Shadow Government

In Obama's waning America, a glimmer of hope on energy security

For national security conservatives, last week's State of the Union address was something of a wasteland. On the most pressing challenges facing the nation -- Iranian and North Korean nukes, Syria's meltdown, the war in Afghanistan, Al Qaeda's metastasization, the looming disaster of defense sequestration -- we were treated to a heaping portion of presidential mush, platitudes, and happy talk largely detached from the urgency of the historical moment. The overall effect will surely reinforce a dangerous perception that has increasingly taken root among friend and foe alike: America is waning. The world may be unraveling, but as far as President Obama is concerned, it's really not our problem. U.S. leadership is closed for the season. We're busy nation building at home. 

Dismal as it was, there was a section of the president's address that may hold unexpected promise. Though wrapped in a bright green bow of climate change, Obama's discussion of energy could have important national security consequences. Of particular note was his embrace of an energy security trust fund. The proposal is the brainchild of an organization called Securing America's Future Energy (SAFE) and its Energy Security Leadership Council (ESLC) -- the "nonpartisan coalition of CEOs and retired generals and admirals" that the president highlighted in his speech. 

In a report issued last December, SAFE and the ESLC called for the establishment of an energy security trust that would be funded by royalties derived from expanded drilling for oil and gas on federal lands. The trust would have one purpose only: supporting R&D on technologies designed to break oil's stranglehold over America's transportation sector, which accounts for about 70 percent of overall U.S. consumption.

Importantly, the underlying motive behind the SAFE/ESLC proposal had nothing to do with climate change and everything to do with national security and the country's economic health. Its authors properly see America's dependence on oil as a major strategic vulnerability. Even taking into account today's revolution in North American energy production, the United States for the foreseeable future will remain mired in a global petroleum market characterized by high and volatile prices, domination by an oftentimes hostile cartel, and the constant threat of disruption by geopolitical events in the world's most unstable regions. While convinced that America's current oil and gas boom must be fully exploited for the huge economic benefits it promises, SAFE and the ESLC also believe it must be leveraged for the long-term objective of breaking our dependence on oil once and for all -- thereby achieving true energy security and a measure of strategic flexibility that U.S. foreign policy has not known for decades. 

National security conservatives should be sympathetic to the effort. As I've recounted elsewhere, while the idea of targeting Iranian oil sales as a means of pressuring its nuclear program has been around since at least 2007, the trigger on such sanctions wasn't pulled until 2012. For almost five years, both the Bush and Obama administrations were deterred from taking aggressive action due to fears that removing large quantities of Iranian crude from the market might produce a devastating price shock that would inflict major harm on the global economy. 

That's five crucial years that were largely frittered away while Iran was allowed to earn hundreds of billions of dollars in revenue, dramatically enhance its enrichment capacity, and accumulate a stockpile of enriched uranium that with further processing could be used to build a handful of nuclear bombs. Five crucial years during which the pursuit of America's most pressing national security priority -- stopping Iran from acquiring nuclear weapons -- was dangerously constrained by our vulnerability to global oil markets. If that's not an intolerable situation for the world's leading nation to be in, I'm not sure what is. If there's a realistic strategy for doing something to mitigate it, we damn well should get started. 

Equally worth noting, however, is the fact that when oil sanctions were finally imposed on Iran last year -- cutting Iranian exports by up to a million barrels per day -- a major disruption to global markets was successfully avoided in no small measure because of corresponding increases in oil production from the United States. As the race to stop Iran's nuclear program intensifies in coming months and further steps to curtail Iranian exports are contemplated -- perhaps removing as much as another 1.5 million barrels per day from the world market -- continued growth in U.S. production will only become more vital.

Now that President Obama has sought to co-opt the ESLC's CEOs, generals, and admirals for his purposes, it's vital to keep in mind the details of what exactly their energy security trust entails. Perhaps most importantly, the ESLC proposed that money for the Trust should come from new drilling in currently inaccessible federal lands and waters -- specifically to include the Pacific, Atlantic and eastern Gulf of Mexico areas of the Outer Continental Shelf (OCS), as well as the Arctic National Wildlife Refuge (ANWR). Moreover, the funds should be drawn from royalties that oil companies already pay as a matter of standard operating procedure when granted drilling rights in areas owned by the federal government. More pointedly, the trust as envisioned by SAFE and ESLC, explicitly ruled out the leveling of any new fees or taxes -- carbon or otherwise -- on oil and gas production. Finally, it's important to note that the money that would be diverted to the trust represents but a small fraction -- much less than 10 percent -- of the total new royalties that would fill federal coffers by opening the designated areas to drilling. 

Perhaps not surprisingly, this isn't quite the Obama administration's vision for the Trust -- at least not yet. Most importantly, the administration is proposing that the money should be raised from royalties on existing production rather than from new production in the OCS and ANWR. 

While Republicans should see the trust as an idea worth exploring and engage with Obama accordingly, they should hold fast to the ESLC's actual recommendation that explicitly links the trust to the opening of federal areas that were previously off limits. If the president wants to cloak himself in a proposal that "a nonpartisan coalition of CEOs and retired generals and admirals can get behind," Republicans should insist that he at least remain faithful to that proposal's core content. 

The weight of the argument certainly favors Republicans. Economically, expanding oil production will serve as a huge boon to a still faltering U.S. economy. Strategically, it can play a vital role in stabilizing nervous global markets, especially in light of the looming showdown over Iran's nuclear weapons program. And politically, the reality is that no deal on an energy security trust is likely to get done unless Republicans get something significant on expanded drilling. Addressing that central pillar in the GOP's energy platform is probably an essential trade-off if Republicans are expected to overcome their deep-seated skepticism and go along with yet more funding for the Democrats' favorite hobby horse of green energy research.

Of course, it was the prospect of a win-win compromise that represented the genius of the SAFE/ESLC proposal in the first place. Republicans get expanded drilling.  Democrats get more money for green energy. And in a single package, the sometimes competing goals of economic growth, reducing oil dependence, and lowering carbon emissions could all be addressed in a reasonable way. Something for everyone. That's the basis for broad consensus on a bipartisan energy deal that might actually do the country considerable good. If President Obama turns out to be truly serious about it, Republicans should be prepared to meet him half way.

One final note: For any Washington think tank, having the president of the United States specifically reference your organization in a State of the Union address and endorse one of its policy recommendations is the equivalent of hitting the jackpot.  Major kudos to SAFE, an organization that I work with in an advisory capacity. Its success is a great reminder of the extraordinarily important contribution that privately funded non-profit research institutions can make to U.S. policy and the advancement of American interests.

Tom Pennington/Getty Images

Shadow Government

Tiger Woods evidently holds the keys to sequestration

During last week's congressional hearings, America's military leaders outlined the dire consequences they envision if, as has long seemed likely, the sequestration provision of the 2011 Budget Control Act comes into effect. The hearings were scheduled by sympathetic Armed Services committees to give vent to the Pentagon's alarm.

In one exchange, Rep. Mike Rogers asked the chairman of the joint chiefs of staff if he had informed the president of the dire consequences to readiness from sequestration beginning on March 1. "We have had that conversation," Gen. Martin Dempsey answered. Rogers followed up to ask how the president responded. "He assured me he's working on it," said Dempsey.

The president "working on it" has not equated to producing a budget that piles up less than a trillion-dollar deficit for fiscal year 2013. It has not equated to finding means within his executive powers to minimize the effect of the reductions -- to the contrary, the White House explicitly instructed agencies to spend and plan as though the law would not come into effect. It has not equated to working with Congress to strike a deal; the president has no meetings scheduled with congressional leaders. It has not equated to acknowledging his critics may have a point or have proposals that could be incorporated into his plan (he has not offered a plan). It has not even equated to acknowledging that mandatory spending is driving our debt. The president is allowing these cuts to discretionary spending in order to protect mandatory spending, otherwise known as "entitlement" programs.

Congress is stuck. It is stuck because two years ago markets started signaling concern about the level of America's national debt and the rate at which the U.S. government continued to incur it. The Congressional Budget Office reported in December that federal revenues increased by $30 billion in the first two months of the fiscal year, but federal spending increased by $87 billion. We borrow $4.8 billion dollars a day. The United States borrows 31 cents of every single dollar it spends. 

As the euro crisis has demonstrated, market confidence can collapse quickly and is very expensive to regain. Ratings agencies have already downgraded the U.S. because of our inability to bring our spending and revenue into balance. That is the political impetus behind draconian measures to force an end to deficit spending and produce a medium-term plan to ramp down our national debt. Unless we show markets the United States has the capacity to bring our budget into alignment, we will be at great risk of getting involved in the kind of escalating game of chicken European governments have been forced into over the past three years: committing ever more money to a firewall that forestalls a market run and driving interest rates up to devastating levels. And to be clear: markets are not to blame for gaming our currency. We are to blame for putting ourselves at risk by racking up so much debt.

Breaking the congressional deadlock requires presidential leadership. That's why our form of government has a chief executive. But the president is now not only leading from behind in foreign policy, but also leading from behind in the domestic policy that is the basis of our international strength. Instead of working to prevent sequestration from going into effect -- with two weeks remaining until training is curtailed for 80 percent of Army forces, the military faces what Gen. Dempsey described as an unprecedented readiness crisis, and the pivot to Asia becomes unaffordable -- President Obama took the long weekend to golf in Florida with Tiger Woods. The military is claiming dread crisis, and the commander in chief has gone golfing. Is it possible all of us missed the seminal role Tiger Woods must have in breaking the political stalemate in Washington?

Cory Lum - Pool/Getty Images)