Economy

Is the exurban era over? For the last sixty years, American urban development has been characterized by a relentless, outward surge of population to the edge. While the reasons are complex, the top two are easy loans courtesy of Federal programs like Fannie Mae and cheap gas. With housing stalled and gas prices soaring, the peculiar American invention of sprawl may be approaching a crisis. The car culture that supports sprawl made sense at $1.50 a gallon. But now that prices are rising, there is a very real possibility that today's exurbs could be tomorrow's wasteland.

Paul Krugman addresses this question today in an oped that finds the future of urban development, not in India or China but in old Europe. Why? Europe embodies precisely the high density, transportation-oriented-development that may be the answer to sprawl. Krugman points out that Berlin has about as many people as Atlanta but they get around by bus or train, not by car. German families own cars; they just get higher mileage and drive less. The result is a sustainable-and not too shabby--style of living that is less harmful to the planet and a lot easier on the family budget.

Smart growth, as it is known in America, has been around for a while but it has yet to get real traction. Besides cheap gas and plentiful cheap land at the edge, the ideal of high density, eco-friendly development has repeatedly run into the US preference for highways instead of rail, the suburban homestead as opposed to apartments and our system of federalism that has wrought a patchwork of tiny, competing jurisdictions. With low gas prices no longer supporting sprawl, however, the other supports may not sustain it.

What could save the exurbs? High mileage cars will help, but they are not enough. America needs to make a massive investment in rail and other forms of public transporation to link exurban centers which still tend to radiate outward from cities together. To do that, a reform in infrastructure finance is needed. In turn, zoning codes need to change as well to promote higher density development and open space preservation. Currently the very definition of sprawl-separation of residential housing form commercial stores-is baked into tens of thousands of zoning codes around the country. Model zoning codes that promote smart growth should be enacted nationally.

It's a big challenge. But America should start now if it has any chance to forestall what may be major dislocation down the road.

Senator Clinton has not run a flawless race this year but as Denver gets nearer, each mistake grows more critical. If one stands out in yesterday's results, it was not just proposing but pressing for a cut in the gas tax this last week. The idea suffered from so many flaws it is hard to imagine the conversations that led her advisors to propose it, let alone run ads on the issue.

First, John McCain had the idea first. While her addition of a windfall profits tax on the oil companies made sense enough, that was not enough to differentiate her version. In a race where Obama has been dying for chances to link her with Republicans, adopting one of McCain's ideas should have been strike one.

Strike two, neither she nor McCain will be President this summer. Voters want to hear what she will do as President after January 20, 2009.

Third, the idea was clearly bad policy, guaranteeing its universal panning by economists, energy analysts and pundits. No doubt her own policy staff probably argued that a tax cut will not relieve upward pressures on oil prices, will encourage more use of gas that may actually increase prices and undermines her strong message on global warming and energy security.

Strike four is that the controversy completely doused the firestorm around Senator Obama's former pastor, the Reverend Wright that was lifting her in the polls as recently as last Thursday.

Senator Obama will probably talk about this issue as long as he can. As for Senator Clinton, the episode should be a reminder that in a complex world, good policy is the truest signpost of good politics.

Clinton and Obama have released a new round of gas tax ads in advance of Indiana and North Carolina. Clinton's argues that she will fight the oil companies and make them pay the gas tax, while Obama's argues that her propsal is "bogus" and "a gimmick."

Clinton's ad:

On the gasoline tax, the survey underlined the risk Mrs. Clinton is taking in embracing a position that most Americans — including a majority of her own supporters — appear to view as political pandering. More than 60 percent of voters in the poll said that Mrs. Clinton said what people wanted to hear, rather than what she believed. Forty-three percent said that about Mr. Obama, and 41 percent about Mr. McCain.

Update 2: Obama's latest ad going into tomorrow's primaries says Clinton is taking "the low road."

NDN gas tax coverage round up:

• Obama goes after Clinton on gas tax
• More on the gas tax - including a quote from Globalization Initiative Chair Dr. Robert Shapiro
• Ads focus on gas tax
• Energy Insanity - coverage of Thomas Friedman's column by Green Project Director Michael Moynihan
• Candidates talk energy policy

Who would have thought that the gas tax would be a top political issue going into the Indiana primary? Both Democratic campaigns have used the issue to push their narratives: Clinton's that she is a fighter for the working class and Obama's that he represents a new kind of politics. Both have been running ads in Indiana on this policy difference, and Obama has released a new one taking on Clinton directly on her support for John McCain's gas tax holiday proposal.

Watch "Pennies"

Also, today's New York Times has an interesting article entitled "Unlikely Allies Campaign for a Gas-Tax Holiday."

Senators John McCain and Hillary Rodham Clinton found themselves taking a lonely stand on the campaign trail Thursday, defending the proposed gasoline-tax holiday while critics from both parties lined up against it.

Three times, twice unprompted, Mr. McCain, of Arizona, brought up the idea, which Senator Barack Obama's campaign began calling "the McCain-Clinton gas-tax holiday."

Their proposal would suspend the federal excise tax on gasoline, 18.4 cents a gallon, for the summer travel season.

Mrs. Clinton, campaigning in central and southern Indiana, championed her plan as a boon to commuters, truckers and summer vacationers.

At an event in Jeffersonville, Ind., on Thursday evening, Mrs. Clinton amplified her frequent pledge to introduce legislation to suspend the gas tax, saying she wanted to put members of Congress on the spot on the issue.

"Do they stand with hard-pressed Americans who are trying to pay their gas bills at the gas station or do they once again stand with the big oil companies?" Mrs. Clinton, of New York, said. "That's a vote I'm going to try to get, because I want to know where they stand, and I want them to tell us - are they with us or against us?" (Some Clinton supporters and superdelegates in Congress are among those who oppose a gas tax holiday.)

In Iowa, sounding more exasperated as the day went on, Mr. McCain grimaced slightly when a questioner at a town-hall-style meeting asked him about the plan.

"You'd think that I was attacking Western civilization as we know it," Mr. McCain replied. "The special interests, ‘Oh, my God. This will destroy our transportation system in America. This will have disastrous consequences.' Look, all I think is we ought to give low-income Americans, in particular, a little relief."

Mr. McCain did not say which special interests he meant. But by Thursday afternoon, opposition to the plan was robust and bipartisan, including Senator John Thune, Republican of South Dakota; Senator Tom Harkin, Democrat of Iowa; and Speaker Nancy Pelosi, Democrat of California.

Even lawmakers in Mrs. Clinton's backyard, including Mayor Michael R. Bloomberg of New York City (a former Republican, now an independent) and Gov. David A. Paterson, a Democrat, expressed doubts.

"It's about the dumbest thing I've heard in an awful long time from an economic point of view," Mr. Bloomberg told reporters, adding that he did not see "any merit to it whatsoever."

The Wall Street Journal also has an article on the issue today, entitled "Will Voters Accept Obama's Gas Plea?" which points out that Obama's arguments on the issue are not always getting through to voters.

NDN gas tax coverage round up:

• More on the gas tax - including a quote from Globalization Initiative Chair Dr. Robert Shapiro
• Ads focus on gas tax
• Energy Insanity - coverage of Thomas Friedman's column by Green Project Director Michael Moynihan
• Candidates talk energy policy

UPDATE: Senator Clinton is reportedly introducing legislation today to suspend the gas tax for the summer. With broadbased opposition to the measure, including Speaker Pelosi, this legislation probably is not going anywhere, but Clinton has said that she wants to "get every member of Congress on the record," on this issue. The Obama campaign is arguing that Clinton is overplaying her hand and risks alienating the members of Congress (read: super delegates) she needs to win the nomination.

Dr. Robert Shaprio, Chair of NDN's Globalization Initiative, was quoted by Sam Stein in the Huffington Post on the gas tax holiday proposal. The article, entitled "Expert Support for Gas Tax Holiday Appears Nonexistant," comes on the heels of a Thomas Friedman column and New York Times editorial that both deride the proposal.

From the Huffington Post:

"Stated as clearly as I can," [Shapiro] wrote, "it's utterly misguided both environmentally and economically. Environmentally, it does actual harm, since it reduces the price of producing greenhouse gases. And economically it's trivial or worse -- by reducing the price of driving it encourages more of it, thereby increasing demand for gasoline, which inevitably pushes the price back up - the consumer gains nothing, and the oil companies and OPEC collect the extra bucks instead of the government."

On another note, the conferees on the upcoming farm bill agreed to reduce the subsidy for ethanol. Corn based ethanol has been blamed, among many factors, for the rise in food prices.

The past two days have seen a back and forth from Senators Clinton and Obama on the proposal to suspend the gas tax for the summer. Green Project Director Michael Moynihan blogged on a Thomas Friedman column on the subject today, and the New York Times covered the debate yesterday. Now, both candidates have ads airing in Indiana on the subject.

Senator Clinton hits Obama:

Senator Obama's response:

Obama has said he was going to avoid going negative in the coming weeks, while Clinton has not shied away from her strategy. Both ads clearly reflect that, and stay on message: Clinton's of being a fighter and Obama's change in Washington argument. We will see if this issue can score points for either one.

Americans have dealt with significant increases in their costs of living during the Bush administration. One of the most significant is rising energy costs, most visibly seen in high prices at the pump. This issue has suddenly found itself at the center of the Presidential campaign in the form of a proposal to suspend the gas tax for the summer, saving the average American, according to estimates, at most about $30 over that time.

From the New York Times:

As angry truckers encircled the Capitol in a horn-blaring caravan and consumers across the country agonized over $60 fill-ups, the issue of high fuel prices flared on the campaign trail on Monday, sharply dividing the two Democratic candidates.

Senator Hillary Rodham Clinton lined up with Senator John McCain, the presumptive Republican nominee for president, in endorsing a plan to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for the summer travel season. But Senator Barack Obama, Mrs. Clinton’s Democratic rival, spoke out firmly against the proposal, saying it would save consumers little and do nothing to curtail oil consumption and imports.

While Mr. Obama’s view is shared by environmentalists and many independent energy analysts, his position allowed Mrs. Clinton to draw a contrast with her opponent in appealing to the hard-hit middle-class families and older Americans who have proven to be the bedrock of her support. She has accused Mr. Obama of being out of touch with ordinary Americans who are struggling to meet their mortgages and gas up their cars and trucks.

Mrs. Clinton said at a rally on Monday morning in Graham, N.C., that she would introduce legislation to impose a windfall-profits tax on oil companies and use the revenue to suspend the gasoline tax temporarily.

"At the heart of my approach is a simple belief," Mrs. Clinton said. "Middle-class families are paying too much and oil companies aren't paying their fair share to help us solve the problems at the pump."
…

Mrs. Clinton said the tax on the oil companies, which have been reporting record profits as oil prices soar, would cover all of the lost revenue from the federal tax on gasoline and diesel fuel. She also said no highway projects would suffer.

Mr. Obama derided the McCain-Clinton idea of a federal tax holiday as a "short-term, quick-fix" proposal that would do more harm than good, and said the money, which is earmarked for the federal highway trust fund, is badly needed to maintain the nation’s roads and bridges.

Here at NDN, we are pleased to see the candidates addressing energy reform and discussing America’s weakening infrastructure. NDN Green Project Director Michael Moynihan recently wrote a paper about the need to invest in America’s infrastructure, and the Green Project has been promoting a long term solution to America’s energy needs. Going forward, we encourage the candidates to incorporate long term solutions these issues into their policy prescriptions.