We have dramatically expanded early childhood education and will continue to improve its quality, because we know that the most formative learning comes in those first years of life. We have made college affordable for nearly seven million more students. And we have provided the resources necessary to prevent painful cuts and teacher layoffs that would set back our children’s progress.
But we know that our schools don’t just need more resources. They need more reform. That is why this budget creates new incentives for teacher performance; pathways for advancement, and rewards for success. We’ll invest in innovative programs that are already helping schools meet high standards and close achievement gaps. And we will expand our commitment to charter schools.
It is our responsibility as lawmakers and educators to make this system work. But it is the responsibility of every citizen to participate in it. And so tonight, I ask every American to commit to at least one year or more of higher education or career training. This can be community college or a four-year school; vocational training or an apprenticeship. But whatever the training may be, every American will need to get more than a high school diploma. And dropping out of high school is no longer an option. It’s not just quitting on yourself, it’s quitting on your country – and this country needs and values the talents of every American. That is why we will provide the support necessary for you to complete college and meet a new goal: by 2020, America will once again have the highest proportion of college graduates in the world.
I know that the price of tuition is higher than ever, which is why if you are willing to volunteer in your neighborhood or give back to your community or serve your country, we will make sure that you can afford a higher education. And to encourage a renewed spirit of national service for this and future generations, I ask this Congress to send me the bipartisan legislation that bears the name of Senator Orrin Hatch as well as an American who has never stopped asking what he can do for his country – Senator Edward Kennedy.
These education policies will open the doors of opportunity for our children. But it is up to us to ensure they walk through them. In the end, there is no program or policy that can substitute for a mother or father who will attend those parent/teacher conferences, or help with homework after dinner, or turn off the TV, put away the video games, and read to their child. I speak to you not just as a President, but as a father when I say that responsibility for our children's education must begin at home.
There is, of course, another responsibility we have to our children. And that is the responsibility to ensure that we do not pass on to them a debt they cannot pay. With the deficit we inherited, the cost of the crisis we face, and the long-term challenges we must meet, it has never been more important to ensure that as our economy recovers, we do what it takes to bring this deficit down.
I’m proud that we passed the recovery plan free of earmarks, and I want to pass a budget next year that ensures that each dollar we spend reflects only our most important national priorities.
Yesterday, I held a fiscal summit where I pledged to cut the deficit in half by the end of my first term in office. My administration has also begun to go line by line through the federal budget in order to eliminate wasteful and ineffective programs. As you can imagine, this is a process that will take some time. But we’re starting with the biggest lines. We have already identified two trillion dollars in savings over the next decade.
In this budget, we will end education programs that don’t work and end direct payments to large agribusinesses that don’t need them. We’ll eliminate the no-bid contracts that have wasted billions in Iraq, and reform our defense budget so that we’re not paying for Cold War-era weapons systems we don’t use. We will root out the waste, fraud, and abuse in our Medicare program that doesn’t make our seniors any healthier, and we will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas.
In order to save our children from a future of debt, we will also end the tax breaks for the wealthiest 2% of Americans. But let me perfectly clear, because I know you’ll hear the same old claims that rolling back these tax breaks means a massive tax increase on the American people: if your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime. In fact, the recovery plan provides a tax cut – that’s right, a tax cut – for 95% of working families. And these checks are on the way.
To preserve our long-term fiscal health, we must also address the growing costs in Medicare and Social Security. Comprehensive health care reform is the best way to strengthen Medicare for years to come. And we must also begin a conversation on how to do the same for Social Security, while creating tax-free universal savings accounts for all Americans.
Finally, because we’re also suffering from a deficit of trust, I am committed to restoring a sense of honesty and accountability to our budget. That is why this budget looks ahead ten years and accounts for spending that was left out under the old rules – and for the first time, that includes the full cost of fighting in Iraq and Afghanistan. For seven years, we have been a nation at war. No longer will we hide its price.
We are now carefully reviewing our policies in both wars, and I will soon announce a way forward in Iraq that leaves Iraq to its people and responsibly ends this war.
And with our friends and allies, we will forge a new and comprehensive strategy for Afghanistan and Pakistan to defeat al Qaeda and combat extremism. Because I will not allow terrorists to plot against the American people from safe havens half a world away.
As we meet here tonight, our men and women in uniform stand watch abroad and more are readying to deploy. To each and every one of them, and to the families who bear the quiet burden of their absence, Americans are united in sending one message: we honor your service, we are inspired by your sacrifice, and you have our unyielding support. To relieve the strain on our forces, my budget increases the number of our soldiers and Marines. And to keep our sacred trust with those who serve, we will raise their pay, and give our veterans the expanded health care and benefits that they have earned.
To overcome extremism, we must also be vigilant in upholding the values our troops defend – because there is no force in the world more powerful than the example of America. That is why I have ordered the closing of the detention center at Guantanamo Bay, and will seek swift and certain justice for captured terrorists – because living our values doesn’t make us weaker, it makes us safer and it makes us stronger. And that is why I can stand here tonight and say without exception or equivocation that the United States of America does not torture.
In words and deeds, we are showing the world that a new era of engagement has begun. For we know that America cannot meet the threats of this century alone, but the world cannot meet them without America. We cannot shun the negotiating table, nor ignore the foes or forces that could do us harm. We are instead called to move forward with the sense of confidence and candor that serious times demand.
To seek progress toward a secure and lasting peace between Israel and her neighbors, we have appointed an envoy to sustain our effort. To meet the challenges of the 21st century – from terrorism to nuclear proliferation; from pandemic disease to cyber threats to crushing poverty – we will strengthen old alliances, forge new ones, and use all elements of our national power.
And to respond to an economic crisis that is global in scope, we are working with the nations of the G-20 to restore confidence in our financial system, avoid the possibility of escalating protectionism, and spur demand for American goods in markets across the globe. For the world depends on us to have a strong economy, just as our economy depends on the strength of the world’s.
As we stand at this crossroads of history, the eyes of all people in all nations are once again upon us – watching to see what we do with this moment; waiting for us to lead.
Those of us gathered here tonight have been called to govern in extraordinary times. It is a tremendous burden, but also a great privilege – one that has been entrusted to few generations of Americans. For in our hands lies the ability to shape our world for good or for ill.
I know that it is easy to lose sight of this truth – to become cynical and doubtful; consumed with the petty and the trivial.
But in my life, I have also learned that hope is found in unlikely places; that inspiration often comes not from those with the most power or celebrity, but from the dreams and aspirations of Americans who are anything but ordinary.
I think about Leonard Abess, the bank president from Miami who reportedly cashed out of his company, took a $60 million bonus, and gave it out to all 399 people who worked for him, plus another 72 who used to work for him. He didn’t tell anyone, but when the local newspaper found out, he simply said, ''I knew some of these people since I was 7 years old. I didn't feel right getting the money myself."
I think about Greensburg, Kansas, a town that was completely destroyed by a tornado, but is being rebuilt by its residents as a global example of how clean energy can power an entire community – how it can bring jobs and businesses to a place where piles of bricks and rubble once lay. "The tragedy was terrible," said one of the men who helped them rebuild. "But the folks here know that it also provided an incredible opportunity."
And I think about Ty’Sheoma Bethea, the young girl from that school I visited in Dillon, South Carolina – a place where the ceilings leak, the paint peels off the walls, and they have to stop teaching six times a day because the train barrels by their classroom. She has been told that her school is hopeless, but the other day after class she went to the public library and typed up a letter to the people sitting in this room. She even asked her principal for the money to buy a stamp. The letter asks us for help, and says, "We are just students trying to become lawyers, doctors, congressmen like yourself and one day president, so we can make a change to not just the state of South Carolina but also the world. We are not quitters."
We are not quitters.
These words and these stories tell us something about the spirit of the people who sent us here. They tell us that even in the most trying times, amid the most difficult circumstances, there is a generosity, a resilience, a decency, and a determination that perseveres; a willingness to take responsibility for our future and for posterity.
Their resolve must be our inspiration. Their concerns must be our cause. And we must show them and all our people that we are equal to the task before us.
I know that we haven’t agreed on every issue thus far, and there are surely times in the future when we will part ways. But I also know that every American who is sitting here tonight loves this country and wants it to succeed. That must be the starting point for every debate we have in the coming months, and where we return after those debates are done. That is the foundation on which the American people expect us to build common ground.
And if we do – if we come together and lift this nation from the depths of this crisis; if we put our people back to work and restart the engine of our prosperity; if we confront without fear the challenges of our time and summon that enduring spirit of an America that does not quit, then someday years from now our children can tell their children that this was the time when we performed, in the words that are carved into this very chamber, "something worthy to be remembered." Thank you, God Bless you, and may God Bless the United States of America.
Remarks of President Barack Obama – As Prepared for Delivery
Address to Joint Session of Congress
Tuesday, February 24th, 2009 at 9:01 pm
Madame Speaker, Mr. Vice President, Members of Congress, and the First Lady of the United States:
I’ve come here tonight not only to address the distinguished men and women in this great chamber, but to speak frankly and directly to the men and women who sent us here.
I know that for many Americans watching right now, the state of our economy is a concern that rises above all others. And rightly so. If you haven’t been personally affected by this recession, you probably know someone who has – a friend; a neighbor; a member of your family. You don’t need to hear another list of statistics to know that our economy is in crisis, because you live it every day. It’s the worry you wake up with and the source of sleepless nights. It’s the job you thought you’d retire from but now have lost; the business you built your dreams upon that’s now hanging by a thread; the college acceptance letter your child had to put back in the envelope. The impact of this recession is real, and it is everywhere.
But while our economy may be weakened and our confidence shaken; though we are living through difficult and uncertain times, tonight I want every American to know this:
We will rebuild, we will recover, and the United States of America will emerge stronger than before.
The weight of this crisis will not determine the destiny of this nation. The answers to our problems don’t lie beyond our reach. They exist in our laboratories and universities; in our fields and our factories; in the imaginations of our entrepreneurs and the pride of the hardest-working people on Earth. Those qualities that have made America the greatest force of progress and prosperity in human history we still possess in ample measure. What is required now is for this country to pull together, confront boldly the challenges we face, and take responsibility for our future once more.
Now, if we’re honest with ourselves, we’ll admit that for too long, we have not always met these responsibilities – as a government or as a people. I say this not to lay blame or look backwards, but because it is only by understanding how we arrived at this moment that we’ll be able to lift ourselves out of this predicament.
The fact is, our economy did not fall into decline overnight. Nor did all of our problems begin when the housing market collapsed or the stock market sank. We have known for decades that our survival depends on finding new sources of energy. Yet we import more oil today than ever before. The cost of health care eats up more and more of our savings each year, yet we keep delaying reform. Our children will compete for jobs in a global economy that too many of our schools do not prepare them for. And though all these challenges went unsolved, we still managed to spend more money and pile up more debt, both as individuals and through our government, than ever before.
In other words, we have lived through an era where too often, short-term gains were prized over long-term prosperity; where we failed to look beyond the next payment, the next quarter, or the next election. A surplus became an excuse to transfer wealth to the wealthy instead of an opportunity to invest in our future. Regulations were gutted for the sake of a quick profit at the expense of a healthy market. People bought homes they knew they couldn’t afford from banks and lenders who pushed those bad loans anyway. And all the while, critical debates and difficult decisions were put off for some other time on some other day.
Well that day of reckoning has arrived, and the time to take charge of our future is here.
Now is the time to act boldly and wisely – to not only revive this economy, but to build a new foundation for lasting prosperity. Now is the time to jumpstart job creation, re-start lending, and invest in areas like energy, health care, and education that will grow our economy, even as we make hard choices to bring our deficit down. That is what my economic agenda is designed to do, and that’s what I’d like to talk to you about tonight.
It’s an agenda that begins with jobs.
As soon as I took office, I asked this Congress to send me a recovery plan by President’s Day that would put people back to work and put money in their pockets. Not because I believe in bigger government – I don’t. Not because I’m not mindful of the massive debt we’ve inherited – I am. I called for action because the failure to do so would have cost more jobs and caused more hardships. In fact, a failure to act would have worsened our long-term deficit by assuring weak economic growth for years. That’s why I pushed for quick action. And tonight, I am grateful that this Congress delivered, and pleased to say that the American Recovery and Reinvestment Act is now law.
Over the next two years, this plan will save or create 3.5 million jobs. More than 90% of these jobs will be in the private sector – jobs rebuilding our roads and bridges; constructing wind turbines and solar panels; laying broadband and expanding mass transit.
Because of this plan, there are teachers who can now keep their jobs and educate our kids. Health care professionals can continue caring for our sick. There are 57 police officers who are still on the streets of Minneapolis tonight because this plan prevented the layoffs their department was about to make.
Because of this plan, 95% of the working households in America will receive a tax cut – a tax cut that you will see in your paychecks beginning on April 1st.
Because of this plan, families who are struggling to pay tuition costs will receive a $2,500 tax credit for all four years of college. And Americans who have lost their jobs in this recession will be able to receive extended unemployment benefits and continued health care coverage to help them weather this storm.
I know there are some in this chamber and watching at home who are skeptical of whether this plan will work. I understand that skepticism. Here in Washington, we’ve all seen how quickly good intentions can turn into broken promises and wasteful spending. And with a plan of this scale comes enormous responsibility to get it right.
That is why I have asked Vice President Biden to lead a tough, unprecedented oversight effort – because nobody messes with Joe. I have told each member of my Cabinet as well as mayors and governors across the country that they will be held accountable by me and the American people for every dollar they spend. I have appointed a proven and aggressive Inspector General to ferret out any and all cases of waste and fraud. And we have created a new website called recovery.gov so that every American can find out how and where their money is being spent.
So the recovery plan we passed is the first step in getting our economy back on track. But it is just the first step. Because even if we manage this plan flawlessly, there will be no real recovery unless we clean up the credit crisis that has severely weakened our financial system.
I want to speak plainly and candidly about this issue tonight, because every American should know that it directly affects you and your family’s well-being. You should also know that the money you’ve deposited in banks across the country is safe; your insurance is secure; and you can rely on the continued operation of our financial system. That is not the source of concern.
The concern is that if we do not re-start lending in this country, our recovery will be choked off before it even begins.
You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education; how stores stock their shelves, farms buy equipment, and businesses make payroll.
But credit has stopped flowing the way it should. Too many bad loans from the housing crisis have made their way onto the books of too many banks. With so much debt and so little confidence, these banks are now fearful of lending out any more money to households, to businesses, or to each other. When there is no lending, families can’t afford to buy homes or cars. So businesses are forced to make layoffs. Our economy suffers even more, and credit dries up even further.
That is why this administration is moving swiftly and aggressively to break this destructive cycle, restore confidence, and re-start lending.
We will do so in several ways. First, we are creating a new lending fund that represents the largest effort ever to help provide auto loans, college loans, and small business loans to the consumers and entrepreneurs who keep this economy running.
Second, we have launched a housing plan that will help responsible families facing the threat of foreclosure lower their monthly payments and re-finance their mortgages. It’s a plan that won’t help speculators or that neighbor down the street who bought a house he could never hope to afford, but it will help millions of Americans who are struggling with declining home values – Americans who will now be able to take advantage of the lower interest rates that this plan has already helped bring about. In fact, the average family who re-finances today can save nearly $2000 per year on their mortgage.
Third, we will act with the full force of the federal government to ensure that the major banks that Americans depend on have enough confidence and enough money to lend even in more difficult times. And when we learn that a major bank has serious problems, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.
I understand that on any given day, Wall Street may be more comforted by an approach that gives banks bailouts with no strings attached, and that holds nobody accountable for their reckless decisions. But such an approach won’t solve the problem. And our goal is to quicken the day when we re-start lending to the American people and American business and end this crisis once and for all.
I intend to hold these banks fully accountable for the assistance they receive, and this time, they will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer. This time, CEOs won’t be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet. Those days are over.
Still, this plan will require significant resources from the federal government – and yes, probably more than we’ve already set aside. But while the cost of action will be great, I can assure you that the cost of inaction will be far greater, for it could result in an economy that sputters along for not months or years, but perhaps a decade. That would be worse for our deficit, worse for business, worse for you, and worse for the next generation. And I refuse to let that happen.
I understand that when the last administration asked this Congress to provide assistance for struggling banks, Democrats and Republicans alike were infuriated by the mismanagement and results that followed. So were the American taxpayers. So was I.
So I know how unpopular it is to be seen as helping banks right now, especially when everyone is suffering in part from their bad decisions. I promise you – I get it.
But I also know that in a time of crisis, we cannot afford to govern out of anger, or yield to the politics of the moment. My job – our job – is to solve the problem. Our job is to govern with a sense of responsibility. I will not spend a single penny for the purpose of rewarding a single Wall Street executive, but I will do whatever it takes to help the small business that can’t pay its workers or the family that has saved and still can’t get a mortgage.
That’s what this is about. It’s not about helping banks – it’s about helping people. Because when credit is available again, that young family can finally buy a new home. And then some company will hire workers to build it. And then those workers will have money to spend, and if they can get a loan too, maybe they’ll finally buy that car, or open their own business. Investors will return to the market, and American families will see their retirement secured once more. Slowly, but surely, confidence will return, and our economy will recover.
So I ask this Congress to join me in doing whatever proves necessary. Because we cannot consign our nation to an open-ended recession. And to ensure that a crisis of this magnitude never happens again, I ask Congress to move quickly on legislation that will finally reform our outdated regulatory system. It is time to put in place tough, new common-sense rules of the road so that our financial market rewards drive and innovation, and punishes short-cuts and abuse.
The recovery plan and the financial stability plan are the immediate steps we’re taking to revive our economy in the short-term. But the only way to fully restore America’s economic strength is to make the long-term investments that will lead to new jobs, new industries, and a renewed ability to compete with the rest of the world. The only way this century will be another American century is if we confront at last the price of our dependence on oil and the high cost of health care; the schools that aren’t preparing our children and the mountain of debt they stand to inherit. That is our responsibility.
In the next few days, I will submit a budget to Congress. So often, we have come to view these documents as simply numbers on a page or laundry lists of programs. I see this document differently. I see it as a vision for America – as a blueprint for our future.
My budget does not attempt to solve every problem or address every issue. It reflects the stark reality of what we’ve inherited – a trillion dollar deficit, a financial crisis, and a costly recession.
Given these realities, everyone in this chamber – Democrats and Republicans – will have to sacrifice some worthy priorities for which there are no dollars. And that includes me.
But that does not mean we can afford to ignore our long-term challenges. I reject the view that says our problems will simply take care of themselves; that says government has no role in laying the foundation for our common prosperity.
For history tells a different story. History reminds us that at every moment of economic upheaval and transformation, this nation has responded with bold action and big ideas. In the midst of civil war, we laid railroad tracks from one coast to another that spurred commerce and industry. From the turmoil of the Industrial Revolution came a system of public high schools that prepared our citizens for a new age. In the wake of war and depression, the GI Bill sent a generation to college and created the largest middle-class in history. And a twilight struggle for freedom led to a nation of highways, an American on the moon, and an explosion of technology that still shapes our world.
In each case, government didn’t supplant private enterprise; it catalyzed private enterprise. It created the conditions for thousands of entrepreneurs and new businesses to adapt and to thrive.
We are a nation that has seen promise amid peril, and claimed opportunity from ordeal. Now we must be that nation again. That is why, even as it cuts back on the programs we don’t need, the budget I submit will invest in the three areas that are absolutely critical to our economic future: energy, health care, and education.
It begins with energy.
We know the country that harnesses the power of clean, renewable energy will lead the 21st century. And yet, it is China that has launched the largest effort in history to make their economy energy efficient. We invented solar technology, but we’ve fallen behind countries like Germany and Japan in producing it. New plug-in hybrids roll off our assembly lines, but they will run on batteries made in Korea.
Well I do not accept a future where the jobs and industries of tomorrow take root beyond our borders – and I know you don’t either. It is time for America to lead again.
Thanks to our recovery plan, we will double this nation’s supply of renewable energy in the next three years. We have also made the largest investment in basic research funding in American history – an investment that will spur not only new discoveries in energy, but breakthroughs in medicine, science, and technology.
We will soon lay down thousands of miles of power lines that can carry new energy to cities and towns across this country. And we will put Americans to work making our homes and buildings more efficient so that we can save billions of dollars on our energy bills.
But to truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy. So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America. And to support that innovation, we will invest fifteen billion dollars a year to develop technologies like wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient cars and trucks built right here in America.
As for our auto industry, everyone recognizes that years of bad decision-making and a global recession have pushed our automakers to the brink. We should not, and will not, protect them from their own bad practices. But we are committed to the goal of a re-tooled, re-imagined auto industry that can compete and win. Millions of jobs depend on it. Scores of communities depend on it. And I believe the nation that invented the automobile cannot walk away from it.
None of this will come without cost, nor will it be easy. But this is America. We don’t do what’s easy. We do what is necessary to move this country forward.
For that same reason, we must also address the crushing cost of health care.
This is a cost that now causes a bankruptcy in America every thirty seconds. By the end of the year, it could cause 1.5 million Americans to lose their homes. In the last eight years, premiums have grown four times faster than wages. And in each of these years, one million more Americans have lost their health insurance. It is one of the major reasons why small businesses close their doors and corporations ship jobs overseas. And it’s one of the largest and fastest-growing parts of our budget.
Given these facts, we can no longer afford to put health care reform on hold.
Already, we have done more to advance the cause of health care reform in the last thirty days than we have in the last decade. When it was days old, this Congress passed a law to provide and protect health insurance for eleven million American children whose parents work full-time. Our recovery plan will invest in electronic health records and new technology that will reduce errors, bring down costs, ensure privacy, and save lives. It will launch a new effort to conquer a disease that has touched the life of nearly every American by seeking a cure for cancer in our time. And it makes the largest investment ever in preventive care, because that is one of the best ways to keep our people healthy and our costs under control.
This budget builds on these reforms. It includes an historic commitment to comprehensive health care reform – a down-payment on the principle that we must have quality, affordable health care for every American. It’s a commitment that’s paid for in part by efficiencies in our system that are long overdue. And it’s a step we must take if we hope to bring down our deficit in the years to come.
Now, there will be many different opinions and ideas about how to achieve reform, and that is why I’m bringing together businesses and workers, doctors and health care providers, Democrats and Republicans to begin work on this issue next week.
I suffer no illusions that this will be an easy process. It will be hard. But I also know that nearly a century after Teddy Roosevelt first called for reform, the cost of our health care has weighed down our economy and the conscience of our nation long enough. So let there be no doubt: health care reform cannot wait, it must not wait, and it will not wait another year.
The third challenge we must address is the urgent need to expand the promise of education in America.
In a global economy where the most valuable skill you can sell is your knowledge, a good education is no longer just a pathway to opportunity – it is a pre-requisite.
Right now, three-quarters of the fastest-growing occupations require more than a high school diploma. And yet, just over half of our citizens have that level of education. We have one of the highest high school dropout rates of any industrialized nation. And half of the students who begin college never finish.
This is a prescription for economic decline, because we know the countries that out-teach us today will out-compete us tomorrow. That is why it will be the goal of this administration to ensure that every child has access to a complete and competitive education – from the day they are born to the day they begin a career.
Already, we have made an historic investment in education through the economic recovery plan. We have dramatically expanded early childhood education and will continue to improve its quality, because we know that the most formative learning comes in those first years of life. We have made college affordable for nearly seven million more students. And we have provided the resources necessary to prevent painful cuts and teacher layoffs that would set back our children’s progress.
But we know that our schools don’t just need more resources. They need more reform. That is why this budget creates new incentives for teacher performance; pathways for advancement, and rewards for success. We’ll invest in innovative programs that are already helping schools meet high standards and close achievement gaps. And we will expand our commitment to charter schools.
It is our responsibility as lawmakers and educators to make this system work. But it is the responsibility of every citizen to participate in it. And so tonight, I ask every American to commit to at least one year or more of higher education or career training. This can be community college or a four-year school; vocational training or an apprenticeship. But whatever the training may be, every American will need to get more than a high school diploma. And dropping out of high school is no longer an option. It’s not just quitting on yourself, it’s quitting on your country – and this country needs and values the talents of every American. That is why we will provide the support necessary for you to complete college and meet a new goal: by 2020, America will once again have the highest proportion of college graduates in the world.
I know that the price of tuition is higher than ever, which is why if you are willing to volunteer in your neighborhood or give back to your community or serve your country, we will make sure that you can afford a higher education. And to encourage a renewed spirit of national service for this and future generations, I ask this Congress to send me the bipartisan legislation that bears the name of Senator Orrin Hatch as well as an American who has never stopped asking what he can do for his country – Senator Edward Kennedy.
These education policies will open the doors of opportunity for our children. But it is up to us to ensure they walk through them. In the end, there is no program or policy that can substitute for a mother or father who will attend those parent/teacher conferences, or help with homework after dinner, or turn off the TV, put away the video games, and read to their child. I speak to you not just as a President, but as a father when I say that responsibility for our children's education must begin at home.
There is, of course, another responsibility we have to our children. And that is the responsibility to ensure that we do not pass on to them a debt they cannot pay. With the deficit we inherited, the cost of the crisis we face, and the long-term challenges we must meet, it has never been more important to ensure that as our economy recovers, we do what it takes to bring this deficit down.
I’m proud that we passed the recovery plan free of earmarks, and I want to pass a budget next year that ensures that each dollar we spend reflects only our most important national priorities.
Yesterday, I held a fiscal summit where I pledged to cut the deficit in half by the end of my first term in office. My administration has also begun to go line by line through the federal budget in order to eliminate wasteful and ineffective programs. As you can imagine, this is a process that will take some time. But we’re starting with the biggest lines. We have already identified two trillion dollars in savings over the next decade.
In this budget, we will end education programs that don’t work and end direct payments to large agribusinesses that don’t need them. We’ll eliminate the no-bid contracts that have wasted billions in Iraq, and reform our defense budget so that we’re not paying for Cold War-era weapons systems we don’t use. We will root out the waste, fraud, and abuse in our Medicare program that doesn’t make our seniors any healthier, and we will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas.
In order to save our children from a future of debt, we will also end the tax breaks for the wealthiest 2% of Americans. But let me perfectly clear, because I know you’ll hear the same old claims that rolling back these tax breaks means a massive tax increase on the American people: if your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime. In fact, the recovery plan provides a tax cut – that’s right, a tax cut – for 95% of working families. And these checks are on the way.
To preserve our long-term fiscal health, we must also address the growing costs in Medicare and Social Security. Comprehensive health care reform is the best way to strengthen Medicare for years to come. And we must also begin a conversation on how to do the same for Social Security, while creating tax-free universal savings accounts for all Americans.
Finally, because we’re also suffering from a deficit of trust, I am committed to restoring a sense of honesty and accountability to our budget. That is why this budget looks ahead ten years and accounts for spending that was left out under the old rules – and for the first time, that includes the full cost of fighting in Iraq and Afghanistan. For seven years, we have been a nation at war. No longer will we hide its price.
We are now carefully reviewing our policies in both wars, and I will soon announce a way forward in Iraq that leaves Iraq to its people and responsibly ends this war.
And with our friends and allies, we will forge a new and comprehensive strategy for Afghanistan and Pakistan to defeat al Qaeda and combat extremism. Because I will not allow terrorists to plot against the American people from safe havens half a world away.
As we meet here tonight, our men and women in uniform stand watch abroad and more are readying to deploy. To each and every one of them, and to the families who bear the quiet burden of their absence, Americans are united in sending one message: we honor your service, we are inspired by your sacrifice, and you have our unyielding support. To relieve the strain on our forces, my budget increases the number of our soldiers and Marines. And to keep our sacred trust with those who serve, we will raise their pay, and give our veterans the expanded health care and benefits that they have earned.
To overcome extremism, we must also be vigilant in upholding the values our troops defend – because there is no force in the world more powerful than the example of America. That is why I have ordered the closing of the detention center at Guantanamo Bay, and will seek swift and certain justice for captured terrorists – because living our values doesn’t make us weaker, it makes us safer and it makes us stronger. And that is why I can stand here tonight and say without exception or equivocation that the United States of America does not torture.
In words and deeds, we are showing the world that a new era of engagement has begun. For we know that America cannot meet the threats of this century alone, but the world cannot meet them without America. We cannot shun the negotiating table, nor ignore the foes or forces that could do us harm. We are instead called to move forward with the sense of confidence and candor that serious times demand.
To seek progress toward a secure and lasting peace between Israel and her neighbors, we have appointed an envoy to sustain our effort. To meet the challenges of the 21st century – from terrorism to nuclear proliferation; from pandemic disease to cyber threats to crushing poverty – we will strengthen old alliances, forge new ones, and use all elements of our national power.
And to respond to an economic crisis that is global in scope, we are working with the nations of the G-20 to restore confidence in our financial system, avoid the possibility of escalating protectionism, and spur demand for American goods in markets across the globe. For the world depends on us to have a strong economy, just as our economy depends on the strength of the world’s.
As we stand at this crossroads of history, the eyes of all people in all nations are once again upon us – watching to see what we do with this moment; waiting for us to lead.
Those of us gathered here tonight have been called to govern in extraordinary times. It is a tremendous burden, but also a great privilege – one that has been entrusted to few generations of Americans. For in our hands lies the ability to shape our world for good or for ill.
I know that it is easy to lose sight of this truth – to become cynical and doubtful; consumed with the petty and the trivial.
But in my life, I have also learned that hope is found in unlikely places; that inspiration often comes not from those with the most power or celebrity, but from the dreams and aspirations of Americans who are anything but ordinary.
I think about Leonard Abess, the bank president from Miami who reportedly cashed out of his company, took a $60 million bonus, and gave it out to all 399 people who worked for him, plus another 72 who used to work for him. He didn’t tell anyone, but when the local newspaper found out, he simply said, ''I knew some of these people since I was 7 years old. I didn't feel right getting the money myself."
I think about Greensburg, Kansas, a town that was completely destroyed by a tornado, but is being rebuilt by its residents as a global example of how clean energy can power an entire community – how it can bring jobs and businesses to a place where piles of bricks and rubble once lay. "The tragedy was terrible," said one of the men who helped them rebuild. "But the folks here know that it also provided an incredible opportunity."
And I think about Ty’Sheoma Bethea, the young girl from that school I visited in Dillon, South Carolina – a place where the ceilings leak, the paint peels off the walls, and they have to stop teaching six times a day because the train barrels by their classroom. She has been told that her school is hopeless, but the other day after class she went to the public library and typed up a letter to the people sitting in this room. She even asked her principal for the money to buy a stamp. The letter asks us for help, and says, "We are just students trying to become lawyers, doctors, congressmen like yourself and one day president, so we can make a change to not just the state of South Carolina but also the world. We are not quitters."
We are not quitters.
These words and these stories tell us something about the spirit of the people who sent us here. They tell us that even in the most trying times, amid the most difficult circumstances, there is a generosity, a resilience, a decency, and a determination that perseveres; a willingness to take responsibility for our future and for posterity.
Their resolve must be our inspiration. Their concerns must be our cause. And we must show them and all our people that we are equal to the task before us.
I know that we haven’t agreed on every issue thus far, and there are surely times in the future when we will part ways. But I also know that every American who is sitting here tonight loves this country and wants it to succeed. That must be the starting point for every debate we have in the coming months, and where we return after those debates are done. That is the foundation on which the American people expect us to build common ground.
And if we do – if we come together and lift this nation from the depths of this crisis; if we put our people back to work and restart the engine of our prosperity; if we confront without fear the challenges of our time and summon that enduring spirit of an America that does not quit, then someday years from now our children can tell their children that this was the time when we performed, in the words that are carved into this very chamber, "something worthy to be remembered." Thank you, God Bless you, and may God Bless the United States of America.
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