We all know we’re on an unsustainable course with all of this spending. And this is why I voted for this guy: he’s a realist. We needed a short term shot in the arm when he first got in here, but now we have to worry about the long term consequences.

Politico has more:

On the practical side, Obama has spent more money on new programs in nine months than Bill Clinton did in eight years, pushing the annual deficit to $1.4 trillion. This leaves little room for big spending initiatives.

On the political side, Obama can help moderate Democrats avoid some tough votes in an election year and, perhaps more importantly, calm the nerves of independent voters who are voicing big concerns with the big spending and deficits. Even if Obama succeeds – and that’s a big if – it will be tough for many Democrats to sell themselves as deeply concerned about spending after voting for the stimulus, the bailouts, the health care legislation and a plan to address global warming, four enormous government programs.

“Democrats have to reassure voters we are not being reckless,” said a Democratic official involved in the planning. “The White House knows this and that’s why we’ll be hearing a lot about reducing the deficit early next year. Democrats owned this issue for the past four years and cannot afford to cede it to Republicans now.”

And sure, some of this is political, but it’s still a refreshingly logical decision and goes completely against the “socialist” meme that Obama’s critics are trying to smear him with. It makes even more sense when you consider that Independent voters are starting to grow weary of the Congressional Dems.

So then, will a focus on the deficit and jobs in 2010 put Obama in a better position for 2012?

The New York Times uncovers a rather disturbing oversight that economists are just now focusing on.

Actually, disturbing isn’t the right word. Terrifying is much more of an accurate descriptor.

In any event…

The fundamental shortcoming is in the way imports are accounted for. A carburetor bought for $50 in China as a component of an American-made car, for example, more often than not shows up in the statistics as if it were the American-made version valued at, say, $100. The failure to distinguish adequately between what is made in America and what is made abroad falsely inflates the gross domestic product, which sums up all value added within the country.

American workers lose their jobs when carburetors they once made are imported instead. The federal data notices the decline in employment but fails to revalue the carburetors or even pinpoint that they are foreign-made. Because it seems as if $100 carburetors are being produced but fewer workers are needed to do so, productivity falsely rises — in the national statistics.

“We don’t have the data collection structure to capture what is happening in a real time way, or what is being traded and how it is affecting workers,” said Susan Houseman, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich., who has done pioneering research in the field. “We have no idea how to measure the occupations being offshored or what is being inshored.”

Yeah, this is a tricky one because the government would literally have to account for every single import, how much it was bought for, etc. And there’s no way big business will go for that.

So it does indeed seem like our economic data has a big, gaping hole in it that is impossible to fill. But if we can’t point to the GDP as an accurate measure, which number do we point to? Employment and median wages seem to be the most obvious indicators since the more people are employed, the more likely they are to spend and the more our economy will flourish…given that it’s driven by consumer spending.

But maybe I’m missing something. What do you think the focus should be on if the GDP is a big boatload of nonsense?

We’ve crossed the psychological barrier and this spells bad news for Dems unless they can turn it around in the next couple months. Because this is the highest rate since 1983 and you’ll be hearing that time and time again in the next month.

Here’s more about those numbers:

Among the major worker groups, the unemployment rates for adult men (10.7 percent) and whites (9.5 percent) rose in October. The jobless rates for adult women (8.1 percent), teenagers (27.6 percent), blacks (15.7 percent), and Hispanics (13.1 percent) were little changed over the month. The unemployment rate for Asians was 7.5 percent, not seasonally adjusted.

The number of long-term unemployed (those jobless for 27 weeks and over) was little changed over the month at 5.6 million. In October, 35.6 percent of unemployed persons were jobless for 27 weeks or more.

The civilian labor force participation rate was little changed over the month at 65.1 percent. The employment-population ratio continued to decline in October, falling to 58.5 percent.

Thankfully, only 190,000 non-farm jobs were lost last month. That’s lower than September’s 216,000 so the trend is in the right direction.

Also, some good news for those without work…jobless benefits are being extended:

After weeks of partisan debate, the Senate voted on Wednesday to lengthen unemployment benefits by up to 20 weeks and to extend the $8,000 homebuyer tax credit.

The closely watched legislation would extend jobless benefits in all states by 14 weeks. Those that live in states with unemployment greater than 8.5% would receive an additional six weeks. The proposal would be funded by extending a longstanding federal unemployment tax on employers through June 30, 2011.

The measure would apply to those whose benefits will run out by Dec. 31, which is nearly two million people, according to Senate estimates. Those whose checks have already stopped would be able to reapply for another round.

The vote was 98 to 0.

How’s that for bipartisan?

More as it develops…

As I’ve said numerous times before, voters aren’t stupid. They know who piloted our economic collapse last year and it’s going to be extremely hard for Republicans to convince them otherwise.

Still, it is kind of telling that Republicans blame Obama more for the economy than Bush, even though it’s by a very small 6 point margin. I mean, come on folks…we’re 10 months in and you REALLY believe that Obama is the reason why we’re still only treading water?

Also note how the number of Republicans is skewing the total to be 7 points more than what Independents think. Because that number is really what you should be looking at since they’ll determine whether or not Republicans make serious gains in 2010. And since the economy is bound to be the #1 issue at that time, this doesn’t bode well for the GOP.

Still, I predict that if the economy doesn’t get better by this time next year Obama and Bush will be even. At least among Indies. Because at that point it’ll be about 20 months in and, fair or not, Obama will own it.

But what do you think? When will Obama own the economy in swing voters’ minds?

True, it might go right back down tomorrow, but I have to say that this is a nice little psychological boost.

But it’s not just psychological.

Look at the 52 week spread in that picture…at this time last year we were down to 6,469. That’s a pretty significant jump in just one year’s time. Not only that, we were hovering around 8,000 in July and gained 1,600+ points since then (a 20% increase).

I don’t know about you but my 401(k) is looking a lot fatter these days.

So between this and the news about the recession…can we get some agreement that things are starting to look up?

More as it develops…

Yep. That’s right. A group of economic forecasters are projecting that we’ll see growth in the next quarter, so the recession is technically over. And hey, we can all be thankful for that.

However, the pain will linger for years to come.

The problem is that all of the lagging indicators of true economic health (rising employment, wages, spending, etc.) probably won’t start turning around until sometime next year…and even then it’s going to take a while for things to get back to normal.

Here’s more from BizJournal:

The association is expecting the nation’s inflation-adjusted Gross Domestic Product will grow at a rate of roughly 3 percent in the second half of this year. That’s after a sharp 6.4 percent contraction in the first quarter and a 0.7 percent drop in the second quarter.

The association also said the three-year downturn in the housing market appears close to coming to an end, with growth expected next year.

While the unemployment rate is forecast to rise to 10 percent in the first quarter, it is expected to slip to 9.5 percent by the end of 2010.

“The good news is that this deep and long recession appears to be over and, with improving credit markets, the U.S. economy can return to solid growth next year without worry about rising inflation,” Lynn Reaser, the association’s president-elect, said in a release.

And to the point about lagging indicators…here’s a sobering fact about unemployment…

Fewer than 8 percent of the panelists expect lost jobs will be regained before 2012.

If Obama doesn’t actually create a job in the positive direction, that could become a political hot potato for the 2012 election. And, realistically, jobs and spending will probably be the two issues on the GOP’s dart board anyway.

More as it develops…

If you’re not familiar with the word rescission, this is the practice of canceling policies because people didn’t reveal a preexisting condition. And it’s one of the key reasons why the health insurance companies can claim that there’s $100 billion in health care fraud every year.

Here’s one example of what they consider fraud…

“They said I never mentioned I had a back problem,” said [Sally] Marrari, 52, whose coverage with Blue Cross was abruptly canceled in 2006 after a thyroid disorder, fluid in the heart and lupus were diagnosed. That left the Los Angeles woman with $25,000 in medical bills and the stigma of the company’s claim that she had committed fraud by not listing on a health questionnaire “preexisting conditions” Marrari said she did not know she had.

By the time she filed a lawsuit in 2008, she also got a diagnosis of pancreatic cancer and her debts had swelled beyond $200,000. She was able to see a specialist by trading office visits for work on the doctor’s 1969 Porsche at the garage she owns with her husband.

That’s rich, eh? Can’t afford medical bills so she has to trade services for it…to work on the doctor’s vintage car. If that’s not a symbol for everything that’s wrong with how we buy and pay for health care in this country, I don’t know what is.

Of course, finding cases of “fraud” is a lucrative business and the insurance companies are making sure they identify all they can. But sometimes they get caught…

In the past 18 months, California’s five largest insurers paid almost $19 million in fines for marooning policyholders who had fallen ill. That includes a $1 million fine against Health Net, which admitted offering bonuses to employees for finding reasons to cancel policies, according to company documents released in court.

To me, rescission is a patently immoral practice that amounts to private rationing so insurance companies can make more money. Not just make money. Not just stay in business. They are offering BONUSES to people who find fraud.

Folks, the “death panels” are here and while the insurance companies consider rescission a way to identify fraud in their system, I think this entire practice of finding ways to cut people from their insurance (especially in their most vulnerable hour) constitutes a systematic fraud on the public trust and it MUST end.

And that’s why, if we achieve nothing else in this health care fight, we should at least make it illegal for insurance companies to cut people from their policies because of preexisting conditions. That’s THE most important reform measure in this debate, and I hope those of you who continue to push the public option realize that.

Why?

The reason is clear to me: we stepped in, took action and did something instead of just allowing the markets determine our fate.

WSJ explains…

The U.S. economy is beginning to show signs of improvement, with many economists asserting the worst is past and data pointing to stronger-than-expected growth. On Tuesday, data showed manufacturing grew in August for the first time in more than a year. “There’s a method to the madness. We’re getting out of this,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight.

Much of the stimulus spending is just beginning to trickle through the economy, with spending expected to peak sometime later this year or in early 2010. The government has funneled about $60 billion of the $288 billion in promised tax cuts to U.S. households, while about $84 billion of the $499 billion in spending has been paid. About $200 billion has been promised to certain projects, such as infrastructure and energy projects.

Economists say the money out the door — combined with the expectation of additional funds flowing soon — is fueling growth above where it would have been without any government action.

And yes, we can project whether doing nothing would have been better…

Many forecasters say stimulus spending is adding two to three percentage points to economic growth in the second and third quarters, when measured at an annual rate. The impact in the second quarter, calculated by analyzing how the extra funds flowing into the economy boost consumption, investment and spending, helped slow the rate of decline and will lay the groundwork for positive growth in the third quarter — something that seemed almost implausible just a few months ago. Some economists say the 1% contraction in the second quarter would have been far worse, possibly as much as 3.2%, if not for the stimulus.

For the third quarter, economists at Goldman Sachs & Co. predict the U.S. economy will grow by 3.3%. “Without that extra stimulus, we would be somewhere around zero,” said Jan Hatzius, chief U.S. economist for Goldman.

Yes, I know this is like fingernails across the chalkboard to several of you, but sometimes it’s entirely appropriate for the government to step in, prevent calamity and then leave. And now we see some positive steps that we’re moving forward again. Perhaps not a V-shaped recovery, but I definitely don’t think we’re going to see a “Lost Decade” as they did in Japan.

Hell, we’re actually making money from the TARP program and being repaid A LOT faster than we first thought. Also, there’s a chance we could make money from Freddie and Fannie. Obviously this wasn’t the intention when we stepped in, but a welcome surprise for taxpayers nonetheless.

More as it develops…

Per Politico, the White House claims that “more than half of the projected deficits over the next 10 years are directly attributable to the previous Administration’s failure to follow the pay-as-you-go principle.”

But even if that’s true, which is likely given the Medicare drug benefit, the Iraq and Afghanistan wars and the expansion of the Pentagon’s budget since 9/11, how likely is it that voters will believe that come 2012? Especially when he passed a $787 billion stimulus plan?

NY Times has more…

WASHINGTON — The Obama administration, citing an economic downturn that has been deeper than it had first thought, raised its estimate on Tuesday of the government’s deficit over the next decade to $9 trillion from $7.1 trillion.

The Office of Management and Budget also said that it expected the economy to contract 2.8 percent this year, substantially more than previously estimated, and that employment would peak at around 10 percent.

But the CBO has substantially different numbers…but there’s a reason for that…

Analysts at the Congressional Budget Office put their 10-year deficit estimate slightly lower, at $7.14 trillion, though the agency uses a slightly different method to reach its number. The budget office takes into account only policies already in place, while the administration can consider policies and budget decisions that it hopes to install.

And some less bad news on our budget deficits…

White House officials predicted that the budget deficit this year would peak at $1.58 trillion, though they said the 2009 shortfall would be about $261 billion lower than they had predicted in May. The main reason is that officials have decided that they will not need another round of bailout money for the nation’s banks. The Congressional Budget Official also estimated a deficit this year of about $1.6 trillion.

So we didn’t spend a quarter of a trillion we thought we might have to because the banks have pulled out of their rut, but still…wow. Again, I think this would be a lot easier to blame on the Bushies had Obama not requested the stimulus and wasn’t trying to reform health care.

Which opens up the question: will the debt and our budget deficits be THE key story in 2012?

More as it develops…

The company that literally almost brought it all tumbling down about a year ago right around this time is back in the black?

Not so much.

More from Politics Daily…

For the first time since 2007, AIG on Friday claimed a profit. The insurance giant reported second-quarter net income of over $1.8 billion. That’s still just a fraction of the $180 billion that AIG received as part of a government bailout in 2008. AIG’s chief executive claimed that the profits demonstrated “stabilization,” while acknowledging that parts of the company were still troubled.

Listen, until they pay back the money they owe the government, there is not such thing as profit for AIG.

This is pretty significant for a few reasons.

First, there’s just the psychological effect of 10% unemployment. The media had been positioning that as the dreaded magic number and now it appears that we’ll never reach it.

Second, economists projected 325,000 job losses for July, so coming in 80,000 below is incredibly encouraging.

Third, we lost 545,000 jobs in April, 532,000 in May, 443,000 in June, and now 247,000 in July. Obviously we’re headed in the right direction.

Still, as the NY Times points out, people are hurting…

Karen Triplett, 61, of Atlanta, lost her job in advertising sales in February and said she has been hitting wall after wall as she looks for work. The only job offer she received, she said, turned out to be a scam.

“It’s dismal to say the least,” she said. “I went from making $60,000 a year to $1,100 a month unemployment. I’ve got two friends who have already lost their houses. I’m struggling just to make sure my house note is met.”

Ms. Triplett said she worked nearly full-time since she was a teenager — as a secretary at a bank, a tobacco company and a television station, as a flight attendant, and selling advertising. She raised two children, bought a house, paid her bills on time and had a credit score of 878. Now, she is trying to stretch her unemployment checks far enough to cover her costs and struggling to pay her credit-card bills.

“I’m beyond down to basics,” Ms. Triplett said. “My daughter’s tried to help me. My son has given me money. But what I can’t do, I can’t do.”

So while we’re not adding jobs yet, I can’t help but think we’re only a few months away from that.

Fingers crossed.

Lots of “clunking” going on this morning at the Donk, but it’s the hot topic and since this criticism comes from a Dem I thought it worthy of pointing out some opposition from my side of the fence.

From her Tumblr blog:

Of course the cash for clunkers program is popular, we’re giving away money.

My concerns are first, that we are just moving demand around, and that the sales in this program are robbing sales from 2, 3, or 12 months from now when we are going to still need sustained growth in our economy. Remember, around 60,000 to 70,000 people are trading their cars in for new ones every month without this program.

Second, I haven’t yet gotten clear answers on how many deals are currently in the pipeline and how they will wind this program down in a way that will give certainty to buyers and dealers.

Third, I’m worried that an extension right now will penalize the two companies that we just made huge taxpayer invesments in. I’m trying to verify, but I believe, based on my conversations with dealers and other research, that Chrylser and GM both have inventory issues with the cars that qualify for this program. Seems weird we would invest billions of taxpayer dollars in two American companies in an effort to save them, and then extend a program that could penalize them.

I realize all car sales, both foreign and domestic, are good for the economy, but I hate the idea that there may not be a level playing field for the next few weeks because of inventory issues.

I’ll take these one by one.

First, yes, it’s giving money away. But that’s what we’re doing with stimulus dollars anyway, and there’s always some amount of wealth redistribution when you do that. As far as shuffling demand around, I don’t know that I buy that. An additional 3 to 4 grand can turn somebody into a buyer fairly quickly, especially when you’re talking about smaller, lower priced, more fuel efficient cars.

Second, I agree that it’s not clear, but one has to imagine that if it does go over we’ll figure it out so consumers don’t get screwed. After all, we’re talking about a couple billion dollars here and why we’re even fighting about it seems silly to me. This is a drop in the bucket, but it means A LOT to consumers.

Third, when people buy 250,000+ cars in a week, America benefits. Not only that, if GM and Chrysler are running out of stock, well, that’s a good thing…is it not? After all, one of the biggest problems they had was too much inventory. This will help them wind that backlog down. And yes, she’s right that there will be spillover to foreign car makers…but I doubt many of those cars are being shipped over. Most foreign car companies make their autos here, so it’ll ultimately benefit our economy. Personally, I don’t see the problem, and if McCaskill wants people to buy GM and Chrsyler, propose upping the amount of rebate somebody gets for those two brands.

What do you think?

• Your vehicle must be less than 25 years old on the trade-in date
• Only purchase or lease of new vehicles qualify
• Generally, trade-in vehicles must get 18 or less MPG (some very large pick-up trucks and cargo vans have different requirements)
• Trade-in vehicles must be registered and insured continuously for the full year preceding the trade-in
• You don’t need a voucher, dealers will apply a credit at purchase
• Program runs through Nov 1, 2009 or when the funds are exhausted, whichever comes first.
• The program requires the scrapping of your eligible trade-in vehicle, and that the dealer disclose to you an estimate of the scrap value of your trade-in. The scrap value, however minimal, will be in addition to the rebate, and not in place of the rebate.

So what are your thought about the program? Will you take advantage of it?

From NBC…

Back to the January post, which was about cutting back on delivery days, I saw two advantages to that model…

First, the fewer the days the mail is delivered, the less gas the Post Office uses. Demand goes down, price goes down.

Second, I’d rather miss a Tuesday delivery than a Saturday one. That way the mail carriers have a normal work week and a premium is placed on getting mail to you on the weekends via Express Mail. This model would be much more competitive with FedEx, etc.

While closing branches would accomplish the first, it wouldn’t make the Postal Service more competitive with FedEx…which is exactly what they need to do.

More as it develops…

From Politico:

On ABC’s “This Week,” Treasury Secretary Timothy Geithner said in response to a question by host George Stephanopoulos about extending benefits: “I think that is something that the administration and Congress are going to look very carefully at as we get closer to the end of this year.” [...]

“We’ll do what’s necessary to make appropriate unemployment benefits available,” national economic adviser Lawrence Summers said on NBC’s “Meet the Press.” [...]

On “Fox News Sunday,” Sen. Jim DeMint (R-S.C.) said “yes,” his party would back an extension.

After DeMint objected to what he said was rampant emergency government spending, he was asked specifically about extending unemployment benefits, and replied, “Yes, we’ll support it.”

My question…why is Politico this as a stimulus package? Yes, money being pumped into the economy has stimulative effects, but unemployment benefits have less to do with economic stimulation and more about making sure people can pay their bills. Yes, the money goes right back into the economy, but still.

More as it develops…

In this first part, note around the 4:15 mark how the era of easy money was at its worst during the period from 2002 to 2006.

Part One


A vitally important segment in this second part is Greenspan’s testimony around the 2:30 mark. He admits that he and his deregulation focused colleagues got it wrong and it nearly collapsed the world’s financial system.

Part Two


There’s another part to this series and I’ll post that when it becomes available.

Past the constant calls for saving money by eliminating wasteful spending, which never seem to materialize into actual legislation, we need to find new forms of income to pay for this bill. They seem to be failing at convincing enough senators to support taxing benefits and the more affluent, so what else is left?

For the most part, we pay for our governmental services through income taxes (both individual and corporate), property taxes and consumption taxes. Property taxes are used for other things and rightfully shouldn’t be on the table here. The two proposals that were trotted out for discussion by the Democratic leadership were both taxes on types of income. What remains are consumption taxes.

In a way, consumption taxes are the most fair. For instance it makes perfect sense to tax gasoline and tires to pay for roads, as those driving on those roads need those things to do so. So doesn’t it make sense to tax those behaviors that create high health care costs? The American people seem to think so.

Kaiser Family Foundation poll

A poll by the Kaiser Family Foundation, from back in April, found that reforming health care is one of the public’s highest priorities, that a majority of Democrats and Independents believe that we need reform now and that a majority support taxing unhealthy behaviors as an acceptable way to pay for some of these reforms. When asked it they would support raising taxes on “items that are thought to be unhealthy, such as soda, alcohol, junk food and cigarettes,” 61% approved (39% strongly favoring, with 22% somewhat favoring the idea). I’m a huge fan of proposals that kill two (or more) birds with one stone, and I think this is a textbook example of such.

To fund a health care program, it makes much more sense to tax behaviors that lead to health problems than it does to tax income in general. By doing so we can, in one fell swoop, put more of the costs of the system in the hands of those who are causing the most problems, lower the consumption of these products AND help pay for universal health care. We already have taxes on cigarettes, alcohol and items deemed luxuries like jewelry, hotel stays and amusement parks. So why not extend similar taxes to the most unhealthy ‘food’ items in the market? (I put food in quotes because one could argue that high fat and sugar content items like pop, potato chips and many fast food items can hardly be described as food)

First on the cutting block is alcohol, with 68% of respondents strongly or somewhat favoring raising taxes on it to help pay for health care reform. Smoking is more demonized in our country, but alcohol related health costs actually outweigh those related to smoking. The Marin Institute lists several alcohol related health care costs, among them $175.9 billion on alcohol related problems, also saying that they bring about “$184.6 billion dollars per year in health care, business and criminal justice costs, and cause more than 100,000 deaths.” This being the case, I see it as nothing but reasonable to levy a higher tax on alcohol, possibly in relation to which forms of it result in the worst outcomes, that is equal to the cost to society it incurs.

Still with a few hundred billion dollars to go, we come to tobacco. I was a bit surprised that a higher cigarette tax was supported by fewer than the increased alcohol tax, but this may be because tobacco products are already taxed at a high rate. Florida alone loses $20 billion dollars when you compare the taxes it collects to the money it pays out, amounting to nearly $7,000 per smoker. A study released by the CDC in 2002 showed that “For each of the approximately 22 billion packs sold in the U.S. in 1999, $3.45 was spent on medical care attributable to smoking, and $3.73 in productivity losses were incurred, for a total cost of $7.18 per pack.” These numbers are sure to have risen since then, and with somewhere in the neighborhood of 30 billion packs of cigarettes sold in the US last year, it seems more than fair to tack on at least another few dollars per pack.

Whether or not this fills the gap entirely, we also should look at taxing the most unhealthy food items. A study at University of Victoria (British Colombia) found that all income groups would benefit, although more so near the top of the economic spectrum, from a tax on junk foods that sent money towards health care programs. I would suggest that this disparity would be less pronounced in the US, where many people near the bottom of the economic spectrum have much more to gain from such an arrangement, given that it will help pay for health insurance that many of them currently do not have.

Put all of these together, and you might piece together enough to get over the hump. At the very least we could make it easier to pass one of the income tax ideas by lowering the amounts they’d have to raise through it.

One might argue that this would cause people to consume less of these products, thereby reducing the income from the levies. My response would be that we should then increase the taxes to keep up with the costs. This would hopefully create a cycle where more people would consume less, making the purchase of such products even more expensive, driving more out and lowering costs to treat those people over the long run. Herein lies the killing two birds with one stone situation.

One might also argue that this is a regressive tax. In effect it will be that way, at least at first. It is the lower end of the spectrum that spends a larger amount of their overall income on food. They also tend to eat less healthy foods. However, nobody forces them to choose to purchase these particular food items. Nobody should force them to quit, but if they want to continue to lead an unhealthy lifestyle, the rest of society should not be forced to subsidize it.

If people want to smoke, drink or eat themselves to death, then they can make a down payment on the hundreds of thousands of dollars the government will pay to take care of many of them during the last months of their lives. If we can save some of them from that fate by enacting the proposals mentioned above, thats even better.

We’ve been hearing about cellulosic ethanol for several years now, generally with the caveat that were at least a few years, and a few scientific breakthroughs, away from it coming to market and helping wean us from foreign oil. Unlike corn, which breaks down into the sugars necessary to be processed into ethanol relatively easily, cellulose is a hardy material that takes time and energy to break down. Its upside is that there happens to be more cellulose present than any other organic molecule on the planet. This is why millions upon millions of dollars has been poured into cellulosic ethanol research, genetically modifying naturally occurring enzymes to break it down faster and looking for ways to bring the price per gallon down closer to the price of gasoline.

Unlike corn, which takes land out of food production, is inefficient as far as how much energy it takes to produce and is a high maintenance crop, finding raw material for a cellulosic plant is easy. Wood chips from sawmills, the kudzu scourge spreading through the hot and humid Southeast, agricultural waste and even up to 80 percent of what ends up in our landfills could be used to make cellulosic ethanol.  Thankfully, the millions of dollars in research and development have begun to bear fruit.

A gas station near Ottawa is the first in the world to begin selling a cellulosic blend, called CE-10, to the public. Iogen, the company behind the demonstration plant that produced the fuel, plans to build its first full scale cellulosic ethanol plant in Saskatchewan. It has reached an agreement with the local government and Royal Dutch Shell to convert an old Mill site to their purposes, with the government even agreeing to purchase any green energy produced at the site. The running demonstration plant only has the capacity to produce about 3 million liters of ethanol each year, using wheat straw agricultural waste, while the new plant will be able to pump out about 75 million liters. It will make use of a more diverse feed stock, including agricultural waste from other crops, grasses native to nearby areas and even wood chips from area mills.

The march of progress continues, with a number of large companies making big investments into these technologies. Last year GM purchased a large share of Coskata, a big player in the emerging cellulosic ethanol industry, who claims to have developed a process that simplefies the complex and costly process of breaking down cellulose and brings the cost of production down to being competitive with gasoline. There are as many as two dozen companies with plans to build plants similar to Iogen’s, but the economic downturn is effecting their ability to finance these projects. Coskata is hoping to get some stimulus money, in the form of loan guarantees, to help finance its plant, with an estimated production of 50-100 million gallons a year.

As President Obama often says, if we intend to be a leader in the green energy industry of tomorrow, we need to move boldly in that direction today. Now is not the time to let companies who wish to lead us in there falter because of financing problems. Some are talking about a new stimulus bill, which most people reasonably see as a terrible idea, that would focus on these kinds of projects and job creation. The first should have done so, and I have little confidence that a new one would make it through congress without being similarly unfocused and pork laden.

We don’t get too many of these chances, where we can kill three birds with one stone. Job creation, independence from foreign oil and environmental progress can all be had with some smart funding priorities. Lets hope the administration recognizes this in time.

Some sobering stats when thinking about the fallout from last year. Now entire families, like the one pictured above, are living out of a single hotel. And those are the lucky ones.

From Wash Post:

Although the number of homeless individuals remained relatively stable between 2007 and 2008, the number of homeless families rose 9 percent, and in rural and suburban areas the number jumped by 56 percent, according to a report released last week by the U.S. Department of Housing and Urban Development.

In real terms, homelessness is still concentrated in urban areas and among adult males; 20 percent of homeless people live in Los Angeles, New York and Detroit. About 1.6 million people used an emergency shelter between Oct. 1, 2007, and Sept. 30, 2008, including 516,700 people in families. [...]

“The typical homeless person has changed to become less focused on the chronically homeless or single-individual homeless to somebody who is part of a family, whether it be a mother or a father or a child in a homeless family,” HUD Secretary Shaun Donovan said. “I think what that tells us is that the economic crisis is forcing more families who had previously been well-housed into homelessness.”

That 56% jump is pretty insane and speaks to how much people need the basics right now. Especially children. Because free access to good health care becomes that much more important when kids don’t have a home. And not just for physical illnesses. The homeless are much more prone to mental illnesses due to poor diet, feelings of hopelessness, easier access to narcotics, higher incidences of sexual abuse and many other factors.

This is one of the reasons why the administration insisted that health care and unemployment benefits make up a large majority of the stimulus funding. Because it doesn’t do us any good to have these folks out on the street since it’ll cost more in the long run to treat them when they get sick/injured or if they turn to a life of crime to make ends meet. That may sound like nanny state stuff for some who read this blog, but I’d rather deal with these problems now and pay a few thousand dollars to keep folks like these in their homes instead of pay tens of thousands to jail them, treat their mental illnesses, etc.