Baron von Munchausen, famous spinner of tall tales

Was Bob McDonnell Convicted with Tainted Testimony?

Jonnie Williams' trial testimony about a critical meeting with the former governor was contradictory, implausible and sometimes incoherent. But the jury bought it anyway

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Building Connectivity in Suburbia

Building Connectivity in Suburbia

Sunnyvale, Calif., wants to reinvent a 60's-era industrial office park as an innovation district. It's making progress but suburban sprawl is not an easy habit to break.

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The Great U.S. 460 Swamp

The Great U.S. 460 Swamp

VDOT had loads of warning that wetlands could kill the U.S. 460 project but the state charged ahead with a design-build contract that everyone knew could explode.

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Coming up: Car-Lite Burbs

Coming up: Car-Lite Burbs

A California developer is teaming with Daimler AG to bring buses, shuttles and ride sharing to an Orange County community -- with no government subsidies.

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Putting the “Garden” in Rain Garden

Putting the Garden in Rain Garden

Soon Virginians will start spending billions to meet tough storm-water regs. Lewis Ginter Botanical Garden wants to show how we can save the bay – and look really good doing it.

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Kudos: U.S.-China Climate Pact

Shanghai: Soot City

Shanghai: Soot City

By Peter Galuszka

President Barack Obama’s trailblazing pact with Chinese leader Xi Jinping to limit greenhouse gas emissions through 2025 is welcome news and could do much to reduce carbon dioxide emissions since the two countries are responsible for about 40 percent of the globe’s total.

China is an economic powerhouse so energy hungry it builds a new coal-fired generating plant about every eight to 10 days. Its leaders have pledged to cap  carbon emissions by 2030 or earlier.

Obama announced a plan to cut U.S. emissions by 26 to 28 percent below 2005 levels by 2025. This is a bigger cut than the 17 percent reduction by 2020 that he had announced earlier.

The agreement, reached in Beijing, is most welcome for the obvious reason that it would make a huge contribution to reducing greenhouse gases. It also undercuts the arguments by the fossil fuel industry, some utilities and their drum beaters that any steps the U.S. takes in cutting carbon pollution are pointless since China (or other Asian countries) will keep polluting anyway.

The arguments are crucial since Virginia’s Big Energy industry and the staff of the State Corporation Commission are attacking plans by the EPA to greatly reduce carbon.

Consider this gem of wisdom from another correspondent on this blog: “Virginia could revert to stone-age levels of zero greenhouse gas emissions tomorrow, and the savings would offset the increase in CO2 from coal-fired power plants built in India and China in a year! (OK, maybe not a year, but over a very short period of time.)”

Sadly, this kind of mentality is regressive and, with the new Washington-Beijing pact, is becoming increasingly irrelevant.

One thing many American commentators don’t seem to realize is that China isn’t necessarily a primitive business juggernaut stomping on any rational plan to check pollution. Beijing and Shanghai have some of the highest rates of air pollution in the world and its leadership, especially engineers and policy makers capable of understanding how technology can help them, knows they just can’t continue as before.

Three years ago, I visited both cities to research a book on the coal industry (newly out in an updated paperback, by the way, see below). I also went to Ulanbatour, the capital of coal-driven Mongolia where the air was so bad, I felt delirious within hours after arrival and by the next morning I showed signs of pulmonary illness.

The promise for changing things seems to money and the system.

In the U.S., we have a regulatory oversight apparatus over energy generation. This is reasonable because it prevents electric utilities from using their monopoly power to stick customers with high rates. But the system is flawed because: (1) it too often favors big utilities over average consumers and; (2) it is rigged to prevent new, experimental and possibly transformative technologies that very well could allow the use of dirty and dangerous but still cheap coal.

In the latter case, the thinking seems to be to go for ephemeral cost benefits (like using natural gas) without having any long-term strategy that actually might save lots more money through better health and more efficient, less-polluting energy.

In several cases, regulators nixed pilot plants that burn coal but use special new ways of doing so that capture a lot of carbon either in a chemical process involving ammonia or by stripping off the carbon emission from the pollution stream and sequestering them safely away. The plants cost big money. They are much cheaper to do as greenfield sites but regulators are more inclined to prevent them in favor with the soup d’jour of power that happens to be cheapest at the moment, in our current case, natural gas. Continue reading

Virginia’s College Spending Binge

Higher education spending per student at Virginia public universities compared to regional and national averages. Graphic credit:  JLARC

Higher education spending per student at Virginia public universities compared to regional and national averages. Graphic credit: JLARC

by James A. Bacon

Great minds think alike. The wonks at the Joint Legislative Audit and Review Commission (JLARC) apparently have been obsessing over the issue of college overindebtedness, just as I have here at Bacon’s Rebellion. In its newly issued report, “Addressing the Cost of Public Higher Education in Virginia,” JLARC has found that Virginia’s public colleges and universities have far outspent their peers nationally and regionally on buildings and other capital projects, with the result that they are saddled with major debt and interest payments.

“Total debt service for the state’s 15 four-year public institutions grew from $106.2 million in FY 2002 to $421.4 million in FY 2013,” writes JLARC in its executive summary. “Debt service on this institutional debt is equivalent to nine percent of E&G (Education & General) spending by the four-year public institutions in Virginia.”

Last year, Virginia spent almost $2,872 per student on capital projects more than twice the national average of $1,353. In FY 2009, Virginia institutions spent more than three times the national average. As JLARC observes, this spending occurred despite declines in state support and despite the increasing inability of students to afford higher education.

Meanwhile existing facilities have deteriorated. “As of FY 2011, the total deferred maintenance on E&G facilities was estimated at $1.4 billion, or approximately 19 percent of the replacement value of Virginia’s higher education E&G. … National research has found that every $1 of deferred maintenance results in $4 to $5 in long-term capital liabilities.”

Bacon’s bottom line: Building great facilities certainly adds to the allure of Virginia institutions. Handsome facilities are highly visible to prospect faculty and students, while deferred maintenance and other issues go unnoticed. And, as Peter G. observes in a post below, the impact on urban redevelopment can be striking. The City of Richmond has benefited enormously from the capital spending boom at Virginia Commonwealth University.

Indebtedness and leveraged balance sheets can work for enterprises when the market is expanding and new revenues can cover the cost. But it’s a recipe for disaster if the market tops out or, God forbid, enrollments start to shrink — as is actually happening in Virginia today. Colleges and universities cannot prune their debt burden without defaulting, an act that would effectively sign an institution’s debt warrant. System-wide, $400 million in annual debt service is baked into the cost structure. If higher ed institutions have to start cutting, that’s a big chunk that cannot be touched. Other line items must suffer all the more.

JLARC could have added considerable value to an already valuable report by compiling total indebtedness and debt-to-revenue ratios at each of Virginia’s 15 higher ed institutions. It would be nice to have some advance warning of which institutions are especially at risk. Who knows, maybe such data would encourage asleep-at-the-switch trustees on university boards to start asking tougher questions.

Chart of the Day: Whom to Blame for Tuition Increases?

Statewide tuition increases at Virginia public universities, FY 1998 to FY 2012. Image credit: JLARC

Statewide tuition increases at Virginia public universities, adjusted for inflation, FY 1998 to FY 2012. Image credit: JLARC

At last, an answer to a question that I have frequently posed on this blog: To what extent can tuition increases at Virginia public universities be blamed on a decline in state support for higher education? According to a new analysis by the Joint Legislative Audit and Review Commission (JLARC): about 68%.

The decline in state support doe not account, however, for the surge in student fees, which cover athletics and ancillary programs, or room and board. How much did declining state support account for the total cost of a residential college education? JLARC didn’t ask that question, but a reasonable estimate is about half.

Bacon’s bottom line: Colleges and universities have a legitimate point when they blame the escalating cost of higher education on lower state support. But they also should shoulder as much of the blame themselves, something they have been exceedingly reluctant to do.

How Not to Spend Public College Money

vsu multi-use

Virginia State’s multi-use center

By Peter Galuszka

As Virginia’s students and their families struggle paying their tuition and related expenses, the state’s 15 public universities continue to charge excessively for mandatory fees for athletics and massive bricks and mortars projects.

These are the conclusions by the Joint Legislative Audit and Review Commission (JLARC) which has issued a series of studies on college spending to the General Assembly. Dubious fees and a $7 billion collegiate construction boom are some of the reasons why the average tuition for in-state students has risen 122 percent over a decade.

One doesn’t have to look far to see the shiny new buildings. At Virginia Commonwealth University in Richmond, former President Eugene Trani spent decades expanding his school’s two campuses. In the process, he transformed downtown for the better but one must ask why the huge expansion seemed to get more attention and resources than raising the school’s academic status. . Late this summer, VCU ordered a $21 million budget cut to help the state with its $881 million revenue shortfall.

In Charlottesville, students at the University of Virginia can enjoy the recently completed $100 million South Lawn project that was a decade in the making and added a patch of new buildings. It is now adding a children’s medicine building at his health care complex.

For one of the stranger examples of dysfunctional spending, consider Virginia State University near Petersburg. The small, historically Black school is well into building an $84 million multi-use center that would serve students as well as offer a venue for community events, much like VCU’s Siegel Center which hosts graduation ceremonies for many area high schools.

As the center is being built, school officials plan to use it to help transform the surrounding areas of the small town of Ettrick. They are using the model of VCU about 25 miles up Interstate 95 as a blueprint for linking school expansion with local community development.

Yet VSU faces such serious financial problems that its president Keith Miller, stepped down unexpectedly on Halloween. Thanks to shortfalls in financial aid and other problems, the school ended up with a sudden $19 million shortfall. Attendance at the school is down 1,000 from last year and 550 short from what the administration had expected.

Students complain that they found out about cuts in their state and federal aid only at the very last minute and many had to drop out. VSU has been through a series of financial problems that have forced it to switch to a fast food-only menu at one of its dining halls. Laboratory equipment is scarce, students say.

They wonder why the school is busy erecting a huge new multi-use center when they have many more obvious and pressing problems at hand. A school spokesman says that funding for the new center is handled by a foundation and is not directly linked to the school’s financial system. VSU is expected to name an interim president later this week after more than 900 students signed petitions asking for a wholesale revamp of the school’s top management.

JLARC found other areas of concern, such as forcing students to pay mandatory fees for sometimes oversized athletic programs that tend to operate in their own worlds that have little relevance for most students. Not every student cares about all of the sports or has time to support every team. Plus, JLARC says that the state should reconsider its methods of handing out financial aid to make sure that low and middle income students are the ones who actually get it.

One hears a lot about overpaid professors and administrators. But the JLARC studies suggest their salaries may be less of a problem than using colleges as cash cows for construction projects and to prop up ambitious sports programs that may have very little to do with the schools they represent.

Richmond EDA Needs to Open up the Books

Major Dwight Jones (left) and Governor Terry McAuliffe. The commonwealth donated $5 million to the project.

Meanwhile, in the City of Richmond… The Economic Development Authority is ducking transparency in the $74 million Stone Brewing project, a major economic development coup for the city and the state. At issue is the role of the Richmond EDA, which is helping to finance construction of the brewery and related restaurant. On Oct. 22, the EDA picked Hourigan Construction from a field of six contractors.

EDA officials won’t say if Hourigan submitted the lowest bid, on the grounds that the final contract has not been signed yet. Another key question is who Hourigan’s subcontractors are. As Graham Moomaw reports for the Times-Dispatch, the EDA considers not only price but its track record of delivering projects on time and its ability to meet a target of using minority-owned businesses for subcontracts.

The Dwight Jones administration has aggressively pushed economic development such as the Shockoe Slip ballpark, Boulevard redevelopment and the Washington Redskins training camp, in which the city plays a prominent role in financing. Unlike entirely privately financed deals, projects funneled through the EDA are subject to the minority set-aside requirement.

Writes Paul Goldman, a Richmond political activist in a recent email missive:

The EDA is being used for one reason in the Brewery deal: to get around city and state law [that] mandates the use of an open, transparent bid process creating a level playing field and insuring the best result for the city’s taxpayers.

The key to this backroom deal, as the others, is the special “wink, wink” for political influence peddlers and their cronies.

Are buddies of the mayor getting special treatment? Who knows. But that’s the suspicion when city government takes an active role in the financing of economic development projects. Let me be clear: There is no evidence of any wrong-doing. But “trust me” just doesn’t work in this day and age. The public would like assurances that there’s no hanky-panky. Open up the books, please.

– JAB

Virginia’s Political Class and the Chaos of Road Funding

Virginia politician

Virginia politician

The General Assembly is reconvening today to consider a number of issues, most prominently budgetary ones. There are two pieces of the situation that I understand with some clarity. First, the commonwealth is facing a revenue shortfall of some $1.55 billion in the current biennium. Second, Congress failed to pass an Internet tax that the masterminds of McDonnell-era transportation tax “reform” were counting on to fund Virginia’s roads, highways and rail to the tune of $1 billion over five years. The rest of it is an indecipherable mess that will leave voters utterly confused about what is going on, with no idea of whom to hold accountable or why.

Michael Martz, the Times-Dispatch’s go-to guy for explaining topics of mind-numbing complexity, gave it his honest try in the newspaper today, but the result is an incoherent mess. I don’t blame Martz for the incoherence — I blame the legislature and its Rube Goldberg approach to budgeting. Adding to the sense of urgency, a failure to act could threaten $100 million in bonds to be issued by the Northern Virginia Transportation Authority.

This is what you get when you try to “fix” transportation funding by abandoning all logic and principle — such as the old “user pays” system in which pay to build and maintain roads in proportion to which you use them — and substituting a system of subsidies and cross subsidies so that no one is really sure who’s paying for what. This is the environment in which politicians thrive because it allows them to engage in horse trading, deal making and the collection of chits. But the invariable result is episodic chaos — not to mention the overuse of roads that comes from severing the connection between using and paying for them.

– JAB

What Climate Change Could Mean to Virginia

migration_paths

As temperatures rise (assuming that they do), will there be coherent paths for species to migrate north? This map shows areas where such migrations might occur, if not disrupted by human activity.

by James A. Bacon

The political debate over catastrophic global warming won’t end until the climate either fulfills the dire forecasts of mainstream climate scientists or refuses to cooperate, thus disproving them. Stephen Paul Nash’s book, “Virginia Climate Fever,” is not likely to change many minds on that score. But if you’re wondering how global warming — if it occurs — might affect Virginia’s climate, Nash presents a sobering picture that should inform the thinking of every Virginian. If he’s right, the commonwealth’s environmental future looks grim indeed.

This may be the most important book written about Virginia’s environment in a generation. Nash, a journalism professor at the University of Richmond, makes the scientific debate over global warming readily accessible to the layman. He writes beautifully, explains the issues clearly, and he anticipates many of the arguments of the Global Warming skeptics. For this book, he traveled the length and breadth of Virginia, from the peak of Mount Rogers, with its threatened oasis of cold-adapted spruce-and-fir forest, to sixty miles off the coast where researchers are studying the marine life of underwater canyons. He synthesizes the work of dozens of scientists working on one part or another of Virginia’s climate change, creating a fuller picture than any of them could on their own. (Full disclosure: Steve is one of my closest friends.)

Broadly speaking, Nash says Global Warming (and the rising concentrations of carbon dioxide in the atmosphere that drives it) raises three major concerns:

(1) Temperatures are increasing faster than at any time in millions of years, a trend that threatens to outpace the ability of new species to migrate to hospitable ecosystems. Global warming, he suggests, could create a terrible synergy with acid rain, invasive species and the fragmentation of wildlife habitat leading to the extinction of many plant and animal populations and, indeed, of entire species. If existing species are wiped out and new species are slow to migrate north to replace them, America’s once-magnificent Southeast forests could be replaced with a barren savannah.

(2) Rising concentrations of CO2 will acidify the oceans and stress marine life. This problem, incidentally, occurs independently from temperature change. No one disputes the fact that CO2 levels are rising and that acidification stresses marine life; the only debate (of which I’m familiar) is the extent to which marine species can adapt to acidification. In either case, the impact of acidification in the Cheasapeake Bay is magnified by warming waters, overfishing and excess nutrients dumped into the watershed.

(3) Rising sea levels will subject large swaths of the Tidewater to increasing flooding and, ultimately, permanent inundation. Some of the flooding can be attributed to subsidence of the land in response to the retreat of Ice Age glaciers thousands of years ago and will continue, regardless of what happens to global temperatures. If warming occurs, melting icecaps and heating the water — warm water occupies slightly more space than cold — climate change will accelerate the encroachment of the sea upon the land that’s already taking place.

Nash deals with other issues as well, from the impact of temperatures on rainfall and agricultural productivity to the spread of mosquito-borne disease.

My purpose here is not to re-argue the case for and against catastrophic global warming, a topic upon which most people already have firm views and are not likely to change their minds. (For the record, I’m inclined to believe that the planet will continue to warm at a slow-but-steady pace, as it has since the end of the Little Ice Age, but far less rapidly than the catastrophic scenarios called for in the more apocalyptic literature.)

Nash’s valuable contribution that even skeptics should appreciate is to provide a close-up look at environmental risks that Virginia faces. Based on the 18-year pause in rising temperatures, forecast by none of the warmists’ climate models, I don’t see the worst-case scenario transpiring. But Nash makes an excellent point. Let’s assume temperatures and sea levels won’t reach the predicted horror-scenario levels by 2100. It may take a few decades longer than currently anticipated to get there. (Maybe a century longer, in my estimation.) But we’ll get there eventually. We should take advantage of that time to build more resilient communities.

In my view, the tragedy of politics in Virginia is that nearly all public policy is devoted to the proposition that by reducing local greenhouse gas emissions, Virginians can have a meaningful impact on global temperatures. Virginia could revert to stone-age levels of zero greenhouse gas emissions tomorrow, and the savings would offset the increase in CO2 from coal-fired power plants built in India and China in a year! (OK, maybe not a year, but over a very short period of time.) The point is, the commonwealth and its citizens are investing billions of dollars in LEED-certified buildings, renewable energy, mass transit, electric cars and a host of other saintly endeavors whose collective impact upon global temperatures may be measurable in one-hundredths of a degree over the next century. Continue reading

Virginia Metros Rank High in Economic Freedom

EFIby James A. Bacon

The political class is all excited (or agitated, as the case may be) by the Republican takeover of Congress in Washington, D.C., but life continues as usual here in the boondocks. The pocketbook issues that propelled the Republicans to power nationally dominate politics at the state and local level as well. Everyone is asking the same questions: How do we get our lethargic economies moving again? How do we create more jobs? How do we raise incomes?

Normally, to ask the question in a political context is to provide a political answer. To stimulate job creation, government should do X, Y or Z. However, while government is indispensable for providing core services such as education and transportation, one can argue that too much government can crowd out the private-sector activity that engenders growth.

Last year Dean B. Stansel, with Florida Gulf Coast University, put that idea to the test. He created an Economic Freedom Index (EFI) for U.S. metropolitan areas that ranked metro regions by ten measures of government taxation, employment and transfer payments as well as factors such as the minimum wage and union density. The results on a one to ten scale ranged from Naples, Florida (8.52), to El Centro, California (3.32). The results for Virginia Metropolitan Statistical Areas can be seen in the chart above.

If you put much stock in this index, the news is very good for Virginia metros — every metro ranked in the top third nationally in economic freedom, and most ranked in the top quartile. Remarkably, the People’s Republic of Charlottesville scored the No. 10 spot nationally!

Stansel argues that his measures of economic freedom do correlate with jobs and income. The connection with jobs is strongest with correlation coefficient of 0.416, which means that the EFI explains almost 42% of the variation in unemployment between metros. There is a meaningful, though weaker, correlation between economic freedom and incomes: a coefficient of 0.164, explaining 16% of the variation.

(Stansel freely concedes that his EFI is a work in progress. By my reckoning, the index ignores at least one critical aspect of economic freedom: Governments vary widely in the degree to which they regulate land use. The effects of land use upon the cost of government, the quality of life and the environment can be profound. Admittedly, finding uniform statistics that measure the intensity of land use controls and regulations may be a problem.)

On average freer metropolitan areas appear to fare better economically than less-free regions. But the EFI leaves a lot unexplained. The flip side of the coin is that other factors explain 58% of the variation in unemployment and 84% of the variation in income. The regional industry mix is probably the most important factor of all; regional economic fortunes ebb and flow with economic tides over which local government and civic leaders have no control. But the quality and availability of education, I would conjecture, is a factor, as is the adequacy of transportation infrastructure and other government-provided amenities.

I would argue that the optimal regional policy mix would entail (1) government that focused on a few core functions and excelled at providing them, (2) a strong educational system, (3) an adequately funded (but not overfunded) transportation system, and (4) an array of public amenities from recreational parks to bike lanes that help attract and retain young, educated workers.

But others might disagree. Gee, it would be nice if someone compiled a national database that would allow us to run regression analyses on variables that might influence the creation of prosperous, livable and sustainable regions. Maybe that person will share his or her data with Bacon’s Rebellion one day!

Takeaways From the GOP’s Big Win

gillespie warnerBy Peter Galuszka

The night of Tuesday, Nov. 4 was an ugly one for the Democrats and a big win for Republicans. Here are my takeaways from it:

  • U.S. Sen.Mark Warner clings to a tiny lead that seems to grow slightly, still making it uncertain if opponent Ed Gillespie will ask for a recount. The surprisingly tight race is an embarrassment for Warner. It likely takes him out of consideration to be Hillary Clinton’s running mate in 2016 although Democrats Tim Kaine and Jim Webb are still possibilities.
  • Ed Gillespie ran a smart campaign and came off as a solid candidate. Of course, we are comparing him against Kenneth Cuccinelli and that’s a very low bar but Gillespie’s projection of being relaxed and confident helped him. Gillespie did very well despite being dissed by the national Republican money machine. Look for him in the gubernatorial race of 2017.
  • Barack Obama takes his lumps — again. The country’s on the mend and things are going fairly well (despite what you may watch on Fox), but Obama is incapable of cashing in on that. His cool, detached style is a big minus and makes him seem careless and incompetent, especially when crisis like ebola come up that are not of his making.
  • The Republican wins on Capitol Hill are more significant than the Tea Party inspired once during the 2010 midterms.But the earlier races brought in a kind of mindless negativity and gridlock by both parties that truly hurt the country. Will that happen again? Or will older, wise heads prevail?
  • Increase in coverage my Obamacare The New York Times

    Increase in coverage by Obamacare
    The New York Times

    You might get some bipartisan action on taxes and the budget, but deadlock remains for Affordable Care and immigration. The fact is that Obamacare is too far along to change much and people actually like it, despite what you hear in the right-wing echo chamber. This chart from the New York Times shows that the ACA has boosted health coverage in some of the poorest parts of the country, such as the Appalachian coal country, the African-American belts of the Deep South; and poor parts of the Southwest like New Mexico and parts of Arizona. This alone is a big success.

  • Immigration. Look for Obama to use executive authority to come up with an immigration plan. It is an emotional, hot button issue that reveals lots of ugly attitudes. But something needs to be done fast. The GOP has no plan, except for George W. Bush who actually pushed a workable solution that was compassionate. That got soaked by the Tea Party, but then Republican Mitt Romney came up with a health care plan for Massachusetts that looks remarkable like Obamacare and was a precursor. If the GOP can get back to those helpful ideals, there may be hope.
  • Warner lots big swaths of voters who had been with him, like Loudoun County and parts of rural Virginia. This is alarming for the Dems and shows they need to project their messages a lot better. Warner’s poor performance in debates didn’t help either.

It is a big win for the GOP, but somehow I don’t feel as bitter as I was in 2010.

At Last, a Chance to Address Fundamental Issues

Image source: Congressional Budget Office

Image source: Congressional Budget Office

by James A. Bacon

With yesterday’s elections, the Republican Party has taken control of the United States Senate and padded its lead in the House of Representatives, assuring a markedly different political dynamic in the two years ahead. The big question on everybody’s minds is, “Can Republicans govern?” Or will we see two more years dominated by Ted Cruz trying to shut down government?

My sense is that Republicans are very serious about governing, certainly more serious than was outgoing Senate Majority Leader Harry Reid, the one-man algae bloom who rendered the Senate a dead zone for new legislation over the past four years. Republicans are likely to pass a passel of new laws. The question then will be, “Is President Barack Obama serious about governing?” Will he  work with Congress or will he veto everything that comes across his desk?

While the last four years have been a big battle over nothing, rest assured that the next two years will grapple with issues of fundamental importance. As the United States hurtles toward Boomergeddon, Republicans will tackle budgetary issues that Obama has been studiously avoiding since he disavowed the recommendations of his own Bowles-Simpson budget-balancing commission. The issues will be debated in a way they haven’t been for far too long.

This year, the budget situation looks relatively benign. Economic growth is puttering along and the Congressional Budget Office (CBO) projects that the deficit will shrink to its smallest size since 2007, equivalent to about three percent of the economy. That’s roughly equal to the rate of economic growth, so the national debt, while growing, is not growing as a percentage of the economy. But the CBO does not expect this balmy scenario to last. Says the CBO:

The pressures stemming from an aging population, rising health care costs, and an expansion of federal subsidies for health insurance would cause spending for some of the largest federal programs to increase relative to GDP. Moreover, CBO expects interest rates to rebound in coming years from their current unusually low levels, raising the government’s interest payments. That additional spending would contribute to larger budget deficits—equaling close to 4 percent of GDP—toward the end of the 10-year period spanned by the baseline, CBO anticipates. Altogether, deficits during that 2015–2024 period would total about $7.6 trillion.

That sounds bad but not Boomergeddonish. But there’s a big caveat. At some point, says the CBO, government spending crowds out economic growth in the private sector.

The large amount of federal borrowing would draw money away from private investment in productive capital in the long term, because the portion of people’s savings used to buy government securities would not be available to finance private investment. The result would be a smaller stock of capital and lower output and income than would otherwise be the case, all else being equal.

Translation: Under the current policy framework, as government spending crowds out the private sector, economic growth will slow. Slower economic growth reduces tax revenues, which increases budget deficits. I’m not certain, but I don’t believe that the CBO cranks that lower economic growth into its long-term budget forecast, which, by its own admission, is highly conjectural and based upon long-term assumptions that likely will not prove to be accurate.

Under a more pessimistic set of assumptions, the federal debt, instead of rising to 111% of Gross Domestic Product by 2039, would reach 180%.

When discussing climate change, Democrats invoke the “precautionary principle.” While we cannot know with certainty that global temperatures will increase by 4° Fahrenheit by the end of the century, as some climate models forecast, the consequences would be so disastrous that we must act to forestall the possibility. I would invoke a fiscal precautionary principle. While we cannot know with certainty that the national debt will approach 180% of GDP within twenty-five years, the consequences will be so potentially disastrous that we must act to forestall the possibility.

Republicans will be animated by the fiscal precautionary principle in the next two years. If past is precedent, the Obama administration will be driven by the desire to protect government spending at all costs. Americans will engage in the most serious debate over the size and scope of government spending, unclouded by distracting side issues, that we have seen in a generation.