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Economy

ANALYSIS: The Real World Debunks The GOP’s ‘Austerity Now’ Ideology

By Jeff Spross on Feb 13, 2012 at 6:45 pm

Today, the Obama administration released its proposed federal budget for 2013. The Republicans’ reaction has been swift and united in its thematics, claiming the budget fails to promote fiscal responsibility or future prosperity, accusing Obama of “duck[ing] the responsibility to tackle this country’s fiscal problems” and choosing to “campaign instead of govern,” and generally slamming the budget as a “threat to job growth” and “more of the same failed ‘stimulus’-style policies.” All of this suggests the Republicans are unaware that America is not, in fact, the only market-based western democracy attempting to work its way out of a massive economic slump — or that these efforts provide concrete lessons in what will and will not produce economic growth.

In Britain, a large package of budget cuts and austerity measures which rolled out in 2010 has not unleashed the proverbial job creators in the private market. Instead, the country is still shackled with an economic growth trend that’s even worse that what it suffered in the aftermath of the Great Depression.

In the Eurozone as a whole, the European Central Bank and other relevant authorities have so far insisted on massive austerity measures from struggling countries in exchange for fiscal aid. Here, too, the result has not been a revitalized economy but a continuance of dismal growth rates.

Here at home, the effect of 2009′s recovery package and the tax deal in December 2010 was more than offset by cuts in state budgets. By the end of 2009, the combined budgets of the federal and state governments had entered a period of fiscal contraction from which they have yet to emerge.

The portions of Obama’s economic policy which actually passed simply made the economic hole created by state-level cuts less deep. Which was a valuable and necessary function, but insufficient to actually boost the economy back to healthy growth. Contrary to Republicans’ claim that Obama’s first two years were a period of unbound Keynesian experimentation, austerity is the budgetary policy reality which has accompanied America’s stagnant economic growth.

This matters because, now that the wars in Afghanistan and Iraq are winding down, the Bush tax cuts and the lingering effects of the recession remain the two primary drivers of the U.S. federal deficit. While the Republicans insist on not only maintaining all the tax cuts, but blowing an even larger hole in our revenue with added tax relief for the wealthy, Obama has proposed raising new revenue by allowing the Bush cuts for the top income rates to expire and by eliminating other injustices in the code which go to the benefit of the wealthiest Americans.

Even more importantly, because our tax system pulls in a percentage of the country’s overall wealth production, tax revenues will continue to underperform as long as our GDP production remains below capacity. The perverse irony of austerity as an immediate response to economic recession is that it drives down demand and GDP, thus driving down revenues and deepening the deficit hole it seeks to mend. In the opposite direction, a sudden positive jump in GDP could bring our economy back into line with its pre-recession trend and bring tax revenues back up without any change in tax rates or policy at all. The policy history in Britain, Europe, and here in America since the end of 2008 shows the Republicans’ austerity fixation won’t deliver this reinvigoration. But a recommitment by the government to boost demand could do the trick.

Obama’s budget, while imperfect, aims for the proper balance and the proper order of repairs: Investment now in jobs, infrastructure, state aid, extensions for the payroll tax cut and unemployment insurance, and other immediate boosts to demand, followed by longer-term deficit cutting once the economy is again firing on all cylinders. If the GOP had not been using every political tool at their disposal to undermine this approach during the last four years, the president could probably have done considerably more.

Climate Progress

More than 68% of New European Electricity Capacity Came From Wind and Solar in 2011

By Stephen Lacey on Feb 12, 2012 at 10:25 am

As the sovereign debt crisis unfolds in Europe, onlookers have questioned whether the region will stay committed to renewable energy. The answer so far is “yes.”

Even with a few countries pulling back on government support of the industry because of fiscal troubles, 2011 was still a huge year for deployment — with wind and solar alone representing almost 70% of new capacity.

That’s almost a 10-fold increase over deployment in 2000, when only 3.5 GW of renewable energy projects were installed. Last year, 32 GW of renewables — mostly wind and solar — were deployed across European countries.

The figures come from the European Wind Energy Association, which just released a report on industry growth.

Growth in Europe has consistently outstripped forecasts. The EU currently has a target of getting 20% of its final energy (heat, electricity and fuels) from renewable energy. Numerous countries have already surpassed their needed targets in the electricity and heating sectors, and it’s likely that the entire region will move past the goal well ahead of schedule.

It’s expected that renewable electricity sources will meet 34% of demand in Europe by 2020, with 25 of 27 countries to surpass their targets beforehand.

In 2011, solar PV accounted for 26.7% of capacity additions, wind power accounted for 21.4% of additions, and natural gas made up 22% of installations. Below that was coal at 4.8%, fuel oil at 1.6%, large hydro at 1.3%, and concentrating solar power at 1.1% of capacity.

(A side note to anyone confused by terms: It is always important to remember that “capacity” is the ability to do work. It is completely different than actual electricity generation. Just because 68% of new capacity was added in 2011, doesn’t mean that Europe will get 68% more electricity from renewables. Hence, the major differences in generation figures).

So what does Europe’s power capacity mix look like today?


Notice the stunning increase in wind, solar and natural gas — by far the top three choices for developers in the region. However, coal and fuel oil still have a very large market share. Some experts are concerned that a roll back of nuclear in various countries will increase the share of fossil fuels, particularly coal.

But with wind, solar and gas prices all declining to record lows, the combination of those three resources could prevent a sizable increase in coal development.

Related Posts:

Climate Progress

Is Climate Change Bringing the Arctic to Europe?

By Joe Romm on Feb 6, 2012 at 6:10 pm

Less Summer Arctic Sea Ice Cover May Mean Some Colder, Snowier Winters in Central Europe [For Now]

[T]he probability of cold winters with much snow in Central Europe rises when the Arctic is covered by less sea ice in summer. Scientists of the Research Unit Potsdam of the Alfred Wegener Institute for Polar and Marine Research in the Helmholtz Association have decrypted a mechanism in which a shrinking summertime sea ice cover changes the air pressure zones in the Arctic atmosphere and impacts our European winter weather. These results of a global climate analysis were recently published in a study in the scientific journal Tellus A.

That’s the news release for yet another new study examining what will inevitably be the huge implications for extreme weather from the massive amount of heat released by the declining Arctic sea ice cover.


Arctic sea ice in September 2007 reached its lowest extent on record, approximately 40% lower than when satellite records began in 1979. Sea ice loss in 2011 was virtually tied with the ice loss in 2007, despite weather conditions that were not as unusual in the Arctic. ”Such a large area of open water is bound to cause significant impacts on weather patterns, due to the huge amount of heat and moisture that escapes from the exposed ocean into the atmosphere over a multi-month period following the summer melt.”  Image: Cryosphere Today.

You may recall the recent repost of the discussion by meteorologist Dr. Jeff Masters (see “Our Extreme Weather: Is Arctic Sea Ice Loss Partly to Blame?” the source of the figure above):

“The question is not whether sea ice loss is affecting the large-scale atmospheric circulation…. It’s how can it not?” That was the take-home message from Dr. Jennifer Francis of Rutgers University, in her talk “Does Arctic Amplification Fuel Extreme Weather in Mid-Latitudes?”, presented at last week’s American Geophysical Union meeting in San Francisco.

Dr. Francis presented new research in review for publication, which shows that Arctic sea ice loss may significantly affect the upper-level atmospheric circulation, slowing its winds and increasing its tendency to make contorted high-amplitude loops. High-amplitude loops in the upper level wind pattern (and associated jet stream) increases the probability of persistent weather patterns in the Northern Hemisphere, potentially leading to extreme weather due to longer-duration cold spells, snow events, heat waves, flooding events, and drought conditions.

The new German study looks at the specific case of winters in central Europe.  The UK Independent story explains, “A growing number of experts believe complex wind patterns are being changed because melting Arctic sea ice has exposed huge swaths of normally frozen ocean to the atmosphere above.”

As cold weather hit much of Europe, the story describes the findings this way:

Read more

Climate Progress

December 21 News: European Court Upholds Plan to Charge Airlines for Carbon Emissions, Rejecting U.S. Appeal

By Stephen Lacey on Dec 21, 2011 at 9:50 am

Other stories below: Europe’s Debt Crisis Threatens Cap and Trade; U.S. Helps Britain Investigate Hacked Emails


Court Upholds Europe’s Plan to Charge Airlines for Carbon Emissions

The European Union’s highest court on Wednesday endorsed the bloc’s plan to begin charging the world’s biggest airlines for their greenhouse gas emissions from Jan. 1, setting the stage for a potentially costly trade war with the United States, China and other countries.

A group of United States airlines had argued that forcing them to participate in the bloc’s potentially costly emissions-trading program infringed on national sovereignty and conflicted with existing international aviation treaties.

But in its ruling, the European Court of Justice in Luxembourg affirmed an opinion issued in October by its advocate general, who had rejected their claim.

“The court confirms the validity of the directive that integrates aviation activities in the system for trading emissions quotas,” the ruling said, adding that it “infringes neither the principles of customary international law at issue, nor the ‘Open Skies’ agreement” concluded with the United States in 2007.

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NEWS FLASH

Economists: Europe Is Headed For Six Quarters Of Recession | As Europe seeks to patch together a deal to keep the Eurozone together, economists at Citigroup see the continent headed for a long recession. “Our economists believe the sovereign debt and banking crises are causing a renewed recession in the Euro Area,” reads the analysis. “Beginning in 4Q 2012, they forecast real GDP to contract for 6 consecutive quarters. It is expected to be an especially protracted recession. Not even in Japan, during its lost decades, did real GDP decline for 6 consecutive quarters.”

Economy

Contrary To Republican Rhetoric, Europe Is Not In Trouble Because Of Spending And Debt

By Pat Garofalo on Dec 8, 2011 at 5:10 pm

European leaders are meeting in Brussels this week in yet another attempt to craft a plan that would deal with their ongoing fiscal crisis and preserve the Euro. The International Monetary Fund will likely play a role in a fiscal rescue plan, with Reuters reporting today that “Euro zone leaders will likely agree to boost the International Monetary Fund’s lending capacity with 150 billion euros.”

The involvement of the IMF has, like always, gotten Republicans in the U.S. Congress all bent out of shape, since the U.S. is an IMF contributor. According to the Republicans, the IMF lending money to European nations would be indirectly approving of those nations’ fiscal choices.

“Europe is going to default eventually, so why would you socialize their profligate spending?” asked Sen. Tom Coburn (R-OK). “The reason we’re in the situation we’re in [is] because of excessive debt in the industrialized world,” agreed Sen. Orrin Hatch (R-UT).

A lot of mythology has been built up regarding why Europe is in the shape it’s in, but this theory leads the pack — Europe is collapsing because its governments were out-of-control spenders. However, there’s one problem with the theory. As Martin Wolf noted in the Financial Times, the claim that Europe’s most troubled nations spent their way into a crisis is simply not true:

Take a look at the average fiscal deficits of 12 significant (or at least revealing) eurozone members from 1999 to 2007, inclusive. Every country, except Greece, fell below the famous 3 per cent of gross domestic product limit. Focusing on this criterion would have missed all today’s crisis-hit members, except Greece. Moreover, the four worst exemplars, after Greece, were Italy and then France, Germany and Austria. Meanwhile, Ireland, Estonia, Spain and Belgium had good performances over these years. After the crisis, the picture changed, with huge (and unexpected) deteriorations in the fiscal positions of Ireland, Portugal and Spain (though not Italy). In all, however, fiscal deficits were useless as indicators of looming crises.

Now consider public debt. Relying on that criterion would have picked up Greece, Italy, Belgium and Portugal. But Estonia, Ireland and Spain had vastly better public debt positions than Germany. Indeed, on the basis of its deficit and debt performance, pre-crisis Germany even looked vulnerable. Again, after the crisis, the picture transformed swiftly. Ireland’s story is amazing: in just five years it will suffer a 93 percentage point jump in the ratio of its net public debt to GDP.

These charts show that, according to deficits and debt, countries like Spain and Ireland were acting much more responsibly than Germany and France — therefore it can’t have been deficits and debt that caused their problems. As The American Prospect’s Harold Myerson put it, “some of Europe’s current basket cases were actually running budget surpluses in the years before the Lehman meltdown. Ireland and Spain weren’t overspending at all — but the banks and investors speculating on their housing markets most certainly were.” What Europe needed was better regulation of its financial sector and a central bank willing to take the steps necessary to lessen the pain of the Great Recession, neither of which it had.

Republicans like to claim that if the United States doesn’t slash its budget to the bone, then it will wind up like Europe, careening towards a crisis. But it’s simply a myth that it was spending that got Europe into trouble — and austerity is certainly not going to save it.

Green

U.K. Secretly Promotes Canada Tar Sands, Despite Disastrous Implications For The World

By Rebecca Leber on Dec 1, 2011 at 9:53 am

Canada tar sands

Despite the urgency of the Durban climate talks, industry interests have largely undercut global progress on lowering greenhouse gases. One example is the news that the United Kingdom has been quietly working to prevent a European Union climate penalty on Canadian tar sands oil. Throughout Europe’s negotiations, the U.K. government has been in close contact with oil companies Shell and BP:

At least 15 high-level meetings and frequent communications have taken place since September, with David Cameron discussing the issue with his counterpart Stephen Harper during his visit to Canada, and stating privately that the UK wanted “to work with Canada on finding a way forward”, according to documents released under freedom of information laws.

As Europe grapples with cutting greenhouse gases, U.S. activists are fighting the development of the TransCanada Keystone XL pipeline. Tar sands produce an even dirtier form of oil than conventional crude, with 23 percent higher greenhouse pollution, and NASA scientist James Hansen says development would mean “game over for the climate.”

The Guardian’s revelation about lobbying in the U.K. simply highlights how special interests have swayed decision-makers both domestically and abroad. The U.S. Chamber of Commerce has lobbied seven state governments to approve the project. And in Canada, TransCanada lobbyists have met with Canadian officials at least 56 times since May.

President Obama’s decision regarding Keystone XL, as well as the European vote on tar sands penalties this Friday, present opportunities for nations to finally put public interest ahead of Big Oil’s gains.

Security

(UPDATED) Cain Foreign Policy Plan Botches Geography: Lists Germany, Russia, U.K. In ‘The Americas’

By Ali Gharib on Nov 30, 2011 at 10:15 am

Embattled Republican presidential candidate Herman Cain, after a series of embarrassing gaffes on foreign policy, insisted that “leaders” don’t need to actually know about world affairs, but merely provide “clarity” and have a competent staff. If that’s indeed the case, Cain (if he stays in the presidential race) ought to consider firing whoever put together his foreign policy website — a case where advisers and staff, if not the candidate himself, showed glaring incompetence.

Cain’s campaign website on “foreign policy and national security” leaves a little something to be desired in terms of basic geography: It lists Germany, Russia, and the United Kingdom as countries in “the Americas.” Take a look at a screen shot of the campaign website, with those countries highlighted:

While the downloadable version of the document does indeed have a subject heading for “Europe,” where part of Russia and the whole of Germany and the U.K. are located, the website version leaves it out. Cain’s team, it seems, has a problem with editorial oversight on even the most basic subjects.

Other areas of Cain’s plan defy his simplistic foreign policy credo of “peace through strength and clarity” — namely, that he admits having no clarity at all on Libya. The intervention in Libya and its nascent transition to democracy have bedeviled the former pizza company C.E.O. Asked about it earlier this month, Cain gave a bizarre and rambling five-minute answer heavy on long, dramatic pauses. Months before that, though, he did have some clarity on the matter: opposing whatever President Obama was doing. Cain’s answer, which he blamed on a lack of sleep (promising to take a nap upon taking the White House), dovetails nicely with the declaration on his website that he “needs clarity” on Libya. That should come as no surprise from a man who thinks the Afghan Taliban insurgent group took over the North African country. (HT: UN Dispatch)

Update

The original premise of this post was based on Cain’s website listing the United Kingdom, Russia and Germany under “The Americas” section of his foreign policy platform. Upon closer examination, an html formatting error on Cain’s webpage obscured the fact that those countries are indeed listed under “Europe.”

Climate Progress

Offshore Wind Could Meet 14% of Europe’s Energy Demand by 2030, Leveraging $193 Billion in Investments

By Stephen Lacey on Nov 29, 2011 at 2:17 pm

The European Union, long the global leader in offshore wind, will likely stay that way for the next decade — even with the fast-growing wind market in China catching up.

That’s according to new figures released by Europe’s wind trade group, the European Wind Energy Association. In a report issued earlier this month, EWEA projects that the European offshore wind market will grow from 3.9 gigawatts of capacity today to 40 gigawatts of capacity, generating roughly 148 terawatt-hours of energy annually — or about 4% of Europe’s electricity demand. By 2030, cumulative installation levels could reach about 150 GW — enough capacity to generate roughly 14% of European demand.

That compares to the 30 GW of capacity expected for China’s offshore wind market by 2020, as projected by the Chinese Renewable Energy Industries Association.


Assuming these projections are accurate, the employment numbers could be substantial. EWEA estimates that 40% of jobs in the European wind industry will be offshore by 2020, accounting for just under 170,000 jobs. And if recent growth is anything to judge by, a major boom in offshore projects through the next two decades is very likely.

Like many other energy sectors, the offshore wind industry was slowed by the global economic malaise and subsequent European Debt Crisis. But even during three years of economic troubles, offshore wind projects have grown substantially, from 318 MW in 2007 to 883 MW in 2010. Offshore installations are expected to reach roughly a gigawatt this year.

That doesn’t mean the sector is completely dry yet. The evolving debt crisis is may create yet another bottleneck into 2012 and 2013, says Christian Kjaer, the CEO of EWEA:

Read more

NEWS FLASH

European Austerity Measures May Lead To Spike In HIV Infections | European austerity measures may be causing a rise in drug-related HIV infections, health officials warn, as governments stretch limited resources to pay for prevention programs. “Across Europe drug services are under pressure, and HIV prevention is not always given the policy priority it once had,” said Wolfgang Gotz, director of the European Monitoring Centre for Drugs and Drug Addiction. “In some (EU) member states, we are witnessing an exceptional set of circumstances that create a perfect storm for causing the rapid spread of drug-related HIV infections within vulnerable communities.”

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