Battlestations America! Prepare for a... trade war?

With the stunning news that North Korea might agree to freezing its nuclear weapons program (we'll keep our fingers crossed), it seems as though America might have managed to actually avoid going to war. However, large-scale conflict can take different forms and right now the world is gearing up for a trade war in retaliation to the steel and aluminum tariffs proposed by the Trump administration. Before you choose sides in support or opposition to this policy, let's answer a few basic questions:

Why are we embarking on this course?

America's steel production capabilities are essential to our national security. We need this vital material to build our naval vessels, humvees, MRAPs, and other warfighting systems. China has deliberately subsidized their steel producers so that they can dump steel in the global market at prices far below what any private company can compete with. Make no mistake, this is part of a larger strategy to diminish America's ability to produce its own steel and thereby reduce America's military readiness.

America has a legitimate grievance in this case. It is also true that many countries tax our products excessively, use "non-tariff barriers" like quotas to reduce market access for American products, steal intellectual property, and utilize various other means of denying America the same free markets as we provide to other nations. We cannot battle the entire global trading system (nor should we), but we are justified in addressing specific trade practices that harm American global competitiveness. 

Can we withstand a trade war?

The short answer: yes. Our actions must be targeted and part of a long-term strategy for victory. There is little room for mistakes. But America has tremendous leverage in a trade war as we are the most lucrative market in the world and everyone wants access. Trade wars are not "easy to win", but America can withstand the blowback more than most of our trading partners. Do you think that China wants 100 million unemployed factory workers marching through the streets? Even with our clear and undeniable need for global markets, we can take a calculated step back with far greater ease than an export-dependent nation like China.

What do we expect to achieve?  

If America can diminish the practice of intellectual property theft, increase access to foreign markets, and protect our markets from illegal dumping, our businesses and our nation could increase economic output by hundreds of billions of dollars (just look at our trade imbalances as evidence of this assertion). It must be emphasized that we are not advocating protectionism or isolationism. If America wants to correct the improper trade practices utilized by other nations, then we need stronger enforcement of existing trade laws in a targeted and strategic manner. This is creating change within the system.

What is needed to win a trade war?

We need allies, so we should consider which violators are most egregious and consider providing exemptions for others. We need a clear strategy for victory, meaning we must identify the specific trade practices that we want to curb and target them with the proper penalties. Last, we need unity. America has the leverage to win a trade war but only if we can stand the heat long enough to win. If America and its allies can apply pressure on the most harmful trading practices, we can succeed in altering the behaviors of our trading partners. The problem is that America lacks this unity. China can take a position and hold it. In America, the slightest retaliation from our trading partners sends a dozen Congressman and Senators screaming to the news cameras. If we can stand together long enough, we can win. That, plus a targeted strategy with our allies, is all that is needed for victory.

In conclusion, if America really wants to win a trade war we can. Unfortunately, it is doubtful that we can stand together long enough to achieve victory. In the end, the only nation that can defeat America in a trade war is America itself. 

Build America Bonds

The Nonpartisan Policy Alliance had the privilege of hosting a distinguished panel at George Washington University yesterday. The speakers included representatives from the Brookings Institution, the American Society of Civil Engineers, McKinsey and Company, and the American Chemistry Council.

While the discussion covered numerous topics related to infrastructure funding, there was one issue which has become a constant refrain whenever infrastructure is discussed. That issue is the Build America Bonds (BABs)  program which existed for a brief shining moment in the wake of the 2008 economic collapse.

The BABs program provided federal subsidies to municipal bonds, drastically increasing their value and appeal. This model, as opposed to tax-exempt bonds, was extremely attractive to a wide range of investors. Typical municipal bonds provide a tax exempt benefit to investors, so those who do not pay US taxes (foreign sovereign wealth funds, endowments, pension funds, etc.) do not have significant desire to purchase them. BABs provided competitive returns on one of the safest investments that anyone in the world can make- US infrastructure bonds.

There are trillions of dollars around the world looking desperately for a safe and beneficial investment such as this. Reauthorizing this program could create the substantial infrastructure spending that the White House and Congress are hoping to realize. Congress should reauthorize the Build America Bonds program as part of any infrastructure bill that it passes.

Why Are We Talking About the Gas Tax?

As the White House unveils its infrastructure plan, many are left scratching their heads on the issue of funding. With the federal government already running large deficits and many states struggling to fund necessary expenditures, this infrastructure plan seems to be more of an aspirational document than an actual blueprint for infrastructure spending. In other words, it basically says that we should be spending $1.5 trillion on infrastructure development but no one actually wants to dedicate that sum so let's assume the money will come from somewhere.

One idea that has come back to the forefront is raising the gas tax. This blog will not take a position on this issue but we want you to understand this topic and its ramifications. The federal gas tax costs you about 18.4 cents on every gallon of gas that you purchase. That money comes from consumers all around the country and it goes into the Highway Trust Fund which doles it out for infrastructure projects. This system worked for quite a while but then two things happened.

First, the gas tax stopped getting raised even to keep pace with inflation. The tax has remained the same for twenty five years even as America's population and infrastructure needs continued to grow. 

Second, cars became far more fuel efficient. In addition to regular cars needing less gas, hybrids reduce the need for gas even further and electric cars require no gas. This means that in addition to the gas tax remaining relatively low for two and a half decades, people don't need to buy as much gas so their contribution to the gas tax has diminished or (in the case of electric cars) their contribution is now nonexistent. Also, many millenials are rejecting America's traditional car culture in search of public transportation and other options for sharing the cost of travel which reduces their contribution to the gas tax.

The fact is that the gas tax is increasingly archaic and needs to be replaced. A mileage based user fee, which tracks miles traveled by vehicles and charges them accordingly, is a far more practical approach. In the age of smart phones, GPS, smart cars, and even smart infrastructure, there is no reason why we can't incorporate this technology to make user fees fair and adequate. Several states are already experimenting with this model. This will be the future of infrastructure user fees. Even if we increase the gas tax, that model of infrastructure funding will continue to be less and less effective in the coming years.

And, as always, we support creating a National Infrastructure Bank and bringing back the Build America Bonds program.

Pennsylvania's Outdated Voting Machines

In what is great news to those of us in the Nonpartisan Policy Alliance, Montgomery County PA is holding an "open house" to evaluate new voting machines later this month. This county is looking to update their old voting machines in response to rising concerns over election security.

Montgomery County is an important case study for Pennsylvania because, like most of the state, this county uses Direct Recording Electronic voting machines. These machines use touch screen only vote tabulation and produce no physical backup for votes that have been cast. This means that if there is any hacking, tampering, or even just simple computer glitches, there may be no way to recount the votes.

Pennsylvania, a critical swing state, has a real problem with this type of machine. Most of the state uses them with some districts relying entirely on these paperless machines. The state must dedicate real resources to helping counties update and replace these voting machines.

Congress could do a lot to help states like Pennsylvania, and many others with outdated and vulnerable voting machines, by passing the bipartisan Secure Elections Act. This act, introduced by three Republican Senators and three Democratic Senators, would help states to upgrade their voting machines and would provide better guidance to state election officials regarding evolving cyber and software threats. Contact your Senators and tell them to pass the Secure Elections Act today!

IT IS TIME TO GET SERIOUS ABOUT ELECTION SECURITY

Last night, the President and his administration decided not to impose any sanctions in retaliation for Russia attacking our elections. The deadline to implement the new sanctions (supported overwhelmingly by Congress) against Russia's defense and energy sectors passed without any action being taken. With no real penalty enacted against Russia, we can guarantee that they will continue with an even more emboldened attitude and that they will not be alone. The world has been watching our actions. The message that we have sent to our adversaries is clear. It is open season on America's elections.

But there are two very important pieces of legislation which could turn the tables drastically. The bipartisan Secure Elections Act will provide states with grants to upgrade outdated voting machines (especially those that do not produce an auditable paper ballot), streamline communications between state election officials and the Department of Homeland Security to remain current on evolving threats, and provide better guidance on software and cyber-security improvements. 

The bipartisan DETER Act prepares targeted sanctions to be implemented within 10 days of the Director of National Intelligence determining that a foreign actor interfered in our elections. The bill specifically lists sanctions to be implemented against Russia, bypassing the President. But the bill also asks the administration to identify targeted sanctions to use against North Korea, China, and Iran if they decide to interfere.

These two bills don't solve every problem, but they do address some of the biggest concerns. Contact your Senators today and tell them that these bills must be passed immediately!  Americans recognize the threat that we face, but seem lost for answers. Spread the word. Tell your friends and family that the Secure Elections Act and the DETER Act are the first steps that we must take to secure our elections and defend our nation. 

 

Infrastructure Asset Inventory: Sounds boring, but extremely important!

Yesterday morning, the Bipartisan Policy Center hosted a discussion on better management of infrastructure assets at the municipal level. Representatives from Cleveland, San Diego, Detroit, and Washington DC described how their infrastructure inventories had made their cities far more efficient and easier to budget. Let me get right to the main point:

Every city has millions or billions of dollars in assets (transit systems, vacant lots or parcels of land, government housing, schools, roads and bridges, sometimes even sports stadiums, etc.). However, cities often lose track of what they own or what it's worth. This means that enormous value and potential is squandered.

How can cities effectively manage their budgets or invest in infrastructure if they don't know what they own, how old it is or how well it functions, whether to continue maintenance or replace an asset, or what assets could be sold off? Some cities have acres of land that are not used at all. Why not let developers pay for that land instead of letting it sit unused?

These infrastructure asset inventories have done wonders for cities like Washington DC, and they are making cities like Detroit far easier to manage. 

Last point- in Cleveland, the Northeast Ohio Areawide Coordinating Agency conducted asset inventories for five counties surrounding Cleveland. This allowed them to identify shared objectives and worthy projects that could benefit the entire region rather than just one county. In this manner, they essentially acted as a regional infrastructure bank but at the county level. This created great efficiency and cost savings. We were able to ask the panel if such benefits could be expected from regional infrastructure banks at the state level. In other words, could we expect such increases in efficiency and cost savings from having a regional infrastructure bank for the entire Northeast United States, the entire Southwest United States, etc. The favorable reaction to this idea was unanimous.

This is The Nonpartisan Policy Alliance's vision for our National Infrastructure Bank system. It would be comprised of a system of regional banks, each utilizing local expertise and identifying critical projects needed for regional development. These banks would be centrally governed, but they would each be given the autonomy necessary to address the unique needs of each region of the country. This is how we maximize the effect of each dollar that we spend on infrastructure development.

 

Pass the Secure Elections Act

Despite a year of intense media coverage and ceaseless public discourse, very little has been done to overcome the vulnerabilities which threaten the security of America's elections. States and districts continue to utilize outdated voting machines, some of which produce no auditable paper ballot. Election officials across the country have not received timely security updates, with 21 states waiting nearly a year to learn that they had been targeted by Russian hackers (there is no evidence that vote counts were changed...this time). Additionally, states lack proper federal support in regards to cyber-security expertise and updates. 

Luckily, the Senate has not been completely inactive on this issue. The bipartisan Secure Elections Act (introduced by Sens. James Lankford (R-Okla.), Susan Collins (R-Maine), Lindsey Graham (R-S.C.), Amy Klobuchar (D-Minn.), Kamala Harris (D-Calif.), and Martin Heinrich (D-N.M.)) addresses every one of the concerns mentioned above. It provides block grants for states to upgrade their outdated voting machines, streamlines communications between states and DHS, and creates an independent council to recommend cyber-security updates as well as supply funding to states so that they can implement these recommended upgrades. This bill makes explicitly clear that every state retains authority over their election process. Any assistance from the federal government must be accepted by the states voluntarily. Such considerations have brought this bill bipartisan support in the Senate, acclaim among policymakers and advocacy groups, and praise from state and local government officials. 

It is imperative that we enact the Secure Elections Act as soon as possible. The time for action is now! Let's tell Congress to get moving. The security of our democracy is in their hands. They must act, and they must act now. Contact your Senators and tell them to pass the Secure Elections Act.

Newt Gingrich and the Panel to Save American Industry

This morning, The Nonpartisan Policy Alliance attended a fascinating panel discussion which brought together such policy experts as U.S. Army Brigadier General (retired) John Adams, International Vice President of the United Steelworkers Thom Conway, Congressman James Comer of Kentucky, CEO of Century Aluminum Mike Bless, and former House Speaker Newt Gingrich. Clearly, this must have been an important topic.

Indeed, the panel met to discuss the threat to national security posed by China's deliberate efforts to eliminate American competition in the production of aluminum, steel, and solar panels. Both aluminum and steel have tremendous national security significance as they are used in countless military vehicles and weapon systems.

China's strategy is to prop up their steel and aluminum companies with subsidies and cash injections straight from the government. As a result, Chinese companies do not need to worry about profit, productivity, or efficiency. Government backing allows them to sell their products well below market price.

In other words, the government is paying the bills so their companies can stay afloat with government money, not profit. This is fatal to American private businesses that make their money from selling their products at a reasonable price in the free market, not from government handouts. 

If China continues in this endeavor (which they certainly will), they will become the global supplier of materials that are critical to American national defense. Hey China, can we have some steel to make American battleships that we will station around the South China Sea? Guess what their answer will be.

President Trump is expected to take action on this issue later this month. These panelists and many others will be watching his actions closely. We at the Nonpartisan Policy Alliance agree that this is a very serious concern. We would simply add that there are numerous policies in our agenda which are comparably critical to national security. We have only 14 manufacturing institutes while China recently announced that they plan to create more than 90. If we fail to stay ahead of our rivals in terms of manufacturing innovation, then our military capabilities will become inferior. Additionally, we advise that the role of the Committee on Foreign Investment in the United States be expanded to address soft power targets like media outlets and that the Secretary of Transportation be added to the Committee. 

Manufacturing USA: Creating American Dominance in Emerging Technologies

Yesterday, the Nonpartisan Policy Alliance attended a discussion on the future of American manufacturing. The event was hosted by Senator Chris Coons and key participants in the Manufacturing USA program. Upon hearing from this expert panel, several things became increasingly apparent to us.

First, manufacturing is not dead in America. It actually accounts for the majority of research and development done in our country, employs around 10% of the workforce, and represents a significant portion of our exports. This sector is still vital to America’s economic wellbeing.

Second, manufacturing is vital to America’s national security. This has been true ever since Alexander Hamilton stressed the importance of a strong manufacturing base to George Washington shortly after the Revolutionary War. Today, new technologies will dominate the wars and conflicts of the world. Our rivals, most notably China, are well aware of this fact and have been aggressively pursuing dominance in the production of technologies which will have the greatest military advantages.

Third, America can lead the world in advanced manufacturing if we are committed to doing so. We still have all of the advantages. We have the world’s best academic institutions for research, we have strong intellectual property laws, and we have the world’s most lucrative consumer market. So how do we capitalize on these advantages to revolutionize our manufacturing industry?

The Manufacturing USA program is essential to maintaining American dominance in emerging technologies. This model of combining academic research with public and private funding is so effective that it has been copied by our top manufacturing competitors in Europe and Asia. In fact, as part of China’s most recent five year plan they have set a goal of creating over 90 such manufacturing institutions. We have 14.

America must expand our network of manufacturing institutes. We must ensure that they are adequately funded even beyond the initial five year window for federal funding. And we must ensure that entrepreneurs and small manufacturers have access to investors and lenders who understand technology and engineering enough to recognize the next great invention when they see it.

For more information on this critical subject, please visit our Advanced Manufacturing page at policyallies.com. You can also visit manufacturingusa.com.

 

Primaries Coming: Moderates Needed

If we want to reduce polarization in America, and restore sanity and civility, then we need moderate voices to drown out the extreme elements which commandeer our primaries and force candidates to move further from the center.

During general elections, the moderate majority gets to make the final decision on who should be elected to office. But if the primary has produced candidates that are extremist in ideology then it is already too late. The American people will be forced to support one extreme or the other and the moderate majority will be dragged towards these extremes in the process.

This is a significant factor in the increasing gulf between the positions of the two parties. Ideally, both parties would be close enough to the center that it would not take a great feat of strength to pull the sides together on various issues. But extremist candidates make such compromise and cooperation impossible.

By supporting far-right or far-left candidates, the American people are supporting Congressional gridlock, lack of progress on the most important issues, and a further erosion of American cohesion. We need moderate voters to take back the primary process.

With 2018 around the corner, it is the job of every American to get involved in your local and state primaries. Reject extremist candidates that can bring nothing but further dysfunction to American politics. Sound the call for reason and sanity.

Don't let a small group of voters decide who you will choose from in the general election. Moderates- stand together and take back your primaries!

Voting Machines: America's Soft Underbelly?

America’s bravest men and women have been sacrificed on battlefields around the world in defense of freedom, democracy, and the American way of life. But when that defense requires money rather than blood, suddenly the American way of life doesn’t seem so valuable.

At least, that is the takeaway from our research into one of America’s most significant national security vulnerabilities- voting machines. In particular, we are deeply concerned by the continued use of voting machines that do not produce a verifiable paper trail. These machines are still utilized in over a dozen states, including swing states like Pennsylvania.

If these machines are tampered with, hacked into, or if they just have a computer error, then votes could be altered or lost entirely without any way of recounting the ballots. When we spoke with representatives of the Board of Elections in these various states, we were told that the primary impediment to replacing these vulnerable machines was simply money. That is the reason that our next election could be thrown into total chaos.

Our military budget for 2018 will be more than $600 billion, providing us with security against a wide range of physical threats to America’s interests. But all of those tanks, planes, ships and troops cannot defend us against attacks on our elections. Replacing all of the paperless voting machines in America could cost as little as $123 million, according to the Brennan Center for Justice.

Congress must:

-Provide matching funds to states that still need to replace their paperless voting machines

-Provide funds, personnel and expertise for better after-election audits

-Mandate that the Department of Homeland Security brief Congress annually on emerging threats to our elections and possible solutions

Contact your representatives today and demand these policies. Tell them “I want my vote to count!”

A New Approach to Political Action

This organization lays the blame for our current political dysfunction on unnecessary and misguided divisions which prevent our citizens from working in unity toward a new century of American innovation, economic growth, entrepreneurship and global leadership. Throughout the pages of our website, you will find that on nearly every issue there are clear, actionable and bipartisan solutions which can form the blueprint for a new national movement of empowered citizens willing to place country before party.

It is in the national interest to unify, inform and empower the American people to fight for this agenda. This increased political action will bring with it a liberation from feelings of fear, helplessness, suspicion, hatred, and victimization. The new sentiment to permeate the American electorate will be comradery, control, power, hope, and optimism. That is the compulsory attitude of empowered men and women.

Americans are not meant to be despondent. We are an active, rebellious and creative people. When directed toward an attainable goal, these qualities have set us apart as the most proactive and effective nation on Earth. Our people crave challenge and purpose. This is in our very nature and national character, tested and proven throughout our history. Time and time again, we have done the impossible. Whenever America has been able to focus collectively on a particular goal, we have succeeded no matter how great the odds or how extraordinary the objective. The only reason for our current dysfunction is our inability to share a collective vision. Together, we put a man on the moon. Divided, we can’t even pass a budget on time.

We need to stand side by side again. We need to respect, defend and support each other again. We are Americans. That distinction is far more meaningful than party affiliation.