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Newsweek’s Howard Fineman on Obama going too far, too fast, especially on cap and trade

Tuesday, March 10, 2009

HH: Glad to welcome back as well Newsweek’s Howard Fineman. Howard, congratulations, tomorrow I think is the pub date for The 13 American Arguments, that’s your brand-new paperback edition of your book. Am I right?

HF: Yes, I know the nation is waiting with baited breath for that, Hugh.

HH: Well, we’ve got a lot of arguments going on right now.

HF: Don’t we, though?

HH: It might be good to review the old ones before we get into the new ones.

HF: Well, the whole point is that the old ones are the new ones.

HH: You know, The 13 American Arguments, are you going to be, by the way, back out for the L.A. Festival of Books where I saw you last year?

HF: They haven’t…I don’t think so. I think that’s mostly Random House pays for the hardback. I don’t know if they pay for the paperbacks, so no.

HH: Oh, that’s too bad. You ought to get them out here, because that was a fun conversation.

HF: That’s a great event. I encourage anybody within…any of your listeners within distance of that to go to it. It’s wonderful.

HH: Now let’s turn to one of the new arguments. And it’s in your new column, and I want to compliment you on a column which is pretty provocative, and I hope it’s read at the White House, about the dirty states versus the clean states. You’re from one of the dirty states, Pennsylvania. I’m from one of the dirty states, Ohio. And we’re, our homes states are going to get whacked by this tax on coal, Howard. Explain to people what you’re talking about.

HF: Well, the President proposed in this budget a so-called cap and trade system to try to control emissions of carbon dioxide, which has been determined to be a pollutant that the government isn’t required to try and control. And the system that the administration wants to impose is one that would require companies, especially power plants that emit carbon dioxide, to buy pollution permits, for how much we don’t know, and then if they do better for a certain amount of carbon dioxide emissions, if they do a better job of controlling them, then the permit allows they can then sell the excess. They can begin a market in trading those permits. So that’s a nice idea in that it uses or is supposed to use market forces to try to spur change in technology and so forth. Well, a couple of problems with it. One is that it costs money to buy the permits, and of course that’ll be passed along to consumers, in this case, of electricity. And those consumers are primarily going to be consumers of electricity generated by coal, which produces most of the CO2 that goes into the air. And most of those coal-fired power plants are all over the country, but there’s a very heavy concentration of them in the Ohio River Valley, essentially up from St. Louis up to Pittsburgh, and all the states along both sides of the Ohio River. And also, by the way, out in the West in states like Montana and Wyoming and so forth, which have huge coal deposits, too. So those rate payers in those states that are reliant almost exclusively on coal for their energy, yeah, they’re going to get whacked, because they’re the ones whose rates are going to go up the most.

HH: Now two aspects of your column I really want to compliment you on, one is this, this paragraph. “The new tax burden, and it does amount to a new tax, will be born primarily in the two regions of the country,” and you just mentioned one, and the other one is out in the West. And calling it a tax is, I think, wonderfully clear. It’s…I love clarity. But then there’s this thing. I didn’t know this. One concerned Democrat is Senator Evan Bayh of Indiana, who sits on the Energy and Natural Resources Committee. Virtually all of his state’s power is coal generated, and he’s voiced concerns about the Obama proposal. But Bayh won’t get to ask questions in committee, because the cap and trade plan was taken from his jurisdiction, and instead given to Senator Barbara Boxer, a strong proponent of the idea. Senator Harry Reid of Nevada, the Democratic leader and a strong supporter of the plan, ordered the change in committee jurisdiction. That’s hardball on behalf of cap and trade. I hadn’t seen that reported anywhere else, Howard Fineman.

HF: Yeah, well that’s an exclusive tidbit that I managed to unearth. And Harry Reid is a very strong proponent of the cap and trade proposal. And so yeah, he wants to see it enacted. And to call it a tax, some proponents of this system will argue that it’s not a tax, and it’s not a direct tax on carbon, it’s not a direct tax on energy generated from coal, for example. But that’s the effect in the sense that all these utilities, every utility that emits any CO2, and I think maybe some big industrial plants as well that might burn their own, supply their own energy, I’m not 100% sure on that, they’re all going to have to buy these permits. And to the extent, and they’re going to try to do it, that they will try to pass on the cost of the permits that they have to buy to the rate payers. It amounts to the same as a tax. Now the administration is as much as admitting that, because they want to take some of the money to be generated by this. And this is what really got me interested in the story, Hugh, over the next ten years, they’re projecting that the government will raise, would raise six of the approximately, I think, $650 billion dollars doing this. $650 billions dollars.

HH: That’s an extraordinary amount of money that’s going to get passed onto rate payers.

HF: Yeah, now they want to rebate some of it to low income energy consumers.

HH: Yup.

HF: And that’s the giveaway of what the real nature of this is.

HH: Now Howard Fineman, I also want to spend some time here talking about the President and the stock market, and whether or not the sense is spreading that they’ve overreached, they’ve bit off too much. As Jack Welch said today, he’s not focused on the economy, as Warren Buffett warned today, they’ve got to stop a lot of this nonsense, as Jim Cramer…these are three supporters of President Obama blasting him. Do you think the word is getting through that their fundamental ambition is contrary to economic recovery?

HF: Well, it’s funny you mention that, because I’m just sitting here gazing at my laptop trying to write a column saying approximately that. So I can save your viewers, I mean your listeners the time of reading it. But yeah, I think the focus, I think you can’t try to do too much. I understand Obama’s urgency here, because 62% approval ratings don’t last, and nothing in Washington has the attention span of a flea, and you want to try to get your agenda through that you promised in the campaign. But just like you tell your kids, you can’t do everything. You have to make choices. I have two problems. First of all, I don’t think the stimulus…I agree with Paul Krugman, the stimulus package wasn’t big enough, but more important, it wasn’t focused. It wasn’t relentlessly focused on near-term economic stimulus, which would be a combination of tax cuts, more tax cuts, and more immediate spending. Double food stamps, I mean, I’m talking food stamps, welfare, you know, all that kind of stuff. So it wasn’t focused enough on immediate spending, there’s too much long range stuff in the stimulus package, so that wasn’t big enough. And then in the case of the budget, the budget’s too big in the sense that you can’t borrow…it’s okay to borrow money, I mean, I think I agree with most mainline economists that you’ve got to spend, you’ve got to spend. That’s true. But don’t pencil in things like cap and trade which probably aren’t going to happen, that there’s $650 billion dollars. Don’t talk about totally changing the health care and education system right now when we have to focus, to use an old term, like a laser beam on the economy. That’s so…and I think that’s a lot of valid criticism that you’re hearing from a lot of the guys that you just mentioned.

HH: I’ll look forward to reading that column. Is that for next week’s issue? Or is that for mid-week?

HF: That’s for the web, which means as soon as I can write it, it’ll be up.

HH: All right, now I want to try and ride a hobby horse as well, Howard Fineman.

HF: Go ahead.

HH: I’m trying to encourage D.C.-based journalists to focus on the Consumer Product Safety Improvement Act of last year, and the economic havoc it’s causing. Are you familiar with CPSIA at all?

HF: I am not.

HH: It’s the law that was designed to keep lead out of stuff that went to kids, and it’s shutting down the all-terrain vehicle market, it’s shutting down thrift shops, it’s shutting down sporting goods. It’s going to cost a billion dollars in recalls. And I just don’t think it’s generally known. I have Jim DeMint coming up next hour along with a lawyer representing…Jim DeMint knows all about this.

HF: What, are we talking about leads in lures for fishing? Or what are we talking about?

HH: Yes, leads in lures for fishing, lead in the components…

HF: How about the fact that even though I live inside the Beltway, I knew that?

HH: I am very impressed. You must still be going back to your Pittsburgh roots there.

HF: (laughing)

HH: But it’s one of those examples where Congress absolutely swung and missed…

HF: Yeah.

HH: You know, they’re worried about lead and all that stuff, but they’re putting hundreds of thousands of people’s jobs at risk, tens of thousands of jobs already lost, and a billion dollars in goods, and no one seems to know about it. And this goes to my issue about cap and trade. Do we really think that Congress, which can’t get a lead law written right, has the competency to overhaul cap and trade, much less health care, Howard?

HF: Well, my initial question would be why didn’t George Bush veto it? Or didn’t he…

HH: He should have. Oh, it was a big mistake. They all thought it was just a nice motherhood and apple pie thing.

HF: Well, sure. You talk about controlling lead, and who’s going to be for lead? Yeah, I understand, I understand. It’s part of the problem of our times. I’ve got to say, Hugh, that we don’t have enough time, we seem not to have enough time to properly consider anything. And it’s not just a function of a deterioration in the quality of the arguments that we have, and I care about that a lot. We seem to be too busy, and we’re trying to do too much at the same time. This is just another example of it. I don’t know how serious the hearings were on that. I don’t know how much consideration there was given to it. I don’t know how much floor debate there was. You know, one of the things that’s happening in Congress now, Hugh, is they don’t debate it. They don’t really debate anything.

HH: No, they don’t.

HF: They don’t…like this, I’m pretty sure the whole, most of the stimulus package, a whole lot of the other big ticket legislation that’s gone through right at the beginning of the Obama administration, in terms of the amount of actual discussion and debate per dollar spent, has got to be the lowest in history. It’s got to be absolutely the lowest in history, and that’s scary.

HH: I think you’re right.

HF: No matter what your political viewpoint it.

HH: I think you’re right. I hope your column says slow down, take a breath, and fix what you’ve messed up before rushing into new, big stuff. Howard Fineman, congratulations, The 13 American Arguments in paperback, available at We’ll check back with you again soon, Howard.

End of interview.

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