The Wall Street Journal, 4 August 2008
How to Get the Biggest Bang for $10 Billion -- II Last Monday The Wall Street Journal kicked off a debate on how best to allocate scarce resources to solve the world's problems. Bjorn Lomborg offered a summary of the latest findings from his Copenhagen Consensus project, where he has enlisted some of the world's top economists to address the issue. (Please go to OpinionJournal.com to offer your own views.) Over the next few Mondays we'll offer views on the subject from top political and business leaders. How would you spend $10 billion of American resources (either directly or through regulation) over the next four years to help improve the state of the world?
Unleashing America's Ingenuity by Unlocking Its Energy By John Boehner The notion that Washington can spend its way out of any problem does not pass what I call "the straight-face test." Rather than parceling taxpayer dollars out to fund a laundry list of government programs that will only paper over the problems facing our nation and the world, let the American people keep the $10 billion. They can use it far more wisely than Congress. Instead, let's unleash America's ingenuity to address the world's challenges and improve the quality of life for every American, as we have throughout our history. And to do that, let's begin by unlocking America's vast energy resources -- from our natural resources like coal, oil and gas to emerging technologies like alternative and renewable fuels. The fact is, the best, easiest way to boost American investment in alternative fuels and lower our nation's dependence on foreign oil won't cost taxpayers a cent. Democrats in Congress have placed millions of acres of U.S. territory -- far off our coasts, on the remote North Slope of Alaska, and in the Inter-Mountain West -- off limits for energy development. By freeing those domestic resources and increasing the supply of American energy, we can fund development of better solar, wind, biomass and other breakthrough technologies. And House Republicans have a plan to do it -- appropriately titled the American Energy Act, which reflects what we call an "all of the above" energy strategy.
If House Speaker Nancy Pelosi (D., Calif.) would allow a vote on our comprehensive energy plan -- a vote House Republicans and hundreds of Americans demanded on the House floor this past Friday, after Congress adjourned, in a historic revolt -- we could create more American jobs, reduce America's energy dependence on nations with ties to global terrorism, cut emissions to promote a healthy environment, and raise our quality of life. And, we could do it without raising taxes -- and even without spending $10 billion. How? From the production of new American energy under our plan.
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For example, the Congressional Research Service estimates that at $100 per barrel (far below today's price), producing the estimated 10 billion barrels of oil in Alaska's remote Arctic National Wildlife Refuge would generate $153 billion in new federal revenues. Consider the sums we could generate if we produced new American energy in the Outer Continental Shelf far off our nation's shores, where an estimated 86 billion barrels are locked away, and in the Inter-Mountain West, where some 800 billion barrels of oil is trapped in shale deposits. The possibilities are seemingly endless. Nothing is impossible with affordable energy and the promise it holds for investments in technology and higher standards of living. Water can be lifted from deep below the earth. The desert can bloom. Crops can grow where they never did before. Electric lights burn at night so that studying, reading and commerce can outlast the sun. None of this would be possible without affordable and available energy. Reliable energy is among the most liberating forces in the world -- socially, economically and intellectually. In those parts of the world where energy is scarce or too expensive for citizens, daily life is consumed with the drudgery that the absence of energy causes. My goal -- and the goal of every parent -is to leave our nation and our world in better shape than we inherited it. Key to making that happen is to finally solve the energy crisis America -- and the world -- currently faces. That begins with a vote and real action on an "all of the above" energy plan, not with a laundry list of new, costly Washington programs. Mr. Boehner, an Ohio Republican, is the House minority leader.
Helping Humanity Starts at Home By Harold Ford Jr. To be given $10 billion over four years to spend in a way that would best help humanity is a challenging proposition. The problems of the world -- from hunger and disease to terrorism to environmental degradation -- all are worthy projects for investment. But the best way for the United States to improve the condition of the world is to invest the $10 billion here at home in the long-term infrastructure needs of the country. Let me explain. Only an economically vibrant America can help solve some of the vexing problems around the globe. But the American economy is suffering a downturn. Until we turn it around and produce a long-term economic recovery, we will not be as effective in leading the world to solve the larger global challenges.
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The best way to begin restoring our economy is to spend the $10 billion over the next four years on strategic investments in building up our public infrastructure -- our airports, roads, bridges, ports, nuclear power plant security, broadband networks and environmental technologies. Public infrastructure investment not only creates well-paying jobs, but it also generates a healthy multiplier effect throughout the economy by creating demand for materials and services. New roads, for example, can increase the number of new homes, offices and other businesses. Ports link up towns to trade, and airports connect people to other economic centers within the global economy. The U.S. Department of Transportation estimates that spending $1 billion on building roads helps generate more than $6.2 billion in economic activity. Thus, if only the $10 billion were spent on roads, it would generate over $60 billion worth of economic benefit. The multiplier effect is just as powerful when it comes to investing in technology. American leadership in space led to investments in satellite communications, and the invention of the Internet led to Yahoo, Google, Amazon and thousands of other online businesses. Investing in the basic research of nanotechnology, life-sciences technology and new environmental technologies would create high-paying jobs in the worlds of engineering and sciences, and address potentially life-threatening challenges such as epidemics and global warming. Because the $10 billion is dwarfed by the infrastructure needs of the country, we will need to make sure that the money is spent in a way that will leverage the highest public return. To achieve maximum benefit for the investment that is made, we could create a National Infrastructure Bank (NIB) that would provide loans and loan guarantees for worthy projects. Funding the NIB with $10 billion in seed money would enable it to make loans and loan guarantees some five times its initial capitalization. Thus, it would be able to finance $50 billion in new projects, greatly expanding the amount of financing available for infrastructure investment. The NIB should also be allowed to pool, package and sell public infrastructure securities in the capital markets. With this authority, the NIB would be able to channel private finance into public infrastructure almost immediately. The ability to tap financing from pension funds, insurance companies, sovereign wealth funds and other large institutional investors would allow the NIB to raise additional capital beyond the initial $10 billion and further maximize the public benefit. To ensure that the fund did not become a vehicle for random pork-barrel projects, it would be necessary to set up an advisory committee that would develop clear standards and priorities to be used when the NIB considered project requests. Exacting metrics would be applied to every infrastructure request to make sure that they provide the maximum amount of economic return for the investment made. A $10 billion investment in our nation's infrastructure, if spent wisely and leveraged aggressively, could help fund new environmental technologies to address global warming; new energy technologies to replace fossil fuels; new electrical technologies to charge electric cars; expanded and upgraded roads, bridges and airports; and new technologies like Internet II and the extension of online access to lowincome and rural Americans.
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To lead in the 21st century, America will need to make strategic investments at home. To remain competitive in a global world and enhance our national security, it is an imperative. To work with our allies to create progress and prosperity in countries that have been left behind, there is no other way. Mr. Ford is the chairman of the Democratic Leadership Council.
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