January 2012

Enough Water?

by Angela Logomasini on April 9, 2009 · 2 comments

in Environment

Cheers to Bill Nemitz for his very insightful piece “Enough Water: Let’s Figure it Out” in the Portland Press Herald. He showed that the amount of water that Poland Spring would have purchased for $900,000 from the Kennebunk, Kennebunkport and Wells Water Districts represents 0.14 percent of the water that falls in the region each year. He rightly criticizes the activist group that prevented that sale for their claims that operation would threaten such resources in the future.

Nemitz’s point applies to a much larger debate. Activist groups are around the nation offer silly arguments about water resources being “finite” and in danger of depletion. But properly constructed bottling operations do not deplete community water supplies. Aquifers, springs and other natural sources replenish via precipitation, a process called “recharging.” Many have been operating sustainably for hundreds of years. A study produced by Keith N. Eshleman, Ph.D. at the University of Maryland’s Center for Environmental Science reports that “withdrawals for bottled water production represent only 0.019% of the total fresh ground water withdrawals in the U.S.,” which is far less than what Mother Nature recharges. The fact that communities and consumers can “profit” by enjoying these renewable resources is a good thing!

Water shortages can be a problem in certain areas. But problems usually result from government ownership and mismanagement, including from subsidies mostly to large, politically organized users—particularly agriculture. We need market-based systems to these manage resources. There is no reason to stop using them altogether, particularly where they are plentiful.

America – full of Socialists?

by Christine Hall on April 9, 2009 · 1 comment

in Bailout Watch, Culture, Economy, Nanny State, Personal Liberty, Sanctimony, Zeitgeist

Almost half of Americans either prefer socialism to capitalism or are downright confused, according to a Rasmussen poll released today. Twenty percent of Americans polled say socialism is better, and another 27 percent say they are undecided. That just can’t be good. On the bright side, 53 percent say capitalism is preferable. So, basically, about half the people think it might be a great idea for government bureaucrats to run their lives. Too bad those people won’t do the decent thing and form a club collective, leaving the rest of us free to run our own lives. Or, perhaps the liberty-minded among us can do a better job convincing the undecided (at least) that wealth and prosperity are created by capitalist pursuits, not government taxes and programs.

Rasmussen offers an interesting caveat.

It is interesting to compare the new results to an earlier survey in which 70% of Americans prefer a free-market economy. The fact that a “free-market economy” attracts substantially more support than “capitalism” may suggest some skepticism about whether capitalism in the United States today relies on free markets.

I could be convinced that “free[dom]” has a better connotation than “capitalism.” Thoughts on all of the above? Do share.

Waxman-Markey litigation shell game

by Marlo Lewis on April 9, 2009 · 1 comment

in Global Warming, Sanctimony

When I first eyeballed the 648-page draft cap-and-trade bill, authored by Reps. Henry Waxman (D-CA) and Ed Markey (D-MA), I was perplexed, even stunned.

Secs. 831-834 of the draft bill exempt carbon dioxide (CO2) and other greenhouse gases from regulation under the Clean Air Act’s (CAA) National Ambient Air Quality Standards (NAAQS) program, Hazardous Air Pollutant (HAP) program, New Source Review (NSR) pre-construction permitting programs, and Title V operating permits program.

This surprised me for two reasons.

First, it is tacit admission that free-market and industry analysts were correct when they warned that EPA could not control the cascading effects of CAA regulation of CO2 once it starts. It is implicit confirmation of our view that the Supreme Court’s Massachusetts v. EPA decision set the stage for an economy-choking regulatory morass.

What a difference one presidential election can make! Back in July 2008, Waxman and Markey bashed Bush’s EPA for responding to Mass v. EPA by issuing an Advanced Notice of Proposed Rulemaking (ANPR). EPA’s purpose was to inform and solicit public comment on the administrative, legal, and economic repercussions of greenhouse gas regulation under the CAA. Waxman denounced the ANPR as “a transparent delaying tactic.” Markey called it a ”shameful display of political interference with potential regulation of global warming pollution.” They demanded that EPA simply declare ”global warming pollution” a menace to society, and propose regulations to combat it. 

Yet today, Waxman and Markey are peddling legislation that would exempt greenhouse gases from several CAA regulatory authorities. It’s as if they actually learned something from the ANPR and the comments free-market and industry analysts submitted to EPA spotlighting the perils of CO2 regulation under the CAA. 

Or maybe they knew all along that Mass v. EPA created a Pandora’s Box, pretending otherwise gave them another stick to beat Bush with, but now that Obama is in the hot seat, they have to sober up and avoid a politically-damaging regulatory debacle.

Whatever their reasoning, I was also surprised by Secs. 831-834, because the provisions seemed so contrary to the economic interest the eco-litigation “community.”

For example, if EPA establishes greenhouse gas emission standards for new motor vehicles–the explicit policy objective of petitioners in Mass v. EPA–an estimated 1.2 million previously unregulated entities (office buildings, big box stores, enclosed malls, hotels, apartment buildings, even commercial restaurants) would become “major stationary sources” of CO2. As such, those facilities would be vulnerable to new regulation, monitoring, paperwork, penalties, and litigation under the NSR pre-construction permitting programs. Applying NSR to CO2 would produce a surge in NIMBY (“Not In My Backyard”) lawsuits. Construction jobs and economic development would plummet, but “green jobs” for trial lawyers would soar.

Why would Waxman and Markey deny a full-employment program to  the eco-trial bar? This puzzled me. Until yesterday, that is, when I read a blog post by Matt Dempsey of Senator Inhofe’s Senate Environment Public Works Committee staff. As Dempsey explains, the draft bill would dramatically expand “citizen suit” provisions under the CAA:

Over the next few days, EPW PolicyBeat will focus on the Waxman-Markey draft climate change legislation and several of the most interesting provisions therein. In our view, Section 336 is far and away the most interesting in the 648-page bill. Here the authors amend the citizen suit provision in Section 304 of the Clean Air Act. The Waxman-Markey bill authorizes a “person” to “commence an action” who has “suffered, or reasonably expects to suffer, a harm attributable, in whole or in part, to a violation or failure to act referred to in subsection (a).” Sounds innocuous enough…until one reads on. For then one discovers how “harm” is defined: “For purposes of this section, the term ‘harm’ includes any effect of air pollution (including climate change), currently occurring or at risk of occurring, and the incremental exacerbation of any such effect or risk that is associated with a small incremental emission of any air pollutant (including any greenhouse gas defined in Title VII), whether or not the risk is widely shared.” In other words, should the unfortunate happen and Waxman-Markey become law, courts could conceivably be flooded with lawsuits filed by environmental groups who perceive some risk—and they undoubtedly will perceive it—that is “associated with a small incremental emission” of a greenhouse gas—whether from a coal-fired power plant, a manufacturing facility, or some other entity covered by the bill. This provision will further empower the eco-trial bar to fight the ravages of climate change and the businesses it dislikes, with no effect on the former and disastrous consequences for the latter.

So there you have it. What the left hand taketh away, the other left hand restoreth. Secs. 831-834 appear to shield businesses from litigation-driven regulation under the CAA, but this is a slight-of-hand. Sec. 336 would open up a whole new field of climate-related regulatory litigation.

The Waxman-Markey draft bill is tricky in at least one other respect. Although it precludes regulation under the aforementioned CAA programs, it does not preclude regulation under CAA Sec. 111, the New Source Performance Standards (NSPS) program. Anyone who reads the ANPR can see that EPA staff are hot to propose greenhouse gas performance standards for coal-fired power plants, petroleum refineries, and other large industrial facilities.

Although the greenhouse gas performance standards, as envisioned in the ANPR, would mostly require “process efficiency” upgrades, eco-litigation groups entertain much bigger ambitions. Last November, Sierra Club climate council David Bookbinder advocated using NSPS to block construction of new coal-fired power plants and, in time, shut down existing coal plants: 

So what next?  Logically, I think the answer is New Source Performance Standards for fossil-fuel fired power plants.  Just such a rulemaking is sitting in limbo at EPA and it is the appropriate vehicle for limiting new power plant emissions to 800 lb. CO2/MWh.  This would permit new gas-fired plants but would effectively stop any new coal-fired ones that did not employ carbon capture and sequestration (“CCS”).  Perhaps this rulemaking could also contain a second phase, effective 2016 or so, tightening the standard to approximately 250 lb. CO2/MWh.  This would be achievable via either combined gas/solar or gas/wind generation or 90% CCS.  And then they could start thinking about how to deal with existing power plants under Section 111(d) of the Act.  But one thing at a time.

Since coal provides about 50% of all U.S. electric power, an agenda that aims to suppress or even kill off coal generation in a decade or so should worry anyone who worries about the economy (and who doesn’t worry about the economy these days!).

To sum up, the Markey-Waxman bill leaves intact the NSPS threat to our electric supply system. It would create a new launchpad for litigation based on the perceived environmental risks of “small incremental” emissions. Any “regulatory certainty” it appears to offer is illusory.

Trojan Horse “Food Safety” Law

by Hans Bader on April 9, 2009 · 1 comment

in Agriculture, Deregulate to Stimulate, Economy, Employment, Legal, Natural Resources, Personal Liberty, Precaution & Risk, Regulation

A misguided bill, the Food Safety Modernization Act of 2009, may shut down farmer’s markets and “drive out of business local farmers and artisanal, small-scale producers of berries, herbs, cheese, and countless other wares, even when there is in fact nothing unsafe in their methods of production,” warns Walter Olson at Overlawyered.

Ignorance about the law’s broad reach (and how it will be construed by the courts) has thwarted opposition to the bill, which will likely pass Congress. For example, a newspaper claims the bill “doesn’t regulate home gardens.” The newspaper probably assumed that was true because the bill, like most federal laws, only purports to reach activities that affect “interstate commerce.” To an uninformed layperson or journalist, that “sounds as if it might not reach local and mom-and-pop operators at all.” (The bill’s sponsor, Rep. Rosa DeLauro, has sought to forestall opposition to her bill by falsely claiming that that “the Constitution’s commerce clause prevents the federal government from regulating commerce that doesn’t cross state lines.”)

But lawyers familiar with our capricious legal system know better. The Supreme Court ruled in Wickard v. Filburn (1942) that even home gardens (in that case, a farmer’s growing wheat for his own consumption) are subject to federal laws that regulate interstate commerce. Economists and scholars have criticized this decision, but it continues to be cited and followed in Supreme Court rulings, such as those applying federal anti-drug laws to consumption of even home-grown medical marijuana. Indeed, many court decisions allow Congress to define as “interstate commerce” even non-commercial conduct that doesn’t cross state lines — something directly at odds with Rep. DeLauro’s claims.

Moreover, DeLauro’s own bill has a sweepingly broad jurisdictional provision that creates a presumption that home gardens do affect interstate commerce. Section 406 of the bill reads as follows: “PRESUMPTION. In any action to enforce the requirements of the food safety law, the connection with interstate commerce required for jurisdiction shall be presumed to exist.”

Lori Robertson of FactCheck.org, who is not a lawyer (she has a B.A. in advertising), claims the bill doesn’t apply to “that tomato plant in your backyard.” As a lawyer, I am skeptical of this claim. (I co-represented the prevailing defendant in the last successful constitutional challenge to federal regulation under the interstate commerce clause, United States v. Morrison (2000) — one of only two cases since the 1930s where the Supreme Court limited, rather than rubberstamped, regulation in the name of “interstate commerce”). And it appears that that the proposed law CAN apply to that tomato plant in your backyard (or Michelle Obama’s garden), since Congress’s power under the Commerce Clause is almost unlimited in the eyes of the courts.

This so-called “food safety” bill may actually make food less safe. Federal regulation often backfires or reduces competition. A classic example is the 2007 child-safety law, the CPSIA, which was based on junk science. It shut down countless thrift stores and entire industries, resulting in children’s books being thrown out and pulled from library shelves by the thousands. It harmed poor people and special-needs kids. It rendered many ordinary bicycles illegal and made motorcycles more dangerous to children.

My wife, who immigrated from France, already finds it difficult or impossible to obtain many of the food items she likes from her native country (like raw-milk cheeses). This law will make it even worse. As Olson notes, “Many informal makers of ethnically or culturally distinctive food items will go off-books or simply fall by the wayside, overwhelmed by the reporting and batch-tracking paperwork. Many foreign producers who ship in less-than-mass quantities will give up on the U.S. market rather than try to comply with challenging standards that differ drastically from those imposed by European markets or their own countries of origin, which in turn will mean that many interesting and safe specialty foods will simply no longer be available for purchase, at least legally.”

CBO catches up with CEI on ethanol

by Fran Smith on April 9, 2009 · 1 comment

in Agriculture, Energy, Environment, Global Warming

Well.  The Congressional Budget Office has finally caught up with what CEI has been saying for years –  misguided ethanol policies cause higher food prices without providing significant environmental benefits.  In a report released yesterday, CBO noted this about food prices:

CBO estimates that the increased use of ethanol accounted for about 10 percent to 15 percent of the rise in food prices between April 2007 and April 2008.

And what about ethanol’s highly touted reduction of  greenhouse-gas emissions? Here’s what CBO found:

Last year the use of ethanol reduced gasoline usage in the United States by about 4 percent and greenhouse-gas emissions from the transportation sector by less than 1 percent.

In the long run, if increases in the production of ethanol led to a large amount of forests or grasslands being converted into new cropland, those changes in land use could more than offset any reduction in greenhouse-gas emissions—because forests and grasslands naturally absorb more carbon from the atmosphere than cropland absorbs.

Dennis Avery in a 2006 CEI study pointed this out,  as did this CEI 2007 report on unintended consequences of ethanol policy.  Also see CEI’s website on ethanol.

Smith on Smith (and Gjerstad)

by Fran Smith on April 9, 2009

in Economy, Nanny State

In a letter in today’s Wall Street Journal, CEI’s Fred Smith references Steven Gjerstad and Vernon Smith’s earlier op-ed to point out that radical egalitarianism policies have been one of the driving forces behind the housing bubble and the resultant financial crisis.  As Fred notes,

Steven Gjerstad and Vernon Smith suggest one unexplored aspect of our financial crisis: the role of egalitarian policies. To see this, note their distinction between the impacts of the $10 trillion loss in the 2000 stock market collapse and the $3 trillion loss of the recent housing collapse.

A driving force behind all this has been radical egalitarianism — the idea that something that can be afforded by some should be made available to everyone. Our universal housing-ownership passion transformed the housing market. Under the egalitarian promotional housing policies of the last few decades (the Democrat’s “affordable” housing goals; the Republican’s “ownership society” obsession), banks became institutions that would loan you money even if you were unlikely to be able repay it. The moral hazard problems created by our bipartisan egalitarians (the Community Reinvestment Act, the mandates on Fannie Mae and Freddie Mac) enticed far too many Americans into purchasing homes priced beyond their means. There is a critical distinction between the democratizing tendency of the market and the coercive egalitarian policies of politics.

Baptist-Bootlegger Alliance on Tobacco

by Hans Bader on April 8, 2009

in Economy, Healthcare, Legal, Personal Liberty, Politics as Usual, Precaution & Risk, Regulation

In today’s Washington Examiner, Tim Carney has an excellent column on how the bill to place tobacco under FDA regulation would reduce competition in the tobacco industry and enrich the biggest company — Philip Morris — at the expense of consumers and competitors alike. Although the bill is supported by leading anti-smoking groups (which indirectly receive money from Big Tobacco through the $246 billion Master Settlement Agreement), the bill’s “most important ally” is “Philip Morris, the largest cigarette maker in the world.” As Carney notes,

“There’s a metaphor popularized by economist Bruce Yandle that is useful in explaining efforts to regulate anything from energy to toy safety. Call it the Tale of the Baptist and the Bootlegger.

“Picture a small-town Southern politician after Prohibition’s repeal. Call him Jones. Jones’ campaign needs both cash and a winning issue. The state’s most prolific bootlegger comes and offers Jones both. ‘I can bankroll your entire campaign. You just need to outlaw alcohol in the county. If you close down the bars and clear the liquor out of the corner stores, the men will all have to come to me for their fix.’

“Jones, with newly heavy pockets, walks down to the Lady’s Temperance Hall and declares, ‘Ladies, I’m running to end the scourge of alcohol in this town, and I’m asking for your support.’ At his campaign kickoff the next week, Jones has the entire Temperance Union and the local preacher onstage endorsing him, and of course, he’s got the pipeline of alcohol cash from the rumrunner who will get even richer when the county goes dry again.

“Philip Morris is the ‘bootlegger’ today — the undisputed giant of the industry. The company controls more than half of the U.S. cigarette market. . .Parent company Altria has hired three new lobbying firms so far this year, bringing its army to 19 different lobbying firms plus a powerful in-house shop. . .

“Philip Morris stands to benefit from this regulation in many ways. First, all regulation adds to overhead, and thus falls more heavily on smaller firms. Second, restrictions on advertising help Philip Morris’ Marlboro, a brand everyone already knows, by keeping lesser-known brands in the shadows. (Existing restrictions on advertising have already helped Philip Morris in this regard, with an added benefit spelled out in Altria’s annual report: ‘Marketing and selling expenses were lower, reflecting regulatory restrictions on advertising and promotion activities. … ‘) Finally, if the bill passes and the FDA gets added control over the industry, Philip Morris, more than any of its competitors, will have access to those bureaucrats and agency heads making the decisions.”

We wrote earlier about how FDA regulation might actually undermine public health by making it harder to market to smokers other tobacco products, like snus, that are not as lethal as cigarettes.

Federal regulation often backfires. A classic example is the 2007 child-safety law, the CPSIA, which was based on junk science. It shut down countless thrift stores and entire industries, resulting in children’s books being thrown out and pulled from library shelves by the thousands. It harmed poor people and special-needs kids. It rendered many ordinary bicycles illegal and made motorcycles more dangerous to children.

But it is now being used by Congress as a blueprint for a misguided law, the Food Safety Modernization Act of 2009, that would put small food producers and farmers’ markets out of business in the name of food safety.

Speaking of Baptists and bootleggers, a large coalition of religious leaders who know nothing about how regulation works in the real world have endorsed FDA tobacco regulation. Most of them are from liberal religious denominations, like the Unitarian Universalists and Religious Action Center of Reform Judaism, but the signatories also include Dr. Richard Land of the Southern Baptist Convention.

I wrote earlier about the Religious Left, including its claims that Sarah Palin is not really a woman (because she’s a Republican), that Ronald Reagan was “Pontius Pilate,” and its rants about the “Taliban-like American male,” who should “shut up for a milennium.” The Religious Left also believes that God hates secret ballots in the workplace, and falsely accused former Interior Secretary James Watt of publicly stating that all trees should be cut down in light of the imminent return of Jesus Christ.

Ideologies Are Like Cults

by Hans Bader on April 8, 2009 · 2 comments

in Bailout Watch, Economy, Politics as Usual, Stimulus to Nowhere

Herbert Hoover ran up big budget deficits in response to the 1929 stock market crash, in an unsuccessful effort to stave off the Great Depression. That’s incontrovertible history. Even the web site maintained by the Obama White House, which has proposed record-setting budget deficits over the next decade, says Hoover ran up deficits.

But when someone points out that Hoover was a deficit-spender, liberal ideologues falsely claim in response that Hoover pushed for a balanced budget. Nothing supports those claims. But they are necessary to argue that deficit-spending is a miracle cure for the recession — and to defend Obama’s unprecedentedly-large deficits from criticism by economists and financial experts.

Yesterday, the Washington Post carried my letter to the editor noting that Hoover ran up big deficits. In my letter, I noted that contrary to the claim that

“‘President Herbert Hoover’s response” to the 1929 stock market crash ‘was to balance the federal budget.’ Hoover actually ran up massive deficits, as the federal Office of Management and Budget notes. Hoover inherited a large budget surplus, which he quickly turned into a deficit. By 1932, when he lost his bid for reelection, the deficit had reached $2.7 billion — the third-largest budget deficit America had ever experienced. Hoover increased government spending from $3.1 billion to $4.7 billion in a failed effort to stimulate the economy. And he increased marginal tax rates to 63 percent.”

When I cited to the federal Office of Management and Budget, it was to a document on the White House’s own web site, “Historical Tables: Budget of the United States Government, Fiscal Year 2009.” Most of my figures came from Table 1.1 on page 21 of that document.

But all this evidence was to no avail. A hostile commenter on the Post’s web site asserted just the opposite, based on — nothing. He wrote, “Check out the ‘Competitive Enterprise Institute’ website . . . It’s a right-wing organization whose kookiness is akin to the Flat Earth Society. Hoover DID try to balance the budget in the middle of a recession and, consequently, trigered [sic] the Great Depression.”

Needless to say, the hostile commenter didn’t cite any evidence or any sources for his claims about Hoover, because there aren’t any. And the evidence I cited was from the White House’s own web site. (By the way, I have an economics degree, a law degree from Harvard, and graduate level econometrics coursework, not signs of belonging to the “Flat Earth Society”).

Earlier, I noted the parallels between Obama and Herbert Hoover on international trade, taxes, and spending. I linked to source after source supporting my argument. For example, I noted that

“In the Great Depression, President Herbert Hoover raised marginal tax rates to 63%, and went on a deficit spending binge. He also signed the Smoot-Hawley tariff, which helped turn a recession into the Great Depression by triggering a trade war with other countries.

“Obama is on the same path. His deficit-exploding $800 billion stimulus package blocked 97 Mexican truckers from U.S. roads. That NAFTA violation “caused Mexico to retaliate with tariffs on 90 goods affecting $2.4 billion in U.S. trade.” The CBO admits that the stimulus package will actually shrink the economy in the long run.”

Confronted with these incontestable facts, found in newspapers and government reports, an Obama-phile simply asserted that everything I said was false, and that Hoover caused the Great Depression by cutting government spending. After regurgitating Obama Administration talking points, he claimed that “Hoover’s downfall was largely that he CUT spending rather than making sound investment in STIMULATING the already reeling U.S. economy.”

Keep in mind that Hoover increased spending by roughly 50% from $3.1 billion to $4.7 billion from the year he took office in 1929 to his last year in office, 1932. (That increase actually understates Hoover’s big-spending proclivities, for two reasons. First, deflation occurred during the Great Depression, so the increase in the budget after inflation was actually bigger than 50%. Second, Hoover’s influence on the budget wasn’t really felt until well after he took office. When it finally was, spending rose at a much more rapid rate.)

The commenter also claimed that Obama’s $800 billion stimulus package was “much-needed.” The Congressional Budget Office says that package, despite its enormous cost, will actually shrink the economy over the long run, by exploding the national debt and crowding out private investment. That contradicts Obama’s apocalyptic claims that the stimulus package was necessary to avert “irreversible decline” and economic “disaster.” (Note that the Congressional Budget Office’s figures cannot be dismissed as “radical” or right-wing “garbage,” since it is generally non-partisan, but subject to oversight by liberal Congressional leaders).

One Down, Six to Go!

by Fred Smith on April 8, 2009

in Energy, Environment, Global Warming, International, Natural Resources, Trade

Oh the Worries of Our Modern Malthusians! In Washington this week, the Anarctica and Arctic Councils met for the first time.  Secretary of State, Hillary Clinton, used the occasion to discuss the problems that global warming was “causing” in these areas.  Among the myriad disasters is the possibility that the region’s energy resources will become available and that an all-year passage around the pole might open.  

As I recall my history, European explorers spent centuries searching for a Northwest Passage.  Given the massive increases in global trade, the efficiencies that this would provide could give our flagging global economy a significant boost – and reduce energy use also.  And increasing access to new secure energy reserves (especially given that Norwegian and Alaskan activities have already shown we can extract such resources safely) would do much to address energy security concerns.  But to our Modern Malthusians, these are problems! 

As I remember geography there were seven continents – North and South America, Europe, Asia, Africa, Australia/New Zealand, and Anarctica.   Since humanity never reached the latter continent, it had no real defenders and, thus, in 1959, the global Antarctic Treaty, transformed it forever into a ward of the United Nations.  The treaty suggests the global goals of our Modern Malthusians. 

There is a total ban on economic activity, even though continental drift over the eons has meant that Anarctica might well have extensive fossil fuel reserves.  The treaty forbids almost all economic activities but does authorize residency by “scientists.”  This illustrates another bias of the left – “Research good, technology bad!”  In her speech however, Hillary went further calling for tourist restrictions (so much for eco-tourism).  One begins to understand – to protect the planet, we must wall it off from humanity!  

An ambitious goal but one that shouldn’t be ignored.  Malthusians have now captured one continent – only six to go!

Interview with Sam Kazman on the Auto Bailout

by Richard Morrison on April 7, 2009

in Video, Zeitgeist

[youtube:http://www.youtube.com/watch?v=c31kKtLECbQ 285 234]

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