Environmental Policy


The nay-sayers on climate change came out in a big way today with a full page advertisement in the Washington Post and New York Times under the sponsorship of the Cato Institute.   I suspect they are wrong but in the interest of laying it all out there, I think it is important to consider the advertisement and the argument that’s being made.  Perhaps they are right and the rest of us are wrong.  The consequences of them being wrong, however, will likely be catastrophic.

I must also question their involvement with the nay-sayers on this issue.  Who can argue with the Cato Institute’s motto of “free markets, liberty and peace”.  In my view, however, Cato has become much more than its motto.  It has become the home of the rigidly ideological libertarian.  While I can understand that libertarians, who possess a general aversion to government, might chafe at any solution to a problem that necessarily involves a large role for government, I am deeply suspicious in this case that it is Cato’s ideological rigidity more than any science that’s at play here.  It would appear that what’s happening is that Cato and its ideological brethren would rather deny the problem (and science) than accept the inevitable government involvement that would be required should the problem and the science be accepted.       

I suggest that instead of denying climate change that a much better and productive focus for Cato would be on how government can best address the phenomena.  I am firmly in the camp that believes that “cap and trade” as a solution to climate change is folly and that the only viable solution, and the only one that truly relies on market forces, is the carbon tax.  For a variety of reasons beyond climate change a carbon tax, is an idea that needs to be given the most serious consideration.  

It is my view that the American public will neither understand nor ultimately accept the massive government bureaucracy that will be required to administer a cap and trade system.  We would be better off doing it right in the first place with a carbon tax.  For decades we have been subsidizing the internal combustion engine by refusing to attach to the price of gasoline, through a tax, the cost to our government of keeping gasoline inexpensive.  This subsidization has notably included the billions of dollars in defense expenditure required each year to keep the middle east “secure”.  Their have been other notable consequences of this subsidization.  The low cost of gasoline has wreaked havoc on our countryside and our road systems with the burgeoning of suburbia, what I call “McMansions in the burbs”.  This lifestyle is and always has been unsustainable, made possible only by government subsidization of oil imports.  A carbon tax, implemented by government but relying on the market appears to me to be the soundest solution, and a solution that Cato with its ‘less government’ philosophy could help to promote if it weren’t already aligned with the nay-sayers on climate change.  Cato may come to regret this alignment as the train toward climate change legislation moves forward.  I’d argue they could play a much more important role in shaping that solution than they are playing in denying its necessity.

Cato and other libertarians need to quit denying the underlying reality and direct their anti-government instincts toward solutions to climate change that minimize the role of government and emphasize the role of the market.    

There is a story today of a cabinet secretary who this week made a controversial decision that set new policy for the department he heads.  The decision was controversial, apparently, because he followed the unanimous recommendation of scientists within his department “rather than letting political factors influence him.” 

The cabinet secretary is Interior Secretary Ken Salazar.  His decision was to “stick with a controversial Bush administration move that took gray wolves off the endangered species list in most of the northern Rockies”, so reports the Washington Post in its story today entitled Salazar’s Wolf Decision Upsets Administration Allies.  

As I was reading the story I wasn’t surprised at the reaction.  Environmental groups demand total fealty to their view of the world.  Either you follow their prescription or you are anti-environment.  It is their way or else.  What really raised my ire, however, was the following paragraph from the Post story:

One House Democrat, who spoke on the condition of anonymity, framed it in even more blunt political terms. “I just don’t see what this does for us,” the lawmaker said. “Here we are alienating people who did the most — who did a lot to help us in the last election.”

So that is what governing is about, is it?  Doing what the “people who did a lot to help us in the last election” want rather than the right thing?  I have every reason to believe that Secretary Salazar’s decision was the right thing.  And for that he is criticized.  Shame on him for doing the right thing, the politicians are saying. 

This is what is wrong with Washington, what is wrong with our system as it has evolved.  Doing what is right and what science and reason and logic tell us need to be done often play second, third and fourth fiddle to politics.  This is wrong, wrong, wrong.  The American people elected this president in large measure because of his promises of change.  It is clear beyond doubt that the country craved change.  It wanted when it voted for Obama and it wants now for its government to change.  It wants the system to change.  What better way for change to manifest than for a cabinet secretary to do the right thing rather than the political thing?

Get ready for more stories like this.  Such conflict will be inevitable if Secretary Salazar continues to do his job well.  For if he’s doing his job, he is going to have to often ignore political constituencies of the Democratic party and sometimes make decisions with which they won’t approve.

What’s important here is that Secretary Salazar and his counterparts in government continue to have the support of the president.  Trust me that there are many more controversial decisions that Salazar is going to be required to make if he’s going to do his job well and do what’s right for the country.  Mr. Obama needs to make real his promise of change and back Mr. Salazar as he makes tough decisions in the national interest.  This could include decisions to open the offshore to oil and natural gas development or perhaps even to rethink development of the Arctic National Wildlife Refuge (ANWR).  We can never forget that environmental groups have a very parochial interest.  However, Mr. Salazar and the president whom he serves must balance these most parochial of interests with larger ones that include national security and the economic well being of our citizens.  Real change means putting politics in clear second position to making hard and rational decisions.

I argued in a posting before President Obama was elected that Obama had the potential to be able to do things as president that a President McCain could not.  I reasoned that because the American public would not believe that President Obama or his appointees were beholden to oil and natural gas development interests that the President and his cabinet could make rational decisions that might benefit those interests in way that a Republican could never do without being accused of playing politics–of doing favors for his supporters.  All of America would suspect that politics was at play if President McCain’s Secretary of the Interior announced the country was going to open the offshore to development or take gray wolves off the endangered species list.  But if President Obama’s Secretary of the Interior were to make such a decision mustn’t it surely be because it was the right thing to do since his political interests would not only not be be served, but be dis-served by such a decision.  Wouldn’t America respect that?

We’ll have to see.  The problem is that politics stands always ready to rear its ugly head and the power brokers, like the anonymous House Democrat quoted in the Post story, will demand that that we not alienate the Democratic Party’s friends. 

Real change, change that we can believe in, demands that the right thing be done and that politics as usual doesn’t hold sway.  Let’s hope this is an indication that real change is not only possible under this president but, indeed, is already under way.

        

There are a number of ways to judge the success of a presidency.  There is the historical perspective that takes a great many decades to determine with any accuracy.  There is whether the president was able to win re-election, always an important indicator of success.  And, there is whether, when the president is term-limited, the country swings wildly in the opposite political direction when picking the president’s successor.  It is possible, as we’ve just seen, for a president to win re-election yet leave office with abysmally low ratings and a successor that stands for just about everything that he didn’t.  In President Bush’s case, I would argue that his winning re-election was not so much an indicator of his popularity or “success”, but a complete lack of enthusiasm for his opponent.  The Democrats in John Kerry simply didn’t give the country a choice it found acceptable–better the devil you know.  That Bush left office deeply unpopular and with a successor who is his polar opposite in almost every way–personality, intellect, political philosophy–says something about how deeply unpopular, and I would argue “successful” George W. Bush was.

Having last week finally seen the complete unveiling of Barack Obama–no, not a centrist but a true blue Democratic liberal–it is interesting to speculate on how the American public is ultimately going to judge its new leader.  The 2010 mid-term elections will give us a first indication.  Then will come the 2012 general election.  Finally, should Obama be re-elected in 2012, there will be the election of his successor in 2016.

I’m not going to speculate on outcome.  I have no clue at this point.  I am going to suggest scenarios, however, that may give us some indicators.  Let me start by observing that it is entirely possible that by 2012 the bloom will be off the Obama rose but that the Republicans will still be in such philosophical disarray (which includes, in my book, clinging to the southern conservative model of Republicanism) that anyone the Republicans select will be doomed, ala John Kerry in 2004.  Of course, if Obama is despised at that point, which I doubt, it could be that almost any Republican could be elected.  Let’s hope this is not the case for the sake of our country.

Another scenario is to posit Barack Obama as the Democratic Ronald Reagan.  By this I mean a someone who, while clearly a darling of the ideological extremes of his party, is also able to capture a significant amount of independents and centrist members of the opposing party.  To accomplish this it is important that one be charismatic (check), a great communicator (check), and I would argue one more thing.  It will take someone who while talking enough of line to appease his ideological base, delivers policies that are mainstream enough that they don’t alienate the center, where the majority of American electorate resides (unknown).

Now this is where it gets tricky with Barack Obama.  He has announced to the delight of his party’s liberal base a very “liberal” agenda.  How will centrist America take to this?  I would argue that one thing that Ronald Reagan had going for him, that Obama does not, was a Congress that was never entirely in his camp.  In other words, Ronald Reagan never experienced having a Republican majority in both the House and the Senate.  While he had the Senate eventually, he never had a Republican House majority.  I would argue that this required him to moderate his course and deliver a product that was less ideologically conservative than it might otherwise have been and than what he might otherwise have preferred.  Given that most of the electorate is in the center of the political spectrum, this need to moderate arguably inured to Reagan’s political advantage.  Ronald Reagan both won a resounding re-election campaign in 1984 and left office in 1988 highly popular, replaced by his vice-president.

Using the Ronald Reagan model, Barach Obama doesn’t have the barrier (I would also say “advantage”) that Ronald Reagan had.  Unlike Reagan, Obama has healthy majorities in both the House and the Senate.  The only thing he does have that is arguably somewhat similar is a non-filibuster proof Senate.  That could well yet serve him well by holding him back from delivering a more liberal ideological product than he might prefer, but it could also save his political neck.  Since it is less of an obstacle than was Ronald Reagan’s obstacle, it may, however, prove less beneficial.

Of course, a third alternative exists.  America is indeed ready to make a major political shift from center-right to left/center-left.  This could be aided by an economy that is among the worst in the country’s history.  This will depend upon when the economy recovers and which party gets the credit.

I am disinclined to believe the American electorate is radically re-aligning itself to the left.  It will tolerate health care reform and education reform, but only so long as it delivers, on budget.  It will not tolerate huge deficits and massive new unfunded entitlement programs.  It will not tolerate massive new taxes, including taxes masquerading as greatly higher bills for electricity caused by an ill-conceived cap and trade system.  It will also tire of energy program that fails to accomplish its stated objectives (likely, as I pointed out in my posting yesterday).

The bottom line is that this story has yet to unfold.  It could go in many ways.  It will interestingto watch.  It will also be scary, as the country has so much at stake.  Had this been normal times, with an economy that was anywhere withing the range of normal, this liberal experiment that Obama’s proposing might have been an interesting and valuable exercise for the country.  In times of economic crisis, it seems rash and dangerous.  Let’s hope for the best case scenario, for failure could be unthinkably bad.  Let’s hope that Barack Obama does, indeed, turn out to be a liberal Ronald Reagan.

I’ve worked in the energy policy arena for most of my career and consider myself an expert.  I’ve been able to see what works and what doesn’t.  I am convinced that in dealing with climate change what this country does not need, at least not without much more public scrutiny, is a massive and bloated “cap and trade” mechanism to control greenhouse gas emissions.  I am deeply concerned that the public will never understand it as it’s far too complex and requires far too much bureaucracy in order to work.  It is entirely too “command and control” for my liking.

In a refreshing editorial this morning in the Washington Post, the Post editorial staff calls on Barbara Boxer to make good on her pledge to ‘start afresh’ on climate change legislation by “giving a tax on carbon a fair hearing”.  I could not possibly agree more.  The piece is entitled Climate Change Solutions: Senator Boxer is open to everything — except what might work best.

The great appeal of cap and trade is its ability to set clear limits on greenhouse gas emissions.  A carbon tax will take much more trial and error and extrapolation of data in order to determine how effective its been in achieving carbon emission reduction targets but the tax itself will be relatively clear and transparent.  There would also be a bigger public sales job in convincing people they need to pay a tax on energy.  However, cap and trade, make no mistake, will end up raising energy prices as well and the public will never understand how it works or, I predict, trust it.

At the very least, the carbon tax needs to be publicly debated and cap and trade juggernaut slowed enough to allow this debate and a greater public debate about cap and trade and what the mechanism would require in terms of a managing bureaucracy.  The time to begin that process is now.  Bravo to the Post for making this a priority.  It is about time.  

I’m not very hopeful on the energy policy front that President Obama is going to be able to accomplish anything significantly new.  What the country needs is an aggressive “do-it-all” approach to energy.  It would be a policy in which every part of the American energy industry is encouraged to expand and grow with the overlay of needing to move the ball forward, significantly, on mitigating climate change.  But, alas, it doesn’t appear that we’ll be moving into this sphere under President Obama.  I hope I’m wrong, but the early indicators are that we’ll merely emphasize renewables, punish domestic oil and natural gas, and let imports continue to rise (assuming the economy ever rebounds) to fill the gap between what this country can produce and what it needs.

Disappointing but entirely expected from a Democrat Secretary of Interior was the recent voiding of drilling leases on public lands.  The story can be found in the Washington Post and the New York Times.  While this could just be smart politics–cancellation pending review is smart and appeases environmentalist friends–and the end result could be re-leasing much, if not all, of the withdrawn land, don’t count on it.  It would be an unlikely result from a political party so dependent upon its environmentalist constituency.  There is no question that some land needs to be held back from drilling.  We don’t need to drill every square inch of the country, but make no mistake, we need significant domestic drilling to extricate ourselves from our dependence upon foreign oil.  Most environmentalists will only be happy when we halt all domestic oil and gas operations.  It’s unrealistic, but who cares about realism.  This is environmental politics. 

What the country needs to do is encourage domestic drilling in every way it can while at the same time sending a strong signal to the economy, through a gas tax or something similar, that use of oil is very costly.  Senator Richard G. Lugar recently called for imposition of a gas tax in a revenue-neutral way “to treat our oil addiction.”  His Op-ed in the February 1 Washington Post is entitled Raise the Gas Tax.  I’ve advocated for such previously on this weblog (here and here).  It would be sound public policy that in addition to discouraging the use of oil for transportation (our biggest use of oil) would encourage conservation of energy and the growth of renewable and alternative energy.  Win, win, win.  Is it likely to happen?  No.  Politicians are loathe to do unpopular things, even if revenue neutral.

There was also a recent story indicating that green energy has taken a big hit as a result of the declining economy.  This is as tragic as discouraging domestic production of oil and natural gas.  We must do it all.  For the story on how the financial crisis is hurting wind and solar energy, and why the stimulus provisions in this regard will be helpful to the industries, see Dark Days for Green Energy from the February 4 New York Times.

It would not be hard to put together an energy policy that makes everyone happy.  The problem is that such a policy would also make some sad, for the country would have to do some things it wouldn’t do in an ideal world (drill offshore, produce more onshore oil and natural gas, burn more coal, build more nuclear plants, develop wind energy off of Cape Cod).  Doing the right thing is never easy, but it’s the path to progress.