NDN Blog

Clean energy has captured the imagination of people from Silicon Valley, who invested $5.4 billion in the sector last year, to President Obama, who highlighted it in his State of the Union Address. However, it has yet to fulfill its economic promise and displace legacy fuels in America’s electricity sector, especially when compared with the significant progress made in other countries. Today, non-hydro renewables account for just 3.5% of electricity in the US.

This Thursday, NDN and New Policy Institute Green Project Director Michael Moynihan will release a study examining the electricity industry – the network at the center of the wider energy system – to understand why progress has been so slow. He argues that the answer lies in the outdated and complex structure of Electricity 1.0, a closed, highly regulated network created a century ago, fundamentally incompatible with clean technology and renewable power. 

Moynihan will argue that America must upgrade to Electricity 2.0, an open, distributed network, or there will be no clean energy revolution, no explosion of wealth, and no creation of millions of jobs. But if we do make this shift, America can unlock the potential of clean technology and experience a renewable revolution.  

On Thursday at 12pm, Moynihan, a former Senior Advisor on E-Commerce to Treasury Secretaries Summers and Rubin, will describe the transformative power of Electricity 2.0 and will outline the steps America needs to take to achieve this vision. Copies of the paper will be available for distribution, and lunch will be served. If you are unable to join us in person, the event will be live webcast beginning at 12:15pm, and copies of the paper will be posted on the NDN and New Policy Institute websites later in the afternoon. 

Electricity 2.0: Unlocking the Power of the Open Energy Network
Thursday, February 4, 12 p.m.
NDN: 729 15th St. NW, 1st Floor
A live webcast will begin at 12:15 p.m. ET
RSVP  :  Watch Webcast

I look forward to seeing you on Thursday for this important presentation. 

For more on this topic, please see:

Removing Roadblocks to the Growth of Renewables by Michael Moynihan, August 17, 2009

In his weekly address, President Obama talks about his focus on the economy in 2010 and covers his commitment to deficit reduction. Notably, he covers some of the politics that conservatives have been playing with deficit reduction.

Take a look:

The President's remarks on politically motivated changes on issues are a narrative that seems to be working pretty well:

Finally, I've called for a bi-partisan Fiscal Commission - a panel of Democrats and Republicans who would sit down and hammer out concrete deficit-reduction proposals by a certain deadline.  Because we've heard plenty of talk and a lot of yelling on TV about deficits, and it's now time to come together and make the painful choices we need to eliminate those deficits. 

This past week, 53 Democrats and Republicans voted for this commission in the Senate.  But it failed when seven Republicans who had co-sponsored this idea in the first place suddenly decided to vote against it. 

Now, it's one thing to have an honest difference of opinion about something.  I will always respect those who take a principled stand for what they believe, even if I disagree with them. 

But what I won't accept is changing positions because it's good politics.  What I won't accept is opposition for opposition's sake.  We cannot have a serious discussion and take meaningful action to create jobs and control our deficits if politicians just do what's necessary to win the next election instead of what's best for the next generation. 

On that note, if you haven't seen it, take a look at the President's "question time" from yesterday at the House Republican Issues Conference. I'll leave you to judge who got the best of that situation:

This week, President Obama and Senators Schumer and Hatch proposed important job creation ideas similar to those advocated by NDN and Dr. Robert Shapiro over the past several months. At the core of these proposals sit payroll tax cuts or tax credits that reduce the employer’s cost of hiring, which NDN has advocated as the most effective way to spur employment in the near-term. 

Dr. Robert Shapiro, Chair of NDN's Globalization Initiative and former Under Secretary of Commerce for Economic Affairs, said this about the White House and Schumer-Hatch proposals:

Reducing the cost to hire at a time when the economy is encountering special problems creating jobs simply makes good economic sense, and reducing the employer's payroll taxes on new hires, when the employer is also expanding its overall workforce, is the most effective way to do it.  The proposals advanced by the White House and Senators Schumer and Hatch do just that. NDN has long promoted versions of this approach, and while there are no silver bullets for unemployment, understanding the dynamics responsible for weak job creation now and throughout the 2002-2007 recovery is a necessary first step to restoring real prosperity. Taking targeted action now by reducing the payroll tax for new hires a vital next step.

NDN congratulates the Obama Administration and Senators Schumer and Hatch for offering this important proposal and will work for the rapid passage of this measure. For Shapiro's advocacy of such an approach, which dates back to October, please see:

• January 20, 2010, The Path to More Jobs and Growth – "It’s virtually the only proposal that’s actually targeted directly at job creation, and it’s effective because it directly reduces a company’s cost to create new jobs. Its’ projected power to boost GDP follows directly from its success in creating jobs, since the new workers would spend virtually everything they earn, boosting output in the goods and services they choose and the jobs required to provide those goods and services." 

• December 4, 2009, Video of the White House Forum on Jobs and Economic Growth: Encouraging Business Investment, Competitiveness and Job Creation working group in which Dr. Shapiro discusses this proposal. 

• December 2, 2009, How to Create Jobs in a Troubled Economy – "Exempt from payroll taxes the first $3,000 to $5,000 of wages paid in each of the first two years to new hires by firms that expand their work forces."

• November 2, 2009, The Storms on the Economy’s Horizon – "An even better idea would be to jumpstart new job creation by exempting the first few thousand dollars of wages from payroll taxes."

• October 8, 2009, What Washington Should Understand and Do to Create Jobs – "Businesses would receive a tax credit for the first year of payroll taxes on new employees or those moving from part-time to full-time, and a credit for half as much in the second year." (Also posted at The New Republic and NPR.)

For more of NDN's work on the economy, please see our backgrounder on "A New Economic Strategy for America."

With the national conversation focused on the economy and the struggle of everyday people, NDN and the New Policy Institute offer up some of our recent work as background:

• Keeping the Focus on the Struggle of Everyday People: 2010 Edition by Simon Rosenberg, January 26, 2010, The Huffington Post – Simon offers an important, updated narrative on crafting a national agenda focused on the ongoing struggle of everyday people. This version also links to important charts and graphs on the NDN website.

• Prominent Senators Offer Proposal to Cut Payroll Tax, Create Jobs, January 26, 2010 – In column in The New York Times, Senators Schumer and Hatch promote a proposal, similar to that advanced by NDN Globalization Initiative Chair Dr. Robert Shapiro, to exempt a portion of the payroll tax on new hires in order to spur job creation.

• Crafting an American Response to the Rise of the Rest by Simon Rosenberg, January 21, 2010 – This essay written for Salon lays out three strategies for the Obama Administration to craft a comprehensive response to the new politics and global economy of the 21st century.

• The Path to More Jobs and Growth by Dr. Robert Shapiro, January 20, 2010 – Shapiro examines a Congressional Budget Office report illustrating the effectiveness of his proposed payroll tax cut for new hires. He also argues that a new strategy is needed to ensure we do not have another disappointing economic expansion.

• A Lost Decade for Everyday Americans by Jake Berliner, December 17, 2009 – This white paper advances the argument that everyday Americans have just been through a lost decade, marked by stagnating wages and declining incomes, a key factor in explaining the virulence of the Great Recession. 

We hope you find these materials helpful in your thinking on some of the most important issues of our day.

Today in The New York Times, Senators Chuck Schumer and Orrin Hatch embrace a payroll tax exemption designed to promote employment, an idea similar to one NDN's Dr. Rob Shapiro has been discussing:

Starting immediately after enactment, any private-sector employer that hires a worker who had been unemployed for at least 60 days will not have to pay its 6.2 percent Social Security payroll tax on that employee for the duration of 2010. The Social Security trust fund will then be made whole with spending cuts elsewhere in the budget between now and 2015. That’s it. Simple to understand, and easy to explain.

The beauty of this proposal goes beyond its simplicity. Unlike a jobs tax credit of a specific dollar amount, this credit is “front-loaded” in that it provides an incentive for businesses to hire workers earlier in the year — because the tax benefit will be greater. A $60,000 worker hired on Feb. 1 will save a business about $3,400 in taxes, while that same worker hired on May 1 will save it about $2,500.

Here's the idea Shapiro described in October in a piece called What Washington Should Understand and Do to Create Jobs (the piece was also posted on the websites of The New Republic and NPR):

Businesses would receive a tax credit for the first year of payroll taxes on new employees or those moving from part-time to full-time, and a credit for half as much in the second year.  It's not very well targeted, since you end up subsidizing jobs that would have been created without any tax break.  (Keep in mind, falling employment is a net result, with some businesses adding jobs and others cutting them.)  But it is well focused on jobs, so long as we also include some conditions on those who claim it.  For example, a new business should have to be in place for at least six months before qualifying, to head off scams where people close down existing firms, reopen them, and then use all their existing employees to claim a big tax benefit.  And a firm’s total wage costs should have to rise, so employers don't just fire and rehire workers in order to qualify. 

Shapiro discussed this idea at the White House Forum on Jobs and Economic Growth (video here) and also promoted the idea in the following blogs:

• November 2, 2009, The Storms on the Economy’s Horizon – "An even better idea would be to jumpstart new job creation by exempting the first few thousand dollars of wages from payroll taxes."

• December 2, 2009, How to Create Jobs in a Troubled Economy – "Exempt from payroll taxes the first $3,000 to $5,000 of wages paid in each of the first two years to new hires by firms that expand their work forces."

• January 20, 2010, The Path to More Jobs and Growth  – "It’s virtually the only proposal that’s actually targeted directly at job creation, and it’s effective because it directly reduces a company’s cost to create new jobs. Its’ projected power to boost GDP follows directly from its success in creating jobs, since the new workers would spend virtually everything they earn, boosting output in the goods and services they choose and the jobs required to provide those goods and services."

While there is certainly no silver bullet for job creation, exempting a portion of the payroll tax, a direct tax on employment, is an appropriate and serious step that should spur job creation. In the 2002-2007 expansion, private employment grew at less than half the rate, relative to overall growth, as it did during the expansions of the 1990s and 1980s. The proposed change in the payroll tax will help alleviate this development. Senators Schumer and Hatch are to be congratulated for their proposal, and the Congress should pass this legislation with alacrity.

On Tuesday, February 2, NDN will host an address from Phil Angelides, Chairman of the Financial Crisis Inquiry Commission. Formerly the Treasurer of the State of California, Mr. Angelides has been charged by Congress to lead the effort examining the causes of the worst financial crisis since the Great Depression.He will discuss the commission's work, which began in earnest this month with much anticipated hearings. NDN Globalization Initiative Chair Dr. Robert Shapiro will introduce Mr. Angelides and open with the event with contextual remarks.

The event will begin at 12pm and lunch will be served. A live webcast of the event will begin at 12:15pm. Seating is limited and is reserved on a first come, first served basis, so please RSVP soon.

Financial Crisis Inquiry Commission Chairman Phil Angelides:
"Examining Our Financial Past to Secure Our Economic Future"
Tuesday, Febraury 2, 12 p.m.
NDN: 729 15th St. NW, 1st Floor
A live webcast will begin at 12:15 p.m. ET
RSVP  :  Watch Webcast

About the Financial Crisis Inquiry Commission (FCIC)
The bi-partisan 10-member Financial Crisis Inquiry Commission was created by Congress and is charged with examining the causes of the financial meltdown.  It is also examining causes of the collapse of major financial institutions that failed or would likely have failed had they not received exceptional government assistance.  The Commission is comprised of Chairman Phil Angelides, Vice Chairman Bill Thomas, and Commissioners Brooksley Born, Byron Georgiou, Robert Graham, Keith Hennessey, Doug Holtz-Eakin, Heather Murren, John W. Thompson, and Peter Wallison.  Findings and conclusions are to be presented in a formal report to Congress and the President by December 15, 2010.

President Obama today announced a set of stronger-than-previously-proposed restrictions on financial institutions. Here's part of the White House's statement:

President Obama Calls for New Restrictions on Size and Scope of Financial Institutions to Rein in Excesses and Protect Taxpayers

WASHINGTON, DC- President Obama joined Paul Volcker, former chairman of the Federal Reserve; Bill Donaldson, former chairman of the Securities and Exchange Commission; Congressman Barney Frank, House Financial Services Chairman; Senator Chris Dodd, Chairman of the Banking Committee and the President's economic team to call for new restrictions on the size and scope of banks and other financial institutions to rein in excessive risk taking and to protect taxpayers.

The President’s proposal would strengthen the comprehensive financial reform package that is already moving through Congress.

“While the financial system is far stronger today than it was a year one year ago, it is still operating under the exact same rules that led to its near collapse,” said President Barack Obama. “My resolve to reform the system is only strengthened when I see a return to old practices at some of the very firms fighting reform; and when I see record profits at some of the very firms claiming that they cannot lend more to small business, cannot keep credit card rates low, and cannot refund taxpayers for the bailout.  It is exactly this kind of irresponsibility that makes clear reform is necessary.”

The proposal would:

1.   Limit the Scope - The President and his economic team will work with Congress to ensure that no bank or financial institution that contains a bank will own, invest in or sponsor a hedge fund or a private equity fund, or proprietary trading operations unrelated to serving customers for its own profit.

2.   Limit the Size - The President also announced a new proposal to limit the consolidation of our financial sector.  The President’s proposal will place broader limits on the excessive growth of the market share of liabilities at the largest financial firms, to supplement existing caps on the market share of deposits.

For more on the nature of the nation's financial system, NDN will be hosting an address by Phil Angelides, Chairman of the Financial Crisis Inquiry Commission, on February 2. 

In his weekly address, President Obama discusses the struggle that everyday people have been and are currently going through, and how health insurance reform is a key piece of a new foundation. He specifically focuses on reforms that will take effect in the first year after reform passes. Take a look:

I've blogged on this before, but this slide from a poll done by Peter Hart from EPI remains incredibly relevant:

From CEA Chair Christina Romer delivered comments on today's employment numbers:

The unemployment rate remained at 10.0 percent in December.  This level reflected a proportional decline in the number of people unemployed and the number of people in the labor force.  The unemployment rate remains unacceptably high, which underscores the need for responsible actions to jumpstart private-sector job creation.

As the President has said for a year, the road to recovery will not be a straight line.  The monthly employment and unemployment numbers are volatile and subject to substantial revision.  Therefore, it is important not to read too much into any one monthly report, positive or negative.  It is essential that we continue our efforts to move in the right direction and replace job losses with robust job gains.

Sounds like an increasing appetite for more growth and job creation activities. Steven Pearlstein, writing on Wednesday in the Washington Post, discussed the apparent weakness of most potential sources of growth, and laid out an agenda for going forward:

Most important would be for the federal government to step up its spending for infrastructure, basic research, clean-energy development and expanded public higher education. After 20 years of badly underfunding public investment, the first stimulus package was a step in the right direction. A second package would create additional high-paying jobs now, while generating higher growth and tax revenues for decades. A boost in government investment would also provide the perfect political cover for moving aggressively to reduce the government's "consumption" spending by reforming entitlements, reducing farm subsidies and business tax breaks, and eliminating underperforming social and military programs.

Given how we got into this mess, we're probably stuck with several more years of slow growth in jobs and income. The only important question is whether we'll use this opportunity to lay the foundation for another generation of sustained prosperity, or get sidetracked by chasing after short-term stimulus and overzealous deficit reduction.