About Those Electric Cars ….

In a post yesterday, I scored U.S. News & World Report’s Marianne Lavelle for (among other things) passing on an estimate from an advocacy group called “CalCars” that “with today’s electricity prices, drivers would be paying the equivalent of 75 cents per gallon.” In fact, it would cost you almost $3.50 to get the same amount of BTUs from electricity that you get from gasoline in this country (assuming, of course, you are paying the national average price for electricity). This morning, The Daily Kos takes me to task for not going further and taking into consideration the greater efficiency with which electric motors convert BTUs to energy vis a vis internal combustion engines powered by gasoline.

Fair enough. Concentrating simply on BTU costs doesn’t tell the whole story. I did not, however, read Ms. Lavelle’s claim as anything beyond a claim about the cost of electricity versus the cost of gasoline - that is, the cost of fuel.

A good walk-through of the conversion efficiencies in play can be found here. The environmental calculations therein, however, are more problematic in that the authors assume the fuel used to produce the electricity in question comes exclusively from natural gas. That’s not a very good assumption.

Despite claims to the contrary over at the Daily Kos, neither I nor libertarians in general have any axe to grind regarding electric motor vehicles. I am not “for” them or “against” them. When electric motor vehicles become economically attractive, I’m confident that auto manufacturers will produce them. If that were to happen over the next year or two, I would have zero complaint. And to the extent to which I have any opinion on the matter, I think it would be a very good thing if battery technology advanced to such a degree that electric power could compete with petroleum in transportation markets. I simply don’t think government subsidies or mandates are likely to hasten the day in which that wish will be translated into reality.

Inspector General at the Door?

How many federal police agencies can you name?

The list is getting longer. CIA, FBI, NSA, ATF, DEA, INS, TSA, Secret Service, Customs, Border Patrol, U.S. Marshals Service, to name a few. But there are many more. IRS agents are armed. So are EPA agents. Agents with the Bureau of Land Management are not only armed, they have a SWAT team. Now agents with the Office of the Inspector General are getting into the police business, as Ryan Scott found out when his dog was shot and killed by an unnamed investigator.

Expect more stories like this. The number of federal criminal laws has been steadily expanding (pdf). To enforce those laws, Congress hires more agents. The agents, in turn, conduct more raids. To process the cases, Congress hires more prosecutors. And then, of course, Congress builds more prisons.

What we need to do is roll all of this back. Way back. For Cato scholarship on the federalization of crime, go here (pdf), here, and here.

Renewable Energy BS at U.S. News & World Report

In an article posted the other day at U.S. News & World Report, Marianne Lavelle reports on the state of affairs in the renewable energy industry. While the story she tells is a good one, she makes two stunning errors that lead me to question every other figure reported in the article.

Error #1 -

Historically, ethanol has been more expensive than gasoline, but crude oil prices are now so high that ethanol would be cheaper even without its 51-cent-per-gallon subsidy. Indeed, one reason pump prices have not skyrocketed along with the price of crude oil is that so much fuel is blended with 10 percent ethanol.

Really? Ethanol (E100) prices on U.S. spot markets last week averaged $1.87 a gallon. That is indeed cheaper than the price of conventional gasoline in those same markets ($2.25 per gallon), but ethanol has only two-thirds of the energy content of gasoline. If you want to buy enough ethanol to displace the energy you get from a gallon of gasoline, you would have to spend $2.80 per gallon. Hence, ethanol is not cheaper than gasoline, and federal mandates to use ethanol in transportation fuel does not reduce pump prices.

Error #2 -

The plug-in advocacy group CalCars estimates that with today’s electricity prices, drivers would be paying the equivalent of 75 cents per gallon [were they to run their cars on electricity rather than gasoline].

Again, really? Electricity prices last week averaged 9.57 cents per kilowatt hour. Given that there are 3,400 BTUs in a kilowatt hour of electricity and about 124,000 BTUs in a gallon of gasoline, simple math dictates that it would cost almost $3.50 to buy enough electricity to get the same amount of energy we get from a gallon of gasoline.

Reporters have got to stop taking figures at face value from policy activists with political axes to grind. And editors have got to start asking reporters to independently back their numbers up. Until that happens, don’t bother with the print media. The “facts” bandied about therein are a crap shoot. Some are correct, some are not, but you never know which.

More Willful Obtuseness from Michael Gerson

From this week’s Newsweek column, ostensibly about the “lessons of Iraq” and his new book:

Another false lesson is found in the assertion that the Iraq War has actually been creating the terrorist threat we seek to fight—stirring up a hornet’s nest of understandable grievances in the Arab world. In fact, radical Islamist networks have never lacked for historical provocations. When Osama bin Laden proclaimed his 1998 fatwa justifying the murder of Americans, he used the excuse of President Clinton’s sanctions and air strikes against Iraq—what he called a policy of “continuing aggression against the Iraqi people.” He talked of the “devastation” caused by “horrible massacres” of the 1991 Gulf War. All this took place before the invasion of Iraq was even contemplated—and it was enough to result in the murder of nearly three thousand Americans on 9/11. Islamic radicals will seize on any excuse in their campaign of recruitment and incitement. If it were not Iraq, it would be the latest “crime” of Israel, or the situation in East Timor, or cartoons in a Dutch newspaper, or statements by the pope. The well of outrage is bottomless. The list of demands—from the overthrow of moderate Arab governments to the reconquest of Spain—is endless.

I find it difficult to believe that even Gerson finds this reasoning persuasive. If it were, why protest about how this isn’t a war on Islam? Why go to great pains to describe the common ground between people in Islamic countries and ourselves? Why cast anything we’re doing as a “war of ideas?” If Gerson’s argument were persuasive, it wouldn’t make a lick of difference whether the president held a press conference and made obscene gestures at Muslims making the hajj, and tipped his hand about the grand conspiracy to keep Islam weak.

After all, the list of demands is endless. Right? Right?

Spitzer’s Speedy Flip-Flop

Wow. A brief 36 days is all it took New York Governor Eliot Spitzer (D) to abandon his stance on driver licensing and New Yorkers’ public safety. As I wrote at the time, Spitzer got it right when he announced that he would de-link driver licensing and immigration status because of the safety benefits to the state’s drivers.

But shrill attacks from anti-immigrant groups came fast and furious. A small group of 9/11 victims’ family members, grief curdled into hatred of immigrants, regularly bandy fear and their loved ones’ memories for political purposes. And they did so with relish when Spitzer announced his plan. It’s crassness that one would expect a New York pol to stare down.

But Spitzer, unable to withstand the heat, seems to have gone scrambling for an out. The New York Times reports that Spitzer will team up with DHS officials today to announce New York’s planned compliance with the REAL ID Act. It requires proof of legal presence to get a compliant license.

This a flat out reversal of the position Spitzer took just over a month ago. The justification he gave - correctly - for de-linking licensing and immigration status was New Yorkers’ safety. With driver licensing treated as an immigration enforcement tool, illegals don’t get licensed, don’t learn the rules of the road or basic driving skills, and don’t carry insurance. When they cause accidents, they flee the scene, leaving injured and dead New Yorkers and causing higher auto insurance rates. As I noted a few weeks ago during his brief flirtation with principle and fortitude, “Spitzer is not willing to shed the blood of New Yorkers to ‘take a stand’ on immigration, which is not a problem state governments are supposed to solve anyway.”

He may try, but Spitzer can’t honestly claim that he’s been consistent. New York’s compliance with REAL ID, were it actually to materialize, would put REAL ID compliant cards in the hands of citizens and make New York driver data available to the federal government. Thus, possession of a non-REAL-ID-compliant license would be tantamount to a confession of illegal status. Thanks to Spitzer’s flip-flop, illegal aliens will now recognize that getting a license merely provides federal authorities the address at which to later round them up for deportation.

Needless to say, they’re not going to get licenses, and the safety benefits Spitzer correctly sought for New Yorkers just 36 days ago will not materialize. The result is what’s known in regulatory circles as risk transfer. There will be more injuries on New York’s roadways so that the U.S. can have a national ID system. Alas, the security benefits of that system, as I showed in testimony to the Senate Judiciary Committee, are negative.

I was impressed and surprised by how right Spitzer had gotten it when he de-linked driver licensing and immigration status in New York. I’m once again impressed, but in a much different way, by how quickly he went scampering away from this good policy. The reactionary critics of his policy obviously really got to him.

Low Taxes Aren’t a Subsidy

Economist Dean Baker thinks that Amazon owes its profits to the fact that it doesn’t have to collect sales taxes for customers in states where it doesn’t have a physical presence. The absence of sales taxes on Internet purchases, he says, is a “subsidy that Amazon gets from taxpayers.” As I point out over at Techdirt, this is silly. Some states don’t have sales taxes at all, but no one would consider that a taxpayer subsidy. My local Wal-Mart benefits from a variety of state and local government services here in the St. Louis area, such as police and fire protection, and roads and other infrastructure. At least in part, sales taxes go to cover the costs of providing those services. Amazon uses few if any services from state or local governments in Missouri, so it’s hard to see anything unfair about the fact that it doesn’t have to collect sales taxes here.

On the other side of the ledger, sales tax collection would be far more burdensome to Internet-based businesses than to their brick-and-mortar competitors. A mom-and-pop retail store only has to learn about the tax rules in one jurisdiction. Most likely, there’s just one tax rate, one set of rules about which goods are taxable at that rate, and one set of reporting requirements. In contrast, a small e-commerce site would have to familiarize itself with the rules in thousands of different jurisdictions. The state of Missouri, for example, allows municipal governments to tack a variety of local taxes onto the state sales tax. As a result, the tax rate varies from city to city. Even worse, different states have different rules about which goods and services are taxable. Missouri, for example, exempts custom software (but not boxed software), farm equipment, and medical grade oxygen, among other things. Colorado has exemptions for bingo equipment, cigarettes, food, fuel and oil, machinery and machine tools, newsprint, precious metal bullion and coins, and more. Each of the other 40-some states with sales taxes have their own lists of what’s taxable. Many states exempt food and clothing from taxes, but the precise definitions of “food” and “clothing” varies from state to state. For example, in Wyoming, bagels are considered tax-exempt food unless they’re sold with cream cheese and a knife, in which case they become taxable “prepared foods.”

Not surprisingly, small online retailers are worried about the administrative burden of complying with so many different requirements. Some states have banded together to create a unified, “streamlined” sales tax system, but e-tailers are skeptical about how much the system can be simplified. Unless states first radically simplify and harmonize their sales tax rules (which might be a good idea anyway), I don’t think it’s going to be feasible to “streamline” the system enough to make it affordable for small e-tailers.

Bush IS a Big Spender, Pt. 2

Further to Dan’s post below, here’s the McClatchy story arguing that President Bush is the biggest spending president since LBJ. The article got lots of notice — probably because it was linked on the Drudge Report for most of Wednesday. 

The story is mostly old news — I’ve been making the same point for years. But, because it is based on updated data that I provided to the reporter, I’m happy to see the message ripple through the news cycle.

Clearly, the folks at IBD aren’t happy with the McClatchy story. They describe the notion that Bush can be called the biggest spender since LBJ as a “dishonest argument.” Their editorial in today’s edition points out that this claim is based on annual growth rates. That’s true, but the authors go on to say that a better measure of whether a president is a big spender or not should be based on how large government is as a share of GDP.

Funny thing is, I agree with them, and I’ve made that point before. But the argument the IBD editorial makes is misguided. (I won’t stoop to calling it “dishonest.” I don’t allege they deliberately falsified data, something that would obviously be dishonest in every sense. But calling the argument I’m making “dishonest” — well, them’s fightin’ words!)

To illustrate their point, the IBD editors published a chart detailing the average burden of government spending as a percentage of GDP by president. By this measure, George W. Bush has presided over an average spending burden of 20% of GDP during his time in office to date. That puts him around the middle of the presidential pack over the past 40 years.

That may not seem so bad. But a president who reduced government spending from 30% of GDP to 10% over his term in office would get the same ranking as Bush. So would a president who increased spending from 10% to 30%. Wouldn’t we call the latter a big spender and praise the former? Yes, we would and should.

What really matters here is the direction of the change. George W. Bush will likely leave office with a government spending burden higher (around 20%) than it was when he came to office (18.5%). That’s the way things trended in his first six years. Presidents Reagan and Clinton, on the other hand, presided over drops in the spending burden by this measure.

What’s stunning is how much smaller the federal spending burden would be if Bush and the Republican-controlled Congress had not drastically expanded all variety of domestic programs. If non-defense discretionary spending had simply increased at the rate of inflation and the Medicare drug benefit hadn’t been adopted, the spending burden would be around 18.5% today, just about where it was when President Bush assumed office in 2001. It would have been even lower if the president and Congress had cut some spending when they had the chance.

If signing into law every appropriations bill that crossed your desk in the first six years of your presidency — thereby allowing the federal budget to grow faster than the U.S. economy during those years — still doesn’t make you a big-spending president, I don’t know what would.