Cap and Trade Protectionism

It is widely understood that trade protectionism is bad economic policy, and that such policies significantly contributed to the Great Depression. Energy Secretary Steven Chu is ignoring this wisdom, as he has suggested using tariffs on countries who do not commit to cutting carbon emissions.

What he’s talking about is keeping money from leaving the U.S. because other countries have less environmental restrictions that would make operations cheaper. To avoid that transfer, Chu is suggesting a penalty on foreign countries to pressure them into adopting similar environmental policy. As the editorial correctly notes, however:

The Chinese certainly heard Mr. Chu, with Xie Zhenhua, a top economic minister, immediately responding that such a policy would be a “disaster” and “an excuse to impose trade restrictions.” Beijing’s reaction shows that as a means of coercing international cooperation, climate tariffs are worse than pointless. China and India are never going to endanger their own economic growth — and the chance to lift hundreds of millions out of poverty — merely to placate the climate neuroses of affluent Americans in Silicon Valley or Cambridge, Massachusetts. And they certainly won’t do it under the threat of a tariff ultimatum.

Forcing the global economy to shrink to go along with the radical environmental policies pursued by the U.S. would be devastating for the entire global economy. We do not want to start trade wars with countries when we can be doing mutually beneficial business with them. Chu is suggesting extreme environmental priorities that would economically harm everyone, and foolish means for pressuring everyone else into following.

The rest of the world is obviously not on board with the President’s agenda. As the G20 approaches, Germany and Spain are opposing the massive government spending pushed by the US and Britain. It seems that some nations aren’t ready to destroy the economy to expand left-wing priorities.

Great Powers: America and the World After Bush

I heard a Thomas P.M. Barnett interview on the Hugh Hewitt radio show a few weeks ago (transcripts here), discussing his new book Great Powers: America and the World After Bush. Barnett, who has a blog and a Twitter feed, is a strategic planner in national security affairs, and his foreign policy comments during the radio interviews caught my attention.

While there is much to disagree with in Great Powers, there are also many good points. Barnett demonstrates an understanding of the issues associated with globalization, and his book is worth reading to understand those global challenges we face.

Be sure to catch the interview series with Thomas P.M. Barnett on the Hugh Hewitt radio show.

To Mandate or Not?

The House is set to pass sweeping health care reform in the new budget, as Speaker Pelosi announced the creation of a government-run plan to compete with the private insurance market.

Such reform demands and deserves thorough debate, but the Congress seems to be taking its usual reckless approach. There are many questions that require careful consideration, such as whether we should mandate coverage.

The WSJ explores the Massachusetts plan and how its mandate program has caused an explosion in costs that has led to higher fines and will probably lead to inevitable supply limitations.

The mundane details of the debate over mandates are not the most glamorous, but they need to be understood. In an interview with Matthew Holt from The Health Care Blog a few years ago, Dr. David Gratzer of the Manhattan Institute discusses mandates, along with several other topics of health reform. There are some good points on both sides there that should be noted.

Are mandates needed for health reform? It depends somewhat on the goal. Are we trying to give everyone coverage just to satisfy the misleading 46 million statistic, or are we trying to make insurance more affordable and attractive? The Massachusetts plan is an example of how mandates can backfire.

Either the government relies on fines on those who don’t purchase insurance, which creates an unstable dependence and still probably yields supply limitation, or they achieve a full buy-in and have to limit supply to contain costs. Either way, cost containment becomes necessary. In principle, mandates are counterintuitive to the capitalism and freedom we enjoy in this country. But they also render a better marketplace less likely than a voluntary buy-in would.

Debates on issues like these are necessary and crucial. The current government, however, doesn’t seem interested in discussing the details that could have tremendous impact on the future of health care and our economy. They’re sticking to an incompetent approach of lumping any and all legislative priorities together and trying to force them through Congress as fast as possible. There will surely be negative consequences to such a course of action.

“A chaotic and unforgiving capitalism”

The President, in his globally circulated newspaper address, warned of choosing between two options:

I know that America bears our share of responsibility for the mess that we all face.

But I also know that we need not choose between a chaotic and unforgiving capitalism and an oppressive government-run economy. That is a false choice that will not serve our people or any people. This G-20 meeting provides a forum for a new kind of global economic cooperation.

What is important to notice is the hostile characterization of capitalism, and comparing that with the extreme of oppressive socialism. On par these philosophies are not, but the President is revealing his disdain for capitalism, presumably because it creates the inequities that he has spoken against and wants to correct through redistribution.

This is a terrible economic message to send. The attitude the government is taking towards capitalism by demonizing AIG lead one senior executive to offer a letter of resignation to the AIG CEO. Some of his reasons:

I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.

[...]

The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to “name and shame,” and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press.

As the executive writes, many of the AIG employees being demonized had nothing to do with the destructive credit default swaps. Not to mention, some of the AIG employees are receiving threats against their families thanks to the political demonization. Who wants to work in those conditions? Who wants to invest in partnership with the government with the possibility of backlash whenever it is politically convenient?

Preemption Cases and Health Care

The third of three recent and major rulings on federal preemption was for Wyeth v. Levine, a case about pharmaceutical safety and warning. The Supreme Court ruled in favor of the defendant, Diana Levine, and against federal preemption of state liability law.

Two recent preemption cases have also reached the Supreme Court. In Riegel v. Medtronic, the Court ruled that the 1976 Medical Device Amendments of the Federal Food, Drug, and Cosmetic Act (FDCA) provided Congressional intent for the federal preemption of state liability laws under the FDA pre-market approval process for medical devices.

In Altria Group v. Good, the Court ruled against preemption. The WSJ recently took a closer look at the Wyeth ruling and what all three preemption cases tell us when put together.

As WSJ Supreme Court reporter Jess Bravin concluded:

I think the large takeaway is this: All three of these cases wound up being primarily about statutory interpretation. The Court in each looked at the specific statute and determined whether or not it could exist side-by-side with state tort law. But in each it was an individualized examination.

In none of these cases is the Court issuing a new doctrine intended to make new sweeping changes on preemption. The Court is going to look at the statutory scheme, make a judgment on whether state action is absolutely incompatible with federal law or not. If there’s a tie, the Court, it seems, is going to allow state lawsuits.

Pressure Builds on Obama Administration for Detention Cases

SCOTUSblog reports that lawyers for some of the detainees are pushing President Obama on whether or not the AUMF grants him the power to hold the detainees indefinitely. The Obama administration is relying on the AUMF, as President Bush did, while they determine what to do with the detainees.

One complicated case that we’ve written about is that of the Chinese Uighurs. Lawyers in that case attempted to hold Defense Secretary Robert Gates in contempt while the Obama administration determines what to do with the trained jihadists.

Seeking to apply the Hamdan and Boumediene rulings, other lawyers are claiming that Gitmo detainees are not receiving rights granted by the Geneva Conventions. The Obama administration will need to respond to this shortly, though the Pentagon recently reported that Gitmo did meet Geneva Convention requirements.

On the issue of torture, the new administration recently took its first position in federal court by defending U.S. military officials. The administration’s position is that “aliens held at Guantanamo do not have due process rights.”

While the President pretends to change course by searching for a new name for “enemy combatants” and by announcing he’s going to close Guantanamo, he’s keeping the door open to use the same detention policies of the Bush administration.

This process of denouncing President Bush and his policies, and then pretending to reverse them while basically adopting the same ones is what Rich Lowry calls the Obama 3-step plan.

What Do We Do With Terrorist Detainees?

Yesterday, Hugh Hewitt moderated a debate on his program between two former federal prosecutors, Andy McCarthy and Katherine Darmer. Both have important books on the subject of detaining and prosecuting terrorists, and the books are linked in our recommended reading section. This was an hour of discussion on a crucial topic for national security and our justice system, and it’s not one we’re likely to hear from the MSM. If you missed the show, read the transcript here.

All for Show

AIG CEO Edward Liddy came to Congress today hat in hand, much like the automobile CEOs recently did, and announced that AIG has asked executives to give back some of their bonuses. We are setting bad precedents: businesses doing the kowtow to government for money, and government telling us who gets to make what amount of money. Does this sound like the America you know?

Fannie and Freddie are also reportedly set to pay out their own bonuses. Will President Obama, Chuck Schumer, Chris Dodd, Barney Frank, and the media complain about the GSEs rewarding corporate executives? Maybe they’ll wait until the media says something and it looks bad for them, like what happened with AIG.

Now the President and Democrats are looking for a way to prevent such payments in the future. This means more regulation, of course, which was all part of the plan. It’s no wonder the TALF program has gotten of to a slow start, since investors are afraid of the backlash of making too much money.

The President has also decided he doesn’t have to pretend any longer that he wants bipartisan support, as Democrats are looking to cram health care and cap and trade legislation into a massive budget bill. And here I thought the Democrats would at least have enough respect for the public to make these changes incrementally. It appears that they figure we’re too worked up over AIG or whoever else they alienate that we won’t notice a government takeover.

If you’re mad about AIG, think about how badly the government botched that situation before you allow them to run health care or set cap and trade laws.

Lots of grandstanding and rhetoric from the current leadership, and an unserious approach to major issues by cramming everything together without much discussion.

Governor Jindal Explains Stimulus Rejection and More

If you missed Governor Jindal’s interview on the Hugh Hewitt Show, you can get the transcript and the podcast here. The interview is fantastic because Jindal explains what the stimulus does to the states, and why he is therefore rejecting it:

You know, here’s the thing, you’re talking about temporary federal dollars that would require us to make permanent changes in state law, creating permanent new state spending obligations. Here’s what I’m talking about. When you read the stimulus bill, to take this money in the unemployment program, we would have to permanently change Louisiana’s unemployment laws, changing who’s eligible, how they become eligible, how much they get paid, and the federal money runs out. Now we’ve said that just doesn’t make sense. It’s not good for Louisiana’s taxpayers. The way that unemployment law works, this would result in a tax increase on our businesses. I’ve said from day one we will not raise taxes on our people, on our businesses. It makes no sense. It would actually hurt the economy. At first, we had a Democratic Senator come out and say well, no, you can just do a sunset clause, a temporary increase. And I said well, that’s great except that’s not what the stimulus bill says.

Republican governors are catching on to what the stimulus is really trying to do. I commented on this earlier, and linked in a post below the op-ed that Hugh Hewitt refers to about the constitutionality of the stimulus, since I saw it on his blog initially.

Read or listen to the entire interview. It contains some essential points that people need to hear.

Don’t Believe the AIG Outrage

The significant outrage towards and coverage of AIG and their executive bonuses shows one thing: the Democrats are running their playbook well. This is textbook, and people are playing right into it. Allow me to make a suggestion: ignore the talk about AIG.

This phony controversy is meant to do two things: 1) Divert public frustrations away from the administration and the Democrats running the government by using this week’s whipping boy (before it was Rush; who is next?), and 2) Stir up anger at enterprise and the private sector with the use of class envy so that Democrats can leverage more control.

People screaming and shouting about AIG is exactly what the Democrats want, and the media is helping them by keeping the spotlight focused on executive bonuses instead of the current government’s incompetence. Did government know in advance about the executive pay? Perhaps, but we should focus on the big picture. (UPDATE: Washington Post says the President knew of the bonuses before they were paid)