What Lies Beneath? U.S. Foreign and Domestic Policy after the 2006 Elections
About This Event

The incoming Congressional leadership has outlined legislative priorities including reducing the deficit, raising the minimum wage, repealing some tax cuts, addressing the costs of college, requiring the government to directly negotiate with drug companies to secure lower prices for Medicare beneficiaries, taking a firmer hand on trade agreements, and increasing Listen to Audio


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subsidies for alternative fuel technologies and greenhouse-gas controls. AEI scholars Joseph Antos, Claude Barfield, Kenneth P. Green, Kevin A. Hassett, and Frederick M. Hess will discuss these issues during the first panel of this event.

Last week’s midterm elections sent a clear message to America’s leaders. But what is the message on foreign policy? Out of Iraq or timelines for Iraq? Talks with Iran or forget about Iran? Some have speculated that the Bush doctrine has failed. Does the return of senior officials from the administration of George H. W. Bush signal that this president is ready for status quo ante? A new secretary of defense and a new Congress will face up to the same old challenges and more. Can we anticipate new strategies on Iraq, Iran, and North Korea? Will the new Congress end America’s embrace of Putin’s Russia? And what about the rise of China? AEI scholars Leon Aron, Dan Blumenthal, Frederick W. Kagan, Danielle Pletka, Michael Rubin, and Gary J. Schmitt will discuss U.S. foreign policy in the new Congress during the second panel.

Agenda
9:45 a.m.
Registration
10:00
Panel I: Domestic Policy
Panelists:
Joseph Antos, AEI
Claude Barfield, AEI
Kenneth P. Green, AEI
Kevin A. Hassett, AEI
Frederick M. Hess, AEI
11:15
Panel II: Foreign Policy
Panelists:
Leon Aron, AEI
Dan Blumenthal, AEI
Frederick W. Kagan, AEI
Danielle Pletka, AEI
Michael Rubin, AEI
Gary J. Schmitt, AEI
12:30 p.m.
Adjournment
Event Summary

November 2006

What Lies Beneath? U.S. Foreign and Domestic Policy after the 2006 Elections

The incoming Congressional leadership has outlined legislative priorities including reducing the deficit, raising the minimum wage, repealing some tax cuts, addressing the costs of college, requiring the government to directly negotiate with drug companies to secure lower prices for Medicare beneficiaries, taking a firmer hand on trade agreements, and increasing subsidies for alternative fuel technologies and greenhouse-gas controls. AEI scholars Joseph Antos, Claude Barfield, Kenneth P. Green, Kevin A. Hassett, and Frederick M. Hess discussed these issues during the first panel of z November 20 AEI event.

Last week’s midterm elections sent a clear message to America’s leaders on foreign policy. But what is the message on foreign policy? Out of Iraq or timelines for Iraq? Talks with Iran or forget about Iran? Some have speculated that the Bush doctrine has failed. Does the return of senior officials from the administration of George H. W. Bush signal that this president is ready for status quo ante? A new secretary of defense and a new Congress will face up to the same old challenges and more. Can we anticipate new strategies on Iraq, Iran, and North Korea? Will the new Congress end America’s embrace of Putin’s Russia? And what about the rise of China? AEI scholars Leon Aron, Dan Blumenthal, Frederick W. Kagan, Danielle Pletka, Michael Rubin, and Gary J. Schmitt discussed U.S. foreign policy in the new Congress during the second panel.

Domestic Policy Panel

Joseph Antos
AEI

The key to health policy is money, and the Democrats are quickly finding out that they may not have enough. There are three big areas in health policy: Medicare, health insurance, and the Food and Drug Administration (FDA).

Democrats are planning to allow Medicare to negotiate prescription drug prices. Will it be successful? Such an arrangement would imply that the government sets a formula for prices, which would raise drug prices in the long run for everyone.

The Medicare Payment Advisory Commission claims that Medicare Advantage plans are overpaid. Democrats could try to reallocate some of that money to prescription drug benefits. Democrats may want to bundle all these issues and put them in a veto-proof bill. Also, the State Children’s Health Insurance Program is up for reauthorization next year. Democrats are willing to increase funding for the program, but money will be tight.

The FDA needs a new commissioner. Senator Charles Grassley (R-Iowa), outgoing chairman of the Senate Finance Committee, has objected to the appointment of Dr. Andrew von Eschenbach, which could ultimately doom the nomination. The Prescription Drug User Fee Act also needs to be reauthorized. This will increase FDA funding and may also result in changes intended to promote public safety.

We should not expect any good new health policy ideas for the next two years. The nominees for the next presidential elections will pick up that issue in 2008.

Claude Barfield
AEI

The House is split between moderate and liberal Democrats on social issues, but that is not the case on trade. Anti-trade Democrats will be replacing pro-trade Republicans. The Democratic Party is not likely to follow Bill Clinton’s ideal; “compete, not retreat” may become “retreat, not compete.” Harry Reid, incoming Senate majority leader, has voted against every free trade arrangement, including the North American Free Trade Agreement. Democrats are likely to maintain their anti-trade and anti-globalism agenda.

Reid has also stated that trade promotion authority (TPA) will not be renewed. If there is a breakthrough in the Doha round, Democrats will be pushed to extend TPA. However, the chances of such a breakthrough by spring are much less than 50-50. If the administration can convince Congress that they have received most of what they wanted out of the Doha round, the Democrats may be compelled to renew TPA. The Robert Rubin wing of the party, which includes former President Bill Clinton, is likely to take a stronger pro-trade stance.
 
Nevertheless, Democrats will try to reshape trade policy. There will be much stronger labor and environmental restrictions. The current stance is that the United States is trying to force other countries to follow existing rules, rather than imposing new rules on them. A Democratic Congress is likely to change that philosophy and to force other countries to adopt new regulations.

Kenneth P. Green
AEI

There is a dearth of good ideas on environmental policy. Speaker Nancy Pelosi (D-Calif.) and the Democrats have stated several priorities. They want to impose California’s greenhouse gas cap--a 25 percent reduction in greenhouse emissions nationally by 2020--raise Corporate Average Fuel Efficiency standards (CAFE), end subsidies to the fossil fuel and petroleum sector, and extend subsidies to the “renewable” energy sector.

Whether the Democrats can impose California’s gas cap and some sort of national trading system depends on opposition from President Bush and the Republicans. Such a move is also likely to be challenged in court. The subsidies to the petroleum sector can be axed; however, it is questionable whether subsidies to “renewable” energy will be large enough to have any significant impact. They will have to deal with the consequences of higher energy prices. CAFE increases are reasonably possible, but their benefits are questionable.

Most of the existing environmental statutes have their own built-in review system. It is unclear what the Democratic Congress can do to change things, other than holding more hearings to question agency heads. Other items, such as EPA regulation of carbon dioxide, are before the Supreme Court. Democrats probably do not want to impose any new regulations before 2008. Expect hearings to exceed action by a considerable margin.

Frederick M. Hess
AEI

Democrats will need money to implement new ideas in education policy. Education was not a priority in the last elections, and there are few clear partisan divisions on the issue. Thus, it is unclear how a Democratic Congress may impact education.

The No Child Left Behind (NCLB) Act is scheduled for reauthorization in 2007, and the current circumstances are unlike those in 2001. Support among both parties is unclear. It is important to note that both Congressman George Miller (D-Calif.) and Senator Ted Kennedy (D-Mass.), incoming chairmen of the House and Senate Education Committees, were strong supporters of NCLB in 2001. However, they have expressed that the administration has not met its funding commitments. Much depends on how the Democrats plan to meet their budget restrictions. Reauthorization will require bipartisan cooperation between the administration and pro-NCLB Democrats.

In the area of higher education, Democrats have committed to reducing guaranteed interest rates for college loans, increasing funding for Pell grants, and increasing tax credits for college students. All of these policies will readily find support among Republican ranks, and the president will be reluctant to veto them. However, they may cost between $20 and $30 billion to implement, and this depends on how the Democrats handle the budget. Both parties are divided on increasing accountability for colleges and universities, so it is unclear what may emerge.

Kevin A. Hassett
AEI

The lame duck session of Congress is likely to push as many items as possible to the next session. The Democrats have advocated a pay-go tax policy and thus have to appear to abide by it. However, enforcing pay-go will be difficult since the Democrats have so many items on their agenda.

The alternative minimum tax (AMT) poses a serious concern. Since the AMT does not allow deduction of state and local taxes and since Democratic states have more taxes, it is largely a tax on Democrats. Next year the AMT is projected to capture 23 million people, as opposed to 4 million this year. The Democrats want to patch it up for another year. However, such a patch will cost them $50 billion for just one year.

Any measures to raise federal taxes will probably be obstructed by Republicans. There may also be attempts to cut oil subsidies. The Democrats need another $100 billion to address their agenda, and pay-go is a major constraint. The Democrats may decide to scrap pay-go or to stick with it. If they do not follow pay-go, which is the more likely option, then we will observe some form of negotiation between the administration and the Democrats. If they do follow pay-go, it is hard to predict what will happen. It is always the party in opposition that supports such a restriction.

Foreign Policy Panel

Michael Rubin
AEI

The Baker-Hamilton Commission will loom large over the policy debate in the coming months. It seems the commission believes that engagement with Syria and Iran and a reopening of the Arab-Israeli peace process will be critical to success in Iraq. However, there are many difficulties with this approach.

With respect to Iran, negotiations are problematic as it is difficult determine which portion of the government is actually determining policy. Similarly, European engagement with Iran has led to increased trade but not corresponding improvement in domestic conditions or a slowing of Iran’s nuclear program. Indeed, if Iran’s nuclear development continues, the United States will be increasingly deterred from pressuring the state. Syria, on the other hand, seems to have little interest in Iraqi stability, demonstrated by its continued harboring of supporters of the Iraqi insurgency, undercutting one of the core assumptions of the commission. Also, going to Syria for help may mean forgiving Damascus for interference in Lebanon. Finally, dealing with the Arab-Israeli crisis, while important, does not address much deeper ideological problems with radical Islam.

Leon Aron
AEI

Aside from Russia’s recent accession to the World Trade Organization (WTO), there will be little good news coming from the Kremlin. As President Vladmir Putin has largely rejected liberal and democratic values, the relationship between the United States and Russia must now be based on shared interests. This will make relations between the two countries increasingly unstable. The United States’ five main interests in Russia--nuclear nonproliferation; energy stability; the War on Terror; the containment of a potentially resurgent, authoritarian China; and Russia’s transition to liberal, capitalist democracy--will therefore be a greater challenge in the coming years.

Gary J. Schmitt
AEI

Despite a major second term effort to revitalize transatlantic relations, there may be little progress on this front in the near future. While the coming NATO summit may well bring Australia and Japan into the fold, Europeans view the recent U.S. election as creating a lame duck president. Coupled with domestic political considerations in Europe, this should cool down any warming in U.S.-European relations that has been taking place. Within the United States, the time between now and the State of the Union address provides President Bush a window to put forward plausible policy alternatives on Iraq.

Frederick W. Kagan
AEI

The current military situation in Iraq is not the subject of much debate. The Iraqi army is entirely reliant on the U.S. Army for support and logistics, meaning that, in all probability, a pullout will lead to Iraq’s collapse and an increase in the already substantial sectarian violence. Proposals to redeploy troops outside of Iraq are tantamount to a pullout.

Iran’s influence over the militias within Iraq seems to be limited, and there is already too much weaponry within the country to make closing Iraq’s borders an effective option. The only tenable choices are to adapt military strategy and stay in, or to pull out and let the country collapse. The next few months should see much debate on this subject in Washington, leading to a discernable course of action sometime next year.

Dan Blumenthal
AEI

While North Korea continues to pose a problem for U.S. foreign relations, it seems that the administration will continue to rely on China to deal with the situation. Even though the likelihood that China will deliver a change in North Korea is slim, the United States may have to compromise on policy with China, especially with respect to Taiwan, if there is to be any chance of success. Because of the North Korean nuclear threat, Japan will feel pressure to remilitarize. And despite Democratic rhetoric, it appears unlikely that they will seek to change the current multilateral strategy when dealing with China.

AEI interns Waseem Alim and Adrian Myers prepared this summary.

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AEI Participants

 

Joseph
Antos
  • Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute (AEI), where his research focuses on the economics of health policy — including the Affordable Care Act, Medicare, the uninsured, and the overall reform of the health care system and its financing. He also studies the impact of health care expenditures on federal budget policy.

    Before joining AEI, Antos was assistant director for health and human resources at the Congressional Budget Office (CBO). He has also held senior positions in the US Department of Health and Human Services, the Office of Management and Budget, and the President’s Council of Economic Advisers. He recently completed a seven-year term as health adviser to CBO, and two terms as a commissioner of the Maryland Health Services Cost Review Commission. In 2013, he was also named adjunct associate professor of emergency medicine at George Washington University.

    Antos has a Ph.D. and an M.A. in economics from the University of Rochester and a B.A. in mathematics from Cornell University.



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  • Phone: 202-862-5938
    Email: jantos@aei.org
  • Assistant Info

    Name: Neil McCray
    Phone: 2028625826
    Email: Neil.McCray@aei.org

 

Leon
Aron
  • Leon Aron is Resident Scholar and Director of Russian Studies at the American Enterprise Institute. He is the author of three books and over 300 articles and essays. Since 1999, he has written Russian Outlook, a quarterly essay on economic, political, social and cultural aspects of Russia’s post-Soviet transition, published by the Institute. He is the author of the first full-scale scholarly biography of Boris Yeltsin, Yeltsin: A Revolutionary Life (St. Martin’s Press, 2000); Russia’s Revolution: Essays 1989-2006 (AEI Press, 2007); and, most recently, Roads to the Temple: Memory, Truth, Ideas and Ideals in the Making of the Russian Revolution, 1987-1991 (Yale University Press, 2012).


    Dr. Aron earned his Ph.D. from Columbia University, has taught a graduate seminar at Georgetown University, and was awarded the Peace Fellowship at the U.S. Institute of Peace. He has co-edited and contributed the opening chapter to The Emergence of Russian Foreign Policy, published by the U.S. Institute of Peace in 1994 and contributed an opening chapter to The New Russian Foreign Policy (Council on Foreign Relations, 1998).


    Dr. Aron has contributed numerous essays and articles to newspapers andmagazines, including the Washington Post, the New York Times, theWall Street Journal Foreign Policy, The NewRepublic, Weekly Standard, Commentary, New York Times Book Review, the TimesLiterary Supplement. A frequent guest of television and radio talkshows, he has commented on Russian affairs for, among others, 60 Minutes,The Newshour with Jim Lehrer, Charlie Rose, CNN International,C-Span, and National Public Radio’s “All Things Considered” and “Talk of theNation.”


    From 1990 to 2004, he was a permanent discussant at the Voice of America’s radio and television show Gliadya iz Ameriki (“Looking from America”), which was broadcast to Russia every week.


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  • Phone: 202-862-5898
    Email: laron@aei.org
  • Assistant Info

    Name: Katherine Earle
    Phone: 202-862-5872
    Email: katherine.earle@aei.org

 

Claude
Barfield
  • Claude Barfield, a former consultant to the office of the U.S. Trade Representative, researches international trade policy (including trade policy in China and East Asia), the World Trade Organization (WTO), intellectual property, and science and technology policy. His many books and publications include Swap: How Trade Works with Philip Levy, a concise introduction to the principles of world economics, and Telecoms and the Huawei conundrum: Chinese foreign direct investment in the United States, an AEI Economic Studies analysis that explores the case of Chinese telecom equipment maker Huawei and its commitment to long-term investment in the US.
  • Phone: 2028625879
    Email: cbarfield@aei.org
  • Assistant Info

    Name: Hao Fu
    Phone: 202-862-5214
    Email: hao.fu@aei.org

 

Dan
Blumenthal
  • Dan Blumenthal is the director of Asian Studies at the American Enterprise Institute, where he focuses on East Asian security issues and Sino-American relations.  Mr. Blumenthal has both served in and advised the U.S. government on China issues for over a decade.  From 2001 to 2004, he served as senior director for China, Taiwan, and Mongolia at the Department of Defense.  Additionally, he served as a commissioner on the congressionally-mandated U.S.-China Economic and Security Review Commission since 2006-2012, and held the position of vice chairman in 2007.  He has also served on the Academic Advisory Board of the congressional U.S.-China Working Group. Mr. Blumenthal is the co-author of "An Awkward Embrace: The United States and China in the 21st Century" (AEI Press, November 2012).

  • Phone: 202.862.5861
    Email: dblumenthal@aei.org
  • Assistant Info

    Name: Shannon Mann
    Phone: 202-862-5911
    Email: Shannon.Mann@aei.org

 

Kenneth P.
Green

 

Kevin A.
Hassett
  • Kevin A. Hassett is the State Farm James Q. Wilson Chair in American Politics and Culture at the American Enterprise Institute (AEI). He is also a resident scholar and AEI's director of economic policy studies.



    Before joining AEI, Hassett was a senior economist at the Board of Governors of the Federal Reserve System and an associate professor of economics and finance at Columbia (University) Business School. He served as a policy consultant to the US Department of the Treasury during the George H. W. Bush and Bill Clinton administrations.

    Hassett has also been an economic adviser to presidential candidates since 2000, when he became the chief economic adviser to Senator John McCain during that year's presidential primaries. He served as an economic adviser to the George W. Bush 2004 presidential campaign, a senior economic adviser to the McCain 2008 presidential campaign, and an economic adviser to the Mitt Romney 2012 presidential campaign.

    Hassett is the author or editor of many books, among them "Rethinking Competitiveness" (2012), "Toward Fundamental Tax Reform" (2005), "Bubbleology: The New Science of Stock Market Winners and Losers" (2002), and "Inequality and Tax Policy" (2001). He is also a columnist for National Review and has written for Bloomberg.

    Hassett frequently appears on Bloomberg radio and TV, CNBC, CNN, Fox News Channel, NPR, and "PBS NewsHour," among others. He is also often quoted by, and his opinion pieces have been published in, the Los Angeles Times, The New York Times, The Wall Street Journal, and The Washington Post.

    Hassett has a Ph.D. in economics from the University of Pennsylvania and a B.A. in economics from Swarthmore College.

  • Phone: 202-862-7157
    Email: khassett@aei.org
  • Assistant Info

    Name: Emma Bennett
    Phone: 202-862-5862
    Email: emma.bennett@aei.org

 

Frederick M.
Hess
  • An educator, political scientist and author, Frederick M. Hess studies K-12 and higher education issues. His books include "Cage-Busting Leadership," "Breakthrough Leadership in the Digital Age," "The Same Thing Over and Over," "Education Unbound," "Common Sense School Reform," "Revolution at the Margins," and "Spinning Wheels." He is also the author of the popular Education Week blog, "Rick Hess Straight Up." Hess's work has appeared in scholarly and popular outlets such as Teachers College Record, Harvard Education Review, Social Science Quarterly, Urban Affairs Review, American Politics Quarterly, The Chronicle of Higher Education, Phi Delta Kappan, Educational Leadership, U.S. News & World Report, National Affairs, the Washington Post, the New York Times, The Wall Street Journal, the Atlantic and National Review. He has edited widely cited volumes on the Common Core, the role of for-profits in education, education philanthropy, school costs and productivity, the impact of education research, and No Child Left Behind.  Hess serves as executive editor of Education Next, as lead faculty member for the Rice Education Entrepreneurship Program, and on the review boards for the Broad Prize in Urban Education and the Broad Prize for Public Charter Schools. He also serves on the boards of directors of the National Association of Charter School Authorizers and 4.0 SCHOOLS. A former high school social studies teacher, he teaches or has taught at the University of Virginia, the University of Pennsylvania, Georgetown University, Rice University and Harvard University. He holds an M.A. and Ph.D. in Government, as well as an M.Ed. in Teaching and Curriculum, from Harvard University.


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  • Email: rhess@aei.org
  • Assistant Info

    Name: Sarah DuPre
    Phone: 202-862-7160
    Email: Sarah.DuPre@aei.org

 

Frederick W.
Kagan

 

Danielle
Pletka

  • As a long-time Senate Committee on Foreign Relation senior professional staff member for the Near East and South Asia, Danielle Pletka was the point person on Middle East, Pakistan, India and Afghanistan issues. As the vice president for foreign and defense policy studies at AEI, Pletka writes on national security matters with a focus on Iran and weapons proliferation, the Middle East, Syria, Israel and the Arab Spring. She also studies and writes about South Asia: Pakistan, India and Afghanistan.


    Pletka is the co-editor of “Dissent and Reform in the Arab World: Empowering Democrats” (AEI Press, 2008) and the co-author of “Containing and Deterring a Nuclear Iran” (AEI Press, 2011) and “Iranian influence in the Levant, Egypt, Iraq, and Afghanistan” (AEI Press, 2012). Her most recent study, “America vs. Iran: The competition for the future of the Middle East,” was published in January 2014.


     


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  • Phone: 202-862-5943
    Email: dpletka@aei.org
  • Assistant Info

    Name: Alexandra Della Rocchetta
    Phone: 202-862-7152
    Email: alex.dellarocchetta@aei.org

 

Michael
Rubin


  • Michael Rubin is a former Pentagon official whose major research areas are the Middle East, Turkey, Iran and diplomacy. Rubin instructs senior military officers deploying to the Middle East and Afghanistan on regional politics, and teaches classes regarding Iran, terrorism, and Arab politics on board deploying U.S. aircraft carriers. Rubin has lived in post-revolution Iran, Yemen, both pre- and post-war Iraq, and spent time with the Taliban before 9/11. His newest book, Dancing with the Devil: The Perils of Engagement examines a half century of U.S. diplomacy with rogue regimes and terrorist groups.


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  • Phone: 202-862-5851
    Email: mrubin@aei.org
  • Assistant Info

    Name: Ahmad Majidyar
    Phone: 202-862-5845
    Email: ahmad.majidyar@aei.org

 

Gary J.
Schmitt
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