Trump Targets EPA for Cuts; Ignores Job-creating Renewables Revolution; Makes a $2 Trillion Math Mistake on Budget Plan
May 25, 2017
Andy Rowell / Oil Change International & EcoWatch & Ryan Teague Beckwith / TIME Magazine & Lawrence H. Summers / The Washington Post & Max Ehrenfreund / The Washington Post
Analysis: The Trump team prides itself on its business background but choses sto rely on ludicrous supply-side economics. Trump's new budget rests on "a logical error of the kind that would justify failing a student in an introductory economics course" -- a mistake no serious businessperson would make; the most egregious accounting error in a presidential budget in nearly 40 years. How could the Treasury Secretary, the OMB director and the director of the National Economic Council allow such an elementary error?
Trump's EPA Budget:
Five Critical Programs on His Chopping Block
Elgie Holstein / EcoWatch
(May 24, 2017) -- The federal budget that the president proposes annually and Congress votes on is more than a collection of numbers. It tells us who the president is, what he stands for and what he cares about.
President Trump's proposed budget released Tuesday is alarming. It's clear that Trump is directing a full-scale effort to dismantle our nation's core environmental protections.
Helping to lead that charge is Scott Pruitt, head of the US Environmental Protection Agency (EPA). He claims that the deep EPA budget cuts they're proposing -- at more than 30 percent, the worst of any department or agency of government -- are actually a good thing.
By cutting funding to the states, which help the EPA carry out its environmental mission, it will somehow improve environmental protection, Pruitt argues.
What it means in reality is that states will be left holding the environmental bag for some programs they must still carry out, and that some protections will likely just go away or diminish -- and that families and communities in 50 states are put at great risk.
For example, about 25 percent of state and local air quality monitoring funds come from EPA grants. That monitoring allows public health officials to warn families and communities about "Code Red" days -- those badly polluted days when the air is too dangerous for children with asthma and seniors with heart conditions to spend time outdoors.
The Trump administration is proposing deep cuts to that funding, leaving states and local governments legally required to make up the shortfall. Other critical federal public health and environmental programs will just be axed.
Here are five huge concerns when it comes to President Trump's proposed budget:
1. Superfund Sites
There are more than 1,300 toxic Superfund waste sites and 450,000 brownfield hazardous sites across America, causing untold damage to local communities, such as toxins in their drinking water, cancer hotspots and stalled economic development.
Trump and Pruitt plan to cut hundreds of millions of dollars from this program, dramatically slowing cleanup at these sites, many of which have been posing health hazards for decades.
2. Holding Polluters Accountable
Pruitt's long, cozy relationship with companies that have supported his political career -- and his actual record as attorney general of Oklahoma -- suggest he'll go easy on polluters. Serious cuts to the office that enforces clean air and water laws, for which the federal government is responsible, suggests he has no intention of changing his ways.
3. Air Pollution
Pruitt has expressed hostility to rules limiting mercury, acid gas, carbon and smog pollution. With clean air program funding proposed to be scaled back in the budget, we now know he intends to go after these rules and hobble the EPA's ability to carry out the entire Clean Air Act.
4. Lead Protection
There is no safe level of lead, a known neurotoxin that that damages children's IQs for the rest of their lives. While the EPA has made great strides reducing lead exposure from paints, gasoline, pipes, soil and so on, more than half a million American kids have elevated lead levels in their blood.
The Trump-Pruitt budget will slash funding for these programs that are helping these kids.
5. Climate Change
Both President Trump and Administrator Pruitt have said that more study of climate change is needed before any action can be taken. Yet their new budget will rip out all spending for climate research, education and action.
That includes zeroing out the Climate Action Plan, the landmark achievement of the Obama Administration that would impose the first-ever limits on carbon dioxide emissions from power plants.
Elgie Holstein is senior director for strategic planning at Environmental Defense Fund.
Trump: Let's Drill for Oil in America's
Last Pristine Wilderness to Balance the Budget
Andy Rowell / Oil Change International & EcoWatch
(May 24, 2017) -- "Disruption" is one of the buzzwords of the energy market right now as plummeting costs of renewables is changing the way we heat our homes and drive our automobiles.
Some of the biggest names in the energy business spoke Wednesday on that very topic in London at the Financial Times' Energy Transition Strategies Summit, at the panel Rethinking Energy in a Time of Disruption.
The speakers discussed the "major trends transforming the global energy industry and the leading-edge strategies to adapt, thrive and prosper in the brave new post-COP world which is emerging."
At the conference there was huge excitement about the clean energy transition, with the FT believing the transition is well under way. Wilfrid Petrie, CEO of ENGIE UK & Ireland, told the audience, "The transition to clean energy is more like a revolution."
Juliet Davenport, founder and CEO of Good Energy, one of the UK's first 100 percent renewable electricity supply and generator companies, added that rapidly changing "consumer behavior" as well as "technological change" was leading to a "fast energy transition to renewables."
Even Big Oil admitted that rapid change was amongst us. Spencer Dale, chief economist of BP, told the conference that "renewables will grow faster than any energy source ever, any time in history."
Indeed, the International Renewable Energy Agency annual report believes some 9.8 million people are now employed by the renewable industry, up 1.1 percent from 2015. More than three million of those are in solar power.
As the rest of the world embraces renewables, President Trump is belligerently ignoring the global trends and trying to promote fossil fuels. Ed Fenster of US solar group Sunrun told the FT conference, "We really don't see a material impact from the Trump administration."
Despite this, Trump will have some discernible impact on the global energy market, specifically in North America. And while business increasingly wants to rip up the rules of the energy market, Trump wants to rip up one of North America's last pristine wilderness areas for oil: the Arctic National Wildlife Refuge (ANWR).
Many people thought the debate about whether to drill in ANWR, the largest protected wilderness in the US, was long dead and buried. Drilling for oil in ANWR was first mooted in the seventies, and has continued ever since.
According to Defenders of Wildlife, "At more than 19 million acres, the Arctic National Wildlife Refuge is the crown jewel of the National Wildlife Refuge System. It is also one of the last intact landscapes in America, and home to 37 species of land mammals, eight marine mammals, 42 fish species and more than 200 migratory bird species."
But if you thought ANWR was safe, think again. Trump and his fossil fuel cronies want to try and drill it for oil one last time. In his budget announced Tuesday, opening up ANWR is a priority for Trump.
The ANWR line item in the budget plan "is entirely consistent with, and in fact a central part of, the president's desire to be not only energy independent, but energy dominant. We want to dominate that space," according to Mick Mulvaney, director of the Office of Management and Budget.
Trump wants to dominate the energy market. But as energy pioneers disrupt that market towards clean tech, Trump and his fossil fuel buddies cling to a by-gone age of fossil fuels. But we must not let them destroy America's "crown jewels" in what could be one of the last destructive acts of the hydrocarbon age. We must disrupt. We must resist.
Renewable Energy Generates
Jobs for Nearly 10 Million People
Climate Nexus / EcoWatch
(May 24, 2017) -- Renewable energy now employs nearly 10 million people worldwide, according to a new report.
The International Renewable Energy Agency (IRENA) said Wednesday in its 2017 annual review that the solar industry alone provides more than three million jobs worldwide, and projected that the renewable industry could employ 24 million people by 2030.
"Falling costs and enabling policies have steadily driven up investment and employment in renewable energy worldwide since IRENA's first annual assessment in 2012, when just over seven million people were working in the sector," IRENA director-general Adnan Z. Amin said in a statement. "In the last four years, for instance, the number of jobs in the solar and wind sectors combined has more than doubled."
As reported by CNBC:
The report showed that solar photovoltaic was the biggest employer last year, accounting for 3.1 million jobs, up 12 percent compared to 2015. The wind sector represented 1.2 million jobs, while biofuels were responsible for 1.7 million jobs.
Amin went on to state that the potential for renewable jobs was significant.
"As the scales continue to tip in favor of renewables, we expect that the number of people working in the renewables sector could reach 24 million by 2030, more than offsetting fossil-fuel job losses and becoming a major economic driver around the world."
For a deeper dive: Bloomberg, CNBC
For more climate change and clean energy news, you can follow Climate Nexus on Twitter and Facebook, and sign up for daily Hot News
President Trump's Budget Includes a $2 Trillion Math Mistake
Ryan Teague Beckwith / TIME Magazine
(May 23, 2017) -- President Trump's budget includes what critics charge is a simple accounting error that adds up to a $2 trillion oversight, though the White House said it stands by the numbers.
Under the proposed budget released Tuesday, the Trump Administration's proposed tax cuts would boost economic growth enough to pay for $2 trillion in spending by 2027. But the tax cuts are also supposed to be revenue-neutral, meaning that money is already supposed to pay for the revenue lost from the tax cuts.
Former Treasury Secretary Lawrence Summers called the oversight an "elementary double count" and "a logical error of the kind that would justify failing a student in an introductory economics course" in an op-ed in the Washington Post. [See below.]
At a press conference Tuesday, White House budget director Mick Mulvaney disputed the criticism, saying that they simply assumed that the tax plan eventually passed by Congress would be revenue-neutral.
"We stand by the numbers," he said. "We thought that the assumption that the tax reform would be deficit-neutral was the most reasonable of the three options that we had."
The idea that the tax cuts would pay for anything already was criticized. Over the years, it's been a reliable staple of Republican rhetoric about taxes that lowering the rates would lead to a boom in the economy that would offset the loss in revenue, but economists say the idea is often oversold.
According to the Committee for a Responsible Federal Budget, for Trump's tax cuts to pay for themselves, the economy would have to grow at 4.5 percent over the next 10 years. That's two-and-a-half times the growth rate projected by the Congressional Budget Office.
So what's the most likely result of Trump's plan? The nonpartisan group projected that the tax cuts would cost the government between $3 and $7 trillion over the next decade.
Trump’s Budget Is Simply Ludicrous
Lawrence H. Summers / The Washington Post
(May 23, 2017) -- Details of President Trump’s first budget have now been released. Much can and will be said about the dire social consequences of what is in it and the ludicrously optimistic economic assumptions it embodies. My observation is that there appears to be a logical error of the kind that would justify failing a student in an introductory economics course.
Apparently, the budget forecasts that U.S. economic growth will rise to 3.0 percent because of the administration’s policies — largely its tax cuts and perhaps also its regulatory policies. Fair enough if you believe in tooth fairies and ludicrous supply-side economics.
Then the administration asserts that it will propose revenue neutral tax cuts with the revenue neutrality coming in part because the tax cuts stimulate growth! This is an elementary double count. You can’t use the growth benefits of tax cuts once to justify an optimistic baseline and then again to claim that the tax cuts do not cost revenue. At least you cannot do so in a world of logic.
The Trump team prides itself on its business background. This error is akin to buying a company assuming that you can make investments that will raise profits, but then, in calculating the increased profits, counting the higher revenue while failing to account for the fact that the investments would actually cost some money to make.
The revenue generated by the investments might exceed their cost (though the same is almost never true of tax cuts), but that doesn’t change the fact that the investment has a cost that must be included in the accounting.
This is a mistake no serious businessperson would make. It appears to be the most egregious accounting error in a presidential budget in the nearly 40 years I have been tracking them.
Who knew what when? I have no doubt that there are civil servants in Office of Management and Budget, the Treasury and the Council of Economics who do know better than this mistake. Were they cowed, ignored or shut out? How could the secretary of the treasury, the director of OMB and the director of the National Economic Council allow such an elementary error? I hope the press will ferret all this out.
The president’s personal failings are now not just center stage but whole stage. They should not blind us to the manifest failures of his economic team.
Whether it is Secretary Mnuchin’s absurd claims about tax cuts not favoring the rich, Secretary Ross’s claim that the small squib of a deal negotiated last week with China was the greatest trade result with China in history, NEC Director Cohn's ludicrous estimate of the costs of Dodd-Frank, or today's budget, the Trump administration has not yet made a significant economic pronouncement that meets a minimal standard of competence and honesty.
Analysis: Trump's 'Balanced' Budget
Relies on $2.06 Trillion in Mystery Money
Max Ehrenfreund / The Washington Post
WASHINGTON (May 23, 2017) -- White House officials are boasting that President Donald Trump's budget would balance federal finances in 10 years. Yet despite extreme reductions in spending on health care for the poor, food stamps, education, science and other basic government programs, Trump's staff could only balance the budget by claiming vague savings and unspecified sources of new revenue -- in other words, with trillions of dollars in mystery money.
It is not just that Trump is counting on a rapid acceleration in economic growth that economists believe is unlikely, which the budget projects will yield $2.1 trillion in new revenue ($2,062,000,000,000, to be more exact). Besides that bonus from growth, the budget also assumes that Trump's tax cuts -- which he has said will be the largest in history -- would not affect the government's bottom line at all.
And even with optimistic assumptions about the tax code specifically and the overall economy more broadly, the White House still needed to claim over $1 trillion in unidentified cuts to miscellaneous programs to balance the budget.
Presidents often include optimistic assumptions in their budgets, but not to this degree, said Marc Goldwein, policy director at the nonpartisan Committee for a Responsible Federal Budget (CRFB). "I do think this is on a whole new level, based on what we've seen before," he said.
"This is on the outer limits," said Bill Hoagland, a veteran GOP congressional aide. "It is pushing the envelope."
Let's take a closer look at how the White House says it would balance the budget.
Trump has pledged not to reduce spending on Medicare or Social Security and to increase the budget for the Pentagon. Collectively, those categories account for over half of total federal outlays. The goal of balancing the budget in 10 years implies severe reductions in all of the rest of public spending.
In particular, Trump proposes reducing all non-defense, discretionary spending -- a miscellaneous category that includes variety of basic government services, including education, scientific research, highways, the State Department and the Federal Bureau of Investigation -- by about 2 percent annually.
That might not seem like very much, but the reductions add up quickly, especially because inflation and the fact that the population is growing mean that these programs' costs typically increase each year under ordinary circumstances. Over 10 years, Trump's so-called "two-penny plan" adds up to a 27 percent reduction across the board.
Hoagland, who is now a senior vice president the Bipartisan Policy Center, is troubled not only by the size of these cuts, but also by the fact that Trump and his aides did not explain where the savings would the savings would come from in that broad category.
On some non-defense, discretionary priorities -- such as infrastructure and border security -- Trump has said he will increase spending, so it is unclear how the president would achieve that annual goal of 2 percent reductions.
The budget also forecasts $2.1 trillion in additional money attributable to a more robust economy. If economic activity picks up, Americans will earn more, buy more and invest more -- and that means they'll pay more in taxes as well.
This forecast is based on the assumption in the budget that Trump's policies will accelerate the pace of economic growth to about 3 percent a year, which many economists view as optimistic relative to independent projections.
For instance, former President Obama's most optimistic budget, CRFB's Goldwein said, forecast economic growth at about 0.3 percentage points above the projection by the nonpartisan Congressional Budget Office. Trump's first budget puts growth at least a full percentage point above that forecast.
"The growth numbers in this budget are laughable," said Jason Furman, who served as chairman of the Council of Economic Advisers under President Obama. "It's flabbergasting."
The administration hopes to achieve that goal in part through deregulating industry and through imposing stricter requirements on recipients of public assistance to force them to find employment.
Even conservative experts who spoke with The Washington Post suggested that some of Trump's policies might work against achieving that goal. Hoagland pointed out that extreme reductions in funding for science and education would restrain economic growth over the long term.
Technological progress and more skilled labor are crucial for improving standards of living, he said -- and the responsibility for making those investments up front has typically fallen to the government.
Others pointed out that Trump's budget reduces spending on the Earned Income Tax Credit and similar programs, which Rep. Paul Ryan, R-Wis., the speaker of the House, and other conservative policymakers have argued are valuable for encouraging Americans who are not working to look for a job.
At the same time, economists in both parties argue that Trump's broader opposition toward immigration and free trade could slow down economic activity as well.
What is more, this $2.1 trillion apparently does not include any gains from changes to the tax system, which economists say could be one of the more effective ways for the administration to improve the economy.
For Trump, generous tax relief was a crucial aspect of his campaign -- but details on tax reform are completely omitted from the budget released Tuesday. Instead, the administration simply assumes no fundamental change in taxes.
Mick Mulvaney, Trump's budget director, said that the White House was still planning on reforming the tax system, but that because those plans are still preliminary, the administration decided not to assume any overall change in the amount of money collected.
"We don't want to make too many assumptions," Mulvaney told reporters at the White House Tuesday morning. "We thought that the assumption that the tax reform would be deficit neutral was the most reasonable."
It is difficult to know what to make of this statement, because the budget in fact does project a change in the deficit resulting from revenues -- an increase of $2.1 trillion over 10 years. Presumably, Mulvaney means that bonus from economic growth is not a result of changes to the tax system, but instead would be a result of the administration's other polices designed to grow the economy.
In other words, above and beyond that $2.1 trillion, the administration is also assuming a further bonus from its tax policy that will cancel out reduced rates. The size of that additional assumption is unknown.
Yet if experts are dubious of the administration's ability to achieve its economic goals apart from taxes, they are even more witheringly skeptical about the idea that Trump's reductions in taxes could somehow pay for themselves. One recent survey of 37 prominent economists found none who believed that a tax cut would not add to the national debt.
Another interpretation is that the Trump administration has given up on the idea of a tax cut and is planning reforms to the tax system that will not change the overall burden of taxes, but could make the system fairer and more efficient. Experts on both sides of the aisle would welcome that approach, but it would be an abrupt departure from recent statements in favor of a cut by White House officials -- including Trump himself.
"They're trying to have it both ways," Goldwein said.
Ana Swanson contributed.
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