Tonight on BBC TV, I weighed in on the debt ceiling debate and reiterated the same message from many economic experts–the sky will not fall on August 2nd. U.S. lawmakers should practice caution and be measured in their approach to rein in our U.S. debt and implement policies that will promote long term savings and investment.
Columbia Business School Dean Glenn Hubbard makes good sense about how we need to approach deficit reduction and tax reform. Dean Hubbard, a member of the ACCF Center for Policy Research’s Board of Scholars, notes that the huge U.S. deficit is primarily a spending problem. He opposes raising marginal income rates because it would not make a significant dent in the deficit. He does support reducing deductions (as did the President’s National Commission on Fiscal Responsibility and Reform). He also suggests addressing entitlement spending by slowing the rate of benefit growth for middle and upper income social security recipients as well as trimming benefits under the Patient Protection and Affordable Care Act for upper income individuals. Hubbard’s conclusion that the U.S. would be better served by adopting a long-run tax reform plan which moves toward taxing consumption more and saving and less has been substantiated over the last 30 years by the analyses of public finance scholars. As Winston Churchill said, “you can always count on Americans to do the right thing after they’ve tried everything else” Could we be near that point in U.S. tax policy?
See my response to this week’s topic on National Journal’s Energy and Environment Experts blog. As lawmakers look for ways to cut spending in light of our crushing debt, federal subsidies should be scrutinized and cut back as quickly as possible. Renewables, which already receive a lion’s share of the Federal budget energy expenditures, tend to be extremely expensive sources of electricity as I demonstrated in the figure in my blog. Wind, solar and biomass can certainly play a complementary role in U.S. energy supply, but because of their cost, the intermittency of wind and solar, (the sun doesn’t always shine and the wind doesn’t always blow) and need for a backup energy supplies it is foolish to think that they will replace large amounts of our more traditional energy sources in the next 10 to 20 years. Heavy subsidies for renewable energy and alternative fuel vehicles when more cost-effective and efficient energy sources are available will further only delay our economic recovery. As congress weighs the real value of energy subsidies, it should also pursue policies that will allow for expanded capacity like allowing increased access to both off-shore and on-shore areas for drilling and exploration. This would have a positive impact…
See chart on cost breakdown of traditional and alternative energy sources presented by John Rowe, Chairman and CEO of Exelon Corporation made in a recent presentation. Note high costs of high costs of renewables despite tax incentives. CLICK HERE TO ENLARGE.
EPA Administrator Lisa Jackson testified before Senate EPW today and continues to cite specious economic benefits of the Clean Air Act Amendments of 1990. Yet, the EPA’s own economic modeling shows substantial losses of GDP, as I presented in my own testimony last week. Click to enlarge.
Today I participated as witness at a hearing on the impact of the Clean Air Act Amendments of 1990 (CAAA) before the Senate Subcommittee on Clean Energy and Nuclear Safety and Subcommittee on Children’s Health and Environmental Responsibility. Given the continued weakness of the U.S. economy, stubbornly high unemployment rate and sluggish investment spending, I urged lawmakers to closely examine the economic and health benefits from regulatory policies like the CAAA and determine if the cost benefits are based on sound economic modeling. More specifically I zeroed in on the EPA’s much touted claim that CAAA provides $2 trillion in economic value and noted that the figure was not based on sound economic modeling and stands in stark contrast to EPA’s own economic simulations which show substantial losses of GDP under CAAA regulations as demonstrated here: You can read the press release from today’s hearing here. And read my full testimony here. You can also watch today’s hearing here:
ACCF