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Renewing America

Ideas and initiatives for rebuilding American economic strength.

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Morning Brief: Deepwater Oil Drilling Approvals Near Pre-Oil Spill Levels

by Jonathan Masters
March 5, 2012

A Norwegian oil rig drilling in the Burin Sea off the shore of Canada (Ocean Rig CD/Courtesy Reuters). A Norwegian oil rig drilling in the Burin Sea off the shore of Canada (Ocean Rig CD/Courtesy Reuters).

In the past twelve months, the Obama administration issued sixty-one approvals (NYT) for drilling in depths beyond five-hundred feet, compared with sixty-seven in the twelve months before the Deepwater Horizon explosion. High oil prices have encouraged development of onshore and offshore oil reserves worldwide and shifted American political discourse from whether to expand drilling, to how quickly to expand. Meanwhile, BP reached a $7.8 billion settlement accord with plaintiffs in a civil trial over the 2010 spill in the Gulf of Mexico, though no settlement currently exists between BP and the federal government.

House Votes to Exempt New Bridge from Wild and Scenic Rivers Act

Last week, the House of Representatives voted 339-80 (Engineering News-Record) to exempt a new bridge across the St. Croix River between Minnesota and Wisconsin, from the Wild and Scenic Rivers Act. If President Obama signs the legislation (the Senate passed the exemption in January), the proposed $633 million bridge would be the first project to receive a waiver of the Wild and Scenic Rivers Act, which bars federal funding for projects that are deemed to have an “adverse” effect on wild or scenic rivers. This is the latest development for a project proposed in 1995.

Infrastructure. Read more on how upgrading the nation’s aging network of roads, bridges, airports, railways, and water systems is essential to maintaining U.S. competitiveness.

Debt and Deficits

U.S. Government Debt Held by Foreigners Hits Record Level

Since May 2009, foreigners increased holdings of U.S. Treasuries (Bloomberg) by $1.84 trillion to $5 trillion driven by a decrease in the issuance of other AAA-rated securities—other sovereigns, corporate debt, mortgage back securities—and uncertainty about the Euro. While foreign held debt hit a new high, current low yields are driven by the Federal Reserve which increased its holdings over this period by $1.18 trillion to $1.65 trillion.

The Obama administration’s 2013 budget forecasts a deficit of over $900 billion; the United States is partially reliant upon foreign capital to finance its deficit. This CFR Backgrounder outlines the competing policy paths on fiscal reform, and the possible global consequences for failing to bring down U.S. debt.

Debt and deficits. Read more from experts on the challenges in reducing U.S. debt.

Education and Human Capital

Joel Klein Argues for Greater Focus on Education in Campaign 2012

In his op-ed in the Washington Post, Joel Klein lays out his case for why education belongs at the forefront of the presidential campaign. The former chancellor of the New York City Department of Education cites the relatively poor performance of American schools compared to other countries, and proposes three issues each candidate should address. Klein and former Secretary of State Condoleezza Rice are the co-chairs of the forthcoming CFR Independent Task Force on U.S. Education Reform and National Security.

Education and human capital. Read more from experts discussing ways to improve U.S. education and immigration policies.

Innovation

Apple Study of Job Creation Released, Debated

According to a study Apple released on Friday, it “created or supported” 514,000 jobs (NYT) in the United States, from factory workers at Corning glass plants to additional UPS delivery drivers. The actual economic impact of Apple on U.S.-based jobs is under debate and it is not clear how many jobs in Apple’s total would still exist in its absence; in an Apple-less world, many of those UPS drivers may still be employed, just delivering another firm’s products. Most of the jobs directly created by Apple’s products are overseas. The innovative technology giant employs 47,000 directly in the United States, but its network of suppliers employs approximately 700,000 overseas.

Innovation. Read more on how the U.S. capacity to innovate could play a chief role in economic growth.

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