John McCain has unveiled his economic policy and his focus on the future. His campaign is Jobs for America, and I’m going to dig into it and evaluate it here as events permit.
The first thing to note is that he is attacking the key impediments to the US economy with this policy — if I had to list the areas impacting our economy in order my top three would be:
- Free Trade
Today I’m going to look at energy policy to lead off because any economic plan without energy as a key factor is a clear failure to recognize the dynamics at play this century, and possibly for the rest of this millenium. Energy is the fundamental for the US future as well as all of Humanity’s — from energy comes all things.
Without abundant cheap energy, US productivity falls, products and inventories fall, and all transport costs go up. The effects of energy ripple through the economy, and they are not always immediately and readily apparent. One quick example is the mil of plastic used in plastic products. That Starbuck’s cold drink cup you drink out of is thinner mil than it used to be, and plastic bags and product packages are now thinner.
This also heavily affects our ability to export goods, a good example of this is the starvation being seen in Indonesia. The poor of Indonesia are heavily dependent on US soy product, and in the past year transport costs have leapt to new levels, which means many of Indonesia’s indigent poor can’t afford this cheap staple anymore. The effects impact all manufactured goods and most farm goods.
If those effects go on several more years we will not only see hunger and famine stalking many countries, but a real and firm recession here instead of the imagined recession the media has created for political reasons by focusing on a couple of sectors of our economy that are underperforming compared to their past right now (notably housing.)
That’s why it’s so important to create abundant cheap energy for america and that energy needs to be independent of unstable foreign sources. You will notice that Nuclear Energy is at the top of the stack in John McCain’s plan, and that’s for good reason. All long term analysis points to nuclear as the only lasting path to sucess.
Nuclear is a workable solution that will not severely impact the economy and the way we live, and it’s truly a permanent increase in overall world energy supplies. If we really want to do this right then the US needs to not only stop importing energy, but we also need to drive our future economy by becoming net energy exporters, and nuclear energy is one clear way to do that. We need to make energy a cheap staple and one that we can provide abundantly by 2050 when the world’s population will be half again greater than now.
John McCain’s plan puts forth the first steps to that ambtious goal, and the best thing about the plan is the “All of the Above” approach, it includes renewable green resource, conservation, and clean sources while taking care of the dirty sources of energy more common now:
Nuclear Power: Nuclear power is a proven, reliable, zero-emission source of energy, and it is time to recommit to advancing our use of nuclear power. The U.S. has not started construction on a new nuclear power plant in over 30 years. Currently, nuclear power provides 20 percent of our overall energy portfolio. Other countries such as China, India and Russia are looking to increase the role of nuclear power in their energy portfolio and the U.S. should not just look to maintain, but increase its own use. John McCain will put our country on track to construct 45 new nuclear power plants by 2030 with the ultimate goal of eventually constructing 100 new plants.Expand Domestic Production
Of Oil And GasJohn McCain will commit our country to expanding domestic oil and natural gas exploration. The current federal moratorium on drilling in the Outer Continental Shelf stands in the way of energy exploration and production. John McCain believes it is time for the federal government to lift these restrictions and work with states to put our own reserves to use. There is no easier or more direct way to prove to the world that we will no longer be subject to the whims of others than to expand our production capabilities.Addressing Speculative Pricing Of OilJohn McCain believes we must understand the role speculation is playing in our soaring energy prices. Congress already has investigations underway to examine this kind of wagering in our energy markets, unrelated to any kind of productive commerce, because it can distort the market, drive prices beyond rational limits, and put the investments and pensions of millions of Americans at risk. John McCain believes that where we find abuses, they need to be swiftly punished. To make sure it never happens again, we must reform the laws and regulations governing the oil futures market, so that they are just as clear and effective as the rules applied to stocks, bonds, and other financial instruments.Transform TransportationThe only way America can break its strategic dependence on foreign oil is to change how we power our automobiles and rejuvenate our automotive industry. The Lexington Project will help do that through a comprehensive plan.Building Efficiency
Battery Technology: John McCain will propose a $300 million prize to improve battery technology for full commercial development of plug-in hybrid and fully electric automobiles. A $300 million prize should be awarded for the development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars. That battery should deliver a power source at 30 percent of the current costs. At $300 million, the prize is one dollar for every man, woman and child in this country – and a small price to pay for breaking our dependence on oil.
Clean Car Challenge: John McCain will issue a Clean Car Challenge to the automakers of America, in the form of a single and substantial tax credit based on the reduction of carbon emissions. For every automaker who can sell a zero-emissions car, John McCain will commit a $5,000 tax credit for each and every customer who buys that car. For other vehicles, whatever type they may be, the lower the carbon emissions, the higher the tax credit.
Flex-Fuel Vehicles (FFVs): In just three years, Brazil went from new cars sales that were about 5 percent FFVs to over 70 percent of new vehicles that were FFVs. American automakers have committed to make 50 percent of their cars FFVs by 2012. John McCain calls on automakers to make a more rapid and complete switch to FFVs.
Alternative Fuels: John McCain believes alcohol-based fuels hold great promise as both an alternative to gasoline and as a means of expanding consumers’ choices. Some choices such as ethanol are on the market right now. The second generation of alcohol-based fuels like cellulosic ethanol, which won’t compete with food crops, are showing great potential. Unfortunately, today isolationist tariffs and wasteful special interest subsidies are not moving us toward an energy solution. We need to level the playing field and eliminate mandates, subsidies, tariffs and price supports that focus exclusively on corn-based ethanol and prevent the development of market-based solutions which would provide us with better options for our fuel needs.
CAFE Standards: John McCain has long supported CAFE standards – the mileage requirements that automobile manufacturers’ cars must meet. Some carmakers ignore these standards, pay a small financial penalty, and add it to the price of their cars. John McCain believes that the penalties for not following these standards must be effective enough to compel carmakers to produce fuel-efficient vehicles.
We have trillions of dollars worth of oil and gas reserves in the U.S. at a time we are exporting hundreds of billions of dollars a year overseas to buy energy. This is the largest transfer of wealth in the history of mankind. We should keep more of our dollars here in the U.S., lessen our foreign dependency, increase our domestic supplies, and reduce our trade deficit – 41 percent of which is due to oil imports. John McCain proposes to cooperate with the states and the Department of Defense in the decisions to develop these resources.
Estimates from the Minerals Management Service indicate that technically recoverable resources currently off limits in the lower 48 OCS total 18 billion barrels of crude oil and 77 trillion cubic feet of natural gas. John McCain believes in promoting and expanding the use of our domestic supplies of oil and natural gas when people are hurting, and struggling to afford gasoline, food and other necessities, and when our manufacturing businesses are increasingly hampered by the high cost of natural gas.Government Purchasing: John McCain will make greening the federal government a priority of his administration. The federal government is the largest electricity consumer on earth and occupies 3.3 billion square feet of space worldwide. It provides an enormous opportunity to lead by example. By applying a higher efficiency standard to new buildings leased or purchased and retrofitting existing buildings, we can save taxpayers money in energy costs, and move the construction market in the direction of green technology.
American Homes: Homeowners can save hundreds or even thousands of dollars a year with better light bulbs, appliances, windows, and insulation. As Americans retro-fit to improve energy efficiency and reduce their carbon footprint, jobs will flow to the U.S. providers of insulation, windows, appliances, and other sources of energy efficiency.
It is also critical that the U.S. be able to build the components for these plants and reactors within our country so that we are not dependent on foreign suppliers with long wait times to move forward with our nuclear plans. The development of new nuclear plants will re-create a U.S. industry that has disappeared: manufacturing components of nuclear power plants, as well as assembling and operating the plants. A rough estimate is that 45 new nuclear power plants will create roughly 700,000 jobs – jobs in construction, engineering, operation and maintenance.
Coal: John McCain will commit $2 billion annually to advancing clean coal technologies. Coal produces the majority of our electricity today. Some believe that marketing viable clean coal technologies could be over 15 years away. John McCain believes that this is too long to wait, and we need to commit significant federal resources to the science, research and development that advance this critical technology. Once commercialized, the U.S. can then export these technologies to countries like China that are committed to using their coal – creating new American jobs and allowing the U.S. to play a greater role in the international green economy.
The development of clean coal technology will revitalize coal mining and return jobs to some of America’s most economically disadvantaged areas. The demonstration projects alone will employ over 30,000 Americans.
Renewables: John McCain will encourage the market for alternative, low carbon fuels such as wind, hydro and solar power. According to the Department of Energy, wind could provide as much as one-fifth of electricity by 2030. The U.S. solar energy industry continues its double-digit annual growth rate in 2008. To develop these and other sources of renewable energy will require that we rationalize the current patchwork of temporary tax credits that provide commercial feasibility. John McCain believes in an even- handed system of tax credits that will remain in place until renewable energy has progressed to the point that it is competitive with conventional energy sources.
The one quibble I have with this policy is the section on speculation. Just as “speculators” were fundamental in driving the cost up due to real events and supply shortages, now those same speculators are fundamental in driving the costs down as we’ve seen the past two weeks. To pin part of your energy policy on populist unrest and to demonize speculators is silly, and this seems to be more calculated political gesture than policy.
If John and Sarah really want to tackle this best, they need to defang the energy and environmental lobbies. Both are so busy blocking and tackling each other that there hasn’t been a goal worth mentioning reached on either side in 35 years.
The energy lobbies also fight each other, and sometimes they even marshall the forces of the environmental lobbies against each other in short-sighted efforts to keep their share of the energy market pie whole. These same lobbies who have the long knives out for each other have kept us in energy stasis, have kept us beholden to foreign sources, and have increased our use of dirty power sources the past thirty five years.
If you want to reform the future of energy in the US then go get the lobbies to work together under a new blue-sky for all energy futures model, don’t go after the speculators who really represent normal market forces.
With their past history of reform and shaking up the powerful interests, I’m confident that John and Sarah can both bring the change needed to the Energy and Environmental lobby gridlock in Washington.