Reckless Spending
By Thomas Sowell
2/22/2011
Nothing more clearly illustrates the utter irresponsibility of Barack Obama than his advocacy of "high-speed rail." The man is not stupid. He knows how to use words that will sound wonderful to people who do not bother to stop and think.
High-speed rail may be feasible in parts of Europe or Japan, where the population density is much higher than in the United States. But, without enough people packed into a given space, there will never be enough riders to repay the high cost of building and maintaining a high-speed rail system.
Building a high-speed rail system between Los Angeles and San Francisco may sound great to people who don't give it any serious thought. But we are a more spread-out country than England, France or Japan. The distance between Los Angeles and San Francisco is greater than the distance from London to Paris-- by more than 100 miles.
In Japan, the distance between Tokyo and Osaka is comparable to the distance between Los Angeles and San Francisco. But the population of Osaka alone is larger than the combined populations of Los Angeles and San Francisco-- and Tokyo has millions more people than Osaka. That is why it can make sense to have a "bullet train" running between Osaka and Tokyo, but makes no sense to build one between Los Angeles and San Francisco.
However little President Obama knows or cares about economics, he knows a lot about politics-- and especially political rhetoric. "High-speed rail" is simply another set of lofty words to justify continued expansion of government spending. So are words like "investment in education" or "investment" in any number of other things, which serves the same political purpose.
Who cares what the realities are behind these nice-sounding words? Obama can leave that to the economists, the statisticians and the historians. His point is to win the votes of people who know little or nothing about economics, history or statistics. That includes a lot of people with expensive Ivy League degrees.
To talk glibly about spending more money on "high-speed rail" when the national debt has just passed a milestone, by exceeding the total value of our annual output, for the first time in more than half a century, is world-class chutzpa. The last time the U.S. national debt exceeded the value of our entire annual output, it was due to the cost of fighting World War II.
When World War II ended, in less than four years of American participation, we began paying down the national debt. But our current national debt has been expanding by leaps and bounds in peacetime-- and with no sign of an end in sight for the next decade.
Since more than 40 percent of our national debt is owed to foreigners, this means that goods and services produced by Americans, equal in value to more than 40 percent of our current output, will have to be sent overseas, free of charge, by either this generation or the generations that follow.
Since the generations that follow cannot vote today, the Obama administration's latest budget keeps the spending increasing, while regaling us with wonderful plans for big reductions in government spending-- years from now, after Obama is gone.
Make no mistake about it, spending wins votes, and votes are the ultimate bottom line for politicians. If fancy words and lofty visions are enough to get the voters to go along with more spending, then expect to hear a lot of fancy words and lofty visions.
One of the most successful political ploys is to promise people things without having the money to pay for them. Then, when others want to cut back on the things that have been promised, blame them for lacking the compassion of those who wrote the checks without enough money in the bank to cover them.
If all else fails, politicians can always say that we can pay for the things they promised us by raising taxes on "the rich." However, history shows that, when tax rates go up to very high levels, people put more of their money in tax shelters, so the government ends up collecting less revenue than before.
But history is so yesterday. What is far more exciting is to think of high-speed rail in the future, even if it is speeding us toward bankruptcy.
Thomas Sowell
Thomas Sowell is a senior fellow at the Hoover Institute and author of The Housing Boom and Bust.
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Wednesday, February 23, 2011
House Votes Against Money for EPA's Chesapeake Bay Initiative, other EPA rules
Progressive Farmer
Chris Clayton DTN Ag Policy Editor
http://www.dtnprogressivefarmer.com/dtnag/common/link.do;jsessionid=D3249FA4DA33A618056A478CAD626A42.agfreejvm1?symbolicName=/ag/blogs/template1&blogHandle=policy&blogEntryId=8a82c0bc2da1a99e012e3ec7a8b3072f&showCommentsOverride=false
House Votes Against Money for E15, Blender Pumps, EPA
(latest update)
Here's a rundown on some amendments that passed as the House of Representatives passed a Continuing Resolution on spending to cut about $61 billion out of the current federal budget.
Ethanol would take hits with no money to spend on 15 percent ethanol or blender pumps.
The Environmental Protection Agency also would not be allowed to implement a rule on farm dust, greenhouse-gas emissions or any other climate change measure, or higher water-quality standards in the Chesapeake Bay or Florida.
The House voted around 2 a.m. EDT, to block funds preventing the EPA from implementing the 15 percent ethanol waiver. The Amendment was offered by Rep. John Sullivan, R-Okla. And passed 285 to 136. Republicans had 206 votes joining 79 Democrats to back the measure. Thirty one Republicans and 105 Democrats voted against it.
The House had voted about an hour earlier to prevent spending any federal funds for the rest of the fiscal year on construction of blender pumps or an ethanol storage facility. The vote had 78 Democrats joining 183 Republicans to get 261 votes approving the amendment.
"The taxpayers have subsidized ethanol for far too long," said Rep. Jeff Flake, R-Ariz., in describing the blocked funding. "This amendment will simply bring that slowly to a stop."
Growth Energy, which championed E15 and also wants to convert the ethanol blenders' credit into spending for infrastructure, stated in a release on Saturday that the amendments by Sullivan and Flake "would continue America’s addiction to foreign oil and harm our economy."
“The Sullivan provision picks politics over science. EPA’s consideration of E15 was based on a more exhaustive study and collection of data than any of the 11 previously-approved petitions. No other fuel mix has been tested more,” said Tom Buis, CEO of Growth Energy, which filed the Green Jobs Waiver for E15 in March 2009. “With all the turmoil going on in the Middle East and elsewhere, the House of Representatives just voted to stop the only viable alternative to foreign oil: ethanol. It is the wrong move at the wrong time for the wrong reasons.”
Rep. Tom Latham, R-Iowa, spoke in opposition to Flake's amendment, saying it limits consumer choice and is another attack on the nation's progress to move toward energy security. Without the blender pumps, most Americans would continue with just E10, and continue to import more oil.
Flake countered that it's not a consumer choice, it's a mandate and called ethanol a "boondoggle for 30 years."
Also early Saturday morning,the House voted 255-168 on an amendment by Rep. Kristi Noem, R-S.D., to prevent the EPA from regulating agricultural dust, a major thorn in the side of lawmakers from rural America. There were 234 Republicans and 21 Democrats who voted for the measure. Four Republican joined 164 Democrats voting against it. Under the amendment no funds would be made available to modify the national primary ambient air quality standard or the national secondary ambient air quality standard" under the Clean Air Act.
As it was, the House voted Friday and early Saturday in a barrage of amendments to hit the EPA's ability to implement climate and clean-water rules.
Despite the flurry of amendments in the House to cut spending, the House Continuing Resolution still has to go through the Senate and President Obama has said he would veto the cuts.
Under one amendment, the House voted earlier in the day that no funds could be used by the EPA "to implement, administer, or enforce any statutory or regulatory requirement pertaining to emission of carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons or perfluorocarbons from stationary sources that is issues or becomes applicable or effective after Jan. 1, 2011."
Effectively, under that rule there would be no rule to reduce greenhouse-gas emissions. Another amendment blocks any funding for the United Nations panel on climate change.
In another heated discussion on the Chesapeake Bay, the House also voted 230-195 to eliminate funding from EPA actions on the Chesapeake Bay watershed. Rep. Bob Goodlatte, R-Va., who offered the amendment, to eliminate said the EPA was placing arbitrary limits on nutrients and an expansion of authority under the Clean Water Act would devastate local economies. Goodlatte said individual states and communities are better suited to establish water goals than the EPA.
"The EPA does not have authority to micromanage states' water quality goals and we must stop their power grab," he said.
Goodlatte said his amendment would not stop voluntary cleanup efforts in the Chesapeake Bay.
Rep. James Moran, D-Va., called Goodlatte's amendment "extreme" and would hurt multi-state, pollution-reduction efforts in the Chesapeake Bay. "Pollution in the Chesapeake Bay is a job killer for citizens in this watershed," Moran said.
Goodlatte noted the bay is getting healthier without the EPA mandate.
Rep. Tom Rooney, R-Fla., also got a similar amendment passed to eliminate funding for EPA's total maximum daily load of nutrient requirements in Florida as well. Those regulations actually do not go into effect until March 2012.
Another amendment by Rep. Tom McClintock, D-Calif., blocks implementing funds for a Klamath Dam removal and sedimentation study as part of the TMDL for that river basin. Environmentalists and others want to remove dams along the Klamath River. That amendment passed 215-210 in a vote that caused a round boos in the chamber of the House by Democrats.
A summary of the amendment votes can be found at http://clerk.house.gov/…
Specific language on the amendments debated in the House resolution can be found at http://rules.house.gov/…
Posted at 10:36AM CST 02/19/11 by Chris Clayton
Chris Clayton DTN Ag Policy Editor
http://www.dtnprogressivefarmer.com/dtnag/common/link.do;jsessionid=D3249FA4DA33A618056A478CAD626A42.agfreejvm1?symbolicName=/ag/blogs/template1&blogHandle=policy&blogEntryId=8a82c0bc2da1a99e012e3ec7a8b3072f&showCommentsOverride=false
House Votes Against Money for E15, Blender Pumps, EPA
(latest update)
Here's a rundown on some amendments that passed as the House of Representatives passed a Continuing Resolution on spending to cut about $61 billion out of the current federal budget.
Ethanol would take hits with no money to spend on 15 percent ethanol or blender pumps.
The Environmental Protection Agency also would not be allowed to implement a rule on farm dust, greenhouse-gas emissions or any other climate change measure, or higher water-quality standards in the Chesapeake Bay or Florida.
The House voted around 2 a.m. EDT, to block funds preventing the EPA from implementing the 15 percent ethanol waiver. The Amendment was offered by Rep. John Sullivan, R-Okla. And passed 285 to 136. Republicans had 206 votes joining 79 Democrats to back the measure. Thirty one Republicans and 105 Democrats voted against it.
The House had voted about an hour earlier to prevent spending any federal funds for the rest of the fiscal year on construction of blender pumps or an ethanol storage facility. The vote had 78 Democrats joining 183 Republicans to get 261 votes approving the amendment.
"The taxpayers have subsidized ethanol for far too long," said Rep. Jeff Flake, R-Ariz., in describing the blocked funding. "This amendment will simply bring that slowly to a stop."
Growth Energy, which championed E15 and also wants to convert the ethanol blenders' credit into spending for infrastructure, stated in a release on Saturday that the amendments by Sullivan and Flake "would continue America’s addiction to foreign oil and harm our economy."
“The Sullivan provision picks politics over science. EPA’s consideration of E15 was based on a more exhaustive study and collection of data than any of the 11 previously-approved petitions. No other fuel mix has been tested more,” said Tom Buis, CEO of Growth Energy, which filed the Green Jobs Waiver for E15 in March 2009. “With all the turmoil going on in the Middle East and elsewhere, the House of Representatives just voted to stop the only viable alternative to foreign oil: ethanol. It is the wrong move at the wrong time for the wrong reasons.”
Rep. Tom Latham, R-Iowa, spoke in opposition to Flake's amendment, saying it limits consumer choice and is another attack on the nation's progress to move toward energy security. Without the blender pumps, most Americans would continue with just E10, and continue to import more oil.
Flake countered that it's not a consumer choice, it's a mandate and called ethanol a "boondoggle for 30 years."
Also early Saturday morning,the House voted 255-168 on an amendment by Rep. Kristi Noem, R-S.D., to prevent the EPA from regulating agricultural dust, a major thorn in the side of lawmakers from rural America. There were 234 Republicans and 21 Democrats who voted for the measure. Four Republican joined 164 Democrats voting against it. Under the amendment no funds would be made available to modify the national primary ambient air quality standard or the national secondary ambient air quality standard" under the Clean Air Act.
As it was, the House voted Friday and early Saturday in a barrage of amendments to hit the EPA's ability to implement climate and clean-water rules.
Despite the flurry of amendments in the House to cut spending, the House Continuing Resolution still has to go through the Senate and President Obama has said he would veto the cuts.
Under one amendment, the House voted earlier in the day that no funds could be used by the EPA "to implement, administer, or enforce any statutory or regulatory requirement pertaining to emission of carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons or perfluorocarbons from stationary sources that is issues or becomes applicable or effective after Jan. 1, 2011."
Effectively, under that rule there would be no rule to reduce greenhouse-gas emissions. Another amendment blocks any funding for the United Nations panel on climate change.
In another heated discussion on the Chesapeake Bay, the House also voted 230-195 to eliminate funding from EPA actions on the Chesapeake Bay watershed. Rep. Bob Goodlatte, R-Va., who offered the amendment, to eliminate said the EPA was placing arbitrary limits on nutrients and an expansion of authority under the Clean Water Act would devastate local economies. Goodlatte said individual states and communities are better suited to establish water goals than the EPA.
"The EPA does not have authority to micromanage states' water quality goals and we must stop their power grab," he said.
Goodlatte said his amendment would not stop voluntary cleanup efforts in the Chesapeake Bay.
Rep. James Moran, D-Va., called Goodlatte's amendment "extreme" and would hurt multi-state, pollution-reduction efforts in the Chesapeake Bay. "Pollution in the Chesapeake Bay is a job killer for citizens in this watershed," Moran said.
Goodlatte noted the bay is getting healthier without the EPA mandate.
Rep. Tom Rooney, R-Fla., also got a similar amendment passed to eliminate funding for EPA's total maximum daily load of nutrient requirements in Florida as well. Those regulations actually do not go into effect until March 2012.
Another amendment by Rep. Tom McClintock, D-Calif., blocks implementing funds for a Klamath Dam removal and sedimentation study as part of the TMDL for that river basin. Environmentalists and others want to remove dams along the Klamath River. That amendment passed 215-210 in a vote that caused a round boos in the chamber of the House by Democrats.
A summary of the amendment votes can be found at http://clerk.house.gov/…
Specific language on the amendments debated in the House resolution can be found at http://rules.house.gov/…
Posted at 10:36AM CST 02/19/11 by Chris Clayton
Monday, February 21, 2011
Electric Industry De-Regulation Hasn’t Lowered Prices
DATE: 1/27/11
Electric industry de-regulation was supposed to lower cost through competition but many residential customers saw their electric bill increase almost $500/yr! As recently as 2003 our electric rates were competitive with the rest of the nation but now are 36% more. For industrial users the cost differential is an even higher 48% (9.3 cents/Kilowatt hour vs. 6.3 cents/KWh) making Delaware unattractive as a place to locate new industrial facilities. For all users, the cost penalty totaled $350 million in 2009 based on information from the US Energy Information Agency.
Before deregulation companies such as Delmarva Power owned both electric power generating capacity and the distribution system to bring power to your home. It was efficient for the government to grant monopoly rights to one company rather than have duplicate systems. Those monopolies were regulated by a Public Service Commission (PSC) responsible for approving both physical changes to the system and prices. Nationally, this system was very effective at expanding service everywhere and in providing inexpensive power.
In the 1990’s a movement started to open the electric power market to competition with the idea it would lower the price of electricity. The distribution system, the wires, sub-stations, etc., would still be owned by the monopoly power distribution companies and would still be regulated by the PSC. The generation portion of the bill would be open to competition. De-regulation, also called restructuring, became law in Delaware in 1999 with full implementation planned for 2006. Municipal power companies were exempted. In all, twenty-one states passed similar laws. In Delaware, only one new company entered the residential market offering slightly lower prices but a large cancellation charge. Only 4% of customers have opted for the choice.
Several things happened during implementation of the new law. First, power companies sold their generating facilities. This re-set the clock on the value of those plants based on the purchase price and stockholders demanded higher returns on the investment which would no longer be restricted by the PSC. Secondly, fuel prices went up dramatically. Between 2004 and 2005 coal prices increased 33% and natural gas prices increased 240%! The regional wholesale price of electricity went from 4 cents/KWh to 10 cents/KWh. Thirdly, there are a limited number of regional generating companies with excess capacity so it is really not a free, competitive market. Finally, as recently as 1995, generating capacity in Delaware met 82% of electricity used in the state but is now less than half that amount. A combination of trends including tougher environmental regulations, limits on development such as the Coastal Zone Act, and low profit margins made it unattractive to build new generation capacity in Delaware. By 2008, generation in Delaware was down to 57% of use and is expected to drop to 38% by 2014 as power plants are closed. Delaware will be exporting 300 direct power plant jobs and 600 indirect jobs in 2014 by importing so much electricity. Local production lowers transmission losses, limits grid congestion, and keeps voltage high, all important issues in providing low cost, reliable service.
Interstate sale of electric power is common. A regional entity, PJM, manages the regional grid and makes sure power goes where it is needed. They set wholesale rates in part based on transmission costs and on peak power costs. Before de-regulation, generating plants received a reasonable profit on what it cost them to generate power with a slight premium during peak use. Now prices are set by the “market clearing price”. Generators bid to provide power at any given moment and power goes into the system from lowest to highest price. The last, highest price, bid sets the market clearing price during peak periods. So, now we see peak power selling for a four to ten time premium even from plants with only marginally higher costs. In addition, PJM now charges a “capacity reliability” fee when power is sent to a location with transmission constraints. A “Locational Marginal Pricing” fee is also charged and is designed to encourage new generating capacity in areas, such as Delaware, that import a large percent of their power and cause grid congestion.
In 2005, Delmarva Power announced rates would increase 52% causing a panic. Delaware considered re-regulation but opted to spread out the increase for three years instead. Eight other states facing similar increases re-regulated the industry. Virginia is a good example of a re-regulated state. The major power company, Dominion Power, was allowed to get back into the generation business with a guaranteed profit margin from the Virginia PSC. Virginians electric rates are right at the average of other regulated states at $.089/KWh while the Delaware average price rose to $.121/KWh.
David T. Stevenson
Director, Center for Energy CompetitivenessCaesar Rodney Institute
Electric industry de-regulation was supposed to lower cost through competition but many residential customers saw their electric bill increase almost $500/yr! As recently as 2003 our electric rates were competitive with the rest of the nation but now are 36% more. For industrial users the cost differential is an even higher 48% (9.3 cents/Kilowatt hour vs. 6.3 cents/KWh) making Delaware unattractive as a place to locate new industrial facilities. For all users, the cost penalty totaled $350 million in 2009 based on information from the US Energy Information Agency.
Before deregulation companies such as Delmarva Power owned both electric power generating capacity and the distribution system to bring power to your home. It was efficient for the government to grant monopoly rights to one company rather than have duplicate systems. Those monopolies were regulated by a Public Service Commission (PSC) responsible for approving both physical changes to the system and prices. Nationally, this system was very effective at expanding service everywhere and in providing inexpensive power.
In the 1990’s a movement started to open the electric power market to competition with the idea it would lower the price of electricity. The distribution system, the wires, sub-stations, etc., would still be owned by the monopoly power distribution companies and would still be regulated by the PSC. The generation portion of the bill would be open to competition. De-regulation, also called restructuring, became law in Delaware in 1999 with full implementation planned for 2006. Municipal power companies were exempted. In all, twenty-one states passed similar laws. In Delaware, only one new company entered the residential market offering slightly lower prices but a large cancellation charge. Only 4% of customers have opted for the choice.
Several things happened during implementation of the new law. First, power companies sold their generating facilities. This re-set the clock on the value of those plants based on the purchase price and stockholders demanded higher returns on the investment which would no longer be restricted by the PSC. Secondly, fuel prices went up dramatically. Between 2004 and 2005 coal prices increased 33% and natural gas prices increased 240%! The regional wholesale price of electricity went from 4 cents/KWh to 10 cents/KWh. Thirdly, there are a limited number of regional generating companies with excess capacity so it is really not a free, competitive market. Finally, as recently as 1995, generating capacity in Delaware met 82% of electricity used in the state but is now less than half that amount. A combination of trends including tougher environmental regulations, limits on development such as the Coastal Zone Act, and low profit margins made it unattractive to build new generation capacity in Delaware. By 2008, generation in Delaware was down to 57% of use and is expected to drop to 38% by 2014 as power plants are closed. Delaware will be exporting 300 direct power plant jobs and 600 indirect jobs in 2014 by importing so much electricity. Local production lowers transmission losses, limits grid congestion, and keeps voltage high, all important issues in providing low cost, reliable service.
Interstate sale of electric power is common. A regional entity, PJM, manages the regional grid and makes sure power goes where it is needed. They set wholesale rates in part based on transmission costs and on peak power costs. Before de-regulation, generating plants received a reasonable profit on what it cost them to generate power with a slight premium during peak use. Now prices are set by the “market clearing price”. Generators bid to provide power at any given moment and power goes into the system from lowest to highest price. The last, highest price, bid sets the market clearing price during peak periods. So, now we see peak power selling for a four to ten time premium even from plants with only marginally higher costs. In addition, PJM now charges a “capacity reliability” fee when power is sent to a location with transmission constraints. A “Locational Marginal Pricing” fee is also charged and is designed to encourage new generating capacity in areas, such as Delaware, that import a large percent of their power and cause grid congestion.
In 2005, Delmarva Power announced rates would increase 52% causing a panic. Delaware considered re-regulation but opted to spread out the increase for three years instead. Eight other states facing similar increases re-regulated the industry. Virginia is a good example of a re-regulated state. The major power company, Dominion Power, was allowed to get back into the generation business with a guaranteed profit margin from the Virginia PSC. Virginians electric rates are right at the average of other regulated states at $.089/KWh while the Delaware average price rose to $.121/KWh.
David T. Stevenson
Director, Center for Energy CompetitivenessCaesar Rodney Institute
Prediction: Bluewater Wind Project Will Crash and Burn
by David Stevenson
DATE: 2/4/11
NRG, the owners of Bluewater Wind, will have to seek a significant rate increase to justify the investment in its’ Delaware offshore wind project. The attempt could fail bringing the project to an end. The good news is this will save Delaware electricity consumers hundreds of millions of dollars a year in unnecessary price increases and could save hundreds of jobs.
Delmarva Power was basically forced to sign a long term power supply contract with Bluewater Wind by the Delaware Public Service Commission (PSC). The deal was finalized after Bluewater reduced their price. The earliest start-up date for the offshore wind facility is now 2016 when the price will be $.142/Kilowatt-hour (KWh). Similar projects off the coasts of New England and Europe have set contract prices between $.19 and $.24/KWh. There is nothing magic about the waters off the coast of Delaware to justify the difference in price.
The higher prices in other locations already account for government construction subsidies which will come to $800 million for the Bluewater Wind project. However, the subsidies only extend to facilities built by the end of 2011. The US Congress, exhibiting symptoms of subsidy fatigue, may not extend the subsidies further for a mature industry that accounted for 39% of all new generating capacity in 2009. So an even higher price increase may be needed to sustain the project next year.
The wind project is expected to provide about 1.1 billion KWh of electricity a year. Wholesale power from conventional sources costs about $.06/KWH. The “Green Premium” for offshore wind power could range between $.08/KWH and $.20/KWh at full price with no government subsidies. This will cost Delaware consumers between $90 and $220 million a year. This does not include the built in contract price escalator of 2.5% a year. Power from conventional sources is expected to be quite stable over the next decade because of the huge increase in the proven reserves of natural gas and the resurgence of the nuclear power industry.
The offshore wind project is expected to add 170 permanent jobs in Delaware. A sound study1 by Professor Edward Ratledge, at the University of Delaware, estimates the “Green Premium” could cost one to eight jobs elsewhere for every “Green” job created.
There was very little organized public opposition to forces pushing for offshore wind when the contract was finalized in 2007. That will not be the case this time. Solid economic and scientific information have changed the equation. We need clean, affordable generating capacity in Delaware fired by nuclear power and natural gas!
David T. Stevenson
Director, Center for Energy Competitiveness
Caesar Rodney Institute
Note 1: The Impact of the Delmarva/Blue Ware Wind Power Purchase Agreement on the Delaware Economy, Edward C. Ratledge, Director, Center for Applied Demography & Survey Research at the University of Delaware
DATE: 2/4/11
NRG, the owners of Bluewater Wind, will have to seek a significant rate increase to justify the investment in its’ Delaware offshore wind project. The attempt could fail bringing the project to an end. The good news is this will save Delaware electricity consumers hundreds of millions of dollars a year in unnecessary price increases and could save hundreds of jobs.
Delmarva Power was basically forced to sign a long term power supply contract with Bluewater Wind by the Delaware Public Service Commission (PSC). The deal was finalized after Bluewater reduced their price. The earliest start-up date for the offshore wind facility is now 2016 when the price will be $.142/Kilowatt-hour (KWh). Similar projects off the coasts of New England and Europe have set contract prices between $.19 and $.24/KWh. There is nothing magic about the waters off the coast of Delaware to justify the difference in price.
The higher prices in other locations already account for government construction subsidies which will come to $800 million for the Bluewater Wind project. However, the subsidies only extend to facilities built by the end of 2011. The US Congress, exhibiting symptoms of subsidy fatigue, may not extend the subsidies further for a mature industry that accounted for 39% of all new generating capacity in 2009. So an even higher price increase may be needed to sustain the project next year.
The wind project is expected to provide about 1.1 billion KWh of electricity a year. Wholesale power from conventional sources costs about $.06/KWH. The “Green Premium” for offshore wind power could range between $.08/KWH and $.20/KWh at full price with no government subsidies. This will cost Delaware consumers between $90 and $220 million a year. This does not include the built in contract price escalator of 2.5% a year. Power from conventional sources is expected to be quite stable over the next decade because of the huge increase in the proven reserves of natural gas and the resurgence of the nuclear power industry.
The offshore wind project is expected to add 170 permanent jobs in Delaware. A sound study1 by Professor Edward Ratledge, at the University of Delaware, estimates the “Green Premium” could cost one to eight jobs elsewhere for every “Green” job created.
There was very little organized public opposition to forces pushing for offshore wind when the contract was finalized in 2007. That will not be the case this time. Solid economic and scientific information have changed the equation. We need clean, affordable generating capacity in Delaware fired by nuclear power and natural gas!
David T. Stevenson
Director, Center for Energy Competitiveness
Caesar Rodney Institute
Note 1: The Impact of the Delmarva/Blue Ware Wind Power Purchase Agreement on the Delaware Economy, Edward C. Ratledge, Director, Center for Applied Demography & Survey Research at the University of Delaware
Jeff Gundlach: The Muni Market Will Crash, House Prices Will Fall 10-15%, And The S&P Is Going To 500
If you've got the nerve, click on this link to watch the interview:
http://www.businessinsider.com/jeff-gundlach-barrons-interview-2011-2#ixzz1EejwT500
Joe Weisenthal Feb. 20, 2011, 7:32 AM
For folks tired of milquetoast consensus predictions, there's a ton of red meat in this weekend's Barron's interview with star DoubleLine bond manager Jeff Gundlach.
Gundlach, whose returns over the last several years are basically matched by nobody in the bond industry, sees trouble all around.
First in muni land, he expects massive carnage, and is already setting up a fund to buy closed-end muni funds in the next year when they crash to 40% of their net asset values. What makes the muni market so crisis prone is the nature of investors -- the mom and pop folk who will panic. As for the size of the defaults, he doesn't have a specific number in mind.
Recently he's made a ton of money investing in distressed mortgage-related assets, yet he sees another 10-15% decline in home values.
As for equities, get ready for the S&P 500 to hit 500 in the next few years, starting with a bad 2011.Read more: http://www.businessinsider.com/jeff-gundlach-barrons-interview-2011-2#ixzz1EekaRv5N
http://www.businessinsider.com/jeff-gundlach-barrons-interview-2011-2#ixzz1EejwT500
Joe Weisenthal Feb. 20, 2011, 7:32 AM
For folks tired of milquetoast consensus predictions, there's a ton of red meat in this weekend's Barron's interview with star DoubleLine bond manager Jeff Gundlach.
Gundlach, whose returns over the last several years are basically matched by nobody in the bond industry, sees trouble all around.
First in muni land, he expects massive carnage, and is already setting up a fund to buy closed-end muni funds in the next year when they crash to 40% of their net asset values. What makes the muni market so crisis prone is the nature of investors -- the mom and pop folk who will panic. As for the size of the defaults, he doesn't have a specific number in mind.
Recently he's made a ton of money investing in distressed mortgage-related assets, yet he sees another 10-15% decline in home values.
As for equities, get ready for the S&P 500 to hit 500 in the next few years, starting with a bad 2011.Read more: http://www.businessinsider.com/jeff-gundlach-barrons-interview-2011-2#ixzz1EekaRv5N
Federal, state and local debt hits post-WWII levels
Read this article very carefully, then contact your Delaware and national elected officials and ask them to act now to reduce state and national debt and spending. We are very near the limit beyond which decline is inevitable.
The Washington Post
http://www.washingtonpost.com/wp-dyn/content/article/2011/02/20/AR2011022003201.html
By Steven Mufson - Washington Post Staff Writer
Sunday, February 20, 2011; 11:33 PM
The daunting tower of national, state and local debt in the United States will reach a level this year unmatched just after World War II and already exceeds the size of the entire economy, according to government estimates.
But any similarity between 1946 and now ends there. The U.S. debt levels tumbled in the years after World War II, but today they are still climbing and even deep cuts in spending won't completely change that for several years.
As President Obama and Republicans squabble over whose programs to cut and which taxes to raise, slow growth and a rising tide of interest payments - largely beyond their control - are making the job of fixing the budget much harder than in the past. Statehouses and governors face similar challenges.
After World War II, the federal debt - including debt purchased by the Social Security Trust Fund - hit nearly 122 percent of gross domestic product. State and municipal debt back then was minimal. By the time Dwight Eisenhower was elected president six years later, the federal government's debt had dipped to about three-fourths of GDP.
The key factor in the rapid drop in government debt, said Harvard University economist Kenneth Rogoff, was fast economic growth. Spurred by a young labor force, world-leading manufacturers, high personal savings rates, a pent-up demand for consumer goods after years of war and the Depression, and a bout of inflation, the economy grew 57 percent in six years. Thanks to sharp postwar cuts in defense outlays, federal government spending also tumbled for a couple of years.
But today the U.S. economy is in a polar opposite condition. The labor force is aging, U.S. manufacturing often lags behind Asian and European rivals, households are in hock up to their eyeballs, and consumer appetite for goods is tepid. In addition, inflation is tame and government spending locked into entitlement programs and debt service that will be hard or impossible to alter.
"We're not growing like we were after World War II, so the amount of debt you can bear and the trajectory are much worse," Rogoff said.
Moreover, today state and municipal governments are also facing fiscal woes - another difference between now and the postwar era. State and municipal governments from Sacramento to Madison to Harrisburg have racked up about $2.4 trillion in debt, or more than 15 percent of GDP.
Even if analysts leave aside the debt held by the Social Security Trust Fund, the total indebtedness of federal, state and local governments is running around 85 percent, vs. 108.7 percent in 1946.
"It's still very, very, very high," Rogoff said, "and there are a lot of things on the other side of the equation that are much worse." Moreover the debt held by Social Security, which is in surplus now, will have to be paid later as the ranks of senior citizens grow.
Robert D. Reischauer, president of the Urban Institute and former director of the nonpartisan Congressional Budget Office, said that the debt accumulated by 1946 "was for a very different purpose, which was to preserve freedom and democracy versus totalitarianism rather than to throw a huge party and put it on the credit card."
He said that state governments have also squandered much of their spending and failed to meet all their pension obligations.
Reischauer stressed that after World War II, consumers, many of whom had purchased savings bonds, and banks, which had been required to hold certain amounts of government debt, were in strong positions. Today's consumers and banks are strapped.
"We had large household savings, and we flourished," he said of the post-World War II era.
Inflation also reduced the value of World War II-era debts because the United States could pay them back with money that had less buying power. Inflation reached 14 percent in 1947. Many investors fear that inflation is looming now, too, and may be the only way to ease the debt burden. But with high unemployment and slow growth, so far there is little sign of it. On Thursday, the Labor Department said inflation was 1.2 percent during 2010.
Rogoff and Carmen M. Reinhart, a University of Maryland economics professor, have done research showing that once government debt surpasses 90 percent of GDP, average growth rates slide 4 percent. In emerging markets, the threshold is lower and the damage to growth greater.
Slower growth will only slow the erosion of the national debt.
State budget experts say that some governors have exaggerated their fiscal woes. Thanks to relatively low interest rates, states spend on average 4 percent of their budgets to make debt payments, said Joshua Zeitz, state and municipal finance analyst at a research firm, MF Global, and former senior policy adviser to former New Jersey governor John Corzine. (By some calculations, he said, the average is a still modest 5.5 percent.)
Zeitz said that many governors speak of "cuts" when they mean cuts from projected spending, assuming continued growth from inflation and other factors. Many states whose governors boast of making budget cuts could end up with higher levels of spending.
Wisconsin, where Gov. Scott Walker (R) has rocked the legislature with proposed limits on state employee unions, is one of those, Zeitz said. The state is on a two-year budget cycle. This year the governor has talked of a $137 million shortfall, though Zeitz said it was largely of Walker's own making through tax cuts and spending initiatives. In any case, that amount would equal 1 percent of the state budget. "A 1 percent shortfall does not constitute a crisis," Zeitz said.
Walker said the state faces a more than $3 billion deficit next year, but Zeitz said that includes assumptions about program growth and revenue.
Scott D. Pattison, executive director of the National Association of State Budget Officers, estimates that state government revenue will increase 5 percent this year. "The pie is expanding," he said.
But not fast enough for the government sector overall. According to Obama's fiscal 2012 budget proposal released Monday, the federal government's net interest payments (not including money owed the Social Security fund) will rise from 1.4 percent to 3.4 percent over the next decade.
Federal debt (not including debt held by the Social Security fund) fell to a post-World War II low of about 24 percent in 1974. After tax cuts and increased defense spending under President Ronald Reagan, it rose to about 49 percent in 1993, before President Bill Clinton's budget deal took effect. It then fell to 32.5 percent in 2000, but starting rising again when President George W. Bush took office. Tax cuts, war spending and recession costs have more than doubled that level since.
Recalling the post-World War II economy that helped ease government indebtedness, Reischauer said: "It wasn't that when you looked out the windshield of the federal car that you saw steep hills ahead as you do now. It's a very different kind of situation."
The Washington Post
http://www.washingtonpost.com/wp-dyn/content/article/2011/02/20/AR2011022003201.html
By Steven Mufson - Washington Post Staff Writer
Sunday, February 20, 2011; 11:33 PM
The daunting tower of national, state and local debt in the United States will reach a level this year unmatched just after World War II and already exceeds the size of the entire economy, according to government estimates.
But any similarity between 1946 and now ends there. The U.S. debt levels tumbled in the years after World War II, but today they are still climbing and even deep cuts in spending won't completely change that for several years.
As President Obama and Republicans squabble over whose programs to cut and which taxes to raise, slow growth and a rising tide of interest payments - largely beyond their control - are making the job of fixing the budget much harder than in the past. Statehouses and governors face similar challenges.
After World War II, the federal debt - including debt purchased by the Social Security Trust Fund - hit nearly 122 percent of gross domestic product. State and municipal debt back then was minimal. By the time Dwight Eisenhower was elected president six years later, the federal government's debt had dipped to about three-fourths of GDP.
The key factor in the rapid drop in government debt, said Harvard University economist Kenneth Rogoff, was fast economic growth. Spurred by a young labor force, world-leading manufacturers, high personal savings rates, a pent-up demand for consumer goods after years of war and the Depression, and a bout of inflation, the economy grew 57 percent in six years. Thanks to sharp postwar cuts in defense outlays, federal government spending also tumbled for a couple of years.
But today the U.S. economy is in a polar opposite condition. The labor force is aging, U.S. manufacturing often lags behind Asian and European rivals, households are in hock up to their eyeballs, and consumer appetite for goods is tepid. In addition, inflation is tame and government spending locked into entitlement programs and debt service that will be hard or impossible to alter.
"We're not growing like we were after World War II, so the amount of debt you can bear and the trajectory are much worse," Rogoff said.
Moreover, today state and municipal governments are also facing fiscal woes - another difference between now and the postwar era. State and municipal governments from Sacramento to Madison to Harrisburg have racked up about $2.4 trillion in debt, or more than 15 percent of GDP.
Even if analysts leave aside the debt held by the Social Security Trust Fund, the total indebtedness of federal, state and local governments is running around 85 percent, vs. 108.7 percent in 1946.
"It's still very, very, very high," Rogoff said, "and there are a lot of things on the other side of the equation that are much worse." Moreover the debt held by Social Security, which is in surplus now, will have to be paid later as the ranks of senior citizens grow.
Robert D. Reischauer, president of the Urban Institute and former director of the nonpartisan Congressional Budget Office, said that the debt accumulated by 1946 "was for a very different purpose, which was to preserve freedom and democracy versus totalitarianism rather than to throw a huge party and put it on the credit card."
He said that state governments have also squandered much of their spending and failed to meet all their pension obligations.
Reischauer stressed that after World War II, consumers, many of whom had purchased savings bonds, and banks, which had been required to hold certain amounts of government debt, were in strong positions. Today's consumers and banks are strapped.
"We had large household savings, and we flourished," he said of the post-World War II era.
Inflation also reduced the value of World War II-era debts because the United States could pay them back with money that had less buying power. Inflation reached 14 percent in 1947. Many investors fear that inflation is looming now, too, and may be the only way to ease the debt burden. But with high unemployment and slow growth, so far there is little sign of it. On Thursday, the Labor Department said inflation was 1.2 percent during 2010.
Rogoff and Carmen M. Reinhart, a University of Maryland economics professor, have done research showing that once government debt surpasses 90 percent of GDP, average growth rates slide 4 percent. In emerging markets, the threshold is lower and the damage to growth greater.
Slower growth will only slow the erosion of the national debt.
State budget experts say that some governors have exaggerated their fiscal woes. Thanks to relatively low interest rates, states spend on average 4 percent of their budgets to make debt payments, said Joshua Zeitz, state and municipal finance analyst at a research firm, MF Global, and former senior policy adviser to former New Jersey governor John Corzine. (By some calculations, he said, the average is a still modest 5.5 percent.)
Zeitz said that many governors speak of "cuts" when they mean cuts from projected spending, assuming continued growth from inflation and other factors. Many states whose governors boast of making budget cuts could end up with higher levels of spending.
Wisconsin, where Gov. Scott Walker (R) has rocked the legislature with proposed limits on state employee unions, is one of those, Zeitz said. The state is on a two-year budget cycle. This year the governor has talked of a $137 million shortfall, though Zeitz said it was largely of Walker's own making through tax cuts and spending initiatives. In any case, that amount would equal 1 percent of the state budget. "A 1 percent shortfall does not constitute a crisis," Zeitz said.
Walker said the state faces a more than $3 billion deficit next year, but Zeitz said that includes assumptions about program growth and revenue.
Scott D. Pattison, executive director of the National Association of State Budget Officers, estimates that state government revenue will increase 5 percent this year. "The pie is expanding," he said.
But not fast enough for the government sector overall. According to Obama's fiscal 2012 budget proposal released Monday, the federal government's net interest payments (not including money owed the Social Security fund) will rise from 1.4 percent to 3.4 percent over the next decade.
Federal debt (not including debt held by the Social Security fund) fell to a post-World War II low of about 24 percent in 1974. After tax cuts and increased defense spending under President Ronald Reagan, it rose to about 49 percent in 1993, before President Bill Clinton's budget deal took effect. It then fell to 32.5 percent in 2000, but starting rising again when President George W. Bush took office. Tax cuts, war spending and recession costs have more than doubled that level since.
Recalling the post-World War II economy that helped ease government indebtedness, Reischauer said: "It wasn't that when you looked out the windshield of the federal car that you saw steep hills ahead as you do now. It's a very different kind of situation."
Delaware's 'Green' Energy Policy Hurts the Poor and Robs the Middle Class
We are taking money from the poor and giving it to the rich! Misguided energy policies have put the state in the role of the anti-Robin Hood.
The poor and middle class can't afford solar panels but they pay for them anyway. A typical solar installation costs about$35,000. Even after government subsidies, a homeowner would need a $19,000 down payment to install solar panels; this is serious money lower income people don't have. A typical government purchase subsidy is $16,000. This is equal to the entire federal, state, and local tax bill of two average American families being transferred to one affluent family. The panel owner can also sell Solar Renewable Energy Credits (SREC), worth several thousand dollars a year. The total value of subsidies and SREC's, all paid by others in higher electricity and tax bills, can be as high as $58,000 for the $35,000 system.
The pain for Americans in the bottom half of earnings does not stop with subsidizing the solar panel purchases. The cost of Delaware participation in the regional cap and trade program, and government dictates that require your electric company to buy high cost renewable power are also included in your electric bill. For example, power from solar panels cost six times power from conventional sources. We estimate these "green" initiatives will add at least 20% to electricity bills.
The economic consequences go on. A recent study1 by the Delaware Economic Development Office found Delaware industry is threatened by high electricity costs, 50% higher than other states. We have already lost tens of thousands of manufacturing jobs over the last two decades. High electricity prices make it less likely factories will expand or locate here. Thanks to job killing environmental over regulation, electric generation capacity has not kept pace with our electric consumption, so we now import 60% of our electricity from out of state sources. This situation, by itself, has cost the poor and middle class opportunities for a thousand jobs in the power generation sector.
There is some money available for help with utility bills, weatherization programs, and the purchase of solar panels for the very poorest families. However, the weatherization program has been run so poorly it was shut down for over a year. Ending these expensive renewable energy programs would help more with electricity bills than the utility assistance funds. Proponents say renewable energy programs will add jobs. The problem is the "green premium" for renewable power has been shown to eliminate two to eight jobs elsewhere for every "green" job created2.
The 40% of Delaware families earning less than $50,000 a year have discretionary income of about $2000 a year 3. Discretionary income is what is left after taxes and the basics of life are paid; it is sometimes called "happy money". State energy policies could eat up half the discretionary income for those families. There is another way. We need clean, affordable generating capacity in Delaware fired by nuclear power and natural gas! We also need to repeal expensive energy legislation that hurts the poor and middle class, such as the Regional Greenhouse Gas Initiative and the Renewable Portfolio Standard, to reduce the cost of electricity in Delaware and to secure our economic future. It is time for practical, common sense solutions.
David T. Stevenson
Director, Center for Energy Competitiveness
Caesar Rodney Institute
1 - Analysis of Delaware's Economy, Delaware Economic Development Office, Sept 2010
2 - Study of the effects on employment of public aid to renewable energy sourcesGabriel Calzada Álvarez PhD., Universidad Rey Juan Carlos, The Impact of the Delmarva/Blue Ware Wind Power Purchase Agreement on the Delaware Economy, Edward C. Ratledge, Director, Director, Center for Applied Demography & Survey Research at the University of Delaware
3 - The Conference Board, 2007 Report on Discretionary Income
Monday, February 14, 2011
Delaware government: Developer sues DNREC's O'Mara
Here is demonstrated one of the main motivations of those cultivating fear in relation to global warming and sea level rise. It's a way to seize control of citizens and how they live.
Near the end of this article you'll see that DNREC uses 5 feet of sea level rise (in a century) to justify denying a sewer permit. This cannot be scientifically justified.
Written by Jeff Montgomery
Delaware's top environmental officer has rejected plans for a private sewage-treatment plant that would serve a long-disputed, 132-home development just west of Leipsic in an unprecedented ruling that has triggered both an appeal and a civil rights challenge.
Natural Resources and Environmental Control Secretary Collin P. O'Mara said in his opinion that a proposed 39,600 gallon-per-day wastewater plant for The Landings was "contrary to sound environmental policies" and "will enable intensive development to occur in an environmentally sensitive area" outside Delaware's targeted growth zones.
Developer Tony Ashburn & Son Inc. and the 342-acre parcel's owners appealed the decision to the state's Environmental Appeals Board last week, then went one step further by filing a due-process lawsuit against O'Mara and Deputy Secretary David Small in Superior Court.
Both were accused of "corrupt and contemptuous conduct" in handling the permit application, leaving the project "doomed."
The appeal, filed by attorney John W. Paradee, said O'Mara had rejected the on-site wastewater permit application without justification or precedent, in an apparent attempt to overrule Kent County's approval of The Landings despite its location in a low-growth area near riverside marshland.
"It is notable that this basis for denial is not based on any particular state law or DNREC regulation," the appeal said.
Kent County reversed its stand and approved the project after Superior Court overturned an initial county rejection in 2006. That first decision was prompted by the same sprawl issues cited by O'Mara, and opposition from residents in nearby Leipsic.
O'Mara, Ashburn's appeal claims, based his denial of a wastewater plant permit partly on assertions that sea levels could rise by 5 feet over the next century, permanently flooding fringe areas of the plant and exposing more of the plant and community to temporary flooding from storm surges and high tides.
DNREC issued a policy last year requiring all programs and permit reviews to consider "the potential effect of coastal inundation" and sea-level rise.
Delaware's top environmental officer has rejected plans for a private sewage-treatment plant that would serve a long-disputed, 132-home development just west of Leipsic in an unprecedented ruling that has triggered both an appeal and a civil rights challenge.
Natural Resources and Environmental Control Secretary Collin P. O'Mara said in his opinion that a proposed 39,600 gallon-per-day wastewater plant for The Landings was "contrary to sound environmental policies" and "will enable intensive development to occur in an environmentally sensitive area" outside Delaware's targeted growth zones.
Developer Tony Ashburn & Son Inc. and the 342-acre parcel's owners appealed the decision to the state's Environmental Appeals Board last week, then went one step further by filing a due-process lawsuit against O'Mara and Deputy Secretary David Small in Superior Court.
Both were accused of "corrupt and contemptuous conduct" in handling the permit application, leaving the project "doomed."
The appeal, filed by attorney John W. Paradee, said O'Mara had rejected the on-site wastewater permit application without justification or precedent, in an apparent attempt to overrule Kent County's approval of The Landings despite its location in a low-growth area near riverside marshland.
"It is notable that this basis for denial is not based on any particular state law or DNREC regulation," the appeal said.
Kent County reversed its stand and approved the project after Superior Court overturned an initial county rejection in 2006. That first decision was prompted by the same sprawl issues cited by O'Mara, and opposition from residents in nearby Leipsic.
O'Mara, Ashburn's appeal claims, based his denial of a wastewater plant permit partly on assertions that sea levels could rise by 5 feet over the next century, permanently flooding fringe areas of the plant and exposing more of the plant and community to temporary flooding from storm surges and high tides.
DNREC issued a policy last year requiring all programs and permit reviews to consider "the potential effect of coastal inundation" and sea-level rise.
http://www.DelawareOnline.com/apps/pbcs.dll/article?AID=/201102130345/NEWS02/102130341
Group of 7 Lewes Homeowners is Set to Fight UD Wind Turbine
| By Henry J. Evans Jr. A group of Lewes residents is readying a lawsuit that would target the University of Delaware, City of Lewes and other agencies that approved placement of a wind turbine on land adjacent to the university’s College of Earth, Ocean and Environment Hugh R. Sharp Campus. Site preparation for the 2-megawatt wind turbine began last March and the unit began operation in August. The turbine is designed to produce enough electricity to power the college campus. But a group of about seven homeowners, who live about 2,100 feet from the base of the wind turbine, says the device produces noise similar to that of a jet airplane. Jerry Lechliter, a group spokesman, said the noise makes it difficult to fall asleep and get back to sleep if one is awakened. He said substantial data indicates light flicker produced by the spinning blades can trigger epileptic seizures and lead to other health-related problems. Lechliter said the lawsuit would be filed by several citizens in a court yet to be determined. Several defendants would seek dismissal of the suit, but Lechliter said that would be unlikely. He said all parties would seek to know what information the others have, a process known as discovery. “It isn’t them discovering us, it’s us discovering them,” Lechliter said. He said defending agencies would find that withholding documents and refusing to completely comply with discovery rules wouldn’t work. “A bunch of people will be subject to deposition, perhaps even the governor, because there was tremendous political pressure to push this thing through,” Lechliter said. He said the court would decide whether citizens have a legitimate case. Lechliter said the citizens group is obtaining $5,000 from a unnamed foundation that would be used to pay initial legal fees. The group plans to use the money to hire a Pittsburgh-area lawyer with expertise in handling cases involving wind turbines. Lechliter said the attorney has successfully sued Gamesa, manufacturer of the wind turbine installed on the university’s campus, and a utility company. The result was a confidential settlement. Lechliter said Delaware law prohibits structures such as the wind turbine on land designated as open space. He said in 2002 the university sold about 260 acres designated as open space, including the wind turbine site, to the Delaware Department of Natural Resources and Environmental Control (DNREC). Nathan Hayward, a member of the Delaware Open Space Council, said state law requires the council to give its opinion and recommendation when DNREC purchases open space land. The council advises DNREC’s secretary and is overseen by the department. The land purchased included a dredge spoil parcel used by the university adjacent to the wind turbine. “In this particular deal, the General Assembly acted without the council’s recommendation,” Hayward said, referring only to purchase of the dredge spoil site. He said if the turbine is on a parcel adjacent to open space, the council would presumably have standing and would not necessarily approve of the location because it devalues open space. Lechliter said he and other Lewes citizens are unhappy about how officials handled the wind turbine project. “I’m very disappointed in how the city’s managed this. Politicians forget they work for us. The citizens have questions. They should answer them forthright and not hide behind attorney-client privilege,” he said. He said he has attempted to use the Freedom of Information Act to obtain wind turbine-related documents from the university, but to no avail. “It’s a state agency, and it gets over $100 million taxpayer dollars a year. To say that they don’t have to provide us any documents because we can’t show the issue is directly related to taxpayer funds is wrong,” he said. Lewes Mayor Jim Ford said he’d communicated with Lechliter about the wind turbine and acknowledged they have differing opinions on the process and what was involved. Ford said the citizens group has the right to mount a legal challenge, but he stands behind the city’s approval of the turbine. Nancy Targett, dean of the College of Earth, Ocean and Environment, was instrumental in the university obtaining the wind turbine. She said everything the university did to get land-use approval for its placement and permission to erect it took place with full public disclosure. “We followed the rules, and we followed the process. We put a lot of information on the website, and we’ve been as transparent as we could be,” Targett said. Targett said she doesn’t know anything about a pending lawsuit and couldn’t comment until she did. http://www.capegazette.com/storiescurrent/201102-01-15/11004-ud-turbine.html |
Thursday, February 10, 2011
Reaganomics: What We Learned
Here's the lesson that we learned in the 1980s but have now forgotten. This is how America and Delaware can return to greatness.
By Arthur B. Laffer
For 16 years prior to Ronald Reagan's presidency, the U.S. economy was in a tailspin—a result of bipartisan ignorance that resulted in tax increases, dollar devaluations, wage and price controls, minimum-wage hikes, misguided spending, pandering to unions, protectionist measures and other policy mistakes.
In the late 1970s and early '80s, 10-year bond yields and inflation both were in the low double digits. The "misery index"—the sum of consumer price inflation plus the unemployment rate—peaked at well over 20%. The real value of the S&P 500 stock price index had declined at an average annual rate of 6% from early 1966 to August 1982.
For anyone old enough today, memories of the Arab oil embargo and price shocks—followed by price controls and rationing and long lines at gas stations—are traumatic. The U.S. share of world output was on a steady course downward.
Then Reagan entered center stage. His first tax bill was enacted in August 1981. It included a sweeping cut in marginal income tax rates, reducing the top rate to 50% from 70% and the lowest rate to 11% from 14%. The House vote was 238 to 195, with 48 Democrats on the winning side and only one Republican with the losers. The Senate vote was 89 to 11, with 37 Democrats voting aye and only one Republican voting nay. Reaganomics had officially begun.President Reagan was not alone in changing America's domestic economic agenda. Federal Reserve Chairman Paul Volcker, first appointed by Jimmy Carter, deserves enormous credit for bringing inflation down to 3.2% in 1983 from 13.5% in 1981 with a tight-money policy. There were other heroes of the tax-cutting movement, such as Wisconsin Republican Rep. Bill Steiger and Wyoming Republican Sen. Clifford Hansen, the two main sponsors of an important capital gains tax cut in 1978.
What the Reagan Revolution did was to move America toward lower, flatter tax rates, sound money, freer trade and less regulation. The key to Reaganomics was to change people's behavior with respect to working, investing and producing. To do this, personal income tax rates not only decreased significantly, but they were also indexed for inflation in 1985. The highest tax rate on "unearned" (i.e., non-wage) income dropped to 28% from 70%. The corporate tax rate also fell to 34% from 46%. And tax brackets were pushed out, so that taxpayers wouldn't cross the threshold until their incomes were far higher.
Changing tax rates changed behavior, and changed behavior affected tax revenues. Reagan understood that lowering tax rates led to static revenue losses. But he also understood that lowering tax rates also increased taxable income, whether by increasing output or by causing less use of tax shelters and less tax cheating.
Moreover, Reagan knew from personal experience in making movies that once he was in the highest tax bracket, he'd stop making movies for the rest of the year. In other words, a lower tax rate could increase revenues. And so it was with his tax cuts. The highest 1% of income earners paid more in taxes as a share of GDP in 1988 at lower tax rates than they had in 1980 at higher tax rates. To Reagan, what's been called the "Laffer Curve" (a concept that originated centuries ago and which I had been using without the name in my classes at the University of Chicago) was pure common sense.
There was also, in Reagan's first year, his response to an illegal strike by federal air traffic controllers. The president fired and replaced them with military personnel until permanent replacements could be found. Given union power in the economy, this was a dramatic act—especially considering the well-known fact that the air traffic controllers union, Patco, had backed Reagan in the 1980 presidential election.
On the regulatory front, the number of pages in the Federal Register dropped to less than 48,000 in 1986 from over 80,000 in 1980. With no increase in the minimum wage over his full eight years in office, the negative impact of this price floor on employment was lessened.
And, of course, there was the decontrol of oil markets. Price controls at gas stations were lifted in January 1981, as were well-head price controls for domestic oil producers. Domestic output increased and prices fell. President Carter's excess profits tax on oil companies was repealed in 1988.
The results of the Reagan era? From December 1982 to June 1990, Reaganomics created over 21 million jobs—more jobs than have been added since. Union membership and man-hours lost due to strikes tumbled. The stock market went through the roof. From July 1982 through August 2000, the S&P 500 stock price index grew at an average annual real rate of over 12%. The unfunded liabilities of the Social Security system declined as a share of GDP, and the "misery index" fell to under 10%.
Even Reagan's first Democratic successor, Bill Clinton, followed in his footsteps. The negotiations for what would become the North American Free Trade Agreement began in Reagan's second term, but it was President Clinton who pushed the agreement through Congress in 1993 over the objections of the unions and many in his own party.
President Clinton also signed into law the biggest capital gains tax cut in our nation's history in 1997. It effectively eliminated any capital gains tax on owner-occupied homes. Mr. Clinton reduced government spending as a share of GDP by 3.5 percentage points, more than the next four best presidents combined. Where Presidents George H.W. Bush and Bill Clinton slipped up was on personal income tax rates—allowing the highest personal income tax rate to eventually rise to 39.6% from 28%.
The true lesson to be learned from the Reagan presidency is that good economics isn't Republican or Democrat, right-wing or left-wing, liberal or conservative. It's simply good economics. President Barack Obama should take heed and not limit his vision while seeking a workable solution to America's tragically high unemployment rate.
Mr. Laffer is the chairman of Laffer Associates and co-author of "Return to Prosperity: How America Can Regain Its Economic Superpower Status" (Threshold, 2010).
Dueling Polls: 'Stick to Jobs,' or 'Save the Bay'?
These two polls in our neighboring state of Maryland illustrate the quandary that many folks have regarding the economy versus the environment. We believe that if the recession deepens and lengthens, as many expect it will, citizens will eventually have to make a clear choice if they want economic recovery.
Do Marylanders want their government to focus for now on creating jobs over cleaning up the Chesapeake Bay? Or do they think water pollution is a serious problem that will need more government regulation - and maybe some more of taxpayers' money - to reduce?
Those are the seemingly conflicting messages that emerge from a pair of public opinion surveys done in recent weeks - one at the behest of the state's builders, the other at the bidding of a state-funded environmental grant-making group.
More than four out of five Maryland voters want the O'Malley administration to put a higher priority on creating jobs than on restoring the bay, according to the poll done in January by Gonzales Research & Marketing Inc. of Annapolis for the Maryland State Builders Association.
According to the same telephone survey of 802 registered voters, more than half - 57 percent - say economic growth should be the state's main focus, even if it means the environment suffers in the process. And a slim majority - 53 percent - say they're not willing to pay a penny more for bay cleanup and restoration.
On the other hand, in a late December telephone poll of 1,005 Marylanders, 64 percent rated water pollution in rivers, streams and the bay as a very serious problem. The survey was done by OpinionWorks, also of Annapolis, on behalf of the Chesapeake Bay Trust.
In that poll, nearly three-quarters, or 71 percent, said they think government regulation will be needed to address it. Seventy-three percent back the concept, at least, of the "pollution diet" that the Environmental Protection Agency has imposed on bay states.
On paying for bay cleanup, 49 percent of Marylanders in the bay trust poll say they're willing to shell out a "reasonable" fee if state leaders said the money was needed to control polluted runoff from storm water. That support jumps to 71 percent if people are told the storm-water fee would be enacted across the state, and that the revenue would be returned to their communities, creating jobs.
So which is closer to reflecting the public's attitudes about cleaning up the bay these days?
Steve Raabe of OpinionWorks says he thinks the Gonzales poll is based on a flawed premise that there's always a tradeoff between boosting the economy and restoring the bay. "It's a false choice," Raabe says, contending that most believe environmental protections need not hinder economic growth, and can actually help it.
Patrick Gonzales defends his firm's approach, saying there can only be one top priority at a time. He points out that in a separate poll, 58 percent of Marylanders indicated the economy was their top concern, while only 2.4 percent pointed to the environment as their biggest worry.
On one issue, at least, it seems the dueling polls agree. Both found overwhelming public support for tightening restrictions on lawn and garden fertilizers and their application, which lawmakers in Annapolis are going to be asked to consider. Eighty percent favored "strengthened regulations" in the OpinionWorks survey, while nearly two-thirds backed additional rules in the Gonzales poll.
Slide continues for Delaware's once-booming financial sector
Delaware Online - By Wade Malcolm
Nearby businesses also worry they'll see some fallout from the layoffs at Wilmington Trust, whose employees represent a large core of consumers in downtown Wilmington.
"I hope we don't feel it, but I'm sure we somehow will," said Sean McNeice, executive chef at Chelsea Tavern on Market Street, which opened a year ago in March. "We need as many folks as we can down here to keep everything going. Plus, I've been a Delawar-ean, a Wilmingtonian, my whole life. I feel for these folks."
The job cutbacks also will serve as a psychological downer just as economic indicators seemed to be pointing up in Delaware and the nation.
Analyst Mike Bratus started this year with a bright outlook for Delaware's economy. He was forced to adjust his forecast abruptly.
Sudden unemployment will be a big blow to the individual workers, he said, and may delay economic growth locally. But, he said, he doesn't think it will be catastrophic to the state's recovery.
"Wilmington has lagged behind the recovery a little," said Bratus, an associate economist at Moody's Analytics. "This only darkens the picture a little more, but I think in the second half of the year, things will start to look better."
Still, the layoffs could reverberate through the broader economy in several ways, experts said.
A high-end job, such as a bank vice president, supports many other jobs in the local economy through retail spending, Bratus said. More importantly, the news could affect other workers' views of their own job security.
"If it weighs on confidence, it's going to weigh on spending, and that's going to affect retailers," Bratus said.
Many of the middle to upper managers caught in the Wilmington Trust transition will bounce back more easily and are likely to have more savings to cushion the setback than many of the workers in manufacturing or construction who have lost jobs since 2008, economists said.
Wilmington Trust's work force is educated and many have skills that will transfer more easily, even to companies outside the banking industry. But those new jobs may not be in Delaware and the layoffs may force some families to move elsewhere.
"The question for us in Delaware is will those people continue to remain in Delaware, paying taxes, spending money," said Charles Elson, director of the University of Delaware's Weinberg Center for Corporate Governance.
"They're obviously employable, but are they employable here? That's the big question. They may find something, but it's going to be a rough patch for them, their families and their friends."
The layoffs continue a long slide for the financial services industry in Delaware.
As the economy surged on the back of a booming real estate market, employment in the financial sector in Delaware peaked at 30,700 in early 1999. But mergers and the financial collapse of 2008 turned that around, and by the end of 2010 employment in that sector had fallen by nearly 5,000 jobs.
And the contraction still has not subsided. Earlier this year, HSBC announced plans to cut 500 positions at its New Castle office.
The industry is enduring structural changes, Bratus said, and the First State has felt the brunt of it because of the significance of finance in its economy.
Although disheartening, the news out of Wilmington Trust was not unexpected following the merger with M&T Bank, said John Stapleford, an economist at the Caesar Rodney Institute.
"Definitely disappointing, but not unexpected," Stapleford said. "I was hopeful, because M&T didn't have a big presence here, the losses might not be as bad."
Mass layoffs have battered various sectors of the state's economy since the recession began. Closures at the Chrysler plant in Newark, the GM facility near Newport and the Valero refinery in Delaware City have cost thousands of jobs.
Many of those lost jobs have yet to return.
BF Energy now employs several hundred contractors at the Delaware City refinery in preparation for reopening it this spring. The University of Delaware purchased the Chrysler site, but completion of a planned hub for research and development is several years off. Fisker Automotive plans to reopen the former GM plant but has not started any significant hiring.
Those sites will play a large role in Delaware's recovery, economists said.
Those manufacturing job losses also caused more disruption to the local economy when the employers closed. Workers in those industries have struggled mightily to find new work, in large part because they were less educated, with less transferrable skills, Stapleford said.
"I hope we don't feel it, but I'm sure we somehow will," said Sean McNeice, executive chef at Chelsea Tavern on Market Street, which opened a year ago in March. "We need as many folks as we can down here to keep everything going. Plus, I've been a Delawar-ean, a Wilmingtonian, my whole life. I feel for these folks."
The job cutbacks also will serve as a psychological downer just as economic indicators seemed to be pointing up in Delaware and the nation.
Analyst Mike Bratus started this year with a bright outlook for Delaware's economy. He was forced to adjust his forecast abruptly.
Sudden unemployment will be a big blow to the individual workers, he said, and may delay economic growth locally. But, he said, he doesn't think it will be catastrophic to the state's recovery.
"Wilmington has lagged behind the recovery a little," said Bratus, an associate economist at Moody's Analytics. "This only darkens the picture a little more, but I think in the second half of the year, things will start to look better."
Still, the layoffs could reverberate through the broader economy in several ways, experts said.
A high-end job, such as a bank vice president, supports many other jobs in the local economy through retail spending, Bratus said. More importantly, the news could affect other workers' views of their own job security.
"If it weighs on confidence, it's going to weigh on spending, and that's going to affect retailers," Bratus said.
Many of the middle to upper managers caught in the Wilmington Trust transition will bounce back more easily and are likely to have more savings to cushion the setback than many of the workers in manufacturing or construction who have lost jobs since 2008, economists said.
Wilmington Trust's work force is educated and many have skills that will transfer more easily, even to companies outside the banking industry. But those new jobs may not be in Delaware and the layoffs may force some families to move elsewhere.
"The question for us in Delaware is will those people continue to remain in Delaware, paying taxes, spending money," said Charles Elson, director of the University of Delaware's Weinberg Center for Corporate Governance.
"They're obviously employable, but are they employable here? That's the big question. They may find something, but it's going to be a rough patch for them, their families and their friends."
The layoffs continue a long slide for the financial services industry in Delaware.
As the economy surged on the back of a booming real estate market, employment in the financial sector in Delaware peaked at 30,700 in early 1999. But mergers and the financial collapse of 2008 turned that around, and by the end of 2010 employment in that sector had fallen by nearly 5,000 jobs.
And the contraction still has not subsided. Earlier this year, HSBC announced plans to cut 500 positions at its New Castle office.
The industry is enduring structural changes, Bratus said, and the First State has felt the brunt of it because of the significance of finance in its economy.
Although disheartening, the news out of Wilmington Trust was not unexpected following the merger with M&T Bank, said John Stapleford, an economist at the Caesar Rodney Institute.
"Definitely disappointing, but not unexpected," Stapleford said. "I was hopeful, because M&T didn't have a big presence here, the losses might not be as bad."
Mass layoffs have battered various sectors of the state's economy since the recession began. Closures at the Chrysler plant in Newark, the GM facility near Newport and the Valero refinery in Delaware City have cost thousands of jobs.
Many of those lost jobs have yet to return.
BF Energy now employs several hundred contractors at the Delaware City refinery in preparation for reopening it this spring. The University of Delaware purchased the Chrysler site, but completion of a planned hub for research and development is several years off. Fisker Automotive plans to reopen the former GM plant but has not started any significant hiring.
Those sites will play a large role in Delaware's recovery, economists said.
Those manufacturing job losses also caused more disruption to the local economy when the employers closed. Workers in those industries have struggled mightily to find new work, in large part because they were less educated, with less transferrable skills, Stapleford said.
Wednesday, February 9, 2011
Wilmington Trust to Lay off More than 700
http://www.delawareonline.com/article/20110209/BUSINESS/110209029
The company buying Wilmington Trust is informing
hundreds of the Delaware bank’s employees that
they will lose their jobs after the two companies
combine later this year, a spokesman confirmed this
morning.
Last year, Wilmington Trust, a legendary Delaware-
based business, burdened with troubled loans to
real estate developers, sold itself to Buffalo, N.Y.-
based M&TBank.
M&T Bank President Mark Czarnecki said the bank
would lay off 721 employees after the merger and
rebranding is complete. All but three of those would
be in Delaware, largely at the two offices in
downtown Wilmington, he said in a phone interview
this afternoon.
"This is primarily a Delaware event," Czarnecki said.
The areas within the bank where the cuts will be
taking place was not immediately evident.
Mike Zabel, a spokesman for M&T, said less than 30
percent of Wilmington Trust’s 2,800 employees
would be laid off.
“We're going through a process this week of
notifying employees of their status,” he said, adding
that additional information would be available later
today.
The two banks are expected to become one this
summer, he said.
“The vast majority will be affected at conversion or
after,” he said, referring to when the two banks
combine. There will be “a number of employees that
we'll want and need to keep on for months and
months after conversion.”
The company had been planning a public
announcement later this week, but responded to an
inquiry from The News Journal, which had received
a tip about reductions in force.
The company buying Wilmington Trust is informing
hundreds of the Delaware bank’s employees that
they will lose their jobs after the two companies
combine later this year, a spokesman confirmed this
morning.
Last year, Wilmington Trust, a legendary Delaware-
based business, burdened with troubled loans to
real estate developers, sold itself to Buffalo, N.Y.-
based M&TBank.
M&T Bank President Mark Czarnecki said the bank
would lay off 721 employees after the merger and
rebranding is complete. All but three of those would
be in Delaware, largely at the two offices in
downtown Wilmington, he said in a phone interview
this afternoon.
"This is primarily a Delaware event," Czarnecki said.
The areas within the bank where the cuts will be
taking place was not immediately evident.
Mike Zabel, a spokesman for M&T, said less than 30
percent of Wilmington Trust’s 2,800 employees
would be laid off.
“We're going through a process this week of
notifying employees of their status,” he said, adding
that additional information would be available later
today.
The two banks are expected to become one this
summer, he said.
“The vast majority will be affected at conversion or
after,” he said, referring to when the two banks
combine. There will be “a number of employees that
we'll want and need to keep on for months and
months after conversion.”
The company had been planning a public
announcement later this week, but responded to an
inquiry from The News Journal, which had received
a tip about reductions in force.
GOP critic calls Joe Biden's $53 billion high-speed rail plan 'insanity'
Buried in this article is the secret to a lot of what's wrong with the Delaware and the national economy. Go to the bold paragraph below to see a lot of "what ails us."
http://news.yahoo.com/s/csm/362107/print
Los Angeles – Vice President Joe Biden Tuesday proposed that the US government infuse $53 billion into a national high-speed rail network. The announcement was met immediately by deep skepticism from two House Republicans that could be crucial to the plan's success, raising questions about whether it can clear Capitol Hill.
http://news.yahoo.com/s/csm/362107/print
Los Angeles – Vice President Joe Biden Tuesday proposed that the US government infuse $53 billion into a national high-speed rail network. The announcement was met immediately by deep skepticism from two House Republicans that could be crucial to the plan's success, raising questions about whether it can clear Capitol Hill.
House Transportation Committee Chair Rep. John Mica (R) of Florida said previous administration grants to high-speed rail projects were a failure, producing "snail speed trains to nowhere." He called Amtrak a "Soviet-style train system" and said it "hijacked" nearly all the administration's rail projects.
Meanwhile, Railroads Subcommittee Chair Rep. Bill Shuster (R) of Pennsylvania said Mr. Biden's plan was "insanity," adding: "Rail projects that are not economically sound will not 'win the future' " – coopting the slogan President Obama coined in his State of the Union address.
With Republicans controlling the House and dedicating themselves to deep budget cuts, any new spending proposed by the White House will face stiff scrutiny. But Congressman Shuster offers some hope of compromise. On Jan. 28 in Hartford, Conn., he proclaimed his support for expanding high-speed rail in the Northeast, backing a network that could stretch from Montreal to Washington, D.C.
"This is the most congested region in the country. High-speed rail here could be profitable," he said.
Biden's planAccording to the plan laid out Tuesday by Biden, the first step of the six-year plan would be to invest $8 billion to develop or improve three types of interconnected corridors:
Core express corridors would form the backbone of the national high-speed rail system, with electrified trains traveling on dedicated tracks at speeds of 125 to 250 m.p.h or higher.
Regional corridors would lay the foundation for future high-speed service, with trains traveling between 90 to 125 m.p.h.
Emerging corridors would provide travelers with access to the larger national high-speed network and travel at as much as 90 m.p.h.
To backers, the benefits of the plan are twofold. First, it would give a much-needed boost to America's spending on infrastructure. And second, it would provide jobs for the economic recovery.
“If you look at the last 100 years, it has been large public-works projects which have pulled our nation out of every recession,” says Barry LePatner, author of “Too Big to Fall: America’s Failing Infrastructure and the Way Forward.”
Mr. LePatner notes that the building of the Erie Canal opened the Northeast in 1819, the transcontinental railroad connected the populated East to the developing West, and the interstate highway system built under Eisenhower “all opened up vast reservoirs of trade and economic investment.â€
He suggests that studies show $1 billion spent on infrastructure remediation produces between 18,000 and 34,000 jobs. "Twenty-five to 35 percent of that then comes back in taxes, and the other multiplies in geometric ratios as spending on food, clothing, shelter, and other goods,â€
Big projects, big delays
But building high-speed rail is no easy process, says Leslie McCarthy, a high-speed rail expert at Villanova University's College of Engineering. “Whether or not a bill would or should pass is the easiest part of all this,” she says. “The bigger part of the question is purchasing the land, getting right of ways, zoning issues, environmental impact assessments, laying dedicated tracks in a reasonable amount of time.”
She says the typical US highway project can be held up anywhere from three to five years at the low end to 12 to 20 years at the high end. “Legislators and the public aren’t aware of the number of federal, state, and local laws that agencies have to comply with that can’t be gotten around,” she adds.
In fact, the very thing that makes the Northeast so attractive for high-speed rail – its population density – could also make it the most difficult place to build. “There is so much population in the Northeast corridor that I don’t know if there is even enough room for the dedicated tracks needed for high-speed rail,” says Professor McCarthy. “And if the distances you are going are not sufficient to make efficient use of the high speeds, what’s the point?”
Wise investment or money pit?Critics agree. Only two rail corridors in the world – France's Paris to Lyon line and Japan's Tokyo to Osaka line – cover their costs, says Ken Button, director of the Center for Transportation Policy at George Mason University in Fairfax, Va.
“Both of these are the perfect distance for high-speed rail, connect cities over flat terrain with huge populations that have great public transportation to get riders to the railway,” he says, dismissing French claims that other lines make money. He says they calculate costs in ways which ignore capital costs.
To supporters of high-speed rail expansion, however, US transportation must move beyond its reliance on oil. High-speed rail is the only form of intercity transportation that has a 45-year record of moving people without oil, says Anthony Perl, professor of political science at Simon Fraser University in Vancouver, Canada, and a fellow at the Post Carbon Institute.
“That’s why 30 countries around the world have done this and the US and Canada are just laggards," he says. "If people want to get where they are going between cities they are going to need high-speed rail because flying and driving will only become more and more costly.”
Thursday, February 3, 2011
Here's an absolutely shocking article from the Caesar Rodney Institute. Delaware's government is playing a dangerous game with energy during the worst economic slump since the 1930's. There are shocking statistics in this article that all should become familiar with. The standard of living is declining!
DELAWARE'S ECONOMY AND THE RPS
by Dr. John E. Stapleford
Center for Economic Policy and Analysis
Caesar Rodney Institute
This is a poor time to experiment with new energy regulations such as the RPS (Renewable Energy Portfolio Standards). The stark reality is that Delaware's economy is in very serious straits. Delaware has fewer jobs today than it did a decade ago. Over that decade unemployment has gone from 3.3% to 8.5%. Under the best scenario it will take Delaware 3 years to regain its peak pre-recession level of employment, and it may take as long as 5 years. Nearly 19,000 discouraged workers have left Delaware's labor force.
Delaware manufacturing has plummeted from 73 thousand jobs to 26 thousand jobs. The road back for housing from the last recession remains steep. The volume of residential permits is one-third of the pre-recession peak, the value of permits 38% of the peak, and house prices 23% below peak. The unemployment rate in Delaware's construction industry is still above 20%.
To read the rest of this article, go to:
http://www.caesarrodney.org/pdfs/Delaware%27s_Economy_and_the_RPS2.pdf
DELAWARE'S ECONOMY AND THE RPS
by Dr. John E. Stapleford
Center for Economic Policy and Analysis
Caesar Rodney Institute
This is a poor time to experiment with new energy regulations such as the RPS (Renewable Energy Portfolio Standards). The stark reality is that Delaware's economy is in very serious straits. Delaware has fewer jobs today than it did a decade ago. Over that decade unemployment has gone from 3.3% to 8.5%. Under the best scenario it will take Delaware 3 years to regain its peak pre-recession level of employment, and it may take as long as 5 years. Nearly 19,000 discouraged workers have left Delaware's labor force.
Delaware manufacturing has plummeted from 73 thousand jobs to 26 thousand jobs. The road back for housing from the last recession remains steep. The volume of residential permits is one-third of the pre-recession peak, the value of permits 38% of the peak, and house prices 23% below peak. The unemployment rate in Delaware's construction industry is still above 20%.
To read the rest of this article, go to:
http://www.caesarrodney.org/pdfs/Delaware%27s_Economy_and_the_RPS2.pdf
Wednesday, February 2, 2011
It appears that after 3 years, the leaders of Delaware state government are finally starting to realize we're in a serious economic situation. RC
Budget panel reviews grim facts
Retirees' lobbyist says they're due pension increase, not cuts
By J.L. MILLER • The News Journal • February 1, 2011
DOVER -- The Joint Finance Committee got a sobering look Monday at the economic situation facing the state -- and a preview of the pressures the budget-writing panel will face from constituents worried about budget cuts.
Between now and late June, the JFC will reshape Gov. Jack Markell's proposed $3.4 billion budget, a budget that calls for $100 million in spending cuts to help close a revenue gap of $216.4 million.
The JFC began its first session of the new General Assembly with an overview of the economy, courtesy of David Gregor, deputy finance secretary. "It is in fact the worst recession we've had in decades," Gregor said, adding that the state and the nation are "in a period of extraordinary uncertainty."
That is because of three factors, Gregor said: the financial meltdown, a moribund housing industry, and structural pressures that include the pending retirement of the baby boomers. "Now they're moving toward retirement and that puts pressure on the state budget and the federal budget," Gregor said.
According to Ann Visalli, director of the Office of Management and Budget, 16 percent of the state's work force is eligible to retire today. "We have an aging work force," she said.
Markell's budget calls for $3.2 million to be pared from employee health and pension costs, a proposal he said will save at least $100 million over five years. However, he did not detail how those savings would be realized.
Jack Hassman, president of the Delaware Retired School Personnel Association, doesn't want those savings to come at the expense of the 2,000 retirees his group represents. Not only does Hassman's group want the retirees' current health benefits maintained at their current level, its members want a 3 percent pension increase as well. Retirees have not seen a boost in pension benefits for 5 1/2 years.
"With the increases in the prices of food, gasoline, electricity and home heating oil and just about everything else, retirees are quickly losing their financial footing," Hassman said. Some pensioners receive less than $600 per month in benefits, while almost 5,000 receive benefits of less than $1,000 a month, Hassman said. Even those who worked 30 years receive an average of just $23,000 a year, he said."Living on a fixed income isn't an easy task," Hassman said.
Markell also wants to cut Medicaid costs, which are consuming an ever-increasing portion of the budget, and eliminate $3 million in cash assistance for adults who are unemployable, destitute and often homeless.
Those cuts could face resistance, at least from some legislators. Rep. John Kowalko, D-Newark South, isn't a JFC member but he used Monday's opening session to voice his opposition to eliminating the $94 monthly cash payments to the poor.
"They use that money for the most part to get back and forth to the soup kitchen or to wherever they happen to be putting up their tent that night," Kowalko said."I find it questionable that we're abandoning the most destitute among us," he said.
Rep. Dennis P. Williams, D-Wilmington North and the JFC chairman, shot back: "Remember, the governor propose[s] and we dispose.
"Weather permitting, the JFC will hear budget requests today from the Auditor's Office, the Public Defender's Office and the Insurance Department.Contact J.L. Miller at 678-4271 or http://ezurl.co/5095e1
Budget panel reviews grim facts
Retirees' lobbyist says they're due pension increase, not cuts
By J.L. MILLER • The News Journal • February 1, 2011
DOVER -- The Joint Finance Committee got a sobering look Monday at the economic situation facing the state -- and a preview of the pressures the budget-writing panel will face from constituents worried about budget cuts.
Between now and late June, the JFC will reshape Gov. Jack Markell's proposed $3.4 billion budget, a budget that calls for $100 million in spending cuts to help close a revenue gap of $216.4 million.
The JFC began its first session of the new General Assembly with an overview of the economy, courtesy of David Gregor, deputy finance secretary. "It is in fact the worst recession we've had in decades," Gregor said, adding that the state and the nation are "in a period of extraordinary uncertainty."
That is because of three factors, Gregor said: the financial meltdown, a moribund housing industry, and structural pressures that include the pending retirement of the baby boomers. "Now they're moving toward retirement and that puts pressure on the state budget and the federal budget," Gregor said.
According to Ann Visalli, director of the Office of Management and Budget, 16 percent of the state's work force is eligible to retire today. "We have an aging work force," she said.
Markell's budget calls for $3.2 million to be pared from employee health and pension costs, a proposal he said will save at least $100 million over five years. However, he did not detail how those savings would be realized.
Jack Hassman, president of the Delaware Retired School Personnel Association, doesn't want those savings to come at the expense of the 2,000 retirees his group represents. Not only does Hassman's group want the retirees' current health benefits maintained at their current level, its members want a 3 percent pension increase as well. Retirees have not seen a boost in pension benefits for 5 1/2 years.
"With the increases in the prices of food, gasoline, electricity and home heating oil and just about everything else, retirees are quickly losing their financial footing," Hassman said. Some pensioners receive less than $600 per month in benefits, while almost 5,000 receive benefits of less than $1,000 a month, Hassman said. Even those who worked 30 years receive an average of just $23,000 a year, he said."Living on a fixed income isn't an easy task," Hassman said.
Markell also wants to cut Medicaid costs, which are consuming an ever-increasing portion of the budget, and eliminate $3 million in cash assistance for adults who are unemployable, destitute and often homeless.
Those cuts could face resistance, at least from some legislators. Rep. John Kowalko, D-Newark South, isn't a JFC member but he used Monday's opening session to voice his opposition to eliminating the $94 monthly cash payments to the poor.
"They use that money for the most part to get back and forth to the soup kitchen or to wherever they happen to be putting up their tent that night," Kowalko said."I find it questionable that we're abandoning the most destitute among us," he said.
Rep. Dennis P. Williams, D-Wilmington North and the JFC chairman, shot back: "Remember, the governor propose[s] and we dispose.
"Weather permitting, the JFC will hear budget requests today from the Auditor's Office, the Public Defender's Office and the Insurance Department.Contact J.L. Miller at 678-4271 or http://ezurl.co/5095e1
The real story here is that Delaware's leaders might be willing to raise taxes on citizens that have been in economic distress since at least 2008. RC
DelDOT's future looking grimmer
http://www.delawareonline.com/article/201101250345/NEWS/101250333?odyssey=mod_related_topix
Reports indicate shortfall could climb to $90 million by next year
By JEFF MONTGOMERY and MAUREEN MILFORD • The News Journal • January 25, 2011
Estimated shortfalls in state road and transit funds deepened Monday in new DelDOT reports on budget scenarios.In one increasingly likely case, revenues would fall about $90 million short of need next year alone if lawmakers decline to again shift unclaimed financial assets, or escheats, to the Transportation Trust Fund.
Gov. Jack Markell is eyeing escheats as a possible source for a proposed new Infrastructure Trust Fund to support economic development initiatives.The grim picture emerged on a day when DelDOT Secretary Carolann Wicks continued damage control and a management shakeup triggered by revelations about questionable and costly agreements involving developers and politically connected figures in southern Delaware brought to light in a series of News Journal stories. A review ordered by Markell recommended the reforms and led to the departure last week of two top managers in DelDOT’s planning and real estate section.
On Monday, Wicks proposed new regulations that would assure more public and legal scrutiny for deals on land secured far ahead of state needs.The regulatory change would require independent appraisals and legal reviews for contracts to keep land open and undeveloped before final decisions on right-of-way needs. It also would require disclosure of purchase and reservation details in contracts signed by DelDOT and the property owner.
Wicks also proposed clearer-cut requirements for review and "Our goal is to make DelDOT's real estate policies as transparent, consistent, cost effective and fair as
they can be. These regulations are an important part of that effort," Wicks said in a written statement.
Wicks' proposal for new real estate regulations on Monday followed the recent release of a 53-page report by Markell's staff focused mainly on agreements involving land along a U.S. 113 study corridor that led to deals that paid developers millions to forgo construction on projects pending a final decision on the highway route. Experts said the projects could not have been built anyway because of the recession.
Later in the day, Wicks told a task force studying Transportation Trust Fund revenues that even the latest long-range budget estimates could understate pressure on DelDOT's programs. Officials now see shortfalls growing to $140 million or more by 2016, with new calls on state funds arriving regularly.
Project at UD
As if to underscore that point, the University of Delaware indicated Monday that it might seek $25 million in state aid over several years for transportation-related work at a planned research, manufacturing and educational complex on the site of the former Chrysler assembly plant in Newark. Although plans remain rough, 10,000 to 15,000 people could work at the complex in coming decades.
Many would have to come and go by train or bus, using facilities yet to be budgeted or built."The rail improvements [needed] are huge, huge," Wicks cautioned. "If you look at that plan, it can't succeed without the rail. There's just not enough road around there. It's got to be based on the rail side of the house, and it's a six-figure problem."
Wicks later said that new Newark transit facilities and track work would cost in excess of $100 million, a figure that would support creation of a major regional commuter rail hub -- but one that is not now in any long-range budget.
Lawmakers formed the task force last year and set a March 31 deadline for reports on ways to balance the trust-fund budget. Members are expected to work through a list of alternatives in coming weeks, ranging from raising motor fuel taxes, highway tolls and motor vehicle fees to shifting some DelDOT operating expenses back to the General Fund budget and increasing fares for public transit.
Both Wicks and Delaware Economic Development Office Director Alan Levin said they were caught off guard by the university's $25 million need at the Chrysler site, brought up during a briefing on redevelopment plans. Levin did say that the plan needs transportation improvements to support new jobs.
Other revenues could be found for the Trust Fund, Levin added, including possible leasing of state assets to private businesses. State officials have suggested long-term private operation of I-95 or Del. 1 in the past.
"If we could take an asset that we're not maximizing the value of today and possibly lease that and get the benefit today and build a better Delaware, it's something we need to look at," Levin said, "but that's not without its pain and not without its controversy."
Contact Jeff Montgomery at 678-4277 or http://ezurl.co/551991.Contact Maureen Milford at 324-2881 or http://ezurl.co/569a91
DelDOT's future looking grimmer
http://www.delawareonline.com/article/201101250345/NEWS/101250333?odyssey=mod_related_topix
Reports indicate shortfall could climb to $90 million by next year
By JEFF MONTGOMERY and MAUREEN MILFORD • The News Journal • January 25, 2011
Estimated shortfalls in state road and transit funds deepened Monday in new DelDOT reports on budget scenarios.In one increasingly likely case, revenues would fall about $90 million short of need next year alone if lawmakers decline to again shift unclaimed financial assets, or escheats, to the Transportation Trust Fund.
Gov. Jack Markell is eyeing escheats as a possible source for a proposed new Infrastructure Trust Fund to support economic development initiatives.The grim picture emerged on a day when DelDOT Secretary Carolann Wicks continued damage control and a management shakeup triggered by revelations about questionable and costly agreements involving developers and politically connected figures in southern Delaware brought to light in a series of News Journal stories. A review ordered by Markell recommended the reforms and led to the departure last week of two top managers in DelDOT’s planning and real estate section.
On Monday, Wicks proposed new regulations that would assure more public and legal scrutiny for deals on land secured far ahead of state needs.The regulatory change would require independent appraisals and legal reviews for contracts to keep land open and undeveloped before final decisions on right-of-way needs. It also would require disclosure of purchase and reservation details in contracts signed by DelDOT and the property owner.
Wicks also proposed clearer-cut requirements for review and "Our goal is to make DelDOT's real estate policies as transparent, consistent, cost effective and fair as
they can be. These regulations are an important part of that effort," Wicks said in a written statement.
Wicks' proposal for new real estate regulations on Monday followed the recent release of a 53-page report by Markell's staff focused mainly on agreements involving land along a U.S. 113 study corridor that led to deals that paid developers millions to forgo construction on projects pending a final decision on the highway route. Experts said the projects could not have been built anyway because of the recession.
Later in the day, Wicks told a task force studying Transportation Trust Fund revenues that even the latest long-range budget estimates could understate pressure on DelDOT's programs. Officials now see shortfalls growing to $140 million or more by 2016, with new calls on state funds arriving regularly.
Project at UD
As if to underscore that point, the University of Delaware indicated Monday that it might seek $25 million in state aid over several years for transportation-related work at a planned research, manufacturing and educational complex on the site of the former Chrysler assembly plant in Newark. Although plans remain rough, 10,000 to 15,000 people could work at the complex in coming decades.
Many would have to come and go by train or bus, using facilities yet to be budgeted or built."The rail improvements [needed] are huge, huge," Wicks cautioned. "If you look at that plan, it can't succeed without the rail. There's just not enough road around there. It's got to be based on the rail side of the house, and it's a six-figure problem."
Wicks later said that new Newark transit facilities and track work would cost in excess of $100 million, a figure that would support creation of a major regional commuter rail hub -- but one that is not now in any long-range budget.
Lawmakers formed the task force last year and set a March 31 deadline for reports on ways to balance the trust-fund budget. Members are expected to work through a list of alternatives in coming weeks, ranging from raising motor fuel taxes, highway tolls and motor vehicle fees to shifting some DelDOT operating expenses back to the General Fund budget and increasing fares for public transit.
Both Wicks and Delaware Economic Development Office Director Alan Levin said they were caught off guard by the university's $25 million need at the Chrysler site, brought up during a briefing on redevelopment plans. Levin did say that the plan needs transportation improvements to support new jobs.
Other revenues could be found for the Trust Fund, Levin added, including possible leasing of state assets to private businesses. State officials have suggested long-term private operation of I-95 or Del. 1 in the past.
"If we could take an asset that we're not maximizing the value of today and possibly lease that and get the benefit today and build a better Delaware, it's something we need to look at," Levin said, "but that's not without its pain and not without its controversy."
Contact Jeff Montgomery at 678-4277 or http://ezurl.co/551991.Contact Maureen Milford at 324-2881 or http://ezurl.co/569a91
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