FreedomTalks

Our friends at the Heritage Foundation have a great new study out about the economic harms that a cap and trade system on carbon would cause. Both presidential candidates with a shot at the office support “cap and trade.” In fact, Senator McCain will be pushing the bill mentioned below quite hard this summer. Conservatives should continue to point out the extraordinary costs of this bill. We are talking about anywhere from $1.7 to $4 trillion in lost gross domestic product. Cap and trade is all economic pain for no environmental gain.

Our analysis makes clear that S. 2191 promises extraordinary perils for the American economy. Arbitrary restrictions predicated on multiple, untested, and undeveloped technologies will lead to severe restrictions on energy use and large increases in energy costs. In addition to the direct impact on consumers’ budgets, these higher energy costs will spread through the economy and inject unnecessary inefficiencies at virtually every stage of production and consumption–all of which will add yet more financial burdens that must be borne by American taxpayers.

It’s easy to talk in the abstract about government waste, about excessive spending, about Washington bloat. It’s bad! And most everyone, right and left, agrees that it’s bad (appropriators, of course, are the exception). But with all the talk about how bad it is, we often forget to look at why, exactly, and what happens when spending goes compkletely out of control. As Cato’s Elizabeth Karasmeighan explains, that’s exactly what’s happened in California – and now Governor Schwarzenegger is facing the consequences: constituencies angry they’re being cut off from the public dole, backwards spending rules that make cutting spending extremely difficult, and a general fiscal crisis – what to do when there just isn’t enough money?

This is what FreedomWorks’ earmark pledge is about, of course, and why it’s so important for legislators to make a commitment to at least stop the most egregious examples of federal waste. If Congress can’t control itself on something as relatively small as earmarks, is there any chance it will control itself elsewhere?

Glenn Reynolds has an interesting post up about Ron Paul’s new best-selling book The Revolution: A Manifesto.

Socialist candidate Eugene Debs, after all, never got elected President either, but within a few decades much of his platform was adopted by the Democratic Party. May Paul enjoy similar influence on the future of national politics.

Professor Reynolds notes his disagreements with Rep. Paul, especially on national defense. But as he points out, there is much he agrees with.

Paul is surely right that the federal government has expanded its powers far beyond anything the Framers contemplated, involving itself in things, like public education, that are best left to the states and to private entities. He is also right that the federal government’s massive expansion is both the cause and the symptom of government corruption, with politicians favoring big government as a source of additional patronage and graft, and with efforts by interest groups to pursue their agendas leading to the creation of new, self-perpetuating bureaucracies (like the Department of Education).

For various reasons, people on both sides of the political aisle, though more Democrats than Republicans, have supported America’s ethanol policy…a policy which is not just silly but also dangerous.

There’s been a lot of press lately about food shortages in the third world caused in part by America and Europe’s ethanol policy, but that’s only the latest reason to oppose ethanol subsidies and mandates. The other reasons are, if less dramatic, just as good and much older.

There is no science to support ethanol, including in the area of “greenhouse gases” for those of you who believe such things are a real problem. At least as compelling is the outrageous economics of ethanol.

I heard someone being quoted in a radio newscast this morning saying that we should be thankful for ethanol because it costs 50 cents per gallon less than gasoline.  He conveniently forgot to mention that that includes more than $1 per gallon in direct and indirect subsidies, and that ethanol provides far lower miles per gallon than gasoline, making ethanol far more expensive to taxpayers even though for all those reasons the price at the pump may be low enough to fool some consumers into thinking they’re getting a good deal.

You can read a more in-depth article which I’ve written on the subject at this link:
http://www.humanevents.com/article.php?id=26348

IBD agrees: taxing oil profits makes gasoline more expensive, not less:

Senators also want to impose steep penalties on “price gouging” — despite the fact that some 17 separate studies have found it doesn’t exist. The plan amounts to little more than an attempt to impose price controls — a socialist tool dressed up in populist garb.

Democrats hailed their new measure as an attack on “the root causes of high gas prices.” That’s one of the more laughable comments to emerge from the Senate in some time.

As any student who’s taken Econ 101 at the local junior college can tell you, higher taxes don’t encourage production; they discourage it. But Senate Democrats apparently played hooky the day taxes were discussed. They should at least have read the report from their own nonpartisan Congressional Research Service in 2006.

It shows that from 1980 to 1986, the last time the U.S. had a windfall profits tax on oil companies, the results were disappointing. As the chart shows, oil companies were hit hard by the tax. And in line with basic economic theory, they produced less oil, not more.

What’s the real solution? Increase production, decrease regulatory barriers.   As Megan McArdle explains, greater world demand for oil combined with a static supply means that prices are going to rise. And since we’re not going to lower demand any time soon, the challenge is to expand energy production, not grouse and harumph about oil company profits while passing laws that it more difficult and more expensive to fill up our cars.

Congressional Democrats have been keying into the country’s rising gas prices, attempting to use them as a political issue. Take a look, for example, at Hillary Clinton’s recent speech in Indiana, in which she mentions the cost of gasoline at least three times.

So you’d think they’d be offering policy proposals designed to lower gas prices. But no, according the AP, Senate Democrats are proposing “a temporary windfall profits tax on oil companies and a rollback of $17 billion in oil industry tax breaks as part of an energy package.”

This is, quite simply, nuts. Making it more expensive to produce and distribute gasoline is simply going to make gas prices go even higher. That’s not rocket science, or complex mathematics; it’s basic economics. The two best ways to make something less expensive are to drive down production costs and increase the available supply. Yet it increasingly seems like our country’s liberal politicians don’t care, or don’t know, or are actively opposed to the actual facts of our energy situation. They’re pushing policies that make gas more expensive to produce, and at the same time refusing to enact policies that would increase domestic supply – offshore drilling, exploration in ANWR, etc. It’s pretty blatant doublespeak: Gas prices are too high, they say – and in the same breath propose to make them more expensive.

Ben Lieberman over at the Heritage Foundation has a smart piece about the biofuels mandates and their harmful effects. Here is a summary of his argument:

The very food-related problems that we see today are much like the hypothesized future ones that were supposed to be caused by global warming. That global warming policy is more likely a contributor than global warming itself is a strong enough reason to rethink this policy.

For this reason, Congress should repeal its current biofuels mandate. In addition, as the Senate soon takes up debate on S. 2191, the major global warming bill, it should heed the biofuels lesson and avoid any measures that may also prove to be more trouble than they are worth.

The farm bill and the energy bill both contain disturbing provisions that make no sense, especially given the food and fuel costs the world is facing. Congress should end mandates and subsidies for corn-based ethanol and allow the market to allocate food and energy. The government is distorting markets, and it should stop making things worse.

I can’t believe the Treasury Department just sent out this advisory.

Paulson to Visit Treasury Printing Facility in Kansas City Next Week to Observe Stimulus Checks Rolling off the Presses

Washington, DC–Treasury Secretary Henry M. Paulson, Jr. will tour a Treasury Department printing facility in Kansas City next Thursday to observe the first mass production printing and packaging of the 2008 stimulus checks. He will also deliver remarks on the economic stimulus at the Kansas City Central Library.

“By the end of June nearly 130 million stimulus payments should be in the hands of Americans, providing an immediate boost to the economy and helping to create more than 500,000 new jobs by the end of the year,” said Paulson.

The following events are open to the press:

Who Treasury Secretary Henry M. Paulson, Jr.

What Facility Tour

When Thursday, May 8, 8:00 a.m. CDT

Where Kansas City Regional Financial Center

4241 NE 34th Street
Kansas City, MO

The stimulus checks are 100% borrowed money (whatever happened to Democrats’ “pay-go” budget BTW?) …of course, they are financed by real claims from investors through Treasury bonds, but the way the Federal Reserve is debasing the dollar, the metaphor here is pretty remarkable.

Art Brodsky of Public Knowledge has a long and thoughtful piece on net neutrality, written largely in response to a column I wrote on the issue for the Spectator, as well as to a recent Washington Times piece by FreedomWorks chairman Dick Armey. Brodsky claims that what’s at stake is nothing less than “freedom,” and, naturally, that freedom’s on his side. Well, I (obviously) beg to differ. So as much as I’d love it if we could all be Mel Gibson from Braveheart, riding around with war-paint making stirring speeches about liberty, I suspect that our views just aren’t compatible on this.

The main thing I’d take issue with is his characterization of the net as a public utility. He says that it’s “well established that private property is subject to the law.” That hardly, however, addresses whether or not it should be. And just because private property is subject to some law doesn’t mean it’s subject to any and all laws — it’s not a free pass for whatever regulation can be dreamed up.

Brodsky also takes issue with the characterization of wireless networks as “private networks.”

It is privately owned network, but that’s different. A private network is what a company might have to connect its employees. Wireless has 65.2 million retail customers. That would be some humongous private network.

But the fact that it offers customers the opportunity to pay for some use of its property doesn’t suddenly mean it gives up rights to make decisions about how that property is used. Think of a large retailer doing business on private property. Like a wireless network, it’s privately owned. And like a wireless network, it allows the public to come into its store and make use of its property. But by doing so, the store doesn’t suddenly become a public utility; they can still throw customers out for making trouble, deny them entry if they seem suspicious, and/or refuse to sell particular items if they think doing so will, for some reason, ultimately be better for business. That doesn’t mean they should – and you’ll notice that smart retailers rarely do so – but nor does it mean that these businesses should be legally prohibited from such activity.

And that speaks to my final point, which is that Brodsky seems to assume that all of us who oppose neutrality mandates think neutrality is, plain and simple, a bad thing. That’s simply not the case. Neutrality is, in most cases, a good thing, and if my ISP were to suddenly stop allowing access to my favorite websites, I’d be on the phone complaining in an instant – but to my ISP, not to a Congressman. Because it’s there – in the market, not on the floor of Congress – that these debates ought to be solved.

Cross-posted at AmSpec blog.

Mortgage lending giant Countrywide Financial is in serious trouble– its credit rating was cut to junk on Friday and there are new signs that Bank of America may walk away from its acquisition deal. (ht Calculated Risk) The problem for taxpayers is that Countrywide has direct access to the Federal Reserve’s balance sheet through the Fed’s lending windows. If Bank of America walks away from this deal and Countrywide folds, look for a multi-billion dollar hit on the U.S. Treasury. Alternatively, and perhaps more troubling, would be another JP Morgan Chase-Bear Stearns style intervention where the Fed guarantees some of Countrywide’s garbage assets in order to make the Bank of America deal happen.That scenario would avoid the immediate Treasury cost but would expand the Fed’s new role as private dealmaker. The moral hazard introduced by the Bear Stearns bailout is clearly present here…