The Necessity of a National Interest Account

This commentary is part of a report from the CSIS Economic Security and Technology Department, titled Staying Ahead in the Global Technology Race. The report features a set of essays outlining key issues on economic security for the next administration, including global technology competition, industrialization policies, economic partnerships, and global governance.

It is no surprise that the next administration will immediately confront a knot of challenges at the intersection of economic growth, technological advantage, national security, and foreign policy. Right now, excellent thinkers are searching for new frameworks to conceptualize this complexity and to inform the strategies and policies of the next president. This is important intellectual work.

The more urgent work for the next administration, however, involves immediately proposing reforms that increase the government’s options for executing its strategies, whenever they are determined.

And a National Interest Account should be proposal number one.

Execution Before Strategy?

The “usual path” of strategy development is well travelled. After a new administration takes office, it formally begins translating the president’s platform into specific strategies, plans, and policies.

How you define the question dictates the answer. And how the next administration conceptualizes and then articulates a strategic approach to the complex and interdependent challenges of competition for economic growth, technological advantage, national security, and foreign influence is no easy task. This is far from settled, and the task of getting the ideas right should not be underestimated.

But in government, ideas are insufficient and federal strategy development is a long process. Beneath every national security strategy or executive order lie months of intellectual and bureaucratic work. Moreover, for new officials, there is the addition of discovery—learning the myriad stakeholders that require coordination, which adds months of meetings and memos.

In the end, the “usual path” will produce the way ahead. And the president will endorse or sign the bureaucratic manifestations of their will.

Then the usual thing will happen. An authority will call a meeting synonymous with “next steps” and begin to inventory all the interagency “tools”—existing authorities and resources—needed to execute the just-signed strategy. These will inevitably include existing innovations such as the CHIPS Act Program Office; the rechartered Development Finance Corporation (DFC); the reauthorized Export–Import Bank (EXIM), with its China and Transformational Exports Program (CTEP); the revitalized Loan Program Office at the Department of Energy; and the always-included Defense Production Act (DPA).

The laws, policies, and regulations that govern how the executive branch executes its authorities and allots the funds granted are, to put it mildly, labyrinthine. Every “tool” has its own independent constraints, and months will be spent divining workarounds or exceptions, all of which carry risks. Thus, execution inevitably becomes a compromise between the ideas and what can actually be done or, worse, a mere rebranding of what is already being done.

To explicitly state the open secret: good ideas are hard, but executing is harder.

The next administration should therefore make a counterintuitive move and immediately propose structural changes that increase its options for execution.

This is where a National Interest Account should be a top priority.

What Is a National Interest Account?

The concept is simple, and shamelessly plagiarized from Australia, a close U.S. ally.

Were Congress to authorize a tightly scoped, time-limited, and dollar-capped National Interest Account with strenuous reporting requirements, a president could direct government agencies, like those listed above, to support loans deemed in the national interest.

Why? Restrictive laws and Office of Management and Budget (OMB) regulations govern the lending of the various federal departments and agencies. Every loan carries the risk of nonpayment, and those who approve the loans must be conservative in the credit risks they accept on behalf of the taxpayers. This is right and proper.

But many regulations were created in a different time, and for different problems. In today’s competition for economic growth, technological advantage, national security, and foreign influence, our challenges cross old models, while our tools do not—yet.

With a good interagency process, a National Interest Account responsibly shifts approving riskier loans and their related issues to the wider perspectives of Senate-confirmed Cabinet members, including the Department of the Treasury and OMB, from the more insular individual agencies. With a National Interest Account, both determinations—whether a loan actually is in the national interest and whether the risk of that loan is acceptable—would be made with the larger policy and national-interest pictures in mind. Meanwhile, the government lenders would remain within their remit and simply execute their authorities—providing credit assessments, portfolio management, and finance.

For example, if China’s economic coercion of an ally or partner is to be effective, the impact of refusal must be severe enough to coerce the political outcome. This affects the macroeconomic outlook of the coerced, thereby raising the risk of any loan to that market. Today, good credit analysis would likely tell the lender to walk away. And I frequently had to tell my colleagues at the Departments of State and Defense precisely that. But a National Interest Account could allow agencies like EXIM to refer such cases to the cabinet, where the merits and risks could be deliberated, thereby creating an option for action that today simply does not exist.

The Urgency of Optionality

It is counterintuitive to prioritize reforming the ways and means before we know the ends. But whatever an administrations strategy, it will rise or fall on execution. Concepts such as a National Interest Account create options to achieve the president’s ends where today there are few. Thus, the next administration should urgently prioritize structural reforms that affect implementation concurrent with the development of strategy—or the best of ideas risk remaining only that.

Adam Frost is a senior associate (non-resident) with the Economic Security and Technology Department at the Center for Strategic and International Studies in Washington, D.C.