08/05/2008 05:12 am ET | Updated May 25, 2011

Green Cure for Fiscal Red Ink

When my children were younger I had the pleasure of watching many Sesame Street episodes. In one I remember well (#344), Bert complains to Ernie (I paraphrase): "The apartment is getting wet. The rain is coming through the window" and Ernie responds: "It's stuck and it's wet. Not now." Then the rain stops. The sun comes out. Bert complains again: "Can you fix the window?" And Ernie responds: "Well Bert, it's sunny. Why close the window now?"

What's raining down at present is government red ink, directly related to weak government oversight over our financial system and a weak response to America's extravagant use of energy.

As a fish rots from the head, the problem starts in Washington, DC, where President Bush has projected a Fiscal Year 2009 budget deficit of $482 billion, a record dollar high. This is 3.3 percent of GDP, a hike from 2.7 percent of GDP in FY 2008. To pay for it all, Congress included in its approved housing rescue bill an increase in the federal debt ceiling of $800 billion, to $10.6 trillion. The debt ceiling when Bush 43 came into office in 2001 was $5.96 trillion, where it had been since August 1997.

The news from the states is no better. As a group, states have budget gaps of more than $40 billion to close, three times the $13 billion shortfall last year, according to a July 23 report issued by the National Conference of State Legislatures. This is a smaller number than Washington, but the states lack printing presses to cover the gaps. States with 1990s-created rainy day funds were ready to spend them in 2002. New York State's reserve was then 1.5 percent of general-fund expenditures. Only Alaska had a truly big fund (100 percent). Alas, most states do not have Alaska-sized rainy day funds nor indeed Alaska-sized oil and other natural resources.

Many cities are also running into a sea of red ink. The New York City Comptroller has just testified that the City is facing a fiscal rainstorm and he recommends creating the City's own rainy day fund to help cope with fiscal emergencies. The money for a substantial fund would have to be raised mainly in a future sunny recovery, because by this point the stormy weather is already upon us. Fortunately the Big Apple has an automatic property-tax stabilizer, because property-tax assessments are averaged over five years.

How do we close the window on America's reign of red ink?
1. Educate the public that there is no free lunch and that Federal deficits and rising debts rob from the future of our children and grandchildren.
2. Launch a national alternative-energy program to end U.S. dependence on imported fossil fuel.
3. Support green-city technology - possibly New York City's best bet for replacing lost Wall Street jobs.

Cities and states have a wealth of opportunities for innovation in the urban technology arena. New York City, new home of Al Gore and unquestionably the U.S. city with the greenest transportation system, is especially well positioned to capitalize on growth in such areas as:
- Green design, architecture, construction,
- Strategic or impact consulting on green issues,
- Green transportation, carpooling, highway design, parking policies,
- Production of methane gas from leaf biomass,
- Other forms of alternative power generation (wind, solar, sugar alcohol, hydro),
- Air and water quality monitoring and control,
- Creation of green spaces,
- Green procurement and recycling (e.g., of electronic equipment),
- Reorganizing food distribution to reduce carbon emissions,
- Improving the efficiency of food markets,
- Improving local farmers' access to urban consumers.

Which brings us back to Ernie. He should think about the future and fix the window. Or he should turn the tables and fire a question back to Bert: "Why don't you fix the window?"