America’s Response to War in Europe

The Russian invasion of Ukraine is one of the most historically significant foreign policy actions since the turn of the century. Many will die, and the ramifications of President Putin’s actions will affect the world for years to come. The Biden Administration and NATO are facing a momentous task. They have acted diligently so far, but political pressures will only grow for our world leaders. The United States has a notably steep road ahead.

Observe the private sector, Congress, and the media carefully going forward. To start with the private sector: despite early dropoffs in the stock market, war should be terrific for our economy. History serves as our guide here; World War II lifted us from the Great Depression, while the more recent Russian invasion of Crimea resulted in an initial market selloff, followed by a market surge. The media motivations behind emboldening war cries are just as clear: more conflict equals more viewership, and therefore more money. With most politicized media outlets facing ratings slumps of late, media executives would welcome flashy updates about the “War in Europe” to their 24-hour cycles with open arms. 

Looking to Capitol Hill: keep in mind that wartime presidents and Congresses are very popular. Be prepared for politicians on both sides of the aisle to advocate for increased military action against Russian aggression. They have “skin in the game,” although not compared with the soldiers who could be Europe-bound in no time flat. Democrats will use Ukraine to divert attention away from their inflation–enabling economic policies, while many hawkish Republicans will use this opportunity to further bolster national defense and American troop presences across Eastern Europe.

To the credit of this White House, President Biden has adamantly confined punishments of Russia to targeted sanctions. He understands that Ukraine is not a NATO ally, and that a war between nuclear powers over Ukraine’s sovereignty remains highly undesirable. But even so, those unpopular Democrats and hawkish Republicans will emerge in short time – against the wills of their constituencies ­– and Biden will have an increasingly difficult time ignoring their calls to arms.

Two points to keep in mind as we watch the U.S. response to the crisis are American energy policy and the quality – in my view, the strategic inadequacy – of Biden’s foreign policy officials.

The Biden Administration enacted flawed energy policies and they need to reverse course fast. The United States now imports between 12 and 26 million barrels of oil from Russia each month, after losing our energy independence status last year. Will Biden sanction Russian oil companies, thereby raising domestic fuel prices even more, or does he leave those companies untouched? The first outcome appears more likely, as Russia is a petroleum (and natural gas) country and the best way for Biden and NATO to cause real economic damage is by targeting Russian energy production capacities. If this is indeed likely, we should prepare for average gas prices to surpass four dollars per gallon in a short time. The policy prescription for Team Biden here is simple: the administration needs to ignore the progressive wing of his party and bulk up our energy infrastructure. We are not in peacetime anymore, and “climate czar” John Kerry’s excessive energy gambles unacceptably threaten the American people.

Biden’s foreign policy team is utterly and woefully predictable. Between President Obama and the West forfeiting Crimea in 2014, Biden forfeiting Afghanistan last year, and refreshed American dependencies on Russian oil, Putin considered weak targeted sanctions as his worst-case scenario. With President Trump, Putin never knew what he was going to get; this seems to have resulted in a four-year Russian imperial hiatus. But the hiatus is now over, the establishment foreign policy bureaucrats are back in charge, and their playbook has been predictable since the end of the Cold War. While I am not advocating untested foreign policy approaches toward an aggressive nuclear power, Biden’s national security officials must be more creative with their strategies and keep our adversaries guessing.

Mike Tyson once said, “Everyone has a plan until they get punched in the face.” No one knew how Putin would strike Ukraine, while few seem to have expected him to invade so broadly and quickly. There will be confusion in NATO countries about how to respond, amplifying the importance of clear direction from President Biden and European leaders. The West has just been punched in the face, and our leaders are now in the game of damage control. Let us hope that they will lead and represent the free world well. 

America's Next Step Toward Sustainable Energy

Looking beyond the largely political arguments over why average global temperatures are increasing, the fact remains that greenhouse gases are filling our atmosphere at an unsustainable rate. You might be surprised to learn that electricity production is responsible for only 27 percent of greenhouse gases that humans produce today. Still, solving this one quarter of the problem is pivotal to reducing other major sources of greenhouse gases. “Electrifying” these other gas sources –like autos and cement factories–is necessary in order to achieve net-zero carbon emissions. Given the energy options we have today, the United States would be remiss not to pursue nuclear power as a key next step toward environmentally friendly energy production.

Coal and natural gas now produce 59 percent of the U.S.’s electricity. Nuclear energy accounts for 20 percent. The reasons are myriad, but they mainly involve government subsidies for fossil fuels and the relatively cheap cost of excavating and processing these non-renewable sources. To be clear, similar subsidies exist in countries throughout the developed and developing worlds. These factors make the economic landscape unfavorable for competing clean energy solutions.

Solar and wind, despite our hopes, are not the large-scale answers to our clean electricity deficit. We have largely maximized the efficiency of solar cells, yet solar panels remain a high-cost, low-yield commodity. Windmills are nice, but contingent on regular winds and could never satisfy a large percentage of our national energy appetite either. But the larger problem with these two energy sources pertains to how their energy is stored. If we were to construct the battery facilities needed to store solar or wind energy for entire cities, it would be inefficient and a net detriment to the environment. Just think about the amount of lithium required!

When many in the United States think about nuclear energy, the 2011 Fukushima nuclear plant accident likely comes to mind, generating unease. People are usually not interested in creating new facilities capable of accidentally irradiating their backyards. However, the reason for Fukushima's failure had not so much to do with the plant’s science or intended design, but rather with corruption. Nuclear plants contain an array of emergency backup generators, designed to keep the reactors cool in a plant failure or power outage. But one of the conditions for these generators to operate as intended is that they be located well above sea level. Instead, the builders of Fukushima determined that it was less expensive to place the emergency generators below sea level. Due to this poor decision, a tsunami flooded the generators and caused the nuclear chaos we all remember today.

Bear in mind, though, that Fukushima's construction began in 1971. Since then, scientists and engineers have come a long way in developing nuclear facilities that will not have reactor meltdowns. Bill Gates, Warren Buffett, and others have invested considerably in the design of far safer, eco-friendly nuclear plants. Some new plant designs use nuclear waste as an energy source, which makes steam the only notable by-product. In short, safe and environmentally friendly nuclear technology exists today, and it’s pretty neat.

If we look past the public unease about nuclear plants and wish to proceed with adding more nuclear power to our energy sector, how many plants should we be building? The best answer is as many as we can–seriously. The United States cannot possibly build too many, as we would require approximately 306 new reactors to provide 75 percent of our current energy needs. We only have 94 functioning reactors today, all but five of which were operational before 2000. Perhaps even more interesting, every reactor currently operational was contracted by the U.S. government during the 1960s and 70s. Each reactor costs approximately 7.5 billion dollars to build, meaning that the construction costs alone required to nuclear-power 75 percent of today’s American energy production would be between 2 and 2.5 trillion dollars. This is an expensive goal, but demonstrates the cost of edging out fossil fuels in the most cost-efficient way possible.

In 2019 and 2020, the U.S. produced more energy than it consumed for the first time since 1957. We are unfortunately about to reverse this trend in 2021, already importing non-renewable energy predominantly from the Middle East. Maybe the scientific discovery for a quantum leap in energy production technology happens tomorrow, but that remains unlikely. If we are truly interested in a more sustainable future, the American people and government must work toward implementing more attainable energy options, almost inevitably including the one proposed here.

The Economic Hostage Situation in Congress

Our legislative process calls for relatively slow development, so as not to risk fracturing the core of our democratic republic by attempts at rapid, unsustainable reform. Unfortunately, this healthy slowness seems to have disappeared as Democrats have taken control of the legislative and executive branches under the auspices of a worldwide pandemic.

COVID-19 relief policy is the most significant legislative battlefield early in this new session of Congress. It may not only determine the future political balance of power but also gravely threaten the economic underpinnings of the United States. The power of COVID-19 relief policy to shape the coming years is not yet fully recognized. After unconscionable numbers of Americans have been forced indoors and away from their jobs, stymieing economic growth, the Democratic leadership has increased its national influence by foisting upon the nation the $1.9 trillion American Rescue Plan Act of 2021.

The details of this act are unacceptable, at odds with our country’s fundamental principles. To begin with, it includes blatant reverse discrimination, promising over $1 billion to subsidize farmers based on their ethnicity. Meanwhile, social justice initiatives, city bailouts, and flawed public works projects are set for billions of federal tax dollars. The nonpartisan Congressional Budget Office found that one-third of its funds are not to be spent until fiscal year 2022, and another $140 billion is not to be used until fiscal 2024, more than two years from now. So much for “emergency” relief. 
And even in terms of spending levels alone, this package is an absurdity. Nonetheless, Americans who recognize the waste will have to overlook all of this in order to pocket much-needed relief checks.

While I was working in Washington two years ago, I briefly met Senator Rick Scott. He had just delivered remarks at the Heritage Foundation, at one point discussing how he funded public initiatives while governor of Florida. If a state project produced returns on investment, he continued its funding; otherwise, he attempted to adjust the program or cut it altogether. This core principle of financial management is missing not only in the politically unilateral American Rescue Plan Act, but also in many other appropriations bills. Instead, a mentality of throwing money at problems when legislating, and looking good because of it, dominates Washington. While this strategy may win re-election for some, it leaves the American people in a far worse position by rewarding flawed programs rather than making them or policy more productive. 

Now for a crash course on a word economists rarely wish to hear: inflation. With most Americans gaining at least $1,400 in their bank accounts, many are set to spend immediately. This will prompt price increases for various commodities, while devaluing the power of the dollar, on which the entire U.S. economy is based. Make no mistake: this freshly minted money will produce dire consequences for the country because what comes up must come down. When products eventually become out of reach for many Americans–thereby prompting a decrease in demand–their prices will fall. The potential end result: recession. Therefore, it is not an overreaction to say that Congress may have purchased our next 2008. If so, good luck landing that entry-level position at Morgan Stanley right out of college.

We likely have not seen the last COVID-19 relief bill enter the halls of Congress. Lockdowns still dominate the country one year into the pandemic, and vaccines have not restored our maskless way of life. But a new method of legislating has emerged: disguising bills as “COVID-19 relief” while taking billions out the back door. Our country is in an economic hostage situation, where $1,400 checks are provided in return for one political party’s further authority over our industry and communities.