Leibowitz: Bold leadership needed to address the electrical grid, the national debt, and the Iran war

It’s cliche to say it. But spring traditionally brings new hope and green shoots—whether that’s looking forward to vacations or increased business activity. While I viscerally share these positive feelings, I can’t help but thinking of three areas where I’m not feeling very hopeful. Namely, the US electrical grid, the national debt, and the Iran war.

Three big “situations”

I have written before about the fragile nature of the American electric grid. The situation is getting worse. And it will require enormous change to restore a stable system in the face of surging demand and the fraught nature of the electricity supply chain. The matter is made worse by the mistaken policy that tariffs can solve all our problems.

The national debt this year reached $40 trillion, which exceeds the United States’ annual gross domestic product. The disconnect between revenue and expenditures by government is steadily growing larger. And there is no prospect of addressing either revenue shortfalls or skyrocketing spending.

Third, the war in the Middle East keeps going, with no immediate end in sight. Ironically, that may be the least of the three problems—except that Congress has been dealt out of the game for now, which is a worrisome precedent.

I believe all these situations are interrelated. (By the way, I’m using “situation” because the word “crisis” has become all but meaningless through overuse.)

I will start with the war in the Middle East

Last month, after six weeks of war, a cease fire (of sorts) took hold in the US-Iran war, as did a fragile cease fire between Israel and Lebanon. But the war continues in a real sense. President Trump claims the war is over, despite it not achieving of many of its aims. And the blockade of Iranian ports by the United States Navy continues. In legal parlance, a blockade is an “act of war.” Israel, meanwhile, continues to blast away at Hezbollah in Lebanon, doing the job that the Lebanese government should be doing—if it had the will and the strength.

A looming “situation” is the absence of congressional approval of the war. The War Powers Act requires the president to seek congressional approval of hostilities within 60 days or to wind down military operations. President Trump claims the “war is over” because of the cease fire. Trump ignores the blockade, and he thus makes the War Powers resolution a moot point. If shooting starts again, a new 60-day period, in the president’s thinking, will begin. If shooting does not start again, the Iranian regime is likely to feel more secure.

The second “situation” is the power grid

I commend to readers a recent column by Robinson Meyer about the power grid in the New York Times. The column tells a cogent story about the evolution of electric demand and prices. While Meyer is widely known for his views on climate change (he believes it is a “situation”), the facts are clear: electric demand has been growing significantly and will grow dramatically in the future.

The sectors triggering this growth are changing. Lighting and refrigeration have declined in importance, but absolute demand in those sectors is not declining. Meanwhile, demand from computing (data centers and AI) and ventilation (moving and handling air flows) have spiked. In the future, power generation will need to increase to meet these demands, which means higher prices.

But the worst of the “situation” is not increasing demand for electricity. It is the rising cost of moving it from the generator to the consumer. There is, as Meyer points out, no “national” power grid in the US. There are three major regional grids, and 50 state utility commissions, that regulate the maintenance and construction of power lines, transformers, and other transmission and distribution facilities. The current system of utility regulation, mostly by state utility commissions, frustrates efforts to have a national plan. One consequence: industries that rely heavily on electricity as a power source—like EAF steel production and aluminum smelting, as well as AI and data centers—are starting to create their own electric supply.

That brings me to the issue of debt

Our nation’s leaders have avoided discussing it seriously for four decades. Neither major political party wants to talk about the national debt. Why? Because it will inevitably lead to cuts in services Americans rely on. And tax increases cause politicians to lose elections. However, the scale of the debt situation demands attention, or the country will reach a point where incurring more debt will be harder and harder. We do not know when lenders (largely foreign countries like China and Japan) will stop lending. But when it happens, it will be too late.

Solving the debt problem will take a very long time and cause much pain. In addition to spending cuts, a solution requires novel ways for the government to raise revenue. Some revenue-raisers are already being debated. Case in point: California’s wealth tax and Senator Elizabeth Warren’s related ideas to tax assets rather than income in Congress. A value-added tax should also be considered. The United States is virtually the only developed country that does not have one. But all those proposals will require congressional action and a presidential signature. There is little stomach for such notions now.

Tariffs aren’t a “cure-all”

The issue of tariffs affects all these “situations.” While tariffs generate revenues, they also inhibit growth of new industries and ultimately result in reductions in revenue. Also, President Trump has pushed the envelope of his tariff authority beyond the breaking point. The confrontation caused by tariffs that help a few industries at the expense of everyone else has led to international discord and political fighting the country can ill afford.

We have quite a few “situations,” and we need to discuss actions by government and business to address them before it is too late.