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  • The Energy Challenge


    Pollution From Chinese Coal Casts a Global Shadow







     


    Pollution From Chinese Coal Casts a Long Shadow


     



    HANJING, China — One of China's lesser-known exports is a dangerous brew of soot, toxic chemicals and climate-changing gases from the smokestacks of coal-burning power plants.


    In early April, a dense cloud of pollutants over Northern China sailed to nearby Seoul, sweeping along dust and desert sand before wafting across the Pacific. An American satellite spotted the cloud as it crossed the West Coast.


    Researchers in California, Oregon and Washington noticed specks of sulfur compounds, carbon and other byproducts of coal combustion coating the silvery surfaces of their mountaintop detectors. These microscopic particles can work their way deep into the lungs, contributing to respiratory damage, heart disease and cancer.


    Filters near Lake Tahoe in the mountains of eastern California "are the darkest that we've seen" outside smoggy urban areas, said Steven S. Cliff, an atmospheric scientist at the University of California at Davis.


    Unless China finds a way to clean up its coal plants and the thousands of factories that burn coal, pollution will soar both at home and abroad. The increase in global-warming gases from China's coal use will probably exceed that for all industrialized countries combined over the next 25 years, surpassing by five times the reduction in such emissions that the Kyoto Protocol seeks.


    The sulfur dioxide produced in coal combustion poses an immediate threat to the health of China's citizens, contributing to about 400,000 premature deaths a year. It also causes acid rain that poisons lakes, rivers, forests and crops.


    The sulfur pollution is so pervasive as to have an extraordinary side effect that is helping the rest of the world, but only temporarily: It actually slows global warming. The tiny, airborne particles deflect the sun's hot rays back into space.


    But the cooling effect from sulfur is short-lived. By contrast, the carbon dioxide emanating from Chinese coal plants will last for decades, with a cumulative warming effect that will eventually overwhelm the cooling from sulfur and deliver another large kick to global warming, climate scientists say. A warmer climate could lead to rising sea levels, the spread of tropical diseases in previously temperate climes, crop failures in some regions and the extinction of many plant and animal species, especially those in polar or alpine areas.


    Coal is indeed China's double-edged sword — the new economy's black gold and the fragile environment's dark cloud.


    Already, China uses more coal than the United States, the European Union and Japan combined. And it has increased coal consumption 14 percent in each of the past two years in the broadest industrialization ever. Every week to 10 days, another coal-fired power plant opens somewhere in China that is big enough to serve all the households in Dallas or San Diego.


    To make matters worse, India is right behind China in stepping up its construction of coal-fired power plants — and has a population expected to outstrip China's by 2030.


    Aware of the country's growing reliance on coal and of the dangers from burning so much of it, China's leaders have vowed to improve the nation's energy efficiency. No one thinks that effort will be enough. To make a big improvement in emissions of global-warming gases and other pollutants, the country must install the most modern equipment — equipment that for the time being must come from other nations.


    Industrialized countries could help by providing loans or grants, as the Japanese government and the World Bank have done, or by sharing technology. But Chinese utilities have in the past preferred to buy cheap but often-antiquated equipment from well connected domestic suppliers instead of importing costlier gear from the West.


    The Chinese government has been reluctant to approve the extra spending. Asking customers to shoulder the bill would set back the government's efforts to protect consumers from inflation and to create jobs and social stability.


    But each year China defers buying advanced technology, older equipment goes into scores of new coal-fired plants with a lifespan of up to 75 years.


    "This is the great challenge they have to face," said David Moskovitz, an energy consultant who advises the Chinese government. "How can they continue their rapid growth without plunging the environment into the abyss?"


    Living Better With Coal


    Wu Yiebing and his wife, Cao Waiping, used to have very little effect on their environment. But they have tasted the rising standard of living from coal-generated electricity and they are hooked, even as they suffer the vivid effects of the damage their new lifestyle creates.


    Years ago, the mountain village where they grew up had electricity for only several hours each evening, when water was let out of a nearby dam to turn a small turbine. They lived in a mud hut, farmed by hand from dawn to dusk on hillside terraces too small for tractors, and ate almost nothing but rice on an income of $25 a month.


    Today, they live here in Hanjing, a small town in central China where Mr. Wu earns nearly $200 a month. He operates a large electric drill 600 feet underground in a coal mine, digging out the fuel that has powered his own family's advancement. He and his wife have a stereo, a refrigerator, a television, an electric fan, a phone and light bulbs, paying just $2.50 a month for all the electricity they can burn from a nearby coal-fired power plant.


    They occupy a snug house with brick walls and floors and a cement foundation — the bricks and cement are products of the smoking, energy-ravenous factories that dot the valley. Ms. Cao decorates the family's home with calendar pictures of Zhang Ziyi, the Chinese film star. She is occasionally dismissive about the farming village where she lived as a girl and now seldom visits except over Chinese New Year.


    "We couldn't wear high heels then because the paths were so bad and we were always carrying heavy loads," said Ms. Cao, who was wearing makeup, a stylish yellow pullover, low-slung black pants and black pumps with slender three-inch heels on a recent Sunday morning.


    One-fifth of the world's population already lives in affluent countries with lots of air-conditioning, refrigerators and other appliances. This group consumes a tremendous amount of oil, natural gas, nuclear power, coal and alternative energy sources.


    Now China is trying to bring its fifth of the world's population, people like Mr. Wu and Ms. Cao, up to the same standard. One goal is to build urban communities for 300 million people over the next two decades.


    Already, China has more than tripled the number of air-conditioners in the past five years, to 84 per 100 urban households. And it has brought modern appliances to hundreds of millions of households in small towns and villages like Hanjing.


    The difference from most wealthy countries is that China depends overwhelmingly on coal. And using coal to produce electricity and run factories generates more global-warming gases and lung-damaging pollutants than relying on oil or gas.


    Indeed, the Wu family dislikes the light gray smog of sulfur particles and other pollutants that darkens the sky and dulls the dark green fields of young wheat and the white blossoms of peach orchards in the distance. But they tolerate the pollution.


    "Everything else is better here," Mr. Wu said. "Now we live better, we eat better."


    China's Dark Clouds


    Large areas of North-Central China have been devastated by the spectacular growth of the local coal industry. Severe pollution extends across Shaanxi Province, where the Wus live, and neighboring Shanxi Province, which produces even more coal.


    Not long ago, in the historic city of Datong, about 160 miles west of Beijing, throngs of children in colorful outfits formed a ceremonial line at the entrance to the city's 1,500-year-old complex of Buddhist cave grottoes to celebrate Datong's new designation as one of China's "spiritually civilized cities."


    The event was meant to bolster pride in a city desperately in need of good news. Two years ago, Datong, long the nation's coal capital, was branded one of the world's most-polluted cities. Since then, the air quality has only grown worse.


    Datong is so bad that last winter the city's air quality monitors went on red alert. Desert dust and particulate matter in the city had been known to force the pollution index into warning territory, above 300, which means people should stay indoors.


    On Dec. 28, the index hit 350.


    "The pollution is worst during the winter," said Ji Youping, a former coal miner who now works with a local environmental protection agency. "Datong gets very black. Even during the daytime, people drive with their lights on."


    Of China's 10 most polluted cities, four, including Datong, are in Shanxi Province. The coal-mining operations have damaged waterways and scarred the land. Because of intense underground mining, thousands of acres are prone to sinking, and hundreds of villages are blackened with coal waste.


    There is a Dickensian feel to much of the region. Roads are covered in coal tar; houses are coated with soot; miners, their faces smeared almost entirely black, haul carts full of coal rocks; the air is thick with the smell of burning coal.


    There are growing concerns about the impact of this coal boom on the environment. The Asian Development Bank says it is financing pollution control programs in Shanxi because the number of people suffering from lung cancer and other respiratory diseases in the province has soared over the past 20 years. Yet even after years of government-mandated cleanup efforts the region's factories belch black smoke.


    The government has promised to close the foulest factories and to shutter thousands of illegal mines, where some of the worst safety and environmental hazards are concentrated. But no one is talking about shutting the region's coal-burning power plants, which account for more than half the pollution. In fact, Shanxi and Shaanxi are rapidly building new coal-fired plants to keep pace with soaring energy demand.


    To meet that demand, which includes burning coal to supply power to Beijing, Shanxi Province alone is expected to produce almost as much coal as was mined last year in Germany, England and Russia combined.


    Burning all that coal releases enormous quantities of sulfur.


    "Sulfur dioxide is China's No. 1 pollution problem," said Barbara A. Finamore, a senior attorney at the Natural Resources Defense Council's China Clean Energy Program in Washington. "This is the most serious acid rain problem in the world."


    China released about 22.5 million tons of sulfur in 2004, more than twice the amount released in the United States, and a Chinese regulator publicly estimated last autumn that emissions would reach 26 million tons for 2005, although no official figures have been released yet. Acid rain now falls on 30 percent of China.


    Studies have found that the worst effects of acid rain and other pollution occur within several hundred miles of a power plant, where the extra acidity of rainfall can poison crops, trees and lakes alike.


    But China is generating such enormous quantities of pollution that the effects are felt farther downwind than usual. Sulfur and ash that make breathing a hazard are being carried by the wind to South Korea, Japan and beyond.


    Not enough of the Chinese emissions reach the United States to have an appreciable effect on acid rain yet. But, they are already having an effect in the mountains in West Coast states. These particles are dense enough that, at maximum levels during the spring, they account at higher altitudes for a fifth or more of the maximum levels of particles allowed by the latest federal air quality standards. Over the course of a year, Chinese pollution averages 10 to 15 percent of allowable levels of particles. The amounts are smaller for lower-lying cities, like Seattle, San Francisco and Los Angeles.


    China is also the world's largest emitter of mercury, which has been linked to fetal and child development problems, said Dan Jaffe, an atmospheric scientist at the University of Washington.


    Unless Chinese regulators become much more aggressive over the next few years, considerably more emissions could reach the United States. Chinese pollution is already starting to make it harder and more expensive for West Coast cities to meet stringent air quality standards, said Professor Cliff of the University of California, slowing four decades of progress toward cleaner air.


    Nothing Beats It


    China knows it has to do something about its dependence on coal.


    The government has set one of the world's most ambitious targets for energy conservation: to cut the average amount of energy needed to produce each good or service by 20 percent over the next five years. But with an economy growing 10 percent a year and with energy consumption climbing even faster, a conservation target amounting to 3.7 percent a year does not keep pace.


    All new cars, minivans and sport utility vehicles sold in China starting July 1 will have to meet fuel-economy standards stricter than those in the United States. New construction codes encourage the use of double-glazed windows to reduce air-conditioning and heating costs and high-tech light bulbs that produce more light with fewer watts.


    Meanwhile, other sources of energy have problems. Oil is at about $70 a barrel. Natural gas is in short supply in most of China, and prices for imports of liquefied natural gas have more than doubled in the last three years. Environmental objections are slowing the construction of hydroelectric dams on China's few untamed rivers. Long construction times for nuclear power plants make them a poor solution to addressing blackouts and other power shortages now.


    For the past three years, China has also been trying harder to develop other alternatives. State-owned power companies have been building enormous wind turbines up and down the coast. Chinese companies are also trying to develop geothermal energy, tapping the heat of underground rocks, and are researching solar power and ways to turn coal into diesel fuel. But all of these measures fall well short. Coal remains the obvious choice to continue supplying almost two-thirds of China's energy needs.


    Choices and Consequences


    China must make some difficult choices. So far, the nation has been making decisions that it hopes will lessen the health-damaging impact on its own country while sustaining economic growth as cheaply as possible. But those decisions will also add to the emissions that contribute to global warming.


    The first big choice involves tackling sulfur dioxide. The government is now requiring that the smokestacks of all new coal-fired plants be fitted with devices long used in Western power plants to remove up to 95 percent of the sulfur. All existing coal-fired plants in China are supposed to have the devices installed by 2010.


    While acknowledging that they have missed deadlines, Chinese officials insist they have the capacity now to install sulfur filters on every power plant smokestack. "I don't think there will be a problem reaching this target before 2010," said Liu Deyou, chief engineer at the Beijing SPC Environment Protection Tech Engineering Company, the sulfur-filter manufacturing arm of one of the five big, state-owned utilities.


    Japan may be 1,000 miles east of Shanxi Province, but the Japanese government is so concerned about acid rain from China that it has agreed to lend $125 million to Shanxi. The money will help pay for desulfurization equipment for large, coal-fired steel plants in the provincial capital, Taiyuan.


    The question is how much the state-owned power companies will actually use the pollution control equipment once it is installed. The equipment is costly to maintain and uses enormous amounts of electricity that could instead be sold to consumers. Moreover, regulated electricity tariffs offer little reward for them to run the equipment.


    In 2002, the Chinese government vowed to cut sulfur emissions by 10 percent by 2005. Instead, they rose 27 percent. If Chinese officials act swiftly, sulfur emissions could be halved in the next couple of decades, power officials and academic experts say. But if China continues to do little, sulfur emissions could double, creating even more devastating health and environmental problems.


    Even so, halving sulfur emissions has its own consequences: it would make global warming noticeable sooner.


    China contributes one-sixth of the world's sulfur pollution. Together with the emissions from various other countries, those from China seem to offset more than one-third of the warming effect from manmade carbon dioxide already in the atmosphere, according to several climate models.


    But the sulfur particles typically drift to the ground in a week and stop reflecting much sunlight. Recent research suggests that it takes up to 10 years before a new coal-fired power plant has poured enough long-lasting carbon dioxide into the air to offset the cooling effect of the plant's weekly sulfur emissions.


    Climate experts say that, ideally, China would cut emissions of sulfur and carbon dioxide at the same time. But they understand China's imperative to clean up sulfur more quickly because it has a far more immediate effect on health.


    "It's sort of unethical to expect people not to clean up their air quality for the sake of the climate," said Tami Bond, an atmospheric scientist at the University of Illinois at Urbana-Champaign.


    The Hunt for Efficiency

    The second big decision facing China lies in how efficiently the heat from burning coal is converted into electricity. The latest big power plants in Western countries are much more efficient. Their coal-heated steam at very high temperatures and pressures can generate 20 to 50 percent more kilowatts than older Chinese power plants, even as they eject the same carbon-dioxide emissions and potentially lower sulfur emissions.


    China has limited the construction of small power plants, which are inefficient, and has required the use of somewhat higher steam temperatures and pressures. But Chinese officials say few new plants use the highest temperatures and pressures, which require costly imported equipment.


    And Chinese power utilities are facing a squeeze. The government has kept electricity cheap, by international standards, to keep consumers happy. But this has made it hard for utilities to cover their costs, especially as world coal prices rise.


    The government has tried to help by limiting what mines can charge utilities for coal. Mines have responded by shipping the lowest-quality, dirtiest, most-contaminated coal to power plants, say power and coal executives. The utilities have also been reluctant to spend on foreign equipment, steering contracts to affiliates instead.


    "When you have a 1 percent or less profit," said Harley Seyedin, chief executive of the First Washington Group, owner of oil-fired power plants in Southeastern China's Guangdong Province, "you don't have the cash flow to invest or to expand in a reasonable way."


    A New Technology


    The third big choice involves whether to pulverize coal and then burn the powder, as is done now, or convert the coal into a gas and then burn the gas, in a process known as integrated gasification combined combustion, or I.G.C.C.


    One advantage of this approach is that coal contaminants like mercury and sulfur can be easily filtered from the gas and disposed. Another advantage is that carbon dioxide can be separated from the emissions and pumped underground, although this technology remains unproven.


    Leading climate scientists like this approach to dealing with China's rising coal consumption. "There's a whole range of things that can be done; we should try to deploy coal gasification," said Dr. Rajendra K. Pachauri, chairman of the United Nations-affiliated Intergovernmental Panel on Climate Change.


    The World Bank in 2003 offered a $15 million grant from the Global Environment Facility to help China build its first state-of-the-art power plant to convert coal into a gas before burning it. The plan called for pumping combustion byproducts from the plant underground.


    But the Chinese government put the plan on hold after bids to build the plant were higher than expected. Chinese officials have expressed an interest this spring in building five or six power plants with the new technology instead of just one. But they are in danger of losing the original grant if they do not take some action soon, said Zhao Jian-ping, the senior energy specialist in the Beijing office of the World Bank.


    Another stumbling block has been that China wants foreign manufacturers to transfer technological secrets to Chinese rivals, instead of simply filling orders to import equipment, said Anil Terway, director of the East Asia energy division at the Asian Development Bank.


    "The fact that they are keen to have the technologies along with the equipment is slowing things down," he said.


    Andy Solem, vice president for China infrastructure at General Electric, a leading manufacturer of coal gasification equipment, said he believed that China would place orders in 2007 or 2008 for the construction of a series of these plants. But he said some technology transfer was unavoidable.


    Western companies could help Chinese businesses take steps to reduce carbon-dioxide emissions, like subsidizing the purchase of more efficient boilers. Some companies already have such programs in other countries, to offset the environmental consequences of their own carbon-dioxide emissions at home, and are looking at similar projects in China. But the scale of emissions in China to offset is enormous.


    For all the worries about pollution from China, international climate experts are loath to criticize the country without pointing out that the average American still consumes more energy and is responsible for the release of 10 times as much carbon dioxide as the average Chinese. While China now generates more electricity from coal than does the United States, America's consumption of gasoline dwarfs China's, and burning gasoline also releases carbon dioxide.


    An Insatiable Demand?


    The Chinese are still far from achieving what has become the basic standard in the West. Urban elites who can afford condominiums are still a tiny fraction of China's population. But these urban elites are role models with a lifestyle sought by hundreds of millions of Chinese. Plush condos on sale in Shanghai are just a step toward an Americanized lifestyle that is becoming possible in the nation's showcase city.


    Far from the Wu family in rural Shaanxi, the Lu Bei family grew up in cramped, one-room apartments in Shanghai. Now the couple own a large three-bedroom apartment in the city's futuristic Pudong financial district. They have two television sets, four air-conditioners, a microwave, a dishwasher, a washing machine and three computers. They also have high-speed Internet access.


    "This is my bedroom," said Lu Bei, a 35-year-old insurance agency worker entering a spacious room with a king-size bed. "We moved here two years ago. We had a baby and wanted a decent place to live."


    For millions of Chinese to live like the Lus with less damage to the environment, energy conservation is crucial. But curbing that usage would be impossible as long as China keeps energy prices low. Gasoline still costs $2 a gallon, for example, and electricity is similarly cheap for many users.


    With Chinese leaders under constant pressure to create jobs for the millions of workers flooding from farms into cities each year, as well as the rapidly growing ranks of college graduates, there has been little enthusiasm for a change of strategy.


    Indeed, China is using subsidies to make its energy even cheaper, a strategy that is not unfamiliar to Americans, said Kenneth Lieberthal, a China specialist at the University of Michigan. "They have done in many ways," he said, "what we have done."


    Keith Bradsher reported from Hanjing and Guangzhou, China, for this article and David Barboza from Datong and Shanghai.


     


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  • When Bernanke speaks, the markets freak


    FED CHIEF CLEARER THAN PREDECESSOR; INVESTORS DON'T SEEM TO LIKE IT


    By Kevin G. Hall

    Knight Ridder

    In his fifth month on the job, Federal Reserve Chairman Ben Bernanke is learning the hard way that his pledge to make U.S. monetary policy clearer comes with a price.


    Bernanke became chairman Feb. 1, and he's off to a rocky start after roiling the markets in recent weeks. His sin, it seems, is speaking too clearly about interest rates and inflation, as he promised to do after taking the helm from the opaque Alan Greenspan, who turned vague statements into an art form.


    Comments Monday by Bernanke sent the markets plunging most of the week. The technology-heavy Nasdaq composite index fell for six days in a row, finishing the week 3.8 percent lower at 2,135.06. The blue-chip Dow Jones industrial average -- which includes Silicon Valley tech heavyweights Intel and Hewlett-Packard -- slid 3.2 percent to 10,891.92.


    The new chairman's rough patch began April 27, when he signaled before the Joint Economic Committee of Congress that after 16 consecutive interest-rate increases since June 2004, a pause might be in order. Stocks rallied.


    Days later, however, in what he thought was a private conversation with a CNBC reporter, Bernanke said the markets had misunderstood his message and that a pause was in no way certain. CNBC reported it May 1, sparking a Wall Street roller-coaster ride.


    Soon after, data came out suggesting that energy prices were driving inflation to the upper limits of the Fed's comfort zone. The implication: A late June rate increase was now more likely than a pause.


    Bernanke's words in April had proved too optimistic, given that the Fed's main mission is to quell inflation, primarily by setting short-term interest rates.


    Testifying before the Senate in late May, Bernanke apologized for ``a lapse in judgment on my part'' in talking loosely to a reporter. In the future, Bernanke said, he'd stick to formal channels to communicate to the public.


    But even speaking that way roiled the markets. In a speech to a conference Monday in Washington, Bernanke left little doubt that future rate increases should be expected because price inflation had reached a danger zone.


    The Fed chief also said the U.S. economy is showing signs of slowing down. He pointed to slowing consumer spending, the cooling housing market and slower job growth. A slowing economy normally prompts an end to rate increases or spurs rate cuts to rekindle economic embers. But Bernanke left no doubt that he's more worried about rising inflation than slowing growth -- and their combination is troubling.


    ``These are unwelcome developments,'' he said.


    The Dow Jones industrials promptly plunged 200 points, and stocks slumped further through the week. What the markets heard was that rate increases might extend beyond the next expected bump up to 5.25 percent at the Fed's June 28 and 29 meeting.


    Why such volatility? Bernanke, after all, was just engaging in the ``plain speak'' he'd promised.


    Blame Greenspan, who for more than 18 years as Fed chairman developed an oft-impenetrable language to communicate the Fed's thinking.


    ``I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said,'' Greenspan once famously quipped.


    The markets, it appears, don't want straight talk.


    ``The markets and Bernanke haven't quite learned how to listen to each other,'' said James Glassman, a senior economist for investment bank JPMorgan Chase. ``I'm sure he thinks he's leaving the door open . . . but the market needs simple messages, and the markets have sort of been used to getting spoon-fed.''


    The danger in Bernanke's plain talk is that it creates expectations that can be dashed by new contradictory data. When he said future Fed rate decisions would be dependent on emerging data but looked favorable for a pause, he didn't leave the Fed much wiggle room for unexpected data -- as the next set of inflation numbers promptly proved.


    ``The problem here is that Bernanke came in when the easy work was over,'' said Laurence Meyer, a Fed governor from 1996 to 2002. ``Bernanke was not able to give the kind of more precise guidance'' that comes earlier in a rate-raising cycle, Meyer said.


     


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    New Treasury chief is seen as insurance against crisis


    ANALYSTS ASK WHY PAULSON ACCEPTED POST


    By Kevin G. Hall

    Knight Ridder

    When President Bush nominated Wall Street titan Henry Paulson last week to be his next Treasury secretary, there was universal praise for the rock star of investment banking.


    This week, as Paulson met with leaders on Capitol Hill, analysts are pondering why he accepted a post that critics say Bush has rendered impotent.


    Traditionally, a Treasury secretary's powers touch on nearly everything important to the U.S. and global economies, from trade, debt and taxes to Social Security and the minting of money. Men who have held the job in decades past seemed larger than life and kept a firm hand on the tiller of national economic policy.


    President Reagan had James Baker III, whose 1985 Plaza Accord coordinated global currency values and trimmed a mammoth U.S. trade deficit. President Clinton leaned heavily on Robert Rubin, who like Paulson once headed investment bank Goldman Sachs and like Baker took the lead in averting global financial crises, his from Mexico, Asia and Russia.


    Bush's two terms, to date, have been markedly different. His first two Treasury secretaries were men firmly rooted in the old economy, wary of Wall Street and unbridled financial markets. Paul O'Neill headed aluminum giant Alcoa and the departing John Snow ran railroad power CSX. They took on the cheerleader role usually reserved for the commerce secretary, while the White House set economic policy and managed day-to-day decisions.


    ``I don't remember ever seeing that happen before. The White House played a role, but I don't think you would ever find a period where day-to-day'' decisions were made by the White House, said Barry Bosworth, a senior fellow at the Brookings Institution, a center-left research center.


    Bosworth served President Carter as the director of the Council on Wage and Price Stability.


    Paulson met Friday with Senate Majority Leader Bill Frist, R.-Tenn., who said he expects Bush's choice to win Senate confirmation by July 4.


    Donald Evans, Bush's commerce secretary from 2001 to 2005 who reportedly was on the president's short list of potential Treasury candidates, thinks Paulson sees a chance to be the spokesman for addressing the longer-term liabilities that jeopardize the nation's financial future.


    ``I think Hank, as well as anybody in the world, does have a real-time understanding of the state of the economy. . . . He has a very real-time understanding of what the real challenges are and what the real dangers are to the economy as we look into the future,'' said Evans, now president of the Financial Services Forum, a trade association for the financial sector. ``He can articulate those issues with a tremendous amount of credibility.''


    Sen. Charles Grassley, R-Iowa, agreed.


    ``I believe he was selected to be more of a spokesman,'' said Grassley, chairman of the influential Senate Finance Committee, which must approve Paulson's nomination.


    As Bush's administration nears lame-duck status, few expect the president to push for any significant economic-policy changes. Paulson's credibility in global financial circles then becomes the political equivalent of a rainy day fund, something of great value should the stock market drop precipitously or some financial crisis emerges on a global scale.


    ``If there were a crisis, he's very well suited to take the leadership and make the adjustments,'' Bosworth said.


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    Stocks fall again in market's worst week of the year so far


    FOR WEEK, NASDAQ SHEDS 3.8%, DOW 3.2%, S&P 500 2.8%


    Mercury News Wire Services

    Wall Street finished its worst week of the year with a moderate decline Friday as persistent unease over inflation and interest rates kept investors nervous about buying.


    The technology-heavy Nasdaq composite index lost 10.26, or 0.5 percent, to 2,135.06.


    Silicon Valley's largest tech stocks by market value were mostly lower. Cisco Systems, Intel and Gilead Sciences were up. Google, Hewlett-Packard, Oracle, Apple Computer, eBay, Yahoo and Applied Materials were down.


    The Dow Jones industrial average slid 46.90, or 0.4 percent, to 10,891.92. The Standard & Poor's 500 index fell 5.63, or 0.4 percent, to 1,252.30.


    For the week, the Nasdaq plunged 3.8 percent, the Dow dropped 3.2 percent, and the S&P 500 sank 2.8 percent.


    Next week's reports on wholesale and consumer prices will provide the latest clues on the economy's health and could spark more investor debate on the battle between economic growth and inflation, and whether the Federal Reserve will continue raising short-term interest rates.


    ``People will be thinking about what the Fed will be debating at their June 28-29 meeting,'' said Jack Caffrey, equities strategist for JPMorgan Private Bank. ``Investors are scared not necessarily about what the Fed will say, but of the possibility that the Fed may overtighten rates.''


    In corporate news, Dallas chip maker Texas Instruments raised its earnings and revenue targets for the second quarter, but attributed the gains to a legal settlement and a tax break. Texas Instruments dropped $1.04, or 3.4 percent, to $29.68.


    Prudential Equity Group gave further good news to the semiconductor sector with an upgrade to ``favorable'' from ``unfavorable.'' Prudential said inventories are at all-time March-quarter lows in a number of places in the supply chain. ``We view lean inventories at these critical areas as a positive for the semiconductor sector,'' the brokerage said.


    Santa Clara chip giant Intel was up 5 cents, or 0.3 percent, to $17.16.


    Genelabs Technologies rose 11 cents, or 5.9 percent, to $1.98. The Redwood City drug developer said it expects a mid-year cash level of about $15 million. The company also said it received $12.5 million in up-front payments from Novartis.


    Take-Two Interactive Software fell $2.94, or 17.5 percent, to $13.83. The video-game publisher, which sells titles including ``Grand Theft Auto: San Andreas,'' reported a wider-than-expected quarterly loss despite a 20 percent jump in sales.


    Bond prices drifted, with the yield on the 10-year Treasury note, which moves in the opposite direction, slipping to 4.98 percent from 5.01 percent late Thursday. Short-term yields continued lingering above long-term rates, signaling greater expectations of slowing economic growth.


    Elsewhere, the U.S. dollar dipped against the Japanese yen and was flat compared with European currencies, while gold prices stood near $610 an ounce.


     


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    U.S. trade deficit up to $63.4B in April


    MARTIN CRUTSINGER

    Associated Press

    The trade deficit is rising again after two months of declines, pushed by oil prices and a flood of imports from China. Analysts warned that global oil prices above $70 per barrel will swell the deficit more in coming months.


    The Commerce Department reported Friday that the gap between what the United States sells abroad and what it imports rose to $63.4 billion in April, 2.5 percent higher than the March imbalance of $61.9 billion.


    The trade deficit fell in both February and March after hitting an all-time high of $66.2 billion in January.


    While economists noted that the April deficit was smaller than the $65 billion that had been expected, it was still the sixth largest imbalance on record. They said deficits in comings months were likely to be worse given the jump in global crude oil prices.


    On Wall Street, stocks finished their worst week of the year as investors remained nervous over worries about inflation and interest rates. The Dow Jones industrial average fell 46.90 points Friday to close at 10,891.92, ending the week with a loss of more than 355 points.


    Investors' worries about inflation increased after the Labor Department reported that prices for imported goods jumped 1.6 percent in May. Excluding the big rise in petroleum products, import prices were still up 0.6 percent last month.


    The April deterioration in the trade deficit came from a $1.44 billion increase in America's foreign oil bill, which rose to $23.8 billion. That reflected a big jump in crude oil prices which overwhelmed a drop in volume. Oil traded on Friday at $71.45 per barrel in New York, up $1.10 from the previous day. Oil hit an all-time high of $75.17 in late April.


    Through the first four months of this year, the trade deficit is running 12.9 percent above the same period a year go, putting the country on track to run up a record trade deficit for a fifth straight year. Last year's deficit was $716.7 billion.


    Critics of the administration's trade policies seized on the new imbalance as further evidence that President Bush's strategy of striking free-trade deals with countries around the world was not working and was contributing to a loss of nearly 3 million manufacturing jobs since Bush took office.


    "These figures are a jarring reminder that our nation needs a new approach to its trade policy," said Rep. Benjamin Cardin of Maryland, the top Democrat on the Ways and Means trade subcommittee.


    Sen. Byron Dorgan, D-N.D., said that the new deficit figure highlighted the "total failure of U.S. trade policy" and showed that the country was handing over $2 billion a day to foreigners to cover the trade gap.


    But new U.S. Trade Representative Susan Schwab said the country's trade picture was "much less dire" than critics were contending. She noted that the overall economy is performing strongly at present with unemployment dropping to 4.6 percent in May, the lowest jobless rate in nearly five years.


    The increase in the April trade deficit reflected a 0.7 percent rise in imports, which climbed to $179.1 billion, the second highest level on record.


    In addition to a higher oil bill, imports of autos and auto parts were up and shipments of consumer goods from China of such items as furniture, televisions, video recorders and toys all rose.


    That helped to push America's total deficit with China to $17 billion in April, up a hefty 9.4 percent from March. That was likely to add to pressure in Congress to force China to revalue its currency as a way of helping narrow the deficit.


    American manufacturers contend China's currency is undervalued by as much as 40 percent, making Chinese goods cheaper for U.S. consumers and American products more expensive in China.


    Some analysts said that Treasury Secretary nominee Henry Paulson will likely face tough questioning on the administration's approach to China during his upcoming Senate confirmation hearings.


    U.S. exports of goods and services slipped 0.2 percent to $115.7 billion, just slightly below the all-time high set in October, reflecting a big $310 million drop in commercial aircraft shipments and smaller declines in sales of farm products and consumer goods.


    The deficit from last year was revised down from an earlier estimate of $723.6 billion, reflecting annual benchmark revisions that increased America's surplus in services based on more complete data.


    Analysts believe the deficit will set another record this year, although they also think the pace of deterioration is slowing after huge increases in recent years.


    The deficit with Japan rose by 2.8 percent in April to $7.8 billion. The deficit with Canada rose by 16.3 percent to $6.1 billion in April while the imbalance with Mexico fell by 9.3 percent to $4.9 billion.


    America's deficit with the 25-nation European Union declined by 7.2 percent in April to $9.4 billion.


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    Greenspan: Dependence on oil threat to economy


    By Kevin G. Hall

    Knight Ridder

    Rising energy prices are pushing up inflation and increasingly threatening the U.S. economy, former Federal Reserve Chairman Alan Greenspan testified Wednesday.


    He called for speedily developing alternative energy sources such as ethanol and liquefied natural gas.


    In his first appearance on Capitol Hill since he ended his nearly 19-year Fed tenure Jan. 31, Greenspan told the Senate Foreign Relations Committee that the United States had better reduce its dependence on foreign oil or suffer damaging economic consequences.


    A recent terrorist attack on Saudi Arabia's main oil refinery, though thwarted, should serve as a warning that a successful hit on an oil installation could spark a global price shock that would create ``a significant contraction in the economy,'' Greenspan said.


    While the U.S. and global economies have shown surprising resiliency to rising oil and natural-gas prices since 2002, Greenspan said ``recent data indicate we may finally be experiencing some impact.''


    The former Fed chief also detailed how investors, rather than users of oil, have come to set the price of oil through purchasing futures contracts. These speculators are betting that oil will cost above $60 a barrel six or seven years out, he said, suggesting that there won't be a significant retreat for oil prices in coming years.


    But he said ``current oil prices over time should lower to some extent our worrisome dependence on petroleum,'' with the development of alternative fuels and broader use of electric-hybrid cars. This ``would help to wean us off our petroleum dependence,'' Greenspan said.


    Greenspan noted that three-quarters of the world's oil reserves are state-owned. The run-up in prices is resulting in huge amounts of cash ``to countries that are not friends of ours,'' he said. This ``is a very serious issue.''


    The bulk of his nearly three-hour testimony focused on reducing oil dependence and boosting energy security.


    Greenspan said repeatedly that cellulosic ethanol, a next-generation alternative fuel that could be made from nearly any plant fiber, appeared to be the most promising solution to the country's oil addiction.


    ``I'd move as quickly as I could to find out whether cellulosic is a practical alternative,'' he said.


    He said conventional corn-based ethanol holds little promise to reduce U.S. oil dependence significantly. If every bushel of corn grown in the United States went to producing ethanol, it would displace only about 10 percent of projected U.S. gasoline consumption, he said.


    To make cellulosic ethanol, scientists deploy mass-produced, biologically engineered enzymes that can break down virtually any plant stock for fermentation and conversion into ethanol. Among its benefits is that, unlike gasoline or conventional ethanol, its production doesn't produce gases that contribute to global warming.


    Pressed repeatedly, Greenspan frowned on the idea of a federal ``man-to-the-moon''-type project to create alternative fuels. As a political conservative and market-oriented economist, Greenspan typically prefers private-sector to governmental solutions.


    Greenspan also touted liquefied natural gas as an important tool in reducing dependence on oil and gasoline.


    For years, he'd lamented the lack of liquefied natural-gas terminals in the United States. He complained Wednesday that Japan and other countries had locked up supplies in long-term contracts.


    ``This could be another source of replacement for petroleum,'' he said.







     


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  • UC Davis Magazine Online
    Volume 22
    Number 3
    Spring 2005
    Current IssuePast IssuesMagazine HomeSearch Class NotesSend a Letter







    Features: Take Your Veggies | Stolen Shores | Chilean Fresh | Q&A








    CHILEAN FRESH


    Chilean landscape photoChile is one of the world’s leading fresh-fruit exporters, thanks to a group of UC Davis alumni.


    By Kathleen Holder


    Nearly all the table grapes you eat during the winter come from Chile, but you could also say they are the fruit of UC Davis. The same goes for the Chilean-grown apples, peaches, nectarines, pears and avocados that you find out of season in your grocery store.


    More than 50 Chileans who studied agricultural sciences at UC Davis in the 1960s and 1970s—the “Davis boys”—are widely credited with helping to transform their country into one of the world’s leading fresh-fruit exporters.


    Now, there is a new wave of Chilean scholars—protégés of the first Davis boys—who are pursuing graduate studies at UC Davis with hopes of helping their country tackle a new array of challenges, from improving fruit and wine quality to expanding fish farming and cleaning up pollution.


    And campus officials are working with a nonprofit business incubator in Chile to develop UC Davis innovations in food processing, fish farming, agricultural biotechnology and other fields as Chile seeks to diversify its economy beyond copper and fruit exports. Chile last summer became the first South American country with a free-trade agreement with the United States.


    A Fruitful Exchange






     
    Among the many UC Davis alumni in Chilean agriculture are fruit producer José Domingo Godoy (from left); Anthony Wylie, dean of agronomy at Santo Tomás University; Carlos Fernández, a researcher at the nonprofit business incubator Fundación Chile; and Edmundo Bordeu, enology professor at Catholic University of Chile. Photo by José Luis Risetti, El Mercurio.

    Anthony Wylie, dean of agronomy at Chile’s University of Santo Tomás, said he saw great potential to expand Chile’s fruit production before coming to UC Davis in 1965. He earned a master’s degree here in 1966 and a doctorate in 1969.


    He was one of the first Chileans to take advantage of “convenio Chile-California,” a 1965–73 exchange agreement that sent UC professors to Chile and Chilean graduate students to UC campuses. Most of the Chilean students came to the Davis campus to study agriculture.


    The convenio was established with funding from the Ford Foundation at a time when the United States sought new alliances in Latin America to counter communism.


    Wylie said he chose UC Davis over other agricultural programs around the world because California’s climate is so similar to Chile’s and because, for fruit science, “Davis was the best.”


    At UC Davis, Wylie focused his research on peaches, studying varieties and production techniques that could be adapted for Chile. Moreover, he said, he learned a scientific approach to problem solving, which he and other alumni taught—and still teach—to their students back home. “It has a multiplying effect.”


    What followed, beginning in the mid-1970s, was a fruit boom that transformed the Chilean countryside and contributed to the nation’s rising standard of living, according to Chilean and UC Davis experts on Chile’s agricultural development.


    The phrase “Davis boys” derives from the “Chicago boys”—Chileans who studied the neoliberal economics of Milton Friedman and Arnold Harberger at the University of Chicago and launched economic policies that made Chile a model for free-trade advocates. Those policies were started under dictator Augusto Pinochet and extended by succeeding democratic governments.


    The Davis boys provided technical expertise on what crops to introduce to Chile and how to grow them. “These scientists, then mainly professors in Chilean universities, took the lead in explaining to the farmers how to make these changes,” said Lovell “Tu” Jarvis, UC Davis professor of agricultural and resource economics and an associate dean for the College of Agricultural and Environmental Sciences.


    “They identified California varieties that could be grown in Chile and exported to world markets, and then helped farmers adapt production practices to produce high-quality fruit,” Jarvis said. “They knew how to do basic research and taught farmers how new technology and better management could improve profits. Their contributions were crucial to the fruit sector’s tremendous progress between 1974 and 1991.”


    Fruit exports from Chile rose from $50 million to $1 billion during that period and have continued to grow since, Jarvis said. Chile now produces about 95 percent of the table grapes imported by the United States in the winter.


    With the growing season in the Southern Hemisphere from January through March, table grape imports helped rather than hurt California growers, Jarvis said. “People got used to eating grapes year-round,” he said. Consumption rose, as did California growers’ sales and prices.


    UC Davis history professor Arnold Bauer, an authority on Latin American history who wrote a well-known book on Chilean rural society, said that changes in Chile’s central valley over the past few decades have been dramatic.


    “I first came to Chile in the later 1960s when the central valley countryside was still devoted to the traditional activities of cereal, wheat mainly, and livestock, with a few nice wineries, large haciendas or fundos, and lots of raggedy campesinos,” Bauer said via e-mail from Chile where he has directed an Education Abroad program the past three years.


    “Now, driving south from Santiago to Talca and even beyond, one sees hardly anything but stretches of vineyard, rows of apple, peach, pear and apricot trees and, every now and then, huge packing houses, mainly the result of foreign investment by Del Monte, Dole, Uni Frutti and so on. The fields of fruit trees and vineyards are, by and large, owned by Chileans; the commercialization of the product is largely in foreign hands.


    “What Pinochet and the Chicago boys did was carry out, in their terms, a ‘capitalist revolution’ in the countryside with the expected up and down sides. The Davis boys were important in providing the technical expertise in the fruit and grape sectors. I think that the convenio with the University of California and the University of Chile was, in the terms expressed, very successful, even ‘fruitful’ if you don’t mind the pun.”


    Generational Impact


    The Chile–UC Davis links have had long- lasting effects. UC Davis alumni, with advice from UC Davis professors, also helped transform Chilean higher education by establishing agricultural-sciences curricula.


    When Carlos Crisosto was an undergraduate student at the University of Chile, most of his major professors were UC Davis alumni. Even though the convenio had expired and there were fewer scholarships for Chileans to study here, Crisosto came to UC Davis to get his horticulture master’s degree in 1982. “UC Davis was the most distinctive university in agriculture,” he said.


    He now works as a Cooperative Extension specialist at the UC Kearney Research and Extension Center near Fresno, where he researches ways to improve handling, packing and shipping of table grapes, nectarines, fresh market peaches, plums, apricots, kiwifruit, figs, olives and Asian pears.


    Reinaldo Campos, who earned his doctorate in plant biology at UC Davis in 2001, said UC Davis was his first choice for graduate school.


    “The possibility to get many ideas of great scientists is remarkable at Davis,” said Campos, who now conducts research on fruit and vegetable physiology and post-harvest techniques for Chile’s National Institute for Agriculture Research.


    About 25 Chilean students were enrolled this fall at UC Davis, most of them in graduate programs, according to Wes Young, director of Services for International Students and Scholars. That is far fewer than the hundreds of students from China, Korea or Japan. However, Chile, a relatively small country with about 15 million people, still ranks 13th among foreign countries for numbers of students attending UC Davis.


    “A lot of people come here because of the professors we had,” said Cristóbal Uuay, a doctoral student here researching wheat genetics. “We always heard about the quality of education at Davis, and also of the shared interests.”


    Uuay, co-founder of the Chilean Cultural Association of Davis, said many other Chilean graduate students are junior faculty members who continue to receive salaries from their universities on the condition that they go back and work two years for every year they spend here. “The idea is not to have the brain drain from Chile,” Uuay said.


    UC Davis fellowships cover his fees here, so he is not obligated to return immediately after finishing his Ph.D. in 1½ years, leaving open opportunities for postdoctoral research. However, he said he wants ultimately to go back, as do most Chilean students. “There’s a national pride in how we’re doing compared with the rest of Latin America. We want to be part of that. We want to help our country.”


    However, he says that rising fees and visa restrictions are discouraging other Chileans from applying here. Few new students arrived this year to replace the 10 who finished their studies and returned home, he said. “It’s getting harder to get money. It’s getting harder to get visas.”


    More than half the Chilean students study agricultural sciences, Uuay said. But a few study atmospheric sciences under meteorology professor Robert Flocchini, an expert on how agriculture contributes to air pollution. Three others study history.


    Even one of the history students said the long-standing UC Davis–Chile ties influenced his decision to come here. Pablo Whipple, whose history dissertation focuses on 19th century Peru’s ruling class, said colleagues at the Catholic University of Chile and friends studying here recommended UC Davis to him.


    Future Directions


    Alan Bennett, an internationally known UC Davis plant sciences professor and associate vice chancellor for research, said the university is seeking new funds from the U.S. and Chilean governments to bring Chilean graduate students here and to provide opportunities for California students and faculty to carry out research in Chile.


    Bennett has been working with Chilean colleagues to develop technology transfer programs. Last year, he worked with the nonprofit Fundación Chile in developing a national plan for getting Chilean research innovations to market. Created in 1976 by the Chilean government and ITT Corp., Fundación Chile seeks to diversify the Chilean economy by creating new companies based on sustainable natural resources.


    Bennett also developed an agreement between Fundación Chile and UC to identify technologies developed at UC campuses that could be commercialized in Chile. “The university would like to see its technology further developed,” Bennett said. “In some cases, a technology is not being developed in the United States because it doesn’t fit into existing industries here that are typically further advanced but may make sense in the still-developing Chilean industry sector.”


    Bennett said educational exchange programs like the one that trained Chile’s Davis boys are critical to future innovations in both countries. “It’s really through the students that these technologies can be developed.”


    Chile is a good partner because, in addition to UC Davis’ many alumni there, the country shares a similar climate, strong research in agricultural biotechnology and many of the same natural resources as California.


    Chile’s main export is copper, but it is increasing its exports in crops, fish and forestry products. As its economy moves from non-renewable resources to renewable resources, Bennett said, Chile faces a great need to clean up the copper mines.


    At Fundación Chile, Bennett has been working with alumnus Carlos Fernández, who earned a doctorate in plant physiology from UC Davis in 1978 as one of the last Chileans to come under the convenio. He worked 20 years for Monsanto in Brazil, Europe and Davis before returning to Chile five years ago.


    Fernandez said UC Davis’ help in developing technology transfer programs is welcomed in Chile. “In our country, this process is very weak,” he said.


    “Our country is a good producer and exporter of raw materials—fruit, minerals, something you take from the environment. We want to add value to all those natural resources. To add value, we need to produce new technology.


    “Certainly the valuable technology is at UC Davis,” he said. “The general consensus is that the University of California, and UC Davis especially, is a center of knowledge and innovation that is first-line in the world.”


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    Kathleen Holder is associate editor of UC Davis Magazine. Top photo courtesy of Chilean Fresh Fruit Association.


     


     


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  • What the Republicans tell us: The "death tax" (estate tax) takes half or more of a family's hard-earned savings (and at a most difficult time for the family), requiring land holdings to be broken up and bankrupting family farms and small businesses.


    What the Republicans don't tell us: The estate tax applies only to estates of over $650,000 (for single person, double that for a couple), a threshold that will rise to $1 million by 2006. The top marginal estate tax rate is 39 percent, not "over half." In a typical year fewer than two percent of estates pay any tax at all, and only one in twenty farm estates. The estate tax brings in $27 billion a year, more than double the federal income tax paid by the bottom half of all taxpayers.


     


    June 05, 2006


    Paul Krugman: Shameless in the Senate


    Paul Krugman asks how congress can justify eliminating or substantially reducing the estate tax after arguing it had to cut essential social services such as health insurance for children to trim the deficit in a bill signed in February:



    Shameless in the Senate, by Paul Krugman, Estate Tax Commentary, NY Times: The Senate almost voted to repeal the estate tax last fall, but Republican leaders postponed the vote after Hurricane Katrina. It's easy to see why: the public might have made the connection between scenes of Americans abandoned in the Superdome and scenes of well-heeled senators voting huge tax breaks for their even wealthier campaign contributors.


    But memories of Katrina have faded, and they're about to try again. ... So it's important to realize that there's still a clear connection between tax breaks for the rich and failure to help Americans in need. ... To understand this point, ... look at what Congress has been doing lately in the name of deficit reduction. The Deficit Reduction Act of 2005, which was signed in February, consists mainly of cuts to spending on Medicare, Medicaid and education. The Medicaid cuts will ... cause 65,000 people, mainly children, to lose health insurance, and lead many people who retain insurance to skip needed medical care because they can't afford increased co-payments.


    Congressional leaders justified these harsh measures by saying that we have to reduce the budget deficit, and there's no way to do that without inflicting pain. But those same leaders now propose making the deficit worse by repealing the estate tax. Apparently deficits aren't such a big problem after all, as long as we're running up debts to provide bigger inheritances to wealthy heirs rather than to provide medical care to children. ...


    Who would benefit from this largess? The estate tax is overwhelmingly a tax on the very, very wealthy; only about one estate in 200 pays any tax at all. The campaign for estate tax repeal has largely been financed by just 18 powerful business dynasties, including the family that owns Wal-Mart.


    You may have heard tales of family farms and small businesses broken up to pay taxes, but those stories are pure propaganda... Nonetheless, the estate tax is up for a vote this week. First, Republicans will try to repeal the estate tax altogether. If that fails, they'll offer a compromise ... like a plan suggested by Senator Jon Kyl, Republican of Arizona, that would cost almost as much as full repeal, or a plan suggested by Senator Max Baucus, Democrat of Montana, that is only slightly cheaper.


    In each case, the crucial vote will be procedural: if 60 senators vote to close off debate, estate tax repeal ... will surely pass. Any senator who votes for cloture but against estate tax repeal — which I'm told is what John McCain may do — is simply a hypocrite, trying to have it both ways.


    But will the Senate vote for cloture? The answer depends on two groups of senators: Democrats like Mr. Baucus who habitually stake out "centrist" positions that give Republicans almost everything they want, and moderate Republicans like Lincoln Chafee ... who consistently cave in to their party's right wing. Will these senators show more spine than they have in the past?


    In the interest of stiffening those spines, let me remind senators that this isn't just a fiscal issue, it's also a moral issue. Congress has already declared that the budget deficit is serious enough to warrant depriving children of health care; how can it now say that it's worth enlarging the deficit to give Paris Hilton a tax break?


     


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  • From Robert Reich's blog . . .


     


    Friday, June 02, 2006



    The Super-Rich Estate Tax (Don't Call it a Death Tax)




    This coming week, Senate Republicans are putting up for a vote repeal of the estate tax (which Republicans have renamed the "death" tax in order to fool Americans into thinking most have to pay it when they die). Right now, the tax only hits families with more than $4 million to give to their heirs. That's the richest one-half of one percent of American families -- only about 1,200 families altogether. Families can leave their children up to $4 million without any tax at all. But because this small group of families has so large a fortune, repeal would cost the U.S. Treasury $1 trillion in its first ten years. That's about equivalent to what's needed to save Social Security over the next 75 years. Put another way, the yearly loss to the Treasury is almost exactly equal to the amount the U.S. spends each year on homeland security. If the super-wealthy won't pay, the middle class will have to pay more taxes to make up the difference. Or the national debt will expand, and we'll all be paying more interest on the resulting borrowing (mostly from wealthy Americans, along with China and Japan).

    So why aren't Americans making a bigger fuss? Because they've been sold a huge load of lard about this. The PR campaign for repeal has been financed by 18 super-rich families, with a combined total wealth of $185 billion. If they get the tax repealed, they'll save over $70 billion.

    Every Republican president who has waged war during his presidency, from Abe Lincoln on down, has supported the estate tax as a way to finance the war equitably by having the rich pay their fair share. George W. Bush is the first to want to repeal it. To make matters even more absurd, the richest American families, with personal fortunes of $2 million or more, already own a third of all the wealth in the nation. That's a record high, since records have been kept.

    Senator Max Baucus (D-Montana) is about to offer an amendment to repeal up to $7 million. That's still a travesty.

     

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  • I lifted this from Defiance_01's Xanga . . . .


     



     

    Hitler's Protégé:
    The Hatespeech of Ann Coulter

    Don't get me wrong. I am not a person who makes wild, abstract connections between republicans and Nazis; I am well aware that even though Bush and Hitler have committed horrible, intolerant atrocities, but excluding the fact that they both surrounded themselves with yes-men, Bush cannot be compared to Hitler, under any circumstances. Period. Virtually no one in modern American politics can be compared to Hitler.

    Except Ann Coulter, and I am not saying that out of partisan anger. I'm saying that because it's true. She has publicly stated that she idolizes Joseph McCarthy, a man who came to fame in 1949 for campaigning on behalf of Nazis who were convicted of war crimes. Of course, you won't read any of that in her books, because she sweeps that glaringly obvious fact under the rug.

    Don't believe me? Read a salon.com review of her book "Treason: Liberal Treachery from Cold War to the War on Terror"

    Wow, now there's an "honest" title. Right up there with her other books, "Slander: Liberal Lies about the American Right" and "How to Talk to a Liberal (if you must)"

    Wait a second. "How to talk to a liberal if you must" ? How many groups could she get away with using a book like this for?

    "How to talk to a Jew (if you must)" by Ann Coulter
    "How to talk to a Negro (if you must)" by Ann Coulter
    "How to talk to a Queer (if you must)" by Ann Coulter

    Would colleges be inviting her to speak if she had written books like these? Of course not. But throw the word "Liberal" in there and you've got a best-selling book. More proof that we live in a climate where it's becoming increasingly acceptable to hate Liberals.

    "But wait," you may be thinking, "there are people like that on the left too!"

    Oh really?

    This an actual quote from Coulter:

    "When contemplating college liberals, you really regret once again that John Walker is not getting the death penalty. We need to execute people like John Walker in order to physically intimidate liberals, by making them realize that they can be killed, too. Otherwise, they will turn out to be outright traitors."

    Hmmm.....so liberals should be physically intimidated and killed for disagreeing with conservatives?

    I dare you to find a single well-known liberal who thinks the same thing about conservatives.

    Al Franken? Nope.
    Michael Moore? Not in any of his books or movies.
    Noam Chomsky? Guess again.
    Bill Maher? a) Not a liberal. b) Nope.
    Ted Kennedy? Not a word.
    Paul Begala? Wrong.

    Hmmm......

    A few more actual quotes by Coulter:


    "I'm fed up with hearing about civilian casualties in Iraq."

    "I think we ought to nuke North Korea right now just to give the rest of the world a warning."

    "All feminists are weak and pathetic."

    "My only regret with Timothy McVeigh is he did not go to the New York Times Building."

    "Seriously, I think the rest of the countries in the Middle East, after Afghanistan and Iraq, they're pretty much George Bush's bitch,"

    "I will go to a black church and talk about gay marriage. The brothers aren't big on queer theory."

    "We should invade their countries, kill their leaders, and convert them to christianity."

    "When contemplating college liberals, you really regret once again that John Walker is not getting the death penalty. We need to execute people like John Walker in order to physically intimidate liberals, by making them realize that they can be killed, too. Otherwise, they will turn out to be outright traitors."

    "There are no good Democrats."

    "Earth is yours. Take it. Rape it. It's yours."

    "Liberals become indignant when you question their patriotism, but simultaneously work overtime to give terrorists a cushion for the next attack and laugh at dumb Americans who love their country and hate the enemy."

    "Usually the nonsense liberals spout is kind of cute, but in wartime their instinctive idiocy is life-threatening."

    "A central component of liberal hate speech is to make paranoid accusations based on their own neurotic impulses, such as calling Republicans angry, hate-filled, and mean."

    "Liberals don't try to win arguments, they seek to destroy their opponents and silence dissident opinions."

    "Political debate with liberals is basically impossible in America because liberals are calling names while conservatives are trying to make arguments...It's really all the same lie [that liberals tell]

    "The swing voters---I like to refer to them as the idiot voters because they don't have set philosophical principles. You're either a liberal or you're a conservative if you have an IQ above a toaster. "

    "Liberals hate America, they hate "flag-wavers," they hate abortion opponents, they hate all religions except Islam (post 9/11). Even Islamic terrorists don't hate America like liberals do. They don't have the energy. If they had that much energy, they'd have indoor plumbing by now."

    [Ha ha! Wrong again. I hate all religions except Buddhism ]

    "Whether they are defending the Soviet Union or bleating for Saddam Hussein, liberals are always against America. They are either traitors or idiots, and on the matter of America's self-preservation, the difference is irrelevant."

    "Even if corners were cut, (Iran-Contra) was a brilliant scheme.

    "Much of the left's hate speech bears greater similarity to a psychological disorder than to standard political discourse. The hatred is blinding, producing logical contradictions that would be impossible to sustain were it not for the central element faith plays in the left's new religion. The basic tenet of their faith is this: Maybe they were wrong on facts and policies, but they are good and conservatives are evil. You almost want to give it to them. It's all they have left."

    [mmm, hypocritically delicious......]

    "If it were true that conservatives were racist, sexist, homophobic, fascist, stupid, inflexible, angry, and self-righteous, shouldn't their arguments be easy to deconstruct? Someone who is making a point out of anger, ideology, inflexibility, or resentment would presumably construct a flimsy argument. So why can't the argument itself be dismembered rather than the speaker's personal style or hidden motives?"

    [Boy, when she's right, she's right. I suggest "Lies and the Lying Liars Who Tell Themand "The Truth (with Jokes)" by Al Franken.]

    "In the corporeal world, international law is whatever the United States and Great Britain say it is."

    [And then she has the audacity to say this....]
    "There is no serious dialogue or engagement of ideas between the left and the right in this country."

    Gee, I wonder why? Are we actually supposed to be surprised when an asinine extremist like this is booed?

    Ann Coulter hates liberals more than terrorists.

    But, somehow I think there is one piece of government treason that Ann won't write about.....


    ......namely, the fact that Bush was the one to leak Plame's name


    http://www.cnn.com/2006/POLITICS/04/06/libby.ap/index.html


    Allow me a moment to blow my own horn. (....not like that, you sicko.)

    I accurately predicted the neocon response to the leak the very instant I hear the news break on the 6th. I turned to my girlfriend and said, "You know, I'd bet anything that the neocons will come out and say that since Bush is the one who did it, that makes it all okay."

    Sure enough, since the leak story broke we've heard a steady stream of Bush and the people around him saying, "Well, the president has the power to declassify......"

    Oh really? You know what it would be called if someone else were the one to leak Valerie Plame's name in order get revenge on an expert who disagreed with Bush?

    Treason.

    Literally - what has happened in the administration is an offense punishable by death. That's not me saying that, that's an actual law. Treason against America is a capital offense, and leaking a CIA agent's name is treason. But, like always with this administration, no one will really be punished. 

    But then ask yourself this - what message does that send to other CIA agents when a president "declassifies" info about a CIA agent just to get revenge on her husband for pointing out flaws in the president's actions?


     


     


  • UCD wins triple crown over Stanford


    Aggie baseball sweeps the Cardinal in two-game series


    By: Adam Foster


    Issue date: 5/30/06
     









    Aggies first baseman Lukas Kirby tries to tag the Cardinal's Blake Hancock during Saturday's game against Stanford. The series victory over Stanford marks a triple crown for UC Davis with its three major men's sports claiming victory over the Cardinal.
    Media Credit: Elise Kane

    Aggies first baseman Lukas Kirby tries to tag the Cardinal's Blake Hancock during Saturday's game against Stanford. The series victory over Stanford marks a triple crown for UC Davis with its three major men's sports claiming victory over the Cardinal.

    Winning one game in a baseball series may not say a lot, but outscoring a historically elite program 11-3 and sweeping them in a two-game series does.

    So went UC Davis' first series win of the season and a silent ending for Stanford that made the Cardinal (30-25) hold its breath before narrowly qualifying for the NCAA Division I Baseball Championship.

    The sweep also gave life to a legendary Aggie triple crown over the Cardinal, as UC Davis (18-34) wrapped up the 2005-2006 athletic year having defeated Stanford in the three major men's sports.

    "We had to beat them," joked senior first baseman Lukas Kirby. "If we didn't, we were the odd man out."

    While the Aggie bats strung together timely rallies in both games, the real story of the weekend was the starting pitching performances that UC Davis got from seniors Michael Potter and Vince DeCoito.

    Furthering his status as one of the best pitchers in the region, Potter (5-3, 2.77) threw a three-hit shutout under the lights at the Sunken Diamond on Friday. DeCoito (2-3, 5.54) followed on Saturday at Dobbins Stadium with his longest and most effective start of the year, getting within one out of a complete game and giving up just one earned run.

    "I can't imagine any other way to go out," said senior Tyler LaTorre. "You have to tip your hat to DeCoito and Potter."

    Friday, 3-0 win at Stanford

    With Stanford junior ace Greg Reynolds impressing scouts enough to receive consideration as a top-10 pick in the 2006 Major League Baseball Amateur Draft, even Baseball Hall of Famer Tommy Lasorda was present to see what the 6-foot-7 righty could bring.

    But Reynolds was hardly the focus of the evening. Retiring Stanford in order in the bottom of the first after the Aggies scored two runs in the top half of the inning, Potter instantly stole the show.

     

    The lefty only allowed four batters to reach base in nine innings, aided by a stout Aggie defensive effort. And no Cardinal made it past second.

    "Tyler called a great game back there; I didn't shake him off once," Potter said. "I was able to minimize pitches so I could stay out there longer. This might be the last game I ever play, so what did I have to hold back for? I just left it all out there."

    With over 3,000 fans looking on, it took Potter only 110 pitches to shut down Stanford in its final home game of the season.

    Sophomore Daniel Descalso led the UC Davis offense by doubling to left twice and scoring what would turn out to be the game-winning run in the first inning.

    Junior Aaron Hanke singled in Descalso, while senior Jimmy Goetz and sophomore Kevin James also drove in runs for UC Davis, helping Potter pick up the victory.

    "I couldn't ask for a better atmosphere," Potter said, as hordes of young Stanford fans begged for his autograph from the stands. "You've got an excellent crowd to play in front of. This is awesome … great park."


    Saturday, 8-3 win at Davis

    Judging by all the emotion the UC Davis fans carried throughout the second game of the two-game set, it sure didn't seem like they were cheering on a team that entered the afternoon 17 games under .500.

    And they weren't really cheering that team on. A different Aggie team showed up for the second straight game - this time on Senior Day.

    DeCoito didn't exactly pick right up where Potter left off, giving up four sharply lined hits in the top of the first, but he escaped with just one run worth of damage.

    "I kind of thought to myself … I don't want to end my career like this, so I better work hard to get it done," DeCoito said.

    Allowing only five hits over the next seven innings, the senior completely turned around his first start in two months.

    "He went out there and bulldogged his way through it like it was the last time he'd even pitch a game, and it might be," said Aggie coach Rex Peters. "He put pain behind him and just kept grinding away and he was determined to win. It was really exciting to watch."

    Kirby, Hanke and James - in that order - all blasted home runs for UC Davis, driving in five of the team's eight runs.

    Sophomore Matt Dempsey and Kirby both finished the afternoon with three hits. James and LaTorre, who drove in two runs with a single in the eighth, each had two hits in the team's storybook finale.

    "It goes to show you that when you get 35 guys with one goal in mind - to win a ballgame - and not worry about their stats or anything else, just try and win a ballgame … pull the same direction, fight for the same cause and play with some desire and some passion … what can be accomplished," Peters said. "We did that all weekend … both games we were into the game and guys were there to do one thing: win a ballgame."

     

     


  • The Interest Must Be Paid 


    Published: May 29, 2006


    Recent stock market turmoil has been a plus for United States Treasury securities. Over the last couple of weeks, investor demand for safety has generally pushed up the price of the benchmark 10-year Treasury bond, making it cheaper for the government to borrow. But there is still plenty of reason to worry about the United States' borrowing binge.


    By definition, federal borrowing eventually results in a transfer of income from American taxpayers, whose taxes go to pay the interest on the debt, to the investors who hold the Treasury bonds. As long as the bonds are owned by Americans, the transfer is simply from one group of citizens to another. Bond holders may get richer, while taxpayers who don't own bonds get poorer, which could add to troubling disparities in personal wealth. But shuffling the income between the two groups doesn't reduce America's overall wealth.


    Today, however, 43 percent of the United States' publicly held debt of $4.8 trillion is held abroad, mainly by central banks in Japan, China and Britain and by offshore hedge funds. That's up from a 30 percent share in 2001, an extraordinary increase. Indeed, during the Bush years, 73 percent of new government borrowing has been from abroad.


    Paying the interest on the foreign-owned portion of the debt will be a burden on future Americans, draining their wallets and siphoning off the nation's wealth.


    Reliance on foreign lenders poses current dangers, as well. A shift in investor sentiment, away from dollar-based investments and into other countries' assets, could be very destabilizing, forcing a drop in the dollar, higher interest rates and higher prices. Such shifts can be sudden, as in the Asian financial crisis in 1998.


    Of course, no one knows the future. But we can size up our present reality: America is living beyond its means, and foreigners are increasingly supporting the excess — in exchange for a government guarantee that a chunk of America's future collective income will benefit them, not the Americans who earn it.


     


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    "I'm very worried about the budget situation.  You know, government bonds are not a way to finance spending -- they are a way to postpone tax increases -- only when you postpone those tax increases, you have to pay interest as well.  So I think that the magnitude of the deficits we are running -- both now and, even more, the deficits that are prospective -- are a serious mistake for our country.  Republicans and Democrats may have different views on spending priorities, they may have different views on tax priorities, but they ought to be able to agree that borrowing on this scale is a serious mistake for America; it's a serious mistake for the burden it's placing on your students, Mr. Dwyer, when they grow up and are going to have to pay the interest on all of this debt.  It's a serious mistake because of the challenge we're going to be facing in the next decade or two, funding your retirement and my retirement; it's a serious mistake because much of that borrowing is being held abroad by foreigners, and, one wonders how long the world's greatest power should be the world's greatest borrower.  So, yes, I've got very serious concerns about our fiscal policy....Without regard for political parties or partisanship, I would hope that we could see that budget deficit come down before too terribly long."

    Lawrence H. Summers
    President, Harvard University
    July 13, 2004

     

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    Alan S. Blinder is the Gordon S. Rentschler Memorial Professor of Economics at Princeton University.  He was previously vice-chairman of the Federal Reserve's Board of Governors, and before that was a member of President Clinton's Council of Economic Advisers.  Below, an excerpt from a December 4, 2003 interview with Professor Blinder in his Princeton office:

     

    "In talking about deficits it's very important to keep the long-run, short-run distinction in mind -- and this of course gets completely lost in the public discussion -- hopefully students 'get it' and then they grow up to be grown ups and they'll still remember . . . It's when you look at what's coming.  We have set in motion -- these things are 'built-in,' the word that is used is 'structural' -- the tax cuts, the spending base, is going to be higher, forever, that is to say, until Congress un-does it.  In addition to that, the magic year 2010 is not so far in the future.  So, what's the year 2010?  That's the year that the 1940s birth cohort, the vanguard of the post-war baby boom turns 65 and becomes eligible for medicare, becomes eligible for full retirement benefits under Social Security, and, that continues . . . That post-war baby boom is 17-years long -- it gets bigger as it marches through -- so, what that means is, in the year 2020, and 2025, and 2030, there's going to be hugely greater demands on Social Security and Medicare than there are now, even if there is no change in the law . . . So, we know that whatever surplus or deficit we take into the year 2010 is going to deteriorate badly in the decade that follows -- we know that -- no matter who is president, no matter what is done, the only question is in the details, it has to . . . So that, to me, was the main reason why it would have been nice to go into that period with, say, a surplus of 3% of GDP instead of a deficit of 4 or 5% of GDP which is what it looks like we're doing now.  I think that was a crying shame -- it was a great opportunity which fell in our lap -- and we fumbled it . . . and we've created a long-run problem that we're going to regret having done."

    Alan S. Blinder
    Princeton University
    December 4, 2003

     

     

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