Climate Change

A new intelligence report, discussed yesterday by Thomas Fingar, the top analyst in the American intelligence community, outlines the challenges the next president will face. In the midst of debates about lipstick on pigs and other such nonsense, it’s important to consider what some of these challenges may be.

According to an article from today’s Washington Post about the report, the next President will lead an era through which American dominance and the significance of military power will diminish, as will the roles of international institutions. This shift, which comes as a result of globalization, and, as the article points out, is described by Fareed Zakaria as not the "decline of America, but rather about the rise of everyone else."

Climate change, energy security, and immigration policies will also figure heavily into the challenges the next president will face:

The predicted shift toward a less U.S.-centric world will come at a time when the planet is facing a growing environmental crisis, caused largely by climate change, Fingar said. By 2025, droughts, food shortages and scarcity of fresh water will plague large swaths of the globe, from northern China to the Horn of Africa.
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Floods and droughts will trigger mass migrations and political upheaval in many parts of the developing world. But among industrialized states, declining birthrates will create new economic stresses as populations become grayer. In China, Japan and Europe, the ratio of working adults to seniors "begins to approach one to three," he said.

The United States will fare better than many other industrial powers, in part because it is relatively more open to immigration. Newcomers will inject into the U.S. economy a vitality that will be absent in much of Europe and Japan -- countries that are "on a good day, highly chauvinistic," he said.

"We are just about alone in terms of the highly developed countries that will continue to have demographic growth sufficient to ensure continued economic growth," Fingar said.

Dealing with the effects of globalization, confronting climate change, and formulating a rational immigration policy have been hallmarks of NDN’s economic narrative. For more on how to confront these challenges and make globalization work for all Americans, visit NDN’s Globalization Initiative page, and visit the Hispanic Strategy Center’s page for more on NDN’s immigration work, including a brand new poll.

On Morning Joe today, MSNBC’s panel got into some of these issues, and how they do (or don't) play into the state of the election. Take a look:

New York City - The issue of energy was hardly absent from the Republican convention this week or from the McCain campaign this summer.  If anything, it has been a centerpiece, from the chants of Drill Baby Drill during Rudy Giuliani's keynote speech to images of windmills fluttering in and out of slides and television commercials to the mantra of energy independence to renewed calls for nuclear power.  What has been missing, however, is consistency or internal logic to this message.  In fact, a fundamental complication has bedeviled almost all the discussion of energy this year, namely the conflation of the issue of high energy prices with those of energy independence and climate change.  They are not the same issues nor are their policy implications the same.

Consider the following question which in many ways is a Rorschach test of one's true policy priorities.  Is the collapse of gas prices, now down by almost a third in the last month, good or bad?

Since lower prices mean more money for families, and support for a shaky economy, from an economic standpoint, lower prices ought to be good. On the other hand, since lower prices also mean more gas consumption and therefore more consumption of foreign oil as well as more carbon in the atmosphere, one must conclude that from an energy independence and environmental standpoint, lower prices are bad.

Most people--including the Republicans in Minneapolis--would like to have it both ways: lower energy prices as well as energy independence and a better environment.  But to hope to achieve that, it is first necessary to be intellectually honest about what policy choices are likely to have what consequences.

From a purely economic point of view, more energy is better. Drilling offshore and in Alaska, investing in solar energy and building nuclear plants all have the potential to reduce the cost of energy by increasing supply. 

On the other hand, from an energy indpendence and environmental point of view, the source of energy is what matters. Drilling offshore and in Alaska might marginally reduce dependence on foreign oil but it will also clearly increase carbon emissions.  And to the extent it lowers prices, it might actually hook America even more on foreign oil!  More nuclear plants will reduce emissions and increase energy independence but only by creating huge environmental risks.  Only renewable energy such as wind, solar and biofuel technologies has the ability to lower prices, help the environment and create energy independence.  Unfortunately, while the Republicans have been showing windmills in their ads, they made clear in Minneapolis that renewables come third behind drilling and nuclear power.

The fact is that lower energy prices combined with energy independence and help for our ailing planet can only come about through a conversion of our entire energy infrastructure from one based on dirty fuel sources such as oil to one based on clean, renewable technologies.  Building out what Thomas Friedman is calling the ET or Environmental Technology infrastructure is a massive economic opportunity that can accomplish the three goals of lowering prices, achieiving energy independence and fighting climate change.  But subsidizing oil exploration through friendly government leasing and tax credits will only slow down this conversion while subsidizing nuclear energy would divert scarce investment capital.

It should not be surprising that there are many who still cling nostalgically to oil and gasoline, the fuels that powered America through the 20th Century.  After all, America has had a long love affair with gas.  Our entire self identity is bound up in images of fast cars, filling stations and the roar of gasoline engines.  We began by pumping it ourselves.  Then we pumped it in other countries when America was the dominant industrial power and the people inhabiting the desert sands where we drilled rode on camels and horses.  Those days are over.  The overseas wells have been nationalized by governments less and less friendly to ours.  And the oil that remains in America and off our shores is increasingly hard and expensive to find.  No matter how much we may harken back to the past, we have to wake up and smell the coffee. 

Nuclear energy is no panacaea either.  Besides the obvious safety risks, the lack of an acceptable place to store spent fuel rods and the lack of trained engineers that will take ten years to remedy, the cost of building a nuclear plant has soared so that nuclear is no longer financible as a private venture.  Only huge government loan guarantees and subsidies could revive nuclear power.  And if we are going to spend billions on a technology fraught with so many environmental issues, why wouldn't we spend a fraction of that to renew the solar Investment Tax Credit and wind Production Tax Credits to drive renewable prices below that of fossil fuels.  

In short, the Republicans did the causes of lower gas prices, energy independence and a healthier planet few favors at the convention.  However, the good news is that while renewables are not at the top of their list, they are at least, on the list. 

That means there is the potential for common action.  In the weeks ahead, both parties should reach across the aisle to pass bi-partisan legislation to extend the renewable tax credits, pass a national renewable electricity standard and accelerate the rollout of the environmental technologies that in contrast to either oil or nuclear power, can power American prosperity in the 21st Century if only we have the sense to pursue them.

If John McCain was just another go-along partisan politician, he never would have led the fight to fix our broken immigration system or to do something about global warming.

With his choice of Sarah Palin — the Alaska governor who has advocated drilling in the Arctic National Wildlife Refuge and does not believe mankind is playing any role in climate change — for vice president, John McCain has completed his makeover from the greenest Republican to run for president to just another representative of big oil.

Given the fact that Senator McCain deliberately avoided voting on all eight attempts to pass a bill extending the vital tax credits and production subsidies to expand our wind and solar industries, and given his support for lowering the gasoline tax in a reckless giveaway that would only promote more gasoline consumption and intensify our addiction to oil, and given his desire to make more oil-drilling, not innovation around renewable energy, the centerpiece of his energy policy — in an effort to mislead voters that support for drilling today would translate into lower prices at the pump today — McCain has forfeited any claim to be a green candidate.

New Rule: You can't put a windmill in your campaign ad if you voted against every single bill that might lead someone to build one.

Electric car pioneer Shai Agassi is on the cover of this month's Wired, with a story on "The Future of the Electric Car." Shai's innovative and impressive solution is already underway in Israel, and the story is worth a read. Click on the picture for more.

For the last month, the McCain campaign has drilled away at energy as the decisive "separate from Bush and make Obama look bad in the process issue" in the election. McCain’s ads first trumpeted his commitment to cap and trade and later whacked Obama on drilling. His ads pointed to a mythical "electricity tax," and, despite obvious errors, hypocrisies, contradictions, and outright lies, conventional wisdom decided that McCain had won the debate on drilling.

With McCain’s four word key position of "drill here, drill now" exhausted, Obama, as the New York Times covered today, pivoted his message to the economic well being of everyday people. His second Olympic ad focused completely on his economic plan (the first focused on building an energy economy).

In case you haven’t caught Olympic fever and seen it, "Three Bedroom Ranch:"

Then today, John McCain had a moment that played right into Obama’s hands. McCain forgot – in the midst of a housing crisis – how many houses he owned. As I briefly mentioned earlier today, the Obama campaign quickly turned an ad around, noting how out of touch McCain was with everyday people.

McCain will have two, already begun, responses: he will continue to go negative on Obama, moving from a celebrity attack to a politics of association line of attack, and he will try to move the debate back to the issues he feels good about: national security and energy. This strategy has two small problems and one big problem for McCain. First, king oilman Dick Cheney is speaking at the Republican National Convention a week and a half from now – not exactly the backdrop McCain wants on energy. Second, timetable is now an agreed upon word for the end of America’s engagement in Iraq, the proposed Democratic solution.

The really big problem for McCain is that, while some think offshore drilling is nice, and others may care about foreign policy, Americans, in large part, see the economy as the overwhelmingly dominant issue. The McCain responses to his housing uber-gaffe – all personal attacks – do not get away from the fact that their candidate, a man who has spent 26 years in Washington, thinks the level of being rich is having five million dollars, and is extraordinarily wealthy, is no doubt out of touch with the lives of everyday Americans.

If this narrative sticks, if Obama can convince everyday Americans that he is focused on them, and if Obama can close on this message, it is hard to see Obama losing, because, despite all this supposedly bad polling and this supposedly bad month, Obama is still ahead.

In today's New York Times Week in Review, Bill Keller has a thoughtful look at recent events in China and Russia, and what might be called the end of the end of history. I thought Fareed Zakaria captured this sentiment best in his recent book when he described this new era of geopolitics with a simple powerful phrase - Americans are witnessing what he calls "the rise of the rest."

Perhaps after eight years of talk of Basra, Kabul and tax cuts, we will look back at this month as the month that Rip Van Winkle-like Americans woke from their conservative-induced slumber and began to see the 21st century as it is, not as portrayed by the Rovian/Chenesian fantasy of the last eight years.

Perhaps in no area is this new pragmatism more important than on what it means for our people here at home. The next President faces one domestic challenge more important than all the others - how to get wages and incomes rising again.

For most of the Bush era, the American economy performed well by traditional metrics. GDP, productivity, corporate profits and the stock market were strong. But despite this period of growth and strong productivity gains, the typical American family saw its annual income drop by about a $1,000 a year and the rate at which new jobs were created has been slower than any other recovery since the Depression. According to the laws of economics, it was not supposed to be possible to see robust growth in GDP and productivity and see incomes drop. In fact. it has never happened before in the modern economic history of the United States.

Every day Americans figured all this out long before coastal elites did. Our 2007 analysis of public opinion and the 2006 exit polls shows that it was the economy that drove the GOP from office much more than the war. As has been reported in many places, the American people are more unhappy with the state of the nation than anytime since the 1930s. The American people have understood for years that the people running their government has not turned their attention to the most important challenge they face in their own lives - making ends meet in a much more competitive globalized world. And small-bore solutions to this enormous challenge - off shore drilling, children's health insurance, raising the minimum wage, middle class tax cuts - will be treated as they have been treated by the American people these last few years - "that's nice, but where is the long-term, sustained, comprehensive plan big enough to actually improve our lives and the lives of our families?"

Led by Dr. Rob Shapiro, figuring all this out has been the primary focus of NDN's Globalization Initiative these last four years. I won't repeat the major recommendations from our project now, but offer three general observations:

1) It is critical that our political leaders explain to the American people that if we want to maintain our place in the world, and our standard of living, that we will have to "try harder." The rest of the world is rising, catching up, learning our game - as was the goal of foreign policy these last 60 years - and no longer can be seen as characters from an Indiana Jones movie. To compete in this world, this emerging world of the 21st century, we will have do more; invest more; modernize our infrastructure; lessen our dependence on expensive and dirty energy sources; make pensions and health care more portable and accessible; do more to equip our workers and kids with the modern skills they need to compete; accelerate innovation and the formation of "new businesses;" make our global economic liberalization strategies smarter and more modern...this new era must be seen as one of "investment" in a better future, and calls for an anachronistic politics of austerity must be rejected....

2) This economic and public opinion dynamic developed before the recent slowdown, credit crunch, housing crisis and energy/commodity price surge, and thus will not be solved by focusing on these recent developments in the economy. Because incomes went down during a period of sustained growth, the solutions offered by our leaders in the next few years must recognize that the traditional way we help Americans get ahead - by creating macroeconomic growth - is no longer guarenteed to improve the lives of every day people BECAUSE IT DID NOT WORK SO FAR IN THIS DECADE.

3) Given the enormity of this challenge, we here at NDN hope that helping Americans get ahead in this much more competitive world becomes the central focus of the elections this year. In several recent interviews, Senator Obama has said that his three priorities are Iraq, health care and climate change. Not so sure this is the best answer. He needs to be able say that he wants to be judged on whether he can raise Americans' standard of living, and then make doing so the central organizing principle of his campaign and Administration. I think a better response would be "I want to improve the lives of every day Americans who have worked so hard and gotten so little these last few years, and bring the troops home from Iraq." Or something like that.

A risky strategy some might say. For what happens if incomes don't rise? I think we already know the answer to that, as the GOP has shown us in recent years. If the standard of living of Americans don't improve in the next few years, the Democrats should expect to suffer the same fate as the GOP in this decade, and find themselves out of power. Unlike China and Russia, we still are a democracy, and as such, must make the fate of the people of the United States the central focus of our politics...

Keith Johnson, of the Wall Street Journal’s Environmental Capital blog, has a solid summary of where the media narrative on drilling sits: Republicans are winning the battle. This narrative is backed by a new Rasmussen poll that has 64 percent of Americans supporting offshore drilling, and 42 percent seeing it as the "best way to reduce oil prices." Rasmussen also tells us that Americans believe McCain wants to find more sources of energy, while they believe that Obama cares more for limiting energy use. Unsurprisingly then, Americans two-thirds of Americans side with McCain’s approach.

The New Republic’s editors make some interesting but debatable points today about how the narrative has gotten to this point, arguing that blaming speculators and going after oil companies may not have been the best plan of attack. TNR also argues that the Obama and Pelosi shift toward allowing more offshore drilling in a compromise bill that would also include support for renewables and efficiency was the second losing move in this argument, and that Democrats’ inability to debunk the drilling idea in the minds of voters was troubling.

As I argued yesterday, the shift on drilling will not be a big deal, and will likely remove drilling as a wedge issue into the fall. The more important voter perception is that Americans believe that Obama cares about energy austerity while McCain wants to do everything he can to increase production. (His actions don’t bear this out, but perception is what matters.)

Whether drilling specifically will be a voting issue is unknown, and this is likely a case where Republicans are winning the battle on drilling but setting themselves up to lose the war on energy as a whole. However, being portrayed as promoting austere energy use is extremely dangerous for Democrats. Obama has already begun to recast the debate on energy about investing in a clean energy economy, which is forward looking, as opposed to the McCain Republican petro-economy of the past, one that, as Michael Moynihan notes, continues to have dangerous ramifications in foreign policy.

At the end of the day, the most important argument to make and win is that energy policy is central to the economy: energy to power the economy, energy impacting American households and families through gas, home heating, and overall prices, and energy jobs and investment allowing average Americans to enjoy the broad-based prosperity they knew in the 1990’s, but that disappeared in the Bush administration. Transitioning to a clean energy economy will not be simple or easy, but, done responsibly, it is a key to future prosperity. Americans already feel austerity in their pocketbooks; being perceived as asking them to feel it in their energy use is not in Democrats' interests, especially when the better option of investing in a clean energy economy exists.

New York City - The reappearance of a belligerent Russia on the world stage, buoyed by high oil prices and newfound wealth, would appear to signal a new era in global politics. For anyone still clinging to the idea of the unipolar moment, the spectacle of Nicholas Sarkozy brokering a deal between Russia and Georgia, shows that the moment of a single superpower is probably over, and something like a return to the era of the Great Powers, at best, or the Cold War, at worst may be in store--absent real U.S. leadership to the contrary.

Nor is it an accident that high oil prices have ushered in the return of authoritarianism to the global stage. Securing and maintaining oil wealth has never been pretty or conducive to democracy. The huge payoff from controlling the wealth has always encouraged factions to vie for its control and, once they obtain it, quash opposition. So it was throughout Central Asia during the years of the Great Game and remains today, not only in Russia, but also in Saudi Arabia, Iran and even Venezuela. From Putin to Ahmadinejad to Chavez, oil-emboldened strongmen are again asserting their power.

However, as glamorous as unbounded oil wealth inevitably seems, it equally comes at a tremendous cost that in a modern economy, can entirely cancel out its benefits. That is because through the phenomenon of Dutch Disease--the phenomenon noted in Holland after the discovery of North Sea oil, it has an incontrovertible tendency to undermine the rest of a nation's economy. The high profits obtainable through oil, gas, or indeed any valuable commodity, tend to make other industries non-competitive by driving up costs. This is the dark cloud that threatens Russia's future.

Indeed, as Philip Stepens notes in today's Financial Times, Russia faces a raft of deep-seated economic problems that belie her new found swagger. Russia is losing population at an alarming rate due to low birth rates. Infrastructure is crumbling. And the corruption problems that have plagued her for decades have only grown worse as she has become more dependent on oil and gas revenues. Indeed, Russia's decision yesterday to suspend Robert Dudley, the British head of its TNK-BP oil venture, for trumped up reasons, testifies to the absence of the rule of law, likely continued capital flight, and corruption that still characterizes commercial dealings in the country.

Oil wealth always tends to contain the seeds of its own destruction. Were it not so, countries like Iran, Venezuela and Mexico would dominate the global economy. Thus, Russia is riding high for now. However, with her econmomy increasingly dependent on oil and gas, a drop in prices would have strong and swift effects. Russia, herself, would benefit in the long term from diversification away from oil but this is a goal that has always eluded those who worship at the altar of oil.

From a U.S. strategic point of view, shifting energy consumption away from oil and gas toward renewable energy that is not tied to any one geographic locations can, thus have important strategic as well as economic benefits.

In the surprise of the 110th Congress, it turns out that the pro-drilling position taken by many Congressional Republicans and their presumptive nominee for President may actually have been – gasp – election year politics. The 'Gang of 10,' a group of five Democrat and five Republican Senators, has offered a compromise proposal that would contain both incentives for energy efficiency provisions and a limited expansion of offshore drilling. Barack Obama has said that he would support such an expansion as part of a broader energy bill, and Speaker Nancy Pelosi has said she may allow a vote as long as a bill includes renewable energy and environmental safeguard provisions, but many Congressional Republicans, including Senate Minority Leader Mitch McConnell, are opposed to the bill.

According to the Wall Street Journal:

Republicans have used the offshore-drilling issue to paint Democrats as out of touch with ordinary Americans and beholden to environmental groups that oppose any relaxation of the current drilling ban. Arizona Sen. John McCain, the Republican's likely presidential nominee, has made Sen. Obama's opposition to offshore drilling a feature in recent ads critical of his Democratic rival.

But the drilling issue could lose its power as an electoral wedge if both parties agree to the concept put forward by a group of Republicans and Democrats. Their proposal would open additional acreage in the Gulf of Mexico off Florida's western coast to drilling, and also allow Virginia, North Carolina, South Carolina and Georgia to "opt in" to drilling off their shores if their legislatures approve.

The plan would also raise billions of dollars for conservation and energy-efficiency programs partly by making oil companies no longer eligible for a manufacturing tax credit and repealing other tax breaks. Some estimates have put the potential savings from such a move at $13 billion over 10 years.

Some conservatives worry that a deal would remove party differences on what they otherwise see as one of the Republicans' best issues for winning over voters in the November election. Conservative radio-show host Rush Limbaugh has accused the Republicans who favor the compromise of giving a "gift" to Sen. Obama and other Democrats seeking election this fall.

Among many Republicans, "there's a desire to not solve this problem" of gridlock over energy policy, said one of the Republicans supporting the compromise, Sen. Bob Corker of Tennessee. Sen. Corker added that "many people in the Republican Party are missing the point that this is a strong pro-[oil] production bill" and that Republican leaders "made a mistake" by not immediately endorsing it.

This proposal epitomizes the 'all of the above' solution that John McCain and his Republican allies in the Senate claim they support – expanding drilling and investing in energy efficiency and renewable energy. Sadly, only five have actually acted.

McConnell’s line about "objections to the proposal to eliminate the oil companies' eligibility for a tax credit" is part of his growing charade of election year intransigence. The oil industry receives tremendous direct and indirect subsidies from the federal government; meanwhile McConnell refuses to allow for a straight up or down vote for much smaller tax credits on renewables.

McCain, too, has said that he could not support the bill because it "would raise taxes;" he has since changed to a more 'wait and see' approach. For someone running for president on a supposed record of bucking his party on energy policy, this is certainly not the type of proactive leadership one would expect. (Thomas Freidman calls out McCain today for his lack of action on energy and quotes Suntech America President Roger Efird, one of NDN's panelists from our August 1 event on "Energy and the American Way of Life.")

There is only one conclusion to draw: McCain and Republican opposition to this proposal – which should serve as an important bipartisan step toward some sort of action on energy policy – is nothing more than an attempt to maintain a loosening grasp on drilling as a wedge issue in an election year. By refusing to lend his support to this compromise, McCain and his Republican Party owe America an explanation of what energy reform they are actually for, because behind the pretty windmills in McCain’s ads, there’s no substance.

New York City -- Perhaps at no point in his failed presidency, probably the worst in American history, did President Bush look more out of touch than sitting at the Olympics in Communist China as did fellow guest, Vladimir Putin, also watching the festivities was presiding over the invasion of democratic Georgia. Having not so recently invaded a country himself, Bush's moral authority was at a low. But contributing to the aura of self-interested incompetence suffused with a dose of cnyicism was his acquiescence to a vastly diminished American presence in the world.

Although it appears that the immediate Russian strike was triggered by a Georgian action against South Ossetia, the Olympic timing that placed Bush in the Chinese stands as Russian tanks rolled was tailor-made for Vladimir Putin. Pumped up with new oil and gas wealth extracted directly from Europe and the United States, Putin could not have found a better stage to announce his reassertion of Soviet imperial ambitions.

Now as President Bush and his team prepare to leave office, it is left to the rest of us to figure out how to resurrect an America that has been unnecessarily and artificially weakened--economically, militarily and strategically by this oil friendly Administration.

Indeed, oil and natural gas wealth is responsible for virtually all of the hubris on display from Putin like the other petro-strongmen who currently threaten the world's security. And oil and gas revenues are fueling the rebirth of authoritarianism--a point discussed trenchantly by Chrystia Freeland in today's Financial Times.

There should be no mistaking, at this point, that oil and gas wealth is a direct threat to the future security of the West. Thus it should be equally clear that a national commitment to developing alternative fuels must be a central element of American economic and security policy. To be sure, this transfer cannot take place overnight. But neither economically nor strategically, can the United States--or Europe--or other free countries allow themselves to remain dependent on the oil states.

As I have written before, a national program to change how we get our energy should include the following:

• Immediate passage of tax credits for renwable fuels such as the solar investment tax credit and production tas credit which benefits wind power;
• Acclerated development of new and impore energy storage and other advanced energy technologies;
• A renewable electricity standard;
• Legislation and tax credits to take older gas-guzzling vehicles off the road (as suggested by Jack Hidary and recently, Alan Blinder);
• Tax credits to encourage energy savings; and
• Investments in mass transportation and smart growth to lower energy demand across our society.

As major changes in energy consumption in the last few months --sparked by high gas prices--have shown, Americans can adjust. But we cannot leave this transition up to the whims of the market.

Most important of all is that these measures not be viewed independently as elective items but rather as part of a vital national commitment to free ourselves from what has become an unacceptable dependence on fossil fuels.

The alternative--acquiescence to a world run by oil-emboldened strongmen--is simply unacceptable.