A14
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FGHIJ Dangerous curve ahead
an independent newspaper EDITORIALS
S 200%
Federal debt as a percentage of gross domestic product
150 World War II 100
Te Great Depression World War I
50 CBO’s
extended- baseline scenario
0 1790 1810 1830 1850 1870 1890 1910 1930 1950 1970 1990 2010 2030
NOTE: Te extended-baseline scenario adheres closely to current law, following CBO’s 10-year baseline budget projections through 2020 (with adjustments for the recently enacted health-care legislation) and then extending the baseline concept for the rest of the long-term projection period. Te alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period.
SOURCE: Congressional Budget Office
Debt and the Risk of a Fiscal Crisis,” is the Matterhorn-like incline of what happens next. Assuming the unrealistic — that is, assuming that the Bush tax cuts are allowed to expire, that the alternative minimum tax is allowed to hit a growing number of taxpayers — the next several years would simply continue the current, un- healthy level of debt. After that, however, growth in spending on federal health-care programs and Social Security would drive up debt to about 80 percent of GDP by 2035. That is, actually, the rosy scenario. The more realistic scenario — that the tax cuts
are extended, the alternative minimum tax is in- dexed, Medicare payments to physicians are not dramatically reduced — would bring the debt level to dizzying heights. By 2020, debt would be close to 90 percent of GDP, reaching 180 percent of GDP by 2035. “Under the alternative fiscal sce- nario, the surge in debt relative to the country’s output would pose a clear threat of a fiscal crisis during the next two decades,” the CBO report
THE WASHINGTON POST Which gets to the fundamental point: “The
later that actions are taken to address persistent budget imbalances, the more severe they will have to be.” Under the realistic budget scenario, to keep the debt to GDP ratio stable over the next 25 years would require immediate and perma- nent tax increases or spending cuts of about 5 percent of GDP. That is a significant amount, equivalent to about one-fifth of all non-interest government spending this year. But waiting and hoping is not a good alternative. As the CBO put it, “Actions taken later, particularly if there was a fiscal crisis, would need to be significantly great- er to achieve the same objective. Larger and more abrupt changes in fiscal policy, such as sub- stantial cuts in government benefit programs, would be more difficult for people to adjust to than smaller and more gradual changes.” In short, fiscal responsibility and caring for the needy are not antithetical goals. One is nec- essary to ensure that the government can contin- ue to do the other.
Gridlock Maryland needs ‘smart’ electricity. Who should pay?
other “smart grid” innovations can reduce out- ages and direct the flow of power with greater precision, saving energy and money while creat- ing jobs. The Energy Department is spending $3.4 billion in federal stimulus money to help utilities build a smart grid. The hard question is measuring costs and ben-
A
efits precisely — and apportioning them be- tween utilities and ratepayers. The answer will come not from the federal government but from regulators in the 50 states and the District. Case in point: the Maryland Public Service Commis- sion’s (PSC) June 21 rejection of an $835 million proposal by Constellation Energy’s BGE subsid- iary to deploy 2.1 million digital gas and electric meters that track energy use in near real-time. The company says the meters would enable it to encourage less consumption during peak hours, saving $2.6 billion over 15 years. The Energy Department gave BGE $136 mil- lion in stimulus money for the plan. But the PSC objected to the utility’s request to recoup the re- maining cost through small monthly surcharges on customers’ bills. The agency also took um- brage because BGE sought mandatory higher prices during peak hours, facilitated by the me- ters. BGE said this saved customers money in pi- lot programs; the commission worried about the elderly and others who find it hard to fine-tune electricity use. In the commission’s view, BGE wanted customers to pay upfront for savings that “are largely indirect, highly contingent and a long way off.”
MERICA RUNS ON electricity, but the nation’s antiquated power grid struggles to meet the demand. The Obama admin- istration believes digital equipment and
If BGE can’t satisfy the PSC soon, it could lose
federal funding. Hearings on a revised plan by BGE are set for Aug. 5. Meanwhile, Pepco is awaiting approval to install half a million meters in Montgomery and Prince George’s counties, us- ing $69 million in stimulus funds. Unlike BGE, Pepco proposed using its next normal rate in- crease, not a surcharge, to recover costs, which should make its plan more palatable to the regulators.
With hundreds of millions of federal dollars and the energy efficiency of the mid-Atlantic re- gion at stake, the PSC has a lot to think about. As it happens, job creation — the rationale for stim- ulus funding — is too murky to tip the balance. Pepco would have pursued its plan with or with- out federal money, officials say. BGE, too, was pursuing smart meters before the stimulus plan existed. BGE guesstimates its current plan would create 1,350 jobs over the next half-decade — one for every $100,000 in federal money. But both companies say smart meters save money in part because they don’t need meter readers. That is, even if they create jobs now, they destroy jobs later. The PSC needs a regulatory doctrine for the digital age. Its rejection of BGE’s plan was under- standable, given its mandate to protect the pub- lic interest. But there is no free lunch. A more re- liable, efficient and flexible grid is a public good, the cost of which the public may reasonably be expected to share. BGE probably demanded too much from customers the first time around. When the utility comes back before the commis- sion, regulators should weigh its revised propos- als flexibly, with due consideration of the tech- nological future.
ABCDE News pages:
BOISFEUILLET JONES JR., Chairman • KATHARINE WEYMOUTH, Publisher and Chief Executive Officer Vice Presidents
MARCUS W. BRAUCHLI Executive Editor
RAJU NARISETTI, Managing Editor ELIZABETH SPAYD, Managing Editor
SHIRLEY CARSWELL Deputy Managing Editor
KENNETH R. BABBY, Chief Revenue Officer/GM, Digital The Washington Post Company:
1150 15th St. NW, Washington, D.C. 20071 (202) 334-6000 DONALD E. GRAHAM, Chairman of the Board STEPHEN P. HILLS, President and General Manager Business and advertising:
Editorial and opinion pages: FRED HIATT
Editorial Page Editor JACKSON DIEHL
Deputy Editorial Page Editor
ROGER ANDELIN ...................................................................................... Technology BENJAMIN C. BRADLEE ................................................................................. At Large USHA CHAUDHARY.................................................................. Finance & Admin/CFO JAMES W. COLEY JR. ...................................................................................Production L. WAYNE CONNELL ...................................................................... Human Resources LEONARD DOWNIE JR. ................................................................................... At Large WENDY EVANS .......................................................................................... Advertising GREGG J. FERNANDES ..............................................................................Circulation JOHN B. KENNEDY ............................................................................................ Labor ERIC N. LIEBERMAN ...................................................................................... Counsel CHRISTOPHER MA ................................................................................ Development STEVE STUP .................................................................................. Digital Advertising
EUGENE MEYER, 1875-1959 • PHILIP L. GRAHAM, 1915-1963 • KATHARINE GRAHAM, 1917-2001 ——————
Poor marks for some past teachers
If the “highly effective” teacher who is on the board of the completely objective teachers union is qualified to comment on the teacher firings by D.C. Schools Chancellor Michelle Rhee and on the school system’s teacher-evaluation program [letters, July 28], then so, too, am I. Iwas a student in D.C. Public Schools for my entire
primary and secondary educational career, so I have seen the range of educators available to the system. I had numerous great teachers, and they came in all ages, shapes and sizes. Unfortunately, I also had too many teachers who approached their job and their students as if we were some great burden on their day, just an inconvenience to be tolerated. Anything learned in their classes was the sole prov- ince of the student, be it simply reading the textbook or otherwise. Class with these teachers generally con- sisted of busywork, just something to keep students occupied with minimal effort from the teacher. If there was some teacher-evaluation system that was strong enough to remove ineffective educators despite the iron fist of the union, I never saw it. AARONWILLIS, Washington
No buying, no hiring
One wonders if economist Robert J. Samuelson has heard of the notion of “demand” [“Why CEOs aren’t hiring,” op-ed, July 26]. He is right that workers have lost power relative to capital thanks to globalization and the weakened bargaining power of labor.
One of the consequences of the resulting lower
wages for American workers was that much of the consumer demand over the past decade was fi- nanced by homeowners drawing on equity that had been overvalued during the housing bubble. When that housing bubble burst, so did the ATM that many Americans had been using to create de- mand for consumer goods. The loss of hundreds of billions of dollars in
property wealth is at the root of the current un- employment problem: It’s not that CEOs are not hiring because they were “traumatized by the cri- sis” but rather that consumers aren’t buying. Al- though critics make President Obama’s stimulus efforts sound gargantuan, in fact the amount of the stimulus was not sufficient to rival the loss in prop- erty wealth that had fueled consumer demand. RICKROWDEN, New Delhi
Thailand’s good-faith efforts
The July 15 editorial “Wrong way in Thailand” showed a superficial knowledge of Thai politics and the issue of national reconciliation. First, calling the current government “unelect-
ed” demonstrated a lack of understanding of the British parliamentary system. Prime Minister Ab- hisit Vejjajiva assumed office via majority vote in parliament, as did his immediate predecessor. Second, it’s regrettable that the editorial ac-
cused our government — which tolerated a two- month-long demonstration that damaged busi- nesses, hospitals and the livelihoods of our people — of “repression.”We tried in good faith to negoti- ate a settlement with a definitive early election date and a road map for national reconciliation, but the opposition rejected it. Our government abides by the principles of the International Cov- enant on Civil and Political Rights in sustaining national peace and order through an emergency decree — and in regularly reviewing it. The decree has been lifted in 14 provinces in the past three weeks, and it will be relaxed more as the situation warrants. Third, those arrested were mainly instigators or
perpetrators of violence. Releasing them outright would encourage a culture of violence and impunity. Fourth, the editorial’s conclusion that applica- tion of law and restoring security would damage our support among Western allies and hit in- vestment was wrong-headed. In fact, our stock market is up 14 percent this year, exports last month rose the most in 18 years to their highest level ever, and tourism was up 13.7 percent for the first half of 2010.
DON PRAMUDWINAI, Washington
The writer is Thailand’s ambassador to the United States.
CBO’s
alternative baseline scenario
The more we delay, the harder it will be to avoid a debt crisis.
ometimes a chart is worth a thousand editorials. The one we reproduce here, courtesy of the Congressional Budget Office, is one of those. It shows the fed- eral debt throughout U.S. history and
the daunting slope of what is likely to happen in the next few decades. The federal debt held by the public — and, increasingly, “the public” means foreign governments and investors — has mushroomed from 36 percent of gross domestic product at the end of the 2007 fiscal year to a projected 62 percent of GDP at the end of fiscal 2010. By way of comparison, only during and just after World War II has the federal debt exceeded 50 percent of GDP. But that’s not the scary part. The scary part, as outlined in the CBO’s new issue brief, “Federal
says. Even absent a crisis, this debt load would be
stifling. So much government borrowing would crowd out private investment. Rising interest payments would require higher taxes or lower spending. The government’s flexibility to re- spond to events such as war or recession would be curtailed. Then there is the risk of fiscal crisis — a situation in which investors decide the Unit- ed States isn’t such a good bet after all and they don’t want to lend money, except at prohibitively high interest rates. If that were to happen, “pol- icy options for responding to it would be limited and unattractive.” Debt could be restructured, the currency inflated or an austerity program (tax increases plus spending cuts) implemented. None of these would be pleasant.
PROJECTED Talk of the region’s violent storm rages on
I was greatly disturbed by the numerous nasty comments in the news- paper about the power companies after Sunday’s storm. Three hundred thou- sand outages are a lot, and my husband and I fully ex- pected to be last on the list of repairs. However, on Sunday afternoon, a police officer checked out our downed line, reported the situation and blocked the dangerous area with yel- low tape. On Monday morning, a tree crew ar- rived and removed fallen branches, and a Pepco crew called for a tow truck, which came shortly and removed two cars that were blocking access to the power lines. On Tuesday morning, two city trees were removed, and a crew from Ohio appeared and worked for several hours to reknit our frazzled wires. We and our neighbors are very grateful for the ef-
forts made by numerous groups to give us back our electricity and all the related goodies — without our computer and our telephone, we had no way to com- municate with our sons or anyone else. We feel very fortunate to have had Pepco and the related compa- nies working so hard to help us. BETTY BULLOCK, Washington
Regarding the July 27 front-page article “Storm’s
outages likely to linger”: Joseph M. Rigby, chief executive of PHI, Pepco’s parent company, is not responsible for Sunday’s dev- astating storm. Some would argue that he is also not responsible for the loss of power to about 300,000 people. What Mr. Rigby is responsible for, however, is the pathetic response to the problem. A represen- tative for Pepco said the utility was “overwhelmed”; that is another way of saying it was unprepared for power outages affecting about 15 percent of its cus- tomers. The blame needs to be shared with the public
service commissions in the District and Maryland. The relationship with Pepco is far too cozy for com- missioners, who are supposed to represent the citi- zens. Pepco needs to do a better job, Mr. Rigby needs to get off the spreadsheet and do the right thing, and the public service commissions need to serve the people.
JOHNMILLER, Washington
Sunday’s storm showed that area residents do not take such storms seriously.
I was glued to a window on Connecticut Avenue as motorists rolled by, oblivious to the dangers of be- ing on the road during such a storm and ignoring the need to take shelter. They also made it difficult for emergency vehicles to get around. I can understand the excitement such storms gen-
erate. As a boy in Boston, I foolishly was outdoors during the Great New England Hurricane of 1938, marveling at the high winds, fallen trees and sheets of rain that killed hundreds and damaged or de-
SATURDAY, JULY 31, 2010 LETTERS TO THE EDITOR
dletters@washpost.com
MANUEL BALCE CENETA/ASSOCIATED PRESS A tree felled by Sunday’s storm blocks a street in Silver Spring.
stroyed tens of thousands of homes and trees. My parents, meanwhile, anxiously sat at home, glued to their radio and wondering where their wandering boy was.
YALERICHMOND, Washington
After living for seven years in the capital of the
United States, I continue to be surprised that this developed city and country use such an old-fash- ioned way of distributing power, TV and telephone/ Internet service to citizens. I’m tired of news about power outages, which is all about the impact of the storm on power lines and not the question of why we have ugly wooden poles all over this important region, with hanging cables between trees. When I have guests from my home country, the
Netherlands, they are all surprised that the poles are still used. When there is snow and when there is a summer thunderstorm, thousands of people end up without power and streets are left without working traffic lights. Why are these cables not in the ground, like the water and sewer pipes? Western Europe doesn’t have wooden utility poles in its streets. This country shouldn’t have such poles, either. Look at downtown Washington — there are no poles and ugly hanging cables. Without poles and cables, we can leave all the repair trucks, emergency crews and media teams at home. MAARTENWILLEMS, Washington
I live in a condo in Bethesda. We were without power for two days after the big storm. I am grateful to Pepco for restoring power to our building, but I also am perplexed. I watched four Pepco employees working on the power lines, but at the same time, three others in hard hats were on the ground talking and laughing. I watched them for 15 minutes, then got close enough to hear whether they were talking “business.” They were chitchatting about personal things, telling jokes and otherwise enjoying them- selves. This went on for almost an hour before I had to leave. As a Pepco customer, I helped pay for those three men to kill time while others were working. I won- der what their positions are and why they had to be there.
GORDON F. BROWN, Bethesda Funding the Postal Service’s future
The July 23 Washington Forum commentary by Paul B. Carroll and Chunka Mui, “How USPS can save itself,” raised some important points about the future of the U.S. Postal Service. The agency must make changes to continue to provide a vital service to the American peo- ple, but cutting service, particularly Saturday mail de- livery, should not be one of them. For the Postal Service to effectively plan for the fu- ture, Congress must lift unnecessary financial burdens, allowing the agency to think long term rather than make shortsighted cuts to stay above water. The Postal Service has been backed into a corner by a multibillion-dollar overpayment into the Civil Service
Retirement Fund and a congressional mandate that it prefund its retiree health benefits on an accelerated schedule. Since 1971, the Postal Service has made as much as $75 billion in overpayments into its federal re- tirement fund. If that money were returned to the Post- al Service, it could be used to meet the requirement to prefund retiree health benefits. This unnecessary re- quirement, which forces the agency to pay a 75-year lia- bility in a 10-year time frame, has turned Postal Service profits into losses in two of the past three years. FREDRIC V. ROLANDO,Washington
The writer is president of the AFL-CIO’s National Association of Letter Carriers.
d
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