Delivered at the Iowa State University's Manatt-Phelps Lecture Series
More than two hundred years ago, a group of exceptional individuals set upon a perilous and uncertain course in a land that would become the United States of America. They had a purpose to their lives and a vision of liberty with a life free from tyranny, where industry, not privilege, would determine one's future. These free-thinking people were imbued by a sense of fair play, and religious and social tolerance. They possessed a spirit that history had never before seen. They went about building a new land of hope and opportunity.
Our Founders were imperfect. Slavery and the treatment of Native Americans were two blights on this new land and this legacy remains with us today. But, our Founders, imperfect as they were, built for this nation the sturdy foundation for a democratic and vibrant society that has prospered since its creation.
Today, just as it was over two hundred years ago, we live at a time of historic transformation. We are defining our future. The world is confronted with a universe of challenges, threats, and opportunities unlike any that we have ever known. In a 21st century global community, all leaders of all institutions will be faced with more uncontrollables than ever before in their efforts to govern and lead. This will require a 21st century frame of reference. The margins of error for miscalculation will be less than ever before. The 24-hour news cycle that dominates our lives, and the rate and intensity of change, complicates leadership, governance and society. There is today greater diffusion of economic power and global access to information - meaning new found global economic power - than ever before.
This is a critical time for responsible governance. This is a time for hard choices and difficult decisions. This will require courageous, informed and wise leadership.
Maintaining America's competitive position in the global economy demands that we begin to inventory and address the first-order challenges in our country, such as trade, energy, deficit spending, entitlement programs, infrastructure, education, immigration and American foreign policy. We are only beginning to understand the scope and complexity of the threats from terrorism and Islamic extremism, pandemic health outbreaks, endemic poverty, environmental crises, and cycles of despair. Allies and international institutions will be essential to our successful engagement of these threats.
Today, we see some parallels to the period following World War II. Now, as then, the world is in the midst of adjusting to the new challenges of our time. After World War II, the United States and its allies created organizations of global benefit and common purpose such as the United Nations, the General Agreement on Tariffs and Trade, NATO and The World Bank. These institutions and alliances are as vital today as when they were formed. They need constant adjustment and calibration to stay relevant to today's world. What remains unchanged is the critical importance of institutions, alliances and relationships to achieve global security, stability and prosperity.
As Mel Laird, former Secretary of Defense under President Nixon, writes in Foreign Affairs,
"Our pattern of fighting our battles alone or with a marginal coalition of the willing' contributes to the downward spiral in resources and money. Ironically, Nixon had the answer back in 1969. At the heart of the Nixon Doctrine, announced that first year of his presidency, was the belief that the United States could not go it alone. As he said in his foreign policy report to Congress on February 18, 1970, the United States will participate in the defense and development of allies and friends, but America cannot -- and will not -- conceive all the plans, design all the programs, execute all the decisions and undertake all the defense of the free nations of the world. We will help where it makes a real difference and is considered in our interest.
Three decades later, we have fallen into a pattern of neglecting our treaty alliances, such as NATO, and endangering the aid we can give our allies by throwing our resources into fights that our allies refuse to join. Vietnam was just such a fight, and Iraq is, too. If our treaty alliances were adequately tended to and shored up -- and here I include the UN -- we would not have so much trouble persuading others to join us when our cause is just. Still, as the only superpower, there will be times when we must go it alone."
Economics and Trade
At the core of America's success has been America's economic freedom and flexibility anchored by the rule of law. These central elements will remain indispensable for our future. Economic power is the power that allows a nation options and opportunities.
America needs to prepare itself for a period of global uncertainty and complexity. We are witnessing this reality being played out today with the great upheavals of American corporate giants like General Motors, Delphi Corporation, the major airlines and others. Technology, productivity and markets will continue to drive global economic dislocation. No nation will be spared from this phenomenon.
Americans must welcome this new global competition, not cower from it. This global development represents more opportunities for America's consumers, businesses and investors than ever before. Trade is an essential part of our prosperity today and will be even more so in the future. It has been the engine of growth, innovation, wealth and job creation in the United States and the world since World War II. Between 1948 and 2001, world exports rose from $58 billion to almost $6 trillion, and tariffs fell from an average of 40 percent to 4 percent.
We are challenged today by a world that is more competitive than ever before in history. Consider the fact that just 20 years ago China, Russia, Eastern Europe and India were not even in the global trading system. Between 1984 and 2004 American exports of goods and services rose from $291 billion to over $1.2 trillion. And, during the last 20 years the U.S. has seen employment rise from around 105 million workers in 1984 to nearly 140 million today.
Free trade agreements such as NAFTA, CAFTA and bilateral free trade agreements that the United States has recently signed with Singapore, Chile, Jordan, Morocco, and Australia help create new opportunities around the globe. The upcoming Doha Round in Hong Kong this December will be another important milestone, not only in U.S. trade policy, but world trade policy to continue the process of greater market liberalization.
America's openness to foreign direct investment has also been vital to our economy. The world sees the U.S. as a stable and profitable place to invest. In 2004, new foreign investment in the U.S. was almost $80 billion, up 26% from 2003.
But there is a dangerous protectionist streak growing in both of America's political parties that may jeopardize our ability to remain competitively engaged in the world. We cannot let the challenges of the new global economy draw us inward in a senseless retreat from the world. To do so flies in the face of our own best interests.
To retreat behind a wall of trade protectionism would be dangerously misguided and disastrous for America and the world. That course has been tried before with devastating consequences. Global competition sharpens and improves productivity and enhances standards of living worldwide. Increased productivity and a flexible economy have kept America the economic envy of the world.
The global economic integration of the past six decades has also contributed to world stability as more people in more nations have emerged from poverty. As standards of living rise, people become more invested in the future of their countries and in the guarantors of their future - human rights, democracy, rule of law and transparent governance. But, for many around the world, these economic enhancements have remained out of reach. Still today, the majority of the world's seven billion people live in developing or under developed countries. This economic fragility remains a key threat to global stability and the rule of law. It is in America's interest that countries such as China, India, Indonesia, Nigeria and Ukraine grow and prosper. The challenge of widening the reach of economic prosperity will be one of the great tasks of the 21st Century.
Energy and security interests drive global economics and reflect the interconnections of a global society. Energy security, particularly in light of the recent tightening of world energy markets, requires greater diversification of energy sources. This includes bringing new hydrocarbon reserves to market, and devoting more research and resources to both development of renewable and alternate sources of energy, as well as expanded use of nuclear. America will require a wider and deeper portfolio of energy sources as well as a more efficient use of our energy. A comprehensive strategic energy policy must be integrated into America's foreign policy.
To fully seize the opportunities of today's global economy and maintain America's competitive position in the world requires a national consensus of purpose. Every generation of Americans has contributed to making a better world than the one they inherited. Each successive generation of Americans has been bequeathed more opportunities and better preparation than the past generation. Preparing America's next generation is critical for America's future. Part of that preparation is personal responsibility, education and social discipline. To succeed today, just as has always been the case, we must prepare, work hard, be creative and productive, and invest wisely. The next generation of Americans has the ability to do more good for the world than any preceding generation. But it will have to earn that success.
In the challenging and dynamic environment ahead of us, Americans will need to ask themselves some tough questions, like what is the role of government? How much government do they want? What do they want government to do for them? How much government are they willing to pay for? Who bears the responsibility for paying for government?
The President and Congress must set a fiscal policy commensurate with the needs of the nation and the responsibility to tax and spend with a clear prioritization of resources. The Fiscal Year 2005 federal budget deficit was $312 billion and in Fiscal Year 2004 the federal budget deficit was $420 billion. The Congressional Budget Office projects that 62 percent of our $2.6 trillion Fiscal Year 2006 budget will be obligated to mandatory spending. Most of that amount will go toward paying for entitlement programs - Social Security, Medicare and Medicaid. And, nearly $208 billion of that mandatory spending will go toward paying interest on our national debt....which is now $8 trillion.
Our obligations abroad also come with a financial cost. American operations in Iraq today cost from five to six billion dollars a month and monthly costs in Afghanistan are over $1 billion. If you include replacement costs for equipment and infrastructure, the monthly cost in Iraq is about $8 billion. The Congressional Research Service has calculated that America has spent nearly $360 billion so far in Iraq and Afghanistan.
Sustained deficits erode the economic fundamentals of a country. Foreign investors - particularly China and Japan - have provided a majority of the capital that continues to finance our deficits and national debt. This continued weakening of our economic base will have significant economic and national security implications for our future.
We cannot continue to run up the national debt and burden future generations of Americans with huge government obligations that will impair their ability to compete and prosper. This will also limit our foreign policy options.
We must make changes in Social Security, Medicare and Medicaid or they will be unsustainable. Social Security is the most successful social program in the history of our country. I know something about this. When I was 16 years-old, my father died. The Social Security benefits my mother received were critical in helping her raise four young boys. I well remember my mother's relief when that Social Security check arrived each month. We must remember that the first obligation of Social Security is to the most needy Americans. In 2017, Social Security will pay out more money than it takes in. By 2041, it will be insolvent. This is a jarring reality, but it is also one that can be fixed. I was the first United States Senator to introduce comprehensive Social Security reform legislation this year. The future insolvency of Social Security need not happen if leaders have the courage to address it now.
Medicare and Medicaid are more difficult problems to solve because they have become so deeply interwoven into our country's health care system. Medicare drives health care today. We cannot address one piece of this without addressing the entirety. That is why, along with Democratic Representative John Tanner from Tennessee, I introduced a bill this month to create an independent, bipartisan commission charged with reviewing America's three major entitlement programs and making comprehensive recommendations to sustain the solvency and stability of these programs for future generations. Over the next 75 years these three programs represent a $42 trillion unfunded commitment and are on a trajectory that cannot be sustained.
Our nation's infrastructure is another area that requires us to see beyond the horizon of the immediate to develop a sound long-term economic policy for America. We need look no further than the failures of infrastructure in New Orleans to understand the importance and wisdom of investment in infrastructure. Airports, highways, bridges, ports, high-speed internet and broad-band are the lifeblood of our economy. Outdated infrastructure will erode our global competitiveness. These issues need to be addressed now, and there will be a cost for investing in them.
This summer we passed a much-needed Highway bill. It was filled with too many special interest projects, but it also included funding for much-needed infrastructure enhancement. We also need to think creatively. Infrastructure capital accounts budgeting, for example, is being used by other countries such as New Zealand and the United Kingdom to bring more accountability to government spending and investment in their public infrastructure. We need to explore these kinds of new initiatives.
Today's leaders need to examine the way we are preparing our workforce to maintain its competitiveness. A panel created by the National Academy of Sciences and the National Academy of Engineering issued a report this month that said U.S. science and mathematics education is lagging, and American students are not being readied for the "gathering storm" of foreign competition. We need to have a serious national debate about how we prepare for this "gathering storm."
Recently, Gene Budig, a professor at Princeton University's Woodrow Wilson School of Public and International Affairs, a former chief executive of three universities and former president of Major League Baseball's American League, wrote in the Omaha World-Herald:
"The United States has a problem of epic proportions, one that has yet to register on the national radar screen. Its impact on our global competitiveness could be swift and chilling in the years ahead if not addressed in a careful and effective manner.
Amazingly, 46 percent of the new people who enter elementary and secondary schools as teachers in America will leave the profession within five years. And 38 to 40 percent of today's teachers have more than 20 years of service, meaning many are in a long gray line and eligible to retire."
David Brooks, a nationally syndicated columnist, recently warned in the New York Times of the growing societal divide between those who go to college and those who do not. Brooks wrote:
"Only 28 percent of American adults have a college degree, but most of us in this group find ourselves in workplaces in social milieus where almost everybody has been to college. A social chasm is opening up between those in educated society and those in noneducated society, and you are beginning to see vast behavioral differences between the two groups."
I don't believe that massive federal involvement in education is the answer. No Child Left Behind, while well-intentioned....in my opinion, was fundamentally bad policy. The federal government is not equipped to manage education in America. Instead of focusing on slapping federal mandates down on states, we ought to be focused on increasing resources, access and competition in our schools.
The federal government can start by meeting its obligation to fully fund its commitment to the Individuals with Disabilities Education Act (IDEA). If the federal government was meeting its legal commitment to IDEA, local school districts would have far more resources to spend on their additional local education priorities.
We need to prepare our workforce by being honest and realistic about the issue of immigration. Few issues in America today have been subject to as much overheated rhetoric and dishonest appeals to people's worst fears than this one. The lawless crossing of our borders is a national security threat with which we must deal. No one can deny that. But that does not change the fact that there are 10-12 million people living and working in this country illegally. No amount of speech making will make this reality go away.
We can confront this reality by putting in place a program to identify those who are here illegally but are contributing to our society through work, family, faith or any other measure of their industry, and put them on a path to earned legal status, while isolating those who are not here to strengthen our country.
This month, I introduced four immigration reform bills that provide a comprehensive approach to this issue. We need to deal with immigration reform now. It has immense implications for our society, security and economy.
There is a vital intangible that has been an essential building block for American prosperity and security over two centuries- and that is America's leadership in the world. We have traditionally used our leadership to forge consensus on vital international issues. Bringing together allies in common cause, addressing common challenges with common responses. And, we have done so by building relationships, alliances and international organizations that enhance our ability to influence and protect our national interests. These alliances have enhanced our power; not diminished it. The United States, alone, is incapable of confronting 21st century global threats and challenges. We must not unintentionally isolate ourselves in the world.
Most recently however, America has been perceived in the world as having turned away from its successful post World War II multilateral approach. We are confronted today with the reality that trust and confidence in the United States has seriously eroded and that our purpose and power are questioned and opposed around the world.
In the most recent edition of the New Yorker Magazine, President George H.W. Bush's National Security Advisor, General Brent Scowcroft, discusses the state of the world and the challenges we face. We would be wise to listen to Scowcroft. He talks about the importance of "weighing the consequences of alternative political actions." We have failed to heed his counsel. Our inability to examine the possible consequences of our actions before we took them has put us in a precarious position in the world....especially in Iraq and the Middle East.
America's decisions and actions regarding Iraq have isolated and alienated us from much of the world. But Iraq held a successful constitutional referendum on October 15. Iraqi political parties are now preparing for parliamentary elections on December 15 leading to the formation of a constitutionally-based government.
The success of this process will increasingly diminish the influence of the United States; ultimately success or failure in Iraq will be determined by Iraqis.
We must recognize this dynamic and seize the opportunity over the coming months to act decisively to help strengthen regional and international support for Iraq. Once an Iraqi elected government is in place, the United States, along with its allies, should propose a regional security conference on Iraq with the endorsement of the United Nations (UN). Creating this regional context is vital. Today there is no mechanism for regional partners to develop consensus on building relationships around common security, political and economic interests. The United States should take a secondary role, and allow Iraq and its neighbors to lead this effort.
Such a conference would give us another opportunity to help rebuild an international consensus on Iraq and address the regional complexities of the Middle East. More missed opportunities on Iraq will be disastrous for the U.S., Iraq and the region.
As we consider the regional context of stability and security in Iraq, there is another issue that we must deal with - a relationship between the United States and Iran. The fact that our two governments cannot - or will not - sit down to exchange views must end. There will be no stability in the Middle East if Iran is excluded.
Iran is a regional power; it has major influence in Iraq and throughout the Gulf region. Its support of terrorist organizations and the threat it poses to Israel is all the more reason that the U.S. must engage Iran. The United States is capable of engaging Iran in direct dialogue without sacrificing any of its interests or objectives. And, any lasting solution to Iran's nuclear weapons program will require the United States' direct discussions with Iran.
Our military must remain an indispensable element of our power. But over reliance on military power, and the use of force, will lead to deep problems for America. It is wrong and dangerously irresponsible to place upon our military burdens which it cannot carry and objectives it cannot achieve. Without the strongest military in the world America cannot remain secure nor carry out its foreign policy. But our fundamental strength runs deeper than guns and bombs. The strength of America comes from its character. As President Kennedy said:
"I look forward to a future in which our country will match its military strength with our moral restraint, its wealth with our wisdom, its power with our purpose."
So as America prepares for its place in the 21st Century we are reminded that we are more than our military power and economic might. We are people rich in spirit - who have always believed in our country and its destiny. We are people who have been tempered by war, disappointment, and tragedy...but never without hope for a better world and a better tomorrow. Our country has never dwelt on the past or yearned for a simpler time or slower pace. There are great opportunities - and challenges - before us. We can build a successful 21st century world on America's lasting foundational planks of tolerance and respect for others, entrepreneurism and risk taking, courage and faith in each other. Strong and imaginative leadership, coherent policies, and responsible politics and government will sustain our great nation. This is not an uncritical or arrogant America - this is an honest and invigorated America.