Monday, June 29, 2009

Is Barack Obama unable to fight the Congress, or unwilling? 

This is just about the most damning indictment of the Obama administration's mostly costly legislative initiatives (regarding health care and greenhouse gas regulation) you are going to read anywhere, and it comes from somebody who supports both initiatives.

The cap-and-trade bill is a travesty. Its net effect on short- to medium-term carbon emissions will be small to none. This is by design: a law that really made a difference would make energy dearer, hurt consumers and force an economic restructuring that would be painful for many industries and their workers. Congress cannot contemplate those effects. So the Waxman-Markey bill, while going through the complex motions of creating a carbon abatement regime, takes care to neutralise itself.

It proposes safety valves that will ease the cap if it threatens to have a noticeable effect on energy prices. It relies heavily on offsets – theoretical carbon reductions bought from other countries or other industries – so that big US emitters will not need to try so hard. It gives emission permits away, and tells utilities to rebate the windfall to consumers, so their electricity bills do not go up. It creates a vastly complicated apparatus, a playground for special interests and rent-seekers, a minefield of unintended consequences – and the bottom line for all that is business as usual.

If you regard universal access to health insurance as an urgent priority, as I do, the draft healthcare bills are easier to defend as at least a step in the right direction. Nonetheless, the same evasive mindset – the appetite for change without change – has guided their design. If you are happy with your present insurance, the bills’ designers keep telling voters, you will see no difference.

The crux of the US healthcare problem is the incentives that encourage over-production and over-consumption of services. Addressing that would alter the way healthcare is paid for and delivered to all Americans. At that scary prospect, Congress looks away. Debate thus revolves around how much of an increase in coverage you can buy for $1,000bn over 10 years in subsidies and other outlays. That is a good question. But legislators aim to duck the bigger challenge: controlling long-term growth in costs per patient.

That's really great. We're going to do great damage to the economy without actually reducing greenhouse gases, and we are going to create a massive new entitlement without actually restructuring the health care system. Much more of this and we will be done, and nobody, not even the president, seems to give a rat's ass.

The Democrats loved to accuse George W. Bush of recklessness, and "gambling" with the country's future, and so forth. If this rush to spend countless trillions and engineer vast sectors of the U.S. economy (finance, health care, and energy) without any genuine debate or even a "national conversation" is not reckless, what would be?

CWCID: Glenn Reynolds.


By Blogger Andrew X, at Mon Jun 29, 12:36:00 PM:

I just saw California congressman Dan Lundgren on Fox make an astonishingly cogent point. Namely, that government must act like a parent who tells the whining child, “yes, I know you waaaaaant that $2,000 bicycle….. be WE CANNOT AFFORD IT! Therefore you shall not have it.”

And against the (largely conservative) politicians that agree with that, are polititicians by the thousands who will say, “Oh, if you WANT that $2,000 bicycle…. well, then, of course you should have it. Of course! And you see those guys over there? THEY want to tell you you can’t have it! So who do you want to vote for?”

This is what Republicans are up against, and the all-powerful narrative that sells this appallingly immature thinking has been virtually set in stone.

They way I see it, the ONLY way to begin to return to maturity in these matters is to re-seize the narrative, and replace it with a new one. And the best effective new one is a narrative of “it’s the elites (cultural, media, academic, biggest of the big business) vs. you”. EVERY thing this Congress / Administration is doing is about making the these elites feel good about themselves, and while leaving their elite lifestyles virually untouched, and shunting the cost onto the masses (i.e. you and me.). If every Republican message were wrapped around that narrarive, which is in fact real, you might start seeing some progress.  

By Anonymous MarkJ, at Mon Jun 29, 12:57:00 PM:

I've got a cunning plan: let's offer Obama and every Democrat in Congress $1 billion to "just go away" into comfortable exile in someplace warm with lots of palm trees.

Yeah, I know this idea would be initially expensive, but, then again, we'd still be coming out way ahead no matter how you fiddle with the numbers.

Capisci, paisani?  

By Blogger Elise, at Mon Jun 29, 12:57:00 PM:

The debate and national conversation took place during the Presidential campaign and, to a lesser extent, during the Congressional elections. We got a Democratic White House and a Democratic-controlled Congress. Obama's intentions with regard to global warming and universal health care were perfectly clear as was his preference for more government intervention in the economy. I don't like it but as I would point out to a friend of mine during the Bush years - and he points out to me now - part of the price of living in a democracy is accepting your fellow voters' right to make decisions - even when they're stupid decisions.

As for Crook, he's being too pessimistic about Waxman-Markey. Publius at Obsidian Wings thinks it's a good bill because it establishes a regulatory framework (which he says is the hardest part) that can be tweaked and tightened as time passes and the public becomes more amenable to the idea. And it may not even need to be tweaked that much: I read somewhere (cannot find the reference again) that the caps start out weak (to please Blue Dogs) but become quite severe down the road (to please Clive Crook - who I note limits his kvetching to the "net effect on short- to medium-term carbon emissions"). Camel's nose, foot in door, slippery slope, etc. Plus I have argued that the "playground" effect Crook deplores is a feature: if carbon trading can produce another bubble, the economy may look "recovered" for the 2010 midterms and for Obama's 2012 re-election bid.

As for health care, if the AMA believed Obama's promise that he wouldn't use Medicare-type reimbursement rates in a public option to hammer down the cost of medical care, they're too stupid to be doctors. Again, all that's needed is the wedge. Crook is being naive if he thinks Obama is willing to risk political capital to push unpopular programs when he can start small with little risk and then gradually up the ante.

Somewhat off-topic, I'd like Obama to explain how the Big Five - cancer, cardiovascular disease, diabetes, lung disease, and strokes - can be prevented. Decreased incidence, sure, but not prevented. Plus which if people don't die of the Big Five, they're going to die of something else - and there's no reason to believe the new diseases that kill us will be any cheaper to treat.  

By Blogger Purple Avenger, at Mon Jun 29, 01:58:00 PM:

I'd like Obama to explain how the Big Five - cancer, cardiovascular disease, diabetes, lung disease, and strokes - can be prevented.

Prevented? No.

Ignored and insufficiently treated so you die quicker? Absolutely.  

By Blogger PD Quig, at Mon Jun 29, 02:02:00 PM:

I hate to be a wet blanket, but only one in a million Americans understands how the unholy alliance of bankers and politicians is draining the taxpayer of their current and future wealth. It scarcely matters who lives at 1776 Pennsylvania Ave. The money men suck us dry by creating bubbles, bursting them after we the people go 'all in' and then having us bail them our should they incur losses.

AGW is just the next scam. GS and JPM will undoubtedly figure out how to collect massive transaction fees.  

By Anonymous Brian Schmidt, at Mon Jun 29, 02:29:00 PM:

How is the climate legislation going to have no effect on greenhouse gases or energy prices, and still bankrupt the economy?

Clive Crook should stick to one bogus argument rather than come up with two contradictory ones.  

By Anonymous Anonymous, at Mon Jun 29, 04:04:00 PM:

From Link to Brian:

The Energy Bill is a remarkable exercise in idiocy.

Cap and trade is only part of the Energy Bill, and it's phased in over a long time. It won't have much immediate effect, because utilities are grandfathered with free licenses -- a big give away. Farmers get a complete pass. The oil industry -- especially refineries -- gets hosed. To the extent it would have the US cut emissions, they would only go up elsewhere from the jobs we'd lose to dirtier countries. That's unless you believe China and India will come along -- but they'll always point their finger at Russia and Brazil and Indonesia. Something similar has already proven not to work in California ... which lost jobs, has to buy power from elsewhere and in effect exports its emissions to places like Nevada and Canada. When Obama and the CBO talk of increased costs to consumers they're focused on this, and often use average or net figures after "redistribution."

The Energy Bill would require our utilities to use 20% wind and solar and a few other favored current technologies in fairly short order. This could prove very expensive and isn't costed out by Obama and the CBO. These technologies aren't capable of going over 10% -- go look at Spain and Denmark. Wind is so 12th century. Current solar technologies are nowhere close to being cost effective in scale. Backers of wind and solar are oblivious to how electric grids actually work.

As to Obama on nuclear ... as my mother would say ... "he's a lying sack of shit." If you don't want nuclear, give me a reasoned argument why and say so. I believe we need it, but don't like it. We should have an honest debate. Instead, Obama said he was for nuclear late in the campaign, so McCain couldn't get an opening. Obama still says he's for it, but closed down Yucca Mountain. Wink, wink ....

The Energy Bill looks to gut nuclear by making federal loan guarantees impractical -- it's buried in the fine print that only showed up late Wednesday. Developers wouldn't need the guarantees but for the risk of legal delays. Most importantly, nuclear gets no credit in the new regime as an emission-free source of energy. If nuclear were treated fairly, it would clean the clock of wind and solar and biomass.

If Obama & Co had stopped here, they'd have higher odds of passage. But they larded it up with Rube Goldberg bureaucratic provisions it would take a least an hour for me to get through. That was the brilliance of Boehner's impromptu filibuster on Friday. He lost the vote but may have won the battle. Obama-Axelrod declared victory with the House vote but they've pushed Senate consideration to the fall because of Boehner & Co. For his efforts, Boehner has now been marked as an enemy of the left. He should have earned the enduring gratitude of the rest of us, but 98% of us care more about Michael Jackson and Mark Sanford.

As to "transparency", Pelosi and Waxman were playing bait and switch even through the voting. The House was voting while there was question over whether a single up-to-date copy of the Bill was even in the building -- some clerk in a back room was still putting it together. I still don't think the public has access to the actual text of what got approved this past Friday.

Hope and Change, indeed.

Link, over  

By Blogger John Thacker, at Mon Jun 29, 04:52:00 PM:

How is the climate legislation going to have no effect on greenhouse gases or energy prices, and still bankrupt the economy?

Clive Crook should stick to one bogus argument rather than come up with two contradictory ones.

Brian Schmidt, Clive Crook didn't say that. He said that any climate bill that actually worked to have an effect on greenhouse gases would have to cause pain. The current bill creates a complicated apparatus of rent-seeking in an attempt to avoid that pain, with the result that it has very few emissions reductions but a lot of bureaucracy and special interests.(until after 2020, when the permits will supposedly no longer be given away as much)

And he supports a bill that would have teeth, while acknowledging that it would cause some economic pain (though not the words of devastation that you've put in his mouth). That's because he's willing to acknowledge reality in all its senses, including the idea that action on greenhouse gases must involve pain.  

By Anonymous Anonymous, at Mon Jun 29, 04:59:00 PM:

To John Thacker, from Link

"action on greenhouse gases must involve pain"

Allow me to retort. If nuclear has worked for the French, why not for us.

The greens are pursuing an agenda that won't lower emissions but will put us all in tree forts. If we do get to that point, environmental concerns will get tossed.  

By Anonymous Anonymous, at Mon Jun 29, 05:27:00 PM:

The cap and trade bill is a gift straight from the political Gods to the Republican party. In marketing terms, this is the perfect product differentiator. Democrats want to increase the cost of energy by taxing energy. This will make the average American much poorer, and will destroy American competitiveness and therefore jobs. Republicans should oppose this.

The very first plank of the Republican party platform in 2010 and 2012 should be to repeal this bill. Unfortunately, our current Republican party is earning the moniker "The Stupid Party" and will certainly fail to do so.  

By Blogger Andrewdb, at Mon Jun 29, 06:55:00 PM:

>...it establishes a regulatory framework (which he says is the hardest part) that can be tweaked and tightened as time passes and the public becomes more amenable to the idea.

That is not a feature, but a bug.  

By Blogger Dawnfire82, at Mon Jun 29, 11:03:00 PM:

Why the assumption that it will become more amenable to the public?

This is a progressive's hubris... the conviction that they are at the forefront of human progress and everyone else will catch up, eventually.  

By Anonymous NT, at Tue Jun 30, 07:30:00 AM:

By now it should be clear to everyone that the "Climate Legislation" will do nothing more than market manipulation, at a huge estimated cost, and with little effect on emissions but a big impact on the economy. Even the enviros know that which is why I'm getting daily e-mails from the Sierra Club about how this bill needs to get fixed in the Senate. Waxman-Markey is chock full of giveaways and is business-as-usual. Our citizens will foot the bill and they won't see a benefit. But they won't figure that out for a while, which protects the idiots in DC (both sides of the aisle). After all, if we have until 2050 to make reductions, a good number of us grownups will be gone, and today's youthful "yes we can" voters will (hopefully) finally realize what they did to themselves by voting for rainbows and unicorns.

I follow these issues as part of my living (work in the energy field). In my study of the issues, I've watched in particular what Europe has done. The Europeans embraced Kyoto, and their programs actually resulted in a net increase in emissions. The USA did not adopt Kyoto and we've made progress.

I am all for finding new and cleaner ways to make power but in the meantime, rather than ignoring sources that we have available today, let's continue to use them in a cleaner and more efficient way (which can be done -- lots more room on that front) and explore alternatives without driving our economy into the ground. Whether you believe in AGW or not, there's plenty we all can agree on in terms of building our energy future.

A good start for the WH would be to have Carol Browner the Energy Czar actually read the legislation:


By Anonymous Anonymous, at Tue Jun 30, 11:58:00 AM:

Obama's agenda is right on course, thank you very much. With or without Congress (he may lose it next year and that won't stop his plan), Obama's objective now and always is the destruction of the middle class in America.
The wealthy will be taxed heavily but, otherwise allowed to do what they want (they can flee the country and simply follow the Charlie Rangel route); the poor need only queue up for the scraps they will be offered.
The middle class will be the targets of every democrat theft project that the minds of the Chicago thieves and communists can think of. Put Congress with the thieves and the White House with the communists.  

By Anonymous Squealer, at Tue Jun 30, 09:17:00 PM:

Well, this cap-and-trade policy is where I as a staunch supporter of Obama have to eat some roughage. In principle, there is no question in my mind it is the wrong approach to take with respect to global warming. However, as the other commenters and FT author points out, the cap-and-trade details of the bill lack a lot of teeth and may not have much effect on anything for quite some time. Perhaps this is by design. I think it's poor practice to disguise government policies this way, given the unintended consequences; on the other hand, the whole global warming hysteria may provide just enough wind for the U.S. to move toward true energy independence, which I do strongly favor. How much would it be worth the U.S. for the country to be energy independent? I'm not sure 1% annual loss of GDP in to the next century is worth it, but a reasonable fraction of that might be, in my opinion. Would this bill get us there? We've known this is something the country has to do since the 1970s but have gotten nowhere. Curious what others think.  

By Blogger Dawnfire82, at Wed Jul 01, 03:48:00 AM:

If energy independence were the goal, wouldn't we be tapping into our own petro-chemical reserves (or something) until the appropriate technology and infrastructure were established?

Driving up the price of available energy + not bringing online additional energy (either expanded domestic oil/gas production or nuclear; and I've seen no indications of either) = self-inflicted economic handicap. And for what? To assuage a collective guilt trip about driving cars mandated by a doomsayer religion?

Whatever evil earth-destroying carbon emissions we cut will be over-run and then some anyway as China, India, and Brazil fully industrialize. They'll be followed by elements of the Third World, who I promise you don't give a *shit* about global warming. Climate change. Whatever.

There are more than 6 billion people in this world. Only 300 million of them live in the US. Those other 5.7 billion will keep on doing their best to destroy the earth because that's the ticket to prosperity. The whole issue is an exercise in masochistic stupidity, tainted by arrogance.  

By Anonymous CIA Memory Hole, at Wed Jul 01, 02:07:00 PM:

Keep in mind that both Republicans and Democrats, when in power, use their influence to pass enormously important laws with little debate--or even reading--of the legislation in question.  

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