200610

October 16, 2006 11:39AM

Does Big Steel Still Dominate U.S. Trade Policy?

Media Name: ikenson_steel_chart_small.jpg



The chart above depicts the operating performance of the industry that is most protected by U.S. antidumping and countervailing duty restraints. As that chart demonstrates, the U.S. steel industry is in robust health--well outperforming overall manufacturing (i.e., its customers) for the past few years.

Should one conclude that that performance is a reflection of the insulation from competition it has been afforded? That's likely to be one of the steel industry’s arguments before the U.S. International Trade Commission, which is holding a hearing tomorrow concerning the question of whether 13-year old antidumping and countervailing duty restrictions against imported corrosion-resistant steel from six countries should be continued for at least five more years. (This paper explains why revocation in these so-called Sunset Reviews is rare).

But those restrictions, as well as the 160 other trade remedy restraints currently in place to protect the steel industry, date back to the 1990s and earlier, when the industry’s performance was much closer to the first four bars than the last three. If anything, longstanding trade protection delayed the day of reckoning for many inefficient mills by discouraging them from exiting the market and encouraging continued inefficient operation.

From an operating perspective, the year 2004 stands out as a clear dividing line between the steel industry of old, and the new, revitalized industry of today. But the dramatic industry renaissance that has bestowed market power, record profitability, and insulation from any significantly adverse effects of foreign competition on U.S. steel producers began in 2002, after the government assumed $9 billion in the industry’s unfunded pension and health care obligations.

By wiping those liabilities off of the books of several major bankrupt steel producers, that intervention paved the way for mergers and acquisitions and new labor agreements that have enabled the industry to retire inefficient capacity, cut its fixed costs, and consolidate production decisions. In 2003, the top three producers of flat-rolled steel (the steel used in autos, appliances, and construction) controlled 25 percent of flat-rolled steel production capacity. Today, the top three control 70 percent.

That concentration has given the domestic industry a high degree of market power, which enables it to prop up prices and weather downturns in demand by curtailing output. There’s nothing objectionable about that (with the exception of the government-assisted jumpstart) unless, of course, steel is a major component of the products you manufacture. What is objectionable, then, is buttressing this emerging oligopoly with continued trade restraints. Consumers of steel should be expected to adapt to the effects of greater concentration of steel production, but that adaptation requires having access to imported substitutes and supplements.

Taxpayers, steel-using industries, and consumers have subsidized this industry for too long.

The ITC’s decision, expected in December, will speak volumes to the question of whether that agency continues to be a rubber stamp for the steel lobby’s protectionist agenda.

October 13, 2006 4:01PM

Specter’s Signing Statement Bill

Whilst buried by my Cato Supreme Court Review duties, I missed an opportunity to weigh in on the summer blog debate over presidential signing statements (i.e., the president's practice of announcing how a bill will be interpreted by the executive branch).

My general views track Marty Lederman, Walter Dellinger, et al.'s analysis in this post, which concludes that most common complaints about signing statements are overblown.

There is one problem that Lederman et al. don’t mention: the risk that courts will defer to signing statements when the law is ambiguous. Currently, the Court gives deference to agencies’ interpretation of ambiguous laws, under a narrow set of conditions set out in cases like United States v. Mead. In Mead, the Court underscored that judicial deference to the executive is controlled by Congress. Courts defer to the executive when the law is unclear based on a background assumption — a legal fiction, really — that this deference is what Congress wants when it passes an ambiguous law. 

The Court has never decided whether the president deserves the same deference as the agencies under his control. Courts certainly won’t give any deference to presidential constitutional interpretations, just as they don’t give deference to the constitutional interpretations of agencies. But it's possible that future courts might defer to some nonconstitutional signing statements, and the explosion of signing statements in this administration suggests the president is perhaps making a bid for recognition of some such future deference. If that bid is successful, the president’s interpretation would act as a kind of "super-legislative" history, trumping competing legislative history by members of Congress when the text of a law is unclear.

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October 13, 2006 3:41PM

If You Cut the Budget, The Terrorists Win!

Peter Beinart tells readers of this week’s New Republic that the conservative critics of President Bush need to just get over themselves. 

As Beinart writes:

To listen to Bush's critics, you would think that discretionary, nonsecurity-related spending has exploded on his watch. [Note: Emphasis is mine — you’ll see why this is important in a minute]. But it hasn't. As the Center on Budget and Policy Priorities has shown, when you take account of inflation and population growth, it grew a mere 2 percent between 2001 and 2006. And, as a percentage of GDP, it actually fell. What has exploded — rising 32 percent after inflation and population growth — is spending on defense, homeland security, and international affairs. And the people most responsible for those increases are conservatives themselves, who demanded an expansive war on terrorism.*

The first half of the claim boils down to this: If you strip away defense, homeland security, entitlement spending and international aid — what Beinart calls "discretionary, nonsecurity-related spending" — you discover that government hasn’t really grown all that much by historical standards. 

The problem? Those categories account for 80 percent of the entire federal budget.

Call it the “Yeah, but” defense. Yeah, the budget has expanded massively, but if you take away the really big categories — and don’t feel compelled to clarify how you’re defining those big categories — then we come off looking really good! (Of course, as I’ve pointed out elsewhere, the GOP really doesn’t come off looking good. Let’s just assume they do for the sake of argument.) 

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October 13, 2006 3:06PM

Robberies in the Capital

Today’s Washington Post has a front page story on robberies in the District of Columbia.


The District of Columbia has one of the strictest gun control laws in the United States. And the old saw about gun control is that when guns are outlawed, only outlaws will have guns. (Important loopholes: The mayor has his own armed security detail and so do other government employees.)


On this map of the city, the red dots indicate robberies where the criminal brandished a gun against the victim. Query: Is the city’s gun control policy helping the people or the criminals?


Go here for Cato material on gun control. To learn more about a constitutional challenge to DC’s gun control law, go here.

October 13, 2006 2:36PM

How, Again, Is This a Good Use of My Tax Dollars?

This week, Robert Cresanti, the under secretary of commerce for technology, presented the first‐​ever “Recognition of Excellence in Innovation” award to ODIN Technologies of Dulles, Virginia.


Why on earth a federal bureaucrat should run around giving awards to local firms is beyond me. Perhaps Technology Under Secretary Cresanti could have taken the day off. Or maybe just retired, if no actual work is pressing for his time. 


Let’s make the “Recognition of Excellence in Innovation” award a really special honor by discontinuing it. (Tell ODIN that nobody could ever reach the standard they’ve set.) 


I mean, really. Mad as hell and not gonna take it any more. Happy Friday.

October 13, 2006 1:53PM

School Vouchers on the Way in India?

According to an article in The Hindu, an education planning commission in India has recommended the creation of pilot voucher programs in its final "Approach Paper."

I have no doubt that the impetus for this recommendation comes at least in part from James Tooley's work in India and Africa over the past decade, including his most recent study showing the effectiveness and efficiency of private schools serving the poor in the city of Hyderabad.

A particularly interesting aspect of the article is the extent to which the Union Human Resource Development Ministry (in charge of education) misrepresented the facts in its statements to the reporter, Anita Joshua. I just fired off an e-mail to Ms. Joshua, setting the record straight. Some highlights below the fold...

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October 13, 2006 1:41PM

University Lockdown Costs You Plenty

Gallaudet University, the only university in the world focused specifically on deaf and hard-of-hearing students, is locked down. Some students — though it’s never clear how many or what percentage of the overall student body — have barred the entrance to the school to protest the pending installation of a new president, Jane K. Fernandes.

The complaints against Fernandes are myriad, ranging from displeasure with her purported top-down management style to accusations that the presidential search process was not racially inclusive. No one issue, though, appears to be an overriding concern, nor do the reported issues, together, seem to justify students taking the school over Taps style, with football players providing muscle at the gates and even Gallaudet’s elementary and high schools shut down.

As overblown as all this seems, though, it shouldn’t be of much concern outside the university, right? After all, isn’t Gallaudet a private college, meaning that whether or not students shut it down should ultimately be a matter between the students, the school, and maybe a few parents who’d like to know what their tuition payments are going for?

If only.

For one thing, almost all American institutions of higher education receive substantial funds from taxpayers, whether it’s state money going directly to public colleges or federal dollars going to research grants, student aid, or just plain pork at public and private schools. As a result, almost any college shutdown not only costs students and schools time and money, but taxpayers as well.

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