Wayne O'Leary

Fire Sale in Washington

The goblins and gremlins that inhabit the west wing of the White House, putting mischievous thoughts in the mind of the president and encouraging him to make wrongheaded decisions, are at it again. Lately, they’ve been at work on the proposed 2014 Obama budget.

First, it was “chained CPI,” a scheme to cut annual Social Security COLAs, which landed with a thud. Now, hidden in the small print and receiving little fanfare or public notice, is the suggestion that the Tennessee Valley Authority, the Roosevelt-era federal utility that produces and sells public power, be privatized. Calling for a strategic review leading to “the possible divestiture of TVA, in part or as a whole,” the budget makes the claim that “reducing or eliminating the federal government’s role in programs such as TVA, which have achieved their original objectives and no longer require federal participation, can help put the nation on a sustainable fiscal path.”

Precisely which Oval Office gremlin (or gremlins) was responsible for this potential travesty is hard to pin down. Gene Sperling, Geithneresque director of Obama’s National Economic Council, would be a good bet; a market-oriented veteran of the Clinton White House with (what else?) a Wall Street banking background at Goldman Sachs, he was the chief administration apologist for chained CPI. But the culprit could even be the gremlin-in-chief himself, who pointedly remarked during his January inaugural address that, in the name of fiscal retrenchment, “programs will end.”

Whatever the in-house origin of this latest insult to the progressive legacy, it puts the Democratic president in the same company as Wisconsin’s tea-party Republican Gov. Scott Walker, who wants to sell off his state’s public-power facilities. The proposal drew cheers from all the wrong people. The right-leaning journal The Economist referred approvingly to “Barack Thatcher,” and that preeminent inside-the-Beltway disseminator of conventional centrist wisdom, the Washington Post, editorially endorsed TVA divestiture as a step toward undoing an “outdated” New Deal.

The notion that TVA is expendable seems to spring from two distinct impulses, both of which may be at play here. First is the austerity approach to governing, which has taken over Washington and imposed a preoccupation with deficits in pursuit of the new Holy Grail of American politics, a balanced budget. In this regard, the administration’s apparent operational tactic is to continually probe for programmatic weak spots, for places to cut, pushing here and there (Social Security benefits, for example) until the Democratic base or some other interest reacts and pushes back; TVA is the latest budgetary probe.

But there is possibly another, more reprehensible motive for selling TVA. Deeply ingrained in the American psyche, especially among conservatives, is the materialistic belief that nothing has value unless somebody, somewhere, can make money out of it; anything else is “socialism.” This ethic, along with an ideological desire to shrink government, is certainly behind Scott Walker’s effort to strip Wisconsin of its publicly owned power plants, and it may be motivating Obama’s Wall Street-friendly economic advisors on TVA as well. Crudely put, the principle holds that business interests should be able to exploit electrical production, along with other necessities of life, as a profit center.

Both of these rationales, the budget-cutting imperative and free-market ideology (particularly the former), are doubtless present to some degree in the Obama decision to go after TVA. Add to this the quite obvious lack of appreciation for the American tradition of public enterprise in the field of power generation. It’s ironic, then, that the only outspoken opposition to the plan so far has come from Southern Republican lawmakers, who might have been expected to be on board; they’re not, and the obvious question is, why not?

The answer can be found in TVA’s history. A New Deal experiment in regional planning, the agency was created by act of Congress in 1933 to promote flood control, river navigation, reforestation and soil conservation, scientific agriculture, and (most importantly) hydroelectric power in the underdeveloped Tennessee River basin; it eventually utilized a vast complex of dams, locks, and reservoirs that extended into seven states (Kentucky, Tennessee, Mississippi, Alabama, Georgia, North Carolina, and Virginia) and provided electricity at cost to millions of customers.

TVA was the brainchild of Sen. George W. Norris, a progressive Nebraska Republican and staunch New Deal supporter, who can truly be called the father of public power in America. Norris fought for the establishment of TVA as a backfire against the private “power trust” that had dominated the utility industry in the 1920s and price-gouged consumers unmercifully through such infamous monopolies as the Insull group.

Norris’ philosophy was simple: national resources, including water for generating electricity, belonged by rights to the people, not to selfish and greedy private interests seeking monetary gain. “It has always seemed to me,” he wrote, “that the development and conservation of such resources ought to be under public control, public operation, and public ownership.” Norris viewed TVA as a “yardstick” for proper electrical pricing, and it was, forcing down average electric rates across the country by a third during the 1930s. Within the Tennessee Valley itself, TVA and its associated nonprofit distribution network of cooperatives and municipally owned outlets reduced rates to a fraction of what they had been under the agency’s predecessor, regional power monopolist Commonwealth & Southern Corp.

Seventy years later, little has changed. The Southeastern region of the US served by TVA still has the lowest residential electrical rates in the country, roughly one-fifth below the national average and about half what the largely private-utility Northeast pays. This explains why Southern congressmen like Mo Brooks (R-Ala.), who normally excoriate the federal government, are adamant about keeping their region’s socialistic cheap power.

Not that TVA is perfect. To environmentalists, its latter-day use of nuclear and coal power — only a minority of its electricity is any longer hydro-generated — means the agency has gone over to the dark side. And it is badly in need of infrastructure updating and capital investment.

That would seem to make TVA the ideal candidate for a national, jobs-creating infrastructure-renewal project, as well as the focus for a grand experiment in the use of climate-friendly alternative-energy sources, such as wind and solar. It’s time to enhance our existing public-power base, not diminish it.

Wayne O’Leary is a writer in Orono, Maine, specializing in political economy. He is the author of two prizewinning books.

From The Progressive Populist, July 1-15, 2013



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