Obama Speech

[Cleon]

An investment is typically made with the expectation of getting something of greater value in return. That greater value can typically be measured as a rate of return on investment, which your business finance 101 class abbreviated as ROI.

Right. And one thing you learn quickly when working in the private sector is that ROI can also be frequently abbreviated as WAG.

When politicians talk about investment, at best they talk the way Obama did last night, saying what the cost of something will be, but not even attempting to say what the return will be, in any measurable terms.

At the worst, they talk in woolly-brained, feel-good platitudes, like "We have to invest in our children's futures..."

And when you listen to a CEO give a conference call about their quarterly results, you won't hear much different. "This will help us provide world-class service to our clients," or "this investment will take us to new markets" is usually about the level of discourse.

When a politician speaks of "investing," you should take it as a warning to hold on to your wallet until the politician can answer the question, "What's the ROI?" with a number followed by either a unit of currency or a percent sign.

R&D doesn't work that way, though. Organizations that invest heavily in R&D don't do so with an expected ROI--if they could predict that, it wouldn't be R&D. It would just be D.

If you go to Apple, or Google, and ask them what the expected ROI is on their R&D budget (investment), they won't be able to give you a firm number. But if you tell them that their R&D investment is therefore not a real investment, they will laugh a deep, loud, belly laugh.

 

[Ohnoes]

Obama's speech was good as usual, but Jindal's response was what really interested me. From his "Hi, I'm Troy McClure!" introduction to his Kenneth-from-30-Rock delivery, it was fascinating to watch even apart from the content (which, to be fair, was nearly as sucky). People like him and Palin are supposed to be the future of the GOP?

LOL I didn't even think of Troy McClure...I felt like he was going to try and sell me some SHAM-WOWS.

I do agree that the future of the GOP is kinda questionable as it seems they are parading different characters up on stage to see which one sticks.

 

[fuelair]

The applause was very annoying. I avoided looking at Pelosi by simply listening to it from another room (where I was involved with the more important job of squashing opposition to the JREF moderation team. )

Just ban the buggers, everyone!!

 

[gdnp]

Actually, no. If you look carefully, only three of those plants are in the US--and the prices for those are comparable to Georgia's. The Levy plant, for example, is estimated to cost a total of $14 billion. FPL is estimating that the cost of their project will be between $12 and $25 billion. The Texas project, which is listed at $8 billion, is for the expansion of an existing plant, not for a new one.

I recall hearing long ago that this was in part secondary to how regulators set US electricity rates. At least before deregulation, in many states the utility got to charge based on their costs. The were allowed, say, a 5% return, so if they build a billion dollar plant, they got $50 million a year, if they built a $5 billion plant, they got $250 million a year. They thus had a disincentive to control capital costs. The more they spent, the more they made.

This may have changed as production was split from delivery, but I wouldn't be surprised if similar incentives were still in place.

 

[KoihimeNakamura]

That's because warming up the atmosphere causes.. shock.. horror.. climate change

 

[Dr Adequate]

Here's a flat-out lie:

There were about one million bankruptcies in America last year.

That works out to about one bankruptcy every 30 seconds.

And they were all caused by "the crushing cost of health care"?

I bet they weren't. How about things like people owning houses they couldn't afford, people losing jobs...?

There are good reasons to rework our health care system. But claiming it's causing all our bankruptcies is not one of them.

It's the leading cause of bankruptcy; and it is quite possible that the current rate of bankruptcy is higher than last year's average.

 

[Hindmost]

This suggests you're being overcharged.
These are for new plants. The bottom of the report shows that when everything is factored in, the cost of electricity from nuclear power is quite competetive with the cost of electricity from gas and coal, and much less expensive than wind.

And note Obama is talking about $15 billion to develop the technology forwind, solar, and biofuel, not $15 billion to actually build or plant anything. He's talking about R&D. If you think otherwise, try to find a statement anywhere of how many additional KwHs will be generated from this $15 billion "investment." When a normal person tells you that you should "invest" in something, you want an idea of what return you can expect. But, of course, politicians are not normal people. So how many more kilowatt-hours of electricity are we going to get for our $15 billion "investment?"


Anyone? Bueller?

I guess I will play Bueller today. (remember, he out witted everyone--especially Ben Stein...although that might be easier than I previously expected.)

Obama voted for the 2005 energy bill which subsidizes nuclear power a bit. He has stated that nuclear power does have a place in the mix.

Nuclear power isn't going to solve any energy issues in the this country or around the world. There isn't enough industrial capacity to get the job done. The projections world wide are for nuclear to remain flat...there are about 450 plants and many are getting very old and will be shut down--even with life extension. To replace those and grow the industry is going to be difficult.

There are only two places on the planet that can make forgings needed for the reactor vessels and they don't plan on gearing up to add capacity with the uncertainty in the industry. Same issue exists for electronics and valves and pumps etc. Plus, we don't have enough engineers and crafts due to poor energy policies over the last 30 years.

Now, the French plan. Although good in many ways, France has "socialized" engineering when it comes to their plants. They were able to standardize, but the one stop shopping made their plants expensive. That is why they haven't won competitive bids for plants in the world. Just ask the Finns how well things are going.

In the US, utilities picked reactor vendors, A/Es and turbine vendors as part of normal competitive bidding. This made plants somewhat different. It was not expected for the costs to escalate by a factor of 10 or 20. The vendors have formed consortiums now to standardize plants and offer a full nuclear plant. However, we haven't built one yet.

The current plan is to sych up the first plant in the US around 2016--if everything goes perfect. A few more over the decade past that, but certainly not enough to provide all the energy needs.

The overnight costs for nuclear are just guesstimates right now for the US. We really don't have the experience in building a plant from the ground up since we haven't done it for too long. And of course, the Gen III design isn't finished yet. Korea has the best experience and are doing a good job, but the cost of the plants are still in the billions.

The facts are that we need a diverse energy plan and the ethanol plan from all the midwest lobbyists was just garbage. However, cellulose ethanol does have potential and investment should be made now.

glenn

PS: I never listen to any presidential address.

 

[casebro]

My interpretation for BO even giving a speech:

"Oh NOes! My first month i office,and all I've done is sign a very questionable pork bill, flip-flop on Guantanamo, and re-iterate some of Bush's policies. Plus have problems with finding honest nominees for high level posts. This Leader crap isn't turning out like I thought. I better get in some face time and slather on the platitudes for the fools that voted for me... I'll mention health care, energy plans, have a visit from a harmless school marm - "It's for the children" ought to still work..."

Change, my pimply ass. It's Politics as usual.

 

[Hindmost]

I recall hearing long ago that this was in part secondary to how regulators set US electricity rates. At least before deregulation, in many states the utility got to charge based on their costs. The were allowed, say, a 5% return, so if they build a billion dollar plant, they got $50 million a year, if they built a $5 billion plant, they got $250 million a year. They thus had a disincentive to control capital costs. The more they spent, the more they made.

This may have changed as production was split from delivery, but I wouldn't be surprised if similar incentives were still in place.

The utilities had to prove costs were necessary to get any type of rate increase. Utilities commissions were not under any obligation to provide what was requested. Increased costs were not always accomodated with a rate increase and the utilities had to cover the difference. This is one of the reasons most utilities cancelled nuclear power plants as it was capital intensive and they weren't getting a return. Plus, demand went down during the 80s and many of the plants weren't needed.

With deregulation, the issues are a bit unknown since we haven't built a plant in the US under these conditions.

glenn

 

[Dr Adequate]

Poll results:

According to a poll from CBS News, 63 percent of Americans approved of Obama’s handling of the economic crisis before the speech and 80 percent approved of it after the speech. Similarly, 36 percent thought his economic plan would help them personally before the speech, and 51 percent after. A full 74 percent now think President Obama’s plan will improve the economy, while only 26 percent think it will make no difference or make it worse.​

Incidentally, this would seem to mean that at least six percent of people approve of Obama's handling of the crisis while also thinking that he's spending $700000000000 on something that won't actually help.

 

[Prometheus]

Poll results:

According to a poll from CBS News, 63 percent of Americans approved of Obama’s handling of the economic crisis before the speech and 80 percent approved of it after the speech. Similarly, 36 percent thought his economic plan would help them personally before the speech, and 51 percent after. A full 74 percent now think President Obama’s plan will improve the economy, while only 26 percent think it will make no difference or make it worse.​

Incidentally, this would seem to mean that at least six percent of people approve of Obama's handling of the crisis while also thinking that he's spending $700000000000 on something that won't actually help.

Those are the hardline Republicans who don't want him to succeed.

 

[BPSCG]

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.

Next year's budget.

Notice how he slips by this year's?

WASHINGTON - Congress went on a pork-a-palooza yesterday, approving a massive spending bill with big bucks for Hawaiian canoe trips, research into pig smells, and tattoo removal - all while the nation faces an economic crisis.

Among the recipients of federal largesse is the Polynesian Voyaging Society of Honolulu, which got a $238,000 "earmark" in the bill.

The group organizes sea voyages in ancient-style sailing canoes like the ones that first brought settlers to Hawaii.

The sailing club has a powerful wind at its back in the person of Sen. Daniel Inouye (D-Hawaii), the chairman of the Senate Appropriations Committee.

The bill also has a whopping 8 percent increase over last year for the numerous federal agencies it funds.

New York got its share of earmarks, among them $475,000 to "improve and expand" the Italian American Museum in Little Italy.

The project was pushed by New York Reps. Gary Ackerman and Jerrold Nadler. The latter touted it, among other earmarks, on his Web site.

Nadler also announced $4.5 million for new park development in Manhattan.

Uncle Sam's generosity extends upstate, where there's $950,000 to convert a railroad bridge over the Hudson River into a walkway in Poughkeepsie.

Earmarks totaled at least $3.8 billion - a figure used by the House Appropriations Committee.

But the watchdog group Taxpayers for Common Sense calculates that there are an astonishing 8,570 earmarks at a cost of $7.7 billion.

The bill, which critics slammed as larded with pork, has big bucks to combat putrid stenches in the heartland, with $1.7 million for "Swine Odor and Manure Management Research."

That's on top of $1.9 million in each of the last two years, or nearly $6 million over the last three years.

The swine research center, at Iowa State University in Ames, got funds through the Agricultural Research Service, and aims to improve the smell of animals and the lagoons where waste is stored.

There's funding for mosquito trapping in Gainesville, Fla. - requested by Rep. Rosa DeLauro of Connecticut. The research deals with the West Nile virus, and was funded at $1.2 million in each of the last two years.

The House packaged the bill from several spending measures held over from last year. It needs to pass the Senate and be signed into law by President Obama.

Republican Sen. John McCain of Arizona, whom Obama vanquished in November, is calling on the president to veto it.

But Democratic leaders say the spending spree was a bipartisan affair, with up to 40 percent of the earmarks coming from Republicans.

Obama has criticized earmarks and insisted they be kept out of stimulus legislation - a suggestion that drew laughs from Republicans at the president's address to Congress Tuesday night.

Another earmark, by Rep. Howard Berman (D-Calif.) provides $200,000 for a "tattoo-removal violence-outreach program" in Los Angeles.

The funds would buy a tattoo-removal machine to help gang members erase signs of their past.

Link.

Next year, there won't be any earmarks in the budget.

Sure, I believe that.

 

[BPSCG]

It's the leading cause of bankruptcy...

No. Overspending is.

However, different from Himmelstein et al. (2005) who find that
about one half of the bankrupt households claim to have filed for bankruptcy for medical reasons, only a small fraction of our sample seems to be in truly grave situation.

 

[rdaneel]

I wish he had never brought up earmarks. I felt he had it right during the debates when he pointed out that earmarks make up less than 1% of the budget. I seems to me there are much larger issues to worry about and too much attention and energy is being wasted over trimming the budgets toenails.

 

[Dr Adequate]

No. Overspending is.

In Delaware in 2003.