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The Changing Political Discussion Around Defense Spending

Posted on by The Progressive Policy Institute

With today’s New York Times’ article, we may be on the verge of a sea change in political attitudes on defense spending. To be sure, the political dialogue has not fully accepted the necessity of fiscal restraint at the Pentagon, but we’re getting there.

When you hear the likes of Republican Sen. Judd Gregg (R-NH) say, “defense should be looked at” as a part of deficit reduction and Democratic Sen. Daniel Inouye (D-HI) toe a harder-line, something’s up.  Okay, Inouye has a long, hard-earned reputation as a defense porker, but the contrast with the conservative Gregg (even if he is from New Hampshire) is notable.

Defense spending has been a counter-intuitive third-rail of its own in domestic politics. Conservatives, allergic to every government program they’ve ever come across, drip with hypocrisy when they can’t seem to get enough pork at the barbecue of weapons systems. And progressives are often skittish about restraining defense spending in order to preserve home-district jobs and out of fear of “weak on defense liberals” charges.

But Erskine Bowles, Bill Clinton’s chief of staff and co-chair of the Deficit Commission, insists, “We’re going to have to take a hard look at defense if we are going to be serious about deficit reduction.”

It’s something your friends here at PPI have been pushing. Will Marshall, PPI’s president, testified in front of Bowles’ commission in late-June and was adamant that “defense has a contribution to make” in deficit reduction.

The hard part, however, is making sure it’s the right contribution. Secretary of Defense Bob Gates has said that he’s looking at a whole-sale restructuring of Pentagon spending:

What I’m asking for is not a simple budget cut; [what] I’m talking about is changing the way we do business. It’s taking the savings from that and applying it to long-term investments… This is a lot harder than cutting the budget for one year.”

In doing so, it’s critical to strike a balance between fiscal restraint and maintaining national security. This calls for a nuanced approach that doesn’t just ax a few weapons programs one year and starts all over the next. To keep America safe, strong, and solvent, we need creative ideas for restructuring defense spending.

Continue to check in at ProgressiveFix.com, as PPI plans to issue our own plan in the coming weeks.

Photo credit: TrueBritgal’s Photostream

For the Record

Posted on by The Progressive Policy Institute

Recent blog posts by Americans for Tax Reform and Free Press inaccurately portray policy recommendations in the recently released PPI Policy Memo, “The Coming Communications Boom? Jobs, Innovation and Countercyclical Regulatory Policy.”

Written by Michael Mandel, the memo examines recent employment data that suggests the communications and Internet sectors may be emerging as “job leaders” as the overall economy struggles to recover. It also proposes that regulatory policy, like fiscal or monetary policy, should be sensitive to business cycles.

The memo calls for a “countercyclical regulatory policy,” focusing on the timing, rather than the merits of regulation. It recommends the Federal Communications Commission pause for a two-year period before imposing regulations on the growing communications sector in order to not impair job creation. The memo states: “After that period, the agency should systematically and proactively track down areas of excess and exploitive behavior and target them for selected intense regulation.”

The Progressive Policy Institute’s aim is to modernize regulatory policy for the 21st century by making it more flexible, more responsive to “boom and bust” cycles, and more attentive to growth and innovation.

../the-coming-communications-boom-jobs-innovation-and-countercyclical-regulatory-policy

Clinton to Vietnam, Human Rights Raised. Does She Really Care?

Posted on by The Progressive Policy Institute

Secretary of State Hillary Clinton raised concern over human rights during her trip to Vietnam, a country she last visited in the waning days of her husband’s presidency.  Per the NYT:

Noting Vietnam’s recent jailing of democracy activists, attacks on religious groups and curbing of Internet social-networking sites, Mrs. Clinton said she raised the status of human rights in a meeting with a deputy prime minister, Pham Gia Khiem. … She said the United States would press Vietnam to do more to protect individual freedom. …

Mrs. Clinton’s comments were notable, given that she has played down human rights concerns in visits to Vietnam’s neighbor, China. But her timing, at the outset of the visit, suggested that she wanted to make her point, and move on.

The last line is particularly intriguing, and offers potential fodder to critics from across the political spectrum: from conservatives wed to George Bush’s “Freedom Agenda” to liberal critics to issue-focused NGOs, like Human Rights Watch and Freedom House. Is the Secretary of State just making her point and moving on? Have human rights become simply a talking point, as Secretary Clinton unfortunately suggested before her first trip to China in early 2009?

Despite her regrettable gaffes about China, she’s said that her more nuanced approach is “designed to make a difference, not prove a point.” So what is Secretary Clinton’s approach, exactly?

In Russia, a country desperate for some international respect, a stern human rights stare-down could prove counter-productive. The balance between economics, bilateral security, multi-lateral security, climate change and personal freedoms demands measured engagement. Would, for example, Russia have cooperated on New START or Iran sanctions if the Obama administration issued one human rights tongue-lashing on top of another? Anything’s possible, but such agreements would have undoubtedly been more difficult to come by.

That’s why, in big countries as Will Marshall wrote on this site the other day, Secretary Clinton is focused on building civil societies:

In an important speech that got little attention back home, she unveiled what she called a 21st century approach to promoting democracy by defending civil society. Clinton described an independent civic sector as a nursery for democratic citizenship, no less critical to a free society than representative government and a market economy. And she warned of a spreading global backlash against civil society…. This marks a significant departure from the Bush administration’s approach to democracy, which centered on demands for elections and accountable political institutions. …

Clinton aimed more modestly, but shrewdly, at bolstering a particular aspect of liberty – freedom of association. In authoritarian countries, civil society or “third sector” organizations play an especially vital role in building the infrastructure of liberal democracy. … [Clinton’s approach is] deeply subversive, in that it enables indigenous reformers to carve out space for civic action that is independent of state control. By defending the right of CSOs to organize and operate, and receive international support, the United States and other free countries can promote democracy from the ground up.

It’s in this vein that Secretary Clinton addressed an audience on cyber freedom at the Newseum earlier this year.

Some countries have erected electronic barriers that prevent their people from accessing portions of the world’s networks. …  They’ve expunged words, names, and phrases from search engine results. They have violated the privacy of citizens who engage in non-violent political speech. These actions contravene the Universal Declaration on Human Rights.

Expect the direct challenging on human rights to continue behind closed doors, but expect the Obama administration to take a more indirect, but ultimately more effective path in public.

Photo credit: US Mission Canada’s Photostream

Newt and the Religious “Double Standard”

Posted on by The Progressive Policy Institute

As you may have noticed, the latest right-wing “scandal” (at least for those who are not mesmerized by the “exposure” of liberal opinion in the leaked archives of the JournoList) is the planned construction of a mosque and Islamic cultural center near Ground Zero in New York. This is essentially a local land use issue of the sort that New York authorities deal with every day, but the “threat” of this mosque has already become a cause celebre around the country, particularly with the Tea Party folk.

But the most radical reaction so far has been not from any Tea Party spokesman or talk radio jock, but from the former Speaker of the U.S. House of Representatives and a putative presidential candidate in 2012, Newt Gingrich. Check this statement out:

There should be no mosque near Ground Zero in New York so long as there are no churches or synagogues in Saudi Arabia. The time for double standards that allow Islamists to behave aggressively toward us while they demand our weakness and submission is over.

Yes, Gingrich is arguing that religious liberty for Muslims in the United States should be made contingent on religious liberty for non-Muslims in Saudi Arabia. Anything less is a “double standard.”

I suppose this sounds reasonable to people who think all or most Muslims are “Islamists,” or buy Newt’s dubious assertion that the name of the proposed facility, Cordoba House, is a deliberate Islamist provocation aimed at heralding some future armed conquest of the United States. But put aside the particulars here and think about the idea that a unilateral commitment to religious liberty by the United States represents a “double standard” inviting our destruction.

This isn’t a particularly new idea. For a very long time some American Protestants resisted full civil rights for Catholics on grounds that Catholic countries did not extend similar rights to Protestants. You’d think Newt Gingrich, as a very avid recent convert to Catholicism, would be aware of that history and its relevance to his “double standard” argument.

Newt’s line, of course, is an analog to the argument beloved of some conservatives that in the civilizational struggle with Islamism, American principles of decency–say, a reluctance to torture prisoners–are just signs of contemptible weakness that make our enemies laugh at us. It’s richly ironic that the kind of people who deeply believe in “American exceptionalism”–the notion that much of what is good on this planet would disappear if America began to resemble countries like Canada or England or France–are sometimes among the first to argue that America should abandon its distinctive beliefs whenever it is convenient. But Gingrich carries the freedom-is-weakness argument to a brand new extreme. Wonder how his fans would react if he suggested that the right to bear arms should be suspended for the duration of the War On Terror to keep guns out of the hands of Islamists? The mind reels.

This item is cross-posted at The Democratic Strategist.

Photo Credit: Gage Skidmore

New Report Suggests Innovation In the Communications Sector Will Spur Growth and Lead American Job Recovery

Posted on by The Progressive Policy Institute

NEWS RELEASE
FOR IMMEDIATE RELEASE
July 21, 2010

PRESS CONTACT:
Steven Chlapecka—schlapecka@ppionline.org, T: 202.525.3931

Economist Michael Mandel Unveils a New Analysis Citing Countercyclical Regulatory Policy As a Pathway for Job Creation

WASHINGTON, D.C. – July 21, 2010 – The Progressive Policy Institute (PPI) released a new report by economist Michael Mandel titled “The Coming Communications Boom? Jobs, Innovation, and Countercyclical Regulatory Policy.” Unveiled at a July 20 event on Capitol Hill featuring Mandel and Rep. Ron Kind (D-Wis.), co-chair of the New Democrat Coalition Task force on Innovation and Competitiveness, the paper proposes a countercyclical regulatory policy for high-tech and innovation-centric industries to promote job creation and generate a new wave of innovation-led growth.

“This policy memo raises an intriguing question: should regulatory policy be any less sensitive to business cycles than fiscal and monetary policy?” said Will Marshall, president of PPI.

The report finds that the “broad” communications sector – Internet companies, wireless telecom carriers and computer systems design – is creating jobs even as the rest of the economy experiences double-digit unemployment. Mandel cites these sectors as “job leaders” that could spearhead a broader expansion of employment as the U.S. economy fully recovers from a fierce financial meltdown and recession.

Mandel’s research shows that the communications sector is poised to lead job creation in the short term, and is where most of the “energy” and innovation are happening that are needed to avoid a jobless recovery. He cautions that now is not the time for regulators to step in to this sector and derail what is expected to be a strong and steady trajectory to job creation.  

In his paper, Mandel addresses current proposed regulation over the communications sector, stating that “in the early stages of an innovation-driven boom, permissive regulatory policy is important to let new products and services take root.”

The paper proposes the government hold off on imposing regulations over growth sectors for a two-year period. This would “allow the incipient communications boom to get started. After that period, the [FCC] should systematically and proactively track down areas of excess and exploitive behavior, and target them for selective intense regulation.”

To access the full memo, visit: https://bit.ly/98crsS

For additional information, please contact PPI’s press office at 202.525.3931.

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TopSecretAmerica Comes Up Short

Posted on by The Progressive Policy Institute

After digesting three days’ worth of the Washington Post’s TopSecretAmerica series, consider me unimpressed.

As I said in my initial post, I do generally support the series’ aim — to demonstrate that we’ve had a massive intelligence community bureaucracy sprout up since 9/11, and that oversight and public accountability seem to be lacking. That point is well-taken, and one that I support.

My critiques are simple: TopSecretAmerica is neither even-handed nor nuanced. It paints the intelligence community in a broad-brush negative light while ignoring many of its achievements in the last decade.

The series’ point of departure seems to be that the intelligence community is a secretive monster. The articles lean too heavily on the notion that big, expensive and secretive mean scary and, by implication, counter-productive: Companies put the bottom line before country, no one knows what happens at Ft. Meade, and the super-nerds of the NSA are too affluent … and … what? The country is weaker for it?  We don’t know for sure, but that’s the impression I get.

Rarely do the authors acknowledge that much of the money spent in the IC actually, you know, helped keep Americans safe. KSM’s capture? Al-Zarqawi’s death?  Catching the Times Square bomber in 53 hours? The Russian spy ring? The recent slate of high-level Taliban takedowns in Afghanistan and Pakistan? All these, and more, were left conspicuously off the final draft. Of course, this is the IC’s inherent PR nightmare: its shortcomings are publicly scrutinized; its successes often remain hidden.

Instead of striking a proper balance that tells a measured story of waste, overlap and needless spending mixed with strategic intelligence successes, “TopSecretAmerica” is too quick to throw the baby out with the bath water.

The lack of nuance is equally disappointing. As intelligence analysts, the contractors I worked with couldn’t have been more conscientious, patriotic employees. They were crucial components of our analytic team. Should they have been replaced by civilian employees on a purely cost basis (for purely economic reasons)? Probably, and the government is working to facilitate that transition (a point mentioned in the text). But that’s only part of the charge the Post levels against them — did my colleagues value their shareholders more than their country? No way.

And should my colleagues be lumped in with the protective service contractors who did irreparable harm to America’s mission by murdering Iraqi citizens? No, but to the intelligence novice, it’s easy to lump all contractors under one umbrella. A distinction should have been made.

Take the issue of overlap. In instances the Post highlights, yes, analytic overlap, most egregiously in the form of the “soccer ball syndrome“, creates inefficiencies that should be sussed out in better oversight.

However, overlap can provide necessary perspective to individual customers. In my old job, I was once the U.S. government’s foremost expert on maritime terrorism in the Strait of Gibraltar. That’s quite a niche, huh? I focused on all the major terrorist groups in Spain, Morocco, and Gibraltar (amongst other responsibilities) just like every other CIA or DIA analyst charged with those countries. But I did so with an eye towards my Department of the Navy customer as a maritime and regional specialist. If a group’s activity suddenly indicated a maritime inclination in that area, I took over as the lead because I was the subject expert.

Overlap makes contributions elsewhere, too. In another personal example, I worked with my agency’s team in Spain to determine, based solely on random, personal connections between my colleagues and their Spanish intelligence contacts, that Islamic extremists, not ETA as the Spanish first decreed, were responsible for the Madrid bombings of March 2004. Once we — the Navy — issued our initial report stating this possibility, other more appropriate agencies took over.

The lack of oversight in intelligence spending must be addressed, but let’s not forget the IC’s valuable successes, either.

Photo Credit: Marcin Wichary’s Photostream

Low Turnout, High Consequences

Posted on by The Progressive Policy Institute

I’ve found this year’s primaries in my home state of Georgia to be very interesting. Clearly, Georgians do not agree. Despite a host of competitive contests in both parties, total turnout in yesterday’s primaries was about 22 percent, which is pretty pathetic.

In any event, the consequences wrought by those few voters were pretty interesting. On the Democratic side, former governor Roy Barnes took the next step in his attempted redemption from a huge stumble in 2002, when his grossly overconfident re-election campaign was upset by a party-switching good ol’ boy named Sonny Perdue. This time around Barnes impressively defeated an African-American statewide elected official by a three-to-one margin, doing especially well in heavily African-American urban areas. Two Democratic congressmen, Hank Johnson and John Barrow, survived primary challenges.

Republicans set themselves up for some potentially wild-and-crazy runoffs. Sarah Palin’s candidate, Karen Handel, will face Newt Gingrich’s candidate, Nathan Deal, on August 10. All kinds of nastiness between these two candidate broke out late in the primary contest; Handel has basically called Deal a crook and Deal has basically called Handel a godless liberal. It’s not likely to get more civil in the runoff.

The Republican congressional primaries produced some odd results, too. You have to have some sympathy for 9th district congressman Tom Graves. He won his gig after a special election in May and then a runoff in June, all because Nathan Deal resigned the seat to (take your pick) devote more time to his gubernatorial campaign or short-circuit an ethics investigation. Then he had to run for a full term in yesterday’s primary, and once again, he’s in a runoff against the same candidate, Lee Hawkins. So Graves and Hawkins will be facing each other for the fourth time in three months.

Then you’ve got state Rep. Clay Cox (R-GA), who was endorsed by a who’s-who of Georgia Republican politics in his bid to succeed the venerable right-winger John Linder in a safe GOP district. Cox dutifully endorsed Linder’s hobby-horse, the “Fair Tax” proposal, and did everything else expected of him. But he finished a poor third, losing not only to Linder’s former chief of staff, Rob Woodall, but also to talk radio host Jody Hice.

In general, the August 10 runoffs will be mostly a Republican affair, and in that rarefied company, we can expect a lot of more-conservative-than-thou one-upsmanship. Looking forward to the general election, Democrats are in reasonably good shape to do relatively well in this red state, in this bad year.

This item is cross-posted at The Democratic Strategist.

Photo credit: 55thstreet’s Photostream

Primary Watch 2010

Posted on by The Progressive Policy Institute

Today’s major primary is in Georgia, and I covered the Peach State contests pretty thoroughly last week (for more detail, see this preview at FiveThirtyEight). An update, though: one late poll of the Republican gubernatorial race, by Magellan Strategies, shows Karen Handel blowing out to a big lead and long-time front-runner John Oxendine fading fast, with Nathan Deal and Eric Johnson battling for a runoff spot.

The primary calendar going forward includes Oklahoma on July 27; Kansas, Michigan and Missouri on August 3; Tennessee on August 5; and Colorado, Connecticut, Georgia (runoffs) and Minnesota on August 10. The general election calendar for November picked up an additional contest, with West Virginia formally scheduling a special election for the late Sen. Bob Byrd’s seat. The candidates are expected to be West Virginia Governor Joe Manchin, a Democrat, and Republican Rep. Shelley Moore Capito (R-WV), with the special election statute enabling the latter to run concurrently for re-election and for the Senate.

Second-quarter fundraising figures for federal contests have been trickling out during the last week, and the number that drew the most attention was probably the 4.5 million haul brought in by Florida Republican Senate candidate Marco Rubio, more than doubling the funds raised by apostate Gov. Charlie Crist. On the other hand, a new PPP survey of the Florida Senate contest shows Crist maintaining a 35-29 lead over Rubio in a three-way race with Democrat Kendrick Meek (who has 17 percent); 52 percent of Crist’s support is from Democrats. In Nevada, controversial Republican nominee Sharron Angle outraised Sen. Harry Reid (D-NV) by $400,000 ($2.6 million to $2.2 million), though again, the latest poll, from Mason-Dixon, showed Reid now up by 44-37. And in CA, incumbent Democratic Sen. Barbara Boxer (D-CA) had a very good second quarter, raising $4.6 million. Her Republican challenger, Carly Fiorina, raised $3 million, but $1.1 million of that total was a loan from her own personal wealth. The latest poll there, from Rasmussen, shows Boxer up by seven points, 49-42. The largest disconnect between money and public opinion is in Arkansas, where incumbent Sen. Blanche Lincoln (D-AR) outraised Republican John Boozman by a four-to-one margin (though a lot of that was to finance her primary and runoff battles with Bill Halter); even Lincoln’s own polling, from Benenson, shows her trailing Boozman 45-36, while other polls have her down 2-1.

Poll Watch

In other polling news, Rasmussen has Democrat Richard Blumenthal maintaining a 53-40 lead over Republican Linda McMahon in the Connecticut Senate race; and shows Republican Paul LePage holding a 39-31 lead over Democrat Libby Mitchell (with independent Eliot Cutler at 15 percent) in the Maine gubernatorial contest. A Glengariff Group poll for the Detroit News of the Michigan Republican gubernatorial primary shows a close three-way race among congressman Peter Hoekstra, Attorney General Mike Cox, and businessman Rick Snyder. The little-known “outsider” Snyder seems to have a lot of momentum.  And in non-election polling news, an ABC/Washington Post survey on Elena Kagan’s Supreme Court nomination shows support for her confirmation continuing to lead opposition by a 53-25 margin.

Ed Kilgore’s PPI Political Memo runs every Tuesday and Friday

The Coming Communications Boom? Jobs, Innovation and Countercyclical Regulatory Policy

Posted on by The Progressive Policy Institute

 

This policy memo brings together three important strands of current policy debate: jobs, innovation, and regulatory policy. Everyone these days is concerned about the slow pace of job creation coming out of the Great Meltdown. Over the past six months, the economy has generated less than 600,000 net new private sector jobs—hardly enough to make a dent in the 14.6 million unemployed.

A bigger issue, though, is that the job drought actually started well before the meltdown. In the last business cycle—running from 2000 to 2007—the private sector created 4.4 million net new jobs. But out of those, fully 74 percent were in the health/education sector. That is, most of the private-sector jobs were being created in places like hospitals, nursing homes, and universities that are heavily government-funded. In effect, the public sector has been keeping the job market afloat since the beginning of the decade.

Most distressingly, America’s great strength—its innovative sector—actually lost jobs during the 2000-2007 business cycle. This sector includes everything from aerospace to pharmaceuticals to telecommunications to software (see Table 1). Some individual industries added employees, but collectively the innovative sector lost almost
700,000 jobs from 2000 to 2007, before the bust hit.

That performance was far worse than anyone expected: In 2001, the Bureau of Labor Statistics published projections implying that the innovative sector would create 1.7 million net new jobs by 2007. In other words, the innovative sector had a shortfall of 2.4 million jobs relative to expectations, even before the bust.

There are promising signs, however, of a rebound in one part of the innovation sector: communications. Internet companies, along with firms engaged in wireless telecom and computer systems design, seem to be emerging as “job leaders” in the next economic expansion. Unfortunately, these companies are also embroiled in struggles with federal agencies – and among themselves – over whether more regulation is required to police competition in communications.

Download the entire memo.

For Intelligence, Big Doesn’t Always Mean Bad

Posted on by The Progressive Policy Institute

The Washington Post’s new series Top Secret America is well intentioned:

When it comes to national security, all too often no expense is spared and few questions are asked – resulting in an enterprise so massive that nobody in government has a full understanding of it.

That’s right. As an intelligence community analyst for some five years, I’ve seen plenty of the bureaucratic inefficiencies, excess and unchecked spending, and unwieldy sprawl that have mushroomed since 9/11. From this perspective, it’s important that questions get asked, money be justified, and overlap — where necessary and possible — be reduced.

My beef with the article — the first in a three-part series — is that it is framed as “big = bad.” Its thesis seems to be that more construction, more analysts, more information, more publications are all fleecing America. The series’ lede lays out this premise:

The investigation’s other findings include:

* Some 1,271 government organizations and 1,931 private companies work on programs related to counterterrorism, homeland security and intelligence in about 10,000 locations across the United States.

* An estimated 854,000 people, nearly 1.5 times as many people as live in Washington, D.C., hold top-secret security clearances.

* In Washington and the surrounding area, 33 building complexes for top-secret intelligence work are under construction or have been built since September 2001. Together they occupy the equivalent of almost three Pentagons or 22 U.S. Capitol buildings – about 17 million square feet of space.

* Many security and intelligence agencies do the same work, creating redundancy and waste. For example, 51 federal organizations and military commands, operating in 15 U.S. cities, track the flow of money to and from terrorist networks.

* Analysts who make sense of documents and conversations obtained by foreign and domestic spying share their judgment by publishing 50,000 intelligence reports each year – a volume so large that many are routinely ignored.

If you’re writing a piece of investigative journalism that is an implicit call for more oversight, pointing out physical size is an obvious organizing frame that seems to illustrate the problem. If there are a bunch of big buildings and no one knows what happens in them, are they necessary?

The problem, however, is delving into why physical size is symptomatic of the problem. Here, the article falls short — lost is that some of these mysterious, large building have contributed to our national security. Raw size isn’t the intelligence community’s problem.

For example, former Director of National Intelligence Dennis Blair released the IC’s budget for the first time. At $75 billion, it’s almost twice the State Department’s, but only ten percent of DoD’s (however, though the Pentagon’s intel spending is counted in Defense’s budget). If increased oversight improves efficiency by — oh, pick a number — 15 percent, the IC’s budget is still $64 billion and the vast majority of those new buildings out in suburban Maryland are still being built.

Or take the National Security Agency’s budget, the agency that controls our satellite spies that listen in to bad people (when not embroiled in Bush-era domestic eavesdropping cases). It’s budget has doubled.   Based on the “big = bad” frame, you might think this is inherently negative. I’d argue that there’s more to the story, and that the increase in signals intelligence collection has kept the country safer by forcing Al Qaeda to use arcane and slow means of communicating.

Buried are two important reasons why size matters, a link that should be made more explicitly. First:

The overload of hourly, daily, weekly, monthly and annual reports is actually counterproductive, say people who receive them. Some policymakers and senior officials don’t dare delve into the backup clogging their computers.

IC bean-counters value quantity over quality, the latter being more difficult to judge. I can’t tell you how many times we were told to “produce more,” irrespective of whether that production had any mission impact. A lot of dog shit is more valuable that one diamond. That’s because budgets are justified by numbers.

And second:

[S]ecrecy can undermine the normal chain of command when senior officials use it to cut out rivals or when subordinates are ordered to keep secrets from their commanders.  One military officer involved in one such program said he was ordered to sign a document prohibiting him from disclosing it to his four-star commander, with whom he worked closely every day, because the commander was not authorized to know about it.

Almost four years ago, I was in a meeting with the new intelligence chief for a certain country I was working on. He was briefed by my boss’s boss on a variety of secret operations my organization had going in the area. When the chief asked for further information about a specific operation, my boss’s boss continued on for several minutes about all the amazing intelligence we’re getting from it.

It was highly inconvenient that I knew better: in truth, that operation had been shut down for over a year, and continued to exist on paper only. My boss’s boss was giving the new chief a complete snow job, only to give the appearance of competence and justify more money. I decided to quit that afternoon.

In sum, there’s been no question that the intelligence community was ill-equipped to deal with the new security threats facing the country that grew in complexity and immediacy between the end of the Cold War and 9/11. An overhaul was necessary, and the community continues to face growing pains in the aftermath of that reorganization and the increased budgets that come along with it.

The central tension in intelligence spending is striking a balance between dollars and security. Much of the post-9/11 intel money has effectively contributed to the country’s security, an inconvenient truism that’s glossed over in the Post’s new series. In the remaining articles, I hope the focus is on the marginal rate of increased security for every dollar spent. And in cases where we’re not getting enough bang for our buck, I hope there’s a better explanation of what drives those inefficiencies. Raw size is an occasional indicator of a deeper problem, not the problem itself.

Photo Credit: Orin Zebest

Clinton Defends Civil Society

Posted on by The Progressive Policy Institute

President Obama has reorganized U.S. foreign policy around a new trinity of diplomacy, development and defense. That’s been a sore point among some progressive internationalists, who see the omission of a fourth “d” – democracy – as an overreaction to George W. Bush’s messianic freedom agenda.

Administration officials insist that they aren’t abandoning democracy, just promoting it in new and more subtle ways. Secretary of State Hillary Clinton recently offered an intriguing case in point.

As Americans celebrated Independence Day, Clinton was in Krakow, Poland for the 10th anniversary gathering of the Community of Democracies. In an important speech that got little attention back home, she unveiled what she called a 21st century approach to promoting democracy by defending civil society. Clinton described an independent civic sector as a nursery for democratic citizenship, no less critical to a free society than representative government and a market economy. And she warned of a spreading global backlash against civil society.

Over the last six years, Clinton noted, 50 governments have clamped down on the ability of civil society or non-governmental organizations to operate freely. She called out persistent violators by name: not just usual suspects like Russia, China and Iran, but also aspiring autocracies like Venezuela under Hugo Chavez and some, such as Egypt and Ethiopia, that are closely allied with Washington. “An attack on civic activism and civil society is an attack on democracy,” she told the assembly.

This marks a significant departure from the Bush administration’s approach to democracy, which centered on demands for elections and accountable political institutions. “All who live in tyranny and hopelessness can know: the United States will not ignore your oppression, or excuse your oppressors. When you stand for your liberty, we will stand with you,” Bush declared in his 2004 inaugural address. Against the backdrop of the war in Iraq and the war on terror, however, Bush’s freedom agenda acquired a menacing and coercive aura. And when the United States insisted on elections in Gaza, only to see Hamas win in 2006, many critics questioned whether elections are always the right starting point in democracy promotion.

Clinton aimed more modestly, but shrewdly, at bolstering a particular aspect of liberty – freedom of association. In authoritarian countries, civil society or “third sector” organizations play an especially vital role in building the infrastructure of liberal democracy. The United States learned the hard way during the Bush years that democracy can rarely be imposed by force, and from the top down. Support for local voluntary associations, on the other hand, is harder to caricature as some heavy-handed U.S. attempt to “export democracy.” Yet it’s deeply subversive, in that it enables indigenous reformers to carve out space for civic action that is independent of state control. By defending the right of CSOs to organize and operate, and receive international support, the United States and other free countries can promote democracy from the ground up.

Also intriguing was Secretary Clinton’s choice of venue. The Community of Democracies (CD) was launched in 2000 by then Secretary of State Madeleine Albright and Polish Minister of Foreign Affairs Bronisław Geremek. Although originally seen as a way to consolidate the wave of democratic reformism that swept the world after the end of the Cold War, the Community often seemed adrift during the last decade. Lax membership rules haven’t helped: some of its 104 members aren’t by any stretch genuine democracies.

If it is going to be a force for democratic solidarity in the world, the CD needs a clear and invigorating mission. Clinton suggested one: rallying the world’s democracies to support embattled civil society groups. She proposed a four-part plan:

  1. Setting up a mechanism at the CD for monitoring repressive measures against civil society organizations.
  2. Encouraging the United Nations Human Rights Council to champion the right of association.
  3. Enlisting regional organizations such as the Organization of American States, the African Union and the Arab League to protect civil society.
  4. Creating some sort of “rapid response mechanism” to bring joint diplomatic pressure to bear on governments that suppress civil society.

In addition, Clinton said the United States would contribute $2 million to a new fund dedicated to helping NGOs targeted by repressive rulers.

True, these are not especially bold measures. And the Human Rights Council, dominated by autocratic regimes, can scarcely be trusted to defend human rights, let alone the right to associate. But Clinton rather deftly managed to elevate the issue of defending civil society without turning it into a purely American demand or preoccupation. In fact, a CD working group headed by Canada is expected to take the lead.

An internationalist approach, in which America coaxes rather than trying to dominate, is essential at a time when distrust of U.S. unilateralism still lingers, even in a relatively friendly forum like the CD. Our task now is to work with like-minded countries to make defense of civil society an international norm, just as Americans were instrumental in getting the United Nations to adopt the International Declaration of Human Rights after World War II. In this respect, Secretary Clinton’s speech was a strong start.

Photo Credit: nrbelex

Tactical Radicalism and Its Long-Term Implications

Posted on by The Progressive Policy Institute

It’s been obvious for quite some time–dating back at least to the fall of 2008–that the Republican Party is undergoing an ideological transformation that really is historically unusual. Normally political parties that go through two consecutive really bad electoral cycles downplay ideology and conspicuously seek “the center.” Not today’s GOP, in which there are virtually no self-identified “moderates,” and all the internal pressure on politicians — and all is no exaggeration — is from the right.

But as Jonathan Chait notes today, there are two distinct phenomena pulling the GOP to the right this year: there’s ideological radicalism, to be sure, but also what he calls “tactical radicalism:”

Obviously the conservative movement is intoxicated with hubris right now. Part of this hubris is their belief that the American people are truly and deeply on their side and that the last two elections were either a fluke or the product of a GOP that was too centrist. It’s a tactical radicalism, a belief that ideological purity carries no electoral cost whatsoever.

This is what I’ve called the “move right and win” hypothesis, and it’s generally based on some “hidden majority” theory whereby every defeat is the product of a discouraged conservative base or some anti-conservative conspiracy (e.g., the bizarre “ACORN stole the election” interpretation of 2008). As Chait observes, there is a counterpart hypothesis on the left, but is vastly less influential, and anyone watching internal party politics these days will note the vast difference in tone between Democratic primaries where moderation is a virtue and Republican primaries where it’s a vice.

While many Democrats (including Chait in the piece I’ve linked to) are interested in the short-term implications of tactical radicalism, such as the possibility that GOP candidates like Sharron Angle or Rand Paul could lose races that should be Republican cakewalks, there’s a long-term factor as well that no one should forget about for a moment. If, as is almost universally expected, Republicans have a very good midterm election year after a highly-self-conscious lurch to the right, will there be any force on earth limiting the tactical radicalism of conservatives going forward? I mean, really, there’s been almost no empirical evidence supporting the “move right and win” hypothesis up until now, and we see how fiercely it’s embraced by Republicans. Will 2010 serve as the eternal validator of the belief that America is not just a “center-right country” but a country prepared to repudiate every progressive development of the last century or so?

That could well be the conviction some conservatives carry away from this election cycle, and if so, what would normally pass for the political “center” will be wide open for Democrats to occupy for the foreseeable future.

Photo Credit: Steve Rhode’s Photostream

This item is cross-posted at The Democratic Strategist.

Increasing the Powers of the Nuclear Regulatory Commission

Posted on by The Progressive Policy Institute

We’re the good guys, right? The U.S. would never help other countries gain access to potentially dangerous nuclear technologies, would it? In general, that’s true. The United States has stringent export controls, and regularly sanctions companies that try to thwart these laws. Export control regulations, however, only cover technologies that have already been commercialized and are being sold for use in other countries. But what about new technologies for enriching uranium or separating plutonium? Should we be concerned about them even before they get built, especially if new technologies are smaller, more efficient, and could make it harder to detect cheating or covert plants?

I think so. After all, as Georgetown University physics professor Francis Slakey notes, “There’s been a number of different technologies to enrich uranium. Every single one of them — despite best efforts to keep secrets — every single one of them has proliferated.” The world’s most famous proliferator, AQ Khan, worked for the European company URENCO, a leading provider of nuclear fuel, in the 1970s. It is widely believed that he simply copied the blueprints for the enrichment technology — like gas centrifuges — that the company used at the time, and smuggled them out the front door, bit by bit. Later, in his native Pakistan, he led efforts to build centrifuges based on those designs and to improve them. Once he had mastered this technology, he offered both enrichment services and centrifuge designs to nearly anyone. Indeed, the International Atomic Energy Agency has reported that Iran’s centrifuges are based on the stolen URENCO designs.

So is there anything that we can do to prevent the next AQ Khan from stealing the latest and greatest new gadgets? One of our gatekeepers is the U.S. Nuclear Regulatory Commission. Created as an independent agency in 1974 by Congress to license the commercial nuclear power plants, the NRC also has oversight responsibility for all civilian uses of nuclear materials. Much of its jurisdiction predates the independent agency and is derived from the Atomic Energy Act of 1954 (when the NRC was part of the Atomic Energy Commission) and requires that the NRC evaluate whether the issuance of a license “would be inimical to the common defense and security or to the health and safety of the public.”

The Commission has a rigorous process in place to ensure that new nuclear power plants, enrichment facilities and storage depots — such as the now-in-limbo Yucca Mountain — all meet rigorous standards for safety and security. The NRC has not yet decided what role it can and should play in nonproliferation. Six members of the U.S. House of Representatives — both Democrats and Republicans — think that nonproliferation is already part of the NRC’s jurisdiction, and they’re recently written a letter to the NRC “expressing support for including a nonproliferation assessment as part of the process for evaluating license applications.”

The American Physical Society (APS), an organization I’m involved with, wants to go a step further. Based on information assembled in our recent report, Technical Steps to Support Nuclear Arsenal Downsizing, we noted that one way to ensure the peaceful use of fissile materials was to “elevate the priority of non-proliferation in the NRC licensing process.” Because of this, APS has filed a formal petition for an NRC rule change. If changes are made, nonproliferation would be an official part of the Standard Review Plan for the Review of a License Application for a Fuel Cycle Facility – Final Report (NUREG 1520 Revision 1).

What can NRC do? As part of the license application review process, NRC experts can determine if any of the technology is inherently dual-use or if technology is single-purpose. Single purpose technology — items that would only be used in this particular application — can be placed on export control lists and tightly constrained. For dual-use technologies, some may be placed on export controls lists as well. In addition, the NRC can require that no one — or at most, a very few highly trusted individuals — has access to the complete blueprints for these facilities. In other words, the NRC, in conjunction with other parts of the U.S. Government, can work to ensure that the particular components and ideas needed to make these facilities function properly don’t fall into the wrong hands.

So far, the U.S. has a stellar nonproliferation record. By including the Nuclear Regulatory Commission in nonproliferation efforts, we can better secure the country.

Photo Credit: Davi Sommerfeld’s Photostream

Georgia On the Mind

Posted on by The Progressive Policy Institute

As alert readers know by now, Robert Bentley won the Republican gubernatorial runoff in Alabama, with Terri Sewell winning the 7th district Democratic congressional nomination (tantamount to election), and Martha Roby turning back viral ad icon Rick Barber for the Republican nomination in the 2nd congressional district. My write-up of the results can be found here.

The next big primary state is Georgia, where voters go to the polls next Tuesday, July 20. There are competitive primaries for governor in both parties; and competitive Republican primaries for Congress in no fewer than six districts, with two Democratic congressional primaries that have drawn some attention. Georgia has a 50 percent nomination requirement, which means many contests will go to a runoff on August 10. This is also a state with a history of substantial early voting, though as of last week, mail-in and in-person ballots were down from prior elections, perhaps indicating a low turnout.

The Republican gubernatorial race (incumbent Republican Gov. Sonny Perdue is term-limited) has heated up in the last week, with a bunch of polls, sharp exchanges between candidates, and interventions by national figures. For most of the cycle, the front-runner has been State Insurance Commissioner John Oxendine, though he’s been considered vulnerable because of long-pending ethics investigations of alleged illegal contributions to his campaign by insurance companies. Three other candidates—former Secretary of State Karen Handel, former congressman Nathan Deal (who has some ethics issues of his own, which appeared to speed his departure from Congress), and state senator Eric Johnson—have been jockeying for a runoff position opposite Oxendine, though at least two polls now show the front-runner slipping into third place. Handel, whose campaign message closely resembles that of South Carolina gubernatorial nominee Nikki Haley (a “conservative reformer” fighting the “corrupt good old boys”), has been the candidate on the move of late, and got priceless attention this week from a Facebook endorsement by Sarah Palin. Deal countered with an endorsement from Georgian Newt Gingrich. Both Oxendine and Deal have been pounding Handel for alleged heresy on abortion and gay rights. And meanwhile, Johnson has been heavily running television ads, and has moved up into the teens in at least one poll. In other words, just about anything could happen on Tuesday, though Handel looks almost sure to have a runoff spot.

In terms of issues, all the GOP candidates have been competing to show avid support for an Arizona-style illegal immigration crackdown (Deal’s made this a signature issue, while Handel has sported an endorsement from Arizona Gov. Jan Brewer), and two candidates, Oxendine and Handel, have proposed abolition of the state’s income tax, reflecting the wild popularity of national “Fair Tax” proposals among Georgia Republicans. And all the candidates are hard-core conservatives on cultural issues, though Handel got into a fight with Georgia Right-to-Life by opposing its proposal to restrict IV fertilization procedures.

On the Democratic side, the big question all along has been whether former Gov. Roy Barnes, who lost to Perdue in a big upset eight years ago, can win the primary without a runoff, as most recent polls have suggested he will. Barnes’ most prominent challenger, Attorney General Thurbert Baker, got off to a very late start in television advertising, and is now trying to attract enough support from his fellow African-Americans to deny Barnes the win (African-Americans typically cast close to half the votes in Democratic primaries in Georgia). Baker got a significant boost earlier this week with an endorsement from President Bill Clinton (Baker was a big Human Rights Campaign supporter in 2008), and has been promoting legalization of electronic bingo as a way to raise money for K-12 education. But Barnes has strong African-American support of his own; just today he was endorsed by Atlanta Mayor Kasim Reed. Other significant candidates who could soak up some votes include former Secretary of State David Poythress, who’s been running an under-the-radar web-focused campaign, and former state House Democratic leader Dubose Porter, whose wife, Carol, is the odds-on favorite to win the Democratic nomination for Lt. Governor.

On the congressional front, the state’s two white (and Blue Doggy) Democratic House members, Jim Marshall and John Barrow, are as usual considered vulnerable in November. Marshall, whose district went solidly for John McCain, has drawn a strong opponent in state representative Scott Austin, who should win the GOP nomination easily on Tuesday. Barrow, whose district is marginally Democratic even in presidential years, has for the second time drawn a primary challenge from former state representative Regina Thomas, whom he beat 3-1 in 2008. Thomas got some help from in-district anger at Barrow’s vote against health care reform, but his massive financial advantage should get him over the line. Meanwhile, Tea Party-backed candidate Ray McKinney is favored over former fire chief Carl Smith for the right to oppose Barrow, though that race could easily go to a runoff.

There are big and active Republican primaries in the districts of African-American congressmen David Scott and Hank Johnson (who also faces former Dekalb County executive Vernon Jones, something of a party renegade, in the primary but isn’t expected to lose), who has had recent health problems, but Republicans would have to get very lucky to become competitive in either place.

An open seat in the north metro Atlanta 7th district has spawned a mammoth eight-candidate Republican primary to succeed John Linder, with every single candidate endorsing Linder’s “Fair Tax” proposal. Former state representative Clay Cox and former Linder chief of staff Rob Woodall are the favorite to make a runoff, though Christian Right figure Jody Hice also has some support.

And up in the North Georgia 9th district, until recently represented by gubernatorial candidate Nathan Deal, the winner of last month’s special election, Tea Party favorite and former state representative Tom Graves, must face pretty much the same field of opponents in the primary, but is expected to win.

In non-Georgia political news, the big development was probably the implosion of the Colorado gubernatorial campaign of former congressman (and GOP front-runner) Scott McInnis, accused of plagiarizing portions of a think-tank paper for which he was grossly overpaid a few years ago. Colorado Republicans are in a quandary; the only other candidate on the primary ballot, Don Maes, has struggled to raise money, and has, ironically, also been cited for campaign finance violations. To hand-pick another viable candidate, party leaders would have to wait for the primary to occur and then beg the winner to step aside.

Ed Kilgore’s PPI Political Memo runs every Tuesday and Friday

Everything Should Not be on the Budget Cutting Table: The Case for Expanding Public Investment

Posted on by The Progressive Policy Institute

The International Monetary Fund recently scolded the U.S. government for running large budget deficits. Leaving aside the absurdity of cutting deficits when unemployment is still extremely high, it’s clear that at some point – as joblessness declines toward 5 percent – deficit reduction will need to begin in earnest. But the real question is how to do that. There’s a risk that the Washington economic class – grounded as they are in 20th century neo-classical economics — will fail to balance the twin imperatives of fiscal discipline and public investment.

Indeed the common refrain that has become the new “group think” in DC is that “everything should be on the table” when it comes to addressing the debt. For example, the Bipartisan Policy Center’s Debt Reduction Task Force says, “everything should be on the table.” Even President Obama, who has at least rhetorically talked about the need for increases in public investment and fought to include public investment in the stimulus, now says that everything should be on the table. Other groups echo this intellectually easy, but intellectually simplistic, position. Pete Peterson’s Concord Coalition likewise calls for “applying budget discipline to all parts of the budget.” The New America Foundation’s Committee for a Responsible Budget supports a budget freeze on all discretionary spending. For these budget hawks, subsidies to farmers to produce crops that aren’t needed fall in the same category as funding for the National Science Foundation to advance science and technology critical to our nation’s future: they both cost money and both should be cut.

The Government’s Role

But there are some things that governments do – on the tax and spending sides – which drive productivity, spur innovation, improve health, clean up the environment and create other benefits that most certainly should not be on the table. The National Commission on Surface Transportation Financing (which I had the honor of chairing) recently highlighted a federal highway and transit funding gap of nearly $400 billion over the next five years. Increased federal support for highways and transit would lead to significantly greater societal benefits (reduced traffic congestion, higher productivity) than the costs in revenues. Yet some groups wave the budget red flag to oppose expanded infrastructure investment, even if increased user fees, such as the gas tax, pay it for. As ITIF has demonstrated, increasing the Research and Experimentation Tax Credit from 14 to 20 percent would return $9 billion more to the Treasury than it would cost. And as ITIF and the Breakthrough Institute have shown, solving climate change requires significant increases in federal support for clean energy innovation, but the benefits (saving the planet) are massive.

If neo-classical-inspired budget hawks want everything to be on the table, liberal Keynesians want to put practically nothing on the table, except higher taxes on the wealthy and business. For example, economist Jamie Galbraith would take entitlement reform off the table. His solution: pray the Chinese keep lending us money. Likewise, Jeff Faux, founder of the liberal Economic Policy Institute argues that, “The deficit projections no more reflect a crisis of “entitlement” overspending than they reflect a ‘crisis’ in any other category of spending, like military spending or agricultural subsidies. Sensible governance understands that the fact that a program area is expanding does not make it the source of fiscal imbalance. But with entitlements off the table, you can’t solve the government’s fiscal problems simply by raising taxes on the rich.

All Spending Is Not the Same

What’s behind this widespread unwillingness to prioritize investment? Budget hawks fear that sparing one item from the chopping block will only validate the demands of interest groups to exempt their pet programs. In addition, many adhere to a neo-classical economics perspective, which holds that government plays a negligible role in economic growth and should be neutral with regard to private sector activity. In the purest form of this thinking, everything is on the table, because nothing is more important than anything else. To paraphrase Michael Boskin, a neo-classical Bush I economist, a dollar of public investment on computer chips has the same societal value as a dollar spent on potato chips. But government should be anything but neutral. Science and infrastructure funding is more valuable than farm subsidies. Government support for research in computer chips is more valuable than support for potato chips.

For liberals, reducing spending on entitlements will not only harm working Americans, but will also reduce economic growth, since Keynesian doctrine holds that growth comes from increasing aggregate demand – meaning pump more money into the economy, period.

In contrast, an innovation economics approach to the budget distinguishes between spending on consumption and spending on investment. For innovation economics advocates, all spending (either on the tax or expenditure side) should be on the table, and all investment (on the tax and expenditure side) should be off the table.

Tax, Cut and Invest

The last time Washington paid attention to deficits was in the first Clinton term. At that time PPI Vice President Rob Shapiro wrote a series of reports with the title, “Cut and Invest.” The notion was that we should cut unnecessary spending and use a significant share of the savings to invest in the nation’s future, including education, infrastructure and research. That was the right message then and it is the right message now. Although today, such a report might be best titled, “Tax, Cut and Invest.” To solve the budget deficit in a way that enables the significant increases needed in investment, we need to raise some taxes, cut some spending and increase some investment.

The general outline should look like this: On the tax side, we should let the Bush tax cuts on the wealthy expire, including: dividend taxes, estate taxes (above a certain modest size) and top marginal rates. We should increase the gas tax by at least 15 cents a gallon (and index it to inflation) and at the same time institute a carbon tax. We should consider a border-adjustable business activity tax. We should eliminate the home mortgage interest deduction. (Home ownership has many societal benefits, but as we see from other nations without these large tax incentives, nations can get high levels of home ownership without wasteful subsidies.)

On the spending side, we need to deal with entitlements, including: progressive indexing of Social Security benefits and increasing the retirement age, continued health care reform — particularly focused on driving innovation to cut costs and cutting entitlements to farmers — farm subsidies. This should be a gradual process to spread the pain over time.

And most importantly, we should significantly expand investments. We need to expand investments in education and training, science and research, technology (including, but not limited to clean energy) and physical infrastructure. In order to ensure that companies in the U.S. are globally competitive and create jobs here at home, we need to expand corporate tax expenditures. For example, create a new corporate competitiveness tax credit that would include a much more generous credit for research and development, and a credit for business investments in workforce training and new capital equipment, especially software. Making these investments will cost money in the short run. But they will also generate returns to the economy and the government in the long term. In economic downturns, successful corporations don’t cut key investments because they know that these investments are vital to gaining market share and competitive advantage in the moderate term. Governments should think the same way.

So let’s stop talking about putting everything on the table and instead recognize that not only do investments need to be off the table, they need to get more from what’s on the table.

Rob Atkinson is president and founder of ITIF, a Washington-based think tank providing cutting-edge thinking on technology and economic policy issues.

Photo Credit: Gliko’s Photostream

China’s Switch from Importer to Exporter of Fast Trains Holds Lessons for U.S.

Posted on by The Progressive Policy Institute

In the world of high-speed rail, imitation can be an appealing form of flattery. While the Obama administration is literally tying the railway supply industry in knots by insisting on trainsets built solely of U.S. content, China opened its arms to foreign train manufacturers during the early stages of its high-speed rail program.

Now within the space of six years, China has become the fastest-growing exporter of rail equipment in the world. On Wednesday, Argentina signed a $12 billion deal to purchase locomotives, cars and infrastructure from state-owned Chinese railways. This triumph follows the country’s success in exporting its technology to Saudi Arabia, Turkey and Venezuela.

China’s ability to create a booming rail sector is a case study of how to leapfrog over established builders and stimulate domestic employment at the same time.

In 2004, China sealed a contract with a consortium led by Kawasaki Heavy Industries to build “bullet trains.” Local equipment makers soon mastered the know-how for their manufacture and licensed other design features from companies in Canada, France, Germany and Sweden.

Today, China operates the world’s fastest trains, with about 15 percent of the parts coming from overseas.

Cutting a Deal in California

On the global stage, China was a non-factor in high-speed-rail (HSR) manufacturing until about 20 months ago when it started bidding on projects overseas. With its cheap cost basis, China quickly made inroads against Siemens of Germany and Alstom of France – together with its former partner, Kawasaki, which reportedly could not imagine that the catch-up would be so fast.

The Chinese government recently signed a preliminary agreement to cooperate with California to help finance and build a HSR line between San Diego and Sacramento. China’s rail ministry has a framework agreement to license its technology to General Electric.

GE describes the agreement as requiring at least 80 percent of the components to come from American suppliers and final assembly in the U.S. GE itself would supply 200-mph electric locomotives using technology licensed from China.

Gov. Arnold Schwarzenegger is scheduled to lead a trade mission to Beijing in September to discuss China’s offer.

Insisting on All-American Content

The example of China provides an alternative model to the “do-it-yourself” approach of the Obama administration. Propelled by a desire to create jobs quickly, the administration says it will only fund rail projects where all manufactured parts – plus the underlining iron and steel – are produced in the U.S.

The 100-percent American rule was contained in Congressional legislation that authorized the spending of $8 billion in stimulus funds for HSR. The administration has told suppliers that it does not plan to use the law’s waiver to exempt some components, even though subway and light-rail trainsets funded with federal money may use up to 30 percent non-U.S. content.

America’s supremacy in railway carbuilding has long past. The last builder, Pullman-Standard Co., went out of business 25 years ago. A century before, George Pullman built the largest passenger railcar business in the world through his innovative Pullman sleeping car.

Without any current base to produce such equipment domestically, attempts to build a homegrown business are fraught with problems, according to many experts.

Last month, the Government Accountability Office (GAO) noted that it could take as many as nine years to build high-speed trainsets domestically. This included up to 21 months for testing the equipment and 42 months for production.

Easing Safety Rules

Complicating the situation are rules established by the Federal Railroad Administration that bar foreign trainsets on American rails because they do not meet the agency’s safety standards.

FRA requires massive amounts of steel in passenger cars so they can withstand a crash with a freight train on shared track. Foreign standards focus more on crash avoidance rather than crash survival, the GAO pointed out, making for lighter trains that nevertheless have stellar safety records.

The agency has shown some relaxation of its heavy-metal mindset by allowing California to operate European-style trains on a dedicated passenger line being planned between San Francisco and San Jose.

Opening the door to foreign suppliers of cars and locomotives, at least until American companies can digest the technology required for their manufacture, could speed up rail service and potentially re-position the U.S. in markets once ruled by George Pullman.

Photo credit: jiadoldol