Wonkbook: America’s next top energy policy

November 19, 2012

Welcome to Wonkbook, Ezra Klein and Evan Soltas's morning policy news primer. To subscribe by e-mail, click here. Send comments, criticism or ideas to Wonkbook@gmail.com. To read more by Ezra and his team, go to Wonkblog.

Wonkbook's Number of the Day: 70 billion to 140 billion gallons. That's the amount of water it takes to "frack" the 35,000 oil and gas wells drilled in the United States each year, according to a story by Alison Sider, Russell Gold and Ben Lefebvre in the Wall Street Journal. With the rise of hydraulic fracturing, the oil and gas industry is confronting a new wave of challenges in water waste management and pollution control. Today, Wonkblog starts off with a brief look at the news, research, debates and policies at the intersection of energy and environment.

Top story: Is it time for a joint energy-and-environment policy?

World Bank says it's time for action on climate change. "Jim Yong Kim, World Bank president, has made an urgent plea for action to address the 'devastating' risks of climate change as the development body releases a stark assessment of the potential impact of rising global temperatures. 'It is my hope that this report shocks us into action,' Dr Kim said in the foreword of a study the bank commissioned to look at what would happen if the world warmed by 4°C from pre-industrial levels." Pilita Clark in The Financial Times.

Read: The World Bank's report (PDF) 'Turn Down the Heat: Why a 4C warmer world must be avoided.'.

Is an energy policy revamp in the works? "The United States needs to update its energy policy to reflect the boom in natural gas and oil production that has boosted manufacturing jobs, said the top Democrat on the Senate energy committee [Sen. Ron Wyden] on Thursday ... Congress has not had a comprehensive energy bill since 2007, well before the widespread use of hydraulic fracturing or 'fracking' technology to blast free natural gas and oil trapped in shale rock." Roberta Rampton, Reuters.

NationalJournal Debate: Do the results of the 2012 election pave the way for Washington to achieve bipartisan energy and environment policies?.

Should the US export natural gas? "Now that the election is over, the Department of Energy is set to issue a much delayed -- and politically charged -- review that bears on America's manufacturing future: What's the effect of exporting more of the new U.S. gas bonanza?...The Department of Energy is considering a number of new requests to build export facilities that would liquefy natural gas for export abroad. Its imminent report is expected to look at the economic effects of larger exports. It has delayed approving new applications until after the report is issued." John Bussey in the Wall Street Journal.

@noahpinion: I am going to take such inordinate glee over the next 30 years watching conservatives see cheap alternative energy slowly become a reality.

The next step for fracking: recycling the water. "Companies are racing to find ways to recycle the water used in hydraulic fracturing, chasing an emerging market that could be worth billions of dollars ... While the recycled water can't currently be cleaned up enough for drinking or growing crops, it can be cleaned of chemicals and rock debris and reused to frack additional wells, which could sharply cut the costs that energy companies face securing and disposing of water ... Though fracking has brought U.S. oil production to its highest level in more than 14 years and produced a glut of natural gas, it requires huge amounts of water, raising costs for energy companies and spurring opposition from environmental groups at a time when some states are suffering through droughts. It takes between 70 billion to 140 billion gallons of water to frack 35,000 wells a year, the industry's current pace." Alison Sider, Russell Gold and Ben Lefebvre in the Wall Street Journal.

@JimPethokoukis: Dan Yergin says US energy revolution = 1.7M jobs since 2008. Brown energy helped get green energy POTUS reelected

The EPA is refusing to waive the ethanol mandate. "The Environmental Protection Agency is rejecting requests from states and meat industry groups to waive regulations that require the blending of ethanol into gasoline. EPA rejected petitions from nearly a dozen states, including Texas, Virginia, and Maryland, for waivers of the federal Renewable Fuel Standard (RFS)." Ben German in the Hill.

@TPCarney: You know who has a mandate? Gas stations. To buy ethanol.

How communities are looking to use shale oil and gas to spark an enduring turnaround. "A gas boom has brought companies and workers into parts of Pennsylvania that lie atop the Marcellus Shale formation, a rich source of both natural gas and controversy. The common economic criticism of the drilling industry is that it booms and then busts, generating few local jobs and leaving little lasting economic benefit. But Lycoming County, in the north-central part of the state, is trying to change that. The county and its main city, Williamsport, are working diligently to position themselves not just as a host to the arriving companies, but also as a source of local workers for the industry and a long-term beneficiary of its local and national expansion." John Schwartz in the New York Times.

Top op-eds

@Ben_German: GOP's Whitfield on oil tax breaks: “There is widespread sentiment in the House that says look let's just get rid of all [energy] incentives”

Top op-eds

Kamin: The bias toward cutting discretionary spending. "I, and my fellow budget geeks, can generate discretionary savings for negotiators in a jiffy. Just tell me how many hundreds of billions you want cut, and in a minute I can give you back a new set of annual discretionary limits for the decade. Sure, policymakers will eventually have to make specific cuts to hit those limits. But that pain can often be deferred, because specific decisions on discretionary spending are made annually. Discretionary spending five or 10 years from now looks like a piggy bank to negotiators. Take money out, and let some future policymaker actually ax the programs. It’s not the same for other areas of the budget. If policymakers want savings from entitlement programs such as Medicare or Social Security, or if they want additional revenue, they must, in relatively short order, come up with the specific ways to reduce those programs or raise that revenue. The lines on the spreadsheet must be filled with painful decisions about premiums and co-pays, benefit levels and tax rates." David Kamin in The Washington Post.

KRUGMAN: Why we mourn the Twinkie. "[T]he demise of Hostess has unleashed a wave of baby boomer nostalgia for a seemingly more innocent time...[T]he '50s -- the Twinkie Era -- do offer lessons that remain relevant in the 21st century. Above all, the success of the postwar American economy demonstrates that, contrary to today’s conservative orthodoxy, you can have prosperity without demeaning workers and coddling the rich ... Yet in the 1950s incomes in the top bracket faced a marginal tax rate of 91, that’s right, 91 percent, while taxes on corporate profits were twice as large, relative to national income, as in recent years. The best estimates suggest that circa 1960 the top 0.01 percent of Americans paid an effective federal tax rate of more than 70 percent, twice what they pay today." Paul Krugman in the New York Times.

DOUTHAT: The liberal gloat. "Liberals look at the Obama majority and see a coalition bound together by enlightened values -- reason rather than superstition, tolerance rather than bigotry, equality rather than hierarchy. But it’s just as easy to see a coalition created by social disintegration and unified by economic fear... The progressive bias toward the capital-F Future, the old left-wing suspicion of faith and domesticity, the fact that Democrats have benefited politically from these trends -- all of this makes it easy for liberals to just celebrate the emerging America, to minimize the costs of disrupted families and hollowed-out communities, and to treat the places where Americans have traditionally found solidarity outside the state (like the churches threatened by the Obama White House’s contraceptive mandate) as irritants or threats. This is a great flaw in the liberal vision, because whatever role government plays in prosperity, transfer payments are not a sufficient foundation for middle-class success." Ross Douthat in the New York Times.

CAPRETTA AND LEVIN: Why Obamacare is still no sure thing. "Talk of the law's inevitability is intended to pressure these governors into implementing it on the administration's behalf. But states still have two key choices to make that together will put them in the driver's seat: whether to create state health-insurance exchanges, and whether to expand Medicaid. They should say 'no' to both ... Running the exchanges would be an administrative nightmare for states, requiring a complicated set of rules, mandates, databases and interfaces to establish eligibility, funnel subsidies, and facilitate purchases. All of this would have to take place under broad and often incoherent statutory requirements and federal regulations that have yet to be written." James C. Capretta and Yuval Levin in the Wall Street Journal.

KELLER: Honey, I shrunk the Pentagon. "[I]magine you are the new secretary of defense, and, wow, has Secretary Panetta left you a full docket...It’s easy to overlook in all that excitement, but your best opportunity to make a major contribution to the security of your country is none of the above. It is the unglamorous, unpopular, unfinished business of right-sizing our defense budget, without putting us at grave risk." Bill Keller in the New York Times.

BIGGS AND RICHWINE: The truth about federal pay. "Should federal workers get a raise? With salaries and benefits paid to the government’s civilian workers totaling $271 billion in 2011, deciding whether to extend the freeze enacted last year on cost-of-living increases has important budgetary consequences ... The Federal Salary Council, an advisory body of academics and leaders of public employee unions, suggested last month that federal workers are underpaid by an average of 35 percent relative to nonfederal employees." Andrew G. Biggs and Jason Richwine in The Washington Post.

DIONNE: Obama and the end of decline. "Obama should take that opening to relieve an anxiety felt across the partisan and ideological divides. For much of the last decade, Americans of very different stripes have been haunted by the fear that our country is in decline. If Obama is looking for a single, unifying objective, it should be to make sure that by the time he leaves office, the vast majority of Americans will have abandoned their declinist fears. He should want conservatives and Republicans, no less than liberals and Democrats, to perceive their nation as on the move again." E. J. Dionne in The Washington Post.

Top long reads

Sohrab Ahmari examines the rise of censorship and free-speech restriction on university campuses: "At Yale University, you can be prevented from putting an F. Scott Fitzgerald quote on your T-shirt. At Tufts, you can be censured for quoting certain passages from the Quran. Welcome to the most authoritarian institution in America: the modern university -- 'a bizarre, parallel dimension,' as Greg Lukianoff, president of the Foundation for Individual Rights in Education, calls it. Mr. Lukianoff, a 38-year-old Stanford Law grad, has spent the past decade fighting free-speech battles on college campuses. The latest was last week at Fordham University, where President Joseph McShane scolded College Republicans for the sin of inviting Ann Coulter to speak."

Mistakes you've made before made on the international stage interlude: Taliban spokesperson uses "CC" instead of "BCC." Accidentally discloses entire Taliban mailing list.

Got tips, additions, or comments? E-mail me.

The austerity crisis

Tax increases are a necessary part of the deal, Pelosi says. "House Minority Leader Nancy Pelosi (D-Calif.) said in an interview airing Sunday that tax increases must be part of any deal to avert the looming 'fiscal cliff.' Asked by ABC’s Martha Raddatz whether she would accept a deal that capped deductions for high earners but left rates as they are, Pelosi said it would be unacceptable. 'What you just described is a formula in a blueprint for hampering our future,' Pelosi said. 'Just to close loopholes is far too little money.'" Aaron Blake in The Washington Post.

A 'fiscal cliff,' by any other name, spells 'austerity'. "Come January, the United States might careen off the fiscal cliff. Or start rolling down the fiscal slope. Or, in a worst-case scenario, find itself staggering amid the hot ashes of a debtpocalypse ... Many politicians and pundits in Washington are terrified of it, and President Obama and Congressional leaders met Friday to publicly kick off a series of negotiations to avoid it. But that does not mean that anyone can quite agree on what to call it. Indeed, in Washington, vigorous semantic debate has sprung up alongside the heated policy debate. And a thousand tortured metaphors have bloomed."Annie Lowrey in the New York Times.

The uneven bite of curbing tax deductions. "Limiting personal income-tax deductions and other federal tax breaks, an idea gaining momentum as part of a fix for America's budget crisis, would hit some parts of the country harder than others, with a series of high-income blue states leading the way...If that happens, taxpayers in relatively affluent states with higher home prices and state and local taxes could see their tax bill rise significantly, depending how the limits are designed. That in turn is likely to affect how the concept is greeted by lawmakers." Alan Zibel and John D. McKinnon in the Wall Street Journal.

AARP says no cuts to Social Security, Medicare for retirees. "AARP, the lobbying powerhouse for older Americans, last year made a dramatic concession. Amid a national debate over whether to overhaul Social Security, the group said for the first time it was open to cuts in benefits ... [T]his time around, as Washington debates how to tame the ballooning federal debt, AARP is flatly opposed to any benefit reductions for the nation’s retirees. AARP’s rejection of any significant changes to the nation’s safety net could be a major factor as policymakers seek a deal to put the government’s finances in order through raising taxes and cutting spending on federal programs, possibly including popular entitlements such as Medicare and Social Security." Michael A. Fletcher and Zachary A. Goldfarb in The Washington Post.

Will Paul Ryan bridge the gap between a compromise and the House GOP? "[W]hile the campaign trappings and the high profile of the national campaign are behind him, Mr. Ryan now finds himself at the center of one of the biggest fiscal negotiations in a generation. Speaker John A. Boehner has tapped Mr. Ryan, who has returned to his post as the House Budget Committee chairman after an unsuccessful run for vice president, to help strike a deal to avoid big tax increases and spending cuts by the end of the year, and to bring along fellow Republicans." Jennifer Steinhauer in the New York Times.

Stocking the Cabinet

President may announce some picks in just a week or two. "President Barack Obama, who is on a four-day trip through Asia, is reviewing material on reshaping his cabinet and is on track to announce some of his picks as early as the week after Thanksgiving, people familiar with his plans said. The president's top focus is on finding successors for secretaries who are preparing to leave the administration, including the secretaries of state and the Treasury, these people said. He also must fill the positions of some top West Wing advisers who are poised to depart." Peter Nicholas and Carol E. Lee in the Wall Street Journal.

All I want for Christmas interlude: "Projecteo," a thumb-size projector of Instagram photos.

The Republican re-think

GOP plans to neuter right wing's influence in congressional primaries. "Read their lips: no more Todd Akins. In the wake of the GOP’s Election Day beatdown, influential Republican senators say enough’s enough: Party leaders need to put the kibosh on the kind of savage primaries that yielded candidates like Akin -- and crippled Republican prospects of taking the Senate in two straight election cycles...It’s time, they say, for Washington bosses to be more assertive about recruiting and then defending promising candidates." Manu Raju in Politico.

Jindal: Republicans needs to stop saying 'stupid things.' "Louisiana Gov. Bobby Jindal (R) criticized Republican candidates on Sunday for making comments he said alienated voters and cost the party the presidency and key Senate seats. 'We don't need to demonize, and we also don't need to be saying stupid things,' Jindal, the new chairman of the Republican Governors Association, said on 'Fox News Sunday.' ... 'It's not just a marketing campaign. It's not just having better P.R. folks," Jindal said. "We're going to go and convince and fight for every single vote, showing them we are the party for the middle class, upward mobility. We don't start winning majorities and winning elections by insulting our voters.'" Brendan Sasso in the The Hill.

... But they have yet to tell their base the unpleasant news. "By now, [Wyoming] voters here are over the initial shock. The ranchers, businessmen and farmers across this deep-red state who knew, just knew that Americans would never re-elect a liberal tax-and-spender president have grudgingly accepted the reality that voters did just that. But since the election, a blanket of baffled worry has descended on conservatives here like early snow across the plains, deepening a sense that traditional, rural and overwhelmingly white states in the center of the country are losing touch with an increasingly diverse and urban American electorate." Jack Healy in the New York Times.

Why the Republicans' future might not be so bad. "The party’s superstars are coming of age. The 2012 election for Republicans was sort of like the 2004 election for Democrats in terms of candidate quality ... In each case, the superstars-in-waiting for the party were one election away from making runs in their own right ... There are a historic number of GOP governors. Next year, 30 states will be run by Republicans ... Remember that when the Democratic Party found itself in the political wilderness after the 1988 election, it turned to its governors -- including the boy wonder from Arkansas -- for ideas on how to remake itself. And we know how that turned out." Chris Cillizza in The Washington Post.

From sea to shining sea

The Sisyphean task of coastal rebuilding, and the federal subsidies. "Across the nation, tens of billions of tax dollars have been spent on subsidizing coastal reconstruction in the aftermath of storms, usually with little consideration of whether it actually makes sense to keep rebuilding in disaster-prone areas. If history is any guide, a large fraction of the federal money allotted to New York, New Jersey and other states recovering from Hurricane Sandy -- an amount that could exceed $30 billion -- will be used the same way. Tax money will go toward putting things back as they were, essentially duplicating the vulnerability that existed before the hurricane." Justin Gillis and Felicity Barringer in the New York Times.

Fili-busting

Will Senate Democrats’ filibuster reform plan change anything? Experts answer a resounding, 'Maybe.' "When the 113th Congress convenes in January, one of the first things the Senate Democratic majority is expected to do is act to reform the filibuster...So what actually is on the table? Ryan Grim at the Huffington Post reports that Democrats are coalescing around a proposal by Sen. Jeff Merkley (D-Ore.). Under that plan, bills that fail to get a majority would fail immediately, but if a bill gets between 51 and 60, it will be debated as long as a senator is on the floor speaking about it. Once debate ends, a new vote would be conducted, and the bill could pass with a simple majority." Dylan Matthews in The Washington Post.

Economy

This week in economic data. "Data scheduled to be released include existing home sales for October housing starts for October (Tuesday); weekly jobless claims; the Thomson Reuters/University of Michigan consumer sentiment index for November; leading economic indicators for October (Wednesday)." The New York Times.

Investment is falling sharply. "U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery. Half of the nation's 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next, according to a review by The Wall Street Journal of securities filings and conference calls. Nationwide, business investment in equipment and software -- a measure of economic vitality in the corporate sector -- stalled in the third quarter for the first time since early 2009. Corporate investment in new buildings has declined." Sudeep Reddy and Scott Thurm in the Wall Street Journal.

Investors hustle before higher taxes. "Business owners and investors are rapidly maneuvering to shield themselves from the prospect of higher taxes next year, a strategy that is sending ripples across Wall Street and broad areas of the economy.All this is weighing on the broader financial markets, as worries mount about the economic drag from the combination of higher tax rates and reduced government spending set for January if President Obama and Senate Republicans cannot reach a budget compromise before then." Nathaniel Popper and Nelson D. Schwartz in the New York Times.

Music recommendations interlude: Spoon, "I Summon You," 2005.

Health Care

Apres 2012, le deluge? Lots of health care regulations coming soon. "With the national health law’s political future now entrenched, a deluge of new rules is expected in the coming days and weeks as the Obama administration fleshes out the law’s complex components. Most of the anticipation has been focused on rules that determine how the new state-based insurance marketplaces called exchanges will operate. But also closely awaited are decisions about how the government will tax medical devices, allot the shrinking pool of money for hospitals that treat the uninsured, and determine how birth control insurance coverage can be guaranteed for employees of religious schools, universities and charities." Jordan Rau in The Washington Post.

Interview: Mass. Health Policy Commission chair Stuart Altman, or the most important person you haven't heard of in health policy.

What happens when a woman is denied an abortion? "We know a fair amount about the women who obtain abortions...We know a lot less, however, about women who seek out an abortion but don’t receive the service. They don’t get counted in the abortion statistics. At least, not until now. A new research project at the University of California at San Francisco is studying a group of 231 women who were turned away from 30 abortion clinics across the country. Dubbed the Turnaway Project, its researchers recruited women who had shown up at an abortion clinic days after its limit on gestational period had passed. It compares those women, who carried their pregnancies to term, with others who had abortions...They found that 76 percent of the women who were denied abortions were receiving public assistance, compared with 44 percent of those who were not. Sixty-seven percent were living below the poverty line, 11 points above those who received abortions." Sarah Kliff in The Washington Post.

Explainer: 5 battles to watch surrounding the Affordable Care Act.

Three more states have decided not to set up health exchanges for themselves. "Georgia, Ohio and Wisconsin joined more than a dozen other states on Friday in saying they would not establish health insurance exchanges, while a handful of other states said they would take advantage of an extra month allowed by the Obama administration to make decisions." Robert Pear and Abby Goodnough in the New York Times.

Energy

The whole truth about Superstorm Sandy and climate change. "The inconvenient truth on climate change and Sandy falls in the middle of these extreme views. It’s a fuzzy, messy truth that contains many shades of gray. But it’s a truth that’s we’re all equipped to understand. There’s no need to dumb down this reality or suppose anyone will take the issue of climate change any less seriously by appreciating the many nuances in the climate change and hurricane discussion." Jason Samenow in The Washington Post.

Wonkbook is produced with help from Michelle Williams.

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