Carbon Dioxide Followup

My post last night about the EPA regulating carbon dioxide emissions was a quickie, just intended to pass along the news and note some of the political implications.  But David Roberts says I may be downplaying how important these new EPA regs could be:

This element of Obama's impending energy policy hasn't gotten nearly the attention it deserves. If he does it right, it could be the secret weapon that kills new coal plants for good — with far greater certainty than a middling cap-and-trade program. Obama has always said, to those who were listening closely, that he plans to prevent the construction of a new fleet of dirty coal plants, if not by carbon pricing then by other means. EPA regs are the other means. Beyond that, and perhaps even more importantly, EPA regs could hasten the demise of existing coal plants.

Read the whole thing for a more detailed understanding of what EPA may end up doing.  And for the wonks among you, David also has a more detailed explanation than I did of the difficulties with using the machinery of the Clean Air Act to regulate greenhouse gases.

New coal plants are already expensive and hard to build.  If EPA institutes even modest new CO2 regs they'll become so prohibitively expensive that we'll never build another one on U.S. soil.  Politically, this will cause (a) howls of protest from the midwest, which relies heavily on coal-fired electricity, and (b) enormous pressure to set up an alternative regulatory regime.  But any plausible alternative, even if it's weaker than the EPA regs, is likely to raise the price of building a coal-fired power plant beyond what anyone is willing to pay for it.  There's a pretty good chance that this is, finally, the beginning of the end for coal.

Edsall Slams Greenspan

Going after Alan Greenspan, the former Federal Reserve chairman, these days is like shooting dead fish in a drained-out bathtub. But Thomas Edsall spanks the onetime Oracle something awful in HuffPo. The piece opens:

On June 10, 1999, at the height of his power, Alan Greenspan told members of Harvard's graduating class how, in the future, they should assess their lives: "The true measure of a career is to be able to be content, even proud, that you succeeded through your own endeavors without leaving a trail of casualties in your wake."

As Edsall goes on to detail, there's now plenty of bloody mess in Greenspan's wake. He notes that Greenspan had a hand in most of the major regulatory actions (or, put more accurately, non-actions) that led to the current collapse of capitalism as we (and he) know it. These days, the former acolyte of Ayn Rand is advocating the "temporary" nationalization" of "lemon banks" to "facilitate a swift and orderly restructuring." From free-market laissez-faire to corporate socialism, what a long, strange trip it's been. Too bad he took the rest of us on it.

Pack Journalism

Ezra sez:

I love Mike Allen's Playbook. Unabashedly. I wouldn't even deny that it's "the 4chan of political reporting." But it's the best guide to the morning news, and Allen mixes "drive the day" trivia — and there is a lot of that — with a good eye for the substance in stories.

Eh.  Count me out.  We all complain about pack journalism and the glorification of process over policy, but then we all start out our days with.....Playbook.  And The Note.  And The Page.  And Memeorandum.  And then we all spend the rest of the day writing about the exact same bunch of process trivia because Mike Allen woke up before us and that's what he told us to write about.

There's nothing to be done about this.  It's human nature.  But I don't have to like it, and I don't.

California Budget Watch

California finally has a budget, and all it took was a cigar-filled arm twisting session with Arnold Schwarzenegger to procure the final required Republican vote.  The arm twisting, however, wasn't done by Arnie:

Under the arrangement, Sen. Abel Maldonado of Santa Maria provided the final Republican vote needed to pass a spending plan with billions of dollars in tax hikes. In exchange, Democrats agreed to rewrite election rules that Maldonado said had allowed the Capitol to become paralyzed by partisanship, leading the state to the brink of financial ruin.

....Democrats initially said Maldonado's call for "open" primaries, in which voters could cross party lines and candidates of all parties would compete in the same primary, followed by a runoff of the top two vote-getters, was too substantial to be pushed through in a budget deal. But Maldonado said the current budget stalemate proved that California could not return to fiscal sanity without fundamental changes in the way it elects its representatives.

Stay tuned.  We've already been through this twice, first in 1996, with an open primary initiative that passed but was later ruled unconstitutional, and then again in 2004 with a modified initiative that failed.  Maldonado will get his ballot measure, but there's no telling if he can get it past the voters.

Yesterday I noted that Louisiana Governor and hardline Republican Bobby Jindal is contemplating turning down stimulus funds as a way to burnish his conservative credentials in advance of a 2012 or 2016 presidential run. Now it looks like the rest of the GOP's potential presidential candidates are doing the same. Here's MSNBC's First Read:

A half-dozen Republican governors are considering turning down some money from the federal stimulus package, a move opponents say puts conservative ideology ahead of the needs of constituents struggling with foreclosures and unemployment. Who are these GOP governors? They're a "who's who" of possible presidential candidates in 2012 -- Sanford (SC), Jindal (LA), Palin (AK), Perry (TX), and Barbour (MS).

This is a dangerous game. For the sake of making a ideological stand (and scoring some political PR points), these governors are endangering the livelihoods of their constiuents. There is no serious argument for turning down stimulus funds, after all. Sure, these governors may have (wrongly) thought that tax cuts would serve as a better stimulant of their local economy, but now that the federal money is available, it's not as though it can make things worse. And if we have a national tax increase 15 years from now to pay for all this spending, certain states won't be exempted because of the actions of their governors today.

Last year the Supreme Court ruled that the EPA is required to decide if carbon dioxide is a pollutant as defined by the Clean Air Act.  The Bush White House basically just ignored the ruling, but now there's a new sheriff in town:

The Environmental Protection Agency is expected to act for the first time to regulate carbon dioxide and other greenhouse gases that scientists blame for the warming of the planet, according to top Obama administration officials.

....Lisa P. Jackson, the new E.P.A. administrator, said in an interview that she had asked her staff to review the latest scientific evidence and prepare the documentation for a so-called endangerment finding....If the environmental agency determines that carbon dioxide is a dangerous pollutant to be regulated under the Clean Air Act, it would set off one of the most extensive regulatory rule makings in history. Ms. Jackson knows that she would be stepping into a minefield of Congressional and industry opposition and said that she was trying to devise a program that allayed these worries.

This is sort of a good-news-bad-news situation.  The bad news is that the Clean Air Act probably isn't a very good vehicle for regulating greenhouse gases.  Its state-based machinery just wasn't built for something like this.  The good news is that this very fact might act as a spur for Congress to enact something better, such as a national carbon tax, cap-and-trade plan, or even simply some more appropriately designed regulation.  Of these, cap-and-trade seems to be the most likely candidate, since it has support both in Congress and the White House already, and it might pick up some Republican votes it wouldn't otherwise get if the alternative is to let the hated EPA start writing its own rules.

And if it doesn't act as a spur?  Then it's still good news, because it means at least we'll get something, even if it's not the most efficient regulatory regime we can imagine.  All things considered, I'm a fan of cap-and-trade myself, but I figure any port in a storm.  If I can't get what I want, I'll settle for the EPA at least getting the ball rolling.  Eventually the business community will scream hard enough to make Congress do something intelligent.

Perusing her Esquire newsletter earlier this month, former MoJo associate editor Kathryn Olney was intrigued not just by "The Secret World of Lingerie Explained", but also by the reprise of "75 Books Every Man Should Read," first published last September but still going strong on the Esquire site. She sends this riff:

Number 20 is "The Postman Always Rings Twice," because it "teaches men about women." So that's what makes Cain's book great, the message that all women are femmes fatales. Silly me, I thought it was just groundbreaking noir fiction.

Guys, if you’re so curious about women, how come your list includes just one female author, Flannery O'Connor? If you read more about what some great women of letters have on their mind, you wouldn't just be drooling over "women we love" from afar. Hey, even slippery old Chris Hitchens, who doesn’t think women are funny, recommends that everyone read Jane Austen… because “she’s so hilarious about other women” in Northanger Abbey.

There is a bit of a pattern here. Your October list of the 75 most influential people has a grand total of seven women. And that 70 greatest sentences compilation last year? That has four wee sentences penned by females.  People – including us girls-- love these guilty-pleasure lists. But you have to get back to your storied Dubious Distinction roots. Roll up those white shirtsleeves! Go back to your cages and flip through some old issues of Esquire. You gave Gloria Steinem her start; Dorothy Parker and Nora Ephron both used to write columns for you. Joan Didion, Martha Gellhorn, Susan Orlean and Simone De Beauvoir all grace your back issues. Isak Dinesen, Rebecca West, M.F.K. Fisher, Susan Brownmiller, Susan Sontag, Joyce Carol Oates, and Grace Paley made appearances too.

Come to think of it, I guess old habits die hard. Esquire historian Carol Polsgrove reminds me that "when Harold Hayes put together his fat anthology of 60's Esquire pieces, Smiling Through the Apocalypse, only three women made it into the list of 59 entries."

Even if you aren't interested in the classics (Toni Morrison? Edith Wharton? Eudora Welty? Virginia Woolf? Zora Neale Hurston?) surely "today's man" can stand to crack open a book by a few of Esquire's very own more, um, muscular writers like Orlean and Didion. Or maybe they'll at least read Ayn Rand, even if we won't.

MJ readers, help these poor, overworked editors out: post your own favorite writers below. Write pithy little comments akin to their own 75 quips (extra points for tasteful sexual references). I'll start: Susan Orlean: …Because, with a poet's grace and an angel's face, she paved the way for a whole generation of nonfiction literary journalists.”

In today’s New York Post there’s a Sean Delonas cartoon that shows two policemen standing over a dead chimpanzee. One is holding a handgun while the other says, "They'll have to find someone else to write the next stimulus bill."

Al Sharpton is very offended. But he shouldn't be because the cartoon isn't offensive, unless you're an ape.

Sarah Palin Update

Sarah Palin is the crack cocaine of political celebrities.  I want to ignore her, but I just can't.  And you can't either.  Admit it. Michael Leahy of the Washington Post serves up the latest embarrassment:

A couple of weeks before the Alaska legislature began this year's session, a bipartisan group of state senators on a retreat a few hours from here invited Gov. Sarah Palin to join them. Accompanied by a retinue of advisers, she took a seat at one end of a conference table and listened passively as Gary Stevens, the president of the Alaska Senate, a former college history professor and a low-key Republican with a reputation for congeniality, expressed delight at her presence.

Would the governor, a smiling Stevens asked, like to share some of her plans and proposals for the coming legislative session?

Palin looked around the room and paused, according to several senators present. "I feel like you guys are always trying to put me on the spot," she said finally, as the room became silent.

Never forget: this is the person who John McCain thought was qualified to be a heartbeat away from the presidency.

Speaking in Phoenix, Arizona on Wednesday, President Obama said his $75 billion home mortgage rescue plan would "save ourselves the costs of foreclosure tomorrow," but "not help speculators who took risky bets on a rising market." As David Corn highlighted earlier, Obama tempered his appeals to populism and community feeling with a call for responsibility. "Solving this crisis will require more than resources – it will require all of us to take responsibility," Obama said. Great. But how does the plan actually work? Here's a primer.

The first part of the plan is a fairly simple regulatory fix that allows homeowners with Fannie Mae and Freddie Mac mortgages who owe between 80 and 105 percent of what their homes are worth to refinance those mortgages. Previously, only borrowers who had at least 20 percent home equity could refinance. By refinancing at a lower rate, borrowers could save thousands of dollars annually on their mortgage payments.

The second part of the plan focuses on encouraging banks to work with homeowners to modify existing mortgages, which is different from refinancing. The pre-existing "Hope for Homeowners" plan, passed in the closing months of the Bush administration, tried to do this, too, but it didn't work very well. Banks just didn't seem very eager to modify terms to help people stay in their houses. But the new plan, says the Center for American Progress's Andrew Jakabovics, is "light years ahead of anything we saw coming out of the Bush administration."

One big difference with Obama's plan, Jakabovics says, is that it will functionally be "far more compulsory" than the Hope for Homeowners program. Recipients of TARP money will have to participate, and banks will likely be reluctant to turn down government bailout money just so they can avoid modifying terms on home loans. And banks that don't participate might find their loans modified anyway—in the only part of the plan that requires Congressional approval, Obama asks that bankruptcy judges be given the ability to modify loan terms in court. (Judges already have the power to modify terms on people's second and third homes, but not on primary residences).

Just because the plan will be forced on TARP recipients doesn't mean it's a horrible deal for the banks. After the lender reduces interest rates enough so that the borrower’s monthly payment is less than 38 percent of his or her income, the government will split the cost of further payment reductions with the bank, down to a (supposedly sustainable) low of 31 percent. On top of that, lenders will get a cool $1000 for every loan they modify, and further payments if the borrower stays current on the modified loan. And after five years, when the housing market may have recovered, the lenders will be able to start stepping the interest rate back up to the original rate.

What the Obama administration is hoping is that the new payments and government cost-sharing, combined with the threat of bankruptcy court modification and the mandatory participation provisions, will make banks more likely to modify mortgages than they otherwise would be. There's some reason to believe that will be the case, says Jakabovics. "Banks recognize foreclosure is going to be far more costly," he says. The cost of holding properties right now is very high because declining home values, a slow market, and the credit crunch mean foreclosed homes stay on balance sheets for months on end, declining in value and incurring property tax and maintenance costs that banks don't want to pay. Keeping Americans in their homes could be a good deal for banks, too.

The third part of the Obama plan is mostly aimed at keeping interest rates low. The Obama administration will try to do this by having the Treasury Department buy up the dreaded mortgage-backed-securities from Fannie Mae and Freddie Mac, hoping to somewhat reinflate the market for those financial products. Unfortunately, Treasury is probably overpaying for the toxic assets, which have few, if any, other buyers. Economist Dean Baker emails: "The intention is to pay too much. We will take a hit—it's guaranteed... We get whacked on buying Fannie and Freddie MBS at very low rates today." In addition to trying to prop up the MBS market, the Treasury will inject another $200 billion into the two GSE's.