Third Way Perspectives
Ending China’s Cyberattacks
May 15th, 2013
Last week, the Pentagon came out and said it: Cyberintrusions on Defense Department computer systems, as well as economic and defense industrial base sectors are “directly attributable to the Chinese government and military.” China’s cyberintrusions are a serious matter. But why does China’s hacking strike everyone as beyond the pale?
Of course China wants to steal our secrets – after all, espionage is considered the second oldest profession. It’s also hardly surprising that China is cyberspying on America’s defense industrial base to gain military advantage. Governments, no doubt including ours, do this all the time.
No, the real affront here is that the Chinese government is using all the cybertools of the state to break into private sector companies and steal information and ideas for purely commercial advantage. Given that half of China’s economy is owned or effectively controlled by the Chinese government, China has a particular incentive to share ill-gotten secrets with its extensive roster of state-owned enterprises and national champion companies. Beijing is providing them with significant – and highly unfair – advantages over their global commercial competitors. Read the rest of this entry »
Stick to Targeted and Discrete Policies
May 15th, 2013
Energy policy is difficult to move, in part because there’s really no such thing as a “must-pass” energy bill. It doesn’t carry the same urgency or institutionalized process as certain annual taxing and spending bills, and it certainly doesn’t generate the same passion in the electorate as health care, immigration, or other social policy priorities. Let’s face it…energy policy is the stowaway, not the train. You can slip a discrete energy policy into a larger vehicle, as we saw with the PTC’s inclusion in the fiscal cliff deal. But building a large, comprehensive energy bill in this political era is basically the equivalent of a dozen stowaways standing by the tracks deciding to tie themselves together. Good luck with that, guys.
Recent movement of hydropower and efficiency bills, along with bipartisan support for master limited partnerships and ARPA-E, has shown us the potential for passing targeted energy legislation in this Congress. Perhaps these particular issues are unique in that they tend to gin up relatively little controversy. But an incremental and targeted approach can be effective with contentious policies as well. Returning to our earlier example, the PTC for wind has become a target of hyper-conservative groups in recent years. Yet a significant block of Republican lawmakers, including tea party favorites like Steve King and freshman class president Kristi Noem supported the extension. To be precise, they actually FOUGHT for it, pressuring their leadership and colleagues to move the provision. Focusing solely on the PTC for wind allowed geography to trump partisanship. This prioritizing of parochial issues over political ideology is a well-known phenomenon in energy policy, and it has often provided opportunities for compromise and progress in Congress. But the influence of the “geography effect” is diminished once the policy in question is merged with others that are of less interest or that present a conflict for lawmakers.
For the House and Senate, the strategy that seems to be showing the most promise is to keep it simple (and practical), stupid. Smart policy initiatives will minimize variables that give lawmakers a reason (or an excuse) to vote against clean energy interests that matter to folks back home. And they will take advantage of unique coalitions that each individual issue can bring to the table based on geography, local economies, etc. Legislators can also encourage the Administration to continue its use of executive orders to increase efficiency and clean energy procurement within federal agencies, and to pursue collaborations with industry to iron-out regulatory hurdles that could slow the adoption of clean technologies.
The bottom line is, there is plenty to be done. It just can’t be done all at once. So pick your spot on the apple and start taking a bite.
This piece was originally published in the National Journal Energy Experts Blog.
In Search of the Next Crisis
May 13th, 2013
The deficit is going down. Woo-hoo! Let the celebrations begin.
Oh, wait. That may not be altogether a good thing. Certainly not for Republicans. They need an out-of-control deficit to bludgeon Democrats into cutting more spending. It may not be good news for the economic recovery either. Budget austerity means slower growth. Want proof? Look at Europe.
The Congressional Budget Office estimates that this year’s federal budget deficit will drop from $1.1 trillion to $845 billion. Economists at Goldman Sachs project that we will get the deficit under control within two years. Why is this happening?
3 Key Trade Trends the U.S. Can’t Ignore
May 8th, 2013
When America debated the North American Free Trade Agreement in 1993, Groundhog Day – a film about doing the same things over and over – was a box office hit. Since then, our trade debates have often been like Groundhog Day, with trade supporters and critics repeatedly recycling well-worn talking points. But before everyone dusts off old scripts for upcoming debates about trade deals with Asia and Europe, it’s worthwhile to consider what America might learn from more recent trade developments – especially those currently happening outside the United States.
Three trends in global trade highlight why it’s more vital than ever that America continue to play a strong role in writing robust rules for trade.
1. America’s Not the Only Game in Town. As America works to conclude a Trans-Pacific Partnership trade deal and to ramp up new trade talks with the European Union, it’s important to remember that other major economies are also pursuing a bevy of new trade deals.
There are already hundreds of trade agreements in force among groups of countries that don’t include the United States, with many more under negotiation. The EU, for example, is negotiating agreements with Canada, India and Japan. And China, Japan and South Korea have begun talks on a pact that would boost trade among the world’s second-, fourth- and twelfth-largest economies. These three countries – together with 13 regional neighbors – are also negotiating a massive Regional Comprehensive Economic Partnership that would tie together 16 countries with a combined GDP of over $26 trillion.
For the United States, the implications of growing trend are clear – if we don’t continue to engage in developing new norms for global trade, global competitors like China surely will.
How to Talk About Israel’s Recent Strikes in Syria
May 6th, 2013
Israel carried out several limited strikes in Syria over the weekend, raising the possibility of an expanded Syrian civil war. Here’s how to talk about it:
1. Israel was responding to a real, imminent danger to its security.
U.S. and Israeli sources indicated the Israelis late last week struck a shipment of sophisticated, Iranian-built Fateh-110 missiles bound for the Lebanese terror group Hizbollah. The Syrians also claimed Israel hit the Jamraya military complex outside of Damascus this weekend, which U.S. officials say is Syria’s chemical weapons development center.
If Hizbollah obtained the Fateh-110 missile, the terror group would then be able to accurately deliver a half-ton warhead with a range of 185 miles, which could strike almost all of Israel’s major cities and military bases. Israelis living in Jerusalem, Tel Aviv, and other population centers would find themselves in Hizbollah’s crosshairs. These missiles could travel father and hit a target much more accurately than anything currently in Hizbollah’s arsenal. This was a real, imminent danger to Israel, and its leaders acted to mitigate the threat.
Given the serious threat these weapons pose to Israel’s civilian population, we should stand with Israel in its efforts to blunt the threat from Hizbollah.
MLP Bill, With or Without Tax Reform
May 1st, 2013
Comprehensive tax reform is long overdue, but it’s also going to be difficult and may not happen during this, or even the next, session of Congress. In the meantime, we can’t hold up other tax code fixes, especially in vital areas, such as energy. The MLP Parity Act, a fix to our unequal tax code, shouldn’t be delayed just because it doesn’t fix all of the problems with our current tax code.
As it stands now, the government is implicitly telling investors what to invest their money in. Master limited partnerships are attractive investments, passing profits through to investors without being taxed at a corporate level. This appealing financial structure draws in more capital and lowers the cost of capital for projects owned by an MLP. Unfortunately, under our current tax code, qualifying projects are generally oil and gas related – pipelines, extraction, refining or exploration – excluding many types of energy, from biomass to nuclear to wind. As a result, a project such as a wind farm is less attractive to investors and must offer a higher return than a comparable natural gas project.
This bias in the tax code unfairly picks energy winners and losers, incentivizing the types of energy projects that were common in 1981 when master limited partnerships were first created. Although our fuel supply has changed, the tax code has not, leaving clean energy out of the investment pool. While it may not fix all the inequity in our arcane and complex tax code, the MLP Parity Act is a much needed first step towards an even playing field for our energy future.
This piece was originally featured in National Journal.