In his 60 Minutes interview Sunday night, Fed Chairman Bernanke said he saw “green shoots” indicating the beginnings of economic recovery. He didn’t expand on where he saw these, but some of the news from banking, tech, and even real estate have been promising.
Not many people have said or seen good things about the mess in Detroit, which is why this morning’s Wall Street Journal’s report on the Steve Rattner-led review of GM and Chrysler is encouraging. For a month now, since the car companies produced their strategic plans, very little has been said by anyone within the Obama Administration, and teams of bankruptcy lawyers have been assembled. The indications in the Journal’s report that there is an alternative path underscores that while Chapter 11 remains a potential future for either or both of the company, the restructuring facilitated by taxpayer money might yet put Detroit back on the road to viability without bankruptcy. Such a development would be part of the “return to growth” agenda the Obama Administration should be pursuing with singular focus.
Many conservatives are impatient with the process of bailout and want only to start the economic guillotine, and not just for GM and Chrysler, but for AIG, Citigroup etc. They underestimate the chaos this would cause, and not just at home but around the world at a time when economic stability is particularly necessary if our allies are going to be able to continue as full partners in the war against jihadism. When Son of Tarp appears, conservatives should be prepared to condition their support for it on guarantees of tax policies that promote growth and on a delay by at least three years of any cap-and-trade experiment that will be an unnecessary and large shock to the fragile recovery Bernanke sees taking root.
The opportunity to conclude an armistace with the Obama Administration that will last through 2010 is going to arrive shortly. GOP leaders should start demanding now that it be comprehensive and that it emphasize growth across the board. Such an agreement may not be possible given the laundry list of ambitions the president has articulated from health care to carbon taxes, but setting up an “economic growth first” front is a key step for the Congressional GOP.
New ABC News polling shows an enormous surge in optimism and security in Iraq, underscoring not just how dramatic has been the turnaround brought about by the surge, but also the much more broad lesson that extremely adverse circumstances can be quickly remedied and momentum in the opposite direction established and maintained with good leadership and sound strategy.
This broader lesson is applicable, of course, in Afghanistan and Pakistan, anda new Weekly Standard piece by Max Boot and Frederick Kagan and Kimberly Kagan makes it clear that what has happened in Iraq can also happen in Afghanistan.
It seems likely as well that a rapid turnaround in the economic circumstances of the U.S. and its allies is also possible, provided that the Obama Administration actually pursues growth policies as opposed to redistributionist policies. The acceleration of information flows across markets makes rapid changes in direction –both good and bas– possible and information-hungary investors and entrepreneurs react quickly to every change in direction in government economic policy. If President Obama heads in the right direction, the economy watchers will applaud and react accordingly. If he continues down the deep deficit road, the return to vibrant growth will have to wait for a new Congress in 2010 and quite possibly a new president in 2012.
There are indications that some in the media are finally figuring out that the environmental movement is very serious when it says it intends to use the federal Endangered Species Act and the listings of the polar bear and other species to force regulation of many “lower 48″ operations, especially those in the energy business. This article covers a recent gathering of ESA experts wherein the path forward that environmental activists envision was discussed:
Under most traditional interpretations of the Endangered Species Act, an agency like the Bureau of Indian Affairs would have to determine how much of an impact a new coal-fired power plant in New Mexico or Colorado has on polar bears near the North Pole and penguins in Antarctica.
The vexing question is how to measure the site-specific impacts of such a project on a global scale. Top conservation leaders like Kieran Suckling, director of the Center for Biological Diversity, said the federal government is legally obligated to do just that.
The about-to-be-impacted industries have adopted a “hear no evil, see no evil” approach, and have refused the sort of preemptive litigation strategy that would have defined the outer limits of the ESA’s reach via test cases on carbon-emitting activities in industries unrelated to direct energy-production. Had the oil-and-gas industry brought suit, for example, to oblige a small airport expansion to conduct a Section 7 consultation, it could have begun to build a defense against overreaching by the Act’s most aggressive proponents.
Instead it has ceded the legal initiative to the very capable lawyers at the Center for Biological Diversity and other groups, and the rollout of the prevent-global-warming-via-the-ESA strategy is beginning. The impact on energy production across the U.S. will be to sharply curtail new exploration and production and to greatly increase the cost of existing production. Every time a federal permit is proposed that will facilitate energy production –or any carbon-releasing activity for that matter– environmental activists will argue that an ESA mandated permitting process is required. This process, called a Section 7 consultation, is very time-consuming and mandates necessary “mitigations” that are imposed on the sought-after permit. Landowners have learned how to negotiate this regulatory maze in the past two decades, but the vast expansion of jurisdiction foreseen by the advocates of the polar bear and related listings will greatly increase the scope of the Act’s reach and the workload on the Fish & Wildlife Service, not to mention the cost of each permit if a cost can even be calculated.
All of this fallout was easy to predict at the time the Bush Adminstration listed the polar bear last year, but the coverage of the controversy has resolutely refused to explain to the public the enormous price tag it will be paying for the use of ice coverage models in the listing process that were at best speculative and at worse wildly so.