Michael+&+Eric

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TOPIC EDUCATION
Contention One: Topic Education – First, transportation infrastructure is financed in one of two ways – through the general fund, or through increased revenue – Stimulus Programs finance through the general fund while failing to repair the Highway Trust Fund

ARTBA 2k10 (American Road and Transportation Builders Association to the National Commission on Fiscal Responsibility and Reform “The Contribution of the Federal Transportation Investment Programs to Fiscal Responsibility and Deficit Reduction,” pg online @ http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/ARTBA.pdf //um-ef)//

//Transportation Investment and User Financing When Congress created the National System of Interstate and Defense Highways in 1956, it considered two options for financing the construction costs—borrow the money by issuing highway bonds or enact pay-as-you-go taxes on highway users. After much debate, the second option was chosen. Congress raised the federal gasoline tax from two cents per gallon to four cents per gallon and directed the revenues into the newly-created Highway Trust Fund (HTF). Virtually all federal highway investment since then has been financed from the HTF. In 1982, Congress added the Mass Transit Account (MTA) to the HTF. The tax rate on gasoline was increased to 9 cents per gallon, with revenues from one cent of the five cent increase being directed into the MTA. Since then, most federal investment in mass transit has been financed from the Mass Transit Account, while highway improvements have been funded from the Highway Account (HA). Subsequently, the federal tax on gasoline has been increased only twice—in 1990 and 1993—and currently stands are 18.3 cents per gallon. There is also a 24.3 cent-per-gallon tax on diesel fuel (and equivalent taxes on other motor fuels) as well as taxes on large trucks, which are also credited to the HTF. A similar user-fee-funded trust fund finances most federal investment in the nation’s airports and air transportation system. Through the years, user fee financed trust funds have proven a remarkably responsible way to finance federal investment in highways, public transportation and airports. In fact, during most years since its creation in 1956, the Highway Trust Fund generated balances that helped mask the size of the unified federal deficit, leading stakeholders to argue that Congress was violating the trust of highway users by failing to invest all user fee receipts in highway and transit improvements. Three factors have had a significant effect on the HTF balance in recent years: • When Congress enacted the Transportation Equity Act for the 21st Century (TEA-21) in 1998, it transferred $8 billion from the Highway Trust Fund balance to the General Fund at the start of FY 1999 and provided that interest on the HTF balance would henceforth be credited to the General Fund—the only trust fund so treated—costing the HTF almost $11 billion in foregone revenues. In addition, when Congress enacted motor fuel tax increases in 1990 and 1993, more than $22 billion of the revenues were deposited in the General Fund despite being taxes levied on highway users for the purpose of investing in highway and transit improvements. • Economic downturns in 2001 and 2008-09 had a depressing effect on highway travel and thus revenues into the HTF, as did unusually high gasoline and diesel fuel prices in 2008. In addition, highway construction costs skyrocketed between 2004 and 2009, due to world-wide increases in the cost of asphalt, cement and steel. Both effects put immense pressure on HTF revenues. • In 2005, Congress enacted the Safe, Accountable, Flexible, and Efficient Transportation Equity Act – A Legacy for Users (SAFETEA-LU) which increased federal investment in highway and transit improvements without increasing user fees. To accomplish that, Congress funded the federal highway and public transportation programs at a level where projected outlays through FY 2009 would not only use projected HTF revenues, but would also spend down much of the fund’s existing balance. 3 The HTF balance peaked at $31 billion in FY 2000 and has since been drawn down. Nonetheless, between 1956 and 2007—a span of more than 50 years—the federal highway and mass transit programs had no net impact on the federal budget. User revenues into the Highway Trust Fund financed all federal expenditures on highway and transit improvements, imposing no burden on the federal General Fund or the federal budget deficit. The Airport and Airways Trust Fund (AATF) has had a similar history. Created in 1971, the AATF has had positive balances most years since, punctuated only by a period in the mid-1990s when user fees on air travelers had temporarily expired. By FY 2000, the AATF had a balance of more than $7 billion. The need to improve airport security after September 11, 2001, resulted in a temporary decline in the AATF balance, but the balance is projected to bounce back to about $10 billion in FY 2010. The AATF thus has also been an example of how a user-fee financed program contributes to fiscal responsibility. American Recovery and Reinvestment Act and General Fund Transfers Since 2007, General Fund revenues have been used on several occasions to supplement HTF revenues to finance highway and public transportation improvements, which added to the unified federal deficit. This occurred for two reasons: Economic recovery. With the economy in its worst downturn since the Great Depression and unemployment approaching 10 percent, Congress included $48 billion for ready-to-go transportation improvements in the American Recovery and Reinvestment Act of 2009 (ARRA). All of the transportation improvements were financed from the federal General Fund, as was the rest of the $787 billion Recovery Act. Since the purpose of the legislation was to stimulate economic recovery and support jobs in the United States, it was entirely appropriate to finance the highway, transit and airport construction projects through general fund deficits. While this violated the time-honored users-pay approach to financing transportation improvements, the impetus for the spending was not to improve the transportation system, but to use such improvements to stimulate the economy and support jobs. Once this is accomplished, however, asking general taxpayers to pay for regular improvements to the nation’s transportation system would be a clear departure from the user fee financing principle that has served these programs and the federal budget well for decades. Rescue the Highway Trust Fund. Since FY 2007, user revenues into the Highway Trust Fund have been significantly less than expected, due largely to the impact of the economic recession on highway travel (both personal and freight) as discussed above. The failure to generate new HTF revenues to support the SAFETEA-LU highway and public transportation investments made the trust fund extremely vulnerable to these economic shocks. With outlays exceeding revenues, the Highway Account of the HTF was in danger of running out of funds toward the end of FY 2008—two years earlier than the authors of SAFETEA-LU had forecast. Projections showed the transit program would run out of money two years later. To prevent the U.S. government from defaulting on its highway and transit program obligations, Congress injected $8 billion into the Highway Account in FY 2008, followed by $7 billion in FY 2009 and $14.7 billion in FY 2010. In addition, $4.8 billion was injected into the Mass Transit Account in FY 2010. These transfers came from the General Fund and clearly affected the size of the federal budget deficits those years. All three transfers, however, represented previously foregone user fee revenues that should have gone into the Highway Trust Fund, which instead were credited to the General Fund—$8 billion transferred from the HTF to the GF in FY 1999, interest on the HTF balance that was credited to the GF, and federal aid to state and local governments to repair transportation infrastructure damaged by natural disasters (which for many years was paid from the HFT whereas all other federal disaster relief was paid from the GF). If Congress had not diverted these user revenues from the HTF into the GF, there would, arguably, have been no need for the General Fund transfers in FY 2008, FY 2009 and FY 2010. The injection of revenues into the HTF between FY 2008 and FY 2010 is, unfortunately, only a stopgap action. The Congressional Budget Office projects that both the Highway Account and Mass Transit Account will exhaust their existing balances during 2012 or 2013. While this is a serious concern, the far more important issue is that projected Highway Trust Fund revenues in the years ahead are far short of the nation’s transportation investment needs. The Gap Between Needs and Revenues The U.S. Department of Transportation (U.S. DOT) recently released its 2008 Report to Congress on the Status of the Nation’s Highways, Bridges, and Transit: Conditions and Performance. The report found that the United States is investing less each year than the minimum needed just to maintain current physical conditions and operational performance on the nation’s highways and transit systems. For highways, report data indicate that federal highway funding in the next surface transportation bill would have start at $69.5 billion, at minimum, in FY 2010 and grow to $76.3 billion by 2015 just to maintain physical conditions and operating performance on the nation’s highways and bridges. By contrast, Congress provided funding of only $41.1 billion for the federal highway program for FY 2010, almost $28.5 billion less than would be needed just to maintain current conditions. Beyond that, the outlook is for an even greater shortfall. Projected Highway Account revenues range from $32.6 billion in FY 2011 to $35.8 billion in FY 2015, according to the Congressional Budget Office. The annual funding gap during this period averages $39 billion. The contrast between investment needs and revenues through FY 2017 is shown in Figure 1. Federal highway funding met needs in FY 2009 only because of the ARRA highway stimulus. For public transportation, the federal share of transit capital investment during the next surface transportation bill would need to be $8.6 billion in FY 2010, rising to $9.4 billion by FY 2015. Since only 70 percent of federal transit funds go into capital improvements, funding for the transit program in the next authorization bill would thus have to range from $12.3 billion in FY 2010 to $13.5 billion in FY 2015. By comparison, Congress enacted transit program funding of $10.34 billion in FY 2010, which is somewhat less than required to maintain current conditions. It should be noted that funds to construct new transit systems are not included in the Conditions and Performance Report data. The cost of new systems would add substantially to the transit investment needs identified in the report. Moreover, the federal share of transit needs for FY 2010-2015 exceeds projected MTA revenues, which means additional revenues will be required. Federal Commission Recommendations SAFETEA-LU created two commissions to examine the nation’s transportation investment needs and recommend revenue options—the National Surface Transportation Infrastructure Financing Commission and the National Surface Transportation Policy & Revenue Study Commission. Both have issued their final reports. Both commissions arrived at the same conclusion after exhaustively studying myriad revenue enhancing options. In the short-term, both commissions concluded the most efficient way to increase revenue to finance needed federal investment in highway and transit improvements is to raise the federal gas and diesel tax rates and then index these excises annually to inflation: • The Financing Commission recommends an immediate 10 cents per gallon excise rate increase on gasoline sales and a 15 cents per gallon excise rate increase for diesel fuel sales which would both thereafter be annually adjusted to inflation. This level is intended simply to recapture purchasing power lost since the 1993 rate increase. • The Policy & Revenue Study Commission recommends that the federal fuel tax be increased from 5 to 8 cents per gallon per year over the next 5 years, after which it should be indexed to inflation. This blue-ribbon group considered not only recapturing lost purchasing power, but also generating more revenue to meet the program investments it believes are necessary to reform the program and meet future national goals for system preservation, capacity enhancements to facilitate freight movement, transportation-related emission reductions and security, among others. In the longer term, both commissions recommend transition to a vehicle-miles-travelled, or VMT-based, user fee system. The 10 cent gasoline/15 cent diesel excise enhancements would translate into approximately $20 billion per year in additional revenue for the Highway Trust Fund. With these adjustments, on average, individual households would pay approximately $9 per month more in federal gas taxes (individual households now pay on average $17 per month). By comparison, the average household pays about $300 per month to operate and maintain its cars (and about $800 per month to own and operate them). The overall level of revenue enhancement recommended by the National Surface Transportation Policy & Revenue Study Commission is in the range necessary to meet the national highway and transit needs previously discussed. It is also well worth noting that major national business and highway user organizations—including the U.S. Chamber of Commerce and the American Trucking Associations—are publicly supporting a federal motor fuels excise increase to finance an expanded transportation improvements.// //Second, Congress just passed a MASSIVE transportation bill – it should have triggered your disads, but didn’t fix the Highway Trust Fund//

//Snyder 6/26 (Tanya Snyder became Streetsblog's Capitol Hill editor in September 2010 after covering Congress for Pacifica and public radio. She lives car-free in a transit-oriented and bike-friendly neighborhood of Washington, DC., pg online @ http://dc.streetsblog.org/2012/06/26/where-did-the-senate-get-the-extra-money-to-pay-for-its-bill/// um-ef)

Congressional leaders announced opaquely last week that they’d “moved forward” on a deal on the highway section of the transportation bill. That means transit, rail, and safety programs are still being negotiated. And it means the financing of the bill hasn’t yet gotten the seal of approval from the House. Still, both houses of Congress have agreed to spend more on the transportation bill than the Highway Trust Fund itself can bear. (The House gave its green light a couple weeks ago when it nixed the Broun motion to keep transportation spending to HTF receipt levels.) To overspend the HTF but still plausibly deny that they’re deficit-spending, the Senate Finance Committee has done some pretty fancy footwork to offset the expenditures with other savings. Chair Max Baucus (D-MT) squeezed blood from the stone of the U.S. budget, and many of his colleagues have lauded him as a miracle worker. But Taxpayers for Common Sense – and lots of other people with common sense – say the numbers don’t really add up. The information below comes from TCS’s report, released last week, on the Senate pay-fors. Stick with me here – this is all a little convoluted, but understanding the funding is a key part of the process. While the Senate transportation bill may be a good stop-gap compared to the option of even shorter extensions, a look at the funding shows why it provides no long-term answers to the question of how to pay for transportation. The sources of new Highway Trust Fund revenue Baucus et al came up with are: A transfer from the general fund: $4.97 billion. This is the most obvious example of deficit spending – just taking money from the Treasury to pay for transportation. That’s on top of $34.5 billion the Treasury has already coughed up in the last four years to bail out the Highway Trust Fund – something no one wanted to repeat. Dedication of imported car tariffs to the Highway Trust Fund: $4.52 billion. This revenue would no longer go to the general fund. A transfer from the Leaking Underground Storage Tank Trust Fund: $3.685 billion. TCS approves of this use of funds, since they come from the gas tax and are underspent at a three-to-one ratio. This transfer just eliminates most of the backlogged surplus. Dedication of the gas guzzler tax to the Highway Trust Fund: $0.697 billion. The government levies a fee on vehicles whose combined city and highway fuel economy is worse than 22.5 mpg (with exemptions, of course, for some of the worst offenders, like SUVs and minivans). It’s transportation-related, but the tax revenues have always gone into the general fund, so this functions as another transfer from the Treasury. Total new HTF revenues: 13.872 billion. So, since the Senate proposes to take from the general fund to plug the Highway Trust Fund, they have to pay back the Treasury somehow. That’s known on Capitol Hill as an “offset,” to avoid deficit spending. The principal new source of revenue to replenish the general fund is a pension stabilization provision, expected to yield $9.394 billion. By reducing the amount companies have to contribute to employees’ pensions — which are tax-free — that money will become taxable income. Even skeptics seem to agree that $9.394 billion is probably a reasonable amount to expect from this change. But TCS notes that the Pension Benefit Guaranty Corporation (PBGC), which guarantees pension benefits when a company goes bankrupt, has a $23 billion deficit, which they say would be a better fit for this chunk of money. There are 10 more offsets, most of them good for a negligible amount of money, but put them all together (with the pension change) and they total $17 billion. They include changes to arcane tax code provisions, increased enforcement of tax payment on Medicare providers and passport holders, and even a new tax on “roll-your-own” cigarette machines. So that’s enough to pay the general fund back for what the Highway Trust Fund took. But TCS says some of these represent bogus savings. For example, the government is planning to “save” $3.627 billion by further delaying a tax change that hasn’t even taken effect yet. The Senate bill would spend ten years’ worth of this “savings” in little more than a year. But that’s not all! The bill also includes extraneous spending on things that don’t have anything to do with transportation. Most of the non-transportation items have their own funding built in, but TCS wonders why they’re included in the bill at all. They include $3.627 billion for Gulf states’ coastal restoration, paid for out of fines from the BP oil spill; $1.4 billion for reauthorization of the land and water conservation fund, funded with oil drilling money; a change in the definition of a “small-issuer” bond, which is tax-exempt, and therefore forfeiting $0.761 billion in taxes; elimination of the cap on water and sewer bonds; and relief from the alternative minimum tax for investors in private activity bonds (which are often used for infrastructure). The final item under “new spending” does, in fact, deal with transportation. In fact, it’s a key priority for transportation reformers: bringing the transit tax benefit up to the level of the parking benefit for commuters. Currently, the limit is $125 a month for transit and $240 for parking. Putting transit commuters on a level playing field with drivers is a significant transportation goal for this bill to achieve. TCS grumbles that the way to handle the imbalance is to lower the parking subsidy, which is fair enough. But if that’s not going to happen, the $0.139 billion it will cost to raise the transit benefit to achieve parity is well worth it. All together, whew, that’s a lot of complicated math just to avoid raising the gas tax.

Plan:

 * The United States federal government should substantially increase its surface transportation infrastructure investment through an increase in the federal excise tax rate and a phase-in of a variable tax on gasoline**

ENERGY
Contention 2: Energy Current Federal Energy Strategies fail – they impose market distortions, and ineffective constraints on private industry

Turgeon 10 (Evan N. Turgeon, Legal Associate at the Cato Institute; J.D.University of Virginia School of Law 2009; B.A. Tufts University 2004, “Triple-Dividends: Toward Pigovian Gasoline Taxation,” Journal of Land, Resources, & Envir onmental Law 2010, pg lexis//um-ef) The United States' current energy policies take an ineffective, piecemeal approach to addressing the nation's transportation energy needs - an approach that forestalls a comprehensive, coordinated policy from being implemented. [*147] A. Traditional Energy Policies Since the automobile replaced the train as Americans' primary mode of transportation early in the 20th century, United States foreign policy has focused on ensuring American industry and individual consumers have access to inexpensive petroleum. Enormous military and foreign policy expenditures have been maintained to this end. This is not to suggest that such government actions were unwise. n4 Rather, it shows that government foreign policy expenditures have distorted the market for oil. Foreign policy expenditures represent, effectively, a government subsidy of gasoline's true cost. Like any cost not realized by market actors, the low price of gasoline has led to overproduction and overconsumption of vehicles. These distortions have shaped the sprawling development of American society, which widespread car ownership made possible, and which requires Americans living in all but a handful of cities to rely on cars. Not only does the low price of gasoline keep car ownership high, it also decreases consumer demand for fuel-efficient vehicles. These trends have produced a country very dependent on artificially inexpensive foreign oil. Indeed, President George W. Bush went so far as to call this dependency an addiction. n5 But it is an addiction enabled by government policies; if American consumers are addicts, the United States government is their dealer. B. Alternative Energy Policies Recent government policies purportedly intended to wean Americans off oil do not correct existing market distortions, but rather impose additional distortions. Moreover, the fact that these policies are not aimed at making Americans drive less, but only at lessening the environmental impact of this level of driving, n6 suggests that considerations other than efficiency motivate lawmakers. n7 Initiatives promoting the production of biofuels and the consumption of fuel-efficient vehicles provide evidence of this distorting effect. [*148] 1. Biofuel Production Subsidies Biofuels such as ethanol and biodiesel have widely been promoted as a panacea to America's dependence on foreign oil. n8 Touted as providing emissions benefits over fossil fuels, n9 increasing national security, and revitalizing rural communities economically, n10 biofuels have received substantial political support. However, there is a broad consensus that given the low price of gasoline, these alternative fuels will not be competitive in the absences of government sub-sidies. n11 Among the many subsidies available to producers of biofuels, most notable is the Volumetric Ethanol Excise Tax Credit, or "blender's credit," which credits oil companies with $ .51 for each gallon of ethanol mixed into gasoline sold. n12 Biodiesel blenders receive a similar tax credit of $ 1.00 per gallon of "agri-biodiesel," made from plants such as soybeans, and $ .50 per gallon of "wastegrease biodiesel," made from recycled vegetable oils and animal fats. n13 Until December 31, 2008, small producers of ethanol and biodiesel received a tax credit of $ .10 per gallon of biofuel produced, up to 15 million gallons. n14 In addition, the government rewards fueling station owners with a tax credit of 30% (up to $ 30,000) towards the cost of installing biofuel-capable refueling equipment. n15 The federal government also imposes significant tariffs on imported biofuels; imported ethanol is subject first to a tariff equaling 2.5% of its total value, and second to a $ .54 per gallon tariff. n16 [*149] 2. Biofuel Consumption Incentives The government also provides tax credits to consumers who purchase hybrid vehicles, vehicles that run on biofuels, or other fuel-efficient cars. n17 Since hybrids cost $ 2,000 to $ 7,000 more than cars that run on gasoline, such incentives are necessary to make alternative fuel vehicles competitive. Savings from these vehicles' increased fuel economy take many years to compensate for the vehicles' higher prices, even when gasoline prices are high. Indeed, "from a short-term payback perspective, without the tax credits, hybrids make no sense for the average driver[.]" n18 However, tax credits available to consumers "start to go away when a car maker sells its 60,000th alternative-fuel vehicle, a level Toyota reached in mid-2006 and Honda hit in the third quarter of 2007." n19 Some states provide consumers incentives to purchase alternative fuel vehicles as well. For example, in California, hybrid and alternative-fuel vehicles are per-mitted to drive in carpool lanes regardless of the number of passengers they carry. n20 These primarily tax-based policies aim to compensate for the low relative price of gasoline by subsidizing biofuel production and consumption, in order to encourage producers and consumers to utilize non-petroleum resources more than they otherwise would. In this way, lawmakers respond to incentives produced by the artificially low price of gasoline by artificially lowering the price of alternatives. However, so distorting fuel markets has created numerous problems, described below. III. Shortcomings of the Current Approach These problems stem from the economic inefficiency inherent in government policies. Increasing the supply of alternative fuel vehicles rather than addressing the demand for them only encourages dependence on government subsidies, and burdens the government with a role better left to the private sector. As a consequence, the United States' uncoordinated assortment of transportation energy [*150] policies poorly addresses the nation's economic, national security, and environmental concerns. n21 A. Economic Inefficiency Current energy policies both produce and perpetuate inefficient externalities n22 that undermine their success. In the absence of externalities, price information encourages the optimal level of output: that where marginal cost equals marginal benefit. Market prices convey information in two ways; they tell producers what benefits consumers derive from goods and services, and they tell consumers what those goods' and services' production costs are. n23 However, the government's two-sided intervention in the transportation fuel market produces significant externalities unaccounted for in fuel prices. Government policies artificially reduce the cost of transportation fuels such as gasoline. This lower cost inflates consumer demand for these fuels, to the detriment of the United States' economy, national security, and environment. B. Economic Harm 1. Volatile Gasoline Prices Economic externalities produced by the government's current energy policies are significant. While American transportation consumes a great deal of petroleum products, especially gasoline, the United States' domestic petroleum resources are limited. As a consequence, American consumers and industry are vulnerable to price shocks in the international oil markets. n24 OPEC controls 41% of the world's petroleum reserves, providing member countries significant control over oil production and prices. n25 And as is true of any commodity, oil prices are inherently volatile. n26 "The price of crude oil fluctuates based on a wide variety of international and political events, seasonal demand, and other factors, with the [*151] price of crude [oil] determined in the global market." n27 This renders the gasoline market "vulnerable to hurricanes, accidents, crude supply interruptions, terrorists, and dictators." n28 This volatility interacts with consumer behavior in an interesting way. Although consumer demand for gasoline is relatively price inelastic n29 in the short term, n30 fluctuations in gasoline prices do affect individuals' long-term outlook, influencing consumer demand for vehicles, for example. In response to sharp increases in world oil prices during the 1970s n31 and since 2006, consumers seek more fuel-efficient vehicles, and these preferences correspondingly recede as gas prices drop. n32 However, because vehicle design and production lag behind demand, such drastic short-term shifts in consumer demand cripple the automobile industry. Publicly-traded automakers operate on short timelines. Even if they could accurately predict future consumer demand, automakers report earnings to shareholders on a quarterly basis, face constant operating costs, and must make regular payments on outstanding debt. Automakers therefore must respond to consumer demand tied to volatile gasoline prices, which is easier said than done. All too often, automakers fail to anticipate future demand accurately, causing fuel-efficient vehicles to hit the market just in time for falling oil prices to destroy the demand for them. n33 Indeed, as gas prices plunged in November 2008, "the Toyota [*152] Sequoia and Honda Pilot SUVs posted big gains while sales of most other cars plunged." n34 2. Ineffective, Unfair CAFE Standards These dynamics reveal the futility of lawmaker reliance on Corporate Average Fuel Economy ("CAFE") standards. CAFE standards mandate that automakers produce vehicles that meet certain fuel economy ratings. n35 From 1990 to 2007, cars were required to achieve an average fuel economy of 27.5 miles per gallon. n36 In an attempt to decrease the United States' dependency on foreign oil, the 2007 Energy Independence and Security Act ("EISA") removed the previous CAFE exemption for sport utility vehicles and cargo vans and raised the efficiency mandate for all new passenger vehicles to 35 miles per gallon by the year 2020. n37 This standard is projected to decrease United States oil consumption by 2.3 million barrels daily. n38 However, such "government "efficiency' edicts are never efficient." n39 The availability of efficient cars does not affect consumer purchasing decisions regarding efficiency - only gas prices do that. In the short term, people respond to higher fuel prices by purchasing more efficient vehicles, not by driving less. n40 Such behavior is emblematic of efficiency measures designed to decrease consumption. "The energy saved on a more efficient refrigerator trickles all too easily into a larger one, just as the calories saved with a Diet Coke generally trickle into a brownie." n41 Ironically, CAFE standards may even work against government policies subsidizing biofuels because improvements in vehicle efficiency may forestall private research and investment in non-petroleum sources of transportation energy. n42 [*153] Moreover, CAFE standards, intended to counterbalance incentives produced by other government policies, represent a significant uncompensated government imposition on automakers. When gas prices are low, CAFE standards force carmakers to lose money producing small vehicles for which there is less demand, in order to be allowed to produce the large vehicles that earn a profit. n43 Regulators thus dump the true cost of government policies on the private sector, creating the illusion of good government "as they impoverish society as a whole." n44 These energy strategies gut U.S. Foreign Policy strategy – they ensure ineffective diplomatic leverage and lack of U.S. legitimacy

Turgeon 10 (Evan N. Turgeon, Legal Associate at the Cato Institute; J.D.University of Virginia School of Law 2009; B.A. Tufts University 2004, “Triple-Dividends: Toward Pigovian Gasoline Taxation,” Journal of Land, Resources, & Envir onmental Law 2010, pg lexis//um-ef)

C. Foreign Policy Detriment In 1828, James Madison expressed his fear that insufficient governmental intervention in economic matters might betray American interests, writing, "[a] nation leaving its foreign trade, in all cases, to regulate itself, might soon find it regulated, by other nations, into a subserviency to a foreign interest ... ." n47 Just this has occurred in petroleum markets. "To the extent OPEC could maintain high and stable world oil prices, it replaced the [government supply] and import controls that had set the terms for energy markets in the United States for many [*154] years before the [1973 energy] crisis." n48 Since the crisis, OPEC-controlled petroleum markets have cost Americans dearly. n49 Ensuring a steady supply of foreign oil requires enormous foreign policy expenditures, which must be considered in evaluating the appropriateness of current energy policies. 1. Wealth Transfers to OPEC In 2007 alone, the United States imported over 4.9 billion barrels of oil. n50 At an average price of $ 66.29 per barrel, n51 this works out to over $ 325 billion sent overseas. Not only do these expenditures represent lost opportunities for the domestic economy, n52 but much of this money was sent to countries such as Russia, Iran, and Venezuela - countries whose strategic objectives conflict with those of the United States in many policy areas. Revenue from oil sales provides these countries the financial resources to expand their national powers, potentially to the detriment of the United States. n53 Especially problematic is the fact that OPEC member countries control 41% of the world petroleum reserves under national oil companies. n54 In the middle of the 20th century, the "Seven Sisters," a group of privately held oil companies, exerted a great deal of control over oil markets, and "responded to price signals to explore, invest, and promote technologies necessary to increase production." n55 The oligopoly of national oil companies that now control oil markets operate under vastly different incentives, limiting investment and restricting production to keep prices high and prolong the production horizon. n56 In so doing, OPEC reaps profits by undermining economic efficiency in world oil markets. n57 [*155] 2. Costly International Relations Moreover, the United States' military, which maintains bases throughout the world, has as one of its strategic goals ensuring a supply of foreign oil for importation and domestic consumption. Funding such strategic holdings requires enormous annual expenditures. Estimates of the United States' FY 2009 military budget range from $ 515.4 billion n58 to $ 713.1 billion, n59 based on which items are included. Although United States military policy does not consider ensuring an adequate oil supply its only strategic objective, it is safe to assume that defense expenditures could be reduced substantially if foreign oil were less vital to the nation's stability. High oil demand imposes an additional foreign policy cost on the United States: it raises the cost of international relations. The United States' refusal to participate in international climate change initiatives impairs the country's legitimacy in the global community. This may increase the political costliness of foreign government compliance with the strategic objectives of the United States, requiring greater American concessions in exchange for international cooperation. The historical refusal of the United States to bind itself to multilateral energy use agreements also ensures that Americans will take little part in the deliberation over and drafting of such policies. n60 International law detrimental to the United States' interests may result. Lack of legitimacy ensures Nuclear and CBW War

Barlow 2 (Jeffrey, March, Director of the Berglund Center for Internet Studies, holds the Matsushita Chair of Asian Studies at Pacific University, Ph.D. in history from UC Berkeley, 2K2, “American Power, Globalism, and the Internet: Editorial Essay”, The Journal of Education, Community and Values, http://bcis.pacificu.edu/journal/2002/03/editorial.php#6)

Much of Nye’s analysis is intended to make a relatively simple point: That the United States is indefinitely unchallengeable in terms of its “hard power”; but “soft power” is growing steadily more important in a networked world, and is the more frangible of American sources of power. There will be a natural process that somewhat vitiates the impact of American soft power in any event as other information economies mature. For example, by 2010, Nye argues, there will be more Chinese Internet users than American ones.8 While American sites will remain very attractive, because of the fact that English has become the world’s second language, China too sits at the center of a linguistic empire that not only embraces the worldwide Diaspora of Chinese people, but has also in the past embraced much of East Asia including Korea, Japan, Vietnam, and other nations. .05. A Dichotomy or a Transition? (Return to Index) Nye’s position intersects at several points with the analysis of Manuel Castells, sociologist and the author of the encyclopedic multi-volume work, The Information Age: Economy, Society, and Culture.9 Nye’s argument follows in time upon that of Castells in that Castells wrote in 1996, Nye after September 11, 2002. But Nye’s position is ultimately grounded in an earlier tradition of “realist” definitions of power: Power used to be in the hands of princes, oligarchies, and ruling elites; it was defined as the capacity to impose one’s will on others. Modifying their behavior. This image of power does not fit with our reality any longer10… Castells spends far more time than does Nye considering the “Information Age.” In doing so, he perhaps has the advantage in contextualizing American power. His argument is also far more dynamic. To Castells, the Information Age is an ongoing process, which he considers from a number of perspectives. Nye believes that there are two dichotomous kinds of power: “hard” and “soft”. For Castells, there are not two kinds of power, but a still incomplete transition from one kind of power to another. For Castells, power is being permanently transformed; Nye’s hard power is eroding: states, even the most powerful one, the United States, now live in an environment marked by a decentralized net of “local terror equilibria.” 11 In the past, during the Cold War, several major states and their allies established an equilibrium based upon mutual assured destruction; this prevented any one power from dominating the global political or economic system, but it also protected each of the major states from the others. Following the collapse of the Soviet Union the United States then enjoyed a brief period of near absolute dominance. .06. American Power Following 9-11(Return to Index) But global processes had already distributed a variety of weapons of mass destruction among major and minor powers, and more importantly, among non-state actors as well. September 11, 2002, revealed the vulnerabilities of even the greatest of powers to non-state actors. The devastating effect of the low-cost and relatively simple improvised weapons that were used then suddenly illuminated a terrible new world. The use of a bacteriological weapon, Anthrax, then followed quickly upon the trauma of 9-11---so quickly that historians may well treat the two events as one. This attack revealed an additional and, to many, even more terrifying vulnerability and again showed the new power of non-state actors. Castells refers to these sorts of weapons, including chemical and biological ones, as well as the feared low-yield “dirty” nuclear devices sometimes referred to as “suitcase bombs” as “veto technologies” and presumes that this new decentralized web of great and small states and non-state actors will require constant small interventions by many different powers to maintain a relative peace. This seems to be an apt description of events since September 11 as a variety of alliances, states, and international organizations have joined the campaign against terrorism. There are, then, many indications that Castells is, to a considerable degree at least, correct in his analysis of state power in the Information Age, and Nye wrong. State power is evolving toward a decentralized fabric, like all else in the Information Age. .07. The Limitations of the Networked International System (Return to Index) There are also many indications that some in the American policy-making institutions understand the implications of a world like that described by Castells. Recently (March, 2002), the Pentagon report “The Nuclear Posture Review” discussed conditions under which the United States might use nuclear weapons. This analysis immediately attracted a great deal of attention because it suggested the first-strike employment of nuclear weapons against non-nuclear powers. Since the end of World War II such use has been presumed to be outside the parameters of civilized warfare, and particularly outside American nuclear doctrine. But times have changed. As stated by one reporter, Michael Gordon, “Another theme in the report is the possible use of nuclear weapons to destroy enemy stocks of biological weapons, chemical arms and other arms of mass destruction.” 12 These are, of course, precisely the “veto technologies” listed by Castells.13 The limitation in the current international system is probably most critically, from an American point of view, that it tends to restrain unilateral American action. As a result, great attention necessarily must be paid to alliances and coalition building. But if anything terrifies the international community it is the specter of nuclear war, or the possibility of a return to a Cold War system with its attendant enormous expenses and the inherent threat of destruction. .08. The Nuclear Posture Review (Return to Index) The “Nuclear Posture Review” represents the Bush administration’s attempt to break the bonds that presently restrains American power: first-strike use of nuclear weapons effectively removes the need to consult allies. It amounts to an attempt to restore the brief period of absolute domination (and absolute security) enjoyed by the U.S. following the fall of the Soviet Union, before we had become aware of the terrible new forces that could be employed by “rogue states” and criminal organizations such as Al Quaeda. If the United States were to be successful in putting the terrorist genie back in the bottle by threatening nuclear strikes on states that both harbor terrorists and possess weapons of mass destruction, including most especially chemical and bacteriological ones, then Nye is, perhaps, correct: There are two sorts of power and the United States can continue to enjoy a near monopoly of classical “hard” power. But Nye, like Castells, recognizes that “under the influence of the information revolution and globalization, world politics is changing in a way that means Americans cannot achieve all of their international goals acting alone.”14 The uproar, both domestic and international. Effective multilateralism led by the United States solves – prevents multiple triggers for conflict and destruction

Zakaria 8 (Fareed, Ph.D. in Government from Harvard University, & editor of Foreign Affairs magazine & Newsweek Internationa & professor of IR and political philosophy at Harvard and Columbia University, “Wanted: A New Grand Strategy”, 12/8/08, http://www.newsweek.com/id/171249 )

The "Global Trends" report identifies several worrying aspects of the new international order—competition for resources like oil, food, commodities and water; climate change; continued terrorist threats; and demographic shifts. But the most significant point it makes is that these changes are taking place at every level and at great speed in the global system. Nations with differing political and economic systems are flourishing. Subnational groups, with varied and contradictory agendas, are on the rise. Technology is increasing the pace of change. Such ferment is usually a recipe for instability. Sudden shifts can trigger sudden actions—terrorist attacks, secessionist outbreaks, nuclear brinksmanship. The likelihood of instability might increase because of the economic crisis. Despite some booms and busts—as well as 9/11 and the wars in Afghanistan and Iraq—the world has been living through an economic golden age. Global growth has been stronger for the past five years than in any comparable period for almost five decades. Average per capita income has risen faster than in any such period in recorded history. But that era is over. The next five years are likely to be marked by slow growth, perhaps even stagnation and retreat, in certain important areas. What will be the political effects of this slowdown? Historically, economic turmoil has been accompanied by social unrest, nationalism and protectionism. We might avoid these dangers, but it is worth being acutely aware of them. At the broadest level, the objective of the United States should be to stabilize the current global order and to create mechanisms through which change—the rise of new powers, economic turmoil, the challenge of subnational groups like Al Qaeda—can be accommodated without overturning the international order. Why? The world as it is organized today powerfully serves America's interests and ideals. The greater the openness of the global system, the better the prospects for trade, commerce, contact, pluralism and liberty. Any strategy that is likely to succeed in today's world will be one that has the active support and participation of many countries. Consider the financial crisis, which several Western governments initially tried to handle on their own. They seemed to forget about globalization—and nothing is more globalized than capital. Belatedly recognizing this, leaders held the G20 meeting in Washington. This was a good first step (though just a first step). Without a coordinated approach, efforts to patch up the system will fail. The same applies not just to "soft" problems of the future—pandemics, climate change—but to current security challenges as well. The problem of multilateralism in Afghanistan—a place where everyone claims to be united in the struggle—is a sad test case for the future. Thirty-seven nations, operating with the blessing of the United Nations and attacking an organization that has brutally killed civilians in dozens of countries, are still unable to succeed. Why? There are many reasons, but it does not help that few countries involved—from our European allies to Pakistan—are genuinely willing to put aside their narrow parochial interests for a broader common one. Terrorism in South Asia generally requires effective multinational cooperation. Business as usual will produce terrorism that will become usual. National rivalries, some will say, are in the nature of international politics. But that's no longer good enough. Without better and more sustained cooperation, it is difficult to see how we will solve most of the major problems of the 21st century. The real crisis we face is not one of capitalism or American decline, but of globalization itself. As the problems spill over borders, the demand for common action has gone up. But the institutions and mechanisms to make it happen are in decline. The United Nations, NATO and the European Union are all functioning less effectively than they should be. I hold no brief for any specific institution. The United Nations, especially the Security Council, is flawed and dysfunctional. But we need some institutions for global problem-solving, some mechanisms to coordinate policy. Unless we can find ways to achieve this, we should expect more crises and less success at solving them. In a world characterized by change, more and more countries—especially great powers like Russia and China and India—will begin to chart their own course. That in turn will produce greater instability. America cannot forever protect every sea lane, broker every deal and fight every terrorist group. Without some mechanisms to solve common problems, the world as we have come to know it, with an open economy and all the social and political benefits of this openness, will flounder and perhaps reverse. Now, these gloomy forecasts are not inevitable. Worst-case scenarios are developed so that they can be prevented. And there are many good signs in the world today. The most significant rising power—China—does not seem to seek to overturn the established order (as have many newly rising powers in the past) but rather to succeed within it. Considerable cooperation takes place every day at the ground level, among a large number of countries, on issues from nuclear nonproliferation to trade policy. Sometimes a crisis provides an opportunity. The Washington G20 meeting, for instance, was an interesting portent of a future "post-American" world. Every previous financial crisis had been handled by the IMF, the World Bank or the G7 (or G8). This time, the emerging nations were fully represented. At the same time, the meeting was held in Washington, and George W. Bush presided. The United States retains a unique role in the emerging world order. It remains the single global power. It has enormous convening, agenda-setting and leadership powers, although they must be properly managed and shared with all the world's major players, old and new, in order to be effective. President-elect Obama has powers of his own, too. I will not exaggerate the importance of a single personality, but Obama has become a global symbol like none I can recall in my lifetime. Were he to go to Tehran, for example, he would probably draw a crowd of millions, far larger than any mullah could dream of. Were his administration to demonstrate in its day-to-day conduct a genuine understanding of other countries' perspectives and an empathy for the aspirations of people around the world, it could change America's reputation in lasting ways. This is a rare moment in history. A more responsive America, better attuned to the rest of the world, could help create a new set of ideas and institutions—an architecture of peace for the 21st century that would bring stability, prosperity and dignity to the lives of billions of people. Ten years from now, the world will have moved on; the rising powers will have become unwilling to accept an agenda conceived in Washington or London or Brussels. But at this time and for this man, there is a unique opportunity to use American power to reshape the world. This is his moment. He should seize it.

Independently, new CAFE regulations are coming –

Greene 6/28 (Michael, “34.1 MPG CAFE Standards for 2016 Upheld by U.S. Court of Appeals” http://www.treehugger.com/cars/341-mpg-cafe-standards-2016-upheld-us-court-appeals.html//HH)

The 2012-2016 Corporate Average Fuel Economy standards, better known under the acronym CAFE, mandate reaching 34.1 MPG by 2016, a number that many big players felt was too high. This led to a challenge in the courts, all the way to the U.S. Court of Appeal. The U.S. Supreme Court decision on health-care will no doubt totally overshadow this less media-friendly legal decision, but the U.S. Court of Appeal actually upheld the federal CAFE standards: The U.S. Court of Appeals in Washington dismissed challenges brought by states led by Texas and major industries including chemical, energy, utility, agriculture and mining companies as well as the National Association of Manufacturers. The decision is a big win for the Obama administration, which plans to finalize the 2017-25 fuel-efficiency standards and greenhouse gas emissions limits by August. The new rules will hike requirements to 54.5 mpg by 2025. This is great news, because while they are flawed, CAFE standards are what we have now to move things along. They don't say how automakers must increase efficiency, just by how much. The can then figure out what solution works best. They’ll collapse job growth and the Auto Sector

Brownfield 11 (Mike, “How Will Obama’s EPA Regulations Affect the Auto Industry?”, http://www.askheritage.org/how-will-obamas-epa-regulations-affect-the-auto-industry//HH)

Say goodbye to cars and trucks as you know them. Say hello to a brave new future ushered in by the Environmental Protection Agency. It’s one where the federal government reshapes a major U.S. industry by administrative fiat, all in pursuit of a policy goal that will cost money, jobs, and lives—all to satisfy the left’s environmentalist factions while dishing out taxpayer dollars to an Obama-favored unionized industry. That industry is the auto industry, and the Obama Administration is yet again using the mighty fist of the federal government to recast it in its own image. The Washington Post reports that the Obama Administration and the auto industry have reached agreement on new federal regulations that would raise fuel efficiency standards for cars and light trucks, hitting an average of 54.5 miles per gallon by 2025—a 40 percent reduction in fuel consumption compared to today. Those new standards, though designed to reduce greenhouse gases, bring with them significant costs. Fourteen of Michigan’s 15 representatives in Congress—including Democrat Senators Debbie Stabenow and Carl Levin—wrote a letter to the President warning him of the consequences that draconian fuel efficiency standards could have for their state, the home of General Motors, Ford, and Chrysler, citing a report by The Center for Automotive Research which warned that overly stringent standards could add $10,000 to the cost of a new car. Heritage’s Nicolas Loris explains how those higher costs can lead to job loss: Higher prices reduce demand and force people to hold onto their older vehicles longer. Reduced demand means fewer cars produced, which means automakers have to shed jobs. The Michigan-based consulting firm Defour Group projected that a 56 mpg standard would destroy 220,000 jobs. In addition to lost jobs and costlier cars, forcing automakers to achieve those standards could result in a loss of life. In order to make cars more fuel-efficient, automakers reduce the weight of vehicles. As Reason reports, “a 2002 National Academy of Sciences study concluded that CAFE’s downsizing effect contributed to between 1,300 and 2,600 deaths in a single representative year, and to 10 times that many serious injuries.” Auto industry collapse kills economic competitiveness

Szczensny 9

(Joseph, “Auto Industry Key to Future Economic Growth”, http://www.thedetroitbureau.com/2009/06/auto-industry-key-to-future-economic-growth/, Jun 4, 2009//HH) The domestic automobile industry is an important element in innovation engine that is critical to prosperity in the U.S., suggests a new study from a Washington think tank. America’s future depends on its ability to translate new ideas into investment, jobs, and long-term productivity growth, said Kent Hughes, director of the Science, Technology, America, and the Global Economy program at the Woodrow Wilson Center in Washington D.C., and one of the authors of the new study. “In the debate over handling the bankruptcies of Chrysler and General Motors,” he said, “the impact on innovation and the U.S. industrial base has been largely ignored. “The auto sector – including its parts suppliers, engineers, and related services – is a key part of our innovation system that encompasses much more than the goal of producing new, fuel-efficient cars,” Hughes said. “We need an even stronger industrial base so that we can pay our way in the world, instead of borrowing hundreds of billions of dollars from China, Japan, Germany, and many oil-rich states. It is hard to envision America having the capacity to produce hundreds of billions of dollars of manufactured goods in the future without a strong, innovative automotive sector,” he said. In fact, visitors to the Telematics 2009 conference in Novi., Mi., this week, said automakers are pushing for new futures that could help spark sales. “By 2016, the majority of consumers will consider in-vehicle connectivity and the ability of driver/passenger-centric, contextual information as important as traditional automobile features such as high safety and fuel efficiency standards,” says Thilo Koslowski vice president and automotive practice leader at the consulting firm of Gartner Inc. of Stamford, Conn. “The continued rise of connected consumer devices, such as smartphones and mobile Internet devices, will increase consumer expectations for always-on data availability throughout their work and home, and when being mobile – including when driving,” Kosowski said. GM vice chairman Robert Lutz made the same point last week when he said there seems to be a growing realization in Washington D.C., or at least on the part of the Obama administration, that if the U.S. wanted to remain a factor in world affairs, it needed to be able to back up its words with economic might. “It took 30 years for somebody to finally figure it out,” said Lutz, adding, “They want to revitalize the American automobile industry. There finally is a realization that our country cannot remain economically strong and militarily strong and have a global impact if it’s not backed up by wealth-producing industries. Hughes said the role of the government has become more complex. It must act as lender, owner, regulator, and strategist, working toward energy efficiency and energy security, he said. The auto industry’s challenges, however, also come from the market, he added. “Demand for autos is down and the U.S.-based auto sector has to contend with highly competitive exchange rates in China and other parts of East Asia as well as overseas incentives to lure production offshore,” Hughes said. “Going forward,” Hughes warned, “we need national policies that support the auto and other industrial sectors coupled with national investments in advanced manufacturing. We neglect the industrial base at our peril.” Extinction

Khalilzad, ’11 – Bush’s ambassador to Afghanistan, Iraq, and the UN and former director policy planning at the DOD (Zalmay, “The Economy and National Security”, National Review, 2-8-11, http://www.nationalreview.com/articles/259024/economy-and-national-security-zalmay-khalilzad)

The current recession is the result of a deep financial crisis, not a mere fluctuation in the business cycle. Recovery is likely to be protracted. The crisis was preceded by the buildup over two decades of enormous amounts of debt throughout the U.S. economy — ultimately totaling almost 350 percent of GDP — and the development of credit-fueled asset bubbles, particularly in the housing sector. When the bubbles burst, huge amounts of wealth were destroyed, and unemployment rose to over 10 percent. The decline of tax revenues and massive countercyclical spending put the U.S. government on an unsustainable fiscal path. Publicly held national debt rose from 38 to over 60 percent of GDP in three years. Without faster economic growth and actions to reduce deficits, publicly held national debt is projected to reach dangerous proportions. If interest rates were to rise significantly, annual interest payments — which already are larger than the defense budget — would crowd out other spending or require substantial tax increases that would undercut economic growth. Even worse, if unanticipated events trigger what economists call a “sudden stop” in credit markets for U.S. debt, the United States would be unable to roll over its outstanding obligations, precipitating a sovereign-debt crisis that would almost certainly compel a radical retrenchment of the United States internationally. Such scenarios would reshape the international order. It was the economic devastation of Britain and France during World War II, as well as the rise of other powers, that led both countries to relinquish their empires. In the late 1960s, British leaders concluded that they lacked the economic capacity to maintain a presence “east of Suez.” Soviet economic weakness, which crystallized under Gorbachev, contributed to their decisions to withdraw from Afghanistan, abandon Communist regimes in Eastern Europe, and allow the Soviet Union to fragment. If the U.S. debt problem goes critical, the United States would be compelled to retrench, reducing its military spending and shedding international commitments. We face this domestic challenge while other major powers are experiencing rapid economic growth. Even though countries such as China, India, and Brazil have profound political, social, demographic, and economic problems, their economies are growing faster than ours, and this could alter the global distribution of power. These trends could in the long term produce a multi-polar world. If U.S. policymakers fail to act and other powers continue to grow, it is not a question of whether but when a new international order will emerge. The closing of the gap between the United States and its rivals could intensify geopolitical competition among major powers, increase incentives for local powers to play major powers against one another, and undercut our will to preclude or respond to international crises because of the higher risk of escalation. The stakes are high. In modern history, the longest period of peace among the great powers has been the era of U.S. leadership. By contrast, multi-polar systems have been unstable, with their competitive dynamics resulting in frequent crises and major wars among the great powers. Failures of multi-polar international systems produced both world wars. American retrenchment could have devastating consequences. Without an American security blanket, regional powers could rearm in an attempt to balance against emerging threats. Under this scenario, there would be a heightened possibility of arms races, miscalculation, or other crises spiraling into all-out conflict. Alternatively, in seeking to accommodate the stronger powers, weaker powers may shift their geopolitical posture away from the United States. Either way, hostile states would be emboldened to make aggressive moves in their regions. As rival powers rise, Asia in particular is likely to emerge as a zone of great-power competition. Beijing’s economic rise has enabled a dramatic military buildup focused on acquisitions of naval, cruise, and ballistic missiles, long-range stealth aircraft, and anti-satellite capabilities. China’s strategic modernization is aimed, ultimately, at denying the United States access to the seas around China. Even as cooperative economic ties in the region have grown, China’s expansive territorial claims — and provocative statements and actions following crises in Korea and incidents at sea — have roiled its relations with South Korea, Japan, India, and Southeast Asian states. Still, the United States is the most significant barrier facing Chinese hegemony and aggression. Given the risks, the United States must focus on restoring its economic and fiscal condition while checking and managing the rise of potential adversarial regional powers such as China. While we face significant challenges, the U.S. economy still accounts for over 20 percent of the world’s GDP. American institutions — particularly those providing enforceable rule of law — set it apart from all the rising powers. Social cohesion underwrites political stability. U.S. demographic trends are healthier than those of any other developed country. A culture of innovation, excellent institutions of higher education, and a vital sector of small and medium-sized enterprises propel the U.S. economy in ways difficult to quantify. Historically, Americans have responded pragmatically, and sometimes through trial and error, to work our way through the kind of crisis that we face today. The policy question is how to enhance economic growth and employment while cutting discretionary spending in the near term and curbing the growth of entitlement spending in the out years. Republican members of Congress have outlined a plan. Several think tanks and commissions, including President Obama’s debt commission, have done so as well. Some consensus exists on measures to pare back the recent increases in domestic spending, restrain future growth in defense spending, and reform the tax code (by reducing tax expenditures while lowering individual and corporate rates). These are promising options. An increased gas tax solves – it transforms U.S. foreign policy and re-energizes U.S. Diplomacy

Turgeon 10 (Evan N. Turgeon, Legal Associate at the Cato Institute; J.D.University of Virginia School of Law 2009; B.A. Tufts University 2004, “Triple-Dividends: Toward Pigovian Gasoline Taxation,” Journal of Land, Resources, & Envir onmental Law 2010, pg lexis//um-ef)

Significantly increasing federal taxes on gasoline would generate results vastly superior to those produced by current energy policies. While politically unpopular, such Pigovian taxes promote economic efficiency. In so doing, a meaningful federal gasoline tax has the potential to yield a triple-dividend by [*159] simultaneously improving the United States' economy, furthering national security, and inhibiting climate change. n85 The scientific consensus on global warming accepts that reducing greenhouse gas emissions from fossil fuel combustion is necessary to stem the tide of global warming, and that imposing Pigovian taxes would further this goal. However, I argue that such taxes, by reducing domestic oil demand and consumption, would benefit the United States' national security outlook and economy as well. Importantly, these benefits would increase the United States' relative power in the world, and would accrue even if fuel taxes were imposed unilaterally. A. Economic Efficiency Many commentators have noted that raising gasoline taxes would increase economic efficiency by forcing drivers to realize the true costs of their driving. Historically, government policy has permitted Americans to externalize the true costs of their driving onto the national commons, which lowers the cost of driving and increases the amount of driving done. Recognition of these inefficient and unfair externalities has prompted proposals to force drivers to internalize the true cost of driving. n86 1. The Theory of Pigovian Taxation In his 1920 book, The Economics of Welfare, economist Arthur Pigou recommended imposing taxes on polluters to force them to internalize such costs. n87 Since prices act as a signaling mechanism to consumers, n88 the easiest way to reduce excess consumption is to raise prices, and the easiest way to raise prices is to impose a tax. A "Pigovian" tax would increase the cost of driving, and thereby reduce the amount of driving done to the optimal level: where marginal cost equals marginal benefit. A Pigovian gas tax thus has the potential to improve societal welfare. It seems that Pigovian fuel taxation would prove the best method of promoting economic efficiency. Although Pigovian environmental taxes are generally criticized for providing only a "second-best" solution to environmental externalities, n89 it appears that Pigovian gasoline taxation would provide close to a "first best" solution to the economic, national security, and climate change [*160] externalities discussed here. It would simultaneously address the volatile price of gasoline that produces economic problems, the high American consumption of oil that requires high national security expenditures, and the carbon emissions responsible for climate change. n90 The principal economic shortcoming of Pigovian fuel taxation is that it "discourages vehicle use uniformly, ignoring differences in emission rates." n91 As a consequence, it does not perfectly maximize emission reductions. However, higher fuel taxes are fair because the costs of driving would accrue primarily to drivers in proportion to the driving each does, not to all American citizens. n92 Moreover, "the beauty of the fuel tax is its administrative simplicity[,]" n93 which becomes all the more important given the impossibility of monitoring actual vehicle emissions. n94 The United States already levies a low federal tax on gasoline, n95 so Pigovian gasoline taxation would require no additional bureaucracy. In addition, such uniform excise taxes are comprehensive, reaching all drivers, n96 and are difficult for users to avoid. n97 Given the powerful incentives to evade or exploit government energy initiatives, n98 such rigidity and uniformity are virtues. n99 2. Effects on Gasoline Demand The long-term price elasticity of gasoline indicates that increasing fuel taxes will decrease demand for gasoline. While gasoline's short-term price elasticity is notoriously low, long-term elasticity is significantly higher. n100 Indeed, it seems that "even "addicts' consume less in the long run when prices rise." n101 Changes in [*161] consumer's long-term purchasing decisions, such as whether and what type of car to purchase, confirm this. n102 Thus, Pigovian taxes producing high long-term gas prices are likely to encourage efficient consumer behavior. n103 A corollary of the difference in short-and long-term price elasticities is the "Ramsay Rule," which posits that government policies designed to encourage economic efficiency should tax goods and activities with a low price elasticity more highly than those with a high price elasticity. n104 Pigovian gasoline taxation would correct the government's failure to maximize efficiency in this regard. In addition, Pigovian gasoline taxation would likely produce efficiency benefits greater than the current regime of CAFE fuel-efficiency standards, even if those standards were abolished. Economists have noted that although effluent charges (taxing a good that pollutes) and effluent standards (capping the amount of pollution each entity can produce) can produce identical results, effluent charges (such as Pigovian taxes) do so at a lower cost. "The nature of the effluent charge is such that it places a greater economic burden on those firms that can avoid polluting at a lower cost thereby saving society the otherwise unnecessary costs associated with a uniform effluent standard." n105 This indicates that higher gasoline taxes would "screen out, systematically, the trips that are worth least to consumers, sparing [] units of gasoline (and trips) that are worth more." n106 Effluent charges, such as federal gasoline taxes, can provide society the same benefits as effluent standards, such as CAFE standards, but at a significantly lower cost. Any lawmaker concerned with the nation's economic health should take advantage of this cost-savings when formulating national energy policy. n107 3. Forcing Innovation Pigovian gasoline taxation would reduce demand for gasoline and increase the demand for efficient alternative transportation products - products that are deemed efficient by the market, not by politicians. Current policies assume that higher gasoline prices will not provide incentives adequate to foster the research and development necessary to produce biofuels on a mass scale. n108 However, this approach ignores the competitive market's demonstrated ability to force innovation. n109 [*162] The theory of "induced innovation" posits that "changes in relative factor prices should lead to innovations that reduce the need for the relatively expensive factor." n110 For example, high copper prices during World War II prompted the U.S. government to mint steel pennies in 1943. n111 History provides examples of induced innovation in transportation fuel market as well. "When real petrol prices in the USA increased in the period up to the early 1980s, a significant increase in fuel efficiency of new cars occurred. Later, as real petrol prices decreased significantly ... the increase in fuel efficiency of new cars were brought to a halt." n112 Indeed, in his 2002 article, Induced Innovation and Energy Prices, which compared historical United States patent data against energy price trends to evaluate higher energy prices' ability to force meaningful technological discovery, David Popp concluded, The most significant result is the strong, positive impact energy prices have on new innovations. This finding suggests that environmental taxes and regulations not only reduce pollution by shifting behavior away from polluting activities but also encourage the development of new technologies that make pollution control less costly in the long run. My results also make clear that simply relying on technological change as a panacea for environmental problems is not enough. There must be some mechanism in place that encourages new innovation. n113 Popp also noted that with respect to alternative transportation fuels and vehicles, "the price elasticities found suggest [that] the reaction of the research community to a change in policy, such as a carbon tax, will be swift, and that higher prices would quickly lead to a shift toward environmentally friendly innovation." n114 4. Lessons Learned These possibilities demonstrate the shortcomings of current policies. n115 As opposed to government edicts, "it is the free market that is efficient, spontaneously efficient." n116 Therefore, the systemic nature of the nation's energy crisis indicates that lawmakers' should not be in the business of determining the [*163] best solution, but should leave that to the market. n117 While market principles alone may not provide a universal cure-all to government policy problems, the judicious application of market forces would provide significant gains in this case. n118 B. National Security Benefits Pigovian gas taxation has the potential to dramatically improve the United States' national security. Decreasing demand for gasoline will reduce the vulnerability of the United States to price shocks in international petroleum markets. Less exposure to such volatility would decrease the nation's susceptibility to disruptions in supply caused by forces outside the nation's control, such as weather or geopolitics. One such force, OPEC, would lose influence over the United States as the American thirst for oil subsides. n119 Such stability furthers national security, but there are other benefits as well. 1. Shifting Terms-of-Trade Taxing gasoline would alter the terms of international trade in favor of the United States. n120 Decreasing the domestic demand for gasoline would make alternative domestic sources of transportation comparatively more attractive to American consumers, causing the foreign oil industry to contract and domestic alternative fuel industries to expand. As a result, American industries and products would become more competitive vis-a-vis foreign competitors. n121 In response, OPEC would cut oil prices. This "terms of trade effect" would shift part of the cost of gasoline taxes onto foreign producers of oil n122 and result in more money spent domestically, stimulating economic activity. Therefore, the economically-optimal fuel tax may be greater than one merely intended to compensate for the environmental harm caused by fossil fuel combustion. n123 The national security of the United States would benefit from this trade effect as a result of the negative effects that decreased oil revenue would likely have on exporters of oil. Lower profits reduce an oil exporting regime's ability to exert its will internationally and may weaken its control domestically. This produces a relative benefit for the United States, whose international interests conflict with certain oil exporters, such as Russia, Venezuela, and Iran. With respect to Iran, for [*164] example, lower oil prices may increase pressure for economic reform, "potentially putting pressure on the clerical governing elite to loosen its grip." n124 The United States might capitalize on oil exporters' economic weaknesses by establishing aid and trade relationships in exchange for concessions on military and nuclear policies disadvantageous to the United States. n125 Under pressure to maintain their citizens' standard of living, Middle Eastern regimes would likely liberalize social policies in an effort to diversify their economies. Resulting industries would expand economic opportunities for youth in these countries, thereby reducing the attractiveness of terrorist groups, which depend on widespread discontent and unemployment for recruitment. n126 2. Lower Military Spending Geopolitical changes would, in turn, provide politically-attractive opportunities to reduce the ever-growing military expenditures of the United States. n127 Although "one cannot attribute all expenditures in the Middle East to defending oil supplies[,]" n128 preserving American access to inexpensive oil is of the utmost importance to the United States. Estimate of annual military expenditures toward security oil supplies vary widely but are enormous by any estimate, averaging in the tens of billions of dollars per year when the nation is not at war. n129 However, if the military were not so obligated, the United States could reduce significantly its military presence in other countries or at least deploy its military resources in a more cost-effective manner. This conclusion follows from a basic mathematical insight. Suppose that you maximize a function of several variables subject to a constraint on some of the variables. Then the constraint is removed and the function is maximized again. The maximal value of the function must be higher in the latter case than in the former. n130 [*165] Freed from its addiction to oil, the United States' national security outlook stands to benefit enormously from higher federal gasoline taxes. 3. International Law: A New American Weapon Reducing domestic oil consumption provides an additional national security benefit as well. While "the regulatory approach of environmental law in the United States has generally been reactive rather than truly precautionary," n131 the emissions reductions achieved under Pigovian fuel taxes would enable the United States to take an active part in formulating international law on climate change, yielding the United States significant gains in several ways. National self-interest powerfully influences international climate change agreements. For example, the Kyoto Protocol's arbitrary, inflexible emissions reduction plan was a production of signatories' "domestic self-interest, rather than sensible policy." n132 While that plan's drastic carbon dioxide reductions might inconvenience rapidly emerging economies, they would likely have crippled the economy of the United States. n133 However, the reduced greenhouse gas emissions achieved through Pigovian gasoline taxes would enable the United States to participate in international climate change initiatives to its advantage. If the United States were to propose multilateral Pigovian taxes on gasoline, it seems likely that world consumption of fossil fuels would decrease, especially considering that many states actively subsidize gasoline at present. n134 This would provide worldwide monetary gains in efficiency. Keeping in mind that the developing world would bear the brunt of climate change's negative effects, and that securing the United States' participation is vital to ensuring that meaningful emission reductions are achieved, the United States could work to structure international agreements in such a way as to gain a disproportionate amount of the efficiency surplus, which could take the form of lump-sum payments. n135 But even in the absence of universal participation and such wealth transfers, projections indicate that the economic gains from Pigovian taxes are largest when also imposed by other countries. n136 Even if imposed unilaterally, though, Pigovian taxes would likely provide the United States with cost savings in foreign policy. As an additional weapon in the nation's arsenal, climate change agreements present an opportunity for the United States to impose its will on other countries. Diplomats might shape climate change [*166] initiatives to the United States' advantage by promoting American-made technologies, for example. Moreover, such cooperative international engagement is relatively inexpensive in comparison to exercises of military might, thus providing an opportunity to reduce or realign military spending. Not only is the pen mightier than the sword; it is cheaper to use. The deficit is on an unsustainable path – now is the CRITICAL time to re-orient policies to stave-off a new debt tragedy

Council on Foreign Relations 3/2

(“U.S. Deficits and the National Debt,” pg online @ http://www.cfr.org/united-states/us-deficits-national-debt/p27400 //um-ef)

At some point in the not-too-distant future, analysts say, investors may decide the lack of effective governance constitutes an increased risk of default and will no longer be willing to hold U.S. Treasuries at normal interest rates. Standard and Poor's downgrade of the U.S. debt rating in August 2011 indicated as much: "America's governance and policymaking [has become] less stable, less effective, and less predictable than what we previously believed." If many investors begin fleeing to alternatives, it may become prohibitively expensive for Washington to attract new buyers of debt, resulting in even larger deficits, increased borrowing, or what is known as a "debt spiral." Global investors may continue to fund high U.S. deficits for several years, but the recent experiences of several advanced economies in Europe--Greece, Iceland, Ireland, and Portugal--indicate the unpredictability and speed at which fiscal crises can come. Several factors have thus far helped insulate the United States from such a fate--a floating exchange rate, reserve currency status, lower borrowing costs, a higher capacity for growth, and no record of default. But there are also some striking similarities with the situation faced by some European states, including a rising debt to GDP and a reliance on foreign capital to finance debt. A 2009 report by the non-partisan Congressional Research Service suggests that a loss of confidence in the debt market could prompt foreign creditors to unload large portions of their holdings, thus inducing others to do so, and causing a run on the dollar in international markets and a sudden spike in U.S. interest rates. A study of U.S. Treasury data indicates that Beijing is beginning to diversify away from the dollar (WSJ). The percentage of China's foreign exchange reserves held in dollars fell to a decade low of 54 percent for the year ending June 2011, down from 65 percent in 2010. According to the IMF, "Low borrowing costs in Japan and the United States have arguably created a false sense of security, but should be viewed instead as providing a window of opportunity for policies to address fiscal vulnerabilities." CFR Adjunct Senior Fellow Francis Warnock writes that the United States came close to the above scenario in late 2009, when the ten-year Treasury yield jumped fifty basis points from 3.25 to 3.75 percent in response to a record U.S. deficit, the end of the Federal Reserve's quantitative easing program, and an uptick in inflation prospects. However, he says, the onset of the eurozone phase of the global financial crisis staved off an investor backlash. "U.S. policymakers need to understand that this is not a reset, not a new beginning; it is a lucky break," writes Warnock. How lawmakers use this grace period will influence the ability of the United States to borrow in the future and have "broad implications for the sustainability of an active U.S. foreign policy," he says. Congress has two options for the future – increased revenue generation, or deficit spending – only NEW REVENUE ensures Fiscal Responsibility

ARTBA 10

(American Road and Transportation Builders Association to the National Commission on Fiscal Responsibility and Reform “The Contribution of the Federal Transportation Investment Programs to Fiscal Responsibility and Deficit Reduction,” pg online @ http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/ARTBA.pdf //um-ef)

For more than 50 years, the federal highway, public transportation and airport investment programs have demonstrated exemplary fiscal responsibility while providing critical improvements to the nation’s transportation infrastructure. Unlike most of the federal budget, these programs are financed almost exclusively by taxes and fees levied on users. Except for a small fraction of the public transportation program, they have put no burden on the nation’s general taxpayers, used no General Fund money1, and for more than 50 years have exhibited long-term fiscal balance with no net impact on the federal budget deficit. However, projected Highway Trust Fund revenues for the foreseeable future are far short of the investment needed just to maintain current physical and performance conditions on the nation’s highways and mass transit systems. Without additional revenues, Congress has only two options—fund the programs at the level supportable by Highway Trust Fund revenues, which would cause serious deterioration of our highways and transit systems, or close the gap with General Funds, which would significantly increase the federal budget deficit. The National Commission on Fiscal Responsibility and Reform has been charged with making recommendations to Congress to reduce the federal budget deficit. One of the most reliable ways to achieve that would be to assure the future budget-neutrality of the federal transportation investment programs by generating additional user fee revenues, through any of a number of options discussed below. A safe, reliable transportation system is essential to the productivity and growth of the nation’s economy. ARTBA urges the National Commission to recommend that Congress continue financing federal transportation investment through fiscally responsible and budget-neutral user taxes and levies.

Unchecked deficit spending threatens global economic collapse

Farrell 6 [Lt. Gen. Lawrence P, USAF (Ret) “We Must Prepare for Defense Budget Crunch”, January 2006

http://www.ndia.org/Resources/PresidentsPerspective/Pages/January2006.aspx] For years, dire warnings have sounded about an impending defense budget "train wreck" that would inevitably result from mounting Pentagon financial commitments against a backdrop of spending cuts. The looming train wreck has not yet happened, but pundits, legislative leaders and analysts are beginning to talk about it. Substantial growth in defense spending after 9/11 gave the Pentagon's budget a reprieve. The day of financial reckoning, however, may fast be approaching if the current state of the nation's balance sheet offers any clues. Today, the United States is saddled by a large national debt and a rising deficit. Even if increases to military spending were to end immediately, an explosion in the growth of entitlement programs -- especially Social Security and Medicare -- will be very difficult to manage with 78 million baby boomers slated to retire in the coming decades. Without fundamental reforms, the nation is headed for economic collapse, cautioned David Walker, the U.S. comptroller general. "We could be doing nothing more than paying interest on federal debt in 2040," he told lawmakers. Just this month, outgoing Federal Reserve Chairman Alan Greenspan expressed concern that failure to deal with the exploding budget deficit would not only affect the United States but also the global economy. As to what this means specifically for the Defense Department, the answer is that a funding derailment will occur sooner than later. The much talked-about October memo from acting Deputy Defense Secretary Gordon England called for $32 billion in spending cuts ($7.5 billion in 2007) during the next six years. But if we are to believe the dire predictions from Walker and Greenspan, it is clear that even a $32 billion cut hardly will make a dent.

MANUFACTURING
Manufacturing is on steep decline – will take the U.S. economy with it – new action is key Nash-Hoff 3/28/12

(“American Manufacturing Has Declined More Than Most Experts Have Thought,” pg online @ http://www.huffingtonpost.com/michele-nashhoff/manufacturing-jobs_b_1382704.html //um-ef)//

//A new report released by the Information Technology & Innovation Foundation (ITIF) presents a strong case that manufacturing has declined more during the last decade than it did during the Great Depression of the 1930s. It's gratifying to finally see a well-respected non-partisan "think tank" release a report based on empirical data that corroborates what those of working in the manufacturing industry have experienced, about which I have been speaking and writing since 2003. One of the main points of the report is that during the Great Depression, we lost 30.9% of manufacturing jobs, but in the decade of 2000-2010, we lost 33.1% of manufacturing jobs. It becomes more serious when you realize that in the Great Depression, manufacturing accounted for 43% of jobs lost and 34% of all jobs at the time, but now manufacturing only represents about 11% of all jobs, but nearly one-third of the job loss. This percentage loss represents 5.7 million manufacturing jobs. The report states: "On average, 1,276 manufacturing jobs were lost every day for the past 12 years. A net of 66,486 manufacturing establishments closed, from 404,758 in 2000 down to 338,273 in 2011. In other words, on each day since the year 2000, America had, on average, 17 fewer manufacturing establishments than it had the previous day." When you understand the multiplier effect of manufacturing jobs, creating 2-3 supporting jobs, this loss of manufacturing jobs represents 11 to 17 million jobs. The report states, "In fact, in January 2012 there were more unemployed Americans (12.8 million) than there were Americans who worked in manufacturing (just under 12 million)." No wonder we have the high local, state, and federal deficits that we are experiencing -- there are fewer taxpayers and more benefit collectors. The two million manufacturing jobs we lost during the Great Recession was added to the over 3.7 million we had already lost. After the recession ended, the report states: "Just 166,000, or 8.2 percent, returned. That leaves 91.8 percent of jobs to be recovered. At the rate of growth in manufacturing jobs in 2011, it would take until at least 2020 for employment to return to where the economy was in terms of manufacturing jobs at the end of 2007. In reality... U.S. manufacturing has been in a state of structural decline due to loss of U.S. competitiveness, not temporary decline based on the business cycle." It's obvious that with unemployment at 8.3 percent, "all those jobs have not been recreated in other industries." If manufacturing declines further, there are no guarantees that other jobs will appear to replace those lost in manufacturing. The authors validate what I've written in my book and previous articles: "manufacturing jobs pay more; manufacturing is a source of good jobs for non-college-educated workers; and manufacturing is the key driver of innovation -- without manufacturing, non-manufacturing innovation jobs (for example, research and design) will not thrive." For years, most economists, experts, and government officials have said that the decline in manufacturing is a natural outcome of our transformation from an industrial society to a post-industrial society. "This decline is often cited by defenders as 'normal' and in line with what is happening in other countries. In this 'post-industrial' view, advanced nations are transitioning from factories to services; the greater and faster the loss of manufacturing, the more successful nations are in mastering the transition." The authors concede that there is: "Some truth to the post-industrialists' view. Advanced economies naturally see manufacturing jobs contribute to a smaller share of total employment, since manufacturing productivity is typically higher than non-manufacturing productivity. But normally the loss is modest and gradual, in contrast to the United States where in the last decade it was sudden and steep." In addition: "Advanced nations do lose some lower-value-added, lower-skill, commodity-based manufacturing to lower-wage nations. But ... they also increase their demand for the higher-value-added products that developed nations should naturally produce ... the process of global integration does not and should not naturally lead to the deindustrialization of developed economies, but rather to the transformation of their industrial bases toward more complex, higher-value-added production." These same experts have denied that manufacturing has been in decline, arguing that manufacturing became incredibly productive just like agriculture did a century earlier so that fewer workers are needed in the industry. The authors state that: "Virtually everyone makes the argument that massive manufacturing job decline is a sign of success: manufacturers are using technology to automate work and to become more efficient ... Manufacturing is like agriculture has been the dominant story. The United States produces more food than ever, but because farming has become so efficient, it requires a very small share of U.S. workers to grow and harvest the food. So while manufacturing productivity growth may be tough on workers, job loss is seen as a sign of strength, not weakness." It's true that job loss could be result of increased productivity, but what these experts have ignored is that manufacturing's share of the Gross Domestic Product (GD) declined from 15% in 2000 to 11.0% in 2009. While manufacturing has declined as a share of GDP in the United States and some other nations, such as Canada, Italy, Spain, and the United Kingdom," it is stable or even growing in many others (including Austria, China, Finland, Germany, Japan, Korea, the Netherlands, and Switzerland.)" The ITIF report dispels the myth that increased productivity is the reason for the job loss with a review of the productivity of various manufacturing industry sectors, showing that in 2010, "13 of the 19 manufacturing sectors (employing 55 percent of manufacturing workers) were producing less than they there were in 2000 in terms of inflation-adjusted output." In addition, the authors assert that "the government's official calculation of manufacturing output growth, and by definition productivity, is significantly overstated. "Correcting for biases in the official data, ITIF finds that from 2000 to 2010, U.S. manufacturing labor productivity growth was overstated by a remarkable 122 percent. Moreover, manufacturing output, instead of increasing at the reported 16 percent rate, in fact fell by 11 percent over the period." This was during a period when the U. S. GDP increased by 17 percent. Besides, the report states that: "It is not clear how productivity could be the culprit behind the large share of job loss in the 2000s when manufacturing labor productivity (as measured by the official value added data) was not substantially different in the 1990s than it was in the 2000s. During the 1990s, manufacturing jobs fell by one percent, while labor productivity increased by 53 percent. In the 2000s, manufacturing jobs fell by 33 percent while productivity increased by 66 percent ... the 2000s productivity number is actually significantly overstated, even more so than the 1990s figure. Adjusting for bias in the data, the actual productivity growth in the 2000s was just 32 percent." The authors provide evidence that: "There are serious problems with how the U.S. government measures manufacturing output that cause it to significantly overstate output and, by extension, productivity. In order to see how productivity and output are overstated, it is necessary to understand both concepts." Their explanation is too complicated to consider in this short article, but is well worth reading in the report. They conclude: "that there are substantial upward biases in the U.S. government's official statistics and that real manufacturing output and productivity growth is significantly overstated. The most serious bias relates to the computers and electronics industry (NAICS 334) -- its output is vastly overstated. Correcting for these statistical biases, we see that the base of U.S. manufacturing has eroded faster over the past decade than at any time since WWII, when the United States began compiling the statistics." I can substantiate this conclusion from my experience as a manufacturers' representative for American companies who perform fabrication services, such as plastic and rubber molding, metal stamping and casting, machining, and sheet metal fabrication for other American manufacturers. While many of the manufacturers in my sales territory of southern California may still be assembling their products in the U.S., many of the components and subassemblies they are using have been produced offshore. Obviously, it takes fewer American workers to produce the end product because part of the work was actually done by foreign workers.//

Hermann 2k11 (Andrew Herrmann, P.E. SECB, F.ASCE President American Society of Civil Engineers, Impact Of Infrastructure Investment On The Manufacturing Sector, pg lexis//um-ef)//

//ASCE commends the Joint Economic Committee for holding a hearing today on how surface transportation investment is a key factor for continued economic recovery and job creation. The Society is pleased to present to the Committee our views on investing in the nation's infrastructure and the critical link to U.S manufacturing. An agenda that fosters economic growth and job creation through policies that strengthen U.S. manufacturing and infrastructure will allow the nation to remain competitive in the Twenty-First Century. Infrastructure Receives a Grade of "D" ASCE's 2009 Report Card for America's Infrastructure graded the nation's infrastructure a "D" based on 15 categories (the same overall grade as ASCE's 2005 Report Card). The report also concluded that the nation needs to invest approximately $2.2 trillion from 2009 - 2014 to bring our nation's infrastructure to a state of good repair. This number, adjusted for a three percent rate of inflation, represents capital spending at all levels of government and includes current expenditures. Even with current and planned investments from federal, state, and local governments from 2009 - 2014, the "gap" between the overall need and actual spending will exceed $1 trillion by the end of the five-year period. In the Report Card, the nation's surface transportation system included roads receiving a grade of "D-," bridges receiving a grade of "C," and transit receiving a grade of "D". With nearly one-third of roads in poor or mediocre condition, a quarter of the nation's bridges either structurally deficient or functionally obsolete, and transit use increasing to its highest levels in 50 years, the nation's surface transportation system is in a state of critical decline. Additionally, to bring just these three surface transportation categories up to an acceptable condition would require a five-year investment of $1.2 trillion, according to ASCE estimates. If the nation continues to under- invest in infrastructure and ignores this backlog until systems fail, we will incur even greater costs. While Congress is in the process of developing a comprehensive multi-year surface transportation authorization bill, and as President Obama emphasizes the infrastructure investment needs for the nation, our roads, bridges, and transit systems continue on in a state of decline. According to the Congressional Budget Office, the total of all federal spending for infrastructure has steadily declined over the past 30 years. The results of years of under investment can be seen in traffic and airport congestion, unsafe bridges and dams, deteriorating roads, and aging drinking water and wastewater infrastructure. Infrastructure Investment = Jobs Money invested in essential public works can create jobs, provide for economic growth, and ensure public safety through a modern, well-engineered national infrastructure. The nation's transportation infrastructure system has an annual output of $120 billion in construction work and contributes $244 billion in total economic activity to the nation's gross domestic product (GDP). In addition to the overarching economic benefits, the Federal Highway Administration estimates that every $1 billion invested in the nation's highways supports 27,823 jobs, including 9,537 on-site construction jobs, 4,324 jobs in supplier industries, and 13,962 jobs throughout the rest of the economy. Standard and Poor's has stated that highway investment has been shown to stimulate the economy more than any other fiscal policy, with each invested dollar in highway construction generating $1.80 toward the gross domestic product in the short term, while Cambridge Systematics estimates that every dollar taxpayers invest in public transportation generates $6 in economic returns. The transportation industry's experience with the American Recovery and Reinvestment Act of 2009 illustrated the strong job creation impact of dedicated transportation investment, with the $48 billion for transportation improvements in the legislation supporting tens of thousands of jobs in engineering, construction, and supporting industries. Infrastructure Investment = A Healthy Economy The job-creation potential of infrastructure investment is only one contributing factor of the interaction between surface transportation and the nation's ability to compete in the global marketplace. Equally important are the benefits to a region's long term growth and productivity. A significant challenge to this economic growth is increased congestion, which contributes to the deterioration of the nation's infrastructure. Therefore, the importance of freight movement and the impact of congestion on the nation's economy must be emphasized. ASCE is concerned with the increasing deterioration of America's infrastructure, reduced investment for the preservation and enhancement of our quality of life, and the threatened decline of U.S. competitiveness in the global marketplace. In response, ASCE has not only issued multiple Report Cards on the condition of infrastructure, but has also sought to advance policy solutions that provide for a clean and safe quality of life, as well as fuel economic growth. While taken for granted by most Americans, our infrastructure is the foundation on which the national economy depends. As the economy grows, we cannot only think in terms of repairing what we have, but of creating a modernized transportation system that addresses long-term needs. The current system was originally built in the 1950's and 1960's at a time when the country had different transportation needs and a smaller population. With an expanding population and a larger economy, the nation needs a transportation system that can keep pace. Unfortunately, due to the rapid growth of the country, highway and freight capacity failed to keep up. In July 2011, ASCE released an economic study that measures the potential impacts to the economy in 2020 and 2040 if the nation maintains current levels of surface transportation investments. The report is the first in a series of four reports that will focus on the correlation between the nation's infrastructure and the economy. Subsequent reports will detail the economic correlation to the nation's drinking and waste water systems, energy grid, and ports and airports. The first study, Failure to Act: the Economic Impact of Current Investment Trends in Surface Transportation Infrastructure, found that if investments in surface transportation are not made in conjunction with significant policy reforms, families will have a lower standard of living, businesses will be paying more and producing less, and our nation will lose ground in a global economy. The nation's deteriorating surface transportation will cost the American economy more than 876,000 jobs, and suppress the growth of the country's GDP by $897 billion in 2020.The study results estimate that more than 100,900 manufacturing jobs will be lost by 2020. Ultimately, Americans will also get paid less. While the economy will lose jobs overall, those who are able to find work will find their paychecks cut because of the ripple effects that will occur through the economy. In contrast, a study from the Alliance for American Manufacturing shows that roughly 18,000 new manufacturing jobs are created for every $1 billion in new infrastructure spending. These manufacturing jobs would be created in fabricated metals, concrete and cement, glass-rubber- plastics, steel, and wood product industries. Furthermore, the Alliance for American Manufacturing study shows that using American-made materials for these infrastructure projects yields a total of 77,000 additional jobs, based on a projected investment of $148 billion a year (including $93 billion of public investment). International Competitiveness Failure to Act also shows that failing infrastructure will drive the cost of doing business up by adding $430 billion to transportation costs in the next decade. Firms will spend more to ship goods, and the raw materials they buy will cost more due to increased transportation costs. Productivity costs will also fall, with businesses underperforming by $240 billion over the next decade; this in turn will drive up the costs of goods. As a result, U.S. exports will fall by $28 billion, including 79 of 93 tradable commodities. Ten sectors of the U.S. economy account for more than half of this unprecedented loss in export value - among them key manufacturing sectors like machinery, medical devices, and communications equipment. On the contrary, most of America's major economic competitors in Europe and Asia have already invested in and are reaping the benefits of improved competitiveness from their infrastructure systems. To illustrate further the correlation between transportation and a strong national economy, the U.S. Chamber of Commerce in late 2010 released a transportation performance index that examines the overall contribution to economic growth from a well-performing transportation infrastructure. The index displays a decline in the nation's economic competitiveness due to a continued lack of investment in surface transportation systems on all levels. However, the results also indicate that a commitment to raising the performance of transportation infrastructure would provide long-term value for the U.S. economy. At this juncture, even Treasury Secretary Tim Geithner is underscoring the importance of investing in our nation's infrastructure and the value of export promotion for the competitiveness of U.S. businesses. On a recent trip to a North Carolina manufacturing plant, Secretary Geithner drew parallels between investment in infrastructure, jobs creation, and growth of the domestic manufacturing sector. While efforts such as the American Recovery and Reinvestment Act of 2009 have provided some short term relief to a struggling engineering and construction sector, a sustained economic recovery, will remain difficult without a new multi-year surface transportation bill. Five Key Solutions As part of ASCE's 2009 Report Card for America's Infrastructure, ASCE identified five Key Solutions that illustrate an ambitious plan to maintain and improve the nation's infrastructure: Increase federal leadership in infrastructure;// //And, manufacturing capabilities key to technology necessary for U.S. DIB deterrence//

//O’Hanlon et al 2k12 (Mackenzie Eaglen, American Enterprise Institute Rebecca Grant, IRIS Research Robert P. Haffa, Haffa Defense Consulting Michael O'Hanlon, The Brookings Institution Peter W. Singer, The Brookings Institution Martin Sullivan, Commonwealth Consulting Barry Watts, Center for Strategic and Budgetary Assessments “The Arsenal of Democracy and How to Preserve It: Key Issues in Defense Industrial Policy January 2012,” pg online @ http://www.brookings.edu/~/media/research/files/papers/2012/1/26%20defense%20industrial%20base/0126_defense_industrial_base_ohanlon// um-ef)

The current wave of defense cuts is also different than past defense budget reductions in their likely industrial impact, as the U.S. defense industrial base is in a much different place than it was in the past. Defense industrial issues are too often viewed through the lens of jobs and pet projects to protect in congressional districts. But the overall health of the firms that supply the technologies our armed forces utilize does have national security resonance. Qualitative superiority in weaponry and other key military technology has become an essential element of American military power in the modern era—not only for winning wars but for deterring them. That requires world-class scientific and manufacturing capabilities—which in turn can also generate civilian and military export opportunities for the United States in a globalized marketplace. Defense industrial base deters war with Russia

Watts 2k8 (Senior Fellow @ The Center for Strategic and Budgetary Assessments (Barry D, “The US Defense Industrial Base, Past, Present and Future,” CBA, __http://www.csbaonline.org/4Publications/PubLibrary/R.20081015._The_US_Defense_In/R.20081015._The_US_Defense_In.pdf__)

Since the 1950s, the US defense industrial base has been a source of long-term strategic advantage for the United States, just as it was during World War II. American defense companies provided the bombers and missiles on which nuclear deterrence rested and armed the US military with world-class weapons, including low-observable aircraft, wide-area surveillance and targeting sensors, and reliable guided munitions cheap enough to be employed in large numbers. They also contributed to the development of modern digital computers, successfully orbited the first reconnaissance satellites, put a man on the moon in less than a decade, and played a pivotal role in developing the worldwide web. Critics have long emphasized President Eisenhower’s warning in his farewell television address that the nation needed to “guard against the acquisition of undue influence, whether sought or unsought, by the military-industrial complex.” Usually forgotten or ignored has been an earlier, equally important, passage in Eisenhower’s January 1961 speech: A vital element in keeping the peace is our military establishment. Our arms must be mighty, ready for instant action, so that no potential aggressor may be tempted to risk his own destruction. Eisenhower’s warning about undue influence, rather than the need to maintain American military strength, tends to dominate contemporary discussions of the US defense industrial base. While the percentage of US gross domestic product going to national defense remains low compared to the 1950s and 1960s, there is a growing list of defense programs that have experienced problems with cost, schedule, and, in a few cases, weapon performance. In fairness, the federal government, including the Department of Defense and Congress, is at least as much to blame for many of these programmatic difficulties as US defense firms. Nevertheless, those critical of the defense industry tend to concentrate on these acquisition shortcomings. The main focus of this report is on a larger question. How prepared is the US defense industrial base to meet the needs of the US military Services in coming decades? The Cold War challenge of Soviet power has largely ebbed, but new challenges have emerged. There is the immediate threat of the violence stemming from SalafiTakfiri and Khomeinist terrorist groups and their state sponsors, that have consumed so much American blood and treasure in Iraq; the longer-term challenge of authoritarian capitalist regimes epitomized by the rise of China and a resurgent Russia; and, not least, the worsening problem of proliferation, particularly of nuclear weapons. In the face of these more complex and varied challenges, it would surely be premature to begin dismantling the US defense industry. From a competitive perspective, therefore, the vital question about the defense industrial base is whether it will be as much a source of long-term advantage in the decades ahead as it has been since the 1950s. Extinction

Bostrum ’02 [Dr. Nick, Dept. Phil @ yale, “Existential Risks: Analyzing Human Extinction Scenarios and Related Hazards,” www.transhumanist.com/volume9/risks.html/]

A much greater existential risk emerged with the build-up of nuclear arsenals in the US and the USSR. An all-out nuclear war was a possibility with both a substantial probability and with consequences that might have been persistent enough to qualify as global and terminal. There was a real worry among those best acquainted with the information available at the time that a nuclear Armageddon would occur and that it might annihilate our species or permanently destroy human civilization.[4] Russia and the US retain large nuclear arsenals that could be used in a future confrontation, either accidentally or deliberately. There is also a risk that other states may one day build up large nuclear arsenals. Note however that a smaller nuclear exchange, between India and Pakistan for instance, is not an existential risk, since it would not destroy or thwart humankind’s potential permanently. Such a war might however be a local terminal risk for the cities most likely to be targeted. Unfortunately, we shall see that nuclear Armageddon and comet or asteroid strikes are mere preludes to the existential risks that we will encounter in the 21st century.

And, All levels of manufacturing and R&D are interconnected – a sustainable manufacturing base in the U.S. is critical to Advanced Manufacturing and R&D

Lind 2k12 (Michael Lind is policy director of New America’s Economic Growth Program and a co-founder of the New America Foundation. Joshua Freedman is a program associate in New America’s Economic Growth Program. “Value Added: America’s Manufacturing Future,” pg online @ http://growth.newamerica.net/sites/newamerica.net/files/policydocs/Lind,%20Michael%20and%20Freedman,%20Joshua%20-%20NAF%20-%20Value%20Added%20America%27s%20Manufacturing%20Future.pdf// um-ef)

Manufacturing, R&D and the U.S. Innovation Ecosystem Perhaps the greatest contribution of manufacturing to the U.S. economy as a whole involves the disproportionate role of the manufacturing sector in R&D. The expansion in the global market for high-value-added services has allowed the U.S. to play to its strengths by expanding its trade surplus in services, many of them linked to manufacturing, including R&D, engineering, software production and finance. Of these services, by far the most important is R&D. The United States has long led the world in R&D. In 1981, U.S. gross domestic expenditure on R&D was more than three times as large as that of any other country in the world. And the U.S. still leads: in 2009, the most recent year for which there is available data, the United States spent more than 400 billion dollars. European countries spent just under 300 billion dollars combined, while China spent about 150 billion dollars.14 In the United States, private sector manufacturing is the largest source of R&D. The private sector itself accounts for 71 percent of total R&D in the United States, and although U.S. manufacturing accounts for only 11.7 percent of GDP in 2012, the manufacturing sector accounts for 70 percent of all R&D spending by the private sector in the U.S.15 And R&D and innovation are inextricably connected: a National Science Foundation survey found that 22 percent of manufacturers had introduced product innovations and the same percentage introduced process innovations in the period 2006-2008, while only 8 percent of nonmanufacturers reported innovations of either kind.16 Even as the manufacturing industry in the United States underwent major changes and suffered severe job losses during the last decade, R&D spending continued to follow a general upward growth path. A disproportionate share of workers involved in R&D are employed directly or indirectly by manufacturing companies; for example, the US manufacturing sector employs more than a third of U.S. engineers.17 This means that manufacturing provides much of the demand for the U.S. innovation ecosystem, supporting large numbers of scientists and engineers who might not find employment if R&D were offshored along with production. Why America Needs the Industrial Commons Manufacturing creates an industrial commons, which spurs growth in multiple sectors of the economy through linked industries. An “industrial commons” is a base of shared physical facilities and intangible knowledge shared by a number of firms. The term “commons” comes from communallyshared pastures or fields in premodern Britain. The industrial commons in particular in the manufacturing sector includes not only large companies but also small and medium sized enterprises (SMEs), which employ 41 percent of the American manufacturing workforce and account for 86 percent of all manufacturing establishments in the U.S. Suppliers of materials, component parts, tools, and more are all interconnected; most of the time, Harvard Business School professors Gary Pisano and Willy Shih point out, these linkages are geographic because of the ease of interaction and knowledge transfer between firms.18 Examples of industrial commons surrounding manufacturing are evident in the United States, including the I-85 corridor from Alabama to Virginia and upstate New York.19 Modern economic scholarship emphasizes the importance of geographic agglomeration effects and co-location synergies. 20 Manufacturers and researchers alike have long noted the symbiotic relationship that occurs when manufacturing and R&D are located near each other: the manufacturer benefits from the innovation, and the researchers are better positioned to understand where innovation can be found and to test new ideas. While some forms of knowledge can be easily recorded and transferred, much “know-how” in industry is tacit knowledge. This valuable tacit knowledge base can be damaged or destroyed by the erosion of geographic linkages, which in turn shrinks the pool of scientists and engineers in the national innovation ecosystem. If an advanced manufacturing core is not retained, then the economy stands to lose not only the manufacturing industry itself but also the geographic synergies of the industrial commons, including R&D. Some have warned that this is already the case: a growing share of R&D by U.S. multinational corporations is taking place outside of the United States.21 In particular, a number of large U.S. manufacturers have opened up or expanded R&D facilities in China over the last few years.22 Next Generation Manufacturing A dynamic manufacturing sector in the U.S. is as important as ever. But thanks to advanced manufacturing technology and technology-enabled integration of manufacturing and services, the very nature of manufacturing is changing, often in radical ways. What will the next generation of manufacturing look like? In 1942, the economist Joseph Schumpeter declared that “the process of creative destruction is the essential fact about capitalism.” By creative destruction, Schumpeter did not mean the rise and fall of firms competing in a technologically-static marketplace. He referred to a “process of industrial mutation— if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating the new one.” He noted that “these revolutions are not strictly incessant; they occurred in discrete rushes that are separated from each other by spaces of comparative quiet. The process as a whole works incessantly, however, in the sense that there is always either revolution or absorption of the results of revolution.”23 As Schumpeter and others have observed, technological innovation tends to be clustered in bursts or waves, each dominated by one or a few transformative technologies that are sometimes called “general purpose technologies.” Among the most world-transforming general purpose technologies of recent centuries have been the steam engine, electricity, the internal combustion engine, and information technology.24 As epochal as these earlier technology-driven innovations in manufacturing processes and business models proved to be, they are rapidly being superseded by new technologydriven changes as part of the never-ending process of Schumpeterian industrial mutation. The latest wave of innovation in industrial technology has been termed “advanced manufacturing.” The National Science and Technology Council of the Executive Office of the President defines advanced manufacturing as “a family of activities that (a) depend on the use and coordination of information, automation, computation, software, sensing, and networking, and/or (b) make use of cutting edge materials and emerging capabilities enabled by the physical and biological sciences, for example, nanotechnology, chemistry, and biology. It involves both new ways to manufacture existing products and the manufacture of new products emerging from new advanced technologies.”25 Already computer-aided design (CAD) and computer-aided manufacturing (CAM) programs, combined with computer numerical control (CNC), allow precision manufacturing from complex designs, eliminating many wasteful trials and steps in finishing. CNC is now ubiquitous in the manufacturing sector and much of the employment growth occurring in the sector requires CNC skills or training. Information technology has allowed for enterprise resource planning (ERP) and other forms of enterprise software to connect parts of the production process (both between and within a firm), track systems, and limit waste when dealing with limited resources. Other areas in which advanced manufacturing will play a role in creating new products and sectors and changing current ones are: Supercomputing. America’s global leadership in technology depends in part on whether the U.S. can compete with Europe and Asia in the race to develop “exascale computing,” a massive augmentation of computer calculating power that has the potential to revolutionize predictive sci ences from meteorology to economics. According to the Advanced Scientific Computing Advisory Committee (ASCAC), “If the U.S. chooses to be a follower rather than a leader in exascale computing, we must be willing to cede leadership” in industries including aerospace, automobiles, energy, health care, novel material development, and information technology.26 Robotics: The long-delayed promise of robotics is coming closer to fulfillment. Google and other firms and research consortiums are testing robotic cars, and Nevada recently amended its laws to permit autonomous automobiles.27 Amazon is experimenting with the use of robots in its warehouses.28 Nanotechnology may permit manufacturing at extremely small scales including the molecular and atomic levels.29 Nanotechnology is also a key research component in the semiconductor indusmanutry, as government funding is sponsoring projects to create a “new switch” capable of supplanting current semiconductor technology.30 Photonics or optoelectronics, based on the conversion of information carried by electrons to photons and back, has potential applications in sectors as diverse as telecommunications, data storage, lighting and consumer electronics. Biomanufacturing is the use of biological processes or living organisms to create inorganic structures, as well as food, drugs and fuel. Researchers at MIT have genetically modified a virus that generates cobalt oxide nanowires for silicon chips.31 Innovative materials include artificial “metamaterials” with novel properties. Carbon nanotubes, for example, have a strength-to-weight ratio that no other material can match.32 Advanced manufacturing using these and other cuttingedge technologies is not only creating new products and new methods of production but is also transforming familiar products like automobiles. The rapid growth in electronic and software content in automobiles, in forms like GPS-based guidance systems, information and entertainment technology, anti-lock brakes and engine control systems, will continue. According to Ford, around 30 percent of the value of one of its automobiles is comprised by intellectual property, electronics and software. In the German automobile market, electronic content as a share of production costs is expected to rise from 20-30 percent in 2007 to 50 percent by 2020.33

Independently, that innovation solves great power wars

Taylor 2k4 (Mark, Professor of Political Science – Massachusetts Institute of Technology, “The Politics of Technological Change: International Relations versus Domestic Institutions”, 4-1, http://www.scribd.com/doc/46554792/Taylor)

Technological innovation is of central importance to the study of international relations (IR), affecting almost every aspect of the sub-field. 2 First and foremost, a nation’s technological capability has a significant effect on its economic growth, industrial might, and military prowess; therefore relative national technological capabilities necessarily influence the balance of power between states, and hence have a role in calculations of war and alliance formation. Second, technology and innovative capacity also determine a nation’s trade profile, affecting which products it will import and export, as well as where multinational corporations will base their production facilities. 3 Third, insofar as innovation-driven economic growth both attracts investment and produces surplus capital, a nation’s technological ability will also affect international financial flows and who has power over them. 4 Thus, in broad theoretical terms, technological change is important to the study of IR because of its overall implications for both the relative and absolute power of states. And if theory alone does not convince, then history also tells us that nations on the technological ascent generally experience a corresponding and dramatic change in their global stature and influence, such as Britain during the first industrial revolution, the United States and Germany during the second industrial revolution, and Japan during the twentieth century. 5 Conversely, great powers which fail to maintain their place at the technological frontier generally drift and fade from influence on international scene. 6 This is not to suggest that technological innovation alone determines international politics, but rather that shifts in both relative and absolute technological capability have a major impact on international relations, and therefore need to be better understood by IR scholars. Indeed, the importance of technological innovation to international relations is seldom disputed by IR theorists. Technology is rarely the sole or overriding causal variable in any given IR theory, but a broad overview of the major theoretical debates reveals the ubiquity of technological causality. For example, from Waltz to Posen, almost all Realists have a place for technology in their explanations of international politics. 7 At the very least, they describe it as an essential part of the distribution of material capabilities across nations, or an indirect source of military doctrine. And for some, like Gilpin quoted above, technology is the very cornerstone of great power domination, and its transfer the main vehicle by which war and change occur in world politics. 8 Jervis tells us that the balance of offensive and defensive military technology affects the incentives for war. 9 Walt agrees, arguing that technological change can alter a state’s aggregate power, and thereby affect both alliance formation and the international balance of threats. 10 Liberals are less directly concerned with technological change, but they must admit that by raising or lowering the costs of using force, technological progress affects the rational attractiveness of international cooperation and regimes. 11 Technology also lowers information & transactions costs and thus increases the applicability of international institutions, a cornerstone of Liberal IR theory. 12 And in fostering flows of trade, finance, and information, technological change can lead to Keohane’s interdependence 13 or Thomas Friedman et al’s globalization. 14 Meanwhile, over at the “third debate”, Constructivists cover the causal spectrum on the issue, from Katzenstein’s “cultural norms” which shape security concerns and thereby affect technological innovation; 15 to Wendt’s “stripped down technological determinism” in which technology inevitably drives nations to form a world state. 16 However most Constructivists seem to favor Wendt, arguing that new technology changes people’s identities within society, and sometimes even creates new cross-national constituencies, thereby affecting international politics. 17 Of course, Marxists tend to see technology as determining all social relations and the entire course of history, though they describe mankind’s major fault lines as running between economic classes rather than nation-states. 18 Finally, Buzan & Little remind us that without advances in the technologies of transportation, communication, production, and war, international systems would not exist in the first place And, advanced manufacturing technology will make war IMPOSSIBLE

Paone 2k9 (Chuck, 66th Air Base Wing Public Affairs for the US Air Force, 8-10-09, “Technology convergence could prevent war, futurist says,” http://www.af.mil/news/story.asp?id=123162500)

The convergence of "exponentially advancing technologies" will form a "super-intelligence" so formidable that it could avert war, according to one of the world's leading futurists. Dr. James Canton, CEO and chairman of the Institute for Global Futures, a San Francisco-based think tank, is author of the book "The Extreme Future" and an adviser to leading companies, the military and other government agencies. He is consistently listed among the world's leading speakers and has presented to diverse audiences around the globe. He will address the Air Force Command and Control Intelligence, Survelliance and Reconnaissance Symposium, which will be held Sept. 28 through 30 at the MGM Grand Hotel at Foxwoods in Ledyard, Conn., joining Air Force Chief of Staff Gen. Norton Schwartz and a bevy of other government and industry speakers. He offered a sneak preview of his symposium presentation and answered various questions about the future of technology and warfare in early August. "The superiority of convergent technologies will prevent war," Doctor Canton said, claiming their power would present an overwhelming deterrent to potential adversaries. While saying that the U.S. will build these super systems faster and better than other nations, he acknowledged that a new arms race is already under way. "It will be a new MAD for the 21st century," he said, referring to the Cold War-era acronym for Mutually Assured Destruction, the idea that a nuclear first strike would trigger an equally deadly response. It's commonly held that this knowledge has essentially prevented any rational state from launching a nuclear attack. Likewise, Doctor Canton said he believes rational nation states, considering this imminent technology explosion, will see the futility of nation-on-nation warfare in the near future. Plus there's the "socio-economic linking of the global market system." "The fundamental macroeconomics on the planet favor peace, security, capitalism and prosperity," he said. Doctor Canton projects that nations, including those not currently allied, will work together in using these smart technologies to prevent non-state actors from engaging in disruptive and deadly acts. As a futurist, Doctor Canton and his team study and predict many things, but their main area of expertise -- and the one in which he's personally most interested -- is advanced and emerging technology. "I see that as the key catalyst of strategic change on the planet, and it will be for the next 100 years," he said. He focuses on six specific technology areas: "nano, bio, IT, neuro, quantum and robotics;" those he expects to converge in so powerful a way. Within the information technology arena, Doctor Canton said systems must create "meaningful data," which can be validated and acted upon. "Knowledge engineering for the analyst and the warfighter is a critical competency that we need to get our arms around," he said. "Having an avalanche of data is not going to be helpful." Having the right data is. "There's no way for the human operator to look at an infinite number of data streams and extract meaning," he said. "The question then is: How do we augment the human user with advanced artificial intelligence, better software presentation and better visual frameworks, to create a system that is situationally aware and can provide decision options for the human operator, faster than the human being can?" He said he believes the answers can often be found already in what he calls 'edge cultures.' "I would look outside of the military. What are they doing in video games? What are they doing in healthcare? What about the financial industry?" Doctor Canton said he believes that more sophisticated artificial intelligence applications will transform business, warfare and life in general. Many of these are already embedded in systems or products, he says, even if people don't know it.

//SOLVENCY//
//The plan solves – establishing a price floor sends a signal for renewable energy development, while increasing revenue for transportation infrastructure//

//Abelkop 2k9//

//(Adam, J.D., University of Iowa College of Law, 2010; B.A., Wake Forest University, PHd Student @ Univ of Indiana, “Why the Government Should Drink Your Milkshake: The Case for Restructuring the Federal Gas Tax,” The Journal of Corporation Law Winter, 2009, 35 Iowa J. Corp. L. 393 pg lexis//um-ef)

Congress should enact legislation to restructure the federal gasoline tax to better internalize the external costs of gasoline consumption and to send a price signal to investors that would afford them the certainty that they require to take risks on clean energy technology. The following Parts outline a recipe for how the government should accomplish this task. A. Phase-In a Price Floor and Variable Tax on Gasoline Congress should phase-in a price floor and variable tax on gasoline. The price floor mechanism begins with a target price. The amount of the variable tax is the difference between the target price and the market price. Thus, if the market price of a gallon of gasoline falls below the target, then the variable tax makes up the difference. n256 The "variable fuel tax ... increases as the market price drops and decreases as [market] prices rise." n257 If the market price rises above the price floor, then the variable tax becomes zero. The price floor and variable tax will function to stabilize the price at the pump: [*421] regardless of how much the market price fluctuates, the consumer will never pay less than the price floor for a gallon of gasoline. The target price is the key to the success of the price floor mechanism. If the target price is too low, then consumers will not change their consumption patterns and businesses will not feel confident enough to make investments in clean energy technology to the degree necessary to meaningfully contribute to the solution to climate change and oil dependence. If the target price is too high, then it could have a negative effect on economic productivity. There are two ways to limit the tax's economic fallout. First, the target price must not be set too high too early. This is easier said than done; but consider the state of the oil and gas market in mid-2008. The price of oil rose to $ 147 per barrel and gasoline peaked above $ 4 per gallon. Charles Krauthammer argues that "with $ 4 gas still fresh in our memories, the psychological impact of a tax that boosts the pump price to near $ 3 would be far less than at any point in decades." n258 The relentless march of oil prices through mid-2008 certainly affected economic productivity, but high oil prices are not among the primary causes of the financial crisis. n259 Dramatic spikes in the price of oil are inevitable in the long-term n260 and could arise in the short-term. n261 The alternative to a gradual decline in consumption beginning in the short-term is an abrupt decline in consumption brought on by a supply shock and severe economic contraction in the medium-to-long-term. n262 The longer the delay, the worse the contraction will be. n263 It took $ 4 per gallon gasoline to change American consumption patterns in 2008, and it may take less of a price increase to maintain more manageable consumption patterns in the future. n264 Therefore, the ultimate price target should be between $ 3 and $ 4. n265 A $ 4 gallon of gasoline would still cost less than the $ 5 to $ 15 that it would cost if the price were to include all of gasoline's externalities. n266 Moreover, gasoline would still be cheaper in the United States at $ 4 per gallon than it would be in Canada or many EU nations, which tax gasoline at much higher rates. n267 The second way to limit the tax's economic fallout is to phase it in. n268 Beginning with a modest price floor of $ 2 per gallon, for example, and gradually increasing the [*422] target over time would provide consumers and businesses with lead time to prepare for the increased fuel costs. If Congress offsets the gasoline tax increases by simultaneously phasing out payroll or income taxes, then it could set the gasoline price floor higher. As a failsafe, Congress could include a provision in the tax that would allow the IRS to adjust the target price based on its observed effects on gasoline consumption and economic activity. Finally, the statute should adjust the price floor to account for inflation. n269 B. Phase-In Increases in the Current Gasoline Tax In addition to establishing a variable tax on gasoline, Congress should maintain and increase the current excise gasoline tax. Retailers set the price of gasoline, but each phase of the value chain adds to the gasoline's cost. n270 Retailers incorporate these costs into the ultimate price. n271 If gasoline retailers and producers know that the new tax will force consumers to pay a minimum price, then they could simply raise their prices to capture the tax revenue that would otherwise go to the federal government. In other words, in response to a price floor on gasoline, the market could price gasoline equal to or near the statutorily mandated target price. With a price floor of $ 4 per gallon and a market price of, say, $ 3.50 per gallon, the federal government should collect $ 0.50 per gallon in tax revenue. Knowing that consumers will pay $ 4 per gallon, though, refiners, distributors, and retailers could simply raise their prices - thereby raising the market price - to, say, $ 3.75 per gallon. The market, then, would capture $ 0.25 per gallon that would otherwise have been federal tax revenue. Of course, competition always operates to drive down the market price, and this scenario also raises the specter of anticompetitive collusion and possible antitrust violations. This situation, though, is not outside the realm of possibility. States could also raise their respective gasoline taxes to capture a larger portion of the would-be federal tax revenue. Again, imagine a price floor of $ 4 per gallon and a market price of $ 3.50 per gallon in State A. State A, knowing that the federal price floor will compel consumers to pay $ 4 per gallon, could simply raise its own state tax on gasoline by $ 0.50 to capture the tax revenue that would otherwise go to the federal government. This scenario is easy to envision and likely to occur. To ensure that it captures a greater share of the revenue from the variable tax than the current $ 0.184 per gallon excise tax, the federal government should increase the federal excise tax rate. The level of the tax increase will depend on how much revenue the federal government determines that it wants to capture from the variable tax. If Congress phases out payroll or income taxes or issues rebates to low-income earners to offset the economic effects of the increase in the gasoline tax, then it will likely also need to increase its current excise tax on gasoline or make do with a smaller budget. Regardless of who captures the tax revenue, though, the establishment of a price floor on gasoline would send an appropriate price signal to the energy market and achieve more efficient cost/price integration than does the present market for gasoline. [*423] C. Revenue Distribution and Tax Offsets The current gasoline tax is the Highway Trust Fund's (HTF) primary source of revenue. n272 Many supporters of gasoline tax reform argue, however, that additional revenue from gasoline tax increases should be devoted to investment in renewable energy technology. n273 As appealing as this option is to clean energy advocates, it may not be possible or practical. The HTF is presently underfunded and many portions of the federal highway system are in disrepair. n274 At the least, Congress should not divert the current gasoline tax revenue away from funding the HTF without establishing an alternate source of revenue for the HTF. Additionally, the gasoline tax is regressive. n275 It would therefore be prudent to either redistribute the tax revenue to low-income earners in the form of tax rebates or to phase out certain payroll or income taxes, n276 in which case Congress would need to raise the gasoline tax to make up for the lost revenue. The desirability of such changes to the Internal Revenue Code is a contentious issue and beyond the scope of this Note. Ultimately, the tax revenue generated from an increase in the gasoline tax would not - and should not - be distributed to any single use, but should be allocated as the government deems appropriate. The plan kills damaging CAFÉ Standards and transitions away from government interventions into the market

Krauthammer 2k9 (Charles, American Pulitzer Prize–winning syndicated columnist, political commentator, and physician, McGill University degree in political science and economics, Commonwealth Scholar in politics at Balliol College, Oxford, Doctor of Medicine from Harvard Medical School “The Net-Zero Gas Tax; A once-in-a-generation chance,” pg lexis//um-ef)

So why even think about it? Because the virtues of a gas tax remain what they have always been. A tax that suppresses U.S. gas consumption can have a major effect on reducing world oil prices. And the benefits of low world oil prices are obvious: They put tremendous pressure on OPEC, as evidenced by its disarray during the current collapse; they deal serious economic damage to energy-exporting geopolitical adversaries such as Russia, Venezuela, and Iran; and they reduce the enormous U.S. imbalance of oil trade which last year alone diverted a quarter of $1 trillion abroad. Furthermore, a reduction in U.S. demand alters the balance of power between producer and consumer, making us less dependent on oil exporters. It begins weaning us off foreign oil, and, if combined with nuclear power and renewed U.S. oil and gas drilling, puts us on the road to energy independence. High gas prices, whether achieved by market forces or by government imposition, encourage fuel economy. In the short term, they simply reduce the amount of driving. In the longer term, they lead to the increased (voluntary) shift to more fuel-efficient cars. They render redundant and unnecessary the absurd CAFE standards--the ever-changing Corporate Average Fuel Economy regulations that mandate the fuel efficiency of various car and truck fleets--which introduce terrible distortions into the market. As the consumer market adjusts itself to more fuel-efficient autos, the green car culture of the future that environmentalists are attempting to impose by decree begins to shape itself unmandated. This shift has the collateral environmental effect of reducing pollution and CO2 emissions, an important benefit for those who believe in man-made global warming and a painless bonus for agnostics (like me) who nonetheless believe that the endless pumping of CO2 into the atmosphere cannot be a good thing. These benefits are blindingly obvious. They always have been. But the only time you can possibly think of imposing a tax to achieve them is when oil prices are very low. We had such an opportunity when prices collapsed in the mid-1980s and again in the late 1990s. Both opportunities were squandered. Nothing was done. Today we are experiencing a unique moment. Oil prices are in a historic free fall from a peak of $147 a barrel to $39 today. In July, U.S. gasoline was selling for $4.11 a gallon. It now sells for $1.65. With $4 gas still fresh in our memories, the psychological impact of a tax that boosts the pump price to near $3 would be far less than at any point in decades. Indeed, an immediate $1 tax would still leave the price more than one-third below its July peak. The rub, of course, is that this price drop is happening at a time of severe recession. Not only would the cash-strapped consumer rebel against a gas tax. The economic pitfalls would be enormous. At a time when overall consumer demand is shrinking, any tax would further drain the economy of disposable income, decreasing purchasing power just when consumer spending needs to be supported. What to do? Something radically new. A net-zero gas tax. Not a freestanding gas tax but a swap that couples the tax with an equal payroll tax reduction. A two-part solution that yields the government no net increase in revenue and, more importantly--that is why this proposal is different from others--immediately renders the average gasoline consumer financially whole. Here is how it works. The simultaneous enactment of two measures: A $1 increase in the federal gasoline tax--together with an immediate $14 a week reduction of the FICA tax. Indeed, that reduction in payroll tax should go into effect the preceding week, so that the upside of the swap (the cash from the payroll tax rebate) is in hand even before the downside (the tax) kicks in. The math is simple. The average American buys roughly 14 gallons of gasoline a week. The $1 gas tax takes $14 out of his pocket. The reduction in payroll tax puts it right back. The average driver comes out even, and the government makes nothing on the transaction. (There are, of course, more drivers than workers--203 million vs. 163 million. The 10 million unemployed would receive the extra $14 in their unemployment insurance checks. And the elderly who drive--there are 30 million licensed drivers over 65--would receive it with their Social Security payments.) Revenue neutrality is essential. No money is taken out of the economy. Washington doesn't get fatter. Nor does it get leaner. It is simply a transfer agent moving money from one activity (gasoline purchasing) to another (employment) with zero net revenue for the government. Revenue neutrality for the consumer is perhaps even more important. Unlike the stand-alone gas tax, it does not drain his wallet, which would produce not only insuperable popular resistance but also a new drag on purchasing power in the midst of a severe recession. Unlike other tax rebate plans, moreover, the consumer doesn't have to wait for a lump-sum reimbursement at tax time next April, after having seethed for a year about government robbing him every time he fills up. The reimbursement is immediate. Indeed, at its inception, the reimbursement precedes the tax expenditure. One nice detail is that the $14 rebate is mildly progressive. The lower wage earner gets a slightly greater percentage of his payroll tax reduced than does the higher earner. But that's a side effect. The main point is that the federal government is left with no net revenue--even temporarily. And the average worker is left with no net loss. (As the tax takes effect and demand is suppressed, average gas consumption will begin to fall below 14 gallons a week. There would need to be a review, say yearly, to adjust the payroll tax rebate to maintain revenue neutrality. For example, at 13 gallons purchased per week, the rebate would be reduced to $13.) Of course, as with any simple proposal, there are complications. Doesn't reimbursement-by-payroll-tax-cut just cancel out the incentive to drive less and shift to fuel-efficient cars? No. The $14 in cash can be spent on anything. You can blow it all on gas by driving your usual number of miles, or you can drive a bit less and actually have money in your pocket for something else. There's no particular reason why the individual consumer would want to plow it all back into a commodity that is now $1 more expensive. When something becomes more expensive, less of it is bought. The idea that the demand for gasoline is inelastic is a myth. A 2007 study done at the University of California, Davis, shows that during the oil shocks of the late 1970s, a 20 percent increase in oil prices produced a 6 percent drop in per capita gas consumption. During the first half of this decade, demand proved more resistant to change--until the dramatic increases of the last two years. Between November 2007 and October 2008, the United States experienced the largest continual decline in driving history (100 billion miles). Last August, shortly after pump prices peaked at $4.11 per gallon, the year-on-year decrease in driving reached 5.6 percent--the largest ever year-to-year decline recorded in a single month, reported the Department of Transportation. (Records go back to 1942.) At the same time, mass transit--buses, subways, and light rail--has seen record increases in ridership. Amtrak reported more riders and revenue in fiscal 2008 than ever in its 37-year history. Gasoline demand can be stubbornly inelastic, but only up to a point. In this last run-up, the point of free fall appeared to be around $4. If it turns out that at the current world price of $39 a barrel, a $1 tax does not discourage demand enough to keep the price down, we simply increase the tax. The beauty of the gas tax is that we--and not OPEC--do the adjusting. And that increase in price doesn't go into the pocket of various foreign thugs and unfriendlies, but back into the pocket of the American consumer. What about special cases? Of course there are variations in how much people drive. It depends on geography, occupation, and a host of other factors. These variations are unavoidable, and in part, welcome. The whole idea is to reward those who drive less and to disadvantage those who drive more. Indeed, inequities of this sort are always introduced when, for overarching national reasons, government creates incentives and disincentives for certain behaviors. A tax credit for college tuition essentially takes money out of the non-college going population to subsidize those who do go--and will likely be wealthier in the end than their non-college contributors. Not very fair. Nonetheless, we support such incentives because college education is a national good that we wish to encourage. Decreased oil consumption is a similarly desirable national good. There will certainly be special cases, such as truck drivers and others for whom longer distance driving is a necessity that might warrant some special program of relief. That would require some small bureaucracy, some filings for exemption or rebate, and perhaps even some very minor tweak of the gas tax (say, an extra penny or two beyond the dollar). But that's a detail. Most people can drive less. They already do. Why a $1 tax? Because we need a significant increase in the cost of gasoline to change our habits--or, more accurately, maintain the new driving habits and auto purchase patterns that have already occurred as a result of the recent oil shock. We know from the history of the 1980s and 1990s that these habits will be undone and unlearned if gasoline remains at today's amazingly low price. In the very short time that prices have been this low, we have already seen a slight rebound in SUV sales. They remain far below the level of last year--in part because no one is buying anything in this recession, and in part because we have not fully recovered from the psychological impact of $4 gasoline. We are not quite ready to believe that gas will remain this low. But if it does remain this low, as the night follows day, we will resume our gas-guzzling habits. It might therefore be objected that a $1 gasoline tax won't be enough. If $4 was the price point that precipitated a major decrease in driving and a collapse of SUV sales, an immediate imposition of a $1 gas tax would only bring the average price to $2.65. To which I have two answers. First, my preliminary assumption is that it takes $4 to break the habit of gas-guzzling profligacy. But once that is done, it might take something less, only in the range of $3, to maintain the new habit. It may turn out that these guesses are slightly off. The virtue of a gas tax is that these conjectures can be empirically tested and refined, and the precise amount of the tax adjusted to consumer response. Second, my personal preference would be a $1.25 tax today (at $1.65 gasoline) or even a $1.50 tax if gas prices begin to slide below $1.50--the target being near-$3 gasoline. (The payroll tax rebate would, of course, be adjusted accordingly: If the tax is $1.50, the rebate is $21 a week.) The $1 proposal is offered because it seems more politically palatable. My personal preference for a higher initial tax stems from my assumption that the more sharply and quickly the higher prices are imposed, the greater and more lasting the effect on consumption. But whatever one's assumptions and choice of initial tax, the net-zero tax swap remains flexible, adjustable, testable, and nonbureaucratic. Behavior is changed, driving is curtailed, fuel efficiency is increased, without any of the arbitrary, shifting, often mindless mandates decreed by Congress. This is a major benefit of the gas tax that is generally overlooked. It is not just an alternative to regulation; because it is so much more efficient, it is a killer of regulation. The most egregious of these regulations are the fleet fuel efficiency (CAFE) standards forced on auto companies. Rather than creating market conditions that encourage people to voluntarily buy greener cars, the CAFE standards simply impose them. And once the regulations are written--with their arbitrary miles-per-gallon numbers and target dates--they are not easily changed. If they are changed, moreover, they cause massive dislocation, and yet more inefficiency, in the auto industry. CAFE standards have proven devastating to Detroit. When oil prices were relatively low, they forced U.S. auto companies to produce small cars that they could only sell at a loss. They were essentially making unsellable cars to fulfill mandated quotas, like steel producers in socialist countries meeting five-year plan production targets with equal disregard for demand. Yet the great 2008 run-up in world oil prices showed what happens without any government coercion. As the price of gas approached $4 a gallon, there was a collapse of big-car sales that caused U.S. manufacturers to begin cutting SUV production and restructuring the composition of their fleets. GM's CEO, for example, declared in June, "these prices are changing consumer behavior and changing it rapidly," and announced the closing of four SUV plants and the addition of a third shift in two plants making smaller cars. Which is precisely why a gas tax would render these government-dictated regulations irrelevant and obsolete. If you want to shift to fuel-efficient cars, don't mandate, don't scold, don't appeal to the better angels of our nature. Find the price point, reach it with a tax, and let the market do the rest. Yes, a high gas tax constitutes a very serious government intervention. But it has the virtue of simplicity. It is clean, adaptable, and easy to administer. Admittedly, it takes a massive external force to alter behavior and tastes. But given the national security and the economic need for more fuel efficiency, and given the leverage that environmental considerations will have on the incoming Democratic administration and Democratic Congress, that change in behavior and taste will occur one way or the other. Better a gas tax that activates free market mechanisms rather than regulation that causes cascading market distortions. The net-zero gas tax not only obviates the need for government regulation. It obviates the need for government spending as well. Expensive gas creates the market for the fuel-efficient car without Washington having to pick winners and losers with massive government "investment" and arbitrary grants. No regulations, no mandates, no spending programs to prop up the production of green cars that consumer demand would not otherwise support. And if we find this transition going too quickly or too slowly, we can alter it with the simple expedient of altering the gas tax, rather than undertaking the enormously complicated review and rewriting of fuel-efficiency regulations.

Asking for past 2nr's if you hit us early in the tournament won't be very beneficial because both Michael and Eric were 1n's for the few weeks before the camp tournament, so you're asking for our old partners' strategies, not ours