This magic potion is called energy efficiency. It’s a boring name for a boring concept: wasting less energy—more precisely, using less energy to get our showers just as hot and our drinks just as cold. It’s mostly generated by boring products like energy-saving boilers, refrigerators, air conditioners, and light bulbs. But energy wonks love it, because subtracting demand through efficiency is much less expensive, eco-destructive, and time-intensive than adding new supply through drilling or power plants. It doesn’t even require us to unplug our electronic picture frames or power down our PlayStations; that’s conservation, doing less with less energy. Efficiency is doing the same or more with less energy. It doesn’t require behavioral change. And efficiency upgrades usually pay for themselves within a few years through lower energy costs, which is why experts always call them “low-hanging fruit.” A McKinsey & Co. study found that efficiency could cut our energy demand 20 percent by 2020, which could cut our coal use in half.41
To Obama, efficiency wasn’t boring at all. It was “by far the cheapest, cleanest, fastest energy source.” In Detroit, he proposed major increases in fuel efficiency standards, which hadn’t budged since the Reagan era. (U.S. automakers had always argued that tougher rules would ruin their businesses, which they apparently preferred to do themselves.) In Portsmouth, he extended the push beyond vehicles, calling for stricter green building codes and appliance efficiency standards, pledging to phase out incandescent light bulbs. He also vowed that his administration would “weatherize” one million low-income homes per year—by upgrading furnaces, caulking windows, and adding insulation—which could save families money on their bills while reducing energy demand.
Efficiency wasn’t as emotionally satisfying as “drill-baby-drill,” but it appealed to Obama’s Vulcan sense of logic; the cheapest fuel is the fuel we don’t need to buy, and the cheapest power plant is the plant we don’t need to build. Obama even called on states to revamp regulations that rewarded utilities for selling as much power and building as many plants as possible, a holy grail for hard-core efficiency geeks. In California and other states that encouraged utilities to promote efficiency instead, per-capita electricity use had been flat for three decades; in the rest of the country, it had climbed 50 percent.
Obama wanted to clean up our supply as well as reduce our demand, so he also promised to double renewable electricity during his first term. The green revolution was finally underway in Germany, Spain, and even California, which was on track to generate one third of its power from renewables by 2020. Obama thought the rest of the United States just needed a stronger push. Wind power was racing down the cost curve associated with emerging technologies, and solar, while still expensive, had similar potential to shed costs as it added scale. Obama also promised to double U.S. manufacturing of wind turbines, solar panels, and other green components during his first term, which would help create a domestic supply chain and further drive down the cost of clean power. By imposing a price on carbon pollution, cap-and-trade would help level the playing field as well.
Since our windiest plains and sunniest deserts lacked transmission lines to carry power to cities—and our antiquated electrical networks couldn’t handle too much intermittent power that vanished whenever the wind died down or clouds blocked the sun—Obama also talked about modernizing the grid. It was analog in a digital world, relying on switches that still had to be switched by hand and transformers that hadn’t been transformed in a century; Alexander Graham Bell would have been flabbergasted by modern telecommunications, but Thomas Edison would have recognized most of the gizmos in a modern substation.42 Obama wanted to build a smart grid that would self-monitor and self-heal, integrate renewables while keeping the lights on, and enable homeowners with solar roofs and even electric cars to sell power back to their utilities. He touted digital smart meters that could give us real-time feedback and control over our electricity, so we could monitor how much our individual appliances use and cost, manage them from our iPhones—no more wondering if we left the oven on—and even program them to communicate with the grid to save us energy and money automatically.
“It’s safe to say this is the most a presidential candidate has ever talked about the grid,” the environmental writer David Roberts gushed after one Obama riff.43 “Sigh. He talks so purty.”
Obama’s rhetoric often made enviros swoon. He pledged that all new federal buildings would be carbon-neutral by 2025, and that the United States would have one million plug-in electric vehicles by 2015. At the time, no federal buildings were carbon-neutral, and Tesla Motors hadn’t delivered its first Roadster. He also bashed Bush over climate change, noting in Portsmouth that wildfires were already getting worse, polar ice caps were melting, and New Hampshire’s ski industry faced shorter seasons. “Global warming is not a someday problem,” he said. “It is now.”
But Obama was no tree hugger. Nature wasn’t something he felt in his gut, and while he rejected the GOP’s drill-baby-drill mantra, he echoed its “all-of-the-above” rhetoric. He supported emissions-free nuclear power, even though it was anathema to most of the Birkenstocks-and-granola crowd; his top corporate contributor in Illinois was a nuclear utility. Representing a state that produced coal and corn, he had stumbled into alternative energy through his advocacy of “clean coal,” which most environmentalists consider an oxymoron, and corn ethanol, which many scientists believe is even dirtier than gasoline. The ethanol boom has actually accelerated climate change, because rain forests and wetlands that store vast amounts of carbon have been bulldozed into agricultural land to replace the food production lost when we pump corn into our SUVs.44
As a presidential candidate, Obama pledged to build five commercial-scale clean-coal facilities that would capture and store carbon—five more than America had built to date. And he continued to flack for the ethanol industry, which was displacing just 3 percent of our gasoline, while diverting nearly one fourth of our grain crops into fuel tanks, jacking up global food prices and fueling bread riots in countries like Yemen and Pakistan that really didn’t need the extra instability. But he did start to talk about shutting down dirty coal plants, and he did promise to nurture the next generation of eco-friendlier “advanced biofuels” brewed from switchgrass, wood chips, and algae.
“The struggling paper mills in New Hampshire would be back in business if they could use wood to produce biofuels,” he said in Portsmouth.
This was Obama’s favorite argument for alternative energy investments: They would spur economic activity, not just at New Hampshire ski resorts and paper mills, but in new domestic industries on the leading edge of innovation. They were long-term investments in U.S. competitiveness, and they would repatriate cash we were sending the Chávezes of the world. Obama envisioned a future with five million “green jobs,” for caulkers and electricians weatherizing homes; factory workers making energy-efficient windows and electric vehicles; scientists and engineers experimenting with better biofuels and batteries.
In the past, Americans had invented and developed green technologies like wind turbines, solar panels, lithium-ion batteries, and compact fluorescent bulbs, only to see them manufactured and used abroad. Now Germany led the world in solar panel deployment, even though it wasn’t too sunny, and China led the world in solar panel production, while our share of the market had plummeted from 40 percent to 8 percent in a decade.45
“The question is not if a renewable energy economy will thrive in the future,” Obama explained. “It’s where.”
To Obama, America’s energy crisis was also the ultimate example of our shortsighted politics. It reflected our neglect of yesterday’s infrastructure; our grid was so outdated that a tree branch had knocked down a wire outside Cleveland and blacked out eight states. And it reflected our unwillingness to invest in tomorrow’s technologies; over three decades, the Energy Department’s research budget had plunged 85 percent in constant dollars, while corporate funding shriveled to the point where biotech firms like Amgen and Genentech
had larger R&D budgets than the entire energy sector.46 Meanwhile, ExxonMobil earned $40 billion in 2007, the largest profit ever for a U.S. firm, breaking its own record from 2006. That helped explain the lobbyist armies, political donations, and climate-denial think tanks that maintained Big Oil’s stranglehold over Washington.
As a result, we had no energy policy. We hit the panic button when oil prices spiked and the snooze button when they eased. We knew what needed to be done, but we never did it. “I would not be running for president,” Obama said, “if I didn’t believe that this time could be different.”
Health Care: Too Dysfunctional for Too Long
Health care was the second pillar of Obama’s “new foundation,” another recurring nightmare that politicians always chattered about but never ended. Again, he promised that this time would be different, that he’d sign legislation extending insurance to every American during his first term. Again, his plan resembled all the other Democratic plans, except it didn’t include an “individual mandate” requiring everyone to buy insurance. Again, Obama suggested that the real difference was political, that only he could build the bipartisan consensus needed to drive a plan through Congress. Hillary Clinton had botched her chance in 1994.
There was one other substantive difference. While Obama echoed all the usual Democratic talking points about covering the uninsured and standing up to insurers, his health care analysis emphasized one overarching theme.
“It’s just too expensive,” he explained in May at the University of Iowa.
U.S. health spending had quadrupled in two decades; we were spending almost twice as much per person as any other industrialized country.47 Health care took up one sixth of our economy, on course for one third by 2040. Medical bills were causing half our personal bankruptcies, and insurance premiums had almost doubled on Bush’s watch. Obama argued that this was the reason 45 million Americans had no coverage, so many businesses had stopped offering it, and so many families who had it were just one accident or diagnosis away from financial ruin. This was why his initial plan had no mandate, although the plan he eventually signed into law did; at the time, he doubted it would be worth the political heartburn to try to force people to buy insurance they couldn’t afford. And insurance wouldn’t be affordable until care was affordable.
Obama saw this crisis, like the energy crisis, as an economic as well as moral crisis, another crimp on competitiveness. “There was never a distinction in his mind between health care and the economy,” recalls one of his health advisers, Harvard professor David Cutler. The skyrocketing cost of care was a disaster for individuals, driving them into debt, draining their discretionary income, dampening their entrepreneurial spirit by tethering them to jobs with benefits. It also ravaged the bottom lines of corporations; a GM car contained seven times as much health care cost as a Japanese model. And it was on track to bankrupt the Treasury. The Congressional Budget Office warned that if current trends persisted through 2050, federal spending on Medicare and Medicaid would explode from 4 percent to 12 percent of GDP.48 At those levels the Pentagon really would have to hold bake sales, along with every other federal agency. CBO director Peter Orszag—a Clinton White House economist who had been the first director of the Hamilton Project, and would later become Obama’s first budget director—liked to say that our long-term deficit problem was a health care problem.
For all that money, we weren’t buying particularly good health. Global rankings of life expectancy and infant mortality suggested that U.S. outcomes were mediocre at best. One study of preventable deaths ranked the United States last among nineteen industrialized countries.49 The good news was that the U.S. system was so blatantly inefficient that in some areas shrinking costs could raise quality, by reducing unnecessary tests, surgeries, specialist visits, and hospital stays.
Some of those areas required reforms of the entire system, reforms that would consume a year of Obama’s presidency. But some of those areas required relatively uncontroversial investments that members of both parties had been talking about for years, investments that would get slipped into the Recovery Act.
The most obvious area was information technology. In an era of online banking, shopping, and dating, health care was our least computerized industry. The practice of medicine was a high-tech world of genomics, robotics, and artificial organs, but very few doctors used electronic medical records. David Blumenthal, another Harvard professor advising Obama, had been skeptical when his own hospital went digital; he liked his prescription pad and didn’t mind scribbling X-ray requests in triplicate. But he found it helped to have instant access to medical histories and test results when he got late-night calls at home. And one day, as he discharged a patient with a prescription for the sulfa drug Bactrim, a bright red alert flashed across his screen: ALLERGIC TO SULFA.
“My career flashed before my eyes,” he recalls. “I came to understand that information is the lifeblood of medicine, and health IT is destined to be its circulatory system.”
By 2007, everyone seemed to understand this. All the presidential candidates in both parties were pledging to boost health IT. Several bipartisan bills were floating around Congress, and Hillary and Newt Gingrich were both hailing electronic medicine as the future of health care. But in most of the country, doctors still had to be in the same room to discuss the same file. Every minute, redundant new tests were ordered because old results weren’t instantly available. Nurses and doctors wasted countless hours filling out and searching for paperwork, and atrocious penmanship still killed.
Like energy efficiency, health IT was the kind of no-brainer that appealed to Obama’s hyperrational side. It seemed absurd that German doctors used laptops while American doctors used clipboards. He told his health advisers: If everyone agrees we should do this, let’s do it. Bush had spent about $100 million on health IT; Obama proposed an eye-popping $50 billion over five years, and pledged that every American would have an electronic medical record by 2014. “I don’t care if it’s Hillary’s idea,” he told one adviser. “It’s a good idea!”
Health experts believed better information was an even more urgent need than better information technology, which was why Obama also embraced the unglamorous cause of “comparative effectiveness research.” Less than half of U.S. medical treatment was backed by solid evidence of what works; to a shocking extent, we were flying blind.50 To get a drug approved, pharmaceutical companies merely had to prove it worked better than a placebo, not better than any other drug or treatment. To get most medical devices approved, manufacturers just had to prove they weren’t harmful.
The result was the world’s least data-driven $2 trillion industry. No one knew if angioplasty or bypass surgery worked better on clogged arteries, or when blood-thinning drugs were preferable to a procedure, or which blood thinners worked best for which patients. This cluelessness had major cost and quality implications. Studies by Dartmouth researchers suggested that 30 percent of U.S. care was unnecessary, but nobody knew which 30 percent.51 Consumer Reports had compiled evidence that some generic drugs were as good or better than expensive name brands, and some hospitals had virtually eliminated line infections by enforcing simple to-do lists for nurses.52 But those tidbits of evidence were rare, and the efforts to spread them nationwide were paltry—especially compared to the mega-dollar marketing campaigns of drug and medical device companies.
Again, this didn’t seem like a partisan issue. Gingrich coauthored an op-ed in the New York Times with Senator John Kerry, the 2004 Democratic presidential candidate, and Oakland A’s general manager Billy Beane, the stats-head made famous by Moneyball, titled “How to Take American Health Care from Worst to First.”53 The answer, they agreed, was comparative effectiveness research. “Remarkably, a doctor today can get more data on the starting third baseman on his fantasy baseball team than on the effectiveness of life-and-death medical procedures,” they wrote.
This offended Obama’s data-loving sensibilities, and he promised to make comparativ
e effectiveness a priority. As he later explained, it wasn’t brain surgery: “It’s an attempt to say to patients, you know what, we’ve looked at some objective studies out here, concluding that the blue pill, which costs half as much as the red pill, is just as effective, so you might want to get the blue one.54 And if a provider is pushing the red one on you, then you should at least ask some important questions.”
Long before he was ever accused of engineering a government takeover of medicine or pulling the plug on Grandma, Obama knew reinventing health care would be a heavy lift. Democrats had dreamed of universal coverage since the New Deal, and he expected nasty ideological fights. But some policies seemed elementary. Everyone knew the United States faced severe shortages of nurses and primary care doctors; why not offer training and scholarships for understaffed professions? It was no secret that only four cents of every medical dollar went to prevention and wellness; why not try to help more patients avoid the chronic illnesses like diabetes and heart disease that ate up 80 cents?
Politicians always included these hardy perennials in their position papers. What if someone actually did something about them?
Education: Reform for “These Kids”
The sorry state of our public schools was yet another perpetual crisis.
Politicians constantly yakked about the children—apparently, they’re our future—but we still had some of the developed world’s worst dropout rates. Only half our nine-year-olds could multiply or divide. Only half our teenagers understood fractions. And the cost of college tuition, like the cost of energy and health care, was soaring out of reach. Obama saw these failures, like our energy and health care failures, as affronts to the American dream as well as roadblocks to global competitiveness, morally and economically unacceptable.
The New New Deal Page 5