Spiral of self-destruction can be reversed 

Not only is America in decline, we can't figure out a way to reverse it. Breaking that cycle is essential for an American economic renaissance. It can be done, and here's how.

First, we must be clear about the trap we're in. Our economy was hammered five years ago in some ways worse than the Great Depression. Its recovery has been painfully slow and faltering. Today we do not know whether it will continue to creep forward or plunge back into recession.

We keep waiting for the government in Washington to lead us out of this mess. It hasn't, and it is not going to. The government is the problem. The government is $15 trillion in debt. For the first time in our history, its credit worthiness has been downgraded.

Our elected leaders can't agree on a federal budget, entitlement spending, taxes, immigration, energy or education. They only agree on one thing — getting re-elected. And they believe that you and I are stupid enough to give them what they seek — re-election. And so far they have been right!

Are you patriotic enough to stop being stupid? We need to learn some of the lessons from Thomas Friedman and Michael Mandelbaum's book, "That Used To Be Us." They correctly argue that our two political parties are now ideologically homogenous and unable to work together on our behalf. Democrats have become the most conservative force in Washington — defending every federal program in sight. The Republicans have become the party of fiscal radicalism and recklessness. Friedman and Mandelbaum correctly conclude that the Democrats are cowards and the Republicans are crazy.

To reverse the nation's spiral of self-destruction, we need to look under our feet. America is awash in reserves of shale gas and shale oil, immense amounts of both. These reserves can be recovered and marketed here and around the world.

In America there are two distinct energy markets. The transportation market, which includes automobiles and trucks, relies on oil. The electricity market relies upon coal, natural gas and nuclear power. By utilizing our reserves of shale oil and gas, this nation can free itself from the shackles of OPEC, achieve energy independence, create millions of jobs and ignite our moribund economy.

The Department of Energy's map of shale plays in the United States vividly demonstrates how extensive and abundant are these natural resources. They cover enormous swaths of land stretching from New York to Texas as well as the Intermountain West and California.

The principal oil shale play is located at the Green River Formation in Colorado, Utah and Wyoming, while the largest gas shale play is the Marcellus Formation in New York, Pennsylvania, West Virginia and Ohio.

In July 2011, the Energy Information Administration (EIA) of the U.S. Department of Energy reported that the lower 48 states have a total of 750 trillion cubic feet of recoverable shale gas with more than half of it located in the Marcellus Formation. The total amount of recoverable natural gas resources when Alaska and offshore sites are included soars to 4.2 quadrillion cubic feet of natural gas, according to the Institute for Energy Research.

That is enough natural gas to meet the nation's electricity demands for 575 years, enough natural gas to supply homes heated by natural gas for 857 years, and it's more natural gas than Russia, Iran, Qatar, Saudi Arabia and Turkmenistan combined.

Our reserves of shale oil are equally impressive. The Green River Formation in the West contains about 3 trillion barrels of oil. In recent testimony before the House Energy Subcommittee, the General Accountability Office testified that the federal government was in a unique position to influence the development of this oil shale because about three quarters of it was beneath federal land. The Rand Corp. has estimated that 30 to 60 percent of oil shale at Green River can be recovered. That is an amount equal to the entire world's proven oil reserves.

Assuming the 3 trillion barrel estimate is correct and the price of oil is roughly $100 per barrel, the federal non-tax revenue from royalties alone approaches $37.5 trillion. That's more than double our national debt! And in addition to the royalty payments, more revenue would be generated through lease options.

A team of analysts and economists at Citigroup has estimated that energy independence can be achieved by 2020 and the United States can become a net exporter of crude oil, refined products and natural gas. Today there are about 4,300 supertankers plying the world's oceans. Only 59 of them fly the American flag. The opportunities presented in the combined oil and gas shale plays could give rise to the construction of a fleet of American supertankers.

And all of the forgoing has huge implications for manufacturing and jobs. Studies by Wood Mackenzie, the American Chemistry Council, the Public Policy Institute of New York, Penn State University, the Western Energy Alliance and PricewaterhouseCoopers, to name just a few, document job growth in the millions if these recoverable resources are brought to market.

What is staring us in the face is nothing less than a revitalization and re-industrialization of the American economy. It is the American economic renaissance. The question is how to organize the effort to seize that opportunity. My column on Sept. 2 will tackle that question.

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America's decline is quite evident

America is in decline. America is seventh in literacy, 27th in math, 22nd in science, 49th in life expectancy, fourth in labor force, fourth in exports, third in median household income and 34th in infant mortality. Ironically, we lead the world in the number of incarcerated individuals per capita.

Add to that the fact that not only are millions of Americans unemployed or underemployed, but good jobs, jobs that have dignity and upon which a person can support his or her family, are vanishing.

Moreover, there is no reason to believe that our elected leaders in Washington can lead us out of the growing darkness. And trading in a cast of Tweedledees for a cast of Tweedledums on Nov. 6 will make no difference.

The transformation of America from an agrarian to an industrial society was made possible largely by oil and steel. Together they were the fundamental building blocks of the 20th century American colossus.

For oil, it all began in 1859 in Titusville, Pa. That is when the first commercially successful well was dug. By 1870, John D. Rockefeller had founded Standard Oil Co. of Ohio. His firm quickly became one of the largest shippers and refiners in the nation. Rockefeller bought out, absorbed or undercut his competitors to the point that by 1880, Standard was refining more than 90 percent of the oil in America. Rockefeller’s dream, a dream never realized, was to control all of the world’s refineries.

For more than the next half-century, America led the world in oil production and refining. American oil fueled the explosive growth of the American automobile industry, and it fueled the Arsenal of Democracy in World War II.

The rise of the American steel industry is just as remarkable. And the “Rockefeller” of steel was Andrew Carnegie. Carnegie rose swiftly through the ranks of the burgeoning Pennsylvania Railroad. But he left the railroad after the Civil War and founded the Keystone Bridge Works and Union Ironworks in Pittsburgh. He could see the enormous market for rails as the Transcontinental Railroad neared completion.

But the problem was that the iron horses of that day rode on iron rails. And iron rails were not reliable. They could not support the weight of increasingly heavy trains. They became brittle and cracked. Carnegie knew the answer was steel. But the cost of mass-producing steel was prohibitively high.

But British engineer Henry Bessemer solved the problem. He invented a way of injecting molten pig iron with compressed air. The air burned off the high carbon content of the pig iron in a controlled and rapid manner. The result was steel, and it could be mass-produced cheaply.

By 1892, Carnegie Steel Co. had been created, and America was manufacturing more steel than the United Kingdom. In 1901, as Carnegie neared retirement, he sold his steel empire to J.P. Morgan, and United States Steel Corp. was born.

The name of the new company said it all — UNITED STATES STEEL (USS). And for more than the next half century, the American steel industry, led by its flagship, USS, transformed the nation and made it the envy of the world.

But by the 1960s, it all began to go terribly wrong. Enormous reserves of oil and gas had been discovered all over the world. Many of those fields were larger and more easily developed than those in the United States. In addition, most of the nations controlling those petroleum resources were nations that were not allies of the United States. Suddenly a cartel, OPEC, was calling the shots.

And guess who’s their biggest customer? We are. Our appetite for oil is insatiable and growing. We are 4 percent of the world’s population, yet we consume 18 percent of the world’s oil. In 1970, oil cost $3 a barrel. Today it costs $88 a barrel. OPEC has figured out how to play this game. They get to say, “Pay.” And we get to ask, “How much?”

Every president since Jimmy Carter has said American energy independence is essential. Three Democratic and three Republican presidents later, America remains hostage to OPEC.

The steel story is just as depressing. In July 1959, the United Steelworkers went out on strike. The paralyzing strike lasted 116 days. In the interim, American consumers of steel found out what the American steel industry and the United Steelworkers had chosen to ignore at their own peril: Foreign manufacturers of steel were able to produce higher quality steel and sell it at a lower price in America than we could.

The strike devastated the American steel industry. And for decades thereafter, the Middle-Earth thinking of American steel companies and their union kept them in denial. It was nothing short of corporate suicide. When the Trans-Alaska pipeline was built in the mid-1970s, no American steel manufacturer could make the pipe in the correct size and grade. It was supplied by three Japanese steel firms.

In 2011, the world’s top 10 steel producers were all foreign. United States Steel was No. 12.

All of this reminds me of the famous line that Oliver Hardy oft repeated to Stan Laurel, “Well, here’s another fine mess you’ve gotten me into.”

The question is, can we get out of it? The answer is “yes” and will appear in next Sunday’s column.

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Snatching defeat from jaws of victory

In the past century, only three sitting presidents have been defeated for re-election — Herbert Hoover in '32, Jimmy Carter in '80 and George H.W. Bush in '92. Although the circumstances of their defeats were not identical, all of them faced fierce headwinds from a faltering economy with which they could not cope. All of us remember the potency of the advice James Carville gave to Bill Clinton in 1992: "It's the economy stupid."

In fact, no president has ever been re-elected when unemployment was higher than 8 percent. And during President Barack Obama's time in office, the unemployment rate has been higher than 8 percent in every single month but one, his first month in office in January 2009, when it stood at 7.8 percent.

And the nation's economic problems go way beyond the unemployment rate.

The anemic growth of the overall economy is getting worse. For the last quarter, it was only 1.5 percent, and that guarantees that job creation will remain dismal going forward. The overall growth in the economy would need to be about 4 percent in order for there to be robust employment expansion.

So the conclusion seems clear — Obama is history. And I'll lay you long odds that there are plenty of Republicans who have jubilantly drawn that conclusion and are icing down the champagne.

Not so fast, Kemosabe. There's something weird going on this year. And it's something that bears close examination. We know that in most states, the election's over. In states like California and New Jersey, Obama will win going away. In states like Texas and Kentucky, Mitt Romney will win going away. Thus it all comes down to a dozen or fewer battleground states.

And in those battleground states the president leads in all but two, North Carolina and Florida. If those leads hold up on Nov. 6, the result will be a very, very close win for President Obama in the popular vote, but an overwhelming win in the vote that counts — the Electoral College.

In addition, the president's approval rating is the highest that it's been in a year, and it is slowly increasing. It currently stands at 46.8 percent. Electoral history teaches us that if a president has an approval rating higher than 50 percent, he's a shoo-in for re-election.

Now, the American people are not stupid. They know the economy is in the tank. They know the government in Washington is paralyzed and not effectively dealing with the major issues facing the nation. They know the Democrats control most of the levers of power in Washington, and they know the buck stops in the Oval Office.

They also know that candidate Obama promised hope and change and then ran from it like a scalded dog upon taking the oath of office.

And yet, in the face of all of this, and in contradistinction to historical precedent, Obama remains the man to beat. The explanation for this conundrum is much more than luck or the presence of satanic forces. It goes to the fact that Romney has yet to demonstrate that he's ready for prime time. And his time to do so is running out.

If the GOP had a candidate who knew where he wanted to take the country, who had specific and broadly understandable programs to move the nation forward, who could articulate those ideas with force and compassion, and who projected a greater concern for the nation's welfare rather than his own political ambition, then President Obama would not only be on the ropes, he'd be toast. But the GOP has no such candidate. It's got Mitt, and Mitt's made a mess of things.

Ponder this: The Romney campaign has allowed the summer to pass as the Democrats have successfully defined him as Bain Capital's rapacious corporate raider — a man who will stop at nothing in order to grow his vast wealth. In addition, Romney has refused to release all of his tax returns, suggesting that he's got something very damaging to hide.

And then he heads out on the obligatory foreign trip intended to demonstrate that he can handle foreign policy, and he bombs in London by offending the British government and the British people with his comments about their preparations for the Olympic Games. It was a show of arrogant stupidity that defied imagination.

Perhaps he'll right the ship when he makes his selection for vice president. However, the latest trial balloon that has been launched is that of former National Security adviser and Secretary of State Condoleezza Rice, a Gray Flannel Skirt, who is now back at Stanford University as a professor.

What would she bring to the ticket? Would she cut into the president's advantage with the African-American vote? Nope. Would she cut into the president's advantage with single women? Nope. Would she put her home state of California in play? Nope. Would she cut into the president's advantage with college students and academe? Nope. What she would do is give the Obama campaign the opportunity to remind voters that she supported the unnecessary and ill-fated Bush invasion of Iraq.

It is no wonder that Newsweek magazine's cover story is "Romney: The Wimp Factor."

The reason, lamentably, that President Obama remains the favorite for re-election, even in the face of a crippled economy that he has failed to fix, is that the nation faces a choice between a man who has proven that he can't do the job, but is likable, and a man who can't demonstrate that he could do the job, and isn't.

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