Belfer Center Director Graham Allison (left) with Center board members Ashton B. Carter (center) and Joseph S. Nye.
Belfer Center

"For the Next President: Center Scholars Suggest Priority Actions on Security, Climate/Energy and the Financial Crisis"

Newsletter Article, Belfer Center Newsletter

Winter 2008-09

With a new president of the United States soon to be elected, Belfer Center scholars offer their suggestions to the next president on issues of national security, climate/energy policy, and the financial crisis. The Belfer Center's Graham Allison, Ashton B. Carter, and Joseph S. Nye summarize what they think the president's top priorities should be to increase security and decrease the threat of terrorism in the United States. The Center's John P. Holdren, Kelly Sims Gallagher, and Henry Lee join together to suggest steps they believe the next president should take to increase energy security and decrease potentially catastrophic effects of climate disruption.

The global economy, still in turmoil, will undoubtedly be a top priority for the next president. The Belfer Center's Martin Feldstein, Jeffrey Frankel, Lawrence Summers, and Paul Volcker offer suggestions for dealing with the financial upheaval. Feldstein and Summers are members of the Center's Board of Directors, while Volcker is a member of the Center's International Council.

Improving National Security

by Graham Allison

• A Nuclear 9/11 is the only clear and present existential threat to America. Preventing such a catastrophe must be a central organizing principle of your administration.
• A successful strategy must confront the dual challenge: (1) in the short run, a determined adversary who demonstrated on 9/11 a capacity to kill thousands of Americans and (2) over the longer run, trend-lines that threaten to take us to a world of nuclear anarchy. This will require you to:
• "Find, fix, finish" nuclear-capable global terrorists, focusing on the main enemy: Osama bin Laden and Al Qaeda central.
• Mobilize a global undertaking in a new 21st century equivalent of NATO: a Global Alliance Against Nuclear Terrorism. The Alliance should organize to realize four common objectives: No loose nukes, no new nascent nukes, no new nuclear weapons states, and no role for nuclear weapons in international affairs.
• Appoint a Deputy National Security Advisor whose sole responsibility is to integrate, shape and define the strategic, technical, and political dimensions of your strategy, to set targets for all departments and agencies; and to lead U.S. participation in the Global Alliance.

More on Graham Allison's Recommendations:

• Memo to President-elect McBama
• Securing the Nuclear Renaissance
• Nuclear Attack a Worst-Case Reality?

by Ashton B. Carter

• The U.S. is spending almost twice as much on defense as before 9/11. But our investments in national security are out of balance, with spending on "soft power," diplomacy, and foreign aid still tiny in comparison with defense spending. The new president is required to conduct a Quadrennial Defense Review, but he should broaden it to a National Security Review encompassing every tool of peace and justice the U.S. can wield.
• A bipartisan review of DOD's programs to counter WMD proliferation and terrorism, conducted this year by me and Ambassador Robert Joseph (President Bush's counterproliferation head), found that DOD's efforts in this field had not grown since 9/11- with the sole exception of missile defense. The new national security team should implement the recommendations of this review (available here).
• America's reputation matters as much as its power. Our reputation for careful deliberation in how we choose our objectives was dented when we invaded Iraq and our reputation for competent pursuit of our objectives shattered by the early mismanagement of post-war Iraq. Our reputation as a steady ally is questioned from the Korean peninsula to Europe and Latin America. Our reputation for honorable conduct was besmirched by Abu Ghraib, Guantanomo, and waterboarding. Not all of this is fair, but the next president must take it seriously, speaking and acting like a good friend and opponent to be reckoned with.

More on Ashton B. Carter's Recommendations:

• Review Panel on Future Directions for Defense Threat Reduction Agency Missions and Capabilities to Combat Weapons of Mass Destruction
• Defense Strategy & Budget in the Post-Bush Era

by Joseph S. Nye

• Smart power is the ability to combine the hard power of coercion or payment with the soft power of attraction into a successful strategy. Recently, U.S. foreign policy has tended to over-rely on hard power.
• Diplomacy and foreign assistance are under-funded and neglected. Foreign policy institutions and personnel are fractured and compartmentalized and there is no adequate inter-agency process for developing and funding a smart power strategy. Many official instruments of soft or attractive power - public diplomacy, broadcasting, exchange programs, development assistance, disaster relief, military to military contacts - are scattered around the government.
• Last year, the bipartisan Center for Strategic and International Studies Commission on Smart Power proposed that we develop a smart power strategy by: (1) creating a Deputy National Security Advisor charged with developing and implementing such a strategy; and (2) giving him or her the authority to work with the Office of Management and Budget to reallocate departmental funds to fit the strategy. The challenges to integrating our soft and hard power tool kit have deep roots, and it will take a dedicated effort by the next administration and Congress to overcome them.

More on Joseph S. Nye's Recommendations:

• Joseph Nye on Smart Power
• Smart Power in Iran-U.S. Relations
• CSIS Commission on Smart Power

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Acting on Climate and Energy

by John Holdren, Kelly Sims Gallagher, Henry Lee

• Send a climate protection bill to Congress that (1) imposes a significant price on carbon, which escalates over the course of the next two decades, (2) includes a provision to use the revenue from the carbon tax or auctioned cap-and-trade permits to reduce income taxes and ease the transition for those who would be disproportionately harmed by the subsequent increase in prices - primarily low income people, and (3) contains a long-term target for climate stabilization. The prices and long-term targets should be re-evaluated in light of new scientific, economic, and technical information every five to ten years.
• Immediately begin bilateral negotiations with the Chinese government on an international framework for cooperation on global climate change. The United States and China together emit nearly half of the global greenhouse-gas emissions.
• To address both energy security and climate change, impose a variable tax on foreign oil imports that would be triggered when crude oil prices reach a certain threshold. This would entail establishing a floor price. If the price of oil decreases below that floor, the government would impose a tax equal to the difference between the price of oil and the floor. Such a program would give a clear signal to investors and consumers and would significantly reduce the financial uncertainties caused by the volatility in oil prices. This program would encourage alternatives to oil, support U.S. oil producers, and encourage consumers to be more energy-efficient.
• Support accelerated research, development, and demonstration of carbon capture and storage technologies and new electric batteries, and cut in half the tariff on imported biofuels. Sharply increase federal support for basic energy sciences and early-stage applied-energy-technology research in universities and national laboratories.
• Extend the renewable-energy production tax credits (if this has not been done already by the time the new president takes office).
• Increase federal tax credits for private-sector investments in energy-technology research, development, and demonstration.
• Sharply increase federal support (direct spending and tax incentives) for U.S. participation in international cooperation on energy-technology research, development, demonstration, and the accelerated deployment of the most attractive options that RD&D produce.
• Understand that off-shore oil drilling is unlikely to reduce gasoline prices significantly because the resulting increase in world oil production would be marginal, and therefore unlikely to reduce crude oil prices.

More on These Recommendations:

• Memo to the Next President: Addressing the Energy Crisis (video)
• New Report from Kennedy School Researchers Calls for Changes to Biofuels Incentives
• Global Climate Disruption: What do we know? What should we do?

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Global Financial 9/11: What Should Be Done Now?

"We must achieve both security and solvency. In fact, the foundation of military strength is economic strength." -- Dwight D. Eisenhower

by Martin Feldstein

"The Problem is Still Falling House Prices," Wall Street Journal (October 4, 2008)

• "A successful plan to stabilize the U.S. economy and prevent a deep global recession must...address the fundamental cause of the crisis: the downward spiral of house prices."
• "Here's how it might work. The federal government would offer any homeowner with a mortgage an opportunity to replace 20% of the mortgage with a low-interest loan from the government, subject to a maximum of $80,000. This would be available to new buyers as well as those with mortgages."

More on Martin Feldstein's Recommendations:

• The Problem is Still Falling House Prices
• Problems Run Deeper than Wall Street

by Jeffery Frankel

(October 7, 2008)

• The Troubled Asset Relief Program that passed has a provision that, if the taxpayer is still in the red after five years, the president must submit legislation to recover the difference from the finance industry. How might this be done? A securities transaction tax.
• Adding a small tax on securities market transactions will accomplish the fiscal goal of raising revenue, which the federal government sorely needed even before the bailout arose, and give expression in a non-damaging way to the blood lust that the public feels toward Wall Street.

More on Jeffrey Frankel's Recommendations:

• Jeffrey Frankel's Weblog

by Lawrence H. Summers

"A Bailout is Just a Start," Washington Post (September 29, 2008)

• "The idea seems to have taken hold that the nation will have to scale back its aspirations in areas such as health care, energy, education and tax relief. This is more wrong than right. We have here the unusual case where economic analysis suggests that dismal conclusions are unwarranted and recent events suggest that in the near term, government should do more, not less."
• "Indeed, in the current circumstances the case for fiscal stimulus -- policy actions that increase short-term deficits -- is stronger than ever before in my professional lifetime."
• "The best measures would be short-run investments that will pay back to the government over time or those that are packaged with longer-term actions to improve the budget, such as investments in health-care restructuring or steps to enable states and localities to accelerate, or at least not slow, their investments."

More on Lawrence H. Summers' Recommendations:

• A Bailout is Just a Start
• Lawrence H. Summers Testifies on the Economy and the Case for Fiscal Stimulous

by Paul Volcker

"We Have the Tools to Manage the Crisis; Now we need the leadership to use them," Wall Street Journal (October 10, 2008)

• "The inevitable recession can be moderated. The groundwork can be laid for reconstructing the financial system and the regulatory and supervisory arrangements from the bottom up. The extraordinary interventions by the government...should be ended as soon as reasonably feasible."
• "That rebuilding will be the job of another day -- of a new administration here in the U.S., of finance ministries and central banks working together. ...It will require more understanding of the risks embedded in so-called financial engineering and of the perverse compensation incentives that have exalted risk over prudence."

More on Paul Volcker's Recommendations:

• We have the Tools to Manage the Crisis

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