Draining the swap is all fine. As someone who’d like to see all government-granted favors to private businesses terminated either constitutionally or legislatively, I’m for it. How many Boeing-type scandals do we need before legislators are embarrassed to continue passing out subsidies (including through the Export-Import Bank, an agency many of us call “Boeing’s Bank”)? How many more reports like those showing that most Inflation Reduction Act subsidies went to projects that were already in the works?
These debacles, and others like Solyndra, are cautionary tales about how politicians waste your money to help their friends and political allies—that is, their cronies. Sadly, most Americans don’t realize government handouts don’t do what politicians tell you they do.
And so, during Trump’s first term, we saw him proudly announcing steel tariffs—essentially a tax paid by U.S. consumers—on national television, surrounded by all his steel CEO friends. He distributed subsidies and bailouts to various companies, as well as payouts to farmers who were hurt by his tariffs. Then, with several enormous pieces of legislation like the CHIPS and Science Act and the infrastructure bill, the Biden-Harris administration took corporate welfare to a level unseen before.
You might think Ms. Harris could use the partisan divide on climate policy to her advantage. If she hammered Mr. Trump’s frequent recitations of “drill baby, drill,” it could drive turnout from liberal voters who fear the Republican would increase fossil fuel production. She has hardly been neutral on this issue in the past. The vice president personally made the most expensive U.S. climate policy in history into law when she cast the deciding vote for President Biden’s Inflation Reduction Act in 2022.
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Underlying this electoral problem for Ms. Harris is a tricky policy one: The climate policies she would offer promise huge costs for negligible benefits. It’d be one thing to ask for sacrifices that could save the planet. But even at a whopping official price tag of $369 billion over 10 years, the Inflation Reduction Act’s climate measures as written were likely to lower the projected global temperature in 2100 by less than 0.03 degree Fahrenheit. In reality, the IRA has turned out to be an even rawer deal. The cost has rapidly ballooned to somewhere north of $3 trillion over 30 to 40 years, even as emission cuts have been slower and smaller than predicted. No wonder Ms. Harris isn’t trumpeting it.
Ben Zycher makes clear that “both Harris and Trump pose problems for U.S. energy producers.”
Eric Boehm sensibly asks: “Where is Trump’s plan to cut spending?” A slice:
If you want to fund the government at 1890s levels, and using 1890s methods, you have to have a plan to cut spending to 1890s levels too.
GMU Econ alum Dominic Pino explains that the performance of Taiwan Semiconductor Manufacturing Co. in Arizona is no evidence of the alleged wonders of industrial policy. Here’s his conclusion:
Though TSMC’s Arizona success is not a victory for the CHIPS Act, it is a victory for allowing corporations based in allied countries to invest in the U.S. economy — something politicians are currently in the process of blocking in the steel industry.
Bruce Yandle decries the hubris of the executive branch of the U.S. government. A slice:
The current conversation is much like fussing over the comfort of deck chairs on the Titanic. Let us hope whoever wins will turn their attention toward the wellbeing of the deficit-ridden vessel itself. It’s time to remind ourselves of what Adam Smith called the more fundamental duties of the sovereign, set forth in his monumental 1776 work, “Wealth of Nations.”
Smith was describing a “system of natural liberty.” His earlier ideas had reinforced Thomas Jefferson’s ideas for the Declaration of Independence. Anticipating our modern White House expectations, it seems, Smith described his system this way: “Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men.”
Gary Galles makes a strong case against Proposition 2 in California.
Jeff Jacoby reports on the flocking of Hispanic voters in America to the GOP. A slice:
If Donald Trump wins the presidential election next month, he will almost certainly owe his victory in part to the Hispanic voters among whom his support has been surging. Yet even as he does so, he will doubtless still be raging that millions of migrants, most of them Hispanic, have entered this country as part of a plot to ensure the defeat of Republicans.
Samuel Gregg warns of the dangers lurking in Mario Draghi’s dirigisme. A slice:
These measures form part of Draghi’s ambition “to lay out a new industrial strategy for Europe” to overcome its waning competitiveness. One feature of this strategy is the extensive use of industrial policy. Draghi acknowledges the failures and drawbacks of industrial policy “such as defending incumbent companies or picking winners.” Nonetheless, he insists that Europe can overcome the problems inherent to industrial policy by adhering to “a set of key principles which embed best practice.” That involves, according to Draghi, focusing on sectors rather than companies and subjecting the process of allocating subsidies and other forms of assistance to “rigorous monitoring.”
What “rigorous monitoring” means is left undefined, but we have good reason to doubt that it would have any effect. Once set in place, industrial policies are notoriously hard to terminate, even when the failure is manifest. The recipients don’t want government assistance to stop, and no political leader or bureaucrat wants to concede failure.
