US Economy shrinks at 6.2%
February 28, 2009
By JEANNINE AVERSA • Associated Press • February 28, 2009
Excerpts as reported in Courier Post
The economy contracted at a staggering 6.2 percent pace at the end of 2008, the worst showing in a quarter-century, as consumers and businesses ratcheted back spending, plunging the country deeper into recession.
The Commerce Department report released Friday showed the economy sinking much faster than the 3.8 percent annualized drop for the October-December quarter first estimated last month. It also was considerably weaker than the 5.4 percent annualized decline economists expected.
A much sharper cutback in consumer spending — which accounts for about 70 percent of economic activity — along with a bigger drop in U.S. exports sales, and reductions in business spending and inventories all contributed to the largest revision on records dating to 1976.
Looking ahead, economists predict consumers and businesses will keep cutting back spending, making the first six months of this year especially rocky.
“Right now we’re in the period of maximum recession stress, where the big cuts are being made,” said economist Ken Mayland, president of ClearView Economics.
The new report offered grim proof that the economy’s economic tailspin accelerated in the fourth quarter under a slew of negative forces feeding on each other. The economy started off 2008 on feeble footing, picked up a bit of speed in the spring and then contracted at an annualized rate of 0.5 percent in the third quarter.
The faster downhill slide in the final quarter of last year came as the financial crisis — the worst since the 1930s — intensified.
Consumers at the end of the year slashed spending by the most in 28 years. They chopped spending on cars, furniture, appliances, clothes and other things. Businesses retrenched sharply, too, dropping the ax on equipment and software, home building and commercial construction.
Before Friday’s report was released, many economists were projecting an annualized drop of 5 percent in the current January-March quarter. However, given the fourth quarter’s showing and the dismal state of the jobs market, Mayland believes a decline of closer to 6 percent in the current quarter is possible.
The nation’s unemployment rate is now at 7.6 percent, the highest in more than 16 years. The Federal Reserve expects the jobless rate to rise to close to 9 percent this year, and probably remain above normal levels of around 5 percent into 2011.
A smaller decline in the economy is expected for the second quarter of this year. But the new GDP figure — like the old one — marked the weakest quarterly showing since an annualized drop of 6.4 percent in the first quarter of 1982, when the country was suffering through an intense recession.
“It’s going to be a challenging 2009,” Scott Davis, chief executive officer of global shipping giant UPS, said Thursday while speaking to the U.S. Chamber of Commerce in Washington.
American consumers — spooked by vanishing jobs, sinking home values and shrinking investment portfolios have cut back. In turn, companies are slashing production and payrolls. Rising foreclosures are aggravating the already stricken housing market, hard-to-get credit has stymied business investment and is crimping the ability of some consumers to make big-ticket purchases.
It’s creating a self-perpetuating vicious cycle that Washington policymakers are finding hard to break.
To jolt life back into the economy, President Barack Obama recently signed a $787 billion recovery package of increased government spending and tax cuts. The president also unveiled a $75 billion plan to stem home foreclosures and Treasury Secretary Timothy Geithner said as much as $2 trillion could be plowed into the financial system to jump-start lending.
For all of 2008, the economy grew by just 1.1 percent, weaker than the government initially estimated. That was down from a 2 percent gain in 2007 and marked the slowest growth since the last recession in 2001.
With Friday’s figures, Mayland lowered his forecast for this year to show a deeper contraction of just over 2 percent.
In the fourth quarter, consumers cut spending at a 4.3 percent pace. That was deeper than the initial 3.5 percent annualized drop and marked the biggest decline since the second quarter of 1980.
Businesses slashed spending on equipment and software at an annualized pace of 28.8 percent in the final quarter of last year. That also was deeper than first reported and was the worst showing since the first quarter of 1958.
Fallout from the housing collapse spread to other areas. Builders cut spending on commercial construction projects by 21.1 percent, the most since the first quarter of 1975. Home builders slashed spending at a 22.2 percent pace, the most since the start of 2008.
A sharper drop in U.S. exports also factored into the weaker fourth-quarter performance. Economic troubles overseas are sapping demand for domestic goods and services.
Businesses also cut investments in inventories — as they scrambled to reduce stocks in the face of dwindling customer demand — another factor contributing to the weaker fourth-quarter reading. The government last month thought businesses had boosted inventories, which added to gross domestic product, or GDP.
GDP is the value of all goods and services produced in the United States and is the best barometer of the country’s economic health.
Fed Chairman Ben Bernanke earlier this week told Congress that the economy is suffering a “severe contraction” and is likely to keep shrinking in the first six months of this year. But he planted a seed of hope that the recession might end his year if the government managed to prop up the shaky banking system.
Even in the best-case scenario that the recession ends this year and an economic recovery happens next year, unemployment is likely to keep rising.
That’s partly because many analysts don’t think the early stages of any recovery will be vigorous, and because companies won’t be inclined to ramp up hiring until they feel confident that any economic rebound will have staying power.
More job losses were announced this week. JPMorgan Chase & Co. on Thursday said it would eliminate about 12,000 jobs as it absorbs the operations of failed savings and loan Washington Mutual Inc. That figure includes 9,200 cuts announced previously and 2,800 jobs expected to be lost through attrition.
The NFL said Wednesday that the league dropped 169 jobs through buyouts, layoffs and other reductions. Textile maker Milliken & Co. said it would cut 650 jobs at facilities worldwide, while jeweler Zale Corp. said it will close 115 stores and eliminate 245 positions.
Our Perspective:
The news keeps getting gloomier! I guess there is no easy way t0 say it. We took our eye off the ball. We elected officals to represent our interest and take care of our welfare. We can try to point fingers but we are all responsible. We all drank the kool-aid.
We thought this could never happen to us. We’re educated, life is good. We became complacient and did not plan for our future. I know President Obama is throwing a lot against the wall, hoping something will stick.
Roosevelt introduced the NewDeal. If something didn’t work, he said let’s tweak it, what else can we do. Obama is following this lead. It may not be pretty, but we are not left with many alternatives. We can see what happens when we do nothing or we are caught up in our own self interest.
We are all one and we are here to help one another. We must approach this dilemna with the hopes of picking everyone up, not just a few. There will be difficult decisions. We are resilient and we will rebuild and prevail You may leave a comment or email george@hbsadvantage.com .
Let us know your thoughs?
Preparing for a Flood of Energy Efficiency Spending
February 26, 2009
KNOXVILLE, Tenn. — To the casual eye, the basement of this city’s Firehouse 9 looks like a jumble of old hydrants, Dr Pepper cartons, rakes and random gear. To specialists in energy efficiency, the 1960s-era building is a mess of a different sort: wasteful hot water heaters for the firefighters’ showers, ancient refrigerators and outdated lights.
Wrapping up an elaborate energy audit, Knoxville is about to find out which of 99 city buildings are wasting the most energy. It hopes to begin repairs this summer, just in time to catch a tsunami of federal stimulus money earmarked for such unglamorous tasks as replacing light bulbs and fixing leaky insulation.
Knoxville’s timing is excellent. The city began the arduous work of cataloging deficiencies before the stimulus bill passed, and it is well along in planning its next steps. But experts worry that other beneficiaries, especially cities, are not ready to oversee the huge sums of energy-efficiency money about to come their way.
The money in the bill is enough to pay for a tremendous expansion of efficiency efforts across the country. But as with other parts of the stimulus package, the efficiency plan is creating tension between spending the money quickly, to get rapid economic stimulus, and spending it well, to do the most good over the long run.
“There’s enormous opportunity here for expansion of energy efficiency in this country,” said Lowell Ungar, the policy director for the Alliance to Save Energy, an advocacy group. “But there is certainly the potential for waste.”
President Obama signed the stimulus package into law on Feb. 17, hailing it as a shot of money big enough to help shake the economy from its lethargy while advancing many of his campaign priorities. Accelerating the country’s energy transition is at the top of his list. Many experts in the field agree with him that carefully chosen investments in efficiency will ultimately save more than they cost, by cutting energy bills.
At least $20 billion in the stimulus bill was earmarked for programs like improving the efficiency of government buildings and the homes of poor people, and trying to find better ways to save energy. That is far more, advocates say, than any bill in history. Within a few months, the money is likely to start landing in the bank accounts of thinly staffed state and city agencies that are accustomed to scraping for a dime here, a dollar there.
Utah expects that its state energy office will receive $40 million for energy efficiency, renewable energy and related programs — 123 times the size of the office’s current budget, said Jason Berry, who manages the four-person unit. He is about to go on a hiring spree.
The package contains $5 billion to weatherize low-income homes through the Department of Energy, enough to give the state programs that manage that work 10 to 30 times the money they received last year, said Christina Kielich, a department spokeswoman.
For advocates of this relatively obscure program, “it’s like they finally got to the other side of the desert and it’s pouring rain,” said Seth Kaplan, a vice president of the Conservation Law Foundation, an environmental group.
The stimulus package also contains $4.5 billion to modernize federal buildings and $2.5 billion for research into energy efficiency and renewable energy. The biggest chunk, $6.3 billion, will be distributed by the Energy Department in grants to state and local governments, which can spend the money on things as diverse as thicker window panes for state capitols and rebates for homeowners who change their light bulbs.
Homes and commercial buildings account for 39 percent of national energy consumption. Experts say that improving their efficiency is not only cost-effective but also a good way to reduce the nation’s emissions of the greenhouse gases that cause global warming.
But figuring out how to spend the money effectively — learning which university buildings need their doors caulked, for example, or which firehouse walls have insulation that is too thin — can involve time-consuming, tricky analysis by skilled technicians.
“People are very conservative about their buildings,” said Donald Gilligan, the president of the National Association of Energy Service Companies, a trade group. “Nobody wants to put a failed technology into the school buildings or have the lights not work.”
In Knoxville, a team of auditors hired by the city is spending six months peering into the grimy nooks of fire and police stations and even the convention center, where one employee referred to the downstairs boiler area as a “money-eating room.”
In the Southeastern region of the country, where Mr. Plack works, low electricity prices have often made saving energy an afterthought, unlike in California and much of the Northeast. For example, Nashville, nearly 200 miles west of Knoxville, has not conducted an energy audit of its city buildings, though it hopes to use stimulus money to look through its own stock of fire stations and libraries.
“There’s a lot of municipalities out there who are completely unaware this is moving forward,” Mr. Kaplan said, referring especially to smaller cities. “They just don’t have the infrastructure in place to deal with this.”
The Energy Department, which is doling out most of the grants, has been assailed on Capitol Hill for delays in disbursing other types of assistance for clean energy. Ms. Kielich said in an e-mail message that the department hoped efficiency grants would begin flowing to city and state energy offices within 120 days, and that it planned to begin disbursing weatherization money “expeditiously and responsibly.”
On the receiving end, absorbing the huge increase in money for weatherization could be particularly challenging, said Ian Bowles, the secretary of energy and environmental affairs for Massachusetts. Though he contends it can be done, “the weatherization folks are going to have to quintuple their effort in order to put that money out,” he said.
In some cases, the managers of efficiency programs may not need to look far to find ways to spend the money.
In Knoxville, the Community Action Committee, whose operations include helping poor people weatherize their homes, works from a building with a $14,000 monthly utility bill — some of it because of an enormous skylight that lets in too much blistering Tennessee sunshine in the summer.
“It’s embarrassing,” said Barbara Kelly, executive director of the committee. “We do better for our clients than we do for us.”
Our Perspective:
I applaud the stimulus but I am always nervous when large sums of money is out into the government’s hands. Responsible spending is the key to this stimulus spending. Investing in the infrastructure ( roads, bridges, rails and energy), is an investment in our future. This will only make us a stronger nation.
Irresponsible spending and earmarks will only tarnish our efforts and be counterproductive. The United States is poised to lead the next great energy evolution.
Let’s be sure to hold our elected officials accountable!
Let us know your thoughts? You may leave a comment or email george@hbsadvantage.com
Will Obama Put Real Money on the Table for Clean Energy?
February 26, 2009
Originally posted at the Breakthrough Institute
For those paying close attention, there was a nugget of critical energy and climate policy news buried at the tail end of a Saturday New York Times story focused on President Obama’s budget plans: 
On energy policy, Mr. Obama’s budget will show new revenues by 2012 from his proposal to require companies to buy permits from the government for greenhouse gas emissions above a certain cap. The Congressional Budget Office estimates that would rise to $300 billion a year by 2020.
Since companies would pass their costs on to customers, Mr. Obama would have the government use most of the revenues for relief to families to offset higher utility bills and related expenses. The remaining revenues would cover his proposals for $15 billion a year in spending and tax incentives to develop alternative energy.
Many climate advocates will no doubt read this with excitement at Obama’s apparent commitment to move forward with a cap and trade proposal, even during these tough economic times. But if you’re looking closely at the public investments Obama plans to pair with his carbon pricing proposal, you’ve got to start worrying: if Obama remains committed to spending just $15 billion per year to spur a new energy economy, America will fail in that endeavor. Cap or no cap, I’m not sure you can find one energy expert that thinks the public investments required to build a new energy economy will cost that little.
I know I may be chastised for criticizing Obama so soon after he delivered an unprecedented clean energy investment in the stimulus. But let’s be clear: those investments were just the beginning, and Obama needs to articulate a clear and viable plan to make the sustained commitment and ongoing public investments necessary to truly build a new energy economy.
The public is overwhelmingly behind President Obama right now, and if he was elected with a mandate to do anything beyond stem the economic crisis, it was a mandate to build a new, clean energy economy that finally secures America’s energy independence and averts potentially catastrophic climate change.
Yet once you start looking at the critical areas where public investment in a clean energy economy is necessary – research, development and demonstration, or RD&D; critical infrastructure, like a modernized electrical grid; deployment incentives to spur emerging technologies; and efficiency incentives, financing and other investments to retrofit American homes, businesses and factories – it’s not hard to see why the $15 billion per year Obama has pledged is simply not up to the task.
RD&D: There’s widespread consensus – including among Obama advisers like White House science adviser John Holdren, Sec. of Energy Steven Chu, and Obama campaign energy adviser Dan Kammen – that public investments in clean energy RD&D alone need to rise to $15-30 billion annually, putting them on the same scale as other national innovation priorities (e.g. health research at NIH, military R&D, etc.) and past R&D initiatives (e.g. Apollo, Manhattan, Project Independence, etc.).
Building a 21st century electrical grid: building a modern electrical grid, including long-distance transmission expansion and the integration of smart grid (and probably utility-scale energy storage) technologies will cost on the scale of hundreds of billions over the coming decade or two. Not all of that will have to come from the public sector, but a sizable chunk will, maybe $5-15 billion annually. Breakthrough proposes creating a National Electricity Modernization Authority to facilitate and finance grid modernization activities across the country, investing $50 billion in public seed money to get the Authority started. More on what it will take to build a 21st Century Grid in an upcoming post…
Driving clean energy deployment: Incentives to spur the deployment of emerging clean energy technologies and drive down their cost are also necessary, even with a cap and trade program in place. Denmark provides a perfect case study of the necessity of pairing carbon pricing with direct investments in clean energy technology deployment. Looking elsewhere in Europe, it’s also not hard to see that the EU’s Emissions Trading Scheme doesn’t preclude Germany’s sizable investment in solar deployment, a roughly 50 cents/kWh feed-in tariff, for example, nor does it stop nations across the EU from putting in place more modest deployment incentives for wind, solar, biomass and other renewables. Here in the United States, the three-year PTC expansion in the stimulus is projected to cost $13 billion over the next ten years, and the cost of supporting emerging renewable energy technologies will only increase as the scale of their deployment ramps up.
If the United States launched a cohesive strategy to support a whole portfolio of emerging clean energy technologies (for both electricity and transportation), aimed at achieving economies of scale and improving price and performance, it could cost on the scale of $30 billion annually before long. Those are smart investments though to make clean energy cheap over time (in real, unsubsidized terms), especially when compared to the total expected cost of cap and trade ($100-300 billion/year). Since deployment incentives can be targeted strategically at specific technologies, they will cost our economy and taxpayers far less than the blunt instrument that is carbon pricing; why make all energy more expensive than solar (a three-to-five-fold increase in the price of energy) in order make solar competitive when you can design a deployment incentive specifically for solar that accomplishes the same goal at a fraction of the cost?
Rebuilding an efficient economy: Spurring widespread and ongoing energy efficiency retrofits and upgrades across multiple sectors of the US economy will require major public investments as well, particularly in the form of low-cost financing to bring down the high capital costs of efficiency retrofits – what I call the “Capital Barrier.” On the higher end, Architecture 2030 recently called for a $171 billion, two-year stimulus investment to bring down the Capital Barrier for efficiency, predominantly through low-interest mortgages and loans. Green for All, the Center on Wisconsin Strategies, and Center for American Progress have called for a much more modest investment of $15 billion over five years to underwrite the establishment of a $50 billion public revolving loan fund to bring down the Capital Barrier for efficiency retrofits. The stimulus bill, with at least $8.5 billion in annual investments in efficiency gives us another scale reference. And of course, those investments merely begin the task of building a more efficient American economy.
In summary, it’s no wonder the Breakthrough Institute is joined by the the Apollo Alliance, and the Center for American Progress in proposing public investments in clean energy on the scale of $50 billion annually. Obama’s plans to spend just $15 billion a year simply falls far short of what is needed (even after the good start he’s made in the stimulus).
So what will it take to get Obama to double, triple or even quadruple his commitment to the strategic public investments necessary to spark a clean energy economy?
Now, I’m not wedded to financing these investments entirely (or even at all) with money from carbon price revenue (especially since I’m not confident cap and trade will pass soon enough to provide a near-term revenue stream). But if the money doesn’t come from carbon auctions, it’s gotta come from elsewhere (and soon). Does Obama have a plan to finance the scale and type of clean energy investments on the scale we need?
Obama says that sparking a clean energy economy is his top priority (after getting the economy out of crisis). It’s time for him to put (real) money on the table.
Obama signs stimulus plan
February 25, 2009
Written by Martin Lamonica
Martin LaMonica is a senior writer for CNET’s Green Tech blog.
President Obama signed into law a government stimulus package Tuesday and said the energy provisions will pave the path for doubling the amount of renewable energy in the next three years.
Energy is a major piece of the massive $787 billion package, totaling about $38 billion in government spending and about $20 billion in tax incentives over the next 10 years, according to estimates.
President Barack Obama signs the American Recovery and Reinvestment Act in Denver.
(Credit: Screen capture by Martin LaMonica/CNET Networks)
Obama signed the bill, called the American Recovery and Reinvestment Act, into law at the Denver Museum of Nature & Science where he later took a tour of the museum’s solar-panel installation.
The energy portions of the law are intended to promote rapid development of renewable energy sources and increase energy efficiency in buildings, appliances, and other sectors of the economy.
The president said he hoped that the clean-energy-related portions of the bill will inspire Americans the same way that President Kennedy’s goal to put a man on the moon did in the 1960s.
“I hope this investment will ignite our imagination once more in science, medicine, energy and make our economy stronger, our nation more secure, and our planet safer for our children,” Obama said before signing the bill.
The major energy-related portions of the law were largely left intact after Congressional debate. Overall, the plan will more than triple the amount of spending on clean-energy programs, said Daniel Weiss, a fellow at the Center for American Progress.
Major energy portions include:
- A three-year extension to the tax credit for wind, which would have expired at the end of this year, and an extension until the end of 2013 for geothermal and biomass renewable-energy projects. The credit has been increased to 30 percent of the investment.
- $4.5 billion in direct spending to modernize the electricity grid with smart-grid technologies.
- $6.3 billion in state energy-efficient and clean-energy grants and $4.5 billion to make federal buildings more energy efficient.
- $6 billion in loan guarantees for renewable energy systems, biofuel projects, and electric-power transmission facilities.
- $2 billion in loans to manufacture advanced batteries and components for applications such as plug-in electric cars.
- $5 billion to weatherize homes of up to 1 million low-income people.
- $3.4 billion appropriated to the Department of Energy for fossil energy research and development, such as storing carbon dioxide underground at coal power plants.
- A tax credit of between $2,500 and $5,000 for purchase of plug-in electric vehicles, available for the first 200,000 placed into service.
(Click here for full summary from the American Council on Renewable Energy (ACORE) and from law firm Dewey & LeBoeuf.)
Measuring the impact
In general, companies in the green-technology field have welcomed the focus on energy efficiency and renewable energy production in the law.
The law gives renewable-energy project developers an alternative to the existing federal subsidy. Many renewable-energy projects have been stalled, or scrapped, because many investors don’t have enough income to take advantage of a 30 percent federal tax credit. The bill now allows renewable-energy project developers to effectively get the same credit by applying for a loan from the Department of Energy for 30 percent of the project, explained Rhone Resch, the president of the Solar Energy Industry Association (SEIA).
The loan guarantees are designed to help companies to commercialize new energy technologies, by providing money for a manufacturing facility, for example. A number of green-tech companies, including flywheel storage company Beacon Power, electric-car company Tesla Motors, and battery maker A123 Systems have applied
More generally, investors and analysts said that the significance of the law is that it’s a step toward crafting a more comprehensive energy policy, based on sustained commitment to renewable energy and efficiency.
“For years, U.S. policymakers’ support for clean energy has been uneven,” said Michael Liebreich, the CEO of research firm New Energy Finance, in a statement. “No longer…the U.S. will have a great chance to be the growth engine for our industry over the next several years.
The spending on the bill on things like smart grid technologies and energy efficiency should have a rapid impact, said Dennis Costello, a venture capitalist at Braemar Energy Ventures. But he said that even with the economic stimulus of the government spending, the conditions for energy technology firms remains very difficult.
Specifically, he said the drop in the cost of oil over the past year makes it harder for a firm that is seeking to develop a replacement, such as biofuels. Also, the overall recession continues to dampen demand for products and financing remains challenging.
“It’s kind of refreshing to see at least beginnings of a real energy policy, some sort of unified approach to our energy problems,” Costello said. “But it isn’t going to solve our energy problems. There are a lot of countervailing factors to give pause to being overexuberant on the future of energy sector and clean tech.”
Analysts noted there are other challenges to a rapid change in the slow-moving energy sector.
The stimulus act gives the Department of Energy control over billions of dollars in loans and spending on research and development projects–more than the department’s annual budget. But the Energy Department has not dispersed money in the past few years because of its slow approval process, which Secretary Steven Chu said he intends to speed up.
Also, a sharp increase in renewable energy from wind and solar power requires building new power lines to bring electricity from windy and sunny areas to more populated regions.
Bramaer’s Costello said an industry association estimated that the stimulus act spending could lead to 3,000 new miles of transmission lines. However, siting these new lines is a contentious process and likely to meet local and state opposition.
“Siting of transmission lines is this going to be the Achilles’ heel of renewables,” said Elgie Holstein, a senior energy policy adviser in the Obama administration.
The full text of President Obama’s address to Congress Feb 24th, 2009:
February 25, 2009
Madame Speaker, Mr. Vice President, Members of Congress, and the First Lady of the United States:
I’ve come here tonight not only to address the distinguished men and women in this great chamber, but to speak frankly and directly to the men and women who sent us here.I know that for many Americans watching right now, the state of our economy is a concern that rises above all others. And rightly so. If you haven’t been personally affected by this recession, you probably know someone who has – a friend; a neighbor; a member of your family. You don’t need to hear another list of statistics to know that our economy is in crisis, because you live it every day. It’s the worry you wake up with and the source of sleepless nights. It’s the job you thought you’d retire from but now have lost; the business you built your dreams upon that’s now hanging by a thread; the college acceptance letter your child had to put back in the envelope. The impact of this recession is real, and it is everywhere.
But while our economy may be weakened and our confidence shaken; though we are living through difficult and uncertain times, tonight I want every American to know this:
We will rebuild, we will recover, and the United States of America will emerge stronger than before.
The weight of this crisis will not determine the destiny of this nation. The answers to our problems don’t lie beyond our reach. They exist in our laboratories and universities; in our fields and our factories; in the imaginations of our entrepreneurs and the pride of the hardest-working people on Earth. Those qualities that have made America the greatest force of progress and prosperity in human history we still possess in ample measure. What is required now is for this country to pull together, confront boldly the challenges we face, and take responsibility for our future once more.
Now, if we’re honest with ourselves, we’ll admit that for too long, we have not always met these responsibilities – as a government or as a people. I say this not to lay blame or look backwards, but because it is only by understanding how we arrived at this moment that we’ll be able to lift ourselves out of this predicament.
The fact is, our economy did not fall into decline overnight. Nor did all of our problems begin when the housing market collapsed or the stock market sank. We have known for decades that our survival depends on finding new sources of energy. Yet we import more oil today than ever before. The cost of health care eats up more and more of our savings each year, yet we keep delaying reform. Our children will compete for jobs in a global economy that too many of our schools do not prepare them for. And though all these challenges went unsolved, we still managed to spend more money and pile up more debt, both as individuals and through our government, than ever before.
In other words, we have lived through an era where too often, short-term gains were prized over long-term prosperity; where we failed to look beyond the next payment, the next quarter, or the next election. A surplus became an excuse to transfer wealth to the wealthy instead of an opportunity to invest in our future. Regulations were gutted for the sake of a quick profit at the expense of a healthy market. People bought homes they knew they couldn’t afford from banks and lenders who pushed those bad loans anyway. And all the while, critical debates and difficult decisions were put off for some other time on some other day.
Well that day of reckoning has arrived, and the time to take charge of our future is here.
Now is the time to act boldly and wisely – to not only revive this economy, but to build a new foundation for lasting prosperity. Now is the time to jumpstart job creation, re-start lending, and invest in areas like energy, health care, and education that will grow our economy, even as we make hard choices to bring our deficit down. That is what my economic agenda is designed to do, and that’s what I’d like to talk to you about tonight.
It’s an agenda that begins with jobs.
As soon as I took office, I asked this Congress to send me a recovery plan by President’s Day that would put people back to work and put money in their pockets. Not because I believe in bigger government – I don’t. Not because I’m not mindful of the massive debt we’ve inherited – I am. I called for action because the failure to do so would have cost more jobs and caused more hardships. In fact, a failure to act would have worsened our long-term deficit by assuring weak economic growth for years. That’s why I pushed for quick action. And tonight, I am grateful that this Congress delivered, and pleased to say that the American Recovery and Reinvestment Act is now law.
Over the next two years, this plan will save or create 3.5 million jobs. More than 90% of these jobs will be in the private sector – jobs rebuilding our roads and bridges; constructing wind turbines and solar panels; laying broadband and expanding mass transit.
Because of this plan, there are teachers who can now keep their jobs and educate our kids. Health care professionals can continue caring for our sick. There are 57 police officers who are still on the streets of Minneapolis tonight because this plan prevented the layoffs their department was about to make.
Because of this plan, 95% of the working households in America will receive a tax cut – a tax cut that you will see in your paychecks beginning on April 1st.
Because of this plan, families who are struggling to pay tuition costs will receive a $2,500 tax credit for all four years of college. And Americans who have lost their jobs in this recession will be able to receive extended unemployment benefits and continued health care coverage to help them weather this storm.
I know there are some in this chamber and watching at home who are skeptical of whether this plan will work. I understand that skepticism. Here in Washington, we’ve all seen how quickly good intentions can turn into broken promises and wasteful spending. And with a plan of this scale comes enormous responsibility to get it right.
That is why I have asked Vice President Biden to lead a tough, unprecedented oversight effort – because nobody messes with Joe. I have told each member of my Cabinet as well as mayors and governors across the country that they will be held accountable by me and the American people for every dollar they spend. I have appointed a proven and aggressive Inspector General to ferret out any and all cases of waste and fraud. And we have created a new website called recovery.gov so that every American can find out how and where their money is being spent.
So the recovery plan we passed is the first step in getting our economy back on track. But it is just the first step. Because even if we manage this plan flawlessly, there will be no real recovery unless we clean up the credit crisis that has severely weakened our financial system.
I want to speak plainly and candidly about this issue tonight, because every American should know that it directly affects you and your family’s well-being. You should also know that the money you’ve deposited in banks across the country is safe; your insurance is secure; and you can rely on the continued operation of our financial system. That is not the source of concern.
The concern is that if we do not re-start lending in this country, our recovery will be choked off before it even begins.
You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education; how stores stock their shelves, farms buy equipment, and businesses make payroll.
But credit has stopped flowing the way it should. Too many bad loans from the housing crisis have made their way onto the books of too many banks. With so much debt and so little confidence, these banks are now fearful of lending out any more money to households, to businesses, or to each other. When there is no lending, families can’t afford to buy homes or cars. So businesses are forced to make layoffs. Our economy suffers even more, and credit dries up even further.
That is why this administration is moving swiftly and aggressively to break this destructive cycle, restore confidence, and re-start lending.
We will do so in several ways. First, we are creating a new lending fund that represents the largest effort ever to help provide auto loans, college loans, and small business loans to the consumers and entrepreneurs who keep this economy running.
Second, we have launched a housing plan that will help responsible families facing the threat of foreclosure lower their monthly payments and re-finance their mortgages. It’s a plan that won’t help speculators or that neighbor down the street who bought a house he could never hope to afford, but it will help millions of Americans who are struggling with declining home values – Americans who will now be able to take advantage of the lower interest rates that this plan has already helped bring about. In fact, the average family who re-finances today can save nearly $2000 per year on their mortgage.
Third, we will act with the full force of the federal government to ensure that the major banks that Americans depend on have enough confidence and enough money to lend even in more difficult times. And when we learn that a major bank has serious problems, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.
I understand that on any given day, Wall Street may be more comforted by an approach that gives banks bailouts with no strings attached, and that holds nobody accountable for their reckless decisions. But such an approach won’t solve the problem. And our goal is to quicken the day when we re-start lending to the American people and American business and end this crisis once and for all.
I intend to hold these banks fully accountable for the assistance they receive, and this time, they will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer. This time, CEOs won’t be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet. Those days are over.
Still, this plan will require significant resources from the federal government – and yes, probably more than we’ve already set aside. But while the cost of action will be great, I can assure you that the cost of inaction will be far greater, for it could result in an economy that sputters along for not months or years, but perhaps a decade. That would be worse for our deficit, worse for business, worse for you, and worse for the next generation. And I refuse to let that happen.
I understand that when the last administration asked this Congress to provide assistance for struggling banks, Democrats and Republicans alike were infuriated by the mismanagement and results that followed. So were the American taxpayers. So was I.
So I know how unpopular it is to be seen as helping banks right now, especially when everyone is suffering in part from their bad decisions. I promise you – I get it.
But I also know that in a time of crisis, we cannot afford to govern out of anger, or yield to the politics of the moment. My job – our job – is to solve the problem. Our job is to govern with a sense of responsibility. I will not spend a single penny for the purpose of rewarding a single Wall Street executive, but I will do whatever it takes to help the small business that can’t pay its workers or the family that has saved and still can’t get a mortgage.
That’s what this is about. It’s not about helping banks – it’s about helping people. Because when credit is available again, that young family can finally buy a new home. And then some company will hire workers to build it. And then those workers will have money to spend, and if they can get a loan too, maybe they’ll finally buy that car, or open their own business. Investors will return to the market, and American families will see their retirement secured once more. Slowly, but surely, confidence will return, and our economy will recover.
So I ask this Congress to join me in doing whatever proves necessary. Because we cannot consign our nation to an open-ended recession. And to ensure that a crisis of this magnitude never happens again, I ask Congress to move quickly on legislation that will finally reform our outdated regulatory system. It is time to put in place tough, new common-sense rules of the road so that our financial market rewards drive and innovation, and punishes short-cuts and abuse.
The recovery plan and the financial stability plan are the immediate steps we’re taking to revive our economy in the short-term. But the only way to fully restore America’s economic strength is to make the long-term investments that will lead to new jobs, new industries, and a renewed ability to compete with the rest of the world. The only way this century will be another American century is if we confront at last the price of our dependence on oil and the high cost of health care; the schools that aren’t preparing our children and the mountain of debt they stand to inherit. That is our responsibility.
In the next few days, I will submit a budget to Congress. So often, we have come to view these documents as simply numbers on a page or laundry lists of programs. I see this document differently. I see it as a vision for America – as a blueprint for our future.
My budget does not attempt to solve every problem or address every issue. It reflects the stark reality of what we’ve inherited – a trillion dollar deficit, a financial crisis, and a costly recession.
Given these realities, everyone in this chamber – Democrats and Republicans – will have to sacrifice some worthy priorities for which there are no dollars. And that includes me.
But that does not mean we can afford to ignore our long-term challenges. I reject the view that says our problems will simply take care of themselves; that says government has no role in laying the foundation for our common prosperity.
For history tells a different story. History reminds us that at every moment of economic upheaval and transformation, this nation has responded with bold action and big ideas. In the midst of civil war, we laid railroad tracks from one coast to another that spurred commerce and industry. From the turmoil of the Industrial Revolution came a system of public high schools that prepared our citizens for a new age. In the wake of war and depression, the GI Bill sent a generation to college and created the largest middle-class in history. And a twilight struggle for freedom led to a nation of highways, an American on the moon, and an explosion of technology that still shapes our world.
In each case, government didn’t supplant private enterprise; it catalyzed private enterprise. It created the conditions for thousands of entrepreneurs and new businesses to adapt and to thrive.
We are a nation that has seen promise amid peril, and claimed opportunity from ordeal. Now we must be that nation again. That is why, even as it cuts back on the programs we don’t need, the budget I submit will invest in the three areas that are absolutely critical to our economic future: energy, health care, and education.
It begins with energy.
We know the country that harnesses the power of clean, renewable energy will lead the 21st century. And yet, it is China that has launched the largest effort in history to make their economy energy efficient. We invented solar technology, but we’ve fallen behind countries like Germany and Japan in producing it. New plug-in hybrids roll off our assembly lines, but they will run on batteries made in Korea.
Well I do not accept a future where the jobs and industries of tomorrow take root beyond our borders – and I know you don’t either. It is time for America to lead again.
Thanks to our recovery plan, we will double this nation’s supply of renewable energy in the next three years. We have also made the largest investment in basic research funding in American history – an investment that will spur not only new discoveries in energy, but breakthroughs in medicine, science, and technology.
We will soon lay down thousands of miles of power lines that can carry new energy to cities and towns across this country. And we will put Americans to work making our homes and buildings more efficient so that we can save billions of dollars on our energy bills.
But to truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy. So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America. And to support that innovation, we will invest fifteen billion dollars a year to develop technologies like wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient cars and trucks built right here in America.
As for our auto industry, everyone recognizes that years of bad decision-making and a global recession have pushed our automakers to the brink. We should not, and will not, protect them from their own bad practices. But we are committed to the goal of a re-tooled, re-imagined auto industry that can compete and win. Millions of jobs depend on it. Scores of communities depend on it. And I believe the nation that invented the automobile cannot walk away from it.
None of this will come without cost, nor will it be easy. But this is America. We don’t do what’s easy. We do what is necessary to move this country forward.
For that same reason, we must also address the crushing cost of health care.
This is a cost that now causes a bankruptcy in America every thirty seconds. By the end of the year, it could cause 1.5 million Americans to lose their homes. In the last eight years, premiums have grown four times faster than wages. And in each of these years, one million more Americans have lost their health insurance. It is one of the major reasons why small businesses close their doors and corporations ship jobs overseas. And it’s one of the largest and fastest-growing parts of our budget.
Given these facts, we can no longer afford to put health care reform on hold.
Already, we have done more to advance the cause of health care reform in the last thirty days than we have in the last decade. When it was days old, this Congress passed a law to provide and protect health insurance for eleven million American children whose parents work full-time. Our recovery plan will invest in electronic health records and new technology that will reduce errors, bring down costs, ensure privacy, and save lives. It will launch a new effort to conquer a disease that has touched the life of nearly every American by seeking a cure for cancer in our time. And it makes the largest investment ever in preventive care, because that is one of the best ways to keep our people healthy and our costs under control.
This budget builds on these reforms. It includes an historic commitment to comprehensive health care reform – a down-payment on the principle that we must have quality, affordable health care for every American. It’s a commitment that’s paid for in part by efficiencies in our system that are long overdue. And it’s a step we must take if we hope to bring down our deficit in the years to come.
Now, there will be many different opinions and ideas about how to achieve reform, and that is why I’m bringing together businesses and workers, doctors and health care providers, Democrats and Republicans to begin work on this issue next week.
I suffer no illusions that this will be an easy process. It will be hard. But I also know that nearly a century after Teddy Roosevelt first called for reform, the cost of our health care has weighed down our economy and the conscience of our nation long enough. So let there be no doubt: health care reform cannot wait, it must not wait, and it will not wait another year.
The third challenge we must address is the urgent need to expand the promise of education in America.
In a global economy where the most valuable skill you can sell is your knowledge, a good education is no longer just a pathway to opportunity – it is a pre-requisite.
Right now, three-quarters of the fastest-growing occupations require more than a high school diploma. And yet, just over half of our citizens have that level of education. We have one of the highest high school dropout rates of any industrialized nation. And half of the students who begin college never finish.
This is a prescription for economic decline, because we know the countries that out-teach us today will out-compete us tomorrow. That is why it will be the goal of this administration to ensure that every child has access to a complete and competitive education – from the day they are born to the day they begin a career.
Already, we have made an historic investment in education through the economic recovery plan. We have dramatically expanded early childhood education and will continue to improve its quality, because we know that the most formative learning comes in those first years of life. We have made college affordable for nearly seven million more students. And we have provided the resources necessary to prevent painful cuts and teacher layoffs that would set back our children’s progress.
But we know that our schools don’t just need more resources. They need more reform. That is why this budget creates new incentives for teacher performance; pathways for advancement, and rewards for success. We’ll invest in innovative programs that are already helping schools meet high standards and close achievement gaps. And we will expand our commitment to charter schools.
It is our responsibility as lawmakers and educators to make this system work. But it is the responsibility of every citizen to participate in it. And so tonight, I ask every American to commit to at least one year or more of higher education or career training. This can be community college or a four-year school; vocational training or an apprenticeship. But whatever the training may be, every American will need to get more than a high school diploma. And dropping out of high school is no longer an option. It’s not just quitting on yourself, it’s quitting on your country – and this country needs and values the talents of every American. That is why we will provide the support necessary for you to complete college and meet a new goal: by 2020, America will once again have the highest proportion of college graduates in the world.
I know that the price of tuition is higher than ever, which is why if you are willing to volunteer in your neighborhood or give back to your community or serve your country, we will make sure that you can afford a higher education. And to encourage a renewed spirit of national service for this and future generations, I ask this Congress to send me the bipartisan legislation that bears the name of Senator Orrin Hatch as well as an American who has never stopped asking what he can do for his country – Senator Edward Kennedy.
These education policies will open the doors of opportunity for our children. But it is up to us to ensure they walk through them. In the end, there is no program or policy that can substitute for a mother or father who will attend those parent/teacher conferences, or help with homework after dinner, or turn off the TV, put away the video games, and read to their child. I speak to you not just as a President, but as a father when I say that responsibility for our children’s education must begin at home.
There is, of course, another responsibility we have to our children. And that is the responsibility to ensure that we do not pass on to them a debt they cannot pay. With the deficit we inherited, the cost of the crisis we face, and the long-term challenges we must meet, it has never been more important to ensure that as our economy recovers, we do what it takes to bring this deficit down.
I’m proud that we passed the recovery plan free of earmarks, and I want to pass a budget next year that ensures that each dollar we spend reflects only our most important national priorities.
Yesterday, I held a fiscal summit where I pledged to cut the deficit in half by the end of my first term in office. My administration has also begun to go line by line through the federal budget in order to eliminate wasteful and ineffective programs. As you can imagine, this is a process that will take some time. But we’re starting with the biggest lines. We have already identified two trillion dollars in savings over the next decade.
In this budget, we will end education programs that don’t work and end direct payments to large agribusinesses that don’t need them. We’ll eliminate the no-bid contracts that have wasted billions in Iraq, and reform our defense budget so that we’re not paying for Cold War-era weapons systems we don’t use. We will root out the waste, fraud, and abuse in our Medicare program that doesn’t make our seniors any healthier, and we will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas.
In order to save our children from a future of debt, we will also end the tax breaks for the wealthiest 2% of Americans. But let me perfectly clear, because I know you’ll hear the same old claims that rolling back these tax breaks means a massive tax increase on the American people: if your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime. In fact, the recovery plan provides a tax cut – that’s right, a tax cut – for 95% of working families. And these checks are on the way.
To preserve our long-term fiscal health, we must also address the growing costs in Medicare and Social Security. Comprehensive health care reform is the best way to strengthen Medicare for years to come. And we must also begin a conversation on how to do the same for Social Security, while creating tax-free universal savings accounts for all Americans.
Finally, because we’re also suffering from a deficit of trust, I am committed to restoring a sense of honesty and accountability to our budget. That is why this budget looks ahead ten years and accounts for spending that was left out under the old rules – and for the first time, that includes the full cost of fighting in Iraq and Afghanistan. For seven years, we have been a nation at war. No longer will we hide its price.
We are now carefully reviewing our policies in both wars, and I will soon announce a way forward in Iraq that leaves Iraq to its people and responsibly ends this war.
And with our friends and allies, we will forge a new and comprehensive strategy for Afghanistan and Pakistan to defeat al Qaeda and combat extremism. Because I will not allow terrorists to plot against the American people from safe havens half a world away.
As we meet here tonight, our men and women in uniform stand watch abroad and more are readying to deploy. To each and every one of them, and to the families who bear the quiet burden of their absence, Americans are united in sending one message: we honor your service, we are inspired by your sacrifice, and you have our unyielding support. To relieve the strain on our forces, my budget increases the number of our soldiers and Marines. And to keep our sacred trust with those who serve, we will raise their pay, and give our veterans the expanded health care and benefits that they have earned.
To overcome extremism, we must also be vigilant in upholding the values our troops defend – because there is no force in the world more powerful than the example of America. That is why I have ordered the closing of the detention center at Guantanamo Bay, and will seek swift and certain justice for captured terrorists – because living our values doesn’t make us weaker, it makes us safer and it makes us stronger. And that is why I can stand here tonight and say without exception or equivocation that the United States of America does not torture.
In words and deeds, we are showing the world that a new era of engagement has begun. For we know that America cannot meet the threats of this century alone, but the world cannot meet them without America. We cannot shun the negotiating table, nor ignore the foes or forces that could do us harm. We are instead called to move forward with the sense of confidence and candor that serious times demand.
To seek progress toward a secure and lasting peace between Israel and her neighbors, we have appointed an envoy to sustain our effort. To meet the challenges of the 21st century – from terrorism to nuclear proliferation; from pandemic disease to cyber threats to crushing poverty – we will strengthen old alliances, forge new ones, and use all elements of our national power.
And to respond to an economic crisis that is global in scope, we are working with the nations of the G-20 to restore confidence in our financial system, avoid the possibility of escalating protectionism, and spur demand for American goods in markets across the globe. For the world depends on us to have a strong economy, just as our economy depends on the strength of the world’s.
As we stand at this crossroads of history, the eyes of all people in all nations are once again upon us – watching to see what we do with this moment; waiting for us to lead.
Those of us gathered here tonight have been called to govern in extraordinary times. It is a tremendous burden, but also a great privilege – one that has been entrusted to few generations of Americans. For in our hands lies the ability to shape our world for good or for ill.
I know that it is easy to lose sight of this truth – to become cynical and doubtful; consumed with the petty and the trivial.
But in my life, I have also learned that hope is found in unlikely places; that inspiration often comes not from those with the most power or celebrity, but from the dreams and aspirations of Americans who are anything but ordinary.
I think about Leonard Abess, the bank president from Miami who reportedly cashed out of his company, took a $60 million bonus, and gave it out to all 399 people who worked for him, plus another 72 who used to work for him. He didn’t tell anyone, but when the local newspaper found out, he simply said, ”I knew some of these people since I was 7 years old. I didn’t feel right getting the money myself.”
I think about Greensburg, Kansas, a town that was completely destroyed by a tornado, but is being rebuilt by its residents as a global example of how clean energy can power an entire community – how it can bring jobs and businesses to a place where piles of bricks and rubble once lay. “The tragedy was terrible,” said one of the men who helped them rebuild. “But the folks here know that it also provided an incredible opportunity.”
And I think about Ty’Sheoma Bethea, the young girl from that school I visited in Dillon, South Carolina – a place where the ceilings leak, the paint peels off the walls, and they have to stop teaching six times a day because the train barrels by their classroom. She has been told that her school is hopeless, but the other day after class she went to the public library and typed up a letter to the people sitting in this room. She even asked her principal for the money to buy a stamp. The letter asks us for help, and says, “We are just students trying to become lawyers, doctors, congressmen like yourself and one day president, so we can make a change to not just the state of South Carolina but also the world. We are not quitters.”
We are not quitters.
These words and these stories tell us something about the spirit of the people who sent us here. They tell us that even in the most trying times, amid the most difficult circumstances, there is a generosity, a resilience, a decency, and a determination that perseveres; a willingness to take responsibility for our future and for posterity.
Their resolve must be our inspiration. Their concerns must be our cause. And we must show them and all our people that we are equal to the task before us.
I know that we haven’t agreed on every issue thus far, and there are surely times in the future when we will part ways. But I also know that every American who is sitting here tonight loves this country and wants it to succeed. That must be the starting point for every debate we have in the coming months, and where we return after those debates are done. That is the foundation on which the American people expect us to build common ground.
And if we do – if we come together and lift this nation from the depths of this crisis; if we put our people back to work and restart the engine of our prosperity; if we confront without fear the challenges of our time and summon that enduring spirit of an America that does not quit, then someday years from now our children can tell their children that this was the time when we performed, in the words that are carved into this very chamber, “something worthy to be remembered.” Thank you, God Bless you, and may God Bless the United States of America.
N.J. solar panels start soaking up the sun
February 24, 2009
By VICTOR EPSTEIN Associated Press • February 23, 2009
As reported in the Courier Post
SECAUCUS – With a flip of the switch, one of New Jersey’s largest and newest solar panel projects began soaking up the sun Monday.
That’s enough juice to power about 50 single-family homes, according to Alfredo Matos, PSE&G’s vice president for renewables and energy solutions, or about 40 percent of the Exposition Center’s needs.
New Jersey’s largest utility is helping finance the $3 million project with a $1.6 million loan. It’s the first solar array to become operational under a PSE&G program to loan $105 million for solar projects over the next two years.
“This isn’t PR,” Matos said. “Solar systems are still out of the market – meaning they still cost more than traditional systems that rely on fossil fuel generation – but with the incentives available today, including our loan program, you can have a system that pays for itself in three or four years.”
Recipients of PSE&G solar loans will repay the utility in energy credits, not dollars. The utility will sell those credits to fossil fuel power plants seeking to offset their carbon emissions, Matos said.
The federal government covers another 30 percent of the cost of building a solar system through an investment tax credit, he said. That leaves pioneers like Hartz Mountain Industries Inc., the Secaucus commercial real estate firm that owns the Exposition Center, with only 20 percent of the cost.
Emanuel Stern, president of Hartz, said the decision to install the Exposition Center’s rooftop array was a solid financial move for the privately held company.
“I’d rather invest in my roofs than in the stock market right now,” Stern said. “It just seems like a no-brainer to me.”
If the Exposition Center array performs as expected over the next six months, Hartz intends to begin retrofitting four or five buildings a year with solar panels, Stern said.
Hartz has a portfolio of 39 million square feet of space in 200 buildings, many of which are warehouses with large roofs that are ideal for solar arrays. As the roofs reach the end of their useful lives, Hartz will look to install solar arrays while they’re being replaced.
Stern estimates that it will take about 10 years for the solar array on the Exposition Center to pay for itself. After that, Hartz will be getting 40 percent of the Exposition Center’s power from the roof, virtually for free.
New Jersey ranks second behind California among states generating electricity from solar panels, according to the Solar Energy Industries Association.
As manufacturers of solar systems make more equipment, they’ll become more efficient and prices will come down, said Thomas Leyden, a managing director of Sunpower Corp., the San Jose, Calif.-based company that installed the Exposition Center array. Right now, the cost of retrofitting a typical single-family home is nearly $40,000, he said.
The PSE&G loan program and the federal incentives help bridge the gap between how much solar systems cost and how much people can afford, said Leyden. He estimates that the solar industry is probably only six or seven years away from grid parity with fossil fuel generation because of such programs.
“Solar is not only good for the environment and the country, it’s good business,” Leyden said
Our Perspective:
It is good to see New Jersey and the community make a commitment to alternative energy development. In the coming year, we hope to see more projects of this magnitude. As the demand for energy continues to grow, we need these types of projects to help us reduce the demand off the grid.
Let us know your thoughts? You may leave a comment or email george@hbsadvantage.com
Electric Cars get Charrge from Stimulus
February 22, 2009
As reported in Huffington Green
By Peter Valdes-Dapena, CNNMoney.com senior writer
Thanks to President Obama’s stimulus package, Americans can now get big tax breaks on more types of electric vehicles.
The credits originally would have stopped after they had been claimed on 250,000 vehicles across the whole industry. Now the credits will apply on up to 200,000 vehicles from any single manufacturer.
The old rules, passed in the fall of 2008, applied only to cars in the traditional sense, i.e., four-wheeled vehicles. Now three-wheeled and even two-wheeled electric vehicles are also eligible. Tax credits for these vehicles are calculated differently.
The changes also removed really big vehicles from eligibility. Given the environmental impact of heavy-duty trucks, some electric vehicle advocates call that a really big mistake.
The Internal Revenue Service still has to pass its own rules clarifying exactly how this new law will be implemented and what the tax credits will be. The ones shown here are our estimates, based on the legislation. The IRS declined to comment for this story.
So, if you plan to buy a plug-in vehicle, check with a tax accountant before you do anything, and carefully check out any vehicle manufacturer or seller before committing your money.
Hutchinson Business Solutions 