Free Markets, Free People

Monthly Archives: March 2009

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Is It About What’s Best For America Or About Political Payback?

A closer look at the recent problem with Mexico – when the Obama administration, without consultation ended the NAFTA agreement which allowed Mexican trucks the ability to deliver in the US – reveals the answer to the question in the title:

We speak of the Democratic Congress’s recent approval of a law, signed by Mr. Obama, that killed any chance that long-haul freight trucks from Mexico could operate in the United States, as had been promised under the North American Free Trade Agreement. Giving U.S. and Mexican trucks reciprocal access to each other’s markets would save fuel and money. An international arbitration panel has also found that the United States is legally required to let Mexican trucks in.

Yet the Teamsters union bitterly resisted, claiming that poorly regulated trucks from south of the border would be menaces on U.S. highways.

To meet legitimate safety concerns and this country’s legal obligations, the Bush administration promoted a pilot project under which Mexican trucks, screened by U.S. personnel, could operate freely within the United States. The Mexican trucks compiled a safety record comparable to that of American rigs. Almost everyone was happy with the deal — except the Teamsters, for whom economic turf rather than safety has always been paramount.

So we now know that it was a payoff to the Teamsters for their help during the election. Mexican trucks had met the safety concerns of the critics and compiled an excellent safety record in the US. Given that, how else do you explain a move which may end up costing us billions of dollars in agricultural exports to one of our major trading partners for no apparent legitimate reason?

It certainly seems to me that at least in this particular situation, political payback took precedence over what was best for America.

Hope and change.

~McQ


EPA Set To Kill The Economy

Here’s an item which, in the midst of the financial crisis, will probably be overlooked and underreported. However, it has the potential to destroy any economic recovery should we ever get one rolling.

The Environmental Protection Agency sent a proposal to the White House on Friday finding that global warming is endangering the public’s health and welfare, according to several sources, a move that could have far-reaching implications for the nation’s economy and environment.

The proposal — which comes in response to a 2007 Supreme Court decision ordering EPA to consider whether carbon dioxide and other greenhouse gases should be regulated under the Clean Air Act — could lay the groundwork for nationwide measures to limit such emissions. It reverses one of the Bush administration’s landmark environmental decisions: In July 2008 then-EPA administrator Stephen Johnson rejected his scientific and technical staff’s recommendation and announced the agency would seek months of further public comment on the threat posed by global warming pollution.

“This is historic news,” said Frank O’Donnell, who heads the public watchdog group Clean Air Watch. “It will set the stage for the first-ever national limits on global warming pollution. And it is likely to help light a fire under Congress to get moving.”

Actually I prefer to think of it as the excuse the Democratic Congress has been looking for to implement cap-and-trade. “The Court has required the EPA to consider whether CO2 is a pollutant and the EPA has so declared – our hands are tied!” And in such a convenient way.  Al Gore thanks you.

Naturally business interests are not at all happy with the development.  

 In December 2007 EPA submitted a written recommendation to the White House urging the Bush administration to allow EPA to state officially that global warming is a threat to human welfare. But senior White House officials refused to open the document and urged Johnson to reconsider, saying such a finding would trigger sweeping regulatory requirements under the 45-year-old Clean Air Act. An EPA analysis had found the move would cost utilities, automakers and others billions of dollars while also bringing benefits to other economic sectors.

Any guess as to which “economic sectors” EPA’s analysis says will “benefit” from sweeping regulatory requirements costing the utilities and automakers billions? My guess is they really don’t exist in any major form at this moment, and what does exist is chasing vaporware. But those millions of “green collar jobs” have to be funded somehow, don’t they?

But can you guess what else is lurking out there?  

Our old friend, the “Law of Unintended Consequences”.  Not only would every business in our land be effected, so would every “stimulus” project aimed at improving the infrastructure:

“This will mean that all infrastructure projects, including those under the president’s stimulus initiative, will be subject to environmental review for greenhouse gases. Since not one of the projects has been subjected to that review, it is possible that the projects under the stimulus initiative will cease. This will be devastating to the economy.”

Some of the defenders of all of this will try to wave it away by claiming the administration will make exceptions for various industries and it will certainly do so for the infrastructure projects.

But Bill Kovacs, vice president of environment, technology and regulatory affairs at the U.S. Chamber of Commerce knows how this process will end up working, having witnessed similar scenarios over the years:

“Specifically, once the finding is made, no matter how limited, some environmental groups will sue to make sure it is applied to all aspects of the Clean Air Act.

That’s not a threat – that’s a promise. It is precisely how environmental groups have leveraged every environmental ruling and finding in the past. Of course, those who don’t learn from history are doomed to repeat it. And here we go …

~McQ


Quote Of The Day

Australian and acknowledged counter-insurgency expert David Kilcullen answering a question about the Iraqi surge in an interview with the Washington Post:

Our biggest problem during the surge was a hostile American Congress.

Of course the very same people in Congress who were the “biggest problem during the surge” are all about peace, love and getting along together now.

Sow. Reap.


Obama and the Economy: Incompetence, Disinterest, or Something Else?

Over the past several weeks we’ve been pondering Pres. Obama’s handling of the economic crisis. For the most part we’ve all agreed that Obama’s lack of leadership (whether from a dearth of experience or ability) is only serving to exacerbate the situation. But we also have somewhat divergent views as to whether there is a method to Obama’s madness.

Bruce is pretty convinced that the problem is a lack of executive experience, and the fact that Obama is learning on the job, while in the one government position that simply won’t allow for that sort of training. Being devoid of leadership skills or abilities, and being overly confident in his abilities to talk his way out of trouble, is driving Obama into mistake after mistake. Call this the Boy-King scenario.

Dale has suggested that Obama is simply disinterested in things like foreign and economic policy, thus he’s put little effort into guiding those efforts, and instead has handed these messy areas off to subordinates. That those on whom he is depending are not terribly proficient is not helping matters (e.g. Hillary and the “reset” button). But at bottom, the real problem with Obama is that his only real concern is with implementing his social agenda. This is bascially the Louis XVI problem (the King who famously recorded “Rien” as the sole entry to his July 14, 1789 diary, referring to his hunting exploits that day).

Last night on the podcast, I ventured that, in addition to a lack of experience and a disinterest in anything other than social policy, Obama is perfectly happy to let the economy flounder because (he thinks) it will drive more people into the arms of government dependency, and allow him to push forward with the radical transformation he envisions for this country. What he wants most, in my opinion, is to greatly expand the desire and need for government, to instill “democratic” controls into as many areas of life as possible (and especially in economic affairs), and to revise what he sees as a top-down power structure into a bottom-up one. Regardless of whether Obama is right or wrong in any of his thinking, it seems to me that his apparent lack of concern with respect to the economic crisis (only one of seventeen post filled in Treasury, despite the frightening prospects of a new depression?) has more to do with the fact that he does not envision the crisis interfering with his social agenda, and perhaps sees it as an enabler of that agenda. Call this the Commodus explanation.

I’m loathe to suggest that Obama is some sort of Manchurian Candidate, aiming to secretly impose socialism on the US, primarily because we’ve been teetering on that edge for several decades now, and he’s not been shy about wanting to give the final nudge. At the same time, I believe that Obama truly wants what’s best for this country. It’s just that what he views as “best” is something similar to European social-democracy, to which I am absolutely opposed.

So, I’m curious. How do you all see it? Is Obama the Boy-King, Louis XVI, or Commodus? Some combination of the three? Something different altogether?


Does This Guy Even Begin To “Get It”?

On April 3-4, President Obama will attend a summit in Strasbourg, France and meet NATO leaders for the first time. One of the promises he made during his campaign for the presidency is he’d improve relations between the US and other countries around the globe. One would assume that means those who we are friendly with as well. Yet since taking office he has managed to humiliate the Brits, piss off the Mexicans (who’ve now applied tariffs on over 2 billion dollars worth of our agricultural exports), see us embarrassed in front of the Russians, and now, treated NATO like a bastard step-child.

On Wednesday afternoon, e-mails circulating between Brussels and Berlin suggesting that, within the course of the day, Washington would name General James N. Mattis as the Supreme Allied Commander in Europe. The commander is in charge of all US troops in Europe as well as NATO deployments, including the ISAF security force in Afghanistan.

Traditionally, the United States appoints the supreme commander and the Europeans pick the NATO secretary general. The decision to appoint Mattis appeared to be a logical one. He has long carried the title “Supreme Allied Commander Transformation.”

In the end, though, Mattis didn’t get the appointment. Instead, Defense Minister Robert Gates announced that Admiral James Stavridis would be nominated for the highly prestigious position. The US Senate and the NATO Council must approve his nomination, but it appears likely he will get through. Gates said Stavridis was “probably one of the best senior military officers” in the US.

In Brussels, though, many felt bluffed. “America treats this like it’s purely an American matter — and they didn’t even give any hints about the appointment,” one NATO employee said. “The conspiratorial manner of the personnel search was almost reminiscent of the way the pope is selected,” Stefani Weiss, a NATO expert at the Bertelsmann Stiftung foundation in Brussels, told SPIEGEL ONLINE.

Not exactly the way NATO should be treated on the eve of a meeting in which it is clear that Obama is going to ask NATO nations to contribute more to the Afghanistan effort. As Ed Morrisey at Hot Air points out:

Democrats accused the Bush administration of “arrogance” in diplomatic efforts, mostly because we chose to bypass the UN and finish the Iraq War with our own coalition of partners. I doubt that Donald Rumsfeld, with all his New/Old Europe talk, would have appointed a Supreme Allied Commander without at least consulting the major partners in NATO. Obama’s decision to do that speaks to his own arrogance and a certain level of disdain for the Western military alliance.

Obama has spoken constantly during the past two years about the critical nature of the fight in Afghanistan, and how the Bush administration allowed themselves to get distracted by Iraq. He also criticized the damage Bush supposedly did to our alliances that hurt the Afghanistan effort. This snub looks a lot more direct and a lot more damaging than anything Bush did.

So, we’ll see what help NATO’s nations decide to offer in early April after this move.

And speaking of Afghanistan, the Obama administration is getting ready to present its strategy for our fight there. One of the first things expressed by Obama is the need for an exit strategy. Naturally that being the first thing mentioned by the new CiC bothers me. Although obviously true, I’m reminded that his “exit strategy” for Iraq was “get out, get out now and that will force the Iraqis to stand up and take charge.” I can’t help but wonder if that’s not going to be something reflected in his “new” Afghanistan strategy.

Then there’s this very strange report:

The US and its European allies are preparing to plant a high-profile figure in the heart of the Kabul government in a direct challenge to the Afghan president, Hamid Karzai, the Guardian has learned.

The creation of a new chief executive or prime ministerial role is aimed at bypassing Karzai. In a further dilution of his power, it is proposed that money be diverted from the Kabul government to the provinces. Many US and European officials have become disillusioned with the extent of the corruption and incompetence in the Karzai government, but most now believe there are no credible alternatives, and predict the Afghan president will win re-election in August.

Now Hamid Karzai may not be the leader of choice in Afghanistan for most of the West, and he may essentially be the “mayor of Kabul” in a real sense. But, like it or not, he is the duly elected president of Afghanistan. What is being talked about here is technically a coup.

The proposal for an alternative chief executive, which originated with the US, is backed by Europeans. “There needs to be a deconcentration of power,” said one senior European official. “We need someone next to Karzai, a sort of chief executive, who can get things done, who will be reliable for us and accountable to the Afghan people.”

Really? And how do these people think those who voted in Karzai will greet such interference in the internal affairs of Afghanistan? Do they suppose this is going to make the fight we have there easier? This is exactly what the Soviets did. Are they freakin’ nuts?

The risk for the US is that the imposition of a technocrat alongside Karzai would be viewed as colonialism, even though that figure would be an Afghan. Karzai declared his intention last week to resist a dilution of his power. Last week he accused an unnamed foreign government of trying to weaken central government in Kabul.

“That is not their job,” the Afghan president said. “Afghanistan will never be a puppet state.”

Can anyone think of a better way to create another class of enemy within the state of Afghanistan than to essentially depose their leader? Can you imagine the propaganda value of such a move to the Taliban who will surely say “we told you so?”

I’m getting a very bad feeling about all of this.

~McQ


The “Geithner Plan”, Front And Center – Will It Work?

The Geithner Plan for “Bad Bank Assets” has been published in the WSJ under Geithner’s name. It is pretty much that which was leaked and critiqued by Dale here.

James Joyner wonders:

To my non-economist mind, that sounds eerily remniscient of the Troubled Assets Relief Program (TARP), the $700 billion plan passed last October to prop up the frozen financial system by buying, well, troubled assets. Granting, arguendo, that the Bush administration, which ran the first part of TARP, was evil and incompetent and the Obama administration is all sweetness, light, and omniscience, why would this work any better the second time around?

Paul Krugman, as we noted last week, is not impressed by this plan at all:

This is more than disappointing. In fact, it fills me with a sense of despair.

After all, we’ve just been through the firestorm over the A.I.G. bonuses, during which administration officials claimed that they knew nothing, couldn’t do anything, and anyway it was someone else’s fault. Meanwhile, the administration has failed to quell the public’s doubts about what banks are doing with taxpayer money.

And now Mr. Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing.

It’s as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street. And by the time Mr. Obama realizes that he needs to change course, his political capital may be gone.

Krugman goes on to discuss the economics of the situation and a relatively easy way to solve the banking problem. Probably one of the more striking lines in his discussion is:

But the Obama administration, like the Bush administration, apparently wants an easier way out.

This speaks to a theory we’ve all discussed about certain aspects of the job of president in which Barack Obama displays very little interest. From his chuckling though his “punch drunk” interview with Steve Frost yesterday on “60 Minutes” (an invitation to view him as unserious about the crisis) to his seeking an easy and fast solution to the banking crisis, it seems that this is one of those areas which holds little interest for him. He wants it dealt with as quickly as possible (or at least seemingly dealt with so it is at least off of the front pages) so he can move on to his real interest – his costly social agenda.

Anyway, read all of the Krugman critique.

Brad DeLong thinks Krugman may be wrong and lists 3 reasons why:

1. The half empty-half full factor: I see the Geithner Plan as a positive step from where we are. Paul seed it as an embarrassingly inadequate bandaid.

2. Politics: I think Obama has to demonstrate that he has exhausted all other options before he has a prayer of getting Voinovich to vote to close debate on a bank nationalization bill. Paul thinks that the longer Obama delays proposing bank nationalization the lower it’s chances become.

3. I think the private-sector players in financial markets right now are highly risk averse–hence assets are undervalued from the perspective of a society or a government that is less risk averse. Paul judges that assets have low values beceuse they are unlikely to pay out much cash.

While it is nice to be optimistic, it is also important to be realistic. Frankly I think DeLong’s optimism isn’t realistic in the face of this particular crisis and I’m inclined to believe the Krugman critique to be more “spot on”. I have no confidence that this plan will solve the problem.

One of the problems the administration faces which is above and beyond the “workability” of the plan itself is related to the AIG bonus blowup in Congress. Private investors are gunshy about participating – for good reason:

The backlash on Capitol Hill means private firms may think twice about taking part in Geithner’s public-private partnership, even though government financing will limit their risk and increase the potential of earning profits, said David Kotok, chairman and chief investment officer of Cumberland Advisors Inc., in Vineland, New Jersey.

“We expect that the participation in the program to be announced this coming week will be tepid at best” because of “fear that any action which puts them into the federal assistance plan will subject them to the chance of retroactive punishment and taxation,” Kotok said.

A real “chilling effect” given Congressional and adminstration overreaction to the bonus situation. Reports are Obama is cooling to the idea of retroactive taxation, but, right or wrong, there is still going to be a demand for some sort of action. We’ll see what sort of leadership Obama tries to exert concerning those bonuses if any.

~McQ


Yessiree, That Obama Guy Sure Knows How To Make Friends

Not that I’m particularly upset that he’s managed to re-sour (is that even a word?) relations with Venezuela before he even got to meet with Hugo. But you do remember the promise:

Venezuela’s President Hugo Chavez said on Sunday his U.S. counterpart Barack Obama was at best an “ignoramus” for saying the socialist leader exported terrorism and obstructed progress in Latin America.

“He goes and accuses me of exporting terrorism: the least I can say is that he’s a poor ignoramus; he should read and study a little to understand reality,” said Chavez, who heads a group of left-wing Latin American leaders opposed to the U.S. influence in the region.

Chavez said Obama’s comments had made him change his mind about sending a new ambassador to Washington, after he withdrew the previous envoy in a dispute last year with the Bush administration in which he also expelled the U.S. ambassador to Venezuela.

“When I saw Obama saying what he said, I put the decision back in the drawer; let’s wait and see,” Chavez said on his weekly television show, adding he had wanted to send a new ambassador to improve relations with the United States after the departure of George W. Bush as president.

Apparently during the January interview with Spanish language Univision, Obama said Chavez hindered progress in Latin America and accused him of exporting terrorist activities and supporting Colombian guerrillas. As you might imagine this was not something El Supremo found to be helpful:

“My, what ignorance; the real obstacle to development in Latin America has been the empire that you today preside over,” said Chavez, who is a fierce critic of U.S. foreign policy.

Mark up another victory in that promised attempt to have the world “like us better”. The upcoming Summit of the Americas scheduled for next month ought to be a real circus – both Chavez and Obama will be attending.

Man, am I glad that doofus Bush is out of office.

Hope and change.

~McQ


SCOTUS to review speech case

The Supreme Court will take up a case dealing with free speech:

Months after its debut, “Hillary: The Movie” faces nine of the nation’s toughest critics: the Supreme Court.

The justices’ review of the slashing documentary financed by longtime critics of Secretary of State Hillary Clinton could bring more than just a thumbs up or thumbs down. It may settle the question of whether the government can regulate a politically charged film as a campaign ad.
[...]
At issue in the case being argued before justices Tuesday is the 90-minute anti-Clinton movie and television ads [David] Bossie wanted to air during the 2008 primaries advertising the film.

Bossie’s group, the conservative Citizens United, released the movie as Clinton, then a New York senator, was competing with Obama for the Democratic presidential nomination.

The movie is unquestionably anti-Clinton, featuring commentary from conservative pundits, some of whom specifically say Clinton was not fit to be commander in chief.
[...]
The movie was shown in eight theaters. Bossie’s group wanted run ads on television in key election states during peak primary season and show the movie on cable television’s video-on-demand.

Federal courts said the ads would violate the McCain-Feingold law, the popular name for 2002 revisions to the nation’s campaign finance laws. Judges called “Hillary: The Movie” a 90-minute attack ad, rulings that would require Citizens United to identify the financial backers for the ads if they were to appear on television.

The court also said that if Bossie’s group showed the movie on cable television, financial backers would have to be named and the group would have to pay the cost of airing the movie.

Whether you agree with the message of the documentary, but voters will be able to discern for themselves if something is true or not. The government doesn’t need to stifle speech, let alone political speech.

The case is Citizens United v. Federal Election Commission. Oral arguments begin on Tuesday, March 24th.


Podcast for 22 Mar 09

In this podcast, Bruce, Michael and Dale talk about the AIG bonus Fiasco, limiting executive pay,  and the public’s tolerance for President Obama.

The direct link to the podcast can be found here.

Observations

The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2007, they can be accessed through the RSS Archive Feed.


BlogTalk Radio – Tonight, 8pm (EST)

Call in number: (718) 664-9614

Yes, friends, it is a call-in show, so do call in.

Subject(s): The AIG bruhaha and how it has been handled by both Congress and the administration. The banking plan. The recent unpleasantness in the NYT editorial pages with various and sundry pundits taking well-deserved shots at Obama.

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