Keeping America competitive requires affordable government. The federal government is by far the biggest expense for successful American businesses and industrious American workers, because the industrious and successful pay nearly all federal income taxes. Runaway government spending has increased the cost of production for business and lowered the standard of living for consumers.
Federal spending will rise 43 percent between 2001 and 2006, according to Chris Edwards, the author of Downsizing the Federal Government. In the State of the Union Address, however, President Bush said, “Every year of my presidency we’ve reduced the growth of non‐security discretionary spending.”
Putting such new math aside, federal spending is still rising by 8 percent a year, twice as fast as the incomes of those stuck with the bills. Yet the president wants to spend more on compassion (foreign aid) and more on competitiveness (anything at all).
“Preparing our nation to compete in the world is a goal all of us can share,” he supposes. Competitiveness is a goal politicians can share, because it is a handy excuse to spend money. I rarely get a chance to agree with Paul Krugman, but I admired his 1994 article in Foreign Affairs, “Competitiveness: A Dangerous Obsession.” Krugman warned that “thinking and speaking in terms of competitiveness … could result in the wasteful spending of government money supposedly to enhance U.S. competitiveness.”
In the name of competitiveness, President Bush boasted of having already wasted $10 billion on energy boondoggles and talked about making energy “more affordable” by making government more expensive. He proposes to “double the federal commitment” to basic research in physical sciences, plus an extra 22 percent on energy research to “move beyond a petroleum‐based economy” to one based on “wood chips and stalks or switch grass.” And hot air.
It takes gobs of energy to produce hydrogen or ethanol. Owners of the 4 million flexible fuel trucks that could use 85 percent ethanol (E85) know their vehicles use 30 percent more fuel on E85 than on gasoline, so 99 percent choose gasoline. If alternative energy sources have any chance of being competitive, they will not need subsidies. If they need subsidies, they are not “more affordable.” Unfortunately, the ethanol lobby, the hybrid lobby and those seeking research grants are powerful special interest groups that lobby lavishly in Washington. “The federal budget has too many special interest projects,” said the president, as he proposed to add more.
The instant pundits were tricked by his “great goal: to replace more than 75 percent of our oil imports from the Middle East by 2025.” The trick is that U.S. oil imports from the Middle East are already small and getting smaller. We are buying more oil from Canada, Mexico, Russia and others. The Persian Gulf accounted for only 16.3 percent of total U.S. oil imports in November, down from 19 percent last year and 23.3 percent in 2001. Since Iraq accounts for more than 26 percent of U.S. oil imports from the Persian Gulf, war damage to Iraq oil fields had the ironic effect of reducing “our dependence on Middle Eastern oil.”
Where this country buys oil is completely irrelevant to whether or not oil is “affordable,” even though affordable energy was the rhetorical rationale for this latest presidential spending spree. Every barrel of Middle Eastern oil not sold to the United States will be sold to some other country, leaving the world price unaffected.
Meanwhile, some people may question the affordability of the Iraq war, which costs well over a billion dollars a week. The president ended by wondering, “Will we turn back or finish well?” That question could not be answered because 1) the war might finish badly, and 2) whether we turn back or not depends on the voters.
Seeking to postpone the inevitable answer to his question, the president made a mish‐mosh of two different concepts — isolationism and protectionism. He said, “The road of isolationism and protectionism … ends in danger and decline.” Isolationism implies being wary of foreign entanglements, minding our own business, concentrating on domestic affairs and not initiating wars. Avoiding willy‐nilly meddling in other nations’ political problems is entirely consistent with free trade. “I am for free commerce with all nations, political connection with none,” wrote Thomas Jefferson.
President Bush says, “We seek the end of tyranny in our world.” Since he equates freedom with democracy (such as Hamas in Palestine and Hugo Chavez in Venezuela), the president seemed to commit the nation to fixing “the other half” of the world — “places like Syria and Burma, Zimbabwe, North Korea and Iran.”
“Some dismiss that goal as misguided idealism,” he suggested. Others might dismiss it as megalomania.
He says, “We accept the call of history to deliver the oppressed and move this world toward peace.” But deliverance of the oppressed, whether they like it or not, is his rationale for starting a war. “We’re on the offensive in Iraq,” he noted. “Iraqis are showing their courage every day. … I am confident in the will of the Iraqi people.”
On the following day, The Washington Times published a University of Maryland poll showing that 47 percent of the Iraqis “approve of attacks on U.S. led forces in Iraq.” With friends like that, this beleaguered president may wish for more enemies, or at least fewer “yes” men among his policy advisers.