Obama and the 'Amnesty' Trap. By Jason L Riley
The immigration bottom line: We need more legal avenues.
WSJ, Apr 20, 2009
When President Barack Obama turns his attention to immigration reform later this year, he will be pressured by advocacy groups and fellow Democrats to focus on a legalization program for the 12 million or so undocumented immigrants already living in the U.S. Obviously, the plight of this illegal population must be part of any policy discussion. But if Mr. Obama wants to be more successful than the previous administration when it tried to reform immigration, he should avoid getting bogged down in a debate over "amnesty."
Critics of comprehensive immigration reform, which ideally combines legalization with more visas and more enforcement measures, say that the last amnesty enacted -- the Immigration Reform and Control Act (IRCA) of 1986 -- didn't solve the illegal alien problem. This is true but misleading. After all, border enforcement enhancements over the past two decades haven't stanched the illegal flow, either, but that hasn't stopped immigration restrictionists from calling for still more security measures.
The reality is that the 1986 amnesty was never going to solve the problem, because it didn't address the root cause. Illegal immigration to the U.S. is primarily a function of too many foreigners chasing too few visas. Some 400,000 people enter the country illegally each year -- a direct consequence of the fact that our current policy is to make available only 5,000 visas annually for low-skilled workers. If policy makers want to reduce the number of illegal entries, the most sensible and humane course is to provide more legal ways for people to come.
This could be done by creating viable guest-worker programs or increasing green-card quotas or both. The means matter less than the end, which should be to give U.S. businesses legal access to foreign workers going forward. The 1986 amnesty legislation didn't do that, which is why it didn't solve the problem.
The three million illegal aliens who were brought into legal status under IRCA had already been absorbed by the U.S. labor market. The fundamental problem with the bill was that its architects ignored the future labor needs of U.S. employers. After the amnesty took effect, our economy continued to grow and attract more foreign workers. But since the legal channels available were not sufficiently expanded, migrants once again began coming illegally, which is how today's undocumented population grew to its current size. Another amnesty, by itself, will do no more to "solve" the problem in the long run than the first one did.
It's unfortunate that the "no amnesty" crowd has been able to suck up so much oxygen in this debate. Immigration hysterics on talk radio and cable news have used the term effectively to end conversations. And restrictionists in Congress have used it as a political slogan to block reform. But from a public-policy perspective, the fate of the 12 million illegals already here is largely a side issue, a problem that will solve itself over time if we get the other reforms right.
As in 1986, our economy and society have already absorbed most of these illegal workers. Many have married Americans, started families, bought homes, laid down roots. If their presence here is a problem, it is a self-correcting one. In time, they will grow old and pass on with the rest of us. The Obama administration would do better to focus less on whether to grant amnesty or to deport them and more on how to stop feeding their numbers going forward.
Unfortunately, the president will be pressed to do the opposite. The nation's two largest labor groups, the AFL-CIO and Change to Win, have already announced that they will oppose any new guest-worker initiatives and any significant expansion of temporary work programs already in place. Democrats and advocacy groups, who tend to see immigration as a humanitarian issue more than an economic one, will likely side with labor. But history suggests that such programs are effective in reducing illegal entries. Past experience shows that economic migrants have no desire to be here illegally. They will use the front door if it's available to them, which reduces pressure on the border and frees up homeland security resources to target drug dealers, gang members, potential terrorists, and other real threats.
Nearly seven decades ago, the U.S. faced labor shortages in agriculture stemming from World War II, and growers turned to the Roosevelt administration for help. The result was the Bracero program, which allowed hundreds of thousands of Mexican farm workers to enter the country legally as seasonal laborers. In place from 1942 to 1964, the program was jointly operated by the departments of Justice, State and Labor. As the program was expanded after World War II to meet the labor needs of a growing U.S. economy, illegal border crossings fell by 95%. A 1980 Congressional Research Service report concluded that, "without question," the program was "instrumental in ending the illegal alien problem of the mid-1940s and 1950s." Apparently, the law of supply and demand doesn't stop at the Rio Grande.
Beginning in 1960, the program was phased out after it faced opposition from labor unions. And since nothing comparable emerged to replace it, illegal entries began to rise again. The point isn't that we need to resurrect the Bracero program, or that guest-worker programs alone will stop illegal immigration from Mexico. But a Bracero-like program with the proper worker protections ought to be the template. And expanding legal immigration ought to be where the Obama administration channels its energies.
Granted, this will be a hard sell at a time when growing numbers of Americans are out of work. Even in good times, zero-sum thinking -- the notion that what is gained by some must be lost by others -- dominates discussions about immigrants and jobs. But the schooling and skills that the typical Mexican immigrant brings to the U.S. labor market differ markedly from the typical American's, which is why the two don't tend to compete with each other for employment. Labor economists like Richard Vedder have documented that, historically, higher levels of immigration to the U.S. are associated with lower levels of unemployment. Immigrants are catalysts for economic growth, not job-stealers.
There are plenty of ways and plenty of time to deal with the country's undocumented millions in a fair and humane manner. But we'd do better to focus first on not adding to their numbers. If the fate of this group instead drives the policy discussion, we're more likely to end up with the status quo or faux reforms like amnesty that dodge the real problem. By all means, Mr. Obama, lead the fight for immigration reform. But don't lead with your chin.
Mr. Riley, a member of The Wall Street Journal's editorial board, is the author of "Let Them In: The Case for Open Borders" (Gotham), which has just been released in paperback.
Monday, April 20, 2009
WSJ Editorial Page: Susan Rice is confused about international law and North Korea
Spinning a U.N. Failure. WSJ Editorial
Susan Rice is confused about international law and North Korea.
WSJ, Apr 20, 2009
It's strange enough that the Obama Administration is hyping last week's toothless statement by the United Nations Security Council condemning North Korea's recent rocket launch. Even more amazing, it says the U.N. move is "legally binding" on member states.
Those were the words used by Susan Rice, U.S. ambassador to the U.N., and repeated by a State Department spokesman. Ms. Rice is badly misinformed. As she ought to know, a "presidential statement" issued by the Security Council is legally binding on no one.
A presidential statement is agreed to by all 15 members of the Security Council and issued by the rotating president. Invented in 1994, such statements aren't even mentioned in the Security Council's procedural rules and impose zero obligations on members. They are a last resort when the Security Council can't summon the will or agreement to pass a resolution.
That's what happened after North Korea's April 5 missile launch, when neither China nor Russia would agree to the U.S. wish for a resolution. Legal experts -- including the Permanent Five's attorneys in a 2005 memo -- agree that the only U.N. pronouncement that is legally binding is a Security Council resolution issued under Chapter VII of the U.N. Charter, which sets out the Council's powers to maintain peace. Such resolutions can be enforced with sanctions or military action. Resolution 1718, passed in 2006 after North Korea's nuclear and missile tests, falls in this category.
The distinction between "Chapter VII resolutions" and other U.N. utterances is important -- as the example of Israel illustrates. Since the Jewish state has never been subject to a Chapter VII resolution, no Israeli "violation" of a U.N. pronouncement can give rise to sanctions. Even the famous Resolution 242, issued at the end of the 1967 Yom Kippur War, was not issued under Chapter VII. If the Obama Administration considers even U.N. presidential statements "legally binding," it's an invitation to the U.N. to ramp up its attacks on Israel.
Last week's statement on North Korea is binding only in the sense that it calls on member states "to comply fully" with their obligations under Resolution 1718, which bans sales of weapons, weapons parts and luxury goods to North Korea. Resolution 1718 is legally binding, but it has never been enforced. This speaks volumes about the sincerity of promises made at the U.N., and about the failure of the Obama Administration to win Security Council support for a serious response to North Korea's missile launch.
Susan Rice is confused about international law and North Korea.
WSJ, Apr 20, 2009
It's strange enough that the Obama Administration is hyping last week's toothless statement by the United Nations Security Council condemning North Korea's recent rocket launch. Even more amazing, it says the U.N. move is "legally binding" on member states.
Those were the words used by Susan Rice, U.S. ambassador to the U.N., and repeated by a State Department spokesman. Ms. Rice is badly misinformed. As she ought to know, a "presidential statement" issued by the Security Council is legally binding on no one.
A presidential statement is agreed to by all 15 members of the Security Council and issued by the rotating president. Invented in 1994, such statements aren't even mentioned in the Security Council's procedural rules and impose zero obligations on members. They are a last resort when the Security Council can't summon the will or agreement to pass a resolution.
That's what happened after North Korea's April 5 missile launch, when neither China nor Russia would agree to the U.S. wish for a resolution. Legal experts -- including the Permanent Five's attorneys in a 2005 memo -- agree that the only U.N. pronouncement that is legally binding is a Security Council resolution issued under Chapter VII of the U.N. Charter, which sets out the Council's powers to maintain peace. Such resolutions can be enforced with sanctions or military action. Resolution 1718, passed in 2006 after North Korea's nuclear and missile tests, falls in this category.
The distinction between "Chapter VII resolutions" and other U.N. utterances is important -- as the example of Israel illustrates. Since the Jewish state has never been subject to a Chapter VII resolution, no Israeli "violation" of a U.N. pronouncement can give rise to sanctions. Even the famous Resolution 242, issued at the end of the 1967 Yom Kippur War, was not issued under Chapter VII. If the Obama Administration considers even U.N. presidential statements "legally binding," it's an invitation to the U.N. to ramp up its attacks on Israel.
Last week's statement on North Korea is binding only in the sense that it calls on member states "to comply fully" with their obligations under Resolution 1718, which bans sales of weapons, weapons parts and luxury goods to North Korea. Resolution 1718 is legally binding, but it has never been enforced. This speaks volumes about the sincerity of promises made at the U.N., and about the failure of the Obama Administration to win Security Council support for a serious response to North Korea's missile launch.
WSJ Editorial Page: Prostate Cancer and FDA Politics - Dendreon's Provenge
Prostate Cancer and FDA Politics. WSJ Editorial
Their first priority should be to save patients.
WSJ, Apr 20, 2009
Last week brought hopeful news for prostate cancer patients, with the biotech company Dendreon announcing that its cancer treatment Provenge improved survival and prolonged life in an important study. That may finally be enough for Provenge to win Food and Drug Administration approval, but the tragedy is that it wasn't approved years ago.
Provenge is an advanced cancer "vaccine," which stimulates the body's immune system to attack tumor cells and thereby fight off cancer on its own, instead of using chemotherapy or surgery. In an earlier placebo-controlled Phase III trial (the most rigorous kind), men with late-stage cancer who received Provenge lived a median of 25.9 months, compared with 21.4 months otherwise. After three years, 34% were alive, compared to only 11% for the control group. In March 2007, an FDA advisory panel voted 13 to 4 that there was "substantial evidence" the drug worked, and 17-0 that it was safe.
But later that year, the FDA delayed approval, ruling that the trial did not meet its criteria for statistical significance and that the patient sample was too small. So Dendreon agreed to complete another double-blind trial to FDA specifications, and Dendreon officials say the results have now met those benchmarks. The detailed results will be presented later this month.
The larger question is why Provenge wasn't made available sooner to the 30,000 American men who die each year from prostate cancer. The FDA regularly -- and pointlessly -- slow-walks potentially revolutionary therapies, relying on overly simplistic and unscientific statistical models that don't take into account the fact that some drugs may work better in certain subgroups than in others. Its regulatory blockade is especially cruel to terminally ill patients for whom drugs like Provenge may mean extra months or years of life.
These corroborating data should lead to a shift in the way the FDA evaluates innovative oncology medicines. But they almost surely won't, since the demands of bureaucratic politics to play it safe nearly always trump the needs of patients.
Their first priority should be to save patients.
WSJ, Apr 20, 2009
Last week brought hopeful news for prostate cancer patients, with the biotech company Dendreon announcing that its cancer treatment Provenge improved survival and prolonged life in an important study. That may finally be enough for Provenge to win Food and Drug Administration approval, but the tragedy is that it wasn't approved years ago.
Provenge is an advanced cancer "vaccine," which stimulates the body's immune system to attack tumor cells and thereby fight off cancer on its own, instead of using chemotherapy or surgery. In an earlier placebo-controlled Phase III trial (the most rigorous kind), men with late-stage cancer who received Provenge lived a median of 25.9 months, compared with 21.4 months otherwise. After three years, 34% were alive, compared to only 11% for the control group. In March 2007, an FDA advisory panel voted 13 to 4 that there was "substantial evidence" the drug worked, and 17-0 that it was safe.
But later that year, the FDA delayed approval, ruling that the trial did not meet its criteria for statistical significance and that the patient sample was too small. So Dendreon agreed to complete another double-blind trial to FDA specifications, and Dendreon officials say the results have now met those benchmarks. The detailed results will be presented later this month.
The larger question is why Provenge wasn't made available sooner to the 30,000 American men who die each year from prostate cancer. The FDA regularly -- and pointlessly -- slow-walks potentially revolutionary therapies, relying on overly simplistic and unscientific statistical models that don't take into account the fact that some drugs may work better in certain subgroups than in others. Its regulatory blockade is especially cruel to terminally ill patients for whom drugs like Provenge may mean extra months or years of life.
These corroborating data should lead to a shift in the way the FDA evaluates innovative oncology medicines. But they almost surely won't, since the demands of bureaucratic politics to play it safe nearly always trump the needs of patients.
The Red Cross was completely wrong about 'walling' - The Memos Prove We Didn't Torture
The Memos Prove We Didn't Torture. By David B Rivkin Jr and Lee A Casey
The Red Cross was completely wrong about 'walling.'
WSJ, Apr 20, 2009
The four memos on CIA interrogation released by the White House last week reveal a cautious and conservative Justice Department advising a CIA that cared deeply about staying within the law. Far from "green lighting" torture -- or cruel, inhuman or degrading treatment of detainees -- the memos detail the actual techniques used and the many measures taken to ensure that interrogations did not cause severe pain or degradation.
Interrogations were to be "continuously monitored" and "the interrogation team will stop the use of particular techniques or the interrogation altogether if the detainee's medical or psychological conditions indicates that the detainee might suffer significant physical or mental harm."
An Aug. 1, 2002, memo describes the practice of "walling" -- recently revealed in a report by the International Committee of the Red Cross, which suggested that detainees wore a "collar" used to "forcefully bang the head and body against the wall" before and during interrogation. In fact, detainees were placed with their backs to a "flexible false wall," designed to avoid inflicting painful injury. Their shoulder blades -- not head -- were the point of contact, and the "collar" was used not to give additional force to a blow, but further to protect the neck.
The memo says the point was to inflict psychological uncertainty, not physical pain: "the idea is to create a sound that will make the impact seem far worse than it is and that will be far worse than any injury that might result from the action."
Shackling and confinement in a small space (generally used to create discomfort and muscle fatigue) were also part of the CIA program, but they were subject to stringent time and manner limitations. Abu Zubaydah (a top bin Laden lieutenant) had a fear of insects. He was, therefore, to be put in a "cramped confinement box" and told a stinging insect would be put in the box with him. In fact, the CIA proposed to use a harmless caterpillar. Confinement was limited to two hours.
The memos are also revealing about the practice of "waterboarding," about which there has been so much speculative rage from the program's opponents. The practice, used on only three individuals, involved covering the nose and mouth with a cloth and pouring water over the cloth to create a drowning sensation.
This technique could be used for up to 40 seconds -- although the CIA orally informed Justice Department lawyers that it would likely not be used for more than 20 seconds at a time. Unlike the exaggerated claims of so many Bush critics, the memos make clear that water was not actually expected to enter the detainee's lungs, and that measures were put in place to prevent complications if this did happen and to ensure that the individual did not develop respiratory distress.
All of these interrogation methods have been adapted from the U.S. military's own Survival Evasion Resistance Escape (or SERE) training program, and have been used for years on thousands of American service members with the full knowledge of Congress. This has created a large body of information about the effect of these techniques, on which the CIA was able to draw in assessing the likely impact on the detainees and ensuring that no severe pain or long term psychological impact would result.
The actual intelligence benefits of the CIA program are also detailed in these memos. The CIA believed, evidently with good reason, that the enhanced interrogation program had indeed produced actionable intelligence about al Qaeda's plans. First among the resulting successes was the prevention of a "second wave" of al Qaeda attacks, to be carried out by an "east Asian" affiliate, which would have involved the crashing of another airplane into a building in Los Angeles.
The interrogation techniques described in these memos are indisputably harsh, but they fall well short of "torture." They were developed and deployed at a time of supreme peril, as a means of preventing future attacks on innocent civilians both in the U.S. and abroad.
The dedicated public servants at the CIA and Justice Department -- who even the Obama administration has concluded should not be prosecuted -- clearly cared intensely about staying within the law as well as protecting the American homeland. These memos suggest that they achieved both goals in a manner fully consistent with American values.
Messrs. Rivkin and Casey, who served in the Justice Department under George H.W. Bush, were U.S. delegates to the U.N. Subcommission on the Promotion and Protection of Human Rights.
The Red Cross was completely wrong about 'walling.'
WSJ, Apr 20, 2009
The four memos on CIA interrogation released by the White House last week reveal a cautious and conservative Justice Department advising a CIA that cared deeply about staying within the law. Far from "green lighting" torture -- or cruel, inhuman or degrading treatment of detainees -- the memos detail the actual techniques used and the many measures taken to ensure that interrogations did not cause severe pain or degradation.
Interrogations were to be "continuously monitored" and "the interrogation team will stop the use of particular techniques or the interrogation altogether if the detainee's medical or psychological conditions indicates that the detainee might suffer significant physical or mental harm."
An Aug. 1, 2002, memo describes the practice of "walling" -- recently revealed in a report by the International Committee of the Red Cross, which suggested that detainees wore a "collar" used to "forcefully bang the head and body against the wall" before and during interrogation. In fact, detainees were placed with their backs to a "flexible false wall," designed to avoid inflicting painful injury. Their shoulder blades -- not head -- were the point of contact, and the "collar" was used not to give additional force to a blow, but further to protect the neck.
The memo says the point was to inflict psychological uncertainty, not physical pain: "the idea is to create a sound that will make the impact seem far worse than it is and that will be far worse than any injury that might result from the action."
Shackling and confinement in a small space (generally used to create discomfort and muscle fatigue) were also part of the CIA program, but they were subject to stringent time and manner limitations. Abu Zubaydah (a top bin Laden lieutenant) had a fear of insects. He was, therefore, to be put in a "cramped confinement box" and told a stinging insect would be put in the box with him. In fact, the CIA proposed to use a harmless caterpillar. Confinement was limited to two hours.
The memos are also revealing about the practice of "waterboarding," about which there has been so much speculative rage from the program's opponents. The practice, used on only three individuals, involved covering the nose and mouth with a cloth and pouring water over the cloth to create a drowning sensation.
This technique could be used for up to 40 seconds -- although the CIA orally informed Justice Department lawyers that it would likely not be used for more than 20 seconds at a time. Unlike the exaggerated claims of so many Bush critics, the memos make clear that water was not actually expected to enter the detainee's lungs, and that measures were put in place to prevent complications if this did happen and to ensure that the individual did not develop respiratory distress.
All of these interrogation methods have been adapted from the U.S. military's own Survival Evasion Resistance Escape (or SERE) training program, and have been used for years on thousands of American service members with the full knowledge of Congress. This has created a large body of information about the effect of these techniques, on which the CIA was able to draw in assessing the likely impact on the detainees and ensuring that no severe pain or long term psychological impact would result.
The actual intelligence benefits of the CIA program are also detailed in these memos. The CIA believed, evidently with good reason, that the enhanced interrogation program had indeed produced actionable intelligence about al Qaeda's plans. First among the resulting successes was the prevention of a "second wave" of al Qaeda attacks, to be carried out by an "east Asian" affiliate, which would have involved the crashing of another airplane into a building in Los Angeles.
The interrogation techniques described in these memos are indisputably harsh, but they fall well short of "torture." They were developed and deployed at a time of supreme peril, as a means of preventing future attacks on innocent civilians both in the U.S. and abroad.
The dedicated public servants at the CIA and Justice Department -- who even the Obama administration has concluded should not be prosecuted -- clearly cared intensely about staying within the law as well as protecting the American homeland. These memos suggest that they achieved both goals in a manner fully consistent with American values.
Messrs. Rivkin and Casey, who served in the Justice Department under George H.W. Bush, were U.S. delegates to the U.N. Subcommission on the Promotion and Protection of Human Rights.
Executive nominees shouldn't be filibustered - Presidential Picks Deserve a Vote
Presidential Picks Deserve a Vote. By Walter Dellinger
Executive nominees shouldn't be filibustered.
WSJ, Apr 20, 2009
On the eve of George W. Bush's inauguration in 2001, I cautioned fellow Democrats against "delaying or denying confirmation of nominees to cabinet and subcabinet posts." I argued on these pages that blocking executive nominees would weaken the presidency and be counterproductive for the opposition: "If a president cannot promptly place his chosen people in key offices, he can hardly be held fully responsible for the missteps of the administration."
In the past few years, many Republican senators have agreed, saying that it is unacceptable to filibuster a nominee submitted to the Senate for its "advice and consent." Some Republicans have gone further than I would, asserting that filibusters of presidential nominations are unconstitutional.
I was therefore taken aback by recent speculation that Republicans might filibuster two of President Barack Obama's key nominees: Dawn Johnsen, to head the Justice Department's Office of Legal Counsel; and Harold Koh, to be legal adviser to the State Department.
In the past, Republican senators have publicly asserted that it is either "unacceptable" or "unconstitutional" to filibuster an up-or-down vote of a nominee submitted by the president for Senate "advice and consent." I cannot believe they would now abandon that principle.
Just last year, Sen. John Cornyn (Texas) made this point clearly: "Far too many judicial and executive nominees have been delayed. . . . Senators have a right to vote for or against any nominee -- but blocking votes on nominations is unacceptable." Other senatorial statements also are starkly unequivocal. Lamar Alexander (Tennessee) said, "I pledged, then and there, I would never filibuster any president's judicial nominee, period. I might vote against them, but I will always see they came to a vote."
Although the Senate is free to filibuster legislation, a number of senators argued that the Constitution requires it to vote on nominations. Thus Orrin Hatch (Utah) said, "The advice and consent clause is clearly an up-or-down vote -- a majority vote -- on the floor of the Senate." Bob Bennett (Utah) added, "In my view, the Founding Fathers clearly intended the Senate to consent to the president's choices on a majority vote." Kay Bailey Hutchinson of Texas said that "advice and consent as it is called in the Constitution . . . has always meant a majority vote."
For a time it appeared that Republicans might enact a "nuclear option" -- sustaining on a majority vote a ruling that filibusters of presidential nominations are unconstitutional. (The "gang of 14" compromise in 2005, confirming some judges and not others, ended that threat.)
Many Democrats have in the past defended filibustering executive-branch nominees. Democrats filibustered Mr. Bush's nomination of John Bolton to the United Nations post, and blocked his nominations of Eugene Scalia and Otto Reich by delaying votes. Some judicial candidates, like Miguel Estrada, were also subject to actual or threatened filibusters. Judicial candidates, however, present different considerations. Unlike judges, executive-branch nominees work for the president, and he should have greater discretion in deciding who serves in his administration.
I have disagreed with filibusters of executive-branch nominees whether done by Democrats or Republicans. But Democrats have at least been consistent in maintaining, under presidents of both parties, that filibusters were permissible. Those who would now filibuster the nominations of Mr. Koh and Ms. Johnsen would engage in activity that they recently condemned in stark terms.
The list of senators who have virtually ruled out advice-and-consent filibusters also includes Mitch McConnell (Kentucky), Kit Bond (Missouri), Sam Brownback and Pat Roberts (Kansas), Tom Coburn and James Inhofe (Oklahoma), Mike Crapo (Idaho), Lindsey Graham (South Carolina), Chuck Grassley (Iowa), Judd Gregg (New Hampshire), Jon Kyl (Arizona), Jeff Sessions (Alabama), Arlen Specter (Pennsylvania) and George Voinovich (Ohio).
Whether Republicans or Democrats are in office, the loyal opposition should not frustrate a president's ability to execute the powers of his office by denying an up-or-down vote to executive-branch nominees.
Mr. Dellinger was head of the Office of Legal Counsel from 1993 to 1996.
Executive nominees shouldn't be filibustered.
WSJ, Apr 20, 2009
On the eve of George W. Bush's inauguration in 2001, I cautioned fellow Democrats against "delaying or denying confirmation of nominees to cabinet and subcabinet posts." I argued on these pages that blocking executive nominees would weaken the presidency and be counterproductive for the opposition: "If a president cannot promptly place his chosen people in key offices, he can hardly be held fully responsible for the missteps of the administration."
In the past few years, many Republican senators have agreed, saying that it is unacceptable to filibuster a nominee submitted to the Senate for its "advice and consent." Some Republicans have gone further than I would, asserting that filibusters of presidential nominations are unconstitutional.
I was therefore taken aback by recent speculation that Republicans might filibuster two of President Barack Obama's key nominees: Dawn Johnsen, to head the Justice Department's Office of Legal Counsel; and Harold Koh, to be legal adviser to the State Department.
In the past, Republican senators have publicly asserted that it is either "unacceptable" or "unconstitutional" to filibuster an up-or-down vote of a nominee submitted by the president for Senate "advice and consent." I cannot believe they would now abandon that principle.
Just last year, Sen. John Cornyn (Texas) made this point clearly: "Far too many judicial and executive nominees have been delayed. . . . Senators have a right to vote for or against any nominee -- but blocking votes on nominations is unacceptable." Other senatorial statements also are starkly unequivocal. Lamar Alexander (Tennessee) said, "I pledged, then and there, I would never filibuster any president's judicial nominee, period. I might vote against them, but I will always see they came to a vote."
Although the Senate is free to filibuster legislation, a number of senators argued that the Constitution requires it to vote on nominations. Thus Orrin Hatch (Utah) said, "The advice and consent clause is clearly an up-or-down vote -- a majority vote -- on the floor of the Senate." Bob Bennett (Utah) added, "In my view, the Founding Fathers clearly intended the Senate to consent to the president's choices on a majority vote." Kay Bailey Hutchinson of Texas said that "advice and consent as it is called in the Constitution . . . has always meant a majority vote."
For a time it appeared that Republicans might enact a "nuclear option" -- sustaining on a majority vote a ruling that filibusters of presidential nominations are unconstitutional. (The "gang of 14" compromise in 2005, confirming some judges and not others, ended that threat.)
Many Democrats have in the past defended filibustering executive-branch nominees. Democrats filibustered Mr. Bush's nomination of John Bolton to the United Nations post, and blocked his nominations of Eugene Scalia and Otto Reich by delaying votes. Some judicial candidates, like Miguel Estrada, were also subject to actual or threatened filibusters. Judicial candidates, however, present different considerations. Unlike judges, executive-branch nominees work for the president, and he should have greater discretion in deciding who serves in his administration.
I have disagreed with filibusters of executive-branch nominees whether done by Democrats or Republicans. But Democrats have at least been consistent in maintaining, under presidents of both parties, that filibusters were permissible. Those who would now filibuster the nominations of Mr. Koh and Ms. Johnsen would engage in activity that they recently condemned in stark terms.
The list of senators who have virtually ruled out advice-and-consent filibusters also includes Mitch McConnell (Kentucky), Kit Bond (Missouri), Sam Brownback and Pat Roberts (Kansas), Tom Coburn and James Inhofe (Oklahoma), Mike Crapo (Idaho), Lindsey Graham (South Carolina), Chuck Grassley (Iowa), Judd Gregg (New Hampshire), Jon Kyl (Arizona), Jeff Sessions (Alabama), Arlen Specter (Pennsylvania) and George Voinovich (Ohio).
Whether Republicans or Democrats are in office, the loyal opposition should not frustrate a president's ability to execute the powers of his office by denying an up-or-down vote to executive-branch nominees.
Mr. Dellinger was head of the Office of Legal Counsel from 1993 to 1996.
What happens when the president can no longer blame Bush for international strife?
A World Of Trouble For Obama. By Jackson Diehl
WaPo, Monday, April 20, 2009
New American presidents typically begin by behaving as if most of the world's problems are the fault of their predecessors -- and Barack Obama has been no exception. In his first three months he has quickly taken steps to correct the errors in George W. Bush's foreign policy, as seen by Democrats. He has collected easy dividends from his base, U.S. allies in Europe and a global following for not being "unilateralist" or war-mongering or scornful of dialogue with enemies.
Now comes the interesting part: when it starts to become evident that Bush did not create rogue states, terrorist movements, Middle Eastern blood feuds or Russian belligerence -- and that shake-ups in U.S. diplomacy, however enlightened, might not have much impact on them.
The first wake-up call has come from North Korea -- a state that, according to established Democratic wisdom, would have given up its nuclear weapons years ago if it had not been labeled "evil" by Bush, denied bilateral talks with Washington and punished with sanctions. Stephen Bosworth, the administration's new special envoy, duly tried to head off Pyongyang's latest illegal missile test by promising bilateral negotiations and offering "incentives" for good behavior.
North Korea fired the missile anyway. After a week of U.N. Security Council negotiations by the new, multilateralist U.S. administration produced the same weak statement that the Bush administration would have gotten, the Stalinist regime expelled U.N. inspectors and announced that it was returning to plutonium production.
When the inspectors were ousted in 2002, Democrats blamed Bush. Now Republicans blame Obama -- but North Korea's strategy hasn't changed in 15 years. It provokes a crisis, then demands bribes from the United States and South Korea in exchange for restoring the status quo. The Obama team now faces the same dilemma that bedeviled the past two administrations: It must judge whether to respond to the bad behavior by paying the bribe or by trying to squeeze the regime.
A second cold shower rained down last week on George Mitchell, Obama's special envoy to the Middle East. For eight years Democrats insisted that the absence of progress toward peace between Israel and its neighbors was due to the Bush administration's failure at "engagement." Mitchell embodies the correction. But during last week's tour of the region he encountered a divided Palestinian movement seemingly incapable of agreeing on a stance toward Israel and a new Israeli government that doesn't accept the goal of Palestinian statehood. Neither appeared at all impressed by the new American intervention -- or willing to offer even token concessions.
Those aren't the only signs that the new medicine isn't taking. Europeans commonly blamed Bush for Russia's aggressiveness -- they said he ignored Moscow's interests and pressed too hard for European missile defense and NATO membership for Georgia and Ukraine. So Hillary Clinton made a show of pushing a "reset" button, and Obama offered the Kremlin a new arms control agreement while putting missile defense and NATO expansion on a back burner. Yet in recent weeks Russia has deployed thousands of additional troops as well as tanks and warplanes to the two breakaway Georgian republics it has recognized, in blatant violation of the cease-fire agreement that ended last year's war. The threat of another Russian attack on Georgia seems to be going up rather than down.
Obama sent a conciliatory public message to Iranians, and the United States joined in a multilateral proposal for new negotiations on its nuclear program. The regime responded by announcing another expansion of its uranium enrichment facility and placing an American journalist on trial for espionage. Obama told Iraqis that he would, as long promised, use troop withdrawals to pressure the government to take over responsibility for the country. Since he made that announcement, violence in Iraq has steadily increased.
Obama is not the first president to discover that facile changes in U.S. policy don't crack long-standing problems. Some of his new strategies may produce results with time. Yet the real test of an administration is what it does once it realizes that the quick fixes aren't working -- that, say, North Korea and Iran have no intention of giving up their nuclear programs, with or without dialogue, while Russia remains determined to restore its dominion over Georgia. In other words, what happens when it's no longer George W. Bush's fault? That's what the next 100 days will tell us.
WaPo, Monday, April 20, 2009
New American presidents typically begin by behaving as if most of the world's problems are the fault of their predecessors -- and Barack Obama has been no exception. In his first three months he has quickly taken steps to correct the errors in George W. Bush's foreign policy, as seen by Democrats. He has collected easy dividends from his base, U.S. allies in Europe and a global following for not being "unilateralist" or war-mongering or scornful of dialogue with enemies.
Now comes the interesting part: when it starts to become evident that Bush did not create rogue states, terrorist movements, Middle Eastern blood feuds or Russian belligerence -- and that shake-ups in U.S. diplomacy, however enlightened, might not have much impact on them.
The first wake-up call has come from North Korea -- a state that, according to established Democratic wisdom, would have given up its nuclear weapons years ago if it had not been labeled "evil" by Bush, denied bilateral talks with Washington and punished with sanctions. Stephen Bosworth, the administration's new special envoy, duly tried to head off Pyongyang's latest illegal missile test by promising bilateral negotiations and offering "incentives" for good behavior.
North Korea fired the missile anyway. After a week of U.N. Security Council negotiations by the new, multilateralist U.S. administration produced the same weak statement that the Bush administration would have gotten, the Stalinist regime expelled U.N. inspectors and announced that it was returning to plutonium production.
When the inspectors were ousted in 2002, Democrats blamed Bush. Now Republicans blame Obama -- but North Korea's strategy hasn't changed in 15 years. It provokes a crisis, then demands bribes from the United States and South Korea in exchange for restoring the status quo. The Obama team now faces the same dilemma that bedeviled the past two administrations: It must judge whether to respond to the bad behavior by paying the bribe or by trying to squeeze the regime.
A second cold shower rained down last week on George Mitchell, Obama's special envoy to the Middle East. For eight years Democrats insisted that the absence of progress toward peace between Israel and its neighbors was due to the Bush administration's failure at "engagement." Mitchell embodies the correction. But during last week's tour of the region he encountered a divided Palestinian movement seemingly incapable of agreeing on a stance toward Israel and a new Israeli government that doesn't accept the goal of Palestinian statehood. Neither appeared at all impressed by the new American intervention -- or willing to offer even token concessions.
Those aren't the only signs that the new medicine isn't taking. Europeans commonly blamed Bush for Russia's aggressiveness -- they said he ignored Moscow's interests and pressed too hard for European missile defense and NATO membership for Georgia and Ukraine. So Hillary Clinton made a show of pushing a "reset" button, and Obama offered the Kremlin a new arms control agreement while putting missile defense and NATO expansion on a back burner. Yet in recent weeks Russia has deployed thousands of additional troops as well as tanks and warplanes to the two breakaway Georgian republics it has recognized, in blatant violation of the cease-fire agreement that ended last year's war. The threat of another Russian attack on Georgia seems to be going up rather than down.
Obama sent a conciliatory public message to Iranians, and the United States joined in a multilateral proposal for new negotiations on its nuclear program. The regime responded by announcing another expansion of its uranium enrichment facility and placing an American journalist on trial for espionage. Obama told Iraqis that he would, as long promised, use troop withdrawals to pressure the government to take over responsibility for the country. Since he made that announcement, violence in Iraq has steadily increased.
Obama is not the first president to discover that facile changes in U.S. policy don't crack long-standing problems. Some of his new strategies may produce results with time. Yet the real test of an administration is what it does once it realizes that the quick fixes aren't working -- that, say, North Korea and Iran have no intention of giving up their nuclear programs, with or without dialogue, while Russia remains determined to restore its dominion over Georgia. In other words, what happens when it's no longer George W. Bush's fault? That's what the next 100 days will tell us.
Sunday, April 19, 2009
Members of Congress value school choice -- for themselves
Only for the Privileged Few? WaPo Editorial
Members of Congress value school choice -- for themselves.
Monday, April 20, 2009
A NEW SURVEY shows that 38 percent of members of Congress have sent their children to private school. About 20 percent themselves attended private school, nearly twice the rate of the general public. Nothing wrong with those numbers; no one should be faulted for personal decisions made in the best interests of loved ones. Wouldn't it be nice, though, if Congress extended similar consideration to low-income D.C. parents desperate to keep their sons and daughters in good schools?
The latest Heritage Foundation study of lawmakers' educational choices comes amid escalating efforts to kill the federally funded D.C. Opportunity Scholarship Program that helps 1,700 disadvantaged children attend private schools. Congress cut funding beyond the 2009-10 school year unless the program, which provides vouchers of up to $7,500, gets new federal and local approvals. Education Secretary Arne Duncan cited that uncertainty as the reason for his recent decision to rescind scholarship offers to 200 new students. Senate hearings on the program's future are set for this spring, and opponents -- chiefly school union officials -- are pulling out all the stops as they lobby their Democratic allies.
The gap between what Congress practices and what it preaches was best illustrated by the Heritage Foundation's analysis of a recent vote to preserve the program. The measure was defeated by the Senate 58 to 39; it would have passed if senators who exercised school choice for their own children had voted in favor. Alas, the survey doesn't name names, save for singling out Sen. Richard J. Durbin (D-Ill.), architect of the language that threatens the program, for sending his children to private school and attending private school himself.
No doubt there are those who would argue that personal choices should not dictate decisions of policymakers. Fair enough, but where is the objective examination of this program, a rational discussion of the pros and cons? Where is the humanity of not wanting to hurt children who won't be able to continue in their current schools if the scholarship program is eliminated? No one has been able to offer any evidence of the drawbacks of this small, local program, while evidence of its benefits has been mounting. It has been disappointing that many of those one would expect to speak up for the educational rights of poor, minority children -- and Mayor Adrian M. Fenty (D) tops the list -- have been almost mute or, as has been the case with D.C. Del. Eleanor Holmes Norton (D), downright hostile. Meanwhile, former mayor Anthony A. Williams and former D.C. Council member Kevin P. Chavous continue to champion school choice as the civil rights issue it is.
Mr. Duncan, in a recent interview, spoke eloquently of his family's choice of Arlington as a place to live because of what he called the "determining factor" of schools. He told Science magazine: "My family has given up so much so that I could have the opportunity to serve; I didn't want to try to save the country's children and our educational system and jeopardize my own children's education." We don't think it's too much to expect our leaders to treat their constituents with the same fairness and regard they demand for their own families.
Members of Congress value school choice -- for themselves.
Monday, April 20, 2009
A NEW SURVEY shows that 38 percent of members of Congress have sent their children to private school. About 20 percent themselves attended private school, nearly twice the rate of the general public. Nothing wrong with those numbers; no one should be faulted for personal decisions made in the best interests of loved ones. Wouldn't it be nice, though, if Congress extended similar consideration to low-income D.C. parents desperate to keep their sons and daughters in good schools?
The latest Heritage Foundation study of lawmakers' educational choices comes amid escalating efforts to kill the federally funded D.C. Opportunity Scholarship Program that helps 1,700 disadvantaged children attend private schools. Congress cut funding beyond the 2009-10 school year unless the program, which provides vouchers of up to $7,500, gets new federal and local approvals. Education Secretary Arne Duncan cited that uncertainty as the reason for his recent decision to rescind scholarship offers to 200 new students. Senate hearings on the program's future are set for this spring, and opponents -- chiefly school union officials -- are pulling out all the stops as they lobby their Democratic allies.
The gap between what Congress practices and what it preaches was best illustrated by the Heritage Foundation's analysis of a recent vote to preserve the program. The measure was defeated by the Senate 58 to 39; it would have passed if senators who exercised school choice for their own children had voted in favor. Alas, the survey doesn't name names, save for singling out Sen. Richard J. Durbin (D-Ill.), architect of the language that threatens the program, for sending his children to private school and attending private school himself.
No doubt there are those who would argue that personal choices should not dictate decisions of policymakers. Fair enough, but where is the objective examination of this program, a rational discussion of the pros and cons? Where is the humanity of not wanting to hurt children who won't be able to continue in their current schools if the scholarship program is eliminated? No one has been able to offer any evidence of the drawbacks of this small, local program, while evidence of its benefits has been mounting. It has been disappointing that many of those one would expect to speak up for the educational rights of poor, minority children -- and Mayor Adrian M. Fenty (D) tops the list -- have been almost mute or, as has been the case with D.C. Del. Eleanor Holmes Norton (D), downright hostile. Meanwhile, former mayor Anthony A. Williams and former D.C. Council member Kevin P. Chavous continue to champion school choice as the civil rights issue it is.
Mr. Duncan, in a recent interview, spoke eloquently of his family's choice of Arlington as a place to live because of what he called the "determining factor" of schools. He told Science magazine: "My family has given up so much so that I could have the opportunity to serve; I didn't want to try to save the country's children and our educational system and jeopardize my own children's education." We don't think it's too much to expect our leaders to treat their constituents with the same fairness and regard they demand for their own families.
In Falls Church, a transit boondoggle - overall cost to taxpayers is an eye-popping $8 per ride
A Bus to Nowhere. WaPo Editorial
In Falls Church, a transit boondoggle
WaPo, Monday, April 20, 2009
EASING TRAFFIC gridlock in the Washington area isn't an either-or proposition. More mass transit is desperately needed, but buses and trains alone won't clear clogged roads. Transit projects such as the Purple Line, a light-rail line in Montgomery and Prince George's counties, are necessary, but so are road improvements, such as the widening of Interstate 66.
Yet sometimes transit advocates allow their zeal to obscure what is practical. Such is the case in Falls Church, where some officials continue to defend a bus system that is, by any measure, indefensible.
Falls Church is already transit rich. The 2.2-square-mile city has only 11,200 residents, yet is served by two Metrorail stations and Metrobus. There are few spots in the city that are more than a 20-minute walk from a Metro station. Yet, in the mid-1990s, city officials envisioned a fleet of technologically advanced, environmentally friendly buses that would feed into the Metro system. Officials were able to secure enough grants to launch a pilot program. When electric buses proved to be expensive and unworkable, the city acquired four clean diesel buses at a cost of about $250,000 each. In early 2003, the George bus system, named for the country's first president, started operating.
The buses, operated by Metro, are state of the art, but interest has been tepid. George has averaged only 70,000 trips annually, half of what was expected. That amounts to a measly 10 riders per hour of service, according to the Northern Virginia Transportation Alliance. Most of the outside grants have dried up, and George now costs $600,000 a year to operate, half of which is subsidized by the state. The 50-cent fare, which generates $18,000 a year, barely makes a dent. The overall cost to taxpayers is an eye-popping $8 per ride, compared to $1.20 per ride in Fairfax City and $2.08 per ride in Arlington. It would be cheaper, as the alliance has noted, for taxpayers to pay for a cab.
With a painful fiscal 2010 budget shortfall forcing Falls Church to freeze pay and reduce services, George is a luxury the city can't afford. There has to be a better way to spend $600,000.
In Falls Church, a transit boondoggle
WaPo, Monday, April 20, 2009
EASING TRAFFIC gridlock in the Washington area isn't an either-or proposition. More mass transit is desperately needed, but buses and trains alone won't clear clogged roads. Transit projects such as the Purple Line, a light-rail line in Montgomery and Prince George's counties, are necessary, but so are road improvements, such as the widening of Interstate 66.
Yet sometimes transit advocates allow their zeal to obscure what is practical. Such is the case in Falls Church, where some officials continue to defend a bus system that is, by any measure, indefensible.
Falls Church is already transit rich. The 2.2-square-mile city has only 11,200 residents, yet is served by two Metrorail stations and Metrobus. There are few spots in the city that are more than a 20-minute walk from a Metro station. Yet, in the mid-1990s, city officials envisioned a fleet of technologically advanced, environmentally friendly buses that would feed into the Metro system. Officials were able to secure enough grants to launch a pilot program. When electric buses proved to be expensive and unworkable, the city acquired four clean diesel buses at a cost of about $250,000 each. In early 2003, the George bus system, named for the country's first president, started operating.
The buses, operated by Metro, are state of the art, but interest has been tepid. George has averaged only 70,000 trips annually, half of what was expected. That amounts to a measly 10 riders per hour of service, according to the Northern Virginia Transportation Alliance. Most of the outside grants have dried up, and George now costs $600,000 a year to operate, half of which is subsidized by the state. The 50-cent fare, which generates $18,000 a year, barely makes a dent. The overall cost to taxpayers is an eye-popping $8 per ride, compared to $1.20 per ride in Fairfax City and $2.08 per ride in Arlington. It would be cheaper, as the alliance has noted, for taxpayers to pay for a cab.
With a painful fiscal 2010 budget shortfall forcing Falls Church to freeze pay and reduce services, George is a luxury the city can't afford. There has to be a better way to spend $600,000.
Beware green jobs, the new sub-prime
Beware green jobs, the new sub-prime. By Dominic Lawson
Sunday Times, April 19, 2009
When everybody seems to have the same big idea, you just know it can only mean trouble. Remember sub-prime mort-gages? Now universally excoriated as the spawn of the devil, the proximate cause of the credit crunch and all that followed, a few years back “sub-prime” was everyone’s darling. Financiers loved it because it generated sumptuously high-yielding debt instruments; governments, because it promised to make even the poor into proud property owners.
Now business lobbyists and governments on both sides of the Atlantic have got a new big idea. They call it “green jobs”. Leading the pack is, as you might expect, Barack Obama. The president recently defended a vast package of subsidies for renewable energy on the grounds that it would “create millions of additional jobs and entire new industries”.
In Britain, the business secretary, Lord Mandelson, promises billions in state aid for the same purpose. To add verisimilitude, last week he gave a royal wave from the inside of a prototype electric Mini. Mandelson’s chauffeur was a representative of the lower house: the transport secretary, Geoff Hoon.
The occasion for this photo opportunity was the government’s proposal to offer a £5,000 subsidy to anyone buying an electric car of a type not yet available: exact details to be given in Alistair Darling’s forthcoming budget. The idea is to create a “world-beating” British-based electric-car-manufacturing industry, while also attempting to meet Gordon Brown’s promise to have the nation converted to electric or hybrid cars by 2020.
That remarkable prime ministerial pledge predated the recession; its motive was to demonstrate that Britain was “leading the world in the battle against climate change”. We aren’t, as a matter of fact; but under new Labour we have certainly led the world at claiming to do so. Mandelson expressed this almost satirically last week when he declared that “Britain has taken a world lead in setting ambitious targets for carbon reduction”.
As ever, new Labour confuses announcements and newspaper headlines with real action. Whenever it becomes obvious even to ministers that Britain will not meet its current carbon reduction target, they replace it with a yet tougher target, only with an extended deadline.
It does not yet seem to have occurred to new Labour that this is making it look ridiculous, especially to the environmentalists whose support it is presumably trying to solicit. Or perhaps it has, but it would rather that than lose our “world leadership” in target-setting.
There is something almost comical in the government’s belief that the electric car, dependent as it is on the national grid, is a sort of magic recipe for reducing carbon emissions. Some months ago President Sarkozy of France had an identical idea and commissioned a report on the prospects for turning Renault and Citroën into producers of mass-market electric vehicles. The report concluded that “the traditional combustion engine still offers the most realistic prospect of developing cleaner vehicles simply by improving the performance and efficiency of traditional engines and limiting the top speed to 105mph. The overall cost of an electric car remains unfeasible at about double that of a conventional vehicle. Battery technology is still unsatisfactory, severely limiting performance”.
Note that this crushing verdict came in a country where electricity is for the most part generated by nuclear power, which produces . In this country, more than three-quarters of the grid’s power comes from theno CO2 fossil fuels of gas and coal.
Presumably it is the latter that accounts for the fact that when the London borough of Camden commissioned a study to see whether it should introduce electric vehicles for some of its services, it found that “EVs relying on the average UK mix of energy to charge them were responsible for significantly more particles of soot that lodge deeply in the lungs . . . than the average petrol-powered car”.
If all our electricity were to be generated by wind power, without any fossil-fuel back-up, this criticism would not apply. Then the cars could take days, rather than hours, to recharge (depending on the weather) and would be so expensive to run that driving would become the exclusive preserve of the rich.
A further absurdity is that electric cars are suitable only for short rides within urban areas – precisely where we are being encouraged to abandon cars and use public transport. Ken Livingstone exempted electric cars from his congestion charge as if, in addition to their suppositious environmental benefits, they also had the magical property of being incapable of contributing to congestion. As the Ecologist magazine has reported: “The focus on electric vehicles and the political love they get is totally misguided . . . to have that as the spearhead of government transport carbon-reduction policy is insane.”
The magazine is controlled by Zac Goldsmith, the prospective Conservative candidate for Richmond Park and team Cameron’s environmental guru. Last week his colleague George Osborne took a different tack, observing that the absence of plans for a national network of charging points meant that “the Labour plan is like giving people a grant to buy an internal combustion engine, without bothering to set up any petrol stations”. Osborne had his own suggested grant to create “green jobs”: “We will give every household a new entitlement to £6,500 of energy-saving technologies.”
I’m not sure how the Tories came up with the figure of £6,500. It is pointedly bigger than Labour’s proposed £5,000 electric car subsidy; but all these figures are preposterous. If you multiply £6,500 by the number of households in the land, you get to £160 billion, bigger on its own than the national debt that Osborne has repeatedly told us is unaffordable.
Electoral bribes apart, there is a more serious misconception behind the idea that ploughing subsidies into the “green economy” is a sure-fire way of boosting domestic employment. At best it will move people from one economic activity to another. Labour’s plans would subsidise car production workers to move from making conventional models to electric vehicles, which hardly anyone wants to buy. Osborne’s proposals would subsidise the double-glazing and home insulation industry and suck in many workers gainfully employed (without subsidy) elsewhere.
The key to a successful, wealth-generating economy is productivity. Saving energy is what businesses have done already, because it lowers their production costs. The problem with any form of subsidy is that it makes the consumer (through hidden taxes) pay to keep inherently uneconomic businesses “profitable”. Meanwhile, diversified energy companies such as Shell, with plenty of speculatively acquired wind-farm acreage, are salivating at the plans by Obama to introduce cap-and-trade carbon emissions targets for American industry.
Obama’s energy secretary, Steven Chu, had some soothing words for US manufacturing companies that complained that the new policy will make them even less competitive with Chinese exporters, since the people’s republic has indicated that it has no intention of inflicting a similar increase in energy costs on its own producers. He suggested that America might have to introduce some sort of “car-bon-intensive” tariff on Chinese goods. One of China’s envoys, Li Gao, immediately retorted that such a carbon tariff would be a “disaster”, since it could lead to global trade war.
Actually, Mr Li is right: and this is how an achingly fashionable and well-intentioned plan to create “millions of new green jobs” could instead end up making the global economy even sicker than it is already.
Sunday Times, April 19, 2009
When everybody seems to have the same big idea, you just know it can only mean trouble. Remember sub-prime mort-gages? Now universally excoriated as the spawn of the devil, the proximate cause of the credit crunch and all that followed, a few years back “sub-prime” was everyone’s darling. Financiers loved it because it generated sumptuously high-yielding debt instruments; governments, because it promised to make even the poor into proud property owners.
Now business lobbyists and governments on both sides of the Atlantic have got a new big idea. They call it “green jobs”. Leading the pack is, as you might expect, Barack Obama. The president recently defended a vast package of subsidies for renewable energy on the grounds that it would “create millions of additional jobs and entire new industries”.
In Britain, the business secretary, Lord Mandelson, promises billions in state aid for the same purpose. To add verisimilitude, last week he gave a royal wave from the inside of a prototype electric Mini. Mandelson’s chauffeur was a representative of the lower house: the transport secretary, Geoff Hoon.
The occasion for this photo opportunity was the government’s proposal to offer a £5,000 subsidy to anyone buying an electric car of a type not yet available: exact details to be given in Alistair Darling’s forthcoming budget. The idea is to create a “world-beating” British-based electric-car-manufacturing industry, while also attempting to meet Gordon Brown’s promise to have the nation converted to electric or hybrid cars by 2020.
That remarkable prime ministerial pledge predated the recession; its motive was to demonstrate that Britain was “leading the world in the battle against climate change”. We aren’t, as a matter of fact; but under new Labour we have certainly led the world at claiming to do so. Mandelson expressed this almost satirically last week when he declared that “Britain has taken a world lead in setting ambitious targets for carbon reduction”.
As ever, new Labour confuses announcements and newspaper headlines with real action. Whenever it becomes obvious even to ministers that Britain will not meet its current carbon reduction target, they replace it with a yet tougher target, only with an extended deadline.
It does not yet seem to have occurred to new Labour that this is making it look ridiculous, especially to the environmentalists whose support it is presumably trying to solicit. Or perhaps it has, but it would rather that than lose our “world leadership” in target-setting.
There is something almost comical in the government’s belief that the electric car, dependent as it is on the national grid, is a sort of magic recipe for reducing carbon emissions. Some months ago President Sarkozy of France had an identical idea and commissioned a report on the prospects for turning Renault and Citroën into producers of mass-market electric vehicles. The report concluded that “the traditional combustion engine still offers the most realistic prospect of developing cleaner vehicles simply by improving the performance and efficiency of traditional engines and limiting the top speed to 105mph. The overall cost of an electric car remains unfeasible at about double that of a conventional vehicle. Battery technology is still unsatisfactory, severely limiting performance”.
Note that this crushing verdict came in a country where electricity is for the most part generated by nuclear power, which produces . In this country, more than three-quarters of the grid’s power comes from theno CO2 fossil fuels of gas and coal.
Presumably it is the latter that accounts for the fact that when the London borough of Camden commissioned a study to see whether it should introduce electric vehicles for some of its services, it found that “EVs relying on the average UK mix of energy to charge them were responsible for significantly more particles of soot that lodge deeply in the lungs . . . than the average petrol-powered car”.
If all our electricity were to be generated by wind power, without any fossil-fuel back-up, this criticism would not apply. Then the cars could take days, rather than hours, to recharge (depending on the weather) and would be so expensive to run that driving would become the exclusive preserve of the rich.
A further absurdity is that electric cars are suitable only for short rides within urban areas – precisely where we are being encouraged to abandon cars and use public transport. Ken Livingstone exempted electric cars from his congestion charge as if, in addition to their suppositious environmental benefits, they also had the magical property of being incapable of contributing to congestion. As the Ecologist magazine has reported: “The focus on electric vehicles and the political love they get is totally misguided . . . to have that as the spearhead of government transport carbon-reduction policy is insane.”
The magazine is controlled by Zac Goldsmith, the prospective Conservative candidate for Richmond Park and team Cameron’s environmental guru. Last week his colleague George Osborne took a different tack, observing that the absence of plans for a national network of charging points meant that “the Labour plan is like giving people a grant to buy an internal combustion engine, without bothering to set up any petrol stations”. Osborne had his own suggested grant to create “green jobs”: “We will give every household a new entitlement to £6,500 of energy-saving technologies.”
I’m not sure how the Tories came up with the figure of £6,500. It is pointedly bigger than Labour’s proposed £5,000 electric car subsidy; but all these figures are preposterous. If you multiply £6,500 by the number of households in the land, you get to £160 billion, bigger on its own than the national debt that Osborne has repeatedly told us is unaffordable.
Electoral bribes apart, there is a more serious misconception behind the idea that ploughing subsidies into the “green economy” is a sure-fire way of boosting domestic employment. At best it will move people from one economic activity to another. Labour’s plans would subsidise car production workers to move from making conventional models to electric vehicles, which hardly anyone wants to buy. Osborne’s proposals would subsidise the double-glazing and home insulation industry and suck in many workers gainfully employed (without subsidy) elsewhere.
The key to a successful, wealth-generating economy is productivity. Saving energy is what businesses have done already, because it lowers their production costs. The problem with any form of subsidy is that it makes the consumer (through hidden taxes) pay to keep inherently uneconomic businesses “profitable”. Meanwhile, diversified energy companies such as Shell, with plenty of speculatively acquired wind-farm acreage, are salivating at the plans by Obama to introduce cap-and-trade carbon emissions targets for American industry.
Obama’s energy secretary, Steven Chu, had some soothing words for US manufacturing companies that complained that the new policy will make them even less competitive with Chinese exporters, since the people’s republic has indicated that it has no intention of inflicting a similar increase in energy costs on its own producers. He suggested that America might have to introduce some sort of “car-bon-intensive” tariff on Chinese goods. One of China’s envoys, Li Gao, immediately retorted that such a carbon tariff would be a “disaster”, since it could lead to global trade war.
Actually, Mr Li is right: and this is how an achingly fashionable and well-intentioned plan to create “millions of new green jobs” could instead end up making the global economy even sicker than it is already.
Alien Tort Statute - A New Ruling Imperils Firms And U.S. Diplomacy
Rights Case Gone Wrong. By Curtis A. Bradley and Jack L. Goldsmith
A Ruling Imperils Firms And U.S. Diplomacy.
WaPo, Sunday, April 19, 2009
As American taxpayers shell out hundreds of billions of dollars to bail out U.S. companies, a federal court in New York recently paved the way for significantly increasing some of these firms' financial burdens. Relying on the Alien Tort Statute of 1789, the court ruled this month that certain companies that did business with apartheid South Africa -- including distressed firms such as General Motors and Ford -- can be held liable for South Africa's human rights violations during that period.
The Alien Tort Statute was designed to allow diplomatically sensitive tort cases to be brought in federal court in the hopes of avoiding the friction with foreign governments that could arise if state courts failed to provide a fair hearing. The statute hid in obscurity for almost 200 years before a federal appellate court in New York invoked it in 1980 to allow victims of human rights abuses committed abroad to sue foreign officials in U.S. courts. This holding turned the statute on its head by creating, rather than reducing, friction with other countries. It also spawned a cottage industry of human rights litigation.
At first, these cases were largely symbolic. The foreign plaintiffs had little chance of recovering damages from foreign officials; in effect, victims of human rights abuses used U.S. federal courts to criticize foreign governments. But the character of this litigation changed dramatically during the past decade. Plaintiffs started suing corporations on the theory that the firms "aided and abetted" foreign regimes and should be liable for those regimes' actions. These cases are not merely symbolic -- the U.S. corporations have deep pockets and U.S. bank accounts -- and present enormous opportunities for judicial meddling in foreign relations.
The South African case, brought by class-action attorneys many years after apartheid ended, is a dramatic example. The South African government opposed the litigation on the grounds that it would interfere with the policy embodied by its Truth and Reconciliation Commission, which "deliberately avoided a 'victor's justice' approach to the crimes of apartheid." The Bush administration's State Department opposed the lawsuit, arguing that it "risks potentially serious adverse consequences for significant interests of the United States" by threatening international economic relations as well as political relations with South Africa and other countries whose firms are defendants.
This should have been enough for dismissal. Five years ago, the Supreme Court said in reference to the South Africa litigation that "there is a strong argument that the federal courts should give serious weight to the Executive Branch's view of the case's impact on foreign policy." Yet the New York court, unpersuaded, concluded that allowing the lawsuit to proceed "would not contradict American foreign policy in a manner that would 'seriously interfere with important governmental interests.' " Thus it supplanted its foreign policy views for those of the federal government and refused to respect South Africa's efforts to move its society forward.
More significant, the court ruled that firms were liable for a foreign government's human rights violations, even if they did not engage in the abuses or intend to facilitate them, as long as companies were aware that their business activities would substantially assist the government's illegal practices. This put GM and Ford on the hook for supplying trucks that the South African government used to attack anti-apartheid activists, and IBM for providing computers and software that the government used to register and segregate individuals.
The underlying acts associated with apartheid are abhorrent. But it is crass retroactivity to say that these firms are legally responsible for actions of the South African government. Under the New York court's standard, a great deal of global investment in the developing world would now be subject to U.S. judicial scrutiny.
So what can be done about this sort of litigation, which threatens to transfer billions from U.S. firms doing business abroad to plaintiffs' lawyers and their foreign clients? Lower courts won't resolve an issue they created. The Supreme Court's single ruling on the statute in modern times provides little guidance. The high court declined to review an earlier iteration of the South African case because four justices who owned stock in defendant companies recused themselves, precluding a quorum.
The executive branch is unlikely to press for reversal. President Obama recently nominated Yale Law School Dean Harold Koh to be legal adviser to the State Department, the government office that presents the U.S. view of these cases to federal courts. Koh is an intellectual architect and champion of the post-1980 human rights litigation explosion. He joined a brief in the South Africa litigation arguing for broad aiding-and-abetting liability.
That leaves Congress, which has never hinted that corporations should be liable in these cases. Lawmakers have also given foreign governments, including South Africa's, statutory immunity from cases such as the apartheid litigation. Courts circumvent this immunity when they hold liable secondary actors not directly responsible for the abuses. Much worse, these lawsuits threaten to deepen the economic distress of U.S. and foreign firms by imposing an enormous tax on investment in developing countries at a time the world desperately needs such investment. Judicially made corporate human rights litigation is a luxury we can no longer afford.
Curtis A. Bradley is a professor at Duke Law School. Jack L. Goldsmith, a professor at Harvard Law School, has participated in Alien Tort Statute cases in support of defendants.
A Ruling Imperils Firms And U.S. Diplomacy.
WaPo, Sunday, April 19, 2009
As American taxpayers shell out hundreds of billions of dollars to bail out U.S. companies, a federal court in New York recently paved the way for significantly increasing some of these firms' financial burdens. Relying on the Alien Tort Statute of 1789, the court ruled this month that certain companies that did business with apartheid South Africa -- including distressed firms such as General Motors and Ford -- can be held liable for South Africa's human rights violations during that period.
The Alien Tort Statute was designed to allow diplomatically sensitive tort cases to be brought in federal court in the hopes of avoiding the friction with foreign governments that could arise if state courts failed to provide a fair hearing. The statute hid in obscurity for almost 200 years before a federal appellate court in New York invoked it in 1980 to allow victims of human rights abuses committed abroad to sue foreign officials in U.S. courts. This holding turned the statute on its head by creating, rather than reducing, friction with other countries. It also spawned a cottage industry of human rights litigation.
At first, these cases were largely symbolic. The foreign plaintiffs had little chance of recovering damages from foreign officials; in effect, victims of human rights abuses used U.S. federal courts to criticize foreign governments. But the character of this litigation changed dramatically during the past decade. Plaintiffs started suing corporations on the theory that the firms "aided and abetted" foreign regimes and should be liable for those regimes' actions. These cases are not merely symbolic -- the U.S. corporations have deep pockets and U.S. bank accounts -- and present enormous opportunities for judicial meddling in foreign relations.
The South African case, brought by class-action attorneys many years after apartheid ended, is a dramatic example. The South African government opposed the litigation on the grounds that it would interfere with the policy embodied by its Truth and Reconciliation Commission, which "deliberately avoided a 'victor's justice' approach to the crimes of apartheid." The Bush administration's State Department opposed the lawsuit, arguing that it "risks potentially serious adverse consequences for significant interests of the United States" by threatening international economic relations as well as political relations with South Africa and other countries whose firms are defendants.
This should have been enough for dismissal. Five years ago, the Supreme Court said in reference to the South Africa litigation that "there is a strong argument that the federal courts should give serious weight to the Executive Branch's view of the case's impact on foreign policy." Yet the New York court, unpersuaded, concluded that allowing the lawsuit to proceed "would not contradict American foreign policy in a manner that would 'seriously interfere with important governmental interests.' " Thus it supplanted its foreign policy views for those of the federal government and refused to respect South Africa's efforts to move its society forward.
More significant, the court ruled that firms were liable for a foreign government's human rights violations, even if they did not engage in the abuses or intend to facilitate them, as long as companies were aware that their business activities would substantially assist the government's illegal practices. This put GM and Ford on the hook for supplying trucks that the South African government used to attack anti-apartheid activists, and IBM for providing computers and software that the government used to register and segregate individuals.
The underlying acts associated with apartheid are abhorrent. But it is crass retroactivity to say that these firms are legally responsible for actions of the South African government. Under the New York court's standard, a great deal of global investment in the developing world would now be subject to U.S. judicial scrutiny.
So what can be done about this sort of litigation, which threatens to transfer billions from U.S. firms doing business abroad to plaintiffs' lawyers and their foreign clients? Lower courts won't resolve an issue they created. The Supreme Court's single ruling on the statute in modern times provides little guidance. The high court declined to review an earlier iteration of the South African case because four justices who owned stock in defendant companies recused themselves, precluding a quorum.
The executive branch is unlikely to press for reversal. President Obama recently nominated Yale Law School Dean Harold Koh to be legal adviser to the State Department, the government office that presents the U.S. view of these cases to federal courts. Koh is an intellectual architect and champion of the post-1980 human rights litigation explosion. He joined a brief in the South Africa litigation arguing for broad aiding-and-abetting liability.
That leaves Congress, which has never hinted that corporations should be liable in these cases. Lawmakers have also given foreign governments, including South Africa's, statutory immunity from cases such as the apartheid litigation. Courts circumvent this immunity when they hold liable secondary actors not directly responsible for the abuses. Much worse, these lawsuits threaten to deepen the economic distress of U.S. and foreign firms by imposing an enormous tax on investment in developing countries at a time the world desperately needs such investment. Judicially made corporate human rights litigation is a luxury we can no longer afford.
Curtis A. Bradley is a professor at Duke Law School. Jack L. Goldsmith, a professor at Harvard Law School, has participated in Alien Tort Statute cases in support of defendants.
WaPo on Iraq: How the Obama administration can respond to incipient signs of trouble
Iraq's Wobbles. WaPo Editorial
How the Obama administration can respond to incipient signs of trouble.
WaPo, Sunday, April 19, 2009
IT'S BEEN only seven weeks since President Obama outlined a strategy for Iraq aimed at withdrawing most U.S. troops by the end of next summer. But already there is cause for concern. During the past month security around the country has been slipping: At least 37 people have been killed in four major attacks on security forces in the past week alone, and there have been multiple car bombings in Baghdad and other cities. Those strikes have been claimed by al-Qaeda, which appears to be attempting a comeback. But there have also been new bursts of sectarian violence among Sunni and Shiite extremists.
Following successful local elections in January, Iraqi politicians are mired in backroom squabbling over the formation of provincial governments. The Shiite-led national government has made disturbing moves against some of the Sunni leaders who led the fight against al-Qaeda. Hamstrung by the fall in oil prices, the government is having trouble meeting commitments to pay former insurgents or expand the security forces. Normally the U.S. ambassador would be deeply involved in trying to smooth over such problems, but there has been no ambassador in Baghdad since February.
It's not time to panic: U.S. commanders point out that overall, violence in Iraq is at its lowest level since the first year of the war. Iraqi Prime Minister Nouri al-Maliki, bolstered by the election outcome, remains strong and confident. But the administration needs to be alert to what is happening in Iraq -- and ready to adjust political and military plans to prevent what could easily become a downward spiral.
One early decision point involves the withdrawal timetable, which calls for U.S. troops to leave all Iraqi cities by the end of June. That pullout is looking risky in a couple of places, including the northern city of Mosul, which has never been entirely cleansed of anti-government insurgents. The U.S. commander in the area told a Pentagon briefing last week that American troops could remain in the city if the Iraqi government requests it following an ongoing review; such flexibility should be extended to other areas, if necessary.
U.S. diplomats and commanders also need to make sure that Sunni leaders -- already under renewed attack by al-Qaeda -- are treated fairly by the government. It's hard to tell from Washington whether recent arrests of some tribal leaders were justified or prudent; that's one reason why the administration's chosen ambassador, Christopher Hill, needs to get to Baghdad as soon as possible. He should be confirmed when Congress returns this week.
Mr. Hill's main focus, once he arrives, ought to be helping to ensure that Iraq's national elections, expected next January, go smoothly. Judging from January's results, elections may be the best way to defuse sectarian tensions and resolve disputes among feuding factions. Al-Qaeda and other extremists will try to disrupt the democratic process, while Iran will seek to manipulate it. Though the new administration has minimized the promotion of democracy as a goal, both in Iraq and elsewhere, it offers perhaps the best means of enabling the troop withdrawal that Mr. Obama has promised for next year.
How the Obama administration can respond to incipient signs of trouble.
WaPo, Sunday, April 19, 2009
IT'S BEEN only seven weeks since President Obama outlined a strategy for Iraq aimed at withdrawing most U.S. troops by the end of next summer. But already there is cause for concern. During the past month security around the country has been slipping: At least 37 people have been killed in four major attacks on security forces in the past week alone, and there have been multiple car bombings in Baghdad and other cities. Those strikes have been claimed by al-Qaeda, which appears to be attempting a comeback. But there have also been new bursts of sectarian violence among Sunni and Shiite extremists.
Following successful local elections in January, Iraqi politicians are mired in backroom squabbling over the formation of provincial governments. The Shiite-led national government has made disturbing moves against some of the Sunni leaders who led the fight against al-Qaeda. Hamstrung by the fall in oil prices, the government is having trouble meeting commitments to pay former insurgents or expand the security forces. Normally the U.S. ambassador would be deeply involved in trying to smooth over such problems, but there has been no ambassador in Baghdad since February.
It's not time to panic: U.S. commanders point out that overall, violence in Iraq is at its lowest level since the first year of the war. Iraqi Prime Minister Nouri al-Maliki, bolstered by the election outcome, remains strong and confident. But the administration needs to be alert to what is happening in Iraq -- and ready to adjust political and military plans to prevent what could easily become a downward spiral.
One early decision point involves the withdrawal timetable, which calls for U.S. troops to leave all Iraqi cities by the end of June. That pullout is looking risky in a couple of places, including the northern city of Mosul, which has never been entirely cleansed of anti-government insurgents. The U.S. commander in the area told a Pentagon briefing last week that American troops could remain in the city if the Iraqi government requests it following an ongoing review; such flexibility should be extended to other areas, if necessary.
U.S. diplomats and commanders also need to make sure that Sunni leaders -- already under renewed attack by al-Qaeda -- are treated fairly by the government. It's hard to tell from Washington whether recent arrests of some tribal leaders were justified or prudent; that's one reason why the administration's chosen ambassador, Christopher Hill, needs to get to Baghdad as soon as possible. He should be confirmed when Congress returns this week.
Mr. Hill's main focus, once he arrives, ought to be helping to ensure that Iraq's national elections, expected next January, go smoothly. Judging from January's results, elections may be the best way to defuse sectarian tensions and resolve disputes among feuding factions. Al-Qaeda and other extremists will try to disrupt the democratic process, while Iran will seek to manipulate it. Though the new administration has minimized the promotion of democracy as a goal, both in Iraq and elsewhere, it offers perhaps the best means of enabling the troop withdrawal that Mr. Obama has promised for next year.
Saturday, April 18, 2009
US State Dept on Durban Review Conference
Durban Review Conference. By Robert Wood, Acting Department Spokesman, Office of the Spokesman
US State Dept, Bureau of Public Affairs
Washington, DC, April 18, 2009
The United States is profoundly committed to ending racism and racial discrimination. This abiding commitment to the fight against racism and all forms of discrimination arises from the most painful pages of our history, and the most cherished values of our nation. We believe that people of every color and creed are born free and equal in dignity and rights and that equality and nondiscrimination are fundamental principles of international law.
The United States will work with all people and nations to build greater resolve and enduring political will to halt racism and discrimination wherever it occurs.
The United States is deeply grateful to the many country delegations, including Russia as chair, and senior United Nations officials who have worked steadfastly to improve the review conference outcome document and to re-focus the Durban Review Conference squarely on racism and discrimination. We applaud the progress that has been made. The current document is significantly improved compared with prior versions, which is an accomplishment for all who aim to build a world free of every form of discrimination.
However, the text still contains language that reaffirms in toto the Durban Declaration and Programme of Action (DDPA) from 2001, which the United States has long said it is unable to support. Its inclusion in the review conference document has the same effect as inserting that original text into the current document and re-adopting it. The DDPA singles out one particular conflict and prejudges key issues that can only be resolved in negotiations between the Israelis and Palestinians. The United States also has serious concerns with relatively new additions to the text regarding “incitement,” that run counter to the U.S. commitment to unfettered free speech.
Unfortunately, it now seems certain these remaining concerns will not be addressed in the document to be adopted by the conference next week. Therefore, with regret, the United States will not join the review conference. The United States remains fully committed to upholding the human rights of all individuals and to fighting racial discrimination of every form in every context. We will continue to work assiduously in all United Nations fora and with all nations to combat bigotry and end discrimination.
US State Dept, Bureau of Public Affairs
Washington, DC, April 18, 2009
The United States is profoundly committed to ending racism and racial discrimination. This abiding commitment to the fight against racism and all forms of discrimination arises from the most painful pages of our history, and the most cherished values of our nation. We believe that people of every color and creed are born free and equal in dignity and rights and that equality and nondiscrimination are fundamental principles of international law.
The United States will work with all people and nations to build greater resolve and enduring political will to halt racism and discrimination wherever it occurs.
The United States is deeply grateful to the many country delegations, including Russia as chair, and senior United Nations officials who have worked steadfastly to improve the review conference outcome document and to re-focus the Durban Review Conference squarely on racism and discrimination. We applaud the progress that has been made. The current document is significantly improved compared with prior versions, which is an accomplishment for all who aim to build a world free of every form of discrimination.
However, the text still contains language that reaffirms in toto the Durban Declaration and Programme of Action (DDPA) from 2001, which the United States has long said it is unable to support. Its inclusion in the review conference document has the same effect as inserting that original text into the current document and re-adopting it. The DDPA singles out one particular conflict and prejudges key issues that can only be resolved in negotiations between the Israelis and Palestinians. The United States also has serious concerns with relatively new additions to the text regarding “incitement,” that run counter to the U.S. commitment to unfettered free speech.
Unfortunately, it now seems certain these remaining concerns will not be addressed in the document to be adopted by the conference next week. Therefore, with regret, the United States will not join the review conference. The United States remains fully committed to upholding the human rights of all individuals and to fighting racial discrimination of every form in every context. We will continue to work assiduously in all United Nations fora and with all nations to combat bigotry and end discrimination.
WaPo: Stem Cell Sense - NIH research guidelines avoid some moral minefields
Stem Cell Sense. WaPo Editorial
NIH research guidelines avoid some moral minefields.
WaPo, Saturday, April 18, 2009
BY LIMITING federal funding to research on stem cells derived from embryos that were created for reproductive purposes and that were slated for disposal, the National Institutes of Health's draft guidelines, issued yesterday, offer an intelligent solution to an issue that demanded great sensitivity. While a decision with such deep moral and ethical considerations shouldn't have been left to scientists alone, the NIH outcome is a good one.
President Obama issued an executive order last month that lifted the ban on federal funding of research on stem cell lines created after Aug. 9, 2001, and he instructed the NIH to develop guidelines for the research. Because stem cells can be transformed into different kinds of cells, scientists (and quite a few hopeful patients and their loved ones) believe them to hold the key to cures for a host of debilitating diseases and conditions, such as Parkinson's. But because stem cell lines are grown from human embryos, many people have ethical or religious objections to their use. President George W. Bush proposed a compromise that limited federal funding to a set of existing stem cell lines. But they proved too few, limiting potential research.
The draft guidelines hew closely to those at other entities, such as the National Academy of Sciences. Would-be parents who go to clinics for in vitro fertilization generally create more embryos than will be implanted, and embryos not used are destroyed or kept frozen. The guidelines would allow couples to donate embryos for research, as long as they are not paid and are fully informed of their options. Federal money still wouldn't be used to create the stem cell lines from such embryos, but if that work is done with private money, federally funded research could make use of those stem cells. Above all, federal funds wouldn't be used to create embryos for use in research. After a public comment period, final guidelines will be issued by July 7.
The NIH apparently based its decision partly on scientific considerations -- that the new limitations wouldn't unduly restrict research -- and partly on other considerations. Pointing out that there is "broad public and scientific support for stem cell research" on lines derived from embryos created for reproductive purposes, the NIH's acting director, Raynard S. Kington, said that there isn't support for stem cells derived "from other sources." That political assessment really is a job for the White House. But delegation -- or abdication, depending on your point of view -- in this case produced a sensible result.
NIH research guidelines avoid some moral minefields.
WaPo, Saturday, April 18, 2009
BY LIMITING federal funding to research on stem cells derived from embryos that were created for reproductive purposes and that were slated for disposal, the National Institutes of Health's draft guidelines, issued yesterday, offer an intelligent solution to an issue that demanded great sensitivity. While a decision with such deep moral and ethical considerations shouldn't have been left to scientists alone, the NIH outcome is a good one.
President Obama issued an executive order last month that lifted the ban on federal funding of research on stem cell lines created after Aug. 9, 2001, and he instructed the NIH to develop guidelines for the research. Because stem cells can be transformed into different kinds of cells, scientists (and quite a few hopeful patients and their loved ones) believe them to hold the key to cures for a host of debilitating diseases and conditions, such as Parkinson's. But because stem cell lines are grown from human embryos, many people have ethical or religious objections to their use. President George W. Bush proposed a compromise that limited federal funding to a set of existing stem cell lines. But they proved too few, limiting potential research.
The draft guidelines hew closely to those at other entities, such as the National Academy of Sciences. Would-be parents who go to clinics for in vitro fertilization generally create more embryos than will be implanted, and embryos not used are destroyed or kept frozen. The guidelines would allow couples to donate embryos for research, as long as they are not paid and are fully informed of their options. Federal money still wouldn't be used to create the stem cell lines from such embryos, but if that work is done with private money, federally funded research could make use of those stem cells. Above all, federal funds wouldn't be used to create embryos for use in research. After a public comment period, final guidelines will be issued by July 7.
The NIH apparently based its decision partly on scientific considerations -- that the new limitations wouldn't unduly restrict research -- and partly on other considerations. Pointing out that there is "broad public and scientific support for stem cell research" on lines derived from embryos created for reproductive purposes, the NIH's acting director, Raynard S. Kington, said that there isn't support for stem cells derived "from other sources." That political assessment really is a job for the White House. But delegation -- or abdication, depending on your point of view -- in this case produced a sensible result.
J.P. Morgan Chase CEO Jamie Dimon on the lessons of Fan and Fred
'The Largest Failure'. WSJ Editorial
J.P. Morgan Chase CEO Jamie Dimon on the lessons of Fan and Fred.
WSJ, Apr 18, 2009
'Perhaps the largest regulatory failure of all time." That's how J.P. Morgan Chase CEO Jamie Dimon describes the "inadequate regulation of Fannie Mae and Freddie Mac" in his annual shareholder letter, released this week.
Mr. Dimon devotes nearly a quarter of the 28-page letter to analyzing what caused the panic of 2008, and he hands out plenty of blame all around. But he calls it "amazing" that Fannie and Freddie were allowed to grow "larger than the Federal Reserve" thanks to Uncle Sam's implicit guarantee of their obligations.
Mr. Dimon gets obviousness points for observing that Fan and Fred's regulator "clearly was not up to the task," but he's too polite, or cautious, to say why: For years, the two mortgage giants twisted arms on Capitol Hill to keep that regulator weak, and Fan and Fred's Beltway friends obliged. Today, of course, all those same enablers claim that they really did want better regulation, and it was the "other guys" who stood in the way. But that wasn't the tune that Barney Frank, for example, was singing when he advocated "rolling the dice" on Fan and Fred's "safety and soundness" in exchange for more money for affordable housing.
In his letter, Mr. Dimon raises a cry of "never again." But as we move toward creating a "systemic risk regulator" that supposedly will bring to heel two dozen of the largest and most politically savvy financial institutions in the world, the lessons of Fannie, Freddie and their hapless regulator remain all too relevant.
J.P. Morgan Chase CEO Jamie Dimon on the lessons of Fan and Fred.
WSJ, Apr 18, 2009
'Perhaps the largest regulatory failure of all time." That's how J.P. Morgan Chase CEO Jamie Dimon describes the "inadequate regulation of Fannie Mae and Freddie Mac" in his annual shareholder letter, released this week.
Mr. Dimon devotes nearly a quarter of the 28-page letter to analyzing what caused the panic of 2008, and he hands out plenty of blame all around. But he calls it "amazing" that Fannie and Freddie were allowed to grow "larger than the Federal Reserve" thanks to Uncle Sam's implicit guarantee of their obligations.
Mr. Dimon gets obviousness points for observing that Fan and Fred's regulator "clearly was not up to the task," but he's too polite, or cautious, to say why: For years, the two mortgage giants twisted arms on Capitol Hill to keep that regulator weak, and Fan and Fred's Beltway friends obliged. Today, of course, all those same enablers claim that they really did want better regulation, and it was the "other guys" who stood in the way. But that wasn't the tune that Barney Frank, for example, was singing when he advocated "rolling the dice" on Fan and Fred's "safety and soundness" in exchange for more money for affordable housing.
In his letter, Mr. Dimon raises a cry of "never again." But as we move toward creating a "systemic risk regulator" that supposedly will bring to heel two dozen of the largest and most politically savvy financial institutions in the world, the lessons of Fannie, Freddie and their hapless regulator remain all too relevant.
WaPo: Justice for the Uighurs - Chinese Muslim detainees should be welcomed into the US
Justice for the Uighurs. WaPo Editorial
Chinese Muslim detainees should be welcomed into the United States.
WaPo, Saturday, April 18, 2009
FOR THE PAST seven years, 17 men have been held at the U.S. Naval Base in Guantanamo Bay, Cuba, detainees who the U.S. government acknowledges should never have been there. They are not enemies of the United States or its allies and have not engaged in violence against U.S. or other interests. Yet these men -- ethnic Chinese Muslims known as Uighurs -- continue to be prisoners of years-old mistakes, ancient hostilities and modern-day diplomatic failures.
The United States cannot return the men to China for fear that they will be mistreated or even tortured; the Chinese government considers them part of a terrorist group and has itself detained or abused Uighurs even when there was no evidence that they engaged in violence. The Bush administration tried for years to find the Uighurs a home in a third country, but to no avail; the Chinese government has threatened to retaliate politically against any nation that offers the Uighurs a haven.
Efforts to free the Uighurs through court proceedings have fared no better. Last fall, a D.C. federal judge ordered the United States to release the men into this country, but the order was overturned in February by an appeals court that reached the legally defensible conclusion that the judge overstepped his bounds because only the executive branch and Congress have the right to admit people into the country. This month, lawyers for the Uighurs appealed to the Supreme Court. Even if the court accepts the case, a decision would be unlikely to come until next year. In the meantime, 17 innocent men will continue to be confined on an island naval base ringed by barbed wire.
We have previously urged the administration to accept one or two of the detainees as a show of good faith and in an effort to spur ambivalent allies to take in the others. But the time has come for the United States to accept full responsibility for wrongly holding the Uighurs and to act boldly to rectify this miscarriage of justice. President Obama should grant asylum to all of the Uighur detainees, subject to confirmation that they have not engaged in any acts of violence. The International Uighur Human Rights and Democracy Foundation, a well-regarded organization based in Washington, has promised to provide housing and other support for the men if they are welcomed into the country.
This may prove a delicate proposition for Mr. Obama. After all, releasing the men to foreign countries is one thing; inviting them to live next door to Americans is quite another. But the risks of allowing the Uighurs into the country are offset by evidence that they never held any animus toward the United States or its citizens and never engaged in acts of violence against the United States or its allies. So concluded the Bush administration, which determined that the men were not enemy combatants. Allowing them into the country would be a small but important step to make up for seven years of unjust and unjustifiable incarceration.
Chinese Muslim detainees should be welcomed into the United States.
WaPo, Saturday, April 18, 2009
FOR THE PAST seven years, 17 men have been held at the U.S. Naval Base in Guantanamo Bay, Cuba, detainees who the U.S. government acknowledges should never have been there. They are not enemies of the United States or its allies and have not engaged in violence against U.S. or other interests. Yet these men -- ethnic Chinese Muslims known as Uighurs -- continue to be prisoners of years-old mistakes, ancient hostilities and modern-day diplomatic failures.
The United States cannot return the men to China for fear that they will be mistreated or even tortured; the Chinese government considers them part of a terrorist group and has itself detained or abused Uighurs even when there was no evidence that they engaged in violence. The Bush administration tried for years to find the Uighurs a home in a third country, but to no avail; the Chinese government has threatened to retaliate politically against any nation that offers the Uighurs a haven.
Efforts to free the Uighurs through court proceedings have fared no better. Last fall, a D.C. federal judge ordered the United States to release the men into this country, but the order was overturned in February by an appeals court that reached the legally defensible conclusion that the judge overstepped his bounds because only the executive branch and Congress have the right to admit people into the country. This month, lawyers for the Uighurs appealed to the Supreme Court. Even if the court accepts the case, a decision would be unlikely to come until next year. In the meantime, 17 innocent men will continue to be confined on an island naval base ringed by barbed wire.
We have previously urged the administration to accept one or two of the detainees as a show of good faith and in an effort to spur ambivalent allies to take in the others. But the time has come for the United States to accept full responsibility for wrongly holding the Uighurs and to act boldly to rectify this miscarriage of justice. President Obama should grant asylum to all of the Uighur detainees, subject to confirmation that they have not engaged in any acts of violence. The International Uighur Human Rights and Democracy Foundation, a well-regarded organization based in Washington, has promised to provide housing and other support for the men if they are welcomed into the country.
This may prove a delicate proposition for Mr. Obama. After all, releasing the men to foreign countries is one thing; inviting them to live next door to Americans is quite another. But the risks of allowing the Uighurs into the country are offset by evidence that they never held any animus toward the United States or its citizens and never engaged in acts of violence against the United States or its allies. So concluded the Bush administration, which determined that the men were not enemy combatants. Allowing them into the country would be a small but important step to make up for seven years of unjust and unjustifiable incarceration.
The Ethanol Bubble Pops in Iowa - More evidence the fuel makes little economic sense
The Ethanol Bubble Pops in Iowa, by Max Schulz
More evidence the fuel makes little economic sense.
Manhattan Institute, Apr 18,. 2009
Dyersville, Iowa
In September, ethanol giant VeraSun Energy opened a refinery on the outskirts of this eastern Iowa community. Among the largest biofuels facilities in the country, the Dyersville plant could process 39 million bushels of corn and produce 110 million gallons of ethanol annually. VeraSun boasted the plant could run 24 hours a day, seven days a week to meet the demand for home-grown energy.
But the only thing happening 24-7 at the Dyersville plant these days is nothing at all. Its doors are shut and corn deliveries are turned away. Touring the facility recently, I saw dozens of rail cars sitting idle. They've been there through the long, bleak winter. Two months after Dyersville opened, VeraSun filed for bankruptcy, closing many of its 14 plants and laying off hundreds of employees. VeraSun lost $476 million in the third quarter last year.
A town of 4,000, Dyersville is best known as the location of the 1989 film "Field of Dreams." In the film, a voice urges Kevin Costner to create a baseball diamond in a cornfield and the ghosts of baseball past emerge from the ether to play ball. Audiences suspended disbelief as they were charmed by a story that blurred the lines between fantasy and reality.
That's pretty much the story of ethanol. Consumers were asked to suspend disbelief as policy makers blurred the lines between economic reality and a business model built on fantasies of a better environment and energy independence through ethanol. Notwithstanding federal subsidies and mandates that force-feed the biofuel to the driving public, ethanol is proving to be a bust.
In the fourth quarter of 2008, Aventine Renewable Energy, a large ethanol producer, lost $37 million despite selling a company record 278 million gallons of the biofuel. Last week it filed for bankruptcy. California's Pacific Ethanol lost $146 million last year and has defaulted on $250 million in loans. It recently told regulators that it will likely run out of cash by April 30.
How could this be? The federal government gives ethanol producers a generous 51-cent-a-gallon tax credit and mandates that a massive amount of their fuel be blended into the nation's gasoline supplies. And those mandates increase every year. This year the mandate is 11 billion gallons and is on its way to 36 billion gallons in 2022.
To meet this political demand, VeraSun, Pacific Ethanol, Aventine Renewable Energy and others rushed to build ethanol mills. The industry produced just four billion gallons of ethanol in 2005, so it had to add a lot of capacity in a short period of time.
Three years ago, ethanol producers made $2.30 per gallon. But with the global economic slowdown, along with a glut of ethanol on the market, by the end of 2008 ethanol producers were making a mere 25 cents per gallon. That drop forced Dyersville and other facilities to be shuttered. The industry cut more than 20% of its capacity in a few months last year.
What's more, as ethanol producers sucked in a vast amount of corn, prices of milk, eggs and other foods soared. The price of corn shot up, as did the price of products from animals -- chickens and cows -- that eat feed corn.
Texas Gov. Rick Perry reacted by standing with the cattlemen in his state to ask the Environmental Protection Agency last year to suspend part of the ethanol mandates (which it has the power to do under the 2007 energy bill). The EPA turned him down flat. The Consumer Price Index later revealed that retail food prices in 2008 were up 10% over 2006. In Mexico, rising prices led to riots over the cost of tortillas in 2007. The United Nations Food and Agricultural Organization and other international organizations issued reports last year criticizing biofuels for a spike in food prices.
Ethanol is also bad for the environment. Science magazine published an article last year by Timothy Searchinger of Princeton University, among others, that concluded that biofuels cause deforestation, which speeds climate change. The National Oceanographic and Atmospheric Administration noted in July 2007 that the ethanol boom rapidly increased the amount of fertilizer polluting the Mississippi River. And this week, University of Minnesota researchers Yi-Wen Chiu, Sangwon Suh and Brian Walseth released a study showing that in California -- a state with a water shortage -- it can take more than 1,000 gallons of water to make one gallon of ethanol. They warned that "energy security is being secured at the expense of water security."
For all the pain ethanol has caused, it displaced a mere 3% of our oil usage last year. Even if we plowed under all other crops and dedicated the country's 300 million acres of cropland to ethanol, James Jordan and James Powell of the Polytechnic University of New York estimate we would displace just 15% of our oil demand with biofuels.
But President Barack Obama, an ethanol fan, is leaving current policy in place and has set $6 billion aside in his stimulus package for federal loan guarantees for companies developing innovative energy technologies, including biofuels. It's part of his push to create "green jobs." Archer Daniels Midland and oil refiner Valero are already scavenging the husks of shuttered ethanol plants, looking for facilities on the cheap. One such facility may be the plant in Dyersville, which is for sale. Before we're through, we'll likely see another ethanol bubble.
Mr. Schulz is a senior fellow at the Manhattan Institute.
More evidence the fuel makes little economic sense.
Manhattan Institute, Apr 18,. 2009
Dyersville, Iowa
In September, ethanol giant VeraSun Energy opened a refinery on the outskirts of this eastern Iowa community. Among the largest biofuels facilities in the country, the Dyersville plant could process 39 million bushels of corn and produce 110 million gallons of ethanol annually. VeraSun boasted the plant could run 24 hours a day, seven days a week to meet the demand for home-grown energy.
But the only thing happening 24-7 at the Dyersville plant these days is nothing at all. Its doors are shut and corn deliveries are turned away. Touring the facility recently, I saw dozens of rail cars sitting idle. They've been there through the long, bleak winter. Two months after Dyersville opened, VeraSun filed for bankruptcy, closing many of its 14 plants and laying off hundreds of employees. VeraSun lost $476 million in the third quarter last year.
A town of 4,000, Dyersville is best known as the location of the 1989 film "Field of Dreams." In the film, a voice urges Kevin Costner to create a baseball diamond in a cornfield and the ghosts of baseball past emerge from the ether to play ball. Audiences suspended disbelief as they were charmed by a story that blurred the lines between fantasy and reality.
That's pretty much the story of ethanol. Consumers were asked to suspend disbelief as policy makers blurred the lines between economic reality and a business model built on fantasies of a better environment and energy independence through ethanol. Notwithstanding federal subsidies and mandates that force-feed the biofuel to the driving public, ethanol is proving to be a bust.
In the fourth quarter of 2008, Aventine Renewable Energy, a large ethanol producer, lost $37 million despite selling a company record 278 million gallons of the biofuel. Last week it filed for bankruptcy. California's Pacific Ethanol lost $146 million last year and has defaulted on $250 million in loans. It recently told regulators that it will likely run out of cash by April 30.
How could this be? The federal government gives ethanol producers a generous 51-cent-a-gallon tax credit and mandates that a massive amount of their fuel be blended into the nation's gasoline supplies. And those mandates increase every year. This year the mandate is 11 billion gallons and is on its way to 36 billion gallons in 2022.
To meet this political demand, VeraSun, Pacific Ethanol, Aventine Renewable Energy and others rushed to build ethanol mills. The industry produced just four billion gallons of ethanol in 2005, so it had to add a lot of capacity in a short period of time.
Three years ago, ethanol producers made $2.30 per gallon. But with the global economic slowdown, along with a glut of ethanol on the market, by the end of 2008 ethanol producers were making a mere 25 cents per gallon. That drop forced Dyersville and other facilities to be shuttered. The industry cut more than 20% of its capacity in a few months last year.
What's more, as ethanol producers sucked in a vast amount of corn, prices of milk, eggs and other foods soared. The price of corn shot up, as did the price of products from animals -- chickens and cows -- that eat feed corn.
Texas Gov. Rick Perry reacted by standing with the cattlemen in his state to ask the Environmental Protection Agency last year to suspend part of the ethanol mandates (which it has the power to do under the 2007 energy bill). The EPA turned him down flat. The Consumer Price Index later revealed that retail food prices in 2008 were up 10% over 2006. In Mexico, rising prices led to riots over the cost of tortillas in 2007. The United Nations Food and Agricultural Organization and other international organizations issued reports last year criticizing biofuels for a spike in food prices.
Ethanol is also bad for the environment. Science magazine published an article last year by Timothy Searchinger of Princeton University, among others, that concluded that biofuels cause deforestation, which speeds climate change. The National Oceanographic and Atmospheric Administration noted in July 2007 that the ethanol boom rapidly increased the amount of fertilizer polluting the Mississippi River. And this week, University of Minnesota researchers Yi-Wen Chiu, Sangwon Suh and Brian Walseth released a study showing that in California -- a state with a water shortage -- it can take more than 1,000 gallons of water to make one gallon of ethanol. They warned that "energy security is being secured at the expense of water security."
For all the pain ethanol has caused, it displaced a mere 3% of our oil usage last year. Even if we plowed under all other crops and dedicated the country's 300 million acres of cropland to ethanol, James Jordan and James Powell of the Polytechnic University of New York estimate we would displace just 15% of our oil demand with biofuels.
But President Barack Obama, an ethanol fan, is leaving current policy in place and has set $6 billion aside in his stimulus package for federal loan guarantees for companies developing innovative energy technologies, including biofuels. It's part of his push to create "green jobs." Archer Daniels Midland and oil refiner Valero are already scavenging the husks of shuttered ethanol plants, looking for facilities on the cheap. One such facility may be the plant in Dyersville, which is for sale. Before we're through, we'll likely see another ethanol bubble.
Mr. Schulz is a senior fellow at the Manhattan Institute.
Friday, April 17, 2009
Libertarian on EPA's Greenhouse Gases Endangerment Finding
Endangerment Finding: Legislative Hammer or Suicide Note?, by Marlo Lewis
Master Resource, April 17, 2009
EPA’s soon-to-be-published endangerment finding definitely puts a swagger in the step of energy-rationing advocates in the Administration, Congress, and environmental groups. They believe it gives them the whip hand in Congress–a hammer with which to beat opponents into supporting cap-and-tax legislation. This is too clever by half.
Yes, as explained previously, the endangerment finding will trigger a regulatory cascade through multiple provisions of the Clean Air Act (CAA). A strict, letter-of-the-law application of those provisions to carbon dioxide (CO2) and other greenhouse gases would not only raise consumer energy prices. It could also freeze economic development, even shut down much of the economy.
So, it’s not surprising that Team Obama and others think they can frighten opponents into supporting, for example, the Markey-Waxman cap-and-tax bill, which specifically precludes CAA regulation of greenhouse gases under the National Ambient Air Quality Standards (NAAQS) program, the New Source Review (NSR) preconstruction permitting programs, the Title V operating permits program, and the Hazardous Air Pollutant (HAP) program.
But the cap-and-tax faction miscalculate, because the rest of us are not caught between a rock and a hard place. We have a third option: Just say no to cap-and-tax, and then let the Administration take ownership of the rising energy costs, job losses, and GDP impacts that Obama’s EPA inflicts on the country by regulating CO2 under the CAA.
Roger Pielke Jr. concisely explains why the CO2 litigation campaign that begat Massachusetts v. EPA could and should be a political boon to Republicans:
Republicans must be drooling over the possibility that EPA will take extensive regulatory action on climate change. Why? Because the resulting political fallout associated with any actual or perceived downsides (e.g., higher energy prices) will fall entirely on Democrats and the Obama Administration. Far from being an incentive for Congress to act on its own, the looming possibility that EPA will take regulatory action is a strong incentive for Republicans to stalemate Congressional action and a nightmare scenario for Democrats.
Michael Shellenberger of the Breakthrough Institute agrees, pointing out that the Administration’s threat to regulate CO2 under the CAA unless cap-and-tax opponents come along quietly is tantamount to a promise to commit political suicide:
In other words, the White House “threat” to Republicans and moderate Democrats to regulate carbon is the equivalent of threatening your enemy with suicide. (”Don’t make me raise energy prices! You’ll really be in trouble with your voters when I raise their energy prices!”)
The CO2 litigation campaign bespeaks a fundamental contempt for the democratic process. Applying the CAA to CO2 could easily produce a regulatory regime far more costly than the Kyoto Protocol, yet without the people’s elected representatives ever voting on it. Those who instigated the Mass v. EPA case sought to substitute their will for that of Congress. They also sought to create a regulatory nightmare that Congress could fix only by adopting legislation that lawmakers would not otherwise support on the merits.
And now, this litigation strategy could blow up in their faces. ‘Tis a consummation devoutly to be wished. Republicans do have a knack for snatching defeat from the jaws of victory. But with a little coaching from energy realists (okay, a lot of coaching), we may yet protect the economy and the Constitution from Mass v. EPA.
Master Resource, April 17, 2009
EPA’s soon-to-be-published endangerment finding definitely puts a swagger in the step of energy-rationing advocates in the Administration, Congress, and environmental groups. They believe it gives them the whip hand in Congress–a hammer with which to beat opponents into supporting cap-and-tax legislation. This is too clever by half.
Yes, as explained previously, the endangerment finding will trigger a regulatory cascade through multiple provisions of the Clean Air Act (CAA). A strict, letter-of-the-law application of those provisions to carbon dioxide (CO2) and other greenhouse gases would not only raise consumer energy prices. It could also freeze economic development, even shut down much of the economy.
So, it’s not surprising that Team Obama and others think they can frighten opponents into supporting, for example, the Markey-Waxman cap-and-tax bill, which specifically precludes CAA regulation of greenhouse gases under the National Ambient Air Quality Standards (NAAQS) program, the New Source Review (NSR) preconstruction permitting programs, the Title V operating permits program, and the Hazardous Air Pollutant (HAP) program.
But the cap-and-tax faction miscalculate, because the rest of us are not caught between a rock and a hard place. We have a third option: Just say no to cap-and-tax, and then let the Administration take ownership of the rising energy costs, job losses, and GDP impacts that Obama’s EPA inflicts on the country by regulating CO2 under the CAA.
Roger Pielke Jr. concisely explains why the CO2 litigation campaign that begat Massachusetts v. EPA could and should be a political boon to Republicans:
Republicans must be drooling over the possibility that EPA will take extensive regulatory action on climate change. Why? Because the resulting political fallout associated with any actual or perceived downsides (e.g., higher energy prices) will fall entirely on Democrats and the Obama Administration. Far from being an incentive for Congress to act on its own, the looming possibility that EPA will take regulatory action is a strong incentive for Republicans to stalemate Congressional action and a nightmare scenario for Democrats.
Michael Shellenberger of the Breakthrough Institute agrees, pointing out that the Administration’s threat to regulate CO2 under the CAA unless cap-and-tax opponents come along quietly is tantamount to a promise to commit political suicide:
In other words, the White House “threat” to Republicans and moderate Democrats to regulate carbon is the equivalent of threatening your enemy with suicide. (”Don’t make me raise energy prices! You’ll really be in trouble with your voters when I raise their energy prices!”)
The CO2 litigation campaign bespeaks a fundamental contempt for the democratic process. Applying the CAA to CO2 could easily produce a regulatory regime far more costly than the Kyoto Protocol, yet without the people’s elected representatives ever voting on it. Those who instigated the Mass v. EPA case sought to substitute their will for that of Congress. They also sought to create a regulatory nightmare that Congress could fix only by adopting legislation that lawmakers would not otherwise support on the merits.
And now, this litigation strategy could blow up in their faces. ‘Tis a consummation devoutly to be wished. Republicans do have a knack for snatching defeat from the jaws of victory. But with a little coaching from energy realists (okay, a lot of coaching), we may yet protect the economy and the Constitution from Mass v. EPA.
Fighting Piracy through Nation Building?
Fighting Piracy through Nation Building?, by Christopher Preble
Cato at Liberty, Apr 17, 2009
Even though I was on vacation last week, I followed the story of the Maersk-Alabama and Captain Richard Phillips with great interest. And I exulted when three of the four pirates met their end. The safe return of the Maersk-Alabama and her entire crew was a clear win for the cause of justice, and could serve as a model. Future efforts to protect ships from pirates are likely to include some combination of greater vigilance on the part of the shipping companies and crews, in collaboration with the navies of the many different nations who have an interest in keeping the sea lanes open and free. (This is one of the themes that I develop in my new book, and that I will discuss next Monday at Cato.)
We do not need to reorient our grand strategy to deal with pirates. We don’t need to reshape the U.S. Navy to fight a motley band of young men in leaky boats. As my colleague Ben Friedman has written, piracy is a problem, but decidedly minor relative to many other global security challenges.
But some are criticizing the approach taken to resolve last week’s standoff. They say that the only way to truly eliminate the piracy problem is to attack and ultimately clean out the pirates’ sanctuaries in lawless Somalia. This “solution” fits well with the broader push within the Washington foreign policy community that would deal with our security problems by fixing failed states.
I have gone on at length, usually with my colleagues Justin Logan and Ben Friedman, on the many reasons why an overarching strategy for fixing failed states is unwise and unnecessary. I won’t expand on that thesis here, other than to point out that of all failed states in the world, Somalia is arguably the most failed. “Fixing” it would require a massive investment of personnel, money, and time — resources that would be better spent elsewhere.
Mackubin Owens offers one of the more intriguing defenses of this approach in a just published e-note for the Foreign Policy Research Institute. Owens likens a strategy of fixing Somalia to Gen. Andrew Jackson’s military operations in Florida, a story that features prominently in John Lewis Gaddis’s Surprise, Security and the American Experience. As Owens notes, when some members of President James Monroe’s cabinet wanted to punish Jackson for exceeding his mandate — in the course of his military campaign he captured and executed two British citizens accused of cavorting with the marauders who had attacked American citizens — Secretary of State John Quincy Adams jumped to Jackson’s defense and proposed a different tack. He demanded that Spain either take responsibility for cleaning up Florida or else give it up. And we all know what happened. Under the terms of Adams-Onis Treaty of 1819, Florida became a territory of the United States. Some 26 years later, it became our 27th state.
I’ve vacationed in Florida many times. Walt Disney World is wonderful for the kids; I’ve been there six times. I spent three memorable days watching March Madness in Miami a few years back. Spring training baseball is great fun. Adams couldn’t have imagined any of these things when he acquired a vast swampland; he cared only that Florida under Spanish control, or lack thereof, posed a threat.
Here is where the parallels to the present day get complicated. I’ll admit that I’ve never been to Somalia. Perhaps they have their own version of South Beach, or could have some day. But I’m frankly baffled by the mere intimation that our national security is so threatened by chaos there that we need to take ownership of the country’s — or the entire Horn of Africa’s — problems.
And yet, that is what many people believe. And this is not a new phenomenon. In many respects, we have chosen to treat all of the world’s ungoverned spaces as the modern-day equivalent of Spanish Florida.
Max Boot and Robert Kaplan compare U.S. military operations in the 21st century to the westward territorial expansion of the 19th century. In 1994, Kaplan authored one of the seminal works in this genre, “The Coming Anarchy,” in which he advised Western strategists to start concerning themselves with “what is occurring . . . throughout West Africa and much of the underdeveloped world: the withering away of central governments, the rise of tribal and regional domains, the unchecked spread of disease, and the growing pervasiveness of war.” Less than two years later, William Kristol and Robert Kagan wrote, “American hegemony is the only reliable defense against a breakdown of peace and international order.” Boot in 2003 advised Americans to unabashedly embrace imperialism. “Afghanistan and other troubled lands,” he wrote, “cry out for the sort of enlightened foreign administration once provided by self-confident Englishmen in jodhpurs and pith helmets.”
Americans have resisted such advice, and with good reason. The world will not descend down the path to total ruin if the United States hews to a restrained foreign policy focused on preserving its national security and advancing its vital interests. That is because there are other governments in other countries, pursuing similar policies aimed at preserving their security, and regional — much less global — chaos is hardly in their interests. The primary obligation of any government is to defend its citizens from threats. Curiously, our conduct in recent years suggests that U.S. policymakers doubt that other governments see their responsibilities in this way. Indeed, we have constructed and maintained a vast military largely on the grounds that we, and we alone, must police the entire planet.
In The Power Problem, I quote Machiavelli, who noted in his discourses: “Men always commit the error of not knowing where to limit their hopes, and by trusting to these rather than to a just measure of their resources, they are generally ruined.” I continue:
As Machiavelli would have predicted, the notion of what Americans must do to preserve and advance our own security has steadily expanded over the years to encompass the defense of others. Seemingly unconstrained by the resources at our disposal, we are driven by our dreams of fashioning a new global order. But we are also driven by false fears. We believe that we can only be secure if others are secure, that insecurity anywhere poses a threat to Americans everywhere. If someone on the other side of the planet sneezes, the United States is supposedly in danger of catching pneumonia. The putative cure is preventive war. Such geostrategic “hypochondria” has gotten us all into much trouble over the years. We would be wise to take measure of our relative health and vitality, and not confuse a head cold with cancer.
Cato at Liberty, Apr 17, 2009
Even though I was on vacation last week, I followed the story of the Maersk-Alabama and Captain Richard Phillips with great interest. And I exulted when three of the four pirates met their end. The safe return of the Maersk-Alabama and her entire crew was a clear win for the cause of justice, and could serve as a model. Future efforts to protect ships from pirates are likely to include some combination of greater vigilance on the part of the shipping companies and crews, in collaboration with the navies of the many different nations who have an interest in keeping the sea lanes open and free. (This is one of the themes that I develop in my new book, and that I will discuss next Monday at Cato.)
We do not need to reorient our grand strategy to deal with pirates. We don’t need to reshape the U.S. Navy to fight a motley band of young men in leaky boats. As my colleague Ben Friedman has written, piracy is a problem, but decidedly minor relative to many other global security challenges.
But some are criticizing the approach taken to resolve last week’s standoff. They say that the only way to truly eliminate the piracy problem is to attack and ultimately clean out the pirates’ sanctuaries in lawless Somalia. This “solution” fits well with the broader push within the Washington foreign policy community that would deal with our security problems by fixing failed states.
I have gone on at length, usually with my colleagues Justin Logan and Ben Friedman, on the many reasons why an overarching strategy for fixing failed states is unwise and unnecessary. I won’t expand on that thesis here, other than to point out that of all failed states in the world, Somalia is arguably the most failed. “Fixing” it would require a massive investment of personnel, money, and time — resources that would be better spent elsewhere.
Mackubin Owens offers one of the more intriguing defenses of this approach in a just published e-note for the Foreign Policy Research Institute. Owens likens a strategy of fixing Somalia to Gen. Andrew Jackson’s military operations in Florida, a story that features prominently in John Lewis Gaddis’s Surprise, Security and the American Experience. As Owens notes, when some members of President James Monroe’s cabinet wanted to punish Jackson for exceeding his mandate — in the course of his military campaign he captured and executed two British citizens accused of cavorting with the marauders who had attacked American citizens — Secretary of State John Quincy Adams jumped to Jackson’s defense and proposed a different tack. He demanded that Spain either take responsibility for cleaning up Florida or else give it up. And we all know what happened. Under the terms of Adams-Onis Treaty of 1819, Florida became a territory of the United States. Some 26 years later, it became our 27th state.
I’ve vacationed in Florida many times. Walt Disney World is wonderful for the kids; I’ve been there six times. I spent three memorable days watching March Madness in Miami a few years back. Spring training baseball is great fun. Adams couldn’t have imagined any of these things when he acquired a vast swampland; he cared only that Florida under Spanish control, or lack thereof, posed a threat.
Here is where the parallels to the present day get complicated. I’ll admit that I’ve never been to Somalia. Perhaps they have their own version of South Beach, or could have some day. But I’m frankly baffled by the mere intimation that our national security is so threatened by chaos there that we need to take ownership of the country’s — or the entire Horn of Africa’s — problems.
And yet, that is what many people believe. And this is not a new phenomenon. In many respects, we have chosen to treat all of the world’s ungoverned spaces as the modern-day equivalent of Spanish Florida.
Max Boot and Robert Kaplan compare U.S. military operations in the 21st century to the westward territorial expansion of the 19th century. In 1994, Kaplan authored one of the seminal works in this genre, “The Coming Anarchy,” in which he advised Western strategists to start concerning themselves with “what is occurring . . . throughout West Africa and much of the underdeveloped world: the withering away of central governments, the rise of tribal and regional domains, the unchecked spread of disease, and the growing pervasiveness of war.” Less than two years later, William Kristol and Robert Kagan wrote, “American hegemony is the only reliable defense against a breakdown of peace and international order.” Boot in 2003 advised Americans to unabashedly embrace imperialism. “Afghanistan and other troubled lands,” he wrote, “cry out for the sort of enlightened foreign administration once provided by self-confident Englishmen in jodhpurs and pith helmets.”
Americans have resisted such advice, and with good reason. The world will not descend down the path to total ruin if the United States hews to a restrained foreign policy focused on preserving its national security and advancing its vital interests. That is because there are other governments in other countries, pursuing similar policies aimed at preserving their security, and regional — much less global — chaos is hardly in their interests. The primary obligation of any government is to defend its citizens from threats. Curiously, our conduct in recent years suggests that U.S. policymakers doubt that other governments see their responsibilities in this way. Indeed, we have constructed and maintained a vast military largely on the grounds that we, and we alone, must police the entire planet.
In The Power Problem, I quote Machiavelli, who noted in his discourses: “Men always commit the error of not knowing where to limit their hopes, and by trusting to these rather than to a just measure of their resources, they are generally ruined.” I continue:
As Machiavelli would have predicted, the notion of what Americans must do to preserve and advance our own security has steadily expanded over the years to encompass the defense of others. Seemingly unconstrained by the resources at our disposal, we are driven by our dreams of fashioning a new global order. But we are also driven by false fears. We believe that we can only be secure if others are secure, that insecurity anywhere poses a threat to Americans everywhere. If someone on the other side of the planet sneezes, the United States is supposedly in danger of catching pneumonia. The putative cure is preventive war. Such geostrategic “hypochondria” has gotten us all into much trouble over the years. We would be wise to take measure of our relative health and vitality, and not confuse a head cold with cancer.
When Doctors Opt Out - "We already know what government-run health care looks like"
When Doctors Opt Out. By Marc Siegel
We already know what government-run health care looks like.
WSJ, Apr 17, 2009
Here's something that has gotten lost in the drive to institute universal health insurance: Health insurance doesn't automatically lead to health care. And with more and more doctors dropping out of one insurance plan or another, especially government plans, there is no guarantee that you will be able to see a physician no matter what coverage you have.
Consider that the Medicare Payment Advisory Commission reported in 2008 that 28% of Medicare beneficiaries looking for a primary care physician had trouble finding one, up from 24% the year before. The reasons are clear: A 2008 survey by the Texas Medical Association, for example, found that only 38% of primary-care doctors in Texas took new Medicare patients. The statistics are similar in New York state, where I practice medicine.
More and more of my fellow doctors are turning away Medicare patients because of the diminished reimbursements and the growing delay in payments. I've had several new Medicare patients come to my office in the last few months with multiple diseases and long lists of medications simply because their longtime provider -- who they liked -- abruptly stopped taking Medicare. One of the top mammographers in New York City works in my office building, but she no longer accepts Medicare and charges patients more than $300 cash for each procedure. I continue to send my elderly women patients downstairs for the test because she is so good, but no one is happy about paying.
The problem is even worse with Medicaid. A 2005 Community Tracking Physician survey showed that only 50% of physicians accept this insurance. I am now one of the ones who doesn't take it. I realized a few years ago that it wasn't worth the money to file the paperwork for the $25 or less that I received for an office visit. HMOs are problematic as well. Recent surveys from New York show a 10% yearly dropout rate from the state's largest HMO, the Health Insurance Plan of New York (HIP), and a 14% drop-out rate from Health Net of New York, another big HMO.
The dropout rate is less at major medical centers such as New York University's Langone Medical Center where I work, or Mount Sinai Medical Center, because larger physician networks have more leverage when choosing health plans. Still, I am frequently hamstrung as I try to find a good surgeon or specialist to refer one of my patients to.
Overall, 11% of the doctors at NYU Langone don't participate in at least two insurance plans -- Aetna or Blue Cross, for instance -- so I end up not being able to refer my patients to some of our top specialists. This problem, in addition to the mass of paperwork and diminishing reimbursements, is enough of a reason for me to consider dropping out as well.
Bottom line: None of the current plans, government or private, provide my patients with the care they need. And the care that is provided is increasingly expensive and requires a big battle for approvals. Of course, we're promised by the Obama administration that universal health insurance will avoid all these problems. But how is that possible when you consider that the medical turnstiles will be the same as they are now, only they will be clogged with more and more patients? The doctors that remain in this expanded system will be even more overwhelmed than we are now.
I wouldn't want to be a patient when that happens.
Dr. Siegel, an internist and associate professor of medicine at the NYU Langone Medical Center, is a Fox News medical contributor.
We already know what government-run health care looks like.
WSJ, Apr 17, 2009
Here's something that has gotten lost in the drive to institute universal health insurance: Health insurance doesn't automatically lead to health care. And with more and more doctors dropping out of one insurance plan or another, especially government plans, there is no guarantee that you will be able to see a physician no matter what coverage you have.
Consider that the Medicare Payment Advisory Commission reported in 2008 that 28% of Medicare beneficiaries looking for a primary care physician had trouble finding one, up from 24% the year before. The reasons are clear: A 2008 survey by the Texas Medical Association, for example, found that only 38% of primary-care doctors in Texas took new Medicare patients. The statistics are similar in New York state, where I practice medicine.
More and more of my fellow doctors are turning away Medicare patients because of the diminished reimbursements and the growing delay in payments. I've had several new Medicare patients come to my office in the last few months with multiple diseases and long lists of medications simply because their longtime provider -- who they liked -- abruptly stopped taking Medicare. One of the top mammographers in New York City works in my office building, but she no longer accepts Medicare and charges patients more than $300 cash for each procedure. I continue to send my elderly women patients downstairs for the test because she is so good, but no one is happy about paying.
The problem is even worse with Medicaid. A 2005 Community Tracking Physician survey showed that only 50% of physicians accept this insurance. I am now one of the ones who doesn't take it. I realized a few years ago that it wasn't worth the money to file the paperwork for the $25 or less that I received for an office visit. HMOs are problematic as well. Recent surveys from New York show a 10% yearly dropout rate from the state's largest HMO, the Health Insurance Plan of New York (HIP), and a 14% drop-out rate from Health Net of New York, another big HMO.
The dropout rate is less at major medical centers such as New York University's Langone Medical Center where I work, or Mount Sinai Medical Center, because larger physician networks have more leverage when choosing health plans. Still, I am frequently hamstrung as I try to find a good surgeon or specialist to refer one of my patients to.
Overall, 11% of the doctors at NYU Langone don't participate in at least two insurance plans -- Aetna or Blue Cross, for instance -- so I end up not being able to refer my patients to some of our top specialists. This problem, in addition to the mass of paperwork and diminishing reimbursements, is enough of a reason for me to consider dropping out as well.
Bottom line: None of the current plans, government or private, provide my patients with the care they need. And the care that is provided is increasingly expensive and requires a big battle for approvals. Of course, we're promised by the Obama administration that universal health insurance will avoid all these problems. But how is that possible when you consider that the medical turnstiles will be the same as they are now, only they will be clogged with more and more patients? The doctors that remain in this expanded system will be even more overwhelmed than we are now.
I wouldn't want to be a patient when that happens.
Dr. Siegel, an internist and associate professor of medicine at the NYU Langone Medical Center, is a Fox News medical contributor.
Small Cars Are Dangerous Cars - Fuel economy zealots can kill you
Small Cars Are Dangerous Cars. By Sam Kazman
Fuel economy zealots can kill you.
CEI, Apr 17, 2009
The super-high efficiency minicar has become the Holy Grail for many environmentalists. But on Tuesday, a new study on minicar safety tossed some cold water on the dream. The Insurance Institute for Highway Safety (IIHS) reported that in a series of test crashes between minicars and midsize models, minis such as the Smart car provided significantly less protection for their passengers.
The tests did not involve the much ballyhooed mismatches between subcompacts and Hummers, but measured the effect of relatively modest differences in size and weight. Even though the Smart car and other minis such as the Honda Fit and the Toyota Yaris have fared relatively well in single-car crash tests, they performed poorly in these two-car frontal offset collisions. In the words of IIHS president Adrian Lund, "though much safer than they were a few years ago, minicars as a group do a comparatively poor job of protecting people in crashes, simply because they're smaller and lighter."
That difference is reflected in the real world. The death rate in minis in multi-vehicle crashes is almost twice as high as that of large cars. And in single-vehicle crashes, where there's no oversized second vehicle to blame, the difference is even greater: Passengers in minis suffered three times as many deaths as in large cars.
Given the nonstop pronouncements we've been hearing about the green promise of high-efficiency cars, these results were shocking to some. But not to IIHS. The Institute has long been reporting similar results from other tests, and its publications candidly advise that, when it comes to safety, larger and heavier cars are generally better.
That's not what advocates of higher fuel-economy standards want to hear. Greater weight may increase crashworthiness, but it also decreases miles per gallon, so there's an inevitable trade-off between safety and efficiency. A 2002 National Research Council study found that the federal Corporate Average Fuel Economy (CAFE) standards contributed to about 2,000 deaths per year through their restrictions on car size and weight. But amazingly, with the exception of IIHS, there's practically no one else providing information on the size-safety issue:
- Not the National Highway Traffic Safety Administration, which has a highly dubious track record on CAFE. In a 1992 lawsuit filed by the Competitive Enterprise Institute, and Consumer Alert, a federal appeals court found the agency guilty of using "mumbo jumbo" and "legerdemain" to conceal CAFE's lethal effects.
- Not the Environmental Protection Agency, which is about to become a major partner in setting CAFE standards. EPA is often fixated on minute risks, such as radon in drinking water, but don't expect it to admit to CAFE's dangers. Its official mission may be "to protect human health and the environment," but its operating philosophy seems to be "not necessarily in that order."
- Not Ralph Nader and his allied traffic safety groups, which are often CAFE's most energetic cheerleaders. Decades ago, Mr. Nader and his colleagues repeatedly warned of the hazards of small cars. The Center for Auto Safety's 1972 book "Small -- On Safety," noted "the inherent limitations" that "small size and light weight" impose on crashworthiness. But in the 1990s both Mr. Nader and the Center reversed their position. Why? Because CAFE presented them with a stark choice between more government power and more safety. They went for more power.
- Not Consumer Reports, which has consistently failed to mention the importance of size and weight in discussing how to choose a safer car. Though it is regarded as the information bible by many car buyers, not a single one of its annual auto issues in the last five years has touched on this topic.
As the National Research Council reported, the current CAFE program -- 27.5 mpg for passenger cars -- contributed to about 2,000 deaths. But driving is going to get even more lethal over the next decade: CAFE standards will be raised to a 35 mpg combined average for cars and light trucks. And with the notable exception of IIHS, information about those risks may be hard to come by.
Mr. Kazman is general counsel of the Competitive Enterprise Institute.
Fuel economy zealots can kill you.
CEI, Apr 17, 2009
The super-high efficiency minicar has become the Holy Grail for many environmentalists. But on Tuesday, a new study on minicar safety tossed some cold water on the dream. The Insurance Institute for Highway Safety (IIHS) reported that in a series of test crashes between minicars and midsize models, minis such as the Smart car provided significantly less protection for their passengers.
The tests did not involve the much ballyhooed mismatches between subcompacts and Hummers, but measured the effect of relatively modest differences in size and weight. Even though the Smart car and other minis such as the Honda Fit and the Toyota Yaris have fared relatively well in single-car crash tests, they performed poorly in these two-car frontal offset collisions. In the words of IIHS president Adrian Lund, "though much safer than they were a few years ago, minicars as a group do a comparatively poor job of protecting people in crashes, simply because they're smaller and lighter."
That difference is reflected in the real world. The death rate in minis in multi-vehicle crashes is almost twice as high as that of large cars. And in single-vehicle crashes, where there's no oversized second vehicle to blame, the difference is even greater: Passengers in minis suffered three times as many deaths as in large cars.
Given the nonstop pronouncements we've been hearing about the green promise of high-efficiency cars, these results were shocking to some. But not to IIHS. The Institute has long been reporting similar results from other tests, and its publications candidly advise that, when it comes to safety, larger and heavier cars are generally better.
That's not what advocates of higher fuel-economy standards want to hear. Greater weight may increase crashworthiness, but it also decreases miles per gallon, so there's an inevitable trade-off between safety and efficiency. A 2002 National Research Council study found that the federal Corporate Average Fuel Economy (CAFE) standards contributed to about 2,000 deaths per year through their restrictions on car size and weight. But amazingly, with the exception of IIHS, there's practically no one else providing information on the size-safety issue:
- Not the National Highway Traffic Safety Administration, which has a highly dubious track record on CAFE. In a 1992 lawsuit filed by the Competitive Enterprise Institute, and Consumer Alert, a federal appeals court found the agency guilty of using "mumbo jumbo" and "legerdemain" to conceal CAFE's lethal effects.
- Not the Environmental Protection Agency, which is about to become a major partner in setting CAFE standards. EPA is often fixated on minute risks, such as radon in drinking water, but don't expect it to admit to CAFE's dangers. Its official mission may be "to protect human health and the environment," but its operating philosophy seems to be "not necessarily in that order."
- Not Ralph Nader and his allied traffic safety groups, which are often CAFE's most energetic cheerleaders. Decades ago, Mr. Nader and his colleagues repeatedly warned of the hazards of small cars. The Center for Auto Safety's 1972 book "Small -- On Safety," noted "the inherent limitations" that "small size and light weight" impose on crashworthiness. But in the 1990s both Mr. Nader and the Center reversed their position. Why? Because CAFE presented them with a stark choice between more government power and more safety. They went for more power.
- Not Consumer Reports, which has consistently failed to mention the importance of size and weight in discussing how to choose a safer car. Though it is regarded as the information bible by many car buyers, not a single one of its annual auto issues in the last five years has touched on this topic.
As the National Research Council reported, the current CAFE program -- 27.5 mpg for passenger cars -- contributed to about 2,000 deaths. But driving is going to get even more lethal over the next decade: CAFE standards will be raised to a 35 mpg combined average for cars and light trucks. And with the notable exception of IIHS, information about those risks may be hard to come by.
Mr. Kazman is general counsel of the Competitive Enterprise Institute.
Real Chinese middle class and the McKinsey paper
Real Chinese middle class and the McKinsey paper
China Solved, Apr 16, 2009
If you haven’t read the McKinsey paper on China’s Wealthy – take a look. It’s a beautiful publication – and really reinforces the notion of China as the new super-consumer. The paper is full of tasteful shots of young, attractive Chinese people buying wine together and enjoying one another’s company in shopping malls.
But what caught my eye was on page 9 - the size of wealthy population. Less than 1% of urban Chinese households are wealthy – compared to 10% in US, Germany and Japan. But the Chinese are growing their wealthy component fast – around 16% per year. So we can expect China’s wealthy to rise to maybe 2% the population in 5 years. McKinsey says 4 million households by 2015. It’s not a huge number – but China is a developing economy and maybe McK set the bar too high.
How do they define ‘wealthy’ in China? In a footnote on page 8, McKinsey identifies as wealthy the 1.6 million Chinese earning 250,000 rmb per year or more. Unless I get my basic arithmetic wrong (and it’s been known to happen) we’re talking about people earning upwards of 20,800 rmb per month – or just shy of US$40 K a year.
The hopes of the commercial universe are riding on them – this small band of brave uber-consumers.
The Real Chinese Middle Class vs. the Imagined Chinese Middle Class
It may not have been their intent, but the McKinsey report demonstrates just how thin the upscale Chinese market is. If your business model used to be tailored to a ‘middle class expat’ market that is rapidly disappearing, then you’re already finding that the ‘middle class Chinese’ market is both unwilling and unable to fill the void. McKinsey’s “wealthy Chinese” aren’t packing that much of a punch in terms of numbers or spending potential.
Many westerners leaf through McKinsey type reports and conclude that China can support a lot more high-end spending than it really can. China per capita GDP for 2008 was in the neighborhood of US$3,000. They’re doing great – when I first came here it was barely $1800. Kudos to you China. Kudos.
But we’ve got to be careful which myths we allow ourselves to believe. The notion that an army of Chinese super-spenders with piles of disposable income saving are mobilizing to rescue the global economy – and our favorite little Shanghai bistro – is just wishful thinking. If your China business model still includes lots of foot traffic from “middle class Chinese earning 50 or 60,000 rmb / month “, then you’ve got to go back to the drawing board. Those days are over – and they are not likely to come back any time soon.
China Solved, Apr 16, 2009
If you haven’t read the McKinsey paper on China’s Wealthy – take a look. It’s a beautiful publication – and really reinforces the notion of China as the new super-consumer. The paper is full of tasteful shots of young, attractive Chinese people buying wine together and enjoying one another’s company in shopping malls.
But what caught my eye was on page 9 - the size of wealthy population. Less than 1% of urban Chinese households are wealthy – compared to 10% in US, Germany and Japan. But the Chinese are growing their wealthy component fast – around 16% per year. So we can expect China’s wealthy to rise to maybe 2% the population in 5 years. McKinsey says 4 million households by 2015. It’s not a huge number – but China is a developing economy and maybe McK set the bar too high.
How do they define ‘wealthy’ in China? In a footnote on page 8, McKinsey identifies as wealthy the 1.6 million Chinese earning 250,000 rmb per year or more. Unless I get my basic arithmetic wrong (and it’s been known to happen) we’re talking about people earning upwards of 20,800 rmb per month – or just shy of US$40 K a year.
The hopes of the commercial universe are riding on them – this small band of brave uber-consumers.
The Real Chinese Middle Class vs. the Imagined Chinese Middle Class
It may not have been their intent, but the McKinsey report demonstrates just how thin the upscale Chinese market is. If your business model used to be tailored to a ‘middle class expat’ market that is rapidly disappearing, then you’re already finding that the ‘middle class Chinese’ market is both unwilling and unable to fill the void. McKinsey’s “wealthy Chinese” aren’t packing that much of a punch in terms of numbers or spending potential.
Many westerners leaf through McKinsey type reports and conclude that China can support a lot more high-end spending than it really can. China per capita GDP for 2008 was in the neighborhood of US$3,000. They’re doing great – when I first came here it was barely $1800. Kudos to you China. Kudos.
But we’ve got to be careful which myths we allow ourselves to believe. The notion that an army of Chinese super-spenders with piles of disposable income saving are mobilizing to rescue the global economy – and our favorite little Shanghai bistro – is just wishful thinking. If your China business model still includes lots of foot traffic from “middle class Chinese earning 50 or 60,000 rmb / month “, then you’ve got to go back to the drawing board. Those days are over – and they are not likely to come back any time soon.
Hayden & Mukasey: The President Ties His Own Hands on Terror
The President Ties His Own Hands on Terror. By Michael Hayden and Michael B Mukasey
The point of interrogation is intelligence, not confession.
WSJ, Apr 17, 2009
The Obama administration has declassified and released opinions of the Justice Department's Office of Legal Counsel (OLC) given in 2005 and earlier that analyze the legality of interrogation techniques authorized for use by the CIA. Those techniques were applied only when expressly permitted by the director, and are described in these opinions in detail, along with their limits and the safeguards applied to them. AP
The release of these opinions was unnecessary as a legal matter, and is unsound as a matter of policy. Its effect will be to invite the kind of institutional timidity and fear of recrimination that weakened intelligence gathering in the past, and that we came sorely to regret on Sept. 11, 2001.
Proponents of the release have argued that the techniques have been abandoned and thus there is no point in keeping them secret any longer; that they were in any event ineffective; that their disclosure was somehow legally compelled; and that they cost us more in the coin of world opinion than they were worth. None of these claims survives scrutiny.
Soon after he was sworn in, President Barack Obama signed an executive order that suspended use of these techniques and confined not only the military but all U.S. agencies -- including the CIA -- to the interrogation limits set in the Army Field Manual. This suspension was accompanied by a commitment to further study the interrogation program, and government personnel were cautioned that they could no longer rely on earlier opinions of the OLC.
Although evidence shows that the Army Field Manual, which is available online, is already used by al Qaeda for training purposes, it was certainly the president's right to suspend use of any technique. However, public disclosure of the OLC opinions, and thus of the techniques themselves, assures that terrorists are now aware of the absolute limit of what the U.S. government could do to extract information from them, and can supplement their training accordingly and thus diminish the effectiveness of these techniques as they have the ones in the Army Field Manual.
Moreover, disclosure of the details of the program pre-empts the study of the president's task force and assures that the suspension imposed by the president's executive order is effectively permanent. There would be little point in the president authorizing measures whose nature and precise limits have already been disclosed in detail to those whose resolve we hope to overcome. This conflicts with the sworn promise of the current director of the CIA, Leon Panetta, who testified in aid of securing Senate confirmation that if he thought he needed additional authority to conduct interrogation to get necessary information, he would seek it from the president. By allowing this disclosure, President Obama has tied not only his own hands but also the hands of any future administration faced with the prospect of attack.
Disclosure of the techniques is likely to be met by faux outrage, and is perfectly packaged for media consumption. It will also incur the utter contempt of our enemies. Somehow, it seems unlikely that the people who beheaded Nicholas Berg and Daniel Pearl, and have tortured and slain other American captives, are likely to be shamed into giving up violence by the news that the U.S. will no longer interrupt the sleep cycle of captured terrorists even to help elicit intelligence that could save the lives of its citizens.
Which brings us to the next of the justifications for disclosing and thus abandoning these measures: that they don't work anyway, and that those who are subjected to them will simply make up information in order to end their ordeal. This ignorant view of how interrogations are conducted is belied by both experience and common sense. If coercive interrogation had been administered to obtain confessions, one might understand the argument. Khalid Sheikh Mohammed (KSM), who organized the Sept. 11, 2001 attacks, among others, and who has boasted of having beheaded Daniel Pearl, could eventually have felt pressed to provide a false confession. But confessions aren't the point. Intelligence is. Interrogation is conducted by using such obvious approaches as asking questions whose correct answers are already known and only when truthful information is provided proceeding to what may not be known. Moreover, intelligence can be verified, correlated and used to get information from other detainees, and has been; none of this information is used in isolation.
The terrorist Abu Zubaydah (sometimes derided as a low-level operative of questionable reliability, but who was in fact close to KSM and other senior al Qaeda leaders) disclosed some information voluntarily. But he was coerced into disclosing information that led to the capture of Ramzi bin al Shibh, another of the planners of Sept. 11, who in turn disclosed information which -- when combined with what was learned from Abu Zubaydah -- helped lead to the capture of KSM and other senior terrorists, and the disruption of follow-on plots aimed at both Europe and the U.S. Details of these successes, and the methods used to obtain them, were disclosed repeatedly in more than 30 congressional briefings and hearings beginning in 2002, and open to all members of the Intelligence Committees of both Houses of Congress beginning in September 2006. Any protestation of ignorance of those details, particularly by members of those committees, is pretense.
The techniques themselves were used selectively against only a small number of hard-core prisoners who successfully resisted other forms of interrogation, and then only with the explicit authorization of the director of the CIA. Of the thousands of unlawful combatants captured by the U.S., fewer than 100 were detained and questioned in the CIA program. Of those, fewer than one-third were subjected to any of the techniques discussed in these opinions. As already disclosed by Director Hayden, as late as 2006, even with the growing success of other intelligence tools, fully half of the government's knowledge about the structure and activities of al Qaeda came from those interrogations.
Nor was there any legal reason compelling such disclosure. To be sure, the American Civil Liberties Union has sued under the Freedom of Information Act to obtain copies of these and other memoranda, but the government until now has successfully resisted such lawsuits. Even when the government disclosed that three members of al Qaeda had been subjected to waterboarding but that the technique was no longer part of the CIA interrogation program, the court sustained the government's argument that the precise details of how it was done, including limits and safeguards, could remain classified against the possibility that some future president may authorize its use. Therefore, notwithstanding the suggestion that disclosure was somehow legally compelled, there was no legal impediment to the Justice Department making the same argument even with respect to any techniques that remained in the CIA program until last January.
There is something of the self-fulfilling prophecy in the claim that our interrogation of some unlawful combatants beyond the limits set in the Army Field Manual has disgraced us before the world. Such a claim often conflates interrogation with the sadism engaged in by some soldiers at Abu Ghraib, an incident that had nothing whatever to do with intelligence gathering. The limits of the Army Field Manual are entirely appropriate for young soldiers, for the conditions in which they operate, for the detainees they routinely question, and for the kinds of tactically relevant information they pursue. Those limits are not appropriate, however, for more experienced people in controlled circumstances with high-value detainees. Indeed, the Army Field Manual was created with awareness that there was an alternative protocol for high-value detainees.
In addition, there were those who believed that the U.S. deserved what it got on Sept. 11, 2001. Such people, and many who purport to speak for world opinion, were resourceful both before and after the Sept. 11 attacks in crafting reasons to resent America's role as a superpower. Recall also that the first World Trade Center bombing in 1993, the attacks on our embassies in Kenya and Tanzania, the punctiliously correct trials of defendants in connection with those incidents, and the bombing of the USS Cole took place long before the advent of CIA interrogations, the invasion of Saddam Hussein's Iraq, or the many other purported grievances asserted over the past eight years.
The effect of this disclosure on the morale and effectiveness of many in the intelligence community is not hard to predict. Those charged with the responsibility of gathering potentially lifesaving information from unwilling captives are now told essentially that any legal opinion they get as to the lawfulness of their activity is only as durable as political fashion permits. Even with a seemingly binding opinion in hand, which future CIA operations personnel would take the risk? There would be no wink, no nod, no handshake that would convince them that legal guidance is durable. Any president who wants to apply such techniques without such a binding and durable legal opinion had better be prepared to apply them himself.
Beyond that, anyone in government who seeks an opinion from the OLC as to the propriety of any action, or who authors an opinion for the OLC, is on notice henceforth that such a request for advice, and the advice itself, is now more likely than before to be subject after the fact to public and partisan criticism. It is hard to see how that will promote candor either from those who should be encouraged to ask for advice before they act, or from those who must give it.
In his book "The Terror Presidency," Jack Goldsmith describes the phenomenon we are now experiencing, and its inevitable effect, referring to what he calls "cycles of timidity and aggression" that have weakened intelligence gathering in the past. Politicians pressure the intelligence community to push to the legal limit, and then cast accusations when aggressiveness goes out of style, thereby encouraging risk aversion, and then, as occurred in the wake of 9/11, criticizing the intelligence community for feckless timidity. He calls these cycles "a terrible problem for our national security." Indeed they are, and the precipitous release of these OLC opinions simply makes the problem worse.
Gen. Hayden was director of the Central Intelligence Agency from 2006 to 2009. Mr. Mukasey was attorney general of the United States from 2007 to 2009.
The point of interrogation is intelligence, not confession.
WSJ, Apr 17, 2009
The Obama administration has declassified and released opinions of the Justice Department's Office of Legal Counsel (OLC) given in 2005 and earlier that analyze the legality of interrogation techniques authorized for use by the CIA. Those techniques were applied only when expressly permitted by the director, and are described in these opinions in detail, along with their limits and the safeguards applied to them. AP
The release of these opinions was unnecessary as a legal matter, and is unsound as a matter of policy. Its effect will be to invite the kind of institutional timidity and fear of recrimination that weakened intelligence gathering in the past, and that we came sorely to regret on Sept. 11, 2001.
Proponents of the release have argued that the techniques have been abandoned and thus there is no point in keeping them secret any longer; that they were in any event ineffective; that their disclosure was somehow legally compelled; and that they cost us more in the coin of world opinion than they were worth. None of these claims survives scrutiny.
Soon after he was sworn in, President Barack Obama signed an executive order that suspended use of these techniques and confined not only the military but all U.S. agencies -- including the CIA -- to the interrogation limits set in the Army Field Manual. This suspension was accompanied by a commitment to further study the interrogation program, and government personnel were cautioned that they could no longer rely on earlier opinions of the OLC.
Although evidence shows that the Army Field Manual, which is available online, is already used by al Qaeda for training purposes, it was certainly the president's right to suspend use of any technique. However, public disclosure of the OLC opinions, and thus of the techniques themselves, assures that terrorists are now aware of the absolute limit of what the U.S. government could do to extract information from them, and can supplement their training accordingly and thus diminish the effectiveness of these techniques as they have the ones in the Army Field Manual.
Moreover, disclosure of the details of the program pre-empts the study of the president's task force and assures that the suspension imposed by the president's executive order is effectively permanent. There would be little point in the president authorizing measures whose nature and precise limits have already been disclosed in detail to those whose resolve we hope to overcome. This conflicts with the sworn promise of the current director of the CIA, Leon Panetta, who testified in aid of securing Senate confirmation that if he thought he needed additional authority to conduct interrogation to get necessary information, he would seek it from the president. By allowing this disclosure, President Obama has tied not only his own hands but also the hands of any future administration faced with the prospect of attack.
Disclosure of the techniques is likely to be met by faux outrage, and is perfectly packaged for media consumption. It will also incur the utter contempt of our enemies. Somehow, it seems unlikely that the people who beheaded Nicholas Berg and Daniel Pearl, and have tortured and slain other American captives, are likely to be shamed into giving up violence by the news that the U.S. will no longer interrupt the sleep cycle of captured terrorists even to help elicit intelligence that could save the lives of its citizens.
Which brings us to the next of the justifications for disclosing and thus abandoning these measures: that they don't work anyway, and that those who are subjected to them will simply make up information in order to end their ordeal. This ignorant view of how interrogations are conducted is belied by both experience and common sense. If coercive interrogation had been administered to obtain confessions, one might understand the argument. Khalid Sheikh Mohammed (KSM), who organized the Sept. 11, 2001 attacks, among others, and who has boasted of having beheaded Daniel Pearl, could eventually have felt pressed to provide a false confession. But confessions aren't the point. Intelligence is. Interrogation is conducted by using such obvious approaches as asking questions whose correct answers are already known and only when truthful information is provided proceeding to what may not be known. Moreover, intelligence can be verified, correlated and used to get information from other detainees, and has been; none of this information is used in isolation.
The terrorist Abu Zubaydah (sometimes derided as a low-level operative of questionable reliability, but who was in fact close to KSM and other senior al Qaeda leaders) disclosed some information voluntarily. But he was coerced into disclosing information that led to the capture of Ramzi bin al Shibh, another of the planners of Sept. 11, who in turn disclosed information which -- when combined with what was learned from Abu Zubaydah -- helped lead to the capture of KSM and other senior terrorists, and the disruption of follow-on plots aimed at both Europe and the U.S. Details of these successes, and the methods used to obtain them, were disclosed repeatedly in more than 30 congressional briefings and hearings beginning in 2002, and open to all members of the Intelligence Committees of both Houses of Congress beginning in September 2006. Any protestation of ignorance of those details, particularly by members of those committees, is pretense.
The techniques themselves were used selectively against only a small number of hard-core prisoners who successfully resisted other forms of interrogation, and then only with the explicit authorization of the director of the CIA. Of the thousands of unlawful combatants captured by the U.S., fewer than 100 were detained and questioned in the CIA program. Of those, fewer than one-third were subjected to any of the techniques discussed in these opinions. As already disclosed by Director Hayden, as late as 2006, even with the growing success of other intelligence tools, fully half of the government's knowledge about the structure and activities of al Qaeda came from those interrogations.
Nor was there any legal reason compelling such disclosure. To be sure, the American Civil Liberties Union has sued under the Freedom of Information Act to obtain copies of these and other memoranda, but the government until now has successfully resisted such lawsuits. Even when the government disclosed that three members of al Qaeda had been subjected to waterboarding but that the technique was no longer part of the CIA interrogation program, the court sustained the government's argument that the precise details of how it was done, including limits and safeguards, could remain classified against the possibility that some future president may authorize its use. Therefore, notwithstanding the suggestion that disclosure was somehow legally compelled, there was no legal impediment to the Justice Department making the same argument even with respect to any techniques that remained in the CIA program until last January.
There is something of the self-fulfilling prophecy in the claim that our interrogation of some unlawful combatants beyond the limits set in the Army Field Manual has disgraced us before the world. Such a claim often conflates interrogation with the sadism engaged in by some soldiers at Abu Ghraib, an incident that had nothing whatever to do with intelligence gathering. The limits of the Army Field Manual are entirely appropriate for young soldiers, for the conditions in which they operate, for the detainees they routinely question, and for the kinds of tactically relevant information they pursue. Those limits are not appropriate, however, for more experienced people in controlled circumstances with high-value detainees. Indeed, the Army Field Manual was created with awareness that there was an alternative protocol for high-value detainees.
In addition, there were those who believed that the U.S. deserved what it got on Sept. 11, 2001. Such people, and many who purport to speak for world opinion, were resourceful both before and after the Sept. 11 attacks in crafting reasons to resent America's role as a superpower. Recall also that the first World Trade Center bombing in 1993, the attacks on our embassies in Kenya and Tanzania, the punctiliously correct trials of defendants in connection with those incidents, and the bombing of the USS Cole took place long before the advent of CIA interrogations, the invasion of Saddam Hussein's Iraq, or the many other purported grievances asserted over the past eight years.
The effect of this disclosure on the morale and effectiveness of many in the intelligence community is not hard to predict. Those charged with the responsibility of gathering potentially lifesaving information from unwilling captives are now told essentially that any legal opinion they get as to the lawfulness of their activity is only as durable as political fashion permits. Even with a seemingly binding opinion in hand, which future CIA operations personnel would take the risk? There would be no wink, no nod, no handshake that would convince them that legal guidance is durable. Any president who wants to apply such techniques without such a binding and durable legal opinion had better be prepared to apply them himself.
Beyond that, anyone in government who seeks an opinion from the OLC as to the propriety of any action, or who authors an opinion for the OLC, is on notice henceforth that such a request for advice, and the advice itself, is now more likely than before to be subject after the fact to public and partisan criticism. It is hard to see how that will promote candor either from those who should be encouraged to ask for advice before they act, or from those who must give it.
In his book "The Terror Presidency," Jack Goldsmith describes the phenomenon we are now experiencing, and its inevitable effect, referring to what he calls "cycles of timidity and aggression" that have weakened intelligence gathering in the past. Politicians pressure the intelligence community to push to the legal limit, and then cast accusations when aggressiveness goes out of style, thereby encouraging risk aversion, and then, as occurred in the wake of 9/11, criticizing the intelligence community for feckless timidity. He calls these cycles "a terrible problem for our national security." Indeed they are, and the precipitous release of these OLC opinions simply makes the problem worse.
Gen. Hayden was director of the Central Intelligence Agency from 2006 to 2009. Mr. Mukasey was attorney general of the United States from 2007 to 2009.
Black liquor, paper industry and Congressional rewards for the right behavior
Alternative Fuel Folly. By Kimberley A Strassel
WSJ, Apr 17, 2009
Every so often Washington throws out a controversy that brilliantly illustrates everything wrong with Washington. Consider the brewing outrage over "black liquor."
This is the tale of how a supposedly innocuous federal subsidy to encourage "alternative energy" has, in a few short years, ballooned into a huge taxpayer liability and a potential trade dispute, even as it has distorted markets and led to greater fossil-fuel use. Think of it as a harbinger of the unintended consequences that will accompany the Obama energy revolution.
Back in 2005, Congress passed a highway bill. In its wisdom, it created a subsidy that gave some entities a 50-cents-a-gallon tax credit for blending "alternative" fuels with traditional fossil fuels. The law restricted which businesses could apply and limited the credit to use of fuel in motor vehicles.
Not long after, some members of Congress got to wondering if they couldn't tweak this credit in a way that would benefit specific home-state industries. In 2007, Congress expanded the types of alternative fuels that counted for the credit, while also allowing "non-mobile" entities to apply. This meant that Alaskan fish-processing facilities, for instance, which run their boilers off fish oil, might now also claim the credit.
What Congress apparently didn't consider was every other industry that might qualify. Turns out the paper industry has long used something called the "kraft" process to make paper. One byproduct is a sludge called "black liquor," which the industry has used for decades to fuel its plants. Black liquor is cost-effective, makes plants nearly self-sufficient, and, most importantly (at least for this story), definitely falls under Congress's definition of an "alternative fuel."
All of which has allowed the paper industry to start collecting giant federal payments for doing nothing more than what it has done for decades. And in fairness, why not? If Congress is going to lard up the tax code with thousands of complex provisions designed to "encourage" behavior, it shouldn't be surprised when those already practicing said behavior line up for their reward, too.
In March, International Paper announced it had received $71 million from the feds for a one-month period last fall. The company is on track to claim as much as $1 billion in 2009. Verso took in nearly $30 million from the operation of just one mill in one quarter of last year. Other giants are gearing up to realize their own windfalls. Wall Street has gone wild, pushing paper-company stocks up dramatically in recent weeks.
Happy as industry is to have this new federal lifeline in the middle of a recession, it is the only one smiling. Foreign competitors are screaming that the subsidy is unfairly propping up the U.S. industry in tough times. They claim the U.S. industry is ramping up production simply to realize more tax money. Canadian forestry firms are already demanding their government file a trade complaint.
In order to qualify for the credit, alternative fuel must be mixed with a taxable one. (The government might want to encourage alternative fuels, but not to the extent that it loses its gas-tax revenue.) This means that to qualify, the paper industry must mix some diesel with its black liquor. This has sent environmentalists around the bend. They have accused the industry of burning fossil fuels that it didn't used to burn, simply to get the tax dollars. (The industry has not been clear on whether it is, in fact, using more diesel.)
And then there's Congress, which is suddenly looking at billions more in red ink than expected. In 2007 it estimated a 15-month extension of the credit would cost taxpayers $333 million. It has since revised those numbers to take into account black liquor and is now figuring a one-year cost of more than $3 billion. Wall Street analysts are talking $6 billion. Senate Finance Committee bosses Max Baucus and Charles Grassley are reportedly aware of the issue, none too happy, and they are working to bar the paper industry from receiving the credit.
But this, in turn, has tossed up uncomfortable questions. The paper industry argues that if the government is going to be in the business of rewarding good behavior, it ought to do it equally. Is green policy only to be aimed at dirty or economically unviable actors? Is black liquor any less useful than ethanol or biodiesel, and if so why? If not, shouldn't Washington encourage its use? Isn't every green subsidy in fact the basis for a trade dispute? These are questions Congress has no interest in confronting, since it would expose the muddle that is its entire green-energy program.
All of this is highly amusing, if not surprising. Every government attempt to manage energy markets has resulted in similar disarray. Look at the havoc that came from the energy price controls, regulations and subsidies of the 1970s. Or look, more recently, at the ethanol fiasco, and the accompanying soaring food costs. Energy powers the economy. Mess with energy markets, and mess with everything else. When will Washington learn?
WSJ, Apr 17, 2009
Every so often Washington throws out a controversy that brilliantly illustrates everything wrong with Washington. Consider the brewing outrage over "black liquor."
This is the tale of how a supposedly innocuous federal subsidy to encourage "alternative energy" has, in a few short years, ballooned into a huge taxpayer liability and a potential trade dispute, even as it has distorted markets and led to greater fossil-fuel use. Think of it as a harbinger of the unintended consequences that will accompany the Obama energy revolution.
Back in 2005, Congress passed a highway bill. In its wisdom, it created a subsidy that gave some entities a 50-cents-a-gallon tax credit for blending "alternative" fuels with traditional fossil fuels. The law restricted which businesses could apply and limited the credit to use of fuel in motor vehicles.
Not long after, some members of Congress got to wondering if they couldn't tweak this credit in a way that would benefit specific home-state industries. In 2007, Congress expanded the types of alternative fuels that counted for the credit, while also allowing "non-mobile" entities to apply. This meant that Alaskan fish-processing facilities, for instance, which run their boilers off fish oil, might now also claim the credit.
What Congress apparently didn't consider was every other industry that might qualify. Turns out the paper industry has long used something called the "kraft" process to make paper. One byproduct is a sludge called "black liquor," which the industry has used for decades to fuel its plants. Black liquor is cost-effective, makes plants nearly self-sufficient, and, most importantly (at least for this story), definitely falls under Congress's definition of an "alternative fuel."
All of which has allowed the paper industry to start collecting giant federal payments for doing nothing more than what it has done for decades. And in fairness, why not? If Congress is going to lard up the tax code with thousands of complex provisions designed to "encourage" behavior, it shouldn't be surprised when those already practicing said behavior line up for their reward, too.
In March, International Paper announced it had received $71 million from the feds for a one-month period last fall. The company is on track to claim as much as $1 billion in 2009. Verso took in nearly $30 million from the operation of just one mill in one quarter of last year. Other giants are gearing up to realize their own windfalls. Wall Street has gone wild, pushing paper-company stocks up dramatically in recent weeks.
Happy as industry is to have this new federal lifeline in the middle of a recession, it is the only one smiling. Foreign competitors are screaming that the subsidy is unfairly propping up the U.S. industry in tough times. They claim the U.S. industry is ramping up production simply to realize more tax money. Canadian forestry firms are already demanding their government file a trade complaint.
In order to qualify for the credit, alternative fuel must be mixed with a taxable one. (The government might want to encourage alternative fuels, but not to the extent that it loses its gas-tax revenue.) This means that to qualify, the paper industry must mix some diesel with its black liquor. This has sent environmentalists around the bend. They have accused the industry of burning fossil fuels that it didn't used to burn, simply to get the tax dollars. (The industry has not been clear on whether it is, in fact, using more diesel.)
And then there's Congress, which is suddenly looking at billions more in red ink than expected. In 2007 it estimated a 15-month extension of the credit would cost taxpayers $333 million. It has since revised those numbers to take into account black liquor and is now figuring a one-year cost of more than $3 billion. Wall Street analysts are talking $6 billion. Senate Finance Committee bosses Max Baucus and Charles Grassley are reportedly aware of the issue, none too happy, and they are working to bar the paper industry from receiving the credit.
But this, in turn, has tossed up uncomfortable questions. The paper industry argues that if the government is going to be in the business of rewarding good behavior, it ought to do it equally. Is green policy only to be aimed at dirty or economically unviable actors? Is black liquor any less useful than ethanol or biodiesel, and if so why? If not, shouldn't Washington encourage its use? Isn't every green subsidy in fact the basis for a trade dispute? These are questions Congress has no interest in confronting, since it would expose the muddle that is its entire green-energy program.
All of this is highly amusing, if not surprising. Every government attempt to manage energy markets has resulted in similar disarray. Look at the havoc that came from the energy price controls, regulations and subsidies of the 1970s. Or look, more recently, at the ethanol fiasco, and the accompanying soaring food costs. Energy powers the economy. Mess with energy markets, and mess with everything else. When will Washington learn?
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