Free Markets, Free People

Daily Archives: April 22, 2009

About Those Torture Memos…

Well, this is an unexpected revelation.  In all the imbroglio about the “torture memos” and the possibility that the justice department may look into torture indictments of various officials, Rep Pete Hoekstra (R-MI) writes that it’s a bit hypocritical for Congress to escape scrutiny.  Apparently, they knew all about it.

It was not necessary to release details of the enhanced interrogation techniques, because members of Congress from both parties have been fully aware of them since the program began in 2002. We believed it was something that had to be done in the aftermath of the 9/11 terrorist attacks to keep our nation safe. After many long and contentious debates, Congress repeatedly approved and funded this program on a bipartisan basis in both Republican and Democratic Congresses…

Members of Congress calling for an investigation of the enhanced interrogation program should remember that such an investigation can’t be a selective review of information, or solely focus on the lawyers who wrote the memos, or the low-level employees who carried out this program. I have asked Mr. Blair to provide me with a list of the dates, locations and names of all members of Congress who attended briefings on enhanced interrogation techniques.

Hmmm.  That actually might be interesting to see.  Very interesting.

Cap & Trade: Even More Expensive Than Thought

Sometimes math is actually pretty easy. For example, when someone, say some MIT professors, writes a report claiming that a tax on certain businesses will raise a specific amount of revenue for the government ($366 Billion to be exact), and that revenue is divided by an estimated number of American households (117 Million), there isn’t any doubt about how much money per household that tax represents ($366 b./117 m. = $3,128.21). Unless, that is, there are politics involved. Then the math becomes Bistromathic, which allows one of the progenitors of the original numbers to declare “you’re doing it wrong!” and almost everyone will believe him. Unfortunately for them, real math operates on real facts, and thus reality is destined to intrude upon their fantasy.

That, in a nutshell, is basically how the argument over costs of the Obama Administration’s cap and trade policy has unfolded. MIT’s John Reilly co-authored the original study, Republicans used the numbers to derive a cost per taxpayer, Reilly balked, and the media/leftosphere went into paroxysms of outrage about how the GOP were all a bunch of liars. But that was just the main course. For dessert, there will be crow (my emphasis):

During a lengthy email exchange last week with THE WEEKLY STANDARD, MIT professor John Reilly admitted that his original estimate of cap and trade’s cost was inaccurate. The annual cost would be “$800 per household”, he wrote. “I made a boneheaded mistake in an excel spread sheet. I have sent a new letter to Republicans correcting my error (and to others).”

While $800 is significantly more than Reilly’s original estimate of $215 (not to mention more than Obama’s middle-class tax cut), it turns out that Reilly is still low-balling the cost of cap and trade by using some fuzzy logic. In reality, cap and trade could cost the average household more than $3,900 per year.

The $800 paid annually per household is merely the “cost to the economy [that] involves all those actions people have to take to reduce their use of fossil fuels or find ways to use them without releasing [Green House Gases],” Reilly wrote. “So that might involve spending money on insulating your home, or buying a more expensive hybrid vehicle to drive, or electric utilities substituting gas (or wind, nuclear, or solar) instead of coal in power generation, or industry investing in more efficient motors or production processes, etc. with all of these things ending up reflected in the costs of good and services in the economy.”

In other words, Reilly estimates that “the amount of tax collected” through companies would equal $3,128 per household–and “Those costs do get passed to consumers and income earners in one way or another”–but those costs have “nothing to do with the real cost” to the economy. Reilly assumes that the $3,128 will be “returned” to each household. Without that assumption, Reilly wrote, “the cost would then be the Republican estimate [$3,128] plus the cost I estimate [$800].”

In Reilly’s view, the $3,128 taken through taxes will be “returned” to each household whether or not the government cuts a $3,128 rebate check to each household.

In short, Reilly’s claim of “you’re doing it wrong!” amounts to parsing of direct vs. indirect costs. Yes, the cap and trade taxes will be passed onto the consumers in some way, but those aren’t the “real costs” to the economy. Only those direct expenditures made necessary by the policy (the “but for” costs) are “real costs.” As long as the federal government provides a benefit to the taxpayers with the cap and trade taxes, then those higher utility bills are a wash:

In Reilly’s view, the $3,128 taken through taxes will be “returned” to each household whether or not the government cuts a $3,128 rebate check to each household.

He wrote in an email:

It is not really a matter of returning it or not, no matter what happens this revenue gets recycled into the economy some way. In that regard, whether the money is specifically returned to households with a check that says “your share of GHG auction revenue”, used to cut someone’s taxes, used to pay for some government services that provide benefit to the public, or simply used to offset the deficit (therefore meaning lower Government debt and lower taxes sometime in the future when that debt comes due) is largely irrelevant in the calculation of the “average” household. Each of those ways of using the revenue has different implications for specific households but the “average” affect is still the same. […] The only way that money does not get recycled to the “average” household is if it is spent on something that provides no useful service for anyone–that it is true government waste.

He added later: “I am simply saying that once [the tax funds are] collected they are not worthless, they have value.”

Essentially, Reilly is making the pernicious claim that a dollar in the taxpayer’s hand is the same as one in the government treasury. But we all know that’s not true, including (I’ll bet) Mr. Reilly.

No matter how efficient the government is, it will never be able to take $X from me and return exactly $X of benefit. Indeed, at least some portion of that $X will be needed just to support the system of taking the money and providing the benefit. Already the taxpayer is at a loss.

Moreover, there is an implicit assumption in Reilly’s explanation that, in exchange for this de facto tax, the government benefits provided would be returned in proportion to their costs. But that would defy all historical precedence when it comes to the federal government which, once the money is received, tends to dole it back out to suit its own purposes. As Merv aptly states:

I really doubt the government will return any cost of cap and trade dollar for dollar. If they did it would be just an expensive money swap. To the extent the government does return any money you can bet that it will be based on conduct they want from people and not unconditionally. They will be imposing their choices on American families and their lifestyles.

To be fair, Reilly tacitly acknowledges this fact when he explains what use of his numbers would be acceptable to him:

“If the Republicans were to focus on that revenue, and their message was to rally the public to make sure all this money was returned in a check to each household rather than spent on other public services then I would have no problem with their use of our number.”

The fact is, cap and trade is going to cost taxpayers significantly more than the measly $13/week tax cut that the Democrats and the left are so excited about. While the $3,900 cost cited by John McCormack above is an accurate accounting of what Reilly’s study portends, even that is probably an unrealistically low estimate. Consider how the same policy has affected Europe:

Europe’s experiment with cap and trade has turned into a bureaucratic mess that has failed to live up to its initial expectations. A report by the GAO reveals that the supply of carbon permits has exceeded the demand causing allowance prices to fall substantially. This policy failure has caused the European economy to suffer and expectations to reduce CO2 emissions have been lowered.

Additionally, Europe’s cap and trade experiment has led to decreased employment opportunities and higher energy prices across the continent. In France manufacturers have packed up and left for Morocco. In the Netherlands factories are forced to close early to meet emissions standards. In Germany energy prices have risen 5% each year sparking widespread outrage. All across Europe evidence shows that cap and trade has hurt the economy. If the United States implements a European style cap and trade system, estimates show that it could wipe out between 1.2-1.8 million American jobs by 2020.

So the 95% of you who received a “tax cut” from Obama had better start saving that extra money up. You’re going to need every penny to service the debt required to pay for your costs of cap and trade.

Trip Report

Great day yesterday – drove up Skyline Drive which borders the Shenendoah Valley and did the scenery tour.  Absolutely beautiful (we’re staying in Charlottesville, VA).  Then came back through some of the most beautiful countryside I’ve seen in a while to Montpelier – James Madison’s home.

This was particularly interesting to me because of Madison’s role in writing the Federalist papersand the Constitution and Bill of Rights.  The house itself is a work in progress.  They only finally restored it to its original dimensions in September of last year (subsequent owners had added on – they took all the additions off of the house and only kept the parts that were there when the Madison’s owned it).

Anyway, probably the most memorable moment for me was standing in Madison’s study, where he penned much of the Constitution and many of the Federalist papers and staring at the ink stains on the wooden floor where his desk had been.  It’s little things like that which can bring history alive for a person.  That and staring out of the window at the beautiful scenery he looked at as he worked on those incredible documents.

If you get a chance, go see the place.  Web site: www.montpelier.org.

Today Monticello, Ash Lawn-Highland (home of James Monroe) and Michie Tavern (of course). Hopefully the Chancellorsville and Fredericksburg battlefields as well.

Ta ta …

~McQ

Foreign Policy? Becoming A Bit Uncomfortable On The Left

Gloria Borger, hardly a right-winger (and certainly an Obama supporter), takes Obama to task about his performance so far in the foreign policy arena:

This is not a column about whether the president should take pictures with — or shake the hands of — unstable foreign leaders who mostly call him names and rant about America.

Sometimes, it’s just unavoidable. A grimace instead of a smile on the face would be better, sure. But it’s not the end of America’s standing in the world, as some are suggesting.

But there is a problem, and it’s not about photo ops. It’s about finding the appropriate tonal response to leaders who say outrageous things about us and about our allies.

What she’s talking about are two recent incidents – one in which Obama was in attendance and the other occurred in the UN when Iran’s Amadinejad called for the destruction of Israel.

In both cases, Obama’s response was essentially a non-response.

Says Borger:

Case in point: When Iranian President Mahmoud Ahmadinejad used the podium at the United Nations conference in Geneva on Monday to call Israel a “cruel and repressive racist regime,” we might have said something. The European delegates walked out of the conference (we declined to attend), but when asked about the brouhaha later, the State Department spokesman, sticking to the talking points, could only muster that “that type of rhetoric is not helpful and doesn’t help facilitate a constructive dialogue.”

You think?

A bit of a chuckle there for me. You know it’s gotten bad when even the Borgers of the world are criticizing the issuance of boilerplate rhetoric in response to what the rest of the West considers to be outrageous and inflammatory words. While not exactly a non-response, the administration comes as close to one as you can with its words.

But the second incident is even worse. Here Borger is talking about Newt Gingrich’s criticism of Obama and claiming he missed his real opportunity:

But the Summit of the Americas gave them an easy opportunity to decry the president’s weakness, not only after his handshake with Chavez but also when he sat quietly through Nicaraguan President Daniel Ortega’s 50-minute anti-American rant.

He didn’t have to walk out, but he could have given a sharper critique of Ortega’s histrionics after the event. Instead, he decided to just give it the back of his hand, saying only that “it was 50 minutes long.”

Its funny, the administration will attack any domestic critic with the full power of its spin machine. And yet, the president sits through a 50 minute anti-American tirade (after one of his advisers declared anti-Americanism was no longer cool in the world) and has no reaction at all.

Tell me, who’s job is it to defend the US if not his? Of course that’s not an easy thing to do if a president engaged in apologizing for the country at every foreign affairs opportunity, is it?

~McQ