This is the first of a two-part note.  Part one will describe the mechanics of the Summit and show some photos.  Part two will describe the substance.

The action began in mid-October after the President met at Camp David with French President Nicolas Sarkozy and Manuel Barrosso, President of the European Commission:

A statement released after that meeting included the following:

[The three leaders] agreed they would reach out to other world leaders next week with the idea of beginning a series of summits on addressing the challenges facing the global economy.

World leaders will be consulted about the idea of a first summit of heads of government to be held in the U.S. soon after the U.S. elections, in order to review progress being made to address the current crisis and to seek agreement on principles of reform needed to avoid a repetition and assure global prosperity in the future. Later summits would be designed to implement agreement on specific steps to be taken to meet those principles.

Four days later, we released a Statement by Press Secretary Dana Perino, which included the following:

Today, the President is inviting the leaders of the Group of 20 countries to a summit in the Washington, D.C. area, on November 15 to discuss financial markets and the global economy.

… G-20 members are: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union.

The Managing Director of the International Monetary Fund, the President of the World Bank, the United Nations Secretary-General, and the Chairman of the Financial Stability Forum have also been invited to participate.

Normally a summit like this takes at least a year to plan.  The work of an incredible team from the Administration built an incredible summit in only 24 days.

As you can see, the G-20 actually includes 19 States, plus the European Union.  The meeting also included the heads of the major international financial institutions (IFI’s, pronounced “IF-ees”):  the International Monetary Fund (IMF), the World Bank, the U.N. Secretary General, and the Financial Stability Forum.  In addition, the final summit meeting included the heads of Spain and the Netherlands.

Events began last Friday evening with the President spending almost an hour greeting leaders at the North Portico of the White House.

(Game:  Name that Leader.  Answers are at the bottom.)

After a reception in the East Room, the President hosted a dinner in the State Dining Room with the leaders.  Here he is offering a toast:

We are here because we share a concern about the impact of the global financial crisis on the people of our nations.  We share a determination to fix the problems that led to this turmoil.  We share a conviction that by working together, we can restore the global economy to the path of long-term prosperity.

Each nation had four representatives in the Saturday summit discussions:

1. The leader (for the U.S., President Bush);
2. the finance minister (for the U.S., Secretary Paulson);
3. the “Sherpa” (for the U.S., Dan Price); and
4. the deputy finance minister (for the U.S., Dave McCormick).

The “Sherpa” is an interesting position.  It’s derived from the annual G-8 meeting.  Each leader appoints a personal representative to carry his or her heavy load in the negotiations leading up to the leaders’ meeting.  For the U.S., the Sherpa is always the senior international economic policy advisor in the White House.  Dan and Dave led all the negotiations leading up to the G-20 summit (since the U.S. was a host), and they are key players in the success of that summit.  In the G-8 context, the Sherpa’s deputy is known as the “sous-sherpa”, and the #3 person is the “yak.”

The Saturday summit meeting was held at the beautiful National Building Museum in Washington, DC.  Our advance team did all this setup beginning late Thursday night.  Some White House staff showed up at 5 AM Saturday to help escort the delegates:

The meeting began with the traditional “family photo”.

The leaders then went to the summit session.  The inner square is the leaders with their finance ministers.  Behind each is a small table with the Sherpa and Finance deputy.

Here’s the President’s view:

Here are two different angles on the room:

And here’s a view from the U.S. Sherpa/finance deputy table:

After the “plenary session,” the Leaders broke for lunch:

The Leaders left after lunch (one report said there were over 400 vehicles in the motorcades combined), while the President made a statement to the press:

Part two of this note looks at what was actually accomplished at the summit.

Answers to Name that Leader:

1. Mexican President Felipe Calderon
2. Chinese President Hu Jintao
3. Australian Prime Minister Kevin Rudd
4. Indian Prime Minister Manmohan Singh
5. Russian President Dmitryi Medvedev
6. Brazilian President Luiz Inacio Lula da Silva of Brazil (aka “Lula”)

The G-20 Summit in pictures

© 2010 Keith Hennessey - Your guide to American economic policy

Related posts:

1. A quick guide to the G-20 summit
2. What was accomplished at the G-20 Summit?
3. President Bush’s speech on financial markets and the world economy

This speech is a prelude to the financial summit the President will host this weekend.  I’ll write separately about the Summit, and about the elements of today’s speech that talk about principles for reform.

I want to draw your attention to two parts of the speech.

The first is where the President reprises his explanation for the economic causes of our current situation.

Over the past decade, the world experienced a period of strong economic growth.  Nations accumulated huge amounts of savings, and looked for safe places to invest them.  Because of our attractive political, legal, and entrepreneurial climates, the United States and other developed nations received a large share of that money.

The massive inflow of foreign capital, combined with low interest rates, produced a period of easy credit.  And that easy credit especially affected the housing market.  Flush with cash, many lenders issued mortgages and many borrowers could not afford them.  Financial institutions then purchased these loans, packaged them together, and converted them into complex securities designed to yield large returns.  These securities were then purchased by investors and financial institutions in the United States and Europe and elsewhere — often with little analysis of their true underlying value.

The financial crisis was ignited when booming housing markets began to decline.  As home values dropped, many borrowers defaulted on their mortgages, and institutions holding securities backed by those mortgages suffered serious losses.  Because of outdated regulatory structures and poor risk management practices, many financial institutions in America and Europe were too highly leveraged.  When capital ran short, many faced severe financial jeopardy.  This led to high-profile failures of financial institutions in America and Europe, led to contractions and widespread anxiety — all of which contributed to sharp declines in the equity markets.

These developments have placed a heavy burden on hardworking people around the world.  Stock market drops have eroded the value of retirement accounts and pension funds.  The tightening of credit has made it harder for families to borrow money for cars or home improvements or education of the children.  Businesses have found it harder to get loans to expand their operations and create jobs.  Many nations have suffered job losses, and have serious concerns about the worsening economy.  Developing nations have been hit hard as nervous investors have withdrawn their capital.

The second is the last two pages of the speech.  I tried to summarize and excerpt from this, and instead have concluded that the best thing I can do is allow the President’s words to speak for themselves.

All this leads to the most important principle that should guide our work:  While reforms in the financial sector are essential, the long-term solution to today’s problems is sustained economic growth.  And the surest path to that growth is free markets and free people.  (Applause.)

This is a decisive moment for the global economy.  In the wake of the financial crisis, voices from the left and right are equating the free enterprise system with greed and exploitation and failure.  It’s true this crisis included failures — by lenders and borrowers and by financial firms and by governments and independent regulators.  But the crisis was not a failure of the free market system.  And the answer is not to try to reinvent that system.  It is to fix the problems we face, make the reforms we need, and move forward with the free market principles that have delivered prosperity and hope to people all across the globe.

Like any other system designed by man, capitalism is not perfect.  It can be subject to excesses and abuse.  But it is by far the most efficient and just way of structuring an economy.  At its most basic level, capitalism offers people the freedom to choose where they work and what they do, the opportunity to buy or sell products they want, and the dignity that comes with profiting from their talent and hard work.  The free market system provides the incentives that lead to prosperity — the incentive to work, to innovate, to save, to invest wisely, and to create jobs for others.  And as millions of people pursue these incentives together, whole societies benefit.

Free market capitalism is far more than economic theory.  It is the engine of social mobility — the highway to the American Dream.  It’s what makes it possible for a husband and wife to start their own business, or a new immigrant to open a restaurant, or a single mom to go back to college and to build a better career.  It is what allowed entrepreneurs in Silicon Valley to change the way the world sells products and searches for information.  It’s what transformed America from a rugged frontier to the greatest economic power in history — a nation that gave the world the steamboat and the airplane, the computer and the CAT scan, the Internet and the iPod.

Ultimately, the best evidence for free market capitalism is its performance compared to other economic systems.  Free markets allowed Japan, an island with few natural resources, to recover from war and grow into the world’s second-largest economy.  Free markets allowed South Korea to make itself into one of the most technologically advanced societies in the world.  Free markets turned small areas like Singapore and Hong Kong and Taiwan into global economic players.  Today, the success of the world’s largest economies comes from their embrace of free markets.

Meanwhile, nations that have pursued other models have experienced devastating results.  Soviet communism starved millions, bankrupted an empire, and collapsed as decisively as the Berlin Wall.  Cuba, once known for its vast fields of cane, is now forced to ration sugar.  And while Iran sits atop giant oil reserves, its people cannot put enough gasoline in its — in their cars.

The record is unmistakable:  If you seek economic growth, if you seek opportunity, if you seek social justice and human dignity, the free market system is the way to go.  (Applause.)  And it would be a terrible mistake to allow a few months of crisis to undermine 60 years of success.

Just as important as maintaining free markets within countries is maintaining the free movement of goods and services between countries.  When nations open their markets to trade and investment, their businesses and farmers and workers find new buyers for their products.  Consumers benefit from more choices and better prices.  Entrepreneurs can get their ideas off the ground with funding from anywhere in the world.  Thanks in large part to open markets, the volume of global trade today is nearly 30 times greater than it was six decades ago — and some of the most dramatic gains have come in the developing world.

As President, I have seen the transformative power of trade up close.  I’ve been to a Caterpillar factory in East Peoria, Illinois, where thousands of good-paying American jobs are supported by exports.  I’ve walked the grounds of a trade fair in Ghana, where I met women who support their families by exporting handmade dresses and jewelry.  I’ve spoken with a farmer in Guatemala who decided to grow high-value crops he could sell overseas — and helped create more than 1,000 jobs.

Stories like these show why it is so important to keep markets open to trade and investment.  This openness is especially urgent during times of economic strain.  Shortly after the stock market crash in 1929, Congress passed the Smoot-Hawley tariff — a protectionist measure designed to wall off America’s economy from global competition.  The result was not economic security.  It was economic ruin.  And leaders around the world must keep this example in mind, and reject the temptation of protectionism.  (Applause.)

There are clear-cut ways for nations to demonstrate the commitment to open markets.  The United States Congress has an immediate opportunity by approving free trade agreements with Colombia, Peru*, and South Korea.  America and other wealthy nations must also ensure this crisis does not become an excuse to reverse our engagement with the developing world.   And developing nations should continue policies that foster enterprise and investment.  As well, all nations should pledge to conclude a framework this year that leads to a successful Doha agreement.

We’re facing this challenge together and we’re going to get through it together.  The United States is determined to show the way back to economic growth and prosperity.  I know some may question whether America’s leadership in the global economy will continue.  The world can be confident that it will, because our markets are flexible and we can rebound from setbacks.  We saw that resilience in the 1940s, when America pulled itself out of Depression, marshaled a powerful army, and helped save the world from tyranny.  We saw that resilience in the 1980s, when Americans overcame gas lines, turned stagflation into strong economic growth, and won the Cold War.  We saw that resilience after September the 11th, 2001, when our nation recovered from a brutal attack, revitalized our shaken economy, and rallied the forces of freedom in the great ideological struggle of the 21st century.

The world will see the resilience of America once again.  We will work with our partners to correct the problems in the global financial system.  We will rebuild our economic strength.  And we will continue to lead the world toward prosperity and peace.

President Bush’s speech on financial markets and the world economy

© 2010 Keith Hennessey - Your guide to American economic policy

Related posts:

1. Address by President Bush on financial markets
2. Rose Garden Statement by President Bush on financial markets
3. Rose Garden Statement by President Bush on the Economy

Since the big document is 36 pages long, we also have versions of the different component fact sheets on whitehouse.gov.  Here are the economic ones:

• Economy
• Budget
• Free trade
• Energy
• Health care

We also have separate fact sheets outside the economic lane on National Security, Iraq, the Global War on Terror, Veterans, No Child Left Behind, Education, Stem cell research, Faith-based initiatives, Immigration, and Compassion.

While many inside the Beltway focus on the specific phrasing of key sentences to look for nuances, it’s probably even more important to pay attention to what subjects the President discusses.  Those are important signals about his priorities for the upcoming year.  This year, roughly the first third of the speech will be dedicated to economic issues.  Over the next week or two I’ll drill down and explain the details of what he said on particular topics.  Tonight I’ll just point out the broad brush strokes.

Here are a few things you should listen for in tonight’s address:

1. The President will push Congress to quickly enact the bipartisan agreement on growth that we announced last Friday.  The House plans to vote on it tomorrow, and we’re hoping for a big bipartisan vote.  He will ask both the House and Senate to resist the temptation to load up the bill with other provisions.  We need speed, and additions could delay or derail it.
2. While the bipartisan growth agreement is the most urgent economic need, the most important is making the enacted tax cuts permanent, and preventing taxes from increasing beginning in 2011.  He will emphasize that tonight.
3. He will talk about the importance of free trade:  Free Trade Agreements with Colombia, Panama, and South Korea, and the “Doha Round” of global trade talks.
4. He’ll announce new policy on earmarks – telling Congress that he will veto appropriations bills if they do not cut the number and $ amount of earmarks at least in half.  He will also announce that tomorrow he will sign an executive order that directs agencies to ignore future earmarks that are in “report language” which is never voted on by the Congress.
5. He’ll talk about health care, and reaffirm his commitment to reform the tax treatment of health insurance.  The President’s proposed standard deduction for health insurance would make it more affordable for millions of Americans, and would mean that Americans not fortunate enough to get health insurance through their job would now get the same tax advantage as those who do.  More broadly, he’ll emphasize the importance of an approach to health care policy that centers decision-making in individuals and families, rather than in Washington.
6. He’ll talk about energy and climate change.  In December the Congress passed the President’s energy proposal from last year’s State of the Union to reduce our consumption of oil.  This year, he’ll focus more on the power sector, and stress the importance of technology to the three goals of economic growth, energy security, and addressing climate change.
7. He’ll talk about entitlement reform:  Social Security, Medicare, and Medicaid.  Many in Congress have expressed their views on the President’s proposed reforms, especially of Social Security, but they have not proposed solutions of their own.  He will call on them to put forward their own ideas so we can actually debate how best to make these programs sustainable.

I hope you enjoy the speech.  It should be about 45 minutes long.

Economic highlights of the State of the Union address

© 2010 Keith Hennessey - Your guide to American economic policy

Related posts:

1. Earmark reform (State of the Union follow-up)
2. The wrong way to address climate change
3. A bipartisan economic booster shot

We are very pleased.  Let me start with some quotes from the President while he was in Germany this week:

(Y)ou’re not going to have greenhouse gas emissions that mean anything unless all nations, all emitters are at the table.  And if China is not a part of the process, we all can make major strides and yet there won’t be a reduction, until China and India are participants.  And what I have said is, here’s a way to get China and India at the table.

One, it’s going to be very important for us to continue to discuss climate change in a way that actually accomplishes an objective, which is the reduction of greenhouse gases over time, and the advancement of technologies, which will yield to better environmental policy, as well as energy security.

The United States can serve as a bridge between some nations who believe that now is the time to come up with a set goal, as well as a — I said, the remedy, and those who are reluctant to participate in the dialogue.  So I laid out an agenda that can move the process forward within the framework of the United Nations, that, in essence, says that we’ll be setting a goal at the end of 2008 — that “we” being the major emitters — within the framework of the U.N.  In other words, this will fold into the U.N. framework.  And that enables us to get China and India at the table to discuss how we can all move forward together.

Secondly, in my speech I said we’ll come up with our own policies to meet an interim goal for our country, as well as a national goal — or international goal for the rest of the world.

And here is Dave McCormick, who is Steve Hadley’s economic deputy on the National Security Council staff and the President’s “G8 sherpa”:

I think you’ll see an enormous amount of agreement and consensus around a number of key principles.  Again, the importance of climate being thought of within the context of energy security and development; the focus on technology — an enormous focus on technology and the technology being a key driver of dealing with these common challenges and opportunities together.  There was an absolute consensus, building on the President’s speech last week, on the crucial importance of bringing the major emitting economies into a discussion, an agreement on the path ahead.  And so that was a highlighted part of the agreement and text, with a specific outline of how that process with major emitters would move forward, and the role that the G8 would play and the United States would play, from a leadership standpoint, in pushing that dialogue forward to an appropriate and successful end.

Despite what an initial AP article says, the G8 leaders did not agree to halve greenhouse gas emissions by 2050.  That is one specific proposal that will be “seriously considered” during the upcoming “major emitters process” that the U.S. will host.  In fact, the EU, Japan, and Canada each have different versions that we expect will be “seriously considered” during that process.  In addition, it has not been widely reported that the EU, Japanese, and Canadian proposals recommend that the long-term goal be a “common vision” (or aspirational) goal, and not a binding one.

Consistent with the President’s proposal last week, the G8 leaders agreed to set a long-term global goal based on emissions (not temperature) in the upcoming process.  They did not, however, agree in Heiligendamm to any specific quantitative emissions goal.  They also did not agree to create a global cap-and-trade system or a global carbon market.  And because this process will only work with participation by China, India, and other major emitters, the outcome should differ from the Kyoto deal (which the U.S. and others rejected).  The most constructive way to make progress with China and India is to give them an equal seat at the table and to make sure the discussion includes energy security and economic development priorities.  The new “major emitters process” does that.

Let’s look at what they did agree to, and compare it to what the President proposed a week ago today.  Each of these elements that I highlighted last week is now included in the G8 declaration:

• He’s proposing a new process. 

• The discussion would involve the “major emitters” – nations that are responsible for the majority of the world’s greenhouse gases, including India and China. 
  • The top major emitters are:  U.S., China, the European Union, Russia, Canada, Japan, India, South Korea, Australia, Brazil, Mexico, and South Africa.  So everyone in the G8 is included, as well as several others.
  • This year, China’s greenhouse gas emissions are expected to exceed U.S. emissions, and by 2020, China may use 3X-4X more coal than the U.S.  And 75% of the future growth in emissions will come from the major emerging economies.
• We (the U.S.) “will convene a series of meetings.” 
• The group would work to “set a long-term global goal for reducing greenhouse gases.” 
• Such a goal would be an aspirational (non-binding) global goal. 
• The Kyoto Protocol (which the U.S. rejected) expires in 2012.  This new process is to establish a framework that would take effect after that.  By the way, it can take place within the 1992 U.N. Framework Convention on Climate Change. 
• Each country should set its own targets, and its own methods for hitting those targets. 
• The group should have all this worked out by the end of 2008. 

Some additional and important practical features of the President’s proposal are well-reflected in the G8 text:

• the value of a “bottom-up approach” in which we tackle issues on a sector-by-sector basis along the lines of the successful Asia-Pacific Partnership on Clean Development & Climate that the U.S. initiated with Australia, China, India, Japan, and Korea; and
• coal, nuclear, calling on other countries to invest more in R&D (like we already are), and opening up trade by eliminating tariff and non-tariff barriers.

This is a major achievement in finding convergence among a group of countries that have had difficulty finding consensus in the past on this issue.  Kudos go to Dave McCormick, and to the Chairman of the President’s Council on Environmental Quality, Jim Connaughton.

The G-8 agreement (especially on climate change)

© 2010 Keith Hennessey - Your guide to American economic policy

Related posts:

1. What did President Bush announce today on climate change?
2. The wrong way to address climate change
3. Parsing the President: no “climate change”?

Q:         Where is he going?

A:         (1) Prague, Czech Republic.  (2) Heiligendamm, Germany, for the G-8 meetings.  (3) Jurata and Gdansk, Poland.  (4) Rome and the Vatican.  (5) Tirana, Albania.  (6)  Sofia, Bulgaria.

The G-8 meetings are Wednesday, Thursday, and Friday.  There will actually be three groups of leaders meeting:

1. G-8 leaders:  Canada, France, Germany, Italy, Japan, Russia, U.K., USA
2. G-8 + 5, where the + 5 are large developing economies:  Brazil, China, India, Mexico, and South Africa
3. G-8 + some key African leaders:  Algeria, Egypt, Nigeria, Senegal, and South Africa.

Quiz:  Name all the leaders in each group.  (Answer is at the bottom.)

The themes of the G-8 meeting are “Growth and Responsibility.”  As part of the lead-up to this meeting, the President rolled out four major initiatives last week:

• tightening economic sanctions against the Sudan and imposing additional sanctions, to address the ongoing genocide in Darfur;
• a proposed doubling of the American $15 B spending commitment for PEPFAR, the President’s Emergency Plan For AIDS Relief; (We’re actually up to $18 B in spending for ’08.)
• a new climate change framework; and
• a new Africa Financial Sector Initiative and a new Africa Educational Initiative.

In addition the President re-emphasized some long-standing principles in a major international development speech to the U.S. Global Leadership Council last Thursday.  Here they are, in the President’s words.

On trade:

Trade is the best way to help poor countries develop their economies and improve the lives of their people. When I took office, America had free trade agreements with three countries. Today we have free trade agreements in force with 14 countries, most of which are in the developing world. Three weeks ago, my administration and Congress agreed on a new trade policy that will be applied to free trade agreements with Peru, Colombia, Panama and South Korea.

(T)he United States also seeks to open markets to the Doha round of trade negotiations. Doha represents a once-in-a-generation opportunity to help millions in the developing world rise from poverty and despair. If you’re interested in helping the poor people, you ought to be for trade and opening up markets for their goods and services. And the Doha round gives us an opportunity to do just that.

We put forward bold proposals to help conclude a successful Doha round. And at the G8 summit next week, I’m going to urge other nations to do the same. A successful Doha round will benefit all our countries and it’s going to transform the world.

Here’s some quantification of the President’s point about trade being the best way to help poor countries and their citizens:

• Full liberalization of global merchandise trade would be worth about $140 billion per year to developing countries, nearly double last year’s combined G7 development assistance of $75 billion.
• World Bank studies say that in the 1990s, per capita real income grew 3X faster for developing countries that lowered trade barriers than for those that did not.  Also, economic growth is on average 1.2 to 2.6 percentage points higher after a country dismantles its trade and investment barriers and opens its economy.
• Another World Bank study estimates that a successful Doha round could lift tens of millions of people out of poverty.
• About 70% of the duties on goods that developing countries pay go to other developing countries.  (So poor countries are restricting trade with each other, and hurting both sides.)

On debt relief:

Building progress and prosperity to struggling nations requires lifting the burden of debt from the poorest countries. That makes sense. It doesn’t take a Ph.D. in economics to figure out, if you’re paying a lot of money on interest, you’re not having enough money to support your own people. In the past, many poor nations borrowed money, and they couldn’t repay the debt. And their interest payments were huge. And, therefore, they didn’t have the opportunity to invest in education and health care. So the administration, my administration worked with G8 nations to ease the debt burden. We’re not the first administration to figure this out. My predecessor did the same thing, because it’s the right policy for the United States of America.

Two years ago at Gleneagles, the G8 nations agreed to support a multilateral debt relief agreement that freed poor countries of up to $60 billion in debt. This year, we built on that progress, when the Inter-American Development Bank approved another debt relief initiative for some of the poorest nations in our neighborhood, in our own hemisphere. This initiative will cancel $3.4 billion owed by five countries: Bolivia, Guyana, Haiti, Honduras, and Nicaragua. And that represents more than 12 percent of their combined GDP, an average of nearly $110 for every man, woman, and child in these countries. And this money is now free to help these nations invest in improving their lives of citizens. It makes sense to forgive debt. If you’re interested in helping the poor, it makes sense for the developed world to forgive the debt. And that’s what the United States will continue to do.

On the Millennium Challenge Account:

The United States is helping developing nations build these and other free institutions through what we call the Millennium Challenge Account. Under this program, America makes a compact with developing nations. We give aid, and in return they agree to implement democratic reforms, to fight corruption, to invest in their people — particularly in health and education — and to promote economic freedom. Seems like a fair deal, doesn’t it — taxpayers’ money from the United States in return for the habits and procedures necessary for a solid society to develop. We don’t want to give aid to a country where the leaders steal the money. We expect there to be accountability for U.S. money and that’s the principle behind the Millennium Challenge Account. Eleven nations have compacts in place worth nearly $3 billion. And now 14 additional nations are eligible to negotiate compacts with the Millennium Challenge Corporation, headed by Ambassador Danilovich.

Answers to the quiz:

G8:       Canada – Harper;  France – Sarkozy;  Germany – Merkel;  Italy – Prodi;  Japan – Abe;  Russia – Putin;  U.K. – Blair;  USA – Bush.

+5:       Brazil – “Lula” da Silva;  China – Hu;  India – Singh;  Mexico – Calderón Hinerosa;  South Africa – Mbeki

Africa:   Algeria – Bouteflika;  Mubarak – Egypt;  Nigeria – Yar’Adua (President-elect);  Senegal – Wade;  South Africa – Mbeki

President Bush’s trip to Europe

© 2010 Keith Hennessey - Your guide to American economic policy

Related posts:

1. What did President Bush announce today on climate change?
2. President Bush’s speech on financial markets and the world economy
3. What was accomplished at the G-20 Summit?

Here’s the key quote:

In recent years, science has deepened our understanding of climate change and opened new possibilities for confronting it. The United States takes this issue seriously. The new initiative I am outlining today will contribute to the important dialogue that will take place in Germany next week. The United States will work with other nations to establish a new framework on greenhouse gas emissions for when the Kyoto Protocol expires in 2012.

So my proposal is this: By the end of next year, America and other nations will set a long-term global goal for reducing greenhouse gases. To help develop this goal, the United States will convene a series of meetings of nations that produce most greenhouse gas emissions, including nations with rapidly growing economies like India and China.

In addition to this long-term global goal, each country would establish midterm national targets, and programs that reflect their own mix of energy sources and future energy needs. Over the course of the next 18 months, our nations would bring together industry leaders from different sectors of our economies, such as power generation and alternative fuels and transportation. These leaders will form working groups that will cooperate on ways to share clean energy technology and best practices.

Let’s break it down:

• He’s proposing a new process.  This is in part for consideration at next week’s G-8 meeting in Heiligendamm, Germany.  (The G-8 members are Canada, France, Germany, Italy, Japan, Russia, the U.K., and the U.S.)  Stay tuned for more on the G-8 meeting.
• The discussion would involve the “major emitters” – nations that are responsible for the majority of the world’s greenhouse gases.  The top major emitters are: U.S., China, the European Union, Russia, Canada, Japan, India, South Korea, Australia, Brazil, Mexico, and South Africa.  So everyone in the G-8 is included, as well as several others.
• We (the U.S.) “will convene a series of meetings.”
• The group would work to “set a long-term global goal for reducing greenhouse gases.”  Such a goal would be an aspirational (non-binding) global goal.
• The Kyoto Protocol (which the U.S. rejected) expires in 2012.  This new process is to establish a framework that would take effect after that.  By the way, it can take place within the 1992 U.N. Framework Convention on Climate Change.
• Each country would set its own targets, and its own methods for hitting those targets.  Some countries might like a carbon tax, others might like a national cap-and-trade system, others might take a sector-by-sector approach, and still others might set voluntary goals.  But each nation decides for itself what makes sense based on its own particular circumstances.
• The group should have all this worked out by the end of 2008.  That’s an aggressive, but we think achievable, deadline.

Just in case you’re not a climate change expert, there’s some big news here – especially the U.S. talking about a new process post-2012, and a long-term global goal for reducing greenhouse gases, and expanding the discussion to make sure it includes major emitters like China and India.

Here’s the interesting part.  Senator Boxer (D-CA) is the Chair of the Senate Environment and Public Works Committee.  Senator Inhofe (R-OK) is the ranking Republican member of the same committee.  Each is a respected leader in the climate change debate, and let’s just say the debate between them is often quite vigorous.

Senator Boxer was quoted today as follows, “I have written to the President twice this year … to ask him to convene a summit of the world’s largest emitting nations.  Today he has accepted that challenge.  I stand ready to assist him with the summit and continuing negotiations in any way I can.”

Senator Inhofe said today, “Any international effort that builds off of the Asian Pacific Partnership and includes the developing nations is a positive step forward.”  (The Asia-Pacific Partnership on Clean Development and Climate includes six countries that work together to accelerate the development and deployment of clean energy technologies.)

Will the papers tomorrow highlight these preliminary indications of bipartisan support for the President’s proposal?  Or will they instead focus on areas of disagreement?

What did President Bush announce today on climate change?

© 2010 Keith Hennessey - Your guide to American economic policy

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