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We Have Some Really Good News About How America Uses Energy

| Wed Feb. 4, 2015 12:57 PM EST

When you read headlines about how Congress is rife with climate change deniers and willing to vote in favor of a massive oil pipeline that could increase greenhouse gas emissions, it's easy to get discouraged about the direction the US is headed on global warming. But when you look at some of the hard numbers about how Americans are getting their energy, there's actually a lot to be excited about.

This morning Bloomberg New Energy Finance released a fat report on the state of US energy, and it's chock-full of kickass facts and figures that reveal real, tangible progress on reversing the habits that cause climate change. Here are just a few of the most salient bits:

The US is getting way more efficient. It used to be that electricity demand rose and fell roughly in line with economic productivity. That's no longer the case: Thanks to massive gains in energy efficiency in everything from home appliances to factory lines, energy demand is now less tied to economic growth than ever before. In fact, since 2007, electricity demand hasn't grown at all, the report finds. Zero. Another way to say that is that the US is becoming more "energy productive," meaning the US is using fewer units of energy for every unit of GDP. Energy productivity has increased 54 percent since 1990:

BNEF

Since energy makes up about 83 percent of America's total carbon footprint, those gains in efficiency (along with big shakeups in where our energy comes from, which I'll get to shortly) have helped drive total carbon emissions down 9.2 percent from their 2007 all-time peak:

BNEF

Coal is getting the boot. Coal used to provide half or more of the country's electricity. Now, that number is down to 39 percent, thanks largely to increasing reliance on natural gas made plentiful and cheap by the fracking boom. Both production and consumption of natural gas were at all-time highs in 2014:

BNEF

Renewable energy is blowing up. Natural gas isn't the only big winner: Renewables are skyrocketing too. Solar and wind production have more than tripled since 2008. The share of all renewable energy sources combined (including large hydropower dams) in the US energy mix has nearly doubled since 2008, from 8 percent to 13 percent. This chart shows how much new capacity of each energy source was added in each year; the grey is natural gas and the light blue is renewables:

BNEF

As we've reported before, solar is going gangbusters; the bars below show how much rooftop solar was added each year, and the red line represents the cumulative total:

BNEF

Behind that trend is an ongoing freefall in the cost of solar panels. This chart shows how the more solar that gets installed, the cheaper each unit of it becomes, thanks to technology improvements and breakneck production at Chinese factories. The two lines are for different types of modules, but the important thing is that they're both headed downhill:

BNEF

Cars are cleaner, and we're using them less. Gasoline consumption is down 8.6 percent from 2005, which the report attributes to "increasing vehicle efficiency prompted by federal policy, increasing consumer preference for less thirsty vehicles, changing driving patterns (declining number of vehicles on the road, declining miles per vehicle), and increasing biofuel blending." The relative climate benefits of biofuels are still being hotly debated, but the rest of those trends are pretty objectively awesome. The trend for electric vehicles is less impressive. Although the number of public electric vehicle charging stations has exploded 470 percent since 2011, sales are pretty ho-hum. The report blames low oil prices:

BNEF

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FCC Chairman Finally Gets Fully Behind Net Neutrality

| Wed Feb. 4, 2015 12:32 PM EST

FCC chairman Tom Wheeler is now officially on board supporting the strongest possible version of net neutrality. Here's his first-person statement:

Originally, I believed that the FCC could assure internet openness through a determination of “commercial reasonableness” under Section 706 of the Telecommunications Act of 1996. While a recent court decision seemed to draw a roadmap for using this approach, I became concerned that this relatively new concept might, down the road, be interpreted to mean what is reasonable for commercial interests, not consumers.

That is why I am proposing that the FCC use its Title II authority to implement and enforce open internet protections.

Using this authority, I am submitting to my colleagues the strongest open internet protections ever proposed by the FCC. These enforceable, bright-line rules will ban paid prioritization, and the blocking and throttling of lawful content and services. I propose to fully apply—for the first time ever—those bright-line rules to mobile broadband. My proposal assures the rights of internet users to go where they want, when they want, and the rights of innovators to introduce new products without asking anyone’s permission.

Title II is the law that currently regulates telephone networks as common carriers. Applying this to broadband internet gives the FCC extremely strong powers to guarantee free and equal internet access to everyone, just as they currently do for telcos.

The argument against doing this is that Title II has a lot of baggage designed specifically for telcos—baggage that makes sense for telephones but not for internet connections. Wheeler recognizes this, and says that he plans to "modernize" Title II. Under his proposal, for example, "there will be no rate regulation, no tariffs, no last-mile unbundling."

This is a huge win for net neutrality advocates. Nonetheless, it would be a bigger win if it spurred Republicans to take seriously a compromise bill that regulates broadband legislatively. Title II may be a big stick, but it's not necessarily a permanent one. Aside from the fact that it's open to court challenges, it could also be eliminated by a future FCC just as easily as it gets created by today's FCC. If a Republican becomes president in 2016 and appoints a majority Republican FCC, Wheeler's proposal could get tossed out with a simple vote of the five commissioners.

Either way, though, this is a welcome move. Either we get a modernized Title II, or else Wheeler's proposal lights a fire under Sen. John Thune that produces a compromise solution from Congress. So far Democrats haven't been especially open to working with Thune, but I hope they change their minds. Maybe negotiations would go nowhere. If so, nothing is lost and Title II becomes the law of the land. But there's always the chance that with Title II as a backstop, negotiations could produce something genuinely useful. As with all compromises, net neutrality advocates would almost certainly lose some things they value. Republicans wouldn't get everything they want either. But both sides—as well as the broadband industry itself—would gain permanence, and that's worth something.

I Can't Stop Laughing About This Stupid Tweet

| Wed Feb. 4, 2015 9:00 AM EST

This is a real tweet that exists:

Black Sunday is a movie. It is not reality.

If you enjoy laughter—as I know some of you do—head on over to LEMMETWEETTHATFORYOU, a site that allows you to make fake tweets that don't exist. You can then do your own versions!

Here are some of mine:

Leave you contributions in the comments or tweet them to me and I'll add this post with the best of them.

Update: This one made me LOL.

Here's the Big Problem With Liberals' "Middle Class" Agenda

| Wed Feb. 4, 2015 12:38 AM EST

President Obama recently advanced two proposals designed to help the middle class—part of a middle-class agenda that's recently become something of a liberal rallying cry for the 2016 election. The first proposal was a mortgage plan available to anyone who bought a home. The second was a college tuition plan that would have helped middle-income workers with money saved by eliminating 529 college savings plans.

The mortgage plan has met with considerable enthusiasm. The tuition plan, by contrast, flamed out within days and has already been withdrawn. Mechele Dickerson comments:

While both of these proposals ostensibly targeted the middle class, the mortgage plan was lauded because its financial relief applies to all homeowners, regardless of how much they earned. The 529 proposal, by contrast, was doomed because of a fatal flaw: it actually tried to provide relief for just the middle class, carving it out by income.

The success of one and not the other was actually quite predictable. The mortgage proposal, though modest, was welcomed because it was designed to make it easier and cheaper for families to buy homes. Republicans, Democrats, Americans and the financial entities that benefit all agree that any plan that increases homeownership rates is good, even if most of the benefits go to higher-income households and barely reach the middle class.

....The same is true with 529 plans....Fewer than 3 percent of families save for college using 529 plans, according to Federal Reserve data....Since it’s the richest who have the largest accounts, most of the benefits of the tax break go to them. While the average account has about $20,000 in it, the accounts of the top 5 percent average more than $106,000.

This highlights one of the fundamental problems of liberal attempts to help the middle class. In theory, universal programs like Obama's mortgage plan are designed to help the middle class, and this is what makes them both popular and politically palatable. In practice, though, the bulk of their benefits usually go to the well off, and this is what really makes them politically palatable. That's why the tuition program met an instant death. It really did help the middle class—and only the middle class—and this meant it lacked the all-important political support of the well off. In fact, since the well off would be losing a benefit to pay for it, it attracted their instant opposition. And that was that.

As Dickerson says, the problem here is that the American definition of "middle class" is so broad. We basically have the poor on one end and the 1 percent on the other, and everyone in between considers themselves middle class. So if you say your program helps the middle class, it needs to help virtually everyone—including lots of people who make an awful lot of money. It's a good bet that virtually all of those folks with $106,000 in their 529 accounts think of themselves as middle class even if they earn well more than six-figure incomes.

Needless to say, this makes "middle class" programs really expensive. In practice, they have to be effectively universal, and since benefits often scale with income (as with tax deductions and savings plans), including the top 5 percent of the income ladder in these programs balloons their price tag by a whole lot more than 5 percent.

There are answers to this. You can offer tax credits rather than tax deductions. You can cap savings programs. But if you do very much of this, you effectively eliminate benefits for the well off and you lose their support. And as plenty of research has shown, it's the well off who really have political clout. This means you have to buy them off if you want to do something for the middle class, and that makes "middle class programs" a lot pricier than you'd think. It's something that any liberal agenda to help the middle class is going to have to figure out.

EPA: Low Oil Prices Will Make Keystone XL A Climate Nightmare

| Tue Feb. 3, 2015 5:28 PM EST

Earlier today the Environmental Protection Agency released a letter that one of its top officials sent yesterday to the State Department, weighing in on the debate over the Keystone XL pipeline. The letter is part of a last round of comments from federal agencies before the Obama administration makes a final decision about whether to approve the pipeline, and environmentalists had hoped that it would spell out the threat the project could pose to the climate.

They weren't disappointed. The EPA letter argues that the recent drop in oil prices means that Keystone XL could come with a major carbon footprint. This is an argument environmentalists like Bill McKibben have been pushing for years. And it's a big deal—President Barack Obama has said that the pipeline will be approved only if it won't increase overall greenhouse gas emissions.

Here's the logic: A pipeline is the cheapest way to move oil; trucks and trains are much more expensive. Canadian tar sands oil is especially expensive to produce. When the price of oil is high, it makes economic sense to export it with trucks and trains. This is the line of reasoning the State Dept. has used to argue that approving the pipeline won't contribute to climate change: The oil is going to get burned with or without Keystone XL, because producers will just send it out some other way. Republicans in Congress have cited that same State Dept. analysis as evidence that Keystone XL isn't the climate-killing monster environmentalists make it out to be.

But when the price of oil is so low, that calculus gets turned upside down. According to State's own analysis, the economic rationale for using trucks and trains starts to erode once the price of oil dips much below $75 per barrel. Right now, oil is hovering around $50 a barrel. So if prices stay low and the if the pipeline isn't built, that oil might actually stay buried—where many climate scientists have said it needs to stay if we're to avoid disastrous levels of global warming.

You can read the full EPA letter below. Here's the key line:

"At sustained oil prices within this range, construction of the pipeline is projected to change the economics of oil sands development and result in increased oil sands production, and the accompanying greenhouse gas emissions, over what would otherwise occur."

Some energy analysts disagree, arguing that oil prices would have to drop much further than current levels to have an impact on tar sands production. And even though there's reason to think oil could be cheap for a while, energy companies don't tend to make big expensive decisions about where and how to drill based on short-term market trends. So there's still room for debate on the EPA's take here.

The EPA letter is likely to become a centerpiece of the pipeline debate as Congress continues to wrangle over the issue. (A bill to approve the pipeline passed the Senate last week, and next week the House is expected to take it up once again. President Obama has promised to veto the bill.) But the more important thing to watch is whether it changes any minds in the Obama administration, which is nearing a final decision on whether the pipeline will be built.

Congress Already Has Its Eyes on 2016

| Tue Feb. 3, 2015 1:47 PM EST

Steve Benen comments on the GOP's 56th vote to repeal Obamacare:

It’s quite a congressional majority, isn’t it? Nearly a month into the new Congress, Republicans have prioritized an oil-pipeline bill they know can’t pass, an immigration package they know can’t pass, changes to Wall Street safeguards they know can’t pass, anti-abortion legislation they know can’t pass, and anti-healthcare measures they know can’t pass.

Dear every pundit who said the GOP was ready prove it can be a governing party: go sit in the corner for a while.

In fairness, President Obama released a budget this week that he also knows can't pass. The truth is that both parties are jockeying for position right now, setting themselves up for the 2016 election. Republicans want to make sure their base is still with them, while Democrats are making a big play for the middle class. The symbolism of these votes is what's important right now, not whether they actually mean anything.

We should expect a lot more of this. There's going to be some compromising here and there in order to get a budget passed, but it's not clear to me that very much more than that will get accomplished. At this point, neither side really sees much upside in working on half measures when they might be able to get a full loaf after the next election.

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2015 Would Be a Terrible Time for the Fed to Raise Interest Rates

| Tue Feb. 3, 2015 1:37 PM EST

The Fed has kept interest rates near zero for more than six years. With the economy finally showing signs of recovery, is it now time to think about raising rates a bit?

Normally, the answer might be yes: unemployment has trended down to below 6 percent, and orthodox theory suggests that at this level we'll start to see inflationary pressure that the Fed needs to respond to. However, as Paul Krugman points out, orthodox theory isn't telling the right story right now. Core inflation has been going down, not up, for the past two years, and it clocked in at about 1.4 percent in the most recent quarter. This is well below the Fed's target of 2 percent. So what's going on?

Recent data are perfectly consistent with the view that full employment requires an unemployment rate below 5 percent; the most recent data would suggest an even lower rate. This might or might not be right; I don’t know. But the Fed doesn’t know either.

And in the face of that uncertainty, the crucial question is what happens if you’re wrong. And the risks still seem hugely asymmetric. Raise rates “too late”, and inflation briefly overshoots the target. How bad is that?....Raise rates too soon, on the other hand, and you risk falling into a deflationary trap that could take years, even decades, to exit.

I really, really hope this is getting through.

The key issue here is probably an overreliance on the headline unemployment rate. It's now registering 5.6 percent, and under normal circumstances that would be about as low as you could expect it to go. But these aren't normal circumstances, and there's every reason to think that the headline rate isn't telling the whole story. If you look at broader measures, like the one on the right, you can see that we're still well above the level of 2006-07. There are still a whole lot of people who have simply given up looking for work and aren't being counted by the "official" numbers.

The picture is similar if you look at the employment-population ratio, which measures the total percentage of the population that's currently employed. It plummeted by nearly five percentage points during the great crash, and it's recovered less than a point of that loss over the past couple of years. There are several reasons for this, and some of this loss is permanent—the result of baby boomers retiring, for example. Still, this number probably needs to increase another couple of points before we can say we've truly reached full employment.

Finally, you can see the same story if you look at wages. If the economy were at full employment, we'd see not just inflation, but an increase in wages. So far we haven't. This is an almost certain sign that there are still plenty of people out of work who don't want to be.

Janet Yellen and the rest of the Fed are well aware of all this. It's hardly a secret. And as Krugman says, the risks here are all on one side. If it turns out that we really are at full employment and the Fed does nothing, all that happens is that we'll overshoot our inflation target for a short while. There's no harm in that, especially since we've been undershooting it for the past couple of years. But if we tighten too quickly? We risk an economic slowdown at a time when the global economy is still fragile.

This is no time to be taking chances. China is slowing down, Europe is back in recession and facing a possible Greek crisis, and emerging economies are looking distinctly dicey right now. The American economy might be the only engine keeping it all afloat. It's a lousy time to risk an economic downturn based on nothing more than a phantom fear of inflation.

Standard & Poor's Finally Pays Up For Bogus Mortgage Ratings

| Tue Feb. 3, 2015 12:44 PM EST

Standard & Poor's is finally paying up for its role in handing out bogus investment-grade ratings to risky mortgage securities during the housing bubble. Dean Starkman explains what happened:

In May 2004, as the U.S. housing market was heating up, Standard & Poor's Financial Services lost to a rival a huge deal to rate mortgage-backed securities to be issued by a major Japanese bank.

The reason? S&P's credit standards were too high, an employee complained to his boss. The company then went on to "downplay and disregard" its standards to win business, a federal lawsuit alleged, contributing to one of the most devastating financial collapses in history.

....One observer said the settlement would offer at least some accountability for a key player in the financial crisis. "Without the investment-grade ratings bestowed on pools of substandard mortgages, there would have been no mortgage crisis," said Jan Lawrence Handzlik of Los Angeles, a former federal prosecutor who specializes in white-collar criminal defense.

That's taking things too far. S&P and other ratings agencies certainly played a role in supercharging the housing bubble and thus contributing to its subsequent crash. Without the assurance of high ratings for CDOs and other securities that were full of fraudulent mortgages, there would have been less demand for those fraudulent mortgages. And lower demand would have meant fewer crappy mortgages, fewer defaults, and fewer problems with bank balance sheets full of toxic waste—which all came home to roost in 2008.

But there still would have been a housing bubble and a mortgage crisis, and the crash of 2008 still would have happened. The underlying factors that caused it were just too strong. Nonetheless, it's certainly true that if the bubble had been a little smaller, the crash would have been smaller too. We've all paid a big price for S&P's duplicity.

In any case, this morning the settlement with S&P was made official. They'll be paying a total of more than $1 billion:

The $1.37 billion penalty, like the statement of facts, is the product of compromise.

The penalty, half of which is earmarked for the federal government and the rest for the states, is large enough to wipe out S.&P.’s operating profit for a year, and is three times what S.&P. originally offered to settle before the Justice Department filed its lawsuit. But it also falls far short of the $3.2 billion that the government demanded after S.&P. initially refused to settle.

Is $1.37 billion enough? Probably not. But no one has ever paid more than a fraction of the damage they helped cause during the runup to the financial crash. S&P is just the latest to skate by with a ruler to the wrist but not much more.

Harper Lee Publishing "To Kill a Mockingbird" Sequel This Summer

| Tue Feb. 3, 2015 11:44 AM EST

Fifty-five years after publishing the much-beloved classic To Kill a Mockingbird, Harper Lee will release her second book this July. The previously unpublished novel is a follow-up to the 1960 Pulitzer Prize-winning book. From the Associated Press:

"In the mid-1950s, I completed a novel called 'Go Set a Watchman,'" the 88-year-old Lee said in a statement issued by Harper. "It features the character known as Scout as an adult woman, and I thought it a pretty decent effort. My editor, who was taken by the flashbacks to Scout's childhood, persuaded me to write a novel (what became 'To Kill a Mockingbird') from the point of view of the young Scout."

"I was a first-time writer, so I did as I was told. I hadn't realized it (the original book) had survived, so was surprised and delighted when my dear friend and lawyer Tonja Carter discovered it. After much thought and hesitation, I shared it with a handful of people I trust and was pleased to hear that they considered it worthy of publication. I am humbled and amazed that this will now be published after all these years."

The 304-page manuscript was discovered at a "secure location," according to Harper. Go Set a Watchman will be the notoriously recluse author's first new work in decades.

Scott Walker Is Still Clearly a Work in Progress

| Mon Feb. 2, 2015 2:40 PM EST

I see that Martha Raddatz's interview with presidential wannabe Scott Walker is making the rounds today. And deservedly so! After listening to Walker blather a bit about America's need for "big, bold ideas," Raddatz asks him, "What is your big, bold, fresh idea in Syria?" Walker hems and haws a bit about being tough and aggressive, and then we get this:

RADDATZ: You don't think 2,000 air strikes is taking it to ISIS in Syria and Iraq?

WALKER: I think we need to have an aggressive strategy anywhere around the world. I think it's a mistake to —

(CROSSTALK)

RADDATZ: But what does that mean? I don't know what aggressive strategy means. If we're bombing and we've done 2,000 air strikes, what does an aggressive strategy mean in foreign policy?

WALKER: I think anywhere and everywhere, we have to be — go beyond just aggressive air strikes. We have to look at other surgical methods. And ultimately, we have to be prepared to put boots on the ground if that's what it takes, because I think, you know —

RADDATZ: Boots on the ground in Syria? U.S. boots on the ground in Syria?

WALKER: I don't think that is an immediate plan, but I think anywhere in the world —

RADDATZ: But you would not rule that out.

WALKER: I wouldn't rule anything out. I think when you have the lives of Americans at stake and our freedom loving allies anywhere in the world, we have to be prepared to do things that don't allow those measures, those attacks, those abuses to come to our shores.

So there you have it. Walker is so unprepared to talk about foreign policy that he gets quickly trapped into suggesting that we put more American troops into Iraq and Syria to fight ISIS. Did he really mean to do that? Or was he just feeling the pressure of a live interview and felt like he had to say something? Hard to say. A more experienced candidate would have tap danced a lot more effectively, probably with some prattle about arming our allies or something—though Raddatz undoubtedly would have pounced on that too.

Michael Tomasky remains pretty unimpressed with Walker, especially after finally listening to his big speech in Iowa from last weekend:

If this was the standout speech, I sure made the right decision in not subjecting myself to the rest of them. It was little more than a series of red-meat appetizers and entrees: Wisconsin defunded Planned Parenthood, said no to Obamacare, passed some kind of law against “frivolous” lawsuits, and moved to crack down on voter “fraud””—all of that besides, of course, his big move, busting the public-employee unions. There wasn’t a single concrete idea about addressing any of the major problems the country faces.

Well, that will come—though it's unlikely that Walker's ideas will be any different from the usual Republican boilerplate of the past decade or so. Lower taxes and less corporate regulation will supercharge the economy! Hooray!

Walker still has a ways to go before he's ready for prime time. But I'll bet he gets there. He'll learn from his mistakes, and he's just about the only Republican candidate who has potential appeal to both tea partiers and mainstream voters. Six months from now minor early stumbles like this will be ancient history, and he'll have his campaign schtick much more finely honed. He remains a serious contender.