03/11/2009 05:12 am ET | Updated May 25, 2011

Our Twin Crises

It might seem that $25 million is a lot of money. That is the level of campaign donations made by environmentalists and those associated with alternative energy industries since 1990. It sounds as if it should have made "greens" important political players.

That it did not illustrates just how much money is required to become politically influential. Those "green" contributions paled when compared to more than $2 billion provided by individuals associated with Wall Street. Far and away, financial, real estate, and insurance interests were the single largest source of the money collected by politicians during those years.

The dysfunction that results could not be more clear. The current world-wide economic melt-down largely is the perverse consequence of the United States' financial sector's ability to escape regulation, a "success" rooted in its role as the preeminent source of political funds. At the same time, the failure of our political system seriously to address the issue of fossil fuel emissions stems from the fact that the environmental movement lacked the financial resources to buy political clout.

The problem here is that these two - the economic down-turn and the threat of an environmental crisis - are self-reinforcing. Before the economic crisis hit, world-wide private sector investment in alternative energy sources was growing strongly. Expenditures for wind farms, solar parks, biofuel plants, and biomass and waste-to-energy installations increased by 60% between 2006 and 2007, and were growing very strongly again in the first half of 2008. But then the crisis hit and these outlays plummeted. Because of Wall Street's greed and the resulting economic collapse, the probability of an environmental catastrophe has increased.

What makes this situation so threatening is that while time is running out for the environment, neither the tailspin in the economy nor the decline in renewable energy investment is likely to reverse itself in the near future. The Intergovernmental Panel on Climate Change reports that in order to stabilize the climate, greenhouse gas emissions must peak before 2020 and be reduced by 40-70 percent by 2050. But for that to happen, clean energy investment will have to grow to $515 billion dollars per year. To provide context for that figure, investment in alternative energy sources came to $155 billion in 2008, and as one industry source has put it, "the best we think we can hope for in 2009 is a modest step beyond 2008's levels."

However, not all is lost. It is good that at last we have a president in Barack Obama who is alive to both the catastrophe that has struck the economy and the imminent danger that global warming represents. His influence is the reason that a large fiscal stimulus package is advancing in Congress and that it contains upwards of $50 billion in measures to improve energy efficiency and to fund renewable energy research (though I confess to being less than enthusiastic about the provision in the House version of the bill calling for $350 million to be spent on "research into using renewable energy to power weapons systems and military bases").

But the fact is that these are efforts that only partially offset the damage that has been done. High and rising unemployment will be with us for a long time and the time frame in which we must act to successfully deal with global warming is growing ever shorter.

The hope is that the President will be able to build on both the size and "green" content of the stimulus package. The content of that package will not be the last set of initiatives that the economy needs: still required for the housing market to recover for example is aggressive action to assist home owners at risk of defaulting on their adjustable rate mortgages. Similarly, much more has to be done to encourage the shift from fossil fuels. The President should make the case to the American people that a carbon tax is a matter of the highest priority.

But above all he should take a leadership role in reshaping the structure of the American political system. A policy agenda shaped by special interests is an anachronism. It serves the country poorly both in the long run and the short run. That we are unable to manage a functioning economy or deal with climate change because rapacious Wall Street traders have disproportionate political clout is a measure of our political dysfunction.

In addition therefore to working to drag the economy out of its doldrums and encouraging public sector green expenditures, President Obama should get behind the Senate bill that provides public funds for Congressional candidates. This legislation would go far to reduce the power of those who got us into our twin crises. Wealthy individuals must no longer be permitted to impose their special interests at the expense of the country and indeed the entire world.