Plan for a Green Energy Economy

The world today faces economic challenges of a scale that used to be beyond imagination.  Modern industrial economies have been using oil as their major energy source since the early 1900s.  Political leaders and economists commonly believed that there was so much oil to be found, drilled, and used that worldwide supply would only run out in the distant future, if ever.  Unfortunately, researchers have been warning for the past few decades that the unexpected growth of industry has used up most of the world’s oil supply, to the point that oil is becoming scarce while the size of newly-discovered oil fields have dramatically shrunk.  Today, the world faces the harsh reality that we are running out of oil and will have to change the world economy from being driven by oil to using a new energy source.  Today’s worries over the pollution, health hazards, and climate change associated with fossil fuels makes the need for change even more desperate.

Scientists have been studying many different proposals for new energy sources over the past few decades, and these studies have picked up momentum in just the past few years.  Biofuels (liquid fuel made from vegetation), Ethanol (from corn), Natural Gas Vehicles, Hydrogen Fuel Cell Vehicles (HFCVs), and Battery-Energy Vehicles (BEVs) have been proposed to replace our reliance on gasoline (an oil-based fuel) as the major transportation fuel.  Recent research has proven that Hydrogen (HFCVs) and Battery (BEVs) are most efficient and have the least amount of negative environmental results. (Mark Z. Jacobson, “Review of solutions to global warming, air pollution, and energy security,” Energy and Environmental Science, 2009, pages 148-149.  The entire article can be read at http://pubs.rsc.org/en/Content/ArticleLanding/2009/EE/b809990c)  However, the use of HFCVs and BEVs required the increased use of electricity, which the United States mostly generates by burning coal, natural gas, and nuclear material.  All three of these American electricity sources are dirty, contributing huge amounts of carbon dioxide (CO²) that lead to pollution and climate change.  When one considers that coal and natural gas will also run out eventually, just like oil, we realize that we must also largely replace these U.S. electricity sources with clean, renewable power.

The following pages present a plan to do just that: build a renewable energy infrastructure that would supply all American energy needs projected for the year 2030.  The Plan assumes that most vehicles will be BEVs, so much of the electricity produced will go to charging electric cars.  We can generate enough electricity by relying primarily on wind, water, and solar power, all of which are natural, clean, renewable, and will never run out.  The cost for building such infrastructure will be high (about $16.5 trillion), but well worth the investment.  When compared to U.S. government spending during World War II, the last time the American nation faced a national crisis and successfully overcame it, one realizes that the American government easily has the ability to fund Green Energy construction without breaking its budget.  In fact, after considering the psychological, military, and economic benefits of not having to rely on oil, one realizes that the United States cannot afford to avoid building the Green Energy system for much longer.

 

Meeting U.S. Energy Demand

 

Research shows that world energy demand will be 16.9 trillion watts (also known as “terawatts” or TW) by the year 2030.  Research further reveals that U.S. energy demand will be 2.8 TW, or 16.5% of total world demand.  (Mark Z. Jacobson and Mark A. Delucchi, “A Path to Sustainable Energy by 2030: Wind, water and solar technologies, can provide 100 percent of the world’s energy, eliminating all fossil fuels,” Scientific American, November 2009, page 60)  Jacobson and Delucchi also argue that the total cost of building a renewable energy supply system to meet all world demand will be $100 trillion.  (Jacobson and Delucchi, “A Path to Sustainable Energy by 2030,” page 64)  Therefore, we can reasonably estimate the cost of building such a system in the United States alone from these three vital statistics, as the table below shows.

Energy Demand and Infrastructure Costs

Measure                                                   World                     U.S.

Energy Demand in 2030                 16.9 TW             2.8 TW

Percentage of World Demand        100%                   16.5%

Infrastructure Costs (trillion)        $100                    $16.5

According to recent projections, building a worldwide renewable energy system would cost $100 trillion.  If the United States demands 16.5% of world energy, then it will probably cost about $16.5 trillion to construct in the U.S. alone.  That is a huge cost, but within reach once we start planning on how to get the money.

 

Raising the Money for Green Energy Investment

 

$16.5 trillion is an intimidating amount of money, about the size of the entire U.S. economy today.  The Federal government is the only body capable of raising so much cash, but the government’s total Debt is already 100% of its economy – which worries many economists.  Therefore, government should not attempt to borrow the money.  Government must find other means of paying for building the massive Green Energy infrastructure, even when we consider that we could break the $16.5 trillion up into ten years of spending at $1.65 trillion per year.  Several options to raise the money exist.

The best funding option is to raise taxes on a group of people that can afford to pay a slight increase and who have enough overall wealth to fund the Green Energy project.  We could raise a 2% tax on Wall Street transaction that would give the government an estimated $1.4 trillion per year.  That leaves $250 billion.  That last amount can be found by creating a $20 tax on every metric ton of carbon pollution created by the fossil fuel industry – which would raise about $118 billion per year while also giving an incentive for energy companies to move away from burning fossil fuels to generate electricity.  That would leave about $132 billion in money to be found per year, which could be taken from the estimated $1.179 trillion per year in revenue raised from a Fair Tax code proposed in the Plan for a Rational Budget (pages 39-42).  In total, we can fully fund the Green Energy project by creating the following system:

Sources of Green Energy Funding

Source                                           Tax Rate                 Revenue (billions $)

Wall Street Tax                              2%                                    1,400

Carbon Tax                            $20/metric ton                        118

Fair Tax Contribution                                                               132

Total                                                                                              1,650

The Wall Street Transaction Tax is capable of raising the $1.65 trillion per year needed to building the Green Energy infrastructure in ten years.  A 2% tax will not destroy the Wall Street class of wealth that currently dominates much of American politics while paying little in current taxes.  Most of the rest of the country pays about 7% in sales taxes, so Wall Street should not complain about paying a 2% tax for 10 years.  In fact, a 2% tax on Wall Street Transactions would mean that an investor looking to buy $10,000 worth of stock would only have to pay $200 in tax!  Such a small fee is obviously affordable to for the rich and will pay most of the cost of building a renewable energy system that will benefit all Americans.  The remaining $250 billion per year can be raised by a new carbon emissions tax and by taking the last leftover amount from the increase in federal revenue if we implement a new, fair tax system suggested in the Plan for a Rational Budget.

The money is there.  We just need to build the political will to tax it and use it for a Green Energy project that will improve the lives of all Americans.  We know that such national will exists because we have seen examples of it during past national emergencies, most clearly and powerfully during World War Two.

 

The Nation at War

 

The United States won World War II so decisively because its population largely believed that the war was forced upon them and that it was necessary to rid the world of dictatorship.  Building an expensive and ambitious renewable energy system will require a similar amount of motivation and dedication from most Americans.  American soldiers fought World War II on real battlefields while the American “homefront” fought on a moral battlefield against enemies they viewed as evil.  Americans were particularly motivated by a rage against Japan for its sneak attack at Pearl Harbor, Hawaii in December 1941 (which many still use to justify the destruction of 67 major Japanese cities during the war and the atomic bombings of two more Japanese cities in 1945).  Americans understand that the United States today is faced with similar sneak attacks in the form of international terrorism that struck on September 11, 2001.  Middle-Eastern terrorists are obviously motivated by a desire to force the U.S. to end its meddling in Middle-Eastern countries.  Such meddling is only done to guarantee American access to Middle-Eastern oil reserves, so the best way to end that meddling is to build a domestic U.S. energy production network.  In short, we can defeat Middle-Eastern terrorism by investing in the Green Energy Plan, building an internal energy system, and withdrawing from the Middle-East – which would be far easier, productive, and humane than simply bombing terrorist groups into surrender.

Americans believed in the 1940s war effort because they wanted to save the world from Fascism and dictatorship.  Similarly, today’s Americans should realize that the oil economy creates possibly larger threats to human freedom because reliance on oil has clearly created nearly all of the United States’ current wars.  Oil is also getting more scarce, which means that energy prices (particularly gasoline) will rise dramatically.  Using oil has harmed humanity through pollution’s effects on human health and climate change.  Like World War Two, Americans should view the creation of a Green Energy system as a battle for the future of human freedom from war, scarcity, poverty, and health and environmental damage.

These ideas have been pointed out for many years, even by political leaders.  Even a U.S. president made these comparisons as far back as 1977.  President Jimmy Carter called energy conservation and rebuilding proposals “the moral equivalent of war” (Jimmy Carter, Address to the Nation on Energy, April 18, 1977, which can be read and watched at http://millercenter.org/scripps/archive/speeches/detail/3398).  We can and must win that war in the next 10 years.  We know how much energy we will need, we know the technology already exists to meet those needs, we know how to pay for building the infrastructure, and we know that Americans have risen above similar national challenges in the past.  We only lack the ability to force our political leaders to put the plan into effect.  We may have to change the U.S. electoral and budget systems to gain that power over our politicians.  My suggestions for such changes can be read for free at www.machineryofpolitics.com

The Incredible Shrinking President

Barack Obama represented many aspects of progressive politics in the 2008 election, and he promised several solid economic policies: a Health Care “Public Option,” an end to President Bush’s tax cuts for the wealthy, a renegotiation of Free Trade Agreements, an end to U.S. support for foreign dictators that have propped up the U.S. economy, and movement toward ending the U.S. “addiction” to foreign oil imports.  These were his major platform promises in 2008, but he has failed to implement any of them.  In fact, when conservative politicians attacked these logical policies, President Obama repeatedly gave up his platform and caved in to their demands.  Progressives should be outraged at President Obama.  They need to make their demands even clearer during his re-election campaign if they expect to influence the president beyond 2012.  Americans in general also need to overhaul the electoral system that has clearly corrupted his judgment as president.

Health-care was one of the overwhelming topics of debate in the 2008 election.  Barack Obama was a major proponent of changing the existing system to make it more equal for the mass majority of Americans.

If you don’t have health insurance, then what we’re going to do is to provide you the option of buying into the same kind of federal pool that both Sen. McCain and I enjoy as federal employees, which will give you high-quality care, choice of doctors, at lower costs, because so many people are part of this insured group. . . .  This will cost some money on the front end, but over the long term this is the only way that not only are we going to make families healthy, but it’s also how we’re going to save the federal budget, because we can’t afford these escalating costs.  (Third Presidential Debate, held October 15, 2008 in Hempstead, New York.)

Obama here proposed what came to be known as the “public option” in health care: allowing un-insured Americans to purchase coverage in the same pool as federal employees.  Economists estimated that this would, indeed, lower the costs of health insurance due to the pool’s large size, which would allow it to collectively negotiate the best prices.  This is largely already in place in Japan, whose citizens are generally amongst the healthiest in the world.  (For more on Japan and other national health insurance systems, see T.R. Reid, The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care, New York: Penguin, 2010).  Candidate Obama’s proposal was logical and well-proven, but President Obama completely abandoned it in the health care debates of 2009.  He continued asking for a “public option” even in September 2009, when gave a joint address to Congress.  (Barack Obama, Address to a Joint Session of Congress, September 9, 2009)  However, he completely abandoned this demand as Congress approached an actual vote in winter 2009.  The “public option” was not included in the eventual law, and President Obama signed off on this failure in March 2010.   (The final laws that reorganized the health insurance system are H.R. 3590 “The Patient Protection and Affordable Health Care Act of 2010” and H.R. 4872 “The Health Care Education Reconciliation Act of 2010).  The law today requires each citizen to purchase health insurance but does not provide the “public option” Obama campaigned for in 2008, which will result in many citizens being forced to buy overpriced, unreliable insurance through private corporations that are the heart of the American health care catastrophe.

Taxation was also a major debate in 2008.  Obama took a hard stand against President George W. Bush’s tax cuts, which he accused of mostly benefiting the wealthiest citizens.  Obama repeatedly promised to end such tax cuts for the wealthy and to keep taxes low for the middle class and poor.  “I will give a tax break to 95% of Americans who work every day and get taxes taken out of their paychecks every week. And I’ll help pay for this by asking the folks who are making more than $250,000 a year to go back to the tax rate they were paying in the 1990s.”  (Remarks by Senator Barack Obama on November 2, 2008 at Columbus, Ohio)  Obama proposed that tax rates for the rich should return to pre-Bush levels, saying that the government needs revenue to invest in its infrastructure.  “[N]obody likes taxes. I would prefer that none of us had to pay taxes, including myself. But ultimately, we’ve got to pay for the core investments that make this economy strong and somebody’s got to do it.”  (Third Presidential Debate, held October 15, 2008 in Hempstead, New York)  The Bush tax cuts were set to expire at the end of 2010, which would have sent all taxes back to the 1990s levels.  Conservatives demanded that all tax cuts continue, including the tax cuts for people making over $250,000 per year that Obama had specifically campaigned against in 2008.  President Obama surrendered again to conservative demands in December 2010, permitting tax cuts for the rich to continue until the end of 2012.   (The 2010 tax cut extension was included in H.R. 4853, “The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010”)  Somebody’s got to pay for future investments, but Obama is unwilling to force the wealthy to do it.

Free Trade Agreements, which open international trade by eliminating taxes on imports, was mentioned in the Third Presidential Debate.  Obama focused on the shortcomings of Free Trade Agreements, even agreeing with long-held progressive and union stances that labor rights and environmental protections should be included in such treaties.

I believe in free trade. But I also believe that for far too long, certainly during the course of the Bush administration with the support of Sen. McCain, the attitude has been that any trade agreement is a good trade agreement. And NAFTA doesn’t have — did not have enforceable labor agreements and environmental agreements. . . .  [W]e have to stand for human rights and we have to make sure that violence isn’t being perpetrated against workers who are just trying to organize for their rights, which is why, for example, I supported the Peruvian Free Trade Agreement which was a well-structured agreement.”  (Third Presidential Debate, held October 15, 2008 in Hempstead, New York)

Candidate Obama approached a demand to renegotiate NAFTA and other Free Trade Agreements in his support of labor and environmental standards.  However, President Obama avoided such discussions.  Perhaps most disturbingly, his avoidance of new talks comes without counter-demands from conservatives.  Instead, President Obama appears to have made this decision on his own.  In other words, on the topic of free trade, President Obama cannot even be accused of surrendering to public pressure.

Another major problem is that many of these tax reducing deals are made with the agreement of foreign dictators.  The United States has used and abused foreign nations in order to create cheap products for its own economy since the end of World War Two.   (For more on this history, see John Perkins, Secret History of the American Empire: The Truth About Economic Hit Men, Jackals, and How to Change the World, New York: Plume, 2008, and Confessions of an Economic Hit Man, New York: Berrett-Koehler Publishers, 2004)  Some examples are the coups against Iran in the 1950s and support for dictatorships in Saudi Arabia, Egypt, and Iraq beginning in the 1970s – and these are merely the countries that the U.S. targeted for oil reserves!  The U.S. government’s stance for the last 60 years has been to support dictatorships if they are friendly to the United States.  Barack Obama took a clear stand against such policies in 2008, even promising to personally end such foreign relations.

[T]he problem, John, with the strategy that’s been pursued was that, for 10 years, we coddled [Pakaistani dictator Pervez] Musharraf, we alienated the Pakistani population, because we were anti-democratic. We had a 20th-century mindset that basically said, ‘Well, you know, he may be a dictator, but he’s our dictator.’ . . .  That’s going to change when I’m president of the United States.  (First Presidential Debate, held September 26, 2008 in Oxford, Mississippi)

Sadly, that has not changed since Obama became president.  The most stunning example is Egypt, where the Obama Administration has reportedly given $1.5 billion per year to a clear military dictatorship that tortures its own citizens in order to stay in control, but which also supports many U.S. foreign policies in the Middle East.  The Obama Administration refused to support the Egyptian democratic protests in early 2011, and Obama himself did not clearly call for the end of that disgusting regime until after its leader had already resigned.  President Obama has been a major disappointment for those who found hope in his promise to end U.S. support for destructive, but pro-Western, dictatorships, and voters should remind him of that in 2012.

Obama seems to understand that the United States has historically supported brutal dictators largely to guarantee American access to oil reserves.  He repeatedly stated in 2008 that his energy policy would focus on relieving and eventually ending U.S. dependence on Middle-Eastern oil.  He proposed two means of accomplishing that lofty goal within 10 years.  First and foremost, Obama promised to invest heavily in renewable energy technologies.  “I’ll invest 150 billion dollars over the next decade in affordable, renewable sources of energy — wind power and solar power and the next generation of biofuels; an investment that will lead to new industries and 5 million new jobs that pay well and can’t ever be outsourced.”  (Barack Obama, Nomination Address. Delivered August 28, 2008 in Denver, Colorado)  Not only would this long-term plan end reliance on foreign energy sources, but it would also help the U.S. economic recovery because it would create a massive new internal energy infrastructure that largely has to be built from scratch.

Sadly, the yearly federal budgets that President Obama has signed fall short of his campaign’s promise to invest $150 billion over ten years.  That figure averages out to $15 billion per year, but the first two budgets that President Obama singed fell far short of that promise.  The Budget for Fiscal Year 2010 provided only $2.3 billion renewable energy programs, and that only increased to $2.4 billion in the 2011 Budget!  (Budget of the U.S. Government: Fiscal Year 2011.  The entire Budget can be downloaded at http://www.gpo.gov/fdsys/pkg/BUDGET-2011-BUD/content-detail.html.  The $2.4 billion figure appears under the Energy Department’s descriptions of spending on page 70.)  That is a long way from the $15 billion per year that he to implement if elected in 2008.  $2.4 billion is only 16% of his promised $15 billion, and only 8.4% of the overall Energy Department’s Budget in 2011.  That is an unacceptably low amount, and a badly broken promise.  Progressives should give voice to their disappointment in 2012.

Obama’s secondary energy proposal was to increase oil production from reserves already existing in the United States, particularly along its coastlines.  In order to end foreign reliance on Middle-Eastern oil, he said “that means, yes, increasing domestic production and off-shore drilling, but we only have 3 percent of the world’s oil supplies and we use 25 percent of the world’s oil. So we can’t simply drill our way out of the problem.”  (First Presidential Debate, held September 26, 2008 in Oxford, Mississippi)  Obama clearly showed in 2008 that he supports offshore oil drilling, but only within a larger plan of developing renewable energy sources.  Obama promised that new domestic drilling would only be one small piece of a larger solution.  President Obama has held to his promise to increase offshore drilling, notably by opening new areas to offshore drilling beginning in late March 2009.  At the time, he noted that this would be a short-term solution to the nation’s energy needs, but that the long-term solution lies with renewable energy development.

…I want to emphasize is that this announcement is part of a broader strategy that will move us from an economy that runs on fossil fuels and foreign oil to one that relies more on homegrown fuels and clean energy. And the only way this transition will succeed is if it strengthens our economy in the short term and the long run. To fail to recognize this reality would be a mistake.  (Obama’s March 31, 2009 announcement can still be read on Democracy Now!’s website at http://www.democracynow.org/2010/4/1/gas_drill)

Unfortunately, Obama has given up on his demands for renewable energy even while allowing offshore drilling to increase.  Obama’s inability to push for renewable energy was best revealed by the failure of the American Clean Energy and Security Act of 2009, which passed the House of Representatives but was hardly even discussed in the Senate. (There were actually two different bills proposed in June 2009: H.R. 2454 and H.R. 2998.  Both were abandoned within weeks of being introduced in the Senate.)  Even with a so-called “super-majority” in 2009, President Obama did not support the Act heavily enough to push its passage into law.  The result is that offshore drilling, which he wanted to be a minor piece of the solution, has become the major focus of U.S. energy policy.

President Obama has not fought to fulfill the promises he made in 2008.  He has given up, given in, and surrendered his promises for a “public option” in health care, ending tax cuts for the rich, renegotiating labor and environmental protections in Free Trade Agreements, stopping support for foreign dictators, and investing in renewable energy technology.  The only piece of the 2008 platform that President Obama has actually enforced is the promise to increase offshore oil drilling, which conservatives mostly support.  Therefore, President Obama has succeeded in one promise, but given up on five others.  Progressives should send him a clear signal of their disappointment in 2012 if they hope to have an impact on future presidential decisions.

Beyond that, Americans should realize that Obama has repeatedly shown us how ineffective a popular, recently-elected politician is when they are forced to work within an overwhelmingly corrupt electoral system.  We cannot only blame Obama personally for his many political failures since winning the 2008 election; we must also accept the need to change our electoral system if we hope to change our most important government policies.

The Poverty of Conservatism

As the United States moves into its presidential election in 2012, voters should review the economic plans proposed by the Republican Party and its leading presidential candidate, Mitt Romney.  The Republican Party laid out its major economic ideas last spring in its “Path to Prosperity,” (which can be downloaded at http://budget.house.gov/UploadedFiles/PathToProsperityFY2012.pdf) while Mitt Romney outlined his ideas in his “Plan for Jobs and Economic Growth” (available at http://mittromney.com/blogs/mitts-view/2011/09/believe-america-mitt-romneys-plan-jobs-and-economic-growth).  Not surprisingly, the two documents give very similar proposals, likely because both are based on “conservative” principles that have failed for over thirty years.  Both propose lowering income and corporate tax rates and cutting government spending down to 20% of Gross Domestic Product (GDP).  However, neither describes what programs it specifically wants to reduce, while also refusing to provide any detailed plans for saving money on Health Insurance, Social Security, Corporate Welfare, or the Military budget.  Their energy policy proposals are so unrealistic that they could lead to a national disaster.  When compared to other economic policies, particularly the “Plan for a Rational Budget” (available for review and free download at http://www.machineryofpolitics.com/budget.html), the Republican and Romney plans fall far short of anything likely to help the U.S. economy or the federal budget.  This only reminds us how desperately we need to reform the corrupt electoral system that continues to tilt government policies toward an inability to solve our major national problems.

Income Tax

The Republican Party’s taxation plan has not changed since 1981: lower tax rates while broadening the tax base, which means eliminating tax loopholes and havens that the rich use to avoid paying taxes.  “[The Path] draws on the commonly held view that the key to pro-growth tax reform is lowering tax rates while broadening the tax base – that is, letting individuals keep more of the money they earn, while getting rid of distortions, loopholes and preferences that divert economic resources from their most efficient uses.”  (The Path to Prosperity: Restoring America’s Promise, page 50)  In essence, Republicans want to eliminate tax loopholes to raise more revenue, but then lower tax rates to get revenue back to where it was with the loopholes.  Mitt Romney entirely agrees, writing that “[W]e need both to lower rates and to broaden the tax base so that taxation becomes an instrument for promoting economic growth.” (Believe in America: Mitt Romney’s Plan for Jobs and Economic Growth, page 40)  These two ideas are very similar to general Republican proposals since the 1980s.

Unfortunately, those 1980s tax reforms benefited the rich far more than anyone else in the United States.  This has been proven by repeated economic studies, most famously by Joseph A. Pechman.  “The inescapable conclusion from these figures is that the well-to-do in our society had very large reductions in tax rates in recent years, while the tax rates at the low and middle income levels have not changed much.  Since the before-tax distribution has become much more unequal in the 1980s, it follows that inequality has increased even more on an after-tax basis.” (Joseph A. Pechman, “The Future of the Income Tax,” published in The American Economic Review, Volume 80, Number 1, March 1990, page 4)  The poverty of conservative economics was already a clear and present reality by 1990.

Broadening the tax base is also unreliable for the long-term.  The loopholes closed in the 1980s were put back into place by corrupted Congresses and presidents since then, so the lower tax rates are the only thing we can expect to survive over time.  Instead of assuming that closing loopholes will have a long-term affect, we should assume that the loopholes will re-emerge due to a corrupt electoral system, and we should set tax rates accordingly.  The independent “Plan for a Rational Budget” does that, and proposes new tax rates that would reduce taxation or keep rates the same for 80% of Americans while increasing taxes on the top 15% of incomes.  This would increase federal revenues over $800 billion per year, a major improvement over the failures of conservative economic ideas.

Corporate Tax

The Republican Path to Prosperity demands a reduction in corporate tax rates: “Encourage economic growth and job creation by lowering the corporate tax rate from 35 percent, which is the highest in the developed world, to a much more competitive 25 percent.” (Path to Prosperity, page 53)  Mitt Romney proposes the exact same rates; Day One of his administration promises a bill that “Reduces the corporate income tax rate to 25 percent.” (Believe in America, page 6).  Both assume that a lower corporate tax rate would encourage growth, and both ignore the fact that corporations in general only pay half of the current 35% rate (for more on how much corporations pay today, see Robert S. McIntyre, Director of Citizens for Tax Justice, “Statement Before the Senate Budget Committee Regarding Business Tax Subsidies Administered by the Internal Revenue Service,” page 1.  The Statement was given March 9, 2011 and published by the Citizens for Tax Justice at http://ctj.org/ctjreports/2011/03/ctj_director_robert_mcinyres_testimony_on_business_tax_subsidies.php).

In reality, the largest American corporations pay an average of about 18% in corporate taxes today.  Lowering the tax rate from 35% to 25% would have little real effect on revenue, unless the 25% is actually collected in full.  It does not appear likely that a Romney Administration would seek to collect more money (25%) in corporate taxes than what the Obama Administration collects today (18%).  However, lowering the official rates to 25% might encourage corporations to pay even less than the 18% they really pay today.  It would be far better for the government to actually collect the full 35%, see what that does to federal revenue, and then make a more rational decision on where to set the tax rates.

Government Spending

The Republican “Path to Prosperity” gives many dire predictions about U.S. government spending over the next few decades and promised to cut that spending to 20% of GDP.  “With responsible spending cuts now and structural reforms of government spending programs going forward, this budget ensures government spending remains on a sustainable path.  Government spending will fall below 20 percent of the economy by 2015.” (Path to Prosperity, page 56)  However, the Republicans never say which programs they will cut or give any major details on how they will reduce government spending overall.  Romney’s claims, and his lack of detail in what he wants to cut, are eerily similar.  “As president, Mitt Romney will immediately move to cut spending and cap it at 20 percent of GDP.  As spending comes under control, he will pursue further cuts that would allow caps to be set even lower so as to guarantee future fiscal stability.”  (Believe in America, page 141)  He offers few details on how to accomplish such spending reduction, outside of suggesting a balanced budget Amendment to the Constitution and a plan to reduce the federal workforce through retirements.  Neither of these fiscal theories proposes ways of saving money; they only set goals for cutting and capping government spending.

The Plan for a Rational Budget, however, proposes to save money by making adjustments to Health Insurance costs and Social Security while cutting unneeded spending on Corporate Welfare and the Military.  These suggestions would immediately balance the federal budget and save about $1 trillion by altering the government systems that Republican proposals almost totally ignore.

Health Insurance

Republicans largely admit that the U.S. health insurance system is a national disaster, and it is a disaster that is costing far too much money.  The Republican proposal is to continue spending nearly the same amount of money, but give that money to individual states to allow the states to create their own individual insurance systems.  They want to “[s]ecure the Medicaid benefit by converting the federal share of Medicaid spending into a block grant tailored to meet each state’s needs, indexed for inflation and population growth.”  (Path to Prosperity, page 39)  Mitt Romney proposes almost the exact same thing: “As president, Romeny will push for the conversion of Medicaid to a block grand administered by the states.” (Believe in America, page 143)  Despite the fact that Republicans constantly accuse President Obama of pushing the United States toward socialism with his demands for health insurance reform in 2009-10, Republicans themselves continue advocating for taxpayer-funded health insurance that is undeniably socialist.  The major difference is that the Republicans want to pass responsibility for administering health insurance off on the states by creating the “block grants.”  The Republican Party, in effect, is socialist without any solutions on how to run the system to make it work well.

The best answer, given in the Plan for a Rational Budget and advocated by many consumer and physician groups, is to convert to a “single-payer,” universal health-insurance system modeled on the Spanish, Japanese, or Italian systems.  Converting to such universal coverage would actually save the United States budget over $300 billion per year while covering all people in the U.S. with far better care.

Social Security

The Republicans’ lack of solutions for Social Security is even more striking.  The Path to Prosperity gives no suggestions for stabilizing Social Security for the short- or long-term future.  It only demands the President “to put forward specific ideas on fixing Social Security” and for Congress “to offer legislation to ensure the sustainable solvency of this critical program.” (Path to Prosperity, pages 48-49)  Romney’s ideas are hardly more detailed.  He vaguely offers “a number of options that can be pursued to keep the system solvent—from raising the eligibility age to changing the way benefits are indexed to inflation for high-income retirees.  One option that should not on the table is raisin the payroll tax or expanding the base of income to which the tax is applied.” (Believe in America, page 142)  Romney is only willing to take a strong stand against one policy: broadening the base of income subject to taxation.  Instead, he demands to avoid the one policy proposal that would actually solve the long-term funding problem because he does not want people making over $106,000 per year to pay any more taxes.  However, raising the payroll tax limit from $106,000 to $200,000 per year would easily fund Social Security until the 2080s, as the Rational Budget clearly proves.  The Republican lack of leadership in such a fundamental part of American society is shocking, and that shock is only surpassed by their refusal to even consider the best solutions.

Corporate Welfare

The Republican refusal to address Corporate Welfare is yet another glaring gap in their fiscal proposals.  The non-profit Citizens for Tax Justice estimated that U.S. corporations were given at least $365 billion in subsidies in 2011.  (Robert S. McIntyre, “Statement Before the Senate Budget Committee,” page 2)  The Republican Path to Prosperity merely complains about political favoritism in the giving of such funds, while Mitt Romney does not discuss Corporate Welfare at all!  Most companies that receive Corporate Welfare do not actually need the money to run their businesses; instead, they are simply favored by politicians that took campaign donations from those companies.  Corporate Welfare is clearly a corrupt system and should be targeted for elimination if Americans are serious about balancing the budget.  Eliminating 90% of that $365 billion in subsidies would save the United States Budget at least $329 billion per year in spending.  The Plan for a Rational Budget proposes to cut that much waste from the budget.

Military Spending

Republicans are equally silent on the need to cut military spending that has grown out of control.  Their Path to Prosperity wants to keep military budget at “$692.5 billion for national defense spending in Fiscal Year 2012, an amount that is consistent with American’s military goals and strategies.”  (Path to Prosperity, page 28)  Republicans want to later cut inefficient spending by $178 billion per year, but reinvest $100 billion of that into “combat capabilities,” so that the budget will only save $78 billion per year.  Such insignificant savings are an insult to anybody that has studied the long-term history of U.S. military spending, and such a tiny amount will only cut the U.S. budget deficit by about 7%.  Mitt Romney’s plan could only be more short-sighted if he refused to even mention the need to reduce military spending . . . which he fulfills by refusing to discuss military spending at all in his economic plan.

The Rational Budget, though, demands that the United States only keep a military strong enough to defend its own territory.  This can be accomplished by spending as much on our military as the next two largest powers combined, which would continue to make the U.S. military the largest and best-funded in the world.  We can defend U.S. territory, and probably most important allies, even if we reduce military spending by virtually half in order to save $384 billion per year.  That is far more than the Republican plan to save a paltry $78 billion per year, and will go much further toward solving the U.S. deficit.

Energy

Of course, the major reason the U.S. spends so much money on its military today is that it relies on foreign oil sources for energy.  In order to control those sources, the U.S. military has invaded, conquered, corrupted, or otherwise pressured foreign governments to sell oil to the U.S. at prices below normal market value.  The American obsession with controlling foreign oil is one of the biggest factors bankrupting the government.  The Republican Path to Prosperity implies its continuing support for this fiscal madness by demanding that military spending stay constant in order to fulfill its foreign “goals and strategies.”  Republicans want the American economy to continue its reliance on oil and natural gas, most of which does not sit on U.S. territory.  Mitt Romney completely agrees with reinforcing the status quo.  His major energy proposals are “significant regulatory reform, support for increased production, and a government that focuses on funding basic research instead of chasing fads and picking winners.” (Believe in America, page 90)

The Republican/Romney strategy for U.S. oil independence is to drill for more oil in U.S. territory.  This is a weak plan because the U.S. uses 25% of world oil but has at most 5% of world oil reserves in its own territory.  Therefore, even if the U.S. drilled every drop of oil out of its land, it would only produce one-fifth of what its economy actually uses.  The U.S. must find, fund, and build alternative energy sources if its economy is to survive the long-term future.  Many studies have shown that rebuilding the electricity grid to focus on wind, water, and solar power would produce more than enough electricity for predicted future usage rates.  (Mark Z. Jacobson and Mark A. Delucchi, “A Path to Sustainable Energy by 2030,” published in Scientific American, November 2009, page 60)  The U.S. could convert its current gasoline automobile fleet to a combination of hydrogen and electric vehicles to break the current reliance on oil.  U.S. plastic production could largely be replaced by green plastics and production methods.  The U.S. can break its reliance on oil, convert to clean and renewable energy sources, stop polluting its territory and population, and break its ridiculously high amounts of military spending within the next few decades.  The initial investment would carry a high price tag, but would easily be worth the spending in the long run and the overwhelming need for new infrastructure would create an employment boom.

Sadly, the Republican Path to Prosperity ignores all these factors and refuses to make the national investment.  Its only major statements on green technology are to demand that the U.S. only fund high-speed intercity rail lines when “they can be established as self-supporting commercial services.” (Path to Prosperity, page 33)  In effect, Republicans only want to build efficient public transportation when some company has already built them and proven that they are profitable.  Mitt Romney also falls into the trap of declaring energy usefulness only according to profit.

[W]ind and solar power, two of the most ballyhooed forms of alternative fuel, remain sharply uncompetitive on their own with conventional resources such as oil and natural gas in most applications. . . .  As for job creation, studies show that “green” jobs might actually hurt employment more than they help it.  Green energy is capital-intensive and tends to displace labor. (Believe in America, page 90)

Romney wants to focus on oil and natural gas production because they are more profitable today, even though those resources are becoming increasingly scarce, which means they will be more costly to develop in the future.  The growing cost of oil and gas, combined with the technology leaps in green energy that will reduce their cost, will flip current costs in the next ten years, making green technology half as costly as “conventional resources” by 2020. (“Path to Sustainable Energy by 2030,” page 64)  Romney ignores these facts, and instead wants to focus on the dirty, dangerous, and destructive oil economy.  Anyone looking for evidence of those facts can consider the effects of invading Iraq, attempting to conquer Afghanistan, and the inability to stop the BP oil volcano in the Gulf of Mexico in 2010.  If the definition of insanity is to do the same thing over and over again but expect different results, the Republican/Romney plans for energy production rely on a short-sightedness that is truly insane.

The Rational Budget combines a large reduction in military spending with a smaller investment in green technology resources.  Even the most skeptical of environmentalists argues that we can solve the energy and climate problems by investing only $100 billion per year in research (Bjorn Lomborg, editor, Smart Solutions to Climate Change: Comparing Costs and Benefits.  Cambridge: Cambridge University Press, 2010, page 396).  Other scientists argue that we can build an entirely clean, renewable, and safe electricity grid for the U.S. by investing only $17 trillion over two decades.  This would free the U.S. from foreign wars based on the need for increasingly rare oil reserves, from the pollution that currently clogs our major cities and rural communities, and from the high energy prices that Americans pay today.  After considering these possibilities, we realize that Republicans like Romney can only talk about continuing the status-quo because they refuse to discuss or debate anything else.

Conclusions

The Republican Path to Prosperity and Mitt Romney’s Plan for Jobs and Economic Growth reveal a disturbing refusal to admit past mistakes and make desperately needed changes.  They refuse to increase taxes on the wealthiest Americans to help reduce the national deficit.  In fact, they want to lower taxes on the rich while forcing the rest of us to pay, an idea that has proved disastrous since George W. Bush and the Republican Party cut taxes for the rich in 2002.  Today’s Republicans want to go a step further by reducing the corporate income tax, which could likely lead to further fiscal disasters.  They want to balance this by cutting and capping government spending, but they refuse to specify exactly what programs they want to cut.

Strangely, their ideas only grow vaguer from there.  Republicans in general, and Romney in particular, offer zero details on how to fix health insurance, Social Security, corporate welfare, or military spending for the long-term.  They refuse to even discuss the details of these programs, just as they refuse to discuss the details of renewable energy.  They love to debate some of the short-term costs, but never the much more impressive and important long-term benefits of transitioning to a renewable, clean electricity grid.  As American voters turn away from their ideas for economic investment and growth, the public should be reminded that the Plan for a Rational Budget can be read and downloaded for free at http://www.machineryofpolitics.com/budget.html!  Unfortunately, many of these ideas have little chance of becoming real policy until we change our electoral system to eliminate the corruption that keeps these ideas from being considered in Washington, D.C.