Topic: Government and Politics

Bipartisan Nonsense on “Energy Independence” and Trade

Sen. John McCain reinforced his bipartisan credentials Thursday evening by sounding as confused as the Democrats on the nation’s assumed need for “energy independence.”

In his acceptance speech at the GOP convention in St. Paul, McCain pledged federal support for alternative energy so the United States can reduce the amount of energy it imports from abroad. “When I’m president,” McCain told cheering delegates, “we’re going to embark on the most ambitious national project in decades. We are going to stop sending $700 billion a year to countries that don’t like us very much. We will attack the problem on every front.”

He then pledged his support for more offshore drilling, nuclear power plants, wind, tide, solar and natural gas.

Whoa! Before we embark on a project that could cost tens or hundreds of billions of dollars, let’s get the facts straight. Specifically, where did that $700 billion number come from?

That is far more than what we pay for imported energy. In 2007, Americans spent less than half that amount—$319 billion—for imported energy of all kinds, including oil and natural gas. Even with higher energy prices in 2008, our total bill for imported energy this year will be nowhere near $700 billion.

Contrary to popular perception, most of our oil imports come such friendly countries as Canada, Mexico, Colombia, Brazil, and the United Kingdom, or from more neutral suppliers such as Iraq, Kuwait, Nigeria, Angola, Chad and Congo (Brazzaville).  Only a third of our imported oil comes from the major problem countries of Saudi Arabia, Venezuela, Algeria, Ecuador and Russia. We don’t import any oil directly from Iran. [You can check out the latest Commerce Department figures here.]

The $700 billion that Sen. McCain probably had in mind is America’s total trade balance, known as the current account. Last year, Americans rolled up a $731 billion current account deficit with the rest of the world. That account includes not just energy but also manufactured goods, farm products, services, and income from foreign investments.

The current account deficit is not driven by energy imports but by the underlying level of savings and investment in the U.S. economy. We run a current account deficit because, year after year, more is invested in the American economy than Americans save to finance that investment. Foreign capital fills the gap, and the resulting net inflow of foreign investment more or less directly offsets the gap between what we import and what we export.

If the federal government dramatically increases spending on alternative energy, as Sen. McCain and his Democratic opponent both seem to want, the result will be a bigger federal budget deficit, a smaller pool of domestic savings, more foreign capital flowing into the United States, and an even larger current account deficit.

You’re No Reagan—or Lincoln

Last night John McCain proclaimed himself the candidate of “the party of Lincoln, Roosevelt and Reagan.”

One of Abraham Lincoln’s most famous speeches was his 1852 eulogy for Henry Clay. “He loved his country partly because it was his own country,” Lincoln declared, ”but mostly because it was a free country.”

John McCain managed to give a lengthy tribute to America’s virtues without mentioning that it was a free country:

I fell in love with my country when I was a prisoner in someone else’s. I loved it not just for the many comforts of life here. I loved it for its decency; for its faith in the wisdom, justice and goodness of its people. I loved it because it was not just a place, but an idea, a cause worth fighting for. I was never the same again. I wasn’t my own man anymore. I was my country’s.

Fine sentiments, and he did mention that America is “an idea, a cause worth fighting for.” But what is that idea or that cause? He didn’t say. He never mentioned the Constitution, or the Declaration, or the freedom that has made America a beacon to the world. Indeed, his message seemed less like Lincoln’s and more like John F. Kennedy’s “Ask not what your country can do for you — ask what you can do for your country.”

Gerson to McCain: Move Left Fast

Bush speechwriter Michael Gerson, one of the big-government-conservative columnists who are all the rage with the Establishment Media, denounces Barack Obama for having “the ideology of Walter Mondale” and then calls on John McCain to adopt the ideology of Walter Mondale. Here’s his prescription for a winning acceptance speech:

McCain needs to announce new and unexpected reform proposals. Perhaps he should courageously follow the logic of his health plan and promise health coverage as a universal right guaranteed by subsidies for the purchase of private health insurance. Perhaps he should embrace the goal of getting all American electricity from renewable and non-carbon sources by some ambitious but realistic date. Perhaps he should offer guaranteed funding of higher education in exchange for national service.

With Republicans like that, who would need Democrats? If you want the big government of Walter Mondale, you might as well elect Walter Mondale, or his contemporary successor.

And of course it’s not at all clear that such a program would distinguish McCain from the Bush-Hastert-Frist Republicans who have become so unpopular. Ever since Gerson wrote for Bush the words “There is another destructive mindset: the idea that if government would only get out of the way, all our problems would be solved. An approach with no higher goal, no nobler purpose than ‘Leave us alone,’” the Republican party has been eagerly embracing openhanded government. Taxpayer funding for prescription drugs. Subsidies for every form of energy. Huge increases in federal education funding. How would Gerson’s proposed agenda for McCain be “the right address for a rebel?” It would in fact confirm the Bush-McCain alliance to destroy the remnants of Goldwater-Reagan conservatism.

McCain-Palin vs. Obama-Biden on Earmarks

Robert Bluey of the Heritage Foundation beat me to the punch by detailing the differences between McCain-Palin and Obama-Biden on earmarks.

Bluey makes an important point: even unquestioned reformers like Jim DeMint (R-SC) only recently found earmark religion. Better late than never. Especially in a state like Alaska, which is basically a welfare state where corruption is the status quo, Sarah Palin has built an impressive record of reform. Important questions remain to be answered about her stances on tax and budget policy, but compared to Obama and Biden, there’s no question the appropriations cardinals would be sweating bullets under a McCain-Palin administration.

Palin on Health Care, Limited but Encouraging

As with most other issues, Sarah Palin’s record on health care reform is, well, thin.  But what we do know suggests that she leans in the right direction.  She has said that the key to health care reform is to “allow free-market competition and reduce onerous government regulation.”   As governor, she called for abolishing Alaska’s anti-competition certificate-of-need (CON) requirement.  (CON requires that health care providers seek state approval before building or expanding hospitals, purchasing capital equipment, or offering new or expanded services).  She also established a state office to provide health care consumers with information about price and quality.  While this should more properly be handled by the private sector, it shows she understands the importance of making the health care system more transparent and putting consumers at the center of any health care reform.   Given the dismal record of most politicians from both parties on this issue, Palin’s record should be considered limited but encouraging.

Obama vs. Palin on Experience

Is there a libertarian position on what sort of experience a vice president needs? Libertarians have offered mixed reactions to the Sarah Palin pick. David Boaz would have preferred South Carolina Gov. Mark Sanford.

Compared to Sen. Joe Biden, a 36-veteran of the Senate, Palin is a breath of fresh Alaskan air. But conservatives and libertarians should remember the lesson of George W. Bush and never relent in their pressure to make sure a potential McCain-Palin administration does more than talk about cleaning up Washington and reducing the size of government.

The Obama campaign likely will turn to surrogates to make the inexperience argument against Palin because any direct shot from Obama is likely to backfire. Obama’s national experience amounts to four years in the U.S. Senate, most of which he spent not legislating but running for president.

Palin’s tenure as Alaska governor equals, if not exceeds, Obama in experience. Palin, 44, has spent 12 years in elected office: 10 years as a city councilor and mayor and nearly two as governor. Obama, 47, has also spent 12 years in office: eight years as a state senator and close to four as a U.S. senator.

“Today, John McCain put the former mayor of a town of 9,000 with zero foreign policy experience a heartbeat away from the presidency,” an Obama spokesman sniffed. They soon backpedaled on that line of attack, perhaps realizing Obama might alienate small-town voters who realize their mayors are often tested with tough decisions and budgets, rather than up-or-down votes.

Comparing her experience to Biden borders on ridiculous. Since when do libertarians find encouragement in government, much less someone who has spent 36 years in Washington funding programs like Amtrak and prosecuting the drug war?

On foreign policy, it’s not trivial to note that Obama seeks the presidency while Palin seeks the number two slot. Even if McCain died in office, Palin would retain McCain’s foreign policy team and have at least some experience as vice president.

As McCain’s operatives are sure to stress in the coming weeks, it’s pretty ironic for Obama to bash Palin on foreign policy experience when, in July, he visited Iraq for the first time since announcing his presidential bid — after repeated criticism from McCain — and has not held a single hearing on Afghanistan in his Senate subcommittee (again, letting Biden carry his foreign policy water). He also visited Afghanistan for the first time in July. Palin has visited Kuwait once in her role as commander of the Alaska National Guard.

Libertarians still have grave concerns about McCain’s foreign policy, but I think the Iraq war has lost salience as an issue, especially since the U.S. and Iraqi governments have basically agreed to withdraw troops by 2011, and most voters are focusing on the economy.

Finally, some have suggested that Palin was tapped simply because she was a woman. No doubt that played a role in her selection, but what matters is Palin’s reform record and standing as the antithesis of a Beltway insider. I predict attacks that Palin was only selected because of her gender will be as successful as complaints that Obama won because of his race.

Gov. Sarah Palin’s Record on Taxes and Spending

Alaska Gov. Sarah Palin has a mixed record on taxes and spending. She’s clearly erred on a few fiscal decisions during her tenure as mayor of Wasilla and as governor. Palin seems to operate from a small government mindset, which makes her few heresies on economic issues puzzling.

Palin has come under fire for supporting the “Bridge to Nowhere” in Ketchikan before she was against it. Aides said the cost of the bridge soared from $223 million to almost $400 million, prompting her to consider alternatives.

“She made the final decision to kill a very bad project, so she deserves credit for that. But she didn’t do it as an ideological opponent of earmarks. She did it as someone who had to balance the books,” Keith Ashdown, an investigator with Taxpayers for Common Sense told The Washington Post.

At best, Palin has been a convert on earmarks (and perhaps not a full convert). As governor of Alaska, she has requested 31 earmarks worth $197.8 million for next year, according to indicted Alaska Sen. Ted Stevens’ website, the Los Angeles Times reported. As mayor of Wasilla, Palin regularly traveled to Washington to request earmarks. The city obtained funding for several projects, including a bus depot ($600,000) and a water and sewer project ($1.5 million), according to Taxpayers for Common Sense.

As Wasilla mayor, Palin has a decidedly mixed record on taxes and spending. She slashed her salary and cut property taxes by 40 percent because of booming sales tax revenue from new stores.

But Palin also increased the budget by spending on roads and sewers, left the town nearly $20 million in debt and raised the city sales tax by half a percent (she said the money was needed to support construction of an indoor ice rink and sports complex and a police dispatch center).

As governor, Palin slashed more than 10 percent of the state’s budget in 2007 (Question: Besides his checkbook, has Barack Obama ever balanced — much less cut — a budget?). She vetoed $268 million in state projects and imposed objective criteria on the projects.

One of her signature accomplishments as governor was a $1.5 billion tax increase on oil production, infuriating oil companies, according to The New York Times. She accused oil companies of bribing legislators to keep taxes low and, soon after, passed a $1,200 “energy rebate” to each Alaskan from the state’s budget surplus.

As Chris Edwards noted, Palin has a spotty record on tax issues, mentioning the windfall profits tax on oil companies and noting she’s offered only minor tax breaks.

Libertarians should be cautiously optimistic about Palin. She has shown a dogged willingness to go to war with the worst elements of the Republican Party, but her missteps on some tax and spending issues means that libertarians should aggressively pressure a McCain-Palin administration to toe the small government line.