January 2012

Wasteful Stimulus Package Fails Even In Short Term

by Hans Bader on May 19, 2009 · 5 comments

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

1.2 million Americans have lost their jobs since the $800 billion stimulus package was signed into law. The Congressional Budget Office predicted it would shrink the economy “in the long run,” but create jobs in the short run.

But the stimulus package turned out to be harmful even in the short run, because it was so badly designed. It poured money into sectors of the economy where no help is needed because unemployment is low, while siphoning money out of sectors where unemployment is high. Moreover, an Associated Press study “found that states hit hardest by the recession are getting the least amount of stimulus spending.”

The stimulus package has directly destroyed tens of thousands of jobs. A provision in the stimulus package that blocked 97 Mexican truckers from U.S. roads “caused Mexico to retaliate with tariffs on 90 goods affecting $2.4 billion in U.S. trade,” destroying 40,000 American jobs.

It also ignited a trade war with Canada. In response to vague “buy American” provisions in the stimulus package, “A number of Ontario towns, with a collective population of nearly 500,000, retaliated with measures effectively barring U.S. companies from their municipal contracts — the first shot in a larger campaign that could shut U.S. companies out of billions of dollars worth of Canadian projects.”

Yet, Obama had the audacity to claim that only passing the stimulus package would save us from “irreversible decline” and economic ““disaster”.

Obama’s policies echo those of Herbert Hoover, who helped spawn the Great Depression through his protectionism and tax increases.

Organic Food Waste … of Your Money

by Angela Logomasini on May 19, 2009 · 1 comment

in Agriculture, Environment

There is a great piece in Today’s Financial Times authored by Michael S. Kapinker, which is related to an issue raised in my post last week.  It addresses the organic food issue, pointing out that, during a recession, it makes good sense to buy conventional. He notes, its probably a good idea at any time based on the science. It’s worth taking a look.

Photo: courtesy of  Rick Audet.

New fuel economy rules will make cars more costly, less safe, trigger regulatory cascade

by Marlo Lewis on May 19, 2009 · 4 comments

in Global Warming, Odds & Ends

 

At some point today, the EPA and the Department of Transportation (DOT) will propose a first-ever joint regulation to establish first-ever greenhouse gas (GHG) emission standards for new motor vehicles. The new standards, covering model years 2012-2016, will raise federal fuel economy standards to 35.5 mpg in 2016.

This is considerably more stringent than the standard Congress adopted in the December 2007 Energy Independence and Security Act (EISA), which would boost average fuel economy to 35 mpg by 2020.

This is bad news for three reasons.

New cars will be less safe. The proposed standards will require the average car and light truck to be 40% more fuel efficient by 2016. That’s a very aggressive schedule. To meet it, automakers will have to deploy advanced technologies (such as hybrid engines), but that won’t be enough. They’ll also have to reduce average vehicle size and weight. That, in turn, will at a minimum make the average car less safe than it would otherwise be.

Why? It’s a matter of physics. Heavier cars provide more mass to absorb collision forces, and larger cars provide more space between the occupant and the point of impact. Make a car smaller and lighter, and it will go farther on a gallon of gas (and emit fewer pounds of carbon dioxide per mile), but it will also provide less protection in collisions. The National Research Council estimates that the pre-EISA (27.5 mpg) fuel economy standard contributed to about 2,000 additional fatalities per year.

New cars will be more costly. As an unnamed senior administration official said yesterday in an embargoed press briefing, the EISA fuel economy standard will add $700 to the cost of a new car in 2016. The revised standards will add another $600 to the average sticker price. Yet the anonymous official claimed the new rules will help revive the prostrate auto industry. Yep, increase the average cost of a new car by $1,300, and more people will buy them! 

As my colleague Sam Kazman comments, the federal fuel economy program “kills consumers by reducing vehicle size, and now it may well kill car companies by forcing them to produce cars that consumers don’t want.” 

The GHG standards will start a regulatory chain reaction with potentially devastating economic impacts. The new standards are the regulatory complement to the endangerment proposal EPA issued on April 17. As explained here and here, once EPA and DOT finalize the Fuel economy/GHG emission standards, an estimated 1.2 million previously unregulated buildings and facilities will qualify as ”major stationary sources” of carbon dioxide under the Clean Air Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program. Thousands of small- to mid-size firms could be compelled to obtain PSD permits in order to build or modify such “major stationary sources” as office buildings, enclosed malls, big box stores, and commercial restaurants.

The PSD  permitting process is costly and time consuming. In 2003, the average permit cost $125,120 and 866 hours  for regulated entities to obtain (not included any technology investments regulated entities had to make). No small business could operate under the PSD administrative burden. A more potent Anti-Stimulus would be hard to imagine.

Who determines good and bad gambling?

by Michelle Minton on May 19, 2009

in Odds & Ends

slots

Maryland does not have enough money in the budget to pay for the publicly funded programs they have built into the system over the last decade. Politicians are unwilling to cut programs and they don’t want to raise taxes lest they incur the ire of voting residents.

What is the solution to this apparent paradox? Well, for many years, Md. politicians have pushed legalizing and taxing slot machines as a way to bridge the gap. One of the newest rhetorical weapons they’ve paraded around to persuade opponents is by claiming that tax money from slots will be used to help the failing horse racing industry.

As Mark Fisher pointed out in his May 7th Washington Post article “A Matter of Money, Not Md.” the residents of the state don’t seem to be fooled by the flowery talk used to justify legalizing slots, which essentially says slots are a necessary evil to save the greater good–horse racing. This begs the question: why is betting on horse races romantic and worthy of protection while gambling at slot machines is seen as a sleazy stepping stone to crime and addiction?

Fisher’s article rightly paints this desire to “save”  the horse racing industry as completely bogus on all accounts: the government should not appropriate money from one industry or its citizens in order to save another industry. However, their is no reason that slots shouldn’t be legalized and allowed in malls or any other private location where operates can place their machines.

What gives the government the right to tell adults that gambling on horses is fine but slots are off limits?

Malls,  cathedrals to wasteful spending, have ATM machines providing easy access to cash and plenty of opportunity to spend it on useful items as well as opportunity to spend it in ways some might find wasteful.  Teens can buy $100 pairs of jeans, candy, drop unlimited amounts of quarters into arcade games. Who is to say that spending $10 on a movie ticket is any less of a gamble than putting a quarter in a slot machine? While the government shouldn’t be in the business of rescuing businesses consumers have no interest in, it also shouldn’t stand in the way of goods and services that consumers do want–regardless of how much tax money it could garner.

Sam Kazman Debates Obama’s Car Mileage Regulations

by Richard Morrison on May 19, 2009

in Video, Zeitgeist

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

Myron Ebell on Car Mileage Regulations

by Richard Morrison on May 19, 2009

in Video, Zeitgeist

[youtube:http://www.youtube.com/watch?v=qK9-FLQrNOo 285 234]

Calling All Liberty-Loving Writers

by Richard Morrison on May 18, 2009

in CEI Projects, Coalitions & Outreach, Culture, International, Zeitgeist

Our good friend and CEI alumna Kendra Okonski is looking for writers and journalists to enter the distinguished and lucrative Bastiat Prize Competition, presented by the International Policy Network. The competition is designed for writers whose published works promote the institutions of a free society. This year, the Prize has been expanded and  includes a new category for online journalism (including blogs and self-published articles). The first place winner will take home $10,000 and a lovely crystal candlestick.

Past winner have included Bloomberg columnist Amity Shlaes, ABC News co-anchor John Stossel, syndicated columnist Deroy Murdock and Atlantic Monthly editor Clive Crook. Visit the IPN website to read the rules and access the entry form.

Victory for Capitalism in World’s Largest Democracy

by Iain Murray on May 18, 2009

in Deregulate to Stimulate, Economy, International, Zeitgeist

India’s Congress Party was responsible for many mistakes when it turned India into a corrupt socialist state in the 1960s and 70s, but it changed course after a series of electoral defeats, and pro-market reforms were possible in the 1980s and 1990s.. Under Prime Minister Manmohan Singh it has been a champion of free-enterprise capitalism that has turned India into a successful modern state. Despite the global recession, Indians have strongly endorsed Mr Singh’s policies and returned Congress to power. The Communist “Third Force” block, which had boasted that it was going to be the kingmaker in the new Parliament, has suffered major setbacks, including huge losses in its stronghold of West Bengal. Freed from the threat of hindrance by the Marxist-Leninist block, as Swaminthan Anklesaria Aiyar says at Cato@Liberty, the Congress government will be able to press ahead with a number of much-needed liberalizations:

…pension reform, allowing private investment in coal mining, and raising foreign investment limits in insurance, telecom and retail. Victory and stability should also make it politically possible to avoid brazenly protectionist measures advocated by some sections of industry. The new agenda should include education reform—school vouchers to promote choice, liberalized rules for private schools, permission for foreign universities to set up shop in India. India badly needs administrative reforms to make civil servants and the police more accountable to citizens.

All true. If Congress follows through and does not allow itself to get sucked into dynastic politics (the latest scion of the Gandhi-Nehru dynasty has become a major player), then the foundation will have been laid for this century to be the Indian Century, and what was once Anglo-American capitalism may have to be referred to as Anglo-American-Indian capitalism.

Wasteful Cleanup

by Angela Logomasini on May 18, 2009

in Energy, Environment

What is more dangerous: Radioactive waste from a former government nuclear weapons facility or a rotting wood floor? Apparently, it’s the floor. One is hard pressed to show that radioactivity as such sites poses a serious public health threat, but as, the Washington Post reports, a worker at one of the federal sites recently fell through a rotting floor, prompting a safety review at such sites and costing the federal government about $781 million or more. The post story also reports a history of wasteful spending and fraud associated with the cleanup program.

The federal government is in the process of cleaning these sites as part of the “economic stimulus” package. It’s surely not much of a stimulus to clean these sites given the federal government’s overly expensive approach to such things. Several years back, CEI published a paper offering more affordable and environmentally sound approaches for dealing with the waste at least some of these sites. Maybe it’s time for the feds to take a good look at it and consider the fact that cost-effective solutions are better than bloated “economic stimulus” policies.

Image: Department of Energy image of cleanup at Hanford site.

LibertyWeek 43: A House in Gross Disorder

by Richard Morrison on May 18, 2009

in CEI Projects, Podcast

Host Richard Morrison and special guest co-host Jeremy Lott bid a bittersweet farewell to longtime co-host Cord Blomquist, who is departing CEI and LibertyWeek for a new job with the Mercatus Center. On the news front, we discuss pending “cap and trade” legislation for greenhouse gases, scandalous corruption charges in the British Parliament, and new hope for economic and political reform in India. We also return to Craigslist’s fight against state attorney general activism and some highly competitive Olympic News.

Listen to Episode 43 HERE.

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