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After such a historic election, FLYP presents a short documentary video, highlighting what all of our experts say the priorities should be for the Obama administration.
Another Year Older and Deeper in Debt
The president-elect urgently needs to stimulate the economy.
“It’s a difficult starting point for the new administration, because both the short-term and long-term pictures are very grim,” says Maya MacGuineas, a Washington-based budget expert. “I feel so bad for everyone who’s about to walk into the White House.”
In an overleveraged world, the federal government is a champion: total federal debt stands at $10.5 trillion, which is roughly double what it was in 2000. Interest on the debt—$450 billion per year—is one of the largest categories of spending.
Deficits and debt (measured relative to the size of the economy) have grown during two periods over the past half-century: the three terms of Presidents Ronald Reagan and George H. W. Bush, and the two terms of George W. Bush. Unlike the Reagan deficits, excess spending since 2000 didn’t reflect a theory like supply-side economics and a view that deficits did not matter. Instead, politicians simply spent more and taxed less.
Ironically, the day of fiscal reckoning has been delayed by an economic crisis that was partly caused by runaway spending and borrowing. As the country bails itself out of the crisis, the mountain of debt will get significantly bigger—probably several trillion bigger according to budget experts.
The advice of experts like MacGuineas, Gary Burtless of the Brookings Institution or Joshua Gordon of The Concord Coalition is simple. First, do what it takes to stave off a wicked recession and global financial collapse. Then, tackle the deficit with a long period of fiscal austerity including higher taxes, lower spending and reduced eligibility for programs like Social Security.
As Gordon concludes, “I think we need to learn from this financial crisis that worse things happen the longer you wait to take responsibility.”
Back to the Future
Urgent European demands for international monetary reform are premature. But the Obama administration will have a chance to leave its mark on how the global financial system works.
The post-war monetary system was negotiated among the wartime Allies at a resort hotel in Bretton Woods, N.H. during the summer of 1944. That negotiation, based on a British-American plan, gave birth to the International Monetary Fund and the World Bank, as well as to a financial system that went on to underpin the longest period of growth and development the world has ever seen.
The system has changed over the decades. Most importantly, President Richard Nixon broke the link between gold and the dollar, creating a world of floating exchange rates. But one constant has been that the American economy and the dollar remain at the heart of the Bretton Woods system.
The financial shocks of the past year have persuaded at least the Europeans that it’s time for a change. They are worried that financial markets have been regulated too lightly, that the dollar might no longer be the best anchor for a global financial system, and that large imbalances—say, between Chinese surpluses and U.S. deficits—create global economic instability.
They are also worried that a recession seen in Europe as “Made in the USA” is broadening and deepening.
American experts are less persuaded that the time is right for a global reform effort, or that the U.S. caused the global problem by itself. But they agree that the focus should be on trying to do something about declining growth before it intensifies.
Like others, Sherle R. Schwenninger of The New America Foundation argues that President-elect Obama should “seize the agenda and turn this from an effort to create a premature global financial regulatory order, and turn it into a world economic rescue.”
Simon Johnson, former research director at the International Monetary Fund, thinks the Europeans should focus on solving their own problems, and then look toward the bigger global changes. He insists that one key to stability is “to fix the underlying macro and political issues” in Europe, the U.K. and Japan. He wants to see more coordinated stimulus efforts from those countries, as well as from China.
One clear focal point of global concern is lax financial regulations—in the United States and elsewhere—that allowed excess leverage to build up to dangerous levels. However, with the crisis still unfolding, most countries (including the United States) have yet to decide how to change existing regulations.
That would make it premature to try to establish any kind of global regulatory system, insists Brad W. Setser, a monetary specialist at the Council on Foreign Relations. However, Setser does hope for “closer coordination,” which falls far short of what Nicolas Sarkozy and others are demanding.
Ready or not, the leaders of the world’s 20 largest economies are descending on Washington on November 14 and 15 to launch the negotiations that Sarkozy and Gordon Brown have described as aimed at creating a new “Bretton Woods.”
It’s more likely that what they are really hoping to do is to meet Obama.
Talking about the global financial crisis, experts Simon Johnson, Sherle R. Schwenninger and Brad W. Setser give advice to the next president. Watch FLYP’s video interviews here.
Managing A Messy World
Eight years of cowboy diplomacy have badly shredded America’s global image, and weakened American security. We need to start over.
Joe Biden was right: every new president is tested, sooner or later. At a time when we are fighting two wars, worrying about Iran’s nuclear ambitions, coping with Russia’s re-assertion of its power and reframing our relationship with a more powerful China, there is no shortage of potential challenges. However, leading foreign policy experts think Barack Obama will have to start by convincing the world that we are again ready to play by the rules.
The Energy Conundrum
Experts warn that competing priorities and falling energy prices could stop progress against climate change and our dependence on foreign oil.
“People say we can do it all with nukes, or we can do it all with renewables. The answer is we need it all.” – Charles K. Ebinger
Watch FLYP’s interview with energy expert Charles K. Ebinger.
“A call for “massive investment” in transmission lines for wind power, pipelines for natural gas, and transport of biofuels.” – Sherle R. Schwenninger
Sherle R. Schwenninger sat down with FLYP Media to record his thoughts on what America’s energy future should look like. Watch the video interview here.
Coping With a Warming Planet
Experts insist that the pace of climate change demands aggressive U.S. leadership—and action.
One of the few points on which the presidential candidates agreed was the urgency of addressing global climate change. So, in a world in which the country is fighting two wars, the global economy seems headed toward free fall, and the Russians are threatening to deploy westward-facing missiles in Europe, how urgent is the climate change agenda?
Bob Correll, one of the country’s leading experts on climate change, says the incoming president has no time to waste: “We are emitting carbon dioxide at rates that exceed the worst case...four times faster today than in the 1990s, and accelerating.”
A paper recently published in the Open Atmospheric Science Journal by nine leading scientists was even blunter. They wrote that “if the present overshoot of this target CO2 is not brief, there is a possibility of seeding irreversible catastrophic effects.” The authors, led by NASA’s Jim Hansen, wrote that the choice is simple: “If humanity wishes to preserve a planet similar to that on which civilization developed and to which life on earth is adapted,” emissions need to be cut immediately.
The good news is that many experts believe that putting the United States on a path toward rapidly reducing emissions can be done in ways that serve broader political and economic goals. Princeton’s Anne-Marie Slaughter argues that playing a leading role in climate change negotiations is key to re-engaging global multilateral diplomacy. Budget expert Maya MacGuineas believes that an energy tax of some kind will help plug the fiscal gap, while encouraging efficiency.
Terry Tamminen, who was a top aide to California Governor Arnold Scwarzenegger and helped developed that state’s new environmental initiatives, points out that becoming more energy efficient pays for itself over 18 to 36 months. Investing in renewables like wind power reduces fuel costs to zero the day the turbines are turned on.
If the issue is urgent, so is the agenda. Negotiations to replace the so-called Kyoto Agreement on climate change are well underway and should conclude at the end of next year in Copenhagen. The key preparatory meeting will be held next month in Poland. That’s when the world hopes to get the first glimpse at how Barack Obama’s environmental policies will differ from those of George Bush.
Correll’s advice to the next president is straightforward: “You have to assume responsibility for the climate change issue. It affects finance; it affects food supply; it affects foreign policy; it affects water.”
Watch FLYP Media’s video interviews with two of the leading minds on climate change (and America’s required response): Robert W. Correll and Terry Tamminen.
Rx For A National Plague
For an increasingly cash-strapped American public, the health care system itself is an epidemic.
A think-tank president, a former cabinet secretary and a professor of economics argue on behalf of the 116 million Americans who have trouble paying their medical bills and getting access to care. They advocate for a realignment of incentives for insurers and providers, a new technological and administrative infrastructure, more disciplined treatment standards, a health- rather than disease-based approach and the involvement of an informed citizenry.
Speaking about the future of American health care, Karen Davis, Tommy G. Thompson and Len Nichols all pitch in their advice for the next president in FLYP’s video interviews.
Taking Class Out of the Classroom
The biggest problem with American education today is the same as it has been for decades—segregation. But it isn’t just about skin color anymore.
The Supreme Court pinpointed the source of unequal education with its landmark decision in Brown v. Board of Education. However, 55 years was probably not what it had in mind when it called for school desegregation to be implemented “with all deliberate speed.” An expert on what went wrong with George W. Bush’s No Child Left Behind Act argues that the best way to ensure the uniform excellence of student performance in 2009 is, at long last, to end segregation. This time, though, he suggests focusing on class instead of race—and trying incentives rather than forced busing.
“We’ve been trying to make separate-but-equal schools for a long time now. It hasn’t worked.” Watch FLYP’s video interview with education expert Richard D. Kahlenberg.
Just Say No
The Bush administration has aggressively expanded presidential authority in the name of security. The next president needs to re-establish the rule of law.
Three decades ago, then-Congressman Dick Cheney declared that there are times when the president should assume the ancient British king’s right to secretly overrule laws passed by the legislature. Tracing the Bush administration’s response to 9/11 back to that conviction, Frederick A.O. Schwarz, Jr., an accomplished constitutional lawyer, offers key advice to the next president. Renounce that power right at the outset “before you get too tempted.”
What Changes Do You Want?
Americans like to see themselves as doers, not thinkers. We tend to be short on patience and attention span, but long on enthusiasm. We are natural optimists and have an almost childlike belief that anything can be done. We are more interested in results than in process. And we want leaders to lead.
Successful presidents reflect those traits. Lincoln faced a devastating civil war, but never wavered in holding the Union together. Roosevelt trampled laws to fight the Great Depression, and then mobilized the country for total war after Pearl Harbor. Reagan’s optimism helped the country recover from its post-Vietnam and energy crisis blues.
The challenges facing Barack Obama are not yet at those levels, but they are growing with every day.
After eight dismal years, the nation is ready to move on; almost everybody thinks the country has been heading in the wrong direction. Both candidates argued that the country couldn’t afford more “business as usual.”
Obama told voters that he would deliver the change they want. Now he has to deliver.
We’ve put you in touch with some of the country’s leading experts on key issues that demand immediate action. We hope that it leads to a long and interesting conversation—with them and amongst yourselves.
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