Question: How can America return value to its economy?
Wesley Clark: You know, President Eisenhower said, “The real strength of America is not our military/industrial complex and it’s not our armed forces, it’s the economy in America.” And today, you know, we’re struggling again with the economy. We’ve had an unprecedented financial collapse that no one 30 or 40 years ago would have ever anticipated because we thought we had all the controls in place after the Depression of the 1930s to have prevented this. The controls were gradually relaxed. Leverage, excessive leverage took over and suddenly we find ourselves in the longest recession since World War II. And although the recession is technically ended now, job creation typically is a lagging indicator.
Businesses are sitting on the sidelines with trillions of dollars to invest; they’re not doing it. Traditionally, we’ve powered the economy with consumption. Seventy-one percent of the GDP is consumption. And consumers are tapped out and they’re over-leveraged and they’re trying to de-leverage and so this is a tough time in the American economy. It’s a tough time for the administration because they know that until you can overcome the loss of eight million jobs in some way and give people hope for the future, there’s a lot of angry people in America.
The American middle class has most of its assets really tied up in its homes and those homes have sunk in value, due to no fault of the people themselves and this is a huge issue, even for a country as great and wonderful as America.
How do we get value back in this economy? Well, I think at this time what we need to do is go after the easiest money available, that’s the $300 to $400 billion every year that we spend importing oil into the United States. It’s actually that much money. In July, we paid $29 billion to other governments and some international oil companies, but mostly to other governments so could have the privilege of driving up to the filling station and saying, "fill 'er up." Or put the credit card into the pump and stick it in there. And this is something that if we really want to create jobs in America, we have to tackle this and we have to tackle it now.
We’ve been talking for over 30 years about energy independence. We never got it. We have staggered through one crisis in the Middle East after another; we’ve tried to build relationships. I wrote a paper in 1973 saying some day we might have to put military forces in the Middle East to assure access to oil, and you’d have thought I committed treason in the Pentagon. They were scared to death of the paper. They couldn’t imagine that we would actually use military forces to protect access to oil. Well, what do you think the Gulf war was about? And why do you think we went back into Iraq? And in an indirect way, that’s what the whole terrorism issue has been. It’s America’s consumption of oil feeding dollar exports abroad creating petro-dollars which have enriched a lot of these other countries which have fed the resources and have created conflict.
And so here we are in 2010 spending over $300 billion in an economy that’s struggling, struggling to get any economic growth. That $300 billion a year is 3 million American jobs at $100,000 a year or 10 million jobs at $30,000 a year, and there’s Americans that don’t make $30,000 a year. That’s a lot of jobs. That’s a lot of money. That’s 50% of the Pentagon budget. It’s almost as much money as we pay on interest to the national debt. It’s enough to completely fix infrastructure in this country in a very short period of time, give every child a chance to go to college and fix healthcare. That’s the money that we are sending abroad and we can keep that money in America. All we need is the leadership to do it.
How do you do it? Well, the base is to switch off consumption of gasoline because the amount of oil in America that we’re able to pump has declined. We used to be an oil exporting country, now we’re an oil importing country. We’re still producing over five million barrels a day of oil, but we’re consuming about 19 million barrels a day of petroleum products. And the gap is mostly imports. In the second quarter of this year, April-May-June, we imported an average of more than 10 million barrels a day of petroleum products. And that’s’ simply unsustainable. The cost of that is two percent of the American GDP.
And how do we get out of it? Electric automobiles? Compressed natural gas, we’ve got plenty of it. Biofuels? We’re growing corn and enough biofeed stock that if we wanted to, we can create all the liquid fuel we would ever need in this country. And we have the technology to do it.
When the energy business started becoming a national security problem in the 1970’s, we couldn’t do that. We did not have the technology, but we do have that technology now. But what we also have is we have very strong forces on the other side resisting change. It’s about pocketbooks. It’s about job security; it’s about traditional patterns of performance by companies. And so if you’re an oil company, it’s about oil. But if you’re an electric car company, you’re fighting to get traction in the consumer market. And if you’re producing biofuel, like men and women in the Midwest are producing ethanol, you’re fighting against the petroleum industry. Because as... and I work with the ethanol industry, I work with oil, I work with gas, I work with electric automobiles. I’m across the board in the business community because that’s the only way you learn it. And you see the struggles and the tensions.
It was easy to start the Internet because there really wasn’t any competition. And when we started personal computing and people didn’t come up and say, “Oh, these personal computers, they’re really dangerous. They’ll ruin your family life, they have toxic substances, you can’t afford to have them, there’s electrical emissions, they might crash airplanes, please let’s don’t adopt personal computers.” There was no... the people who made slide rules, they just weren’t powerful enough to keep us from having personal computers.
But when it come to energy, it’s different. So we’re in a big struggle and there are a lot of forces in this economy trying to hang onto what the have. Somehow we have to have the leadership to come together to say, $30 billion a month, over $300 billion a year—it’s enough. Never again. We’re not going to pay that kind of money. A thousand dollars for every man, woman and child in America, every year to buy imported gasoline? If another nation came to us and said, "Americans, you’re lavish consumers, you pay us a tax." We’d want to go to war with them. And yet we do it willingly, we pay that tax. It’s going to Mexico and Venezuela, Hugo Chavez is the beneficiary, Nigeria, the Gulf. Why do we want to do that when we have our own technology and our own resources and we can do this at home?
We know where those resources are, we know what the technologies are. They’re all over the Department of Energy, everybody knows it, some how we have to pull together across political lines in this country and say, "Enough’s enough, we’re keeping that money in America and we’re building jobs and our own futures here."
Question: How can America wean itself off of foreign petrol?
Wesley Clark: Well, here’s the problem, that most of the imports are actually used for transportation because electrical energy mostly comes from coal or nuclear or hydro, so it’s not about imported... it’s not about, you know, directly about how you use energy for heating, it’s how you use energy for transportation. And we really only have one liquid fuel in America today and it’s gasoline. That’s what the cars are designed for. They can be designed for something else, you can have flexfuel vehicles. You have to have the infrastructure to put the ethanol in the tanks; you have to have the infrastructure to produce that much ethanol. We’re producing about maybe 12 billion gallons a year of ethanol right now. We’re using about 140 billion gallons of liquid fuel. And of that, about... well essentially all of it is imported if you consider that the oil we produce is for everything else; jet fuel and diesel and everything. So we’re using about nine million barrels a day of gasoline and that’s about what we’re importing of liquid petroleum.
We could replace that with biofuels and eventually replace liquid fuel with electric transportation. But that takes time and every month we lose more money abroad.
So we need an in-depth program, a portfolio approach, different... we can’t prescribe it, you could put trucks on compressed natural gas and liquefied natural gas. You could put cars on greater proportions of ethanol. You can build hybrid cars, plug-in hybrid cars, or electric cars. All of that has to be done. And we have to move as quickly as we can to reduce our reliance on imported oil because that money that we’re saving is what’s going to create growth in America.
Recorded September 23, 2010
Interviewed by Andrew Dermont