Another Shot Fired in the Carbon Tariff Debate

I’ve written before about the “carbon tariff” debate, and will continue to do so as the Senate gears up to write a climate change bill. Indeed, I have a paper coming out in early September with a fuller analysis of the effects of slapping tariffs on countries in an effort to force them to sign up to international carbon-limiting agreements. [Spoiler alert: you’ll be shocked to know that I conclude that using trade measures in climate change policy is possibly illegal under world trade rules, definitely costly to the U.S. economy, and more than likely counterproductive in the efforts to forge a climate agreement (for what that’s worth).]

Seemingly unconcerned about the costs of green protectionism, ten Democratic senators crucial to the upcoming Senate vote (long-standing protectionists all, with the exception of newbie Al Franken) sent a letter to the White House yesterday, urging President Obama to rethink his (lukewarm) resistance to carbon tariffs. They argue that a dreaded “unlevel playing field” would result from saddling U.S. industries with higher carbon costs while, say, Chinese ones remain unencumbered.

You’ll have to wait for my paper for a full examination of those arguments, but in the meantime here’s some excellent analysis of the politics of it all by former Catoite, international trade lawyer, and friend of liberty Scott Lincicome. He assesses the scorecard as follows:

Pro carbon tariffs - Ten protectionist Senators, the US House of Representatives (in Waxman-Markey), France [link added], and Paul Krugman.

Anti carbon tariffs - the rest of the world.

Flood Insurance: Mend It or End It, But Don’t Just Extend It

Before leaving for the August recess, the House of Representatives passed a bill (HR3139) to extend the authority for the National Flood Insurance Program (NFIP) until March 2010.  The program was set to expire on Oct. 1, 2009.   The bill now goes to the Senate.  Instead of taking up HR3139, the Senate should insist on real reforms to the NFIP, rather then a blanket extension.

Since Hurricane Katrina, the NFIP has operated under a deficit of close to $17 billion, which had to be borrowed from the Treasury in order to pay claims.  Under the NFIP’s current structure, it cannot even make the interest payments on its borrowing; these losses will ultimately hit the taxpayer. 

The Senate last Congress passed a strong reform bill that would have eliminated almost half of the subsidies in the NFIP.  The House decided to instead seek an expansion of the broken program, adding wind coverage and raising the coverage levels (despite the availability of private flood insurance).

Many of the homes receiving subsidies under the NFIP are either vacation/second homes or properties where the government has paid repeated claims.  In one instance, a house in Houston this is valued at around $100,000 received over $800,000 in flood insurance claims over a 20-year period, before it was finally destroyed. 

Not only does the NFIP subsidize at taxpayer expense beach-front vacation homes, but there is growing evidence that the program causes substantial harm to the environment and local fisheries.  Just last year, the National Marine Fisheries Service issued a finding that the NFIP is pushing orcas and some runs of salmon to extinction.  Before the federal government forces significant costs on the private sector to protect the environment, perhaps it should take a close look at the damage its own activities inflict.

Senator Harkin Laments Lack of Poverty

An AP story today contains a quote that caught my eye, an indication that apparently jet-gate hasn’t jaded me as much as I thought it had. In the context of rising enrollment in the federal food stamp program (now known as the Supplemental Nutrition Assistance Program, or SNAP) and private charity efforts to feed poorer Americans, Senate Agriculture Committee chairman Tom Harkin (D, IA) says this:

Ensuring that our kids have enough to eat during summer months is critically important, especially during these tough economic times… Unfortunately, despite repeated efforts, the number of children participating in federally reimbursed summer nutrition programs in 2008 was the same as it was 15 years ago. (emphasis added)

At first I thought maybe he was saying how unfortunate it was that there had not been progress in reducing the number of kids receiving nutrition assistance, which would be fair enough. But the context of the quote suggests that Senator Harkin would prefer that more kids receive federal food assistance.

Sometimes I get the impression that politicians want increased power over our lives.

G. A. Cohen

I was contacted by several people about the death of G. A. Cohen, to whose ideas I devoted a chapter of my book Realizing Freedom. (The chapter, originally published in Critical Review, is also available in a PDF form here.)

I’ll just make two points about Cohen here, as I believe it generally best (there are exceptions) not to speak ill of the dead. In a meeting in his office when he reviewed an early draft of the essay above, he admitted that I had found a serious flaw, but demanded to know (and “demanded” is the right word) what my point was: “Are you attacking the argument, or the conclusion?!” I said I did not understand the question. He answered, “Well, the conclusion does not follow from the argument, so which are you attacking?” I was rather flabbergasted, and replied that the conclusion of an argument is a part of the argument, not some separate thing. But that was not how he saw things, and it showed in his entire career.

There are arguments, and there are conclusions. You attach yourself to a conclusion, and then you look for arguments that lead to it. That’s why he was an “analytical Marxist,” i.e., someone who agreed with what he took to be Marx’s conclusions, but who thought that the arguments by which Marx reached them were erroneous or fallacious, so his job was to come up with new arguments. If those didn’t work, you kept the conclusion and looked for other arguments. (In this case, however, despite acknowledging to me that his argument failed to reach the conclusion, he never acknowledged it publicly, but took some pains to lobby journals not to publish my critique, as was confided to me by editors of those journals.)

To get a sense of what kind of man he was, think a bit on this defense of the Soviet Union:

The Soviet Union needed to be there as a defective model so that, with one eye on it, we could construct a better one. It created a non-capitalist mental space in which to think about socialism.*

Millions had to die so that Cohen and his rich friends could enjoy “a non-capitalist mental space in which to think about socialism.” Words almost fail me. But not entirely. He should have spent his life begging forgiveness from all of the people who suffered from his pro-Soviet (he spent a good bit of his youth as a Soviet propagandist, which was essentially a family enterprise) and pro-Communist activities. He was no different than any old National Socialist who might have regretted that National Socialism wasn’t nationally socialist enough, but who enjoyed the “mental space” it created to construct fantasies of an ideal life.

I will merely point out that his attacks on charity and assistance to others is consistent, not only with his political philosophy, but with his personality and life.

*From p. 250 of his 1995 book Self-Ownership, Freedom, and Equality (Cambridge: Cambridge University Press), in which he strings together the “argument” that does not lead to the “conclusion” that property rights are unjustified.

Summer — or Back to School — Reading

The Cato Institute has published thousands of books, studies, articles, and op-eds, and most of them are on our website. But there’s lots of good reading material published elsewhere, and now our analysts are offering handy guides to the best reading in such fields as Principles of Liberty, Constitutional Studies, Health Care, Foreign Policy, and more.

I know that reading lists can sometimes be intimidating — where to start? — and too much of just a list. So these lists are annotated; each recommendation is briefly described. And at my insistence, (almost) all the analysts have started their lists with “Read This First” to suggest a foundational or introductory book or essay. Check them out here.

Pakistani Taliban Commander Dead

While American officials have yet to confirm his death, Baitullah Mehsud, the leader of Tehrik-e-Taliban Pakistan (TTP), which operates as Pakistan’s version of the Taliban, may have been killed Wednesday in an American missile attack in South Waziristan. Pakistan viewed Mehsud as its top internal threat. He was blamed for a wave of attacks that killed nearly 2,000 people in the past two years. He was also suspected of killing former prime minister Benazir Bhutto, and of having connections to al Qaeda.

Three things:

Number one, Mehsud’s death may or may not be a big blow to the TTP. Other deputies can easily take his place. In fact, shortly after Mehsud’s purported death, the Taliban Shura (an advisory council meeting) convened to elect a new TTP chief. (Among those being considered are Hakimullah Mehsud, Azmatullah Mehsud and Waliur Rehman Mehsud. The successor might be announced after Friday evening prayers). Any of these new leaders could quickly pick up where Baitullah left off, which means that picking off high-value targets in any insurgency does not guarantee that jihadists will melt away. We could only hope that a leadership void creates a power struggle among rival factions of the group, but that seems unlikely.

Number two, the drone operation shows improved coordination between the United States and Pakistan, which is welcome news. But the strike exemplifies the binary nature of the discussion surrounding the use of aerial drones: On the one hand, U.S. officials point to the successful killing of high-level al-Qaeda militants, such as Abu Laith al-Libi in January 2008, and chemical weapons expert Abu Khabab al Masri in July 2008. On the other hand, drone strikes have triggered collective armed action throughout the tribal agencies and have added more fuel to violent religious radicalism in this unstable, nuclear-armed country. One U.S. military official, who spoke on the condition of anonymity to McClatchy Newspaper correspondent Jonathan Landay, called drone operations “a recruiting windfall for the Pakistani Taliban.”

Number three, Pakistan might continue the same policy as before, differentiating between the “good Taliban” (those who attack U.S. and NATO forces in Afghanistan) and “bad Taliban” (those who attack the Pakistani military and the government). At the strategic level, Pakistan and the United States are still not on the same page.

The Real Cost of a Government Takeover of Health Care

The Congressional Budget Office estimates that current health care “reform” legislation could cost around a trillion dollars over the coming decade.  But that number likely is low. 

Stephen T. Parente of HSI Network LLC says the CBO did not use the most current data.  HSI figures the cost could be double the CBO estimate. 

Warns Parente:

The biggest player in the health-care debate right now isn’t Nancy Pelosi, Harry Reid, or even President Obama. It’s the Congressional Budget Office, which is responsible for estimating the costs of proposed legislation. After the director of the CBO testified on July 16 that none of the health-reform bills in the House or Senate would reduce the rate of increase in federal spending on health care, congressional efforts fell into disarray. Many policymakers began searching for a way to get costs below the CBO’s frightening estimate of $1.1 trillion over ten years. Others attacked the CBO, calling its estimates irresponsible.

The CBO is actually being kind to the would-be reformers. Its analysis likely understates — by at least $1 trillion — the true costs of expanding health coverage as current Democratic legislation contemplates. Over the last few months, my colleagues and I at the consulting firm Health Systems Innovations have provided cost estimates of health-care reform to both Republican and Democratic members of Congress, and we’ve posted these estimates on our website as well. We believe that the Democratic bills currently under consideration in the House and Senate would cost $2.1 trillion and $2.4 trillion, respectively — much higher than CBO’s figures.

The discrepancies between our estimates and CBO’s stem from our different assumptions about a key issue. The Democratic plans envision a government-run insurance program, modeled after Medicare, that will compete with private insurers. How many people would opt for coverage under this public insurance? We believe that both large and small employers would have powerful incentives to shift their employees out of private coverage and into the public plan. Like the Urban Institute, we estimate that roughly 40 million people would make the shift. CBO seems to assume, however, that large employers would use the public plan only sparingly and that only 11 million people would move from private to public insurance — which would, of course, result in lower costs.

Why the difference in these estimates? We believe that we have better data on this issue than the CBO, which uses simulation models of health-insurance plans based on much older health-plan data — typically from 2001 or even 2000. Our estimates are grounded in 2006 commercial-insurance data to which the CBO doesn’t have access (the data are not publicly available and the CBO didn’t make provisions to purchase them). These data reflect the advent of much cheaper, high-deductible health plans and limited-provider network plans. If the government modeled its public option on these inexpensive plans, the result would be cheap enough to lure far more people away from private health insurance than the CBO estimates.

Yet another reason, as if another reason were necessary, for Congress not to hurry in voting to nationalize the health care system.