Government Bureaucray/Partisanship Stifles Progress

Solar- and wind-energy projects in Arizona and around the country continue to hang in limbo after Congress adjourned for its summer recess without reaching agreement on legislation that would extend renewable-energy tax credits. The subsidies are considered critical for projects like the Solana Generating Station, a $1 billion, 280-megawatt plant slated for construction near Gila Bend. But extending the tax credits beyond their Dec. 31 expiration date is proving to be a difficult, if not impossible, task for Washington's elected officials. The subsidies, which have broad-based support in both the House and the Senate, provide a 30 percent rebate to anyone who installs or builds a solar- or wind-energy system. But they've become the victim of an ongoing partisan logjam between Democrats and Republicans, who have disagreed on everything from how to pay for them to whether they should be prioritized over renewed offshore-drilling efforts.

The chief executive of the mortgage giant Freddie Mac rejected internal warnings that could have protected the company from some of the financial crises now engulfing it, according to more than two dozen current and former high-ranking executives and others. That chief executive, Richard F. Syron, in 2004 received a memo from Freddie Mac’s chief risk officer warning him that the firm was financing questionable loans that threatened its financial health. Today, Freddie Mac and the nation’s other major mortgage finance company, Fannie Mae, are in such perilous condition that the federal government has readied a taxpayer-financed bailout that could cost billions. Though the current housing crisis would have undoubtedly caused problems at both companies, Freddie Mac insiders say Mr. Syron heightened those perils by ignoring repeated recommendations.

A fiscal crisis involving over $3 trillion in pension payouts threatens the financial viability of cities and states nationwide. The Per Charitable Trust now estimates that states will spend trillions of dollars “on pensions, health care, and other retirement benefits for their employees over the next three decades.” Some cities, squeezed by declining property-tax revenues and rising pension costs, have even considered another option: bankruptcy. In California, the medium-size city of Vallejo declared bankruptcy in May. The reason: a $16 million fiscal deficit stemming from the double-whammy of declining property-tax revenue due to the mortgage crisis, and excessive police and firefighter salaries and pensions which eat up nearly 80% of the city’s annual budget. In New Jersey, the state’s debt burden exceeds $32 billion and pensions are badly underfunded. The percentage of state/municipal pensions that are less than 80% funded has grown from 9% in 2000 to 42% in 2006.