Archives: 11/2014

Highway Bill: The Unmentionable Option

In an article about federal highway legislation yesterday, the Washington Post illustrated the art of advocacy journalism cloaked as news reporting. The article explored different options for raising federal taxes $100 billion to fund state highways. It quotes three transportation lobbyists and included scare lines about the supposed consequences of not raising taxes (“… hundreds of thousands of construction jobs put at risk…”).

The article does not mention that spending cuts are an option for the upcoming highway bill. Everyone agrees that there is a large gap in the Highway Trust Fund (HTF), but gaps can be closed either by tax hikes or spending cuts. Yet the “transportation advocates” the Post talked to agreed, “until there is consensus on finding more money, transportation may be doomed to limp along in perpetual crisis.”

Nonsense. As I testified here, federal spending cuts would balance the HTF and solve the crisis, while spurring greater efficiency and innovation in U.S. transportation as the states played a larger role. The Post did not bother to explore that option, despite support from conservatives in Congress, prominent think tanks, and independent transportation experts.

In the election, Congress swung decidedly in a small-government direction, but the Post’s reporting did not reflect that reality, and instead presented only the lobbyist point of view. The Post’s silence on the spending-cut option is all the more striking because the newspaper admits that it would be very difficult to raise transportation taxes due to political and public opposition.

It will be interesting to see how Congress closes the HTF gap before the May expiration of the current highway bill. I hope that we have a robust debate on all the options and that the Washington Post changes course and presents its readers with a more balanced perspective.

U.S. Should Talk to North Korea, Whoever Is in Charge

Power is like quicksilver.  It often slips through the fingers of those attempting to grasp it.  Who is in power in North Korea?  Maybe 31-year-old Kim Jong-un.  Maybe not.

The Democratic People’s Republic of Korea’s Kim disappeared from public view for 40 days.  On his return Pyongyang only released undated still photos.

There’ve been no untoward troop movements or party conclaves in the North, though some other signs seemed conflicting.  Whoever reigns, there is little reason to hope for nuclear disarmament. 

To the contrary, the North appears to be increasing production of fissile material, moving ahead on ICBM development, and upgrading rocket launch facilities.  Even a seemingly secure Kim, the “Great Successor” whose father concocted the North’s “military first” policy, would hesitate challenging the armed services by trading away its most important weapon. 

Yet there are signs of change elsewhere.  The economy appears to be growing, with more consumer goods evident, especially in Pyongyang. 

Moreover, Pyongyang appears to be adjusting diplomatic strategies yet again.  The North released the three Americans it held, apparently without receiving anything in return. 

North Korea’s UN ambassador, So Se-pyong, indicated that the North was ready to return to the six-Party nuclear talks.  In early October Pyongyang sent a high-ranking delegation to Seoul for the Asian Games, which proposed further talks, though the latter later foundered. 

Nothing suggests that the regime is close to collapse. 

In this situation there is little to recommend the administration’s continuing policy of isolating the North.  In August North Korea’s deputy UN representative, Ri Tong-il, complained that “No country in the world has been living like the DPRK under serious threats to its existence, sovereignty, survival.” 

Of course, the North’s leaders are practiced cynics and their claims cannot be taken at face value.  But even paranoids have enemies, it is said, and North Korea is surrounded by wealthier and more powerful adversaries. 

A more pacific U.S. approach might not change the Kim regime’s calculus.  However, it’s hard to imagine a less threatening DPRK without changing America’s approach.

And that could come in part from diplomatic dialogue.  Washington should offer to establish low-key diplomatic relations, perhaps a consulate. 

Such a shift would be even more effective if coupled with policy changes that would be in America’s interest in any case.  Sanctions haven’t changed the DPRK and should be loosened.

Moreover, Washington should bring home its troops.  The U.S. conventional presence is long outmoded:  the South has around 40 times the GDP and twice the population of the DPRK.

Washington then could invite the North’s authorities to reciprocate.  If Pyongyang failed to act, which would surprise no one, Washington would be no worse off. 

It also would be more difficult for Beijing to excuse North Korean misbehavior.  Moreover, a troop withdrawal would eliminate the prospect that Korea unification would result in U.S. troops on China’s border, a Chinese nightmare which discourages Beijing from cooperating with Washington.

Even a more responsive North Korea is unlikely to be a particularly friendly actor.  Nevertheless, there is more hope for internal improvements in human rights and external talks over the issue if the international environment is less threatening for Pyongyang.  America’s earlier refusal to talk to the PRC gained nothing, while the famed Nixon opening helped create an atmosphere more conducive to post-Mao reforms.

Someday North Korea will pass away.  As I wrote in National Interest online:  “Until then the country is likely to remain a mysterious challenge, unsettling an entire region.  Washington’s best approach would be to extricate itself from confrontation and pursue dialogue, while leaving South Korea and Japan free to develop their separate policies.” 

Every strategy toward the DPRK so far seems to have failed.  Anything adopted is likely to be only a second best.  However, today even second best would be a major step forward.  It’s time for Washington to try something different.

Climate, Agriculture, and the Dead Zone

Okay, here’s how much of what calls itself science works today:

1) Find a change in something

2) Say it could be caused by global warming

3) Get more funding

4) Let people ask critical questions

5) Get tenure to protect you from that criticism

Today’s textbook example comes from the Washington Post, in an article, “Large ‘dead zones’, oxygen depeleted water, likely because of climate change”.

This is bad. According to The Post, the authors of newly minted article in Global Change Biology, say,

As global temperatures warm, they will create conditions such as rain [!], wind and sea-level rise that will cause dead zones throughout the world to intensify and grow…

Dead zones are (sometimes) large regions of hypoxic seawater that appear every summer. Because of their seasonality, obviously global warming is making them worse, right? (see 2) above) Or is it due to the fact that, on the average, humans are flushing more agricultural nitrates into the ocean as we produce ever more food? So the nitrates fertilize the ocean, algae bloom and die, bacteria decompose them and in the process, water becomes hypoxic, and fish die.

U.S. Actions Alienate China and Foster Chinese-Russian Cooperation

Two countries that have the capacity to cause serious headaches for the United States are Russia and China.  Yet Washington is committing a cardinal sin in foreign policy: getting on bad terms simultaneously with those two major powers.  As I discuss in a recent article at China-U.S. Focus, that approach is especially unfortunate because Beijing has boundary disputes and an array of historical grievances against Russia.  In addition, China is now uneasy about the precedents being set by the Kremlin’s support of secessionists in Crimea and eastern Ukraine.  Those concerns and would normally cause Chinese officials to be wary about close cooperation with Russia.  But because Washington’s own relations with China have become frosty, the Obama administration may be forfeiting an opportunity to keep Moscow and Beijing from developing a common policy directed against the United States.

Two high-priority Chinese foreign policy objectives are now in conflict.  Beijing does not want to encourage the increasing popularity of secession in the international system.  The breakup of the Soviet Union, the violent fragmentation of Yugoslavia, the emergence of South Sudan, and the increasing likelihood of an independent Kurdistan arising from the wreckage of Iraq and Syria, all confirm a powerful trend.  Russia’s actions in Georgia in 2008 (supporting the breakaway regions of Abkhazia and South Ossetia) and now in Ukraine have given that trend a major boost, much to Beijing’s dismay.  Chinese leaders fret about separatist sentiments in Tibet and Xinjiang, as well as Taiwan’s continuing de facto independence.  From Beijing’s perspective, Moscow’s embrace of secessionist movements in neighboring states is most unhelpfu

However, the Chinese government is reluctant to join the West’s campaign of coercion against Moscow.  Not only is Russia an important partner of China’s in the Shanghai Cooperation Organization, the two countries have significant mutual economic and security interests throughout Central Asia and the Middle East.  The multi-billion dollar energy deal that the two governments recently signed underscores yet another aspect of the growing bilateral ties.

Ivanpah: Time to End the Subsidies

Ivanpah in California is the world’s largest solar project. The project is owned by Google and NRG Energy, and is heavily subsidized by taxpayers. Ivanpah originally received a $1.6 billion loan from the Department of Energy (DOE) in 2011. Now the company is asking for another government subsidy to pay off its original loan.

Ivanpah’s loan guarantee came from the Section 1705 program created by the 2009 stimulus law. Section 1705 provided up to $18 billion in loan guarantees to “certain renewable energy systems, electric power transmission systems and leading-edge biofuels.” The program was temporary, with loans available until the end of fiscal year 2011. Unlike previous energy loan guarantee programs, Congress even provided subsidies to borrowers to pay the fees on loans.. As a consequence, firms were able to get a federal loan guarantee without any direct expenditure, providing a large incentive for firms to take advantage. By the end of the Section 1705 program in September 2011, DOE approved 27 projects totaling $14.5 billion.

Business failures among these loan recipients were common, the most famous being Solyndra. Solyndra, a solar-panel manufacturer, received a $535 million loan guarantee before filing bankruptcy. An analysis by the Reason Foundation found that 10 of the 27 recipients under Section 1705 experienced some sort of financial trouble.

The survival of Ivanpah is still up in the air. The project came online in December 2013. From January to August 2014, the project generated just one quarter of its predicted amount of electricity.

In February, the company asked DOE for permission to delay payments on its loan. According to the Wall Street Journal, DOE gave Ivanpah a one-year extension on the $132 million first payment. A second subcomponent—the loan is divided among three subcomponents—delayed a June payment of $159 million to December.

Now, Ivanpah is asking for $539 million in cash from the federal government. This time, Ivanpah is targeting a Department of Treasury tax credit program that reimburses renewable energy projects for up to 30 percent of project costs.

On Fed Ed, A Little Less Horrible Is Still Awfully Bad

This morning NPR published an interview with Sen. Lamar Alexander (R-TN), the presumptive next chair of the Senate Health, Education, Labor and Pensions Committee. Unfortunately, if you were hoping the new GOP Senate would move decisively in the right direction on education, you may be disappointed. While the interview suggests we could see a moderate move in the right direction at the k-12 level, there is little reason for hope in higher or early childhood education.

For elementary and secondary education Alexander certainly says the right thing – the states should be in charge – and it is better that federal funds be block granted with few rules attached than delivered via numerous, micromanaged streams. So he is moving in the right direction when he says under a Republican plan, “Tennessee, Texas or New York would decide what the academic standards would be, what the curriculum would be, what to do about failing schools and how to evaluate teachers.” His general inclination is also right when he says he wants to “give states the option — not mandate — to take federal dollars and let those dollars follow children to the schools they attend.” Empowering parents beats simply feeding government monopoly schools.

Unfortunately, moving somewhat in the right direction isn’t the same as doing the clearly right thing. The Constitution does not allow federal funding of education (outside of D.C. and federal installations), nor does the record indicate that federal funding is educationally effective. The feds should therefore get out of education, including abandoning plans to provide private school choice, which if voucherized would eventually deliver stultifying federal rules and regulations to private schools nationwide.

Alas, things only go downhill in the interview after tackling k-12.

On higher education, as I feared, Alexander gives no indication he will do what must be done to address colossal waste and crippling price inflation: significantly reduce student aid. Indeed, what he seems most intent on doing is simplifying the Federal Application for Federal Student Aid, which makes sense from a paperwork-reduction standpoint but might actually lead to more aid flowing from Washington as more people complete aid applications. At least, though, Alexander recognizes the danger of the federal government trying to rate all of the nation’s postsecondary institutions, ranging from “Nashville Auto-Diesel College…[to] Harvard.”

And then there is pre-kindergarten. Again, Alexander rightly warns about federal micromanagement, but he seems to fully accept that Washington should be spending tens-of-billions of dollars on pre-k. Indeed, he states that, “The question is not whether early childhood education is a good idea. It’s how best to encourage it.” But the question absolutely is – or at least should be – whether early childhood education is a good idea. As the Cato Policy Analysis published last month by George Mason University professor David J. Armor made abundantly clear, the pre-k research simply does not support the conclusion that early childhood programs work, and talking like it is a settled issue does not make it so.

Based on this one interview, the good news is that Senate Republicans might try to make horrible federal education policy a little bit better. The bad news is that something made a little less horrible is still awfully bad.

When Liberty Knocked Down the Berlin Wall

It’s easy to be pessimistic about the future of liberty.  Yet sometimes freedom advances with extraordinary speed.  Like 25 years ago in Europe.

As 1989 dawned communism had ruled what was the Russian Empire reborn for seven decades.  The system failed to fulfill its promise of human liberation, but survived with the backing of secret police, gulags, and the Red Army.

Then in an instant it all was swept away.  On November 9, 1989, the Berlin Wall was open.  One of the most dramatic symbols of human tyranny was gone. 

Tens of thousands of East Germans were imprisoned for “Republikflucht,” or attempting to flee the East German paradise.  Some 1000 people died trying to escape East Germany, about 200 from Berlin.

As 1989 dawned there was obvious unrest in what Ronald Reagan had called the Evil Empire.  Hope was rising, but no one could forget that previous popular demands for freedom always had been crushed by Soviet tanks. 

In 1989 Hungary led the way.  Plans were made for multiparty elections.  The Communist Party dissolved.  When the new leadership tore down Hungary’s wall with the West the Iron Curtain had a huge hole.

Poland’s communist regime made a deal with a revived Solidarity Union and held free elections.  The liberal tide rose in Czechoslovakia, sweeping away the hardline leadership installed to squelch the Prague Spring of 1968.

The East German regime remained tough.  Frustrated East Germans began escaping through Hungary, with its open border. 

Protests spread, causing the communist leadership to temporize.  On November 4 a million people gathered in East Berlin. 

On November 9 visibly struggling Politburo member Guenter Schabowski declared that East Germans would be free to travel to the West “immediately.”  Border guards desperately sought guidance as tens of thousands of people gathered demanding to be let through. Just before midnight the security forces stood aside.