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The Business Issues Bush and Kerry in the Ring

Oct. 1, 2004
The business issues facing the nation stir debate between the two men in the ring, George Bush and John Kerry.We recently asked both candidates to answer

The business issues facing the nation stir debate between the two men in the ring, George Bush and John Kerry.We recently asked both candidates to answer specific questions about how they would address what many consider the complex issues of this decade and beyond. We found their answers to be well reasoned and thought provoking.

Each candidate was asked several questions that have an impact on our current and future business environment — from the development of a National Energy Policy and the improvement of the nation's manufacturing capacity, to the adoption and implementation of high-tech strategies and initiatives designed to improve the nation's competitiveness and the opportunities for all Americans to take part in the economic future of the nation.

We encourage you to review their responses, as the way in which they respond may affect the way you do business in the future.

Q: PRIMEDIA Business: The nation's economy has been adding to its employment totals over the course of the past year, although that growth does not appear to be as robust as it should be in the midst of the current recovery. In your view, what must we do as a nation to improve on the short-term and long-term job creation in our nation?

A: President Bush: Creating an environment that is ripe for investment, expansion and sustainable job growth is one of my greatest domestic priorities. In the past three-and-a-half years, our nation has overcome many obstacles that have affected our economy, including inherited recession, corporate scandals and the terrorist attacks of September 11th. Our resolve has not faltered, and we have turned our recovery into robust economic growth. In the past 12 months, our economy has created 1.7 million new jobs, including 107,000 new manufacturing jobs since January.

The unemployment rate dropped to 5.4% in August and is lower than the average rates during the 1970s, 1980s and 1990s. Employment has increased in 47 states over the past year, and unemployment claims have declined. This is good progress, but there is still more we can do to ensure more Americans are working. I will not be satisfied until every American looking for work can find a well-paying job.

Now, we must build on this progress and further extend prosperity to every community in America. My six-point plan to strengthen the economy focuses on: reforming the legal system to prevent frivolous lawsuits that increase the cost of doing business; promoting domestic energy development and energy security; streamlining government regulations, especially for small businesses; pursuing free and fair trade agreements that open new markets for American goods and level the playing field for America's workers and businesses; making tax relief for families and small businesses permanent; and expanding access to affordable health care.

In addition, I have called for fundamental tax reform that will give Americans a tax system that is simpler and encourages economic growth. Taken together, these policies will lower the costs of doing business, create new jobs and lead to rising salaries for workers.

A: Senator Kerry: We have a three-part plan to invest in the jobs of the future: make America more competitive and innovative, increase jobs at better wages and combat outsourcing.

We will jump-start job growth. Our new Jobs Tax Credit will encourage hiring by manufacturers, other businesses affected by outsourcing and small businesses in 2005 and 2006. Enforce our trade agreements and trade laws to ensure that our partners are playing by the rules and that China and other countries do not manipulate their currencies.

We will make America more competitive. We will end tax breaks for companies creating jobs overseas and cut taxes for 99% of taxpaying corporations. We will cut the deficit in half in four years to free up more capital for private investment without increasing record borrowing from abroad. We will enact health care reform to cut premiums up to $1000 and move toward energy independence.

We will invest in the jobs of the future. We will move toward universal broadband access to ensure America's technological infrastructure is the best in the world. We will unleash innovative small and medium-sized businesses by establishing Manufacturing Business Investment Corporations and doubling the Manufacturing Extension Partnership. And we will secure universal access to college and expanded job training to prepare workers for high wage jobs of the future.

Q: PRIMEDIA Business: What is your detailed plan/program to sustain long-term job creation in the United States?

A: President Bush: The responsibility of the government is not to create jobs but to establish an environment that will generate sustainable economic and job growth. Our nation's small businesses are vital to our prosperity and are responsible for creating more than 70% of new jobs. One way to help our small businesses remain strong is to allow them to retain more resources that will encourage their expansion.

We successfully passed the most sweeping tax relief package in a generation, keeping more money in the hands of small business owners who are investing it in new equipment and new workers. By quadrupling to $100,000 the amount that small businesses can expense on things like computers and machinery and by sending the death tax on its way to extinction, entrepreneurs can invest more in ways that benefit their employees and strengthen the economy. And because 90% of small businesses pay taxes at individual rates, the across-the-board income tax cuts have extended relief to 25 million small business owners and entrepreneurs.

Bureaucratic Regulation

We have also worked to reduce the government-created obstacles to growth by decreasing the number of bureaucratic regulations and streamlining policies so that small businesses can focus their resources on job creation instead of on excessive paperwork. For example, I have asked the director of the Office of Management and Budget to work with the Small Business Administration's Office of Advocacy to strengthen the enforcement of the Regulatory Flexibility Act. This act requires agencies to prepare an analysis of the impact of new regulations on small businesses before they are put in place.

The burden of health care costs also slows economic growth, and my administration has worked to address these costs with a comprehensive approach to making health care more affordable and accessible for families and small businesses. New Health Savings Accounts (HSAs) are giving Americans greater control over their health care by allowing them to pay for routine medical expenses and save for future medical expenses in a tax-free account that they own and can take with them when they change jobs. In a second term, I will propose to give small business owners a tax credit on HSAs for the first $500 per worker with family coverage and the first $200 per worker with individual coverage that they contribute to an HSA. Self-employed people will be able to claim this credit for contributions to their own accounts. I also have proposed tax credits for low-income families and individuals that are advanceable and immediately available to help families with their expenses. For eligible low-income families that choose to use their tax credit to purchase an HSA, I have proposed that these families receive up to $2000 for their premiums and $1000 cash for their HSA and individuals will be eligible for up to $700 for premiums and $300 for their HSAs.

I have also asked Congress to enact Association Health Plans (AHPs) to give more American working families and small businesses affordable health care insurance plans. These plans will allow small businesses to band together and negotiate on behalf of their workers just like large corporations and unions do. I also want to expand the AHP concept so that charitable organizations, churches and other civic groups can negotiate coverage for their members.

A: Senator Kerry: The private sector is the engine of economic growth and job creation, and it's the government's responsibility to create an environment that will promote private sector investment, foster vigorous competition and strengthen the foundations of an innovative economy. We believe companies can keep jobs in America without sacrificing competitiveness.

We will fight for American jobs by creating new ones and protecting existing ones by cutting taxes for companies that create jobs at home and ending tax breaks for companies that ship jobs overseas; by cutting costs and taxes to make American business more competitive; and by investing in the good-paying jobs of tomorrow to make sure that people of every age learn the skills they need to be successful — today and in the future.

We will enforce trade agreements and close outsourcing loopholes to revitalize manufacturing and create jobs at home. We will step up enforcement of existing agreements and laws to ensure trading partners play by the rules. Specifically, I will immediately investigate China's workers' rights abuses, increase resources for trade enforcement and action at the World Trade Organization (WTO), and engage more forceful alerts to stop illegal currency manipulation by China and other countries. In addition, I will ensure a level playing field for trade by only signing new agreements that include enforceable labor rights and environmental standards.

Close Loopholes

We will close loopholes in international tax law that encourages outsourcing. Today's tax law provides big breaks for companies that send American jobs overseas. Current deferral policies allow American companies to avoid paying taxes on income earned by their foreign subsidiaries and encourage them to keep their profits parked overseas, not reinvested in America. As president, I will end deferral that encourages outsourcing and will shut down other loopholes to make the tax code work for the American worker, not provide tax breaks for companies that ship jobs overseas.

We will offer a onetime tax holiday for companies to reinvest their foreign profits in America. At the end of 2002, American companies were keeping more than $639 billion in profits abroad. We have a plan to bring these profits back home. For one year, we will provide companies with a special low tax rate of 10% on any profits they reinvest in the United States for companies with a domestic reinvestment plan.

We plan to establish a Manufacturing Business Investment (MANBIC) initiative, which is based on the Small Business Investment Company (SBIC), a program I have strongly supported in the past and will champion as president. SBIC provides venture capital and start-up financing to small businesses, many of which have grown into large corporations employing millions of Americans. MANBIC will create added incentives for venture-capital investment in medium-sized manufacturing firms, which are crucial in developing and sustaining new products, new production methods and new markets.

We will be more competitive through the creation of a new Jobs Tax Credit. Research has demonstrated that new job tax credits increase employment. Our new Jobs Tax Credit will cover an employer's share of payroll taxes for net new jobs created in manufacturing, other businesses affected by outsourcing and small business. This credit will be available in 2005 and 2006.

We will plan to lower corporate tax rates by 5%. Our plan to close tax loopholes and end deferral will not increase the deficit by one dime. In fact, it will save an average of $12 billion a year. These profits will be used to lower the corporate tax rate and cut taxes for over 99% of taxpaying companies. Our international tax reform will increase hiring and investment in America by American companies. An analysis of IRS data shows that more than 99% of corporations paying corporate income taxes would see their taxes reduced under this proposal.

Q: PRIMEDIA Business: We have been realizing that high-paying jobs have been drifting overseas, as businessmen here in the United States seek to reduce their costs and improve their operating profits and earnings. What is your plan to recapture the jobs that we have been losing to overseas markets and countries that pay workers a fraction of the salary/wage we pay here in the United States?

A: President Bush: Opening markets to U.S. exports is a key part of sustaining America's economic recovery and creating new jobs for American workers. U.S. exports accounted for almost 25% of U.S. economic growth during the 1990s and support an estimated 12 million jobs today. Jobs in exporting plants pay wages that average 13% to 18% more than jobs in nonexporting plants. Approximately one out of every five factory jobs is due to manufacturing exports, and American farmers plant one out of every three acres for export, generating nearly 25% of their gross cash sales.

We are aggressively enforcing trade agreements to level the playing field for American businesses and workers. My administration is working to do this by removing barriers that hinder American exporters, bringing WTO enforcement actions, combating unfair trading practices and increasing dedicated trade enforcement resources.

American workers are the most productive in the world, and when given a level playing field they can compete against workers anywhere. My administration has and will continue to use every tool at its disposal to stop unfair trade from hurting American businesses and workers. For example, the Commerce Department initiated the largest cases against China ever on imports of a number of products, including furniture, valued at more than $1.5 billion.

We know that any economic change — whether arising from trade or technology or increased productivity — can cause painful dislocation for some workers and their families. That is why I have proposed an aggressive agenda to help workers acquire the skills to find good-paying jobs. In my FY 2005 budget, I proposed $23 billion for job training and employment assistance.

To ease the effects of economic change, I have requested $1.1 billion in the FY 2005 budget for training and cash benefits for workers dislocated by increased imports or a shift of production to foreign countries. The Department of Labor provides benefits and training to displaced workers through Trade Adjustment Assistance (TAA). This program is designed to help trade-impacted workers gain or enhance job-related skills and find new jobs. It provides eligible workers with career counseling; up to two years of training to acquire the skills needed to return to work; income support during training or remedial education classes; job search assistance with 90% of the expenses reimbursed (up to $1250) to support workers exploring out-of-area job opportunities; health care assistance in the form of a 65% tax credit; an alternative wage insurance program for workers over the age of 50 earning not more than $50,000, who are entitled to 50% of the difference between their old and new salaries up to a maximum of $10,000 over a two-year period; and relocation support by reimbursing 90% of the costs of moving the worker and his or her family.

Jobs for the 21st Century Initiative

I have also proposed my Jobs for the 21st Century initiative, which includes more than $500 million in funding for education and job-training programs. Jobs for the 21st Century will better prepare students for success in higher education and the job market, including $100 million to help middle and high school students striving to read; $120 million to improve math education; $40 million to bring professionals with subject-matter knowledge, such as scientists and software engineers, into the classroom; and $12 million to expand the State Scholars program to all 50 states to encourage high school students to take a rigorous academic curriculum, and $33 million to provide an additional $1,000 Pell Grant to students who complete the State Scholars curriculum. Jobs for the 21st Century initiative includes $250 million in funding for America's community colleges, so they can join with companies in growing industries to train workers for jobs that actually exist.

A: Senator Kerry: We have developed a six-part plan to reassert our rights in the global economy and ensure a level playing field for American workers and businesses. Our plan calls for immediate action to force the Bush Administration to take trade enforcement seriously right now and outlines the steps that I would take as president to improve trade enforcement. Here are the steps that we would take:

Immediate reinstatement of the Super 301 process to force the Bush Administration to report and act on foreign trade barriers. We will call on Congress to immediately reinstate the 301 process, which would require the USTR to issue special reports on trade barriers to U.S. exports and work under specific timetables to eliminate such barriers or establish compensatory trade benefits.

As president, I will order an immediate 12-day review of all existing trade agreements to ensure that our trade partners are living up to their obligations, and that trade agreements are being enforced and they are working as anticipated.

We will step up action to strengthen worker's rights and stamp out abusive child labor. We will investigate China's repression of worker's rights. We will initiate an annual review of progress toward establishing core labor rights around the world and we will increase by 50% the funding for International Labor Affairs.

Further, we will increase resources for trade enforcement and action at the World Trade Organization. To strengthen our government's capacity to enforce trade agreements, I would double the USTR's trade enforcement budget which would reverse the 6% funding cut for the overall agency that President Bush proposed in his FY 2005 budget.

I will also make it easier for small and medium-sized businesses to access our trade laws through the creation of a dedicated Small Business Advocacy Office, and I will call on the NEC and NSC to create an interagency task for enforcement in new, complex high-tech industries. The goal here is to ensure that our trading partners are not preying on our small businesses or capturing unfair advantages in new industries that are not yet fully understood.

I will move forcefully to stop illegal currency manipulation, and I will not be satisfied with token actions that continue to leave U.S. exporters at a serious price disadvantage.

Q: PRIMEDIA Business: Before our country can do better, American business must do better. One of the most important areas that must improve is the amount of capital investment now being made by businesses in technology, innovation and markets across the nation and around the world. What is your plan to improve the environment in which businesses can commit to increased capital outlay and investment in new business opportunities and expansion here and abroad?

A: President Bush: We concentrated on individual tax relief that would allow taxpayers to keep, spend and save more of their own money. And, unlike other downturns in the business cycle, consumer spending has remained strong throughout the last few years. The tax relief we passed in 2003 has focused on enhancing investment for families and small businesses. The bill equalized capital gains and dividend tax rates at a lower rate of 15%, and accelerated business depreciation on investments.

These steps have achieved real results. In 2000, before the relief came, business investment growth had dropped from 14% to less than 1%. But now it has grown for five consecutive quarters and in the most recent quarter was back up to an annualized growth rate of 12%.

Technological Edge

One of the most important tools we have today for encouraging business investment in new technology and innovation is the Research and Experimentation Tax Credit. This is a proven tool for maintaining and enhancing America's technological edge. I have repeatedly called on the Congress to make this credit permanent, so businesses can formulate their long-term research plans with confidence. Congress recently extended the credit, which had expired earlier this year. My opponent, on the other hand, opposed extending the credit, singling it out for criticism.

My opponent also has opposed efforts to reduce the tax burden and even now proposes to isolate the United States with the most burdensome tax system for companies competing internationally. His international tax changes will tilt the playing field against U.S. companies and in favor of companies based in other countries. I have an agenda based on reducing the costs of doing business in the United States by curbing regulatory costs, changing incentives for health care costs, ensuring a reliable energy supply, and making the tax relief permanent. My opponent's economic isolationism threatens the millions of jobs and billions of dollars in investment that foreign companies provide in the United States.

A: Senator Kerry: I will promote private sector investment, innovation, competition and the formation of new businesses. This requires a responsible fiscal policy, targeted tax cuts that reward long-term investments, and trade and regulatory policies that will enhance America's high-tech competitiveness. I will eliminate capital gains taxes for long-term investments in small businesses. Small entrepreneurial firms play a critical role in creating new jobs and commercializing new technologies. As new companies, they are less wedded to incremental improvements to existing products and services, but often have difficulty attracting capital because of the high degree of risk involved. I will exempt investments held for five years or more in small businesses.

I will extend the Research and Experimentation Tax Credit, which provides a powerful incentive for companies to invest in R&D. Its effectiveness would be greatly increased if it were extended so that companies could rely on its existence. I will work with Congress to find a way to pay for extending the Research and Experimentation Tax Credit with the goal of making it permanent.

I will reform or eliminate regulations that impede America's high-tech competitiveness, such as supporting the shifting of the emphasis of computer export controls from attempting to control widely available business computers to controlling the availability of classified software created for applications such as weapons development; using market-oriented performance-based and other mechanisms that encourage the development of innovative solutions to meet public goals such as environmental protection, rather than forcing prescriptive measures; ensuring that distributed energy resources can be reliably and affordably connected to the grid; ensuring that the Patent and Trademark Office has the resources it needs to review a growing number of new patent applications and issue high-quality patents by ending the diversion of patent fees.

I will expand trade and open markets for U.S. goods and services abroad. I will vigorously crackdown on unfair trade practices, such as piracy or our intellectual property and China's discriminatory policies toward semiconductors and other technological products. I will end special tax breaks for moving jobs overseas and cut corporate taxes in the United States and cut the budget deficit in half while investing in priorities.

Broadband Strategy

Under my plan, we will create high-tech, high-wage jobs with a national strategy for universal broadband. I will have a national broadband policy that will speed the deployment of this essential infrastructure, since the widespread adoption of broadband could add $500 billion to the U.S. economy, generate more than 1.2 million jobs, and transform the way we learn, work and deliver digital opportunity throughout the country.

I will provide tax incentives to make broadband access universal. I will provide a 10% tax credit for investments in today's broadband technology in rural and inner city areas; ensure universal broadband for first responders by the end of 2006; expand the spectrum available for new broadband wireless services and first responders while raising $30 billion to fund science and technology innovation; promote private sector investment and competition in broadband; and encourage marketplace solutions to attract broadband providers to underserved regions.

I will boost support for the physical sciences and engineering by increasing research investments in agencies such as the National Science Foundation (NSF), the Department of Energy, the National Institute of Standards and Technology, and National Institutes of Health and the National Aeronautics and Space Administration. This funding will provide the foundations for economic growth and prosperity in the 21st century including:

Additional investments in nanotechnology could lead to dramatic improvements in our ability to detect and treat cancer, a “lab on a chip” for defense against biological warfare and clean sources of energy that are competitive with fossil fuels. Increased investment is also needed in nanoelectronics, since the current generation of semiconductor technology is beginning to reach fundamental limits.

Advanced manufacturing and new technology allowing U.S. companies to be more competitive, developing products more rapidly and more cost effectively. I will double the funding for the Manufacturing Extension Partnership, which would speed the adoption of new technology by small and medium-sized manufacturers — the backbone of our economy. In addition, I will restore funding for the Advanced Technology Program.

I will encourage the development of information technology, which can lead to jobs and industries of the future and therefore support recommendations of the President's Information Technology Advisory Committee that call for an increase in long-term IT research. More research is needed, for example, to make high-productivity information systems that are dependable, reliable and resistant to cyber attacks.

Q: PRIMEDIA Business: Our nation has been losing a fair amount of technical jobs (engineering and technical operating professionals) to overseas countries. What are your programs and policies going forward to rekindle the interest in a technical education here in the United States?

A: President Bush: Ensuring that America's workers receive high-level technical skills will keep our workforce competitive and will help to strengthen our economy. Professions that require strong math and science skills tend to be good, high-paying jobs, and creating an interest for these skills at home is essential to preparing our workers for the jobs of the 21st century.

I believe that a sound economic policy begins first with comprehensive education reform. We must ensure that we are preparing the next generation of workers with the math and science skills needed to maintain America's leadership in innovation. The No Child Left Behind Act I signed into law in January 2002 holds schools accountable for ensuring every child is able to read and do math at grade level with science being added shortly.

Including my 2005 budget, these reforms have seen an unprecedented $12 billion (49%) increase in funding for elementary and secondary schools since 2001.

I have proposed major reforms to the major federal worker training grant programs so we can double the number of workers who receive job training. We will train twice as many workers by giving governors more flexibility to direct training dollars and by trimming needless bureaucracy to ensure that training dollars are going to help workers gain new skills.

Earlier, I mentioned my Jobs for the 21st Century initiative. One portion of this initiative proposes strengthening and modernizing vocational education by spending $1 billion a year on a new Secondary and Technical Education program — “Sec Tech” that would provide traditional vocational education combined with a stronger focus on academic achievement. High schools participating in the program would offer four years of English, three years of math and science, and three-and-a-half years of social studies as part of their vocational education curriculum.

I understand the importance of R&D in driving American innovation and supporting the technology industry, which is why I increased federal R&D funding by 44% to $132 billion in 2005, including an all-time high of $26.8 billion for basic research representing a 26% increase from 2001. We have also doubled the budget for the National Institute of Health, increased funding for NSF by 30% and increased support for nanotechnology research by 88%. Finally, I have consistently called upon Congress to make the R&D tax credit permanent.

A: Senator Kerry: We support Jobs in America through Buy American Guidelines. We believe that, when possible, American workers should perform federal contracts. We will support stronger Buy American Guidelines for defense and homeland security, which will help retain and strengthen domestic manufacturing capabilities in strategic manufacturing industries.

We will fight to expand training and lifelong learning by expanding training as part of the Trade Adjustment Assistance (TAA) program, supporting regional skills alliances, and protecting training conducted at community colleges.

We will plan on funding the Manufacturing Extension Partnership (MEP). America's 350,000 small manufacturers account for over half of the total value of U.S. industrial production. They employ 1.1 million people in high-skill, high-wage jobs, with production employees earning 50% more than retail employees. In 2003, the MEP helped small manufacturers create or retain 35,000 jobs and $2.8 billion in sales. I will double the funding for the MEP based on its 2000 level, speeding adoption of new technology by small and medium-sized manufacturers.

We will plan on moving to universal broadband access and a national broadband policy that will speed the deployment of essential infrastructure, including broadband. The widespread adoption of broadband could add $500 billion to the U.S. economy, generate more than 1.2 million jobs, and transform the way we learn, work and deliver digital opportunity throughout the country.

I will restore funding for the Advanced Technology Program so that it supports the growth of high-technology clusters that spring up around research institutions and funds the university-industry consortia that benefit broad sectors of our economy.

We will expand TAA programs to provide immediate relief for manufacturers, workers and communities hurt by manufacturing imports, and integrate these programs with the workforce training programs. I support expanding TAA to service sector workers who lose their jobs due to outsourcing.

In addition, we will develop 21st century manufacturing technologies at the Defense Advanced Research Projects Agency (DARPA). In the past, investments in defense research have helped America's armed forces achieve their current superiority. Investments resulted in innovations like stealth technology, precision-guided munitions and night-vision goggles. We will increase investment in long-term, high-risk defense research through agencies like DARPA and the Office of Naval Research. Some of the increase will be targeted to advanced manufacturing technologies, such as flexible manufacturing, that can provide custom products in low volumes at competitive costs. This will benefit U.S. manufacturing as a whole, not just Defense Department suppliers.

Q: PRIMEDIA Business: Over the course of the past few decades, our nation has been faced with a dilemma of operating without a National Energy Policy. What are the details of a policy that you want to encourage and develop for the nation?

Explain your policy for the following: Your position on developing our natural resources while at the same time protecting the environment. Explain how you will advance environmentally friendly technologies to increase energy supplies and encourage cleaner, more-efficient energy use. Explain how you would address the modernization of our energy infrastructure, including: the network of generating facilities, transmission lines, pipelines and refineries that convert raw resources into usable fuel and power.

A: President Bush: America needs a national energy policy to reduce America's dependence on foreign sources of energy, as well as to create jobs and keep the economy growing. As one of my first acts in office, I crafted a comprehensive National Energy Policy (NEP) to increase domestic energy production, support alternative and renewable energy, invest in our aging energy infrastructure, and promote energy efficiency and conservation. The NEP report included more than 100 recommendations, nearly half of which addressed renewable energy and energy efficiency. To help the economy expand and to keep energy prices affordable, my comprehensive energy plan recommended increased production of all sources of energy, including oil and gas, clean coal, solar, wind, ethanol, biodiesel, biomass, hydropower and other renewables, as well as safe and clean nuclear power.

I have sought more funding for energy-efficiency and renewable energy programs than has been provided in any year during the last two decades. I have also called on Congress to reauthorize the production tax credit to expand the use of wind power and to pass a renewable fuels standard, which would require using 5 billion gallons of domestically produced, cleaner burning ethanol and biodiesel in gasoline. In addition, my budget calls for a $4000 tax credit for people who purchase hybrid vehicles. These measures will help ensure American energy security and create new high-paying jobs in renewable energy industries.

In 2003, I announced the largest increase in Corporate Average Fuel Economy (CAFE) standards in 20 years for light trucks. This will result in savings of approximately 3.6 billion gallons of gasoline over the lifetime of these trucks. My CAFE plan is responsible and technologically feasible, and will not jeopardize passenger safety or American auto jobs.

Additionally, I called for development of just 2000 acres in Alaska (out of a total 19 million acres in the Arctic National Wildlife Refuge). The single step could produce up to 1 million barrels of oil a day for the next 20 years, dramatically increasing America's domestic production and enhancing our national security.

In the longer term, we must transform America's energy infrastructure to support a hydrogen-based economy. I announced two important measures during my 2003 State of the Union Address that will help make a hydrogen economy possible. My budget supports $1.7 billion over five years for the Hydrogen Fuel Initiative and a public-private partnership called Freedom CAR, which will work to create automobiles that run on clean-burning hydrogen.

A: Senator Kerry: Oil prices have hit historic highs and some economists believe they could climb higher. Yet even as gas prices reach the highest levels and America has become more dependent on foreign oil than ever before, the Bush-Cheney Administration has done nothing. We understand that soaring energy costs are burdening middle class families and businesses and that our dependence on Middle East oil is putting our national security at risk. America will be safer when the resources that fuel our economy are in our own hands and developed right here in America.

The goals of our energy plan are to maintain a secure America, independent of Middle East oil; to lower energy bills for American consumers; to establish American leadership in clean-energy jobs of the 21st century and focusing on the energy of the past to developing the clean energy of the future.

We will establish an Energy Trust Fund in order to establish a more secure energy future. Capitalized with more than $20 billion from existing federal offshore oil and gas royalty revenues — to create a permanent funding stream to develop new clean fuels and technologies for our future.

We will strengthen the fuel efficiency of automobiles; help plants retool; help Americans purchase more advanced technology vehicles by establishing consumer incentives of up to $5000 per vehicle for the purchase of clean, efficient vehicles; and use the purchasing power of the federal government toward supporting the market for hybrid and advanced diesel vehicles.

Alternative Fuels

We will foster a new national commitment to alternative fuels that will bring together government, agriculture and industry to put America on a path to meet 20% of its motor fuel demand with domestically produced alternative transportation fuels by 2020. To meet the goal, we will establish a renewable fuels standard; accelerate production and the use of ethanol and biodiesel; extend the ethanol tax incentive; and reinforce the long-term move to hydrogen.

As president, I will rein-in out of control gas prices and re-establish American leadership abroad through aggressive effective diplomacy that will reduce tension in the region and reduce the risk for oil. We will simplify the gasoline rules by working with states to develop rational fuel policies that ensure air quality is protected, while making gas more fungible from region to region to prevent price spikes and volatility.

We will establish strategic oil reserve policies that minimize the negative impact on consumers while ensuring our nation's energy security. We will ensure fair competition in the marketplace by being more cautious about approving energy sector mergers in order to protect consumers. We will enact efficiency standards and promotion measures to cut the federal government's energy bill by 20%, and we will help states and municipalities, businesses and consumers do the same.

We will diversify the sources of energy, including new sources of natural gas and the infrastructure needed to deliver it. We will work to enhance supply by supporting balanced exploration and production of natural gas though developing natural gas sources; constructing infrastructure to move natural gas; and promoting safe and effective development of liquefied natural gas.

Our plan incorporates coal as a part of the 21st energy solution, and we will invest $10 billion over the next decade to develop and deploy clean and reliable energy from coal, and ensure the 20% of our electricity comes from renewable sources by 2020. We will establish a national goal of producing 20% of our electricity from renewable sources such as wind, solar, geothermal and biomass by 2020. We support a renewable energy credit trading market, so more renewable energy is deployed at lower costs and production tax credits to drive these technologies into the marketplace.

Our plan includes a balanced and secure future for nuclear power, but its use comes with key challenges such as nuclear waste disposal, nuclear proliferation and plant security. We should proceed based on peer-reviewed science.

One year ago, America faced an historic blackout. To avoid the possibility of that occurring once again, we should: make the electric grid more reliable and safe through the enactment of mandatory, enforceable reliability standards for the industry; employ innovative technologies and cutting-edge software capabilities to revolutionize our antiquated system; and develop a smart grid and deploy new technologies that are clean, efficient, reliable and less vulnerable to terrorism.

Through our energy policy, we will create 21st century American energy jobs. By aggressively pursuing renewable energy options like wind, biomass and solar, we will create new economic opportunity for farmers, landowners and small businesses.

While we realize that the private sector creates jobs, a major gap exists in the capital markets, slowing the deployment of clean energy technologies. The Energy Trust Fund, along with federal incentives, including loan guarantees, targeted grants and tax credits, will encourage job creation. Additionally, to enhance capital availability we support the extension of the Federal Production Tax Credit (FTC) to the full array of renewable technologies for a period of not less than five to seven years.

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