Jay Reding.com

Law prof Richard A. Epstein has a withering look at the “Cash for Clunkers” program that gave car buyers a $4500 check to trade in an old car for a new one. As with any government program, the intentions of the program and the reality of the program were not quite at odds with each other:

Yet exactly what does the American people get for this expenditure? On the bright side, the beleaguered automotive industry gets yet another shot in the arm. But that cheery argument repeats the common mistake that I addressed two weeks ago: Using tax dollars to stimulate one industry necessarily impairs the recovery prospects of everyone else. To make matters worse, some stimulus payments are just outright gifts, because lots of last week’s eager sellers might have traded in their clunker in the near future anyhow. And no one has a clue as to how many miles would be put on these clunkers anyhow.

The problem with the “Cash for Clunkers” program is that it won’t provide much stimulus, but it will burn through billions in in taxpayer dollars. Is the possible increase in overall gasoline efficiency worth the $1 billion now spent and the billions more that may be spend reviving the program? It’s doubtful we’ll know, because the actual results don’t matter. Congress is essentially buying support by raiding the public fisc under dubious pretenses.

Two thousand years ago, the called it panem et circenses—but “Cash for Clunkers” seems to have much more consonance, even if the concept remains essentially the same.

As the media fixates on the death of Michael Jackson, Congress stands ready to enact the largest and most regressive tax hike in history in the guise of “cap-and-trade.” Jim Lindgren explains why this bill is so dangerous:

The cap-and-trade bill, if passed by the Senate and actually implemented over the next few decades, would do more damage to the country than any economic legislation passed in at least 100 years. It would eventually send most American manufacturing jobs overseas, reduce American competitiveness, and make Americans much poorer than they would have been without it.

The cap-and-trade bill will have little, if any, positive effect on the environment — in part because the countries that would take jobs from US industries tend to be bigger polluters. By making the US — and the world — poorer, it would probably reduce the world’s ability to develop technologies that might solve its environmental problems in the future.

Cap-and-trade is a joke—it is a policy that has already failed in Europe and in virtually guaranteed to fail here in the United States. By giving in to the demands of radical environmentalists, Congress is preparing to take our current recession and plunge it into depression.

As the media focuses once again on celebrity, the advent of the next Great Depression comes closer. Cap-and-trade is terrible policy enacted for foolish reasons, and we will all pay the price for it if we allow it to pass.

The U.S. economy shed 598,000 jobs in January, the worst job loss since 1974. There is no doubt that the U.S. economy is in a state of crisis. Our government is only making it worse.

It is more than mere coincidence that this huge job loss occurred in the same month that President Obama signed the Lily Ledbetter Fair Pay Act into law. The Ledbetter Act basically means that employers can be sued for “paycheck discrimination” years after the events occurred. In Ms. Ledbetter’s case, the alleged discrimination happened so far ago that the supervisor involved had not only left the company, but died. This Act, instead of making things “fairer” for employees, puts a massive burden on employers who now have to worry about lawsuits stemming from events decades old.

This is what the business environment will be like under the Obama Administration. There will be more regulations and those regulations will be written by representatives of big industries and radical special interests. There will be higher taxes on everything from corporate income taxes to personal income taxes to the estate tax, and there is a strong possibility of a carbon tax that will raise prices on every single good that needs shipping. The web of regulations, higher taxes, and the way society is treating the very idea of entrepreneurialism is making American business falter.

The result: more lost American jobs.

This “stimulus” bill will not help. It will give hundreds of billions to political contributors, and barely anything to American small business. Big business, the ones with the lawyers and lobbyists, have already gamed the system. The Democratic Party has no room for the interests of American small business, even though their employees are half of the American workforce. The situation for American small business will be dire: not only will there be more taxes, more regulation, and more self-righteous condemnation from Washington, but the credit markets are still tight. Unless you’re in a field that will be the recipient of government spending, like health care or road construction, forget hiring employees, you have to cut expenses to the bone right now.

American jobs are being lost because we are punishing the people who create them.

President Obama and the irresponsible Congressional Democrats are pushing this recession into a depression. Their wrong-headed pro-government economic policy is turning America into a banana republic. It is crucial that they be stopped.

Atlas is shrugging, and the world is at the brink of tumbling right off.

Popular Mechanics has a great piece on the myth of “shovel ready” infrastructure projects:

The programs that would meet the bill’s 90-day restriction are, for the most part, an unappealing mix of projects that were either shelved after being fully designed and engineered, and have since become outmoded or irrelevant, or projects with limited scope and ambition. No one’s building a smart electric grid or revamping a water system on 90 days notice. The best example of a shovel-ready project, and what engineers believe could become the biggest recipient of the transportation-related portion of the bill’s funding, is road resurfacing—important maintenance work, but not a meaningful way to rein in a national infrastructure crisis. “In developing countries, there are roads that are so bad, they create congestion, because drivers are constantly forced to slow down,” says David Levinson, an associate professor in the University of Minnesota’s civil engineering department. “That’s not the case here. If the road’s a little bit rougher, drivers will feel it, but that’s not going to cause you to go any slower. So the economic benefit of those projects is pretty low.”

That might be acceptable to people focused purely on fostering rapid job growth‹but, ironically, such stimulus spending could fall short on that measure, as well. “In the 1930s, when you were literally building with shovels, that might have made sense. That was largely unskilled labor. Today, it’s blue collar, but it’s not unskilled,” Levinson says. “The guy brushing the asphalt back and forth is unskilled, but the guy operating the steamroller isn’t. And there’s an assumption out there that construction workers are interchangeable between residential and highway projects. But a carpenter isn’t a whole lot of help in building a road.”

It’s ironic given the I-35W bridge collapse being used as a symbol of America’s “failing infrastructure”—that collapse was the result of a design flaw that should have been spotted in the design phase. And what is our reaction to such problems? Push through a bunch of projects in a hurry rather than perform the sort of painstaking design that needs to be done before a project is truly “shovel ready.”

There is some wisdom to spending on infrastructure, but let us be honest. It won’t make a dent in the unemployment rate unless you believe that you can take a stockbroker and put her into a bulldozer and call that good enough. It won’t stimulate the economy because the money will go to government contractors who are the least affected by the economic slowdown. And what stimulus it does produce won’t be likely to come about until well after the slowdown is past. Justifying this sort of spending on the grounds of economic stimulus isn’t realistic.

If we want to spend money on infrastructure, we should do it right. That means assessing our needs in a realistic manner, spending only on projects that will make a real difference, having a realistic plan to build these projects, building them right the first time, and having a competitive bidding process to make sure that money isn’t being funneled to campaign contributors.

This bill is not about stimulus. It’s about the Democratic Party looting the future to pay off their political supporters. It is nearly 100% pure pork that will saddle the future with at least another $1,000,000,000,000 in debt—not counting interest. Even the Congressional Budget Office finds that the “stimulus” bill will just shift the costs to future generations. We can’t rob Peter to pay Paul and expect to get away with it. Recent history should demonstrate all too well why such ideas don’t work.

We need a real stimulus package, not an act of wanton irresponsibility. If President Obama were to demonstrate real leadership, he would tell Reid and Pelosi to stop playing childish partisan games and send him a bill that is nothing but stimulus and no pork—and if they refuse, he should veto it. We need real infrastructure repair, not political cronyism. The only shovel that’s ready to go is the shovel needed to clear out all the B.S. surrounding this bill.

Jim Geraghty notes a curious provision in the stimulus bill directed at the State of Illinois:

None of the funds provided by this Act may be made available to the State of Illinois, or any agency of the State, unless (1) the use of such funds by the State is approved in legislation enacted by the State after the date of the enactment of this Act, or (2) Rod R. Blagojevich no longer holds the office of Governor of the State of Illinois.The preceding sentence shall not apply to any funds provided directly to a unit of local government (1) by a Federal department or agency, or (2) by an established formula from the State.

It seems to me that this move is unconstitutional. The federal government may condition receipt of federal funds on doing certain things. For example, the Supreme Court upheld the federal government only allowing for highway funding to the states if they raised the drinking age to 21. South Dakota v. Dole, 483 U.S. 203 (1987). However, that case only allowed the government to do so for reasons related to the “general welfare”. Helvering v. Davis, 301 U. S. 619, 640–41 (1937).

The question is whether Illinois getting rid of Gov. Blagojevich is related to the “general welfare.” Say what you will of the corrupt and profane Illinois governor, he has not yet been convicted of any crime. This probably isn’t an illegal bill of attainder since it’s punishing Illinois rather than Blagojevich himself, but it’s still a gross violation of the principle of federalism. The “general welfare” isn’t a way for Congress to advance narrow issues or play political hardball. It would be blatantly unconstitutional for Congress to condition federal funding on a state electing a Republican governor or electing a female governor. So why should it be constitutional for the federal government to withhold funds from Illinois because they refuse to impeach Blagojevich on Congress’ timetable.

Even though the courts generally defer to Congress on what is defined as being in the national interest, this seems to be a rather clear case of Congress overstepping their constitutional limits.

Colin Powell’s endorsement of Obama, although not unforeseen, is the big political story of the day. The Editors of National Review have a well reasoned response to the Powell endorsement that is well worth reading.

The problem with Powell’s endorsement of Obama is the same problem with the vast majority of endorsements of Obama: they’re all built on unsound logical ground. Even taking it for granted that the Bush years have been bad for the country (although not because Bush has been a radical conservative—he has not) and that some kind of “change” is needed, I’ve yet to see a coherent case for why Obama’s policies are the right direction.

Oh yes, I’ve seen plenty of ink spilled on why Obama’s personal qualities are so wonderful: everyone says that he’s intelligent, articulate, and vibrant. None of those mean a great deal in the long run. Many very intelligent men and women believe some very idiotic things: visit a college or university campus and ask members of the faculty about basic economic questions and you’ll get some profoundly unserious and utterly misinformed answers. Intelligence alone does not qualify one to be President: Nixon was a very astute thinker, but a lousy President.

Being able to use the bully pulpit of the American Presidency is critically important—look at what Bush’s failure to do so has done to his Presidency. But again, it is not nearly enough to make up for poor policies. Everything Obama stands for, from taxes to the Supreme Court to foreign policy is ill-conceived and often dangerous to the future of this great nation. Crafting lofty speeches will not make it less so. Being a good salesmen does not make the product any more safe.

Would Obama would be a “uniting” force—a “post-racial” President? There’s some good reason to believe that is so. But that is neither assured, nor is it enough. Obama has a history of being a political radical, a member of a virulently racial church, and surrounds himself with members of the extreme left. He has scant little in his record to suggest that he will govern as anything less than a doctrinaire across-the-board leftist—in a country that remains conservative. When Obama has to actually enact his policies, he will do so over the objections of a plurality of Americans who are increasingly seeing themselves as divorced from a left-wing elite. Obama will have to reach across party lines if he wants to avoid being another Clinton or George W. Bush. There is little in his record that suggests that he will do so.

In the end, Powell’s rationales are as superficial as the rest. Obama is a compelling figure, but the messianic nature of his campaign and his virtual coronation by a lickspittle media only makes it that much harder for Obama to govern with anything but a sense of institutional arrogance. Make no mistake about it, contrary to Gen. Powell, Obama will be another divisive and polarizing political figure. We do not need more of that kind of political division.

Sen. McCain, in contrast, has a long record of bipartisan accomplishment, including doing things that have put him against his own party. He stood his ground on campaign finance reform, on immigration reform, on torture, and especially on Iraq and each and every time his stand was based almost entirely on putting principle above politics. McCain can and will reach across the aisle—he’ll have no choice but to do so. Divided government would be healthy for the economy. A government totally controlled by the Democrats would lead to even greater political division than we have now. If an Obama-Pelosi-Reid government passes card check legislation, renews the so-called “Fairness Doctrine” to muzzle criticism of their rule, and enacts legislation repealing the ban on partial-birth abortions, will that heal the nation’s political wounds, or will it make things even worse? The answer should be obvious.

Our Republic is a house divided, and Obama will only expand those divisions. He will not be the figure of “hope” and “change” and the great transformational leader that Gen. Powell would hope him to be. Instead, he will do what he has always done: act as a radical leftist in concert with a radical Congress and arrogantly impose a radical agenda on a divided nation.

That is not the change we need, it is the change that will tear us apart.

The financial services bailout bill just failed to pass the House with a bipartisan rejection

The bailout bill was a turd sandwich, but it was a necessary one to keep the markets from going into an absolute freefall. Which, coincidentally, is what’s going to happen now that the bailout is unlikely to happen.

I can understand the class warfare motives for the rejection, but when companies can’t get the money they need to make payroll, the people who were demanding Congress do nothing will face the consequences.

We are looking at a quadruple-digit drop in the Dow and a major credit contraction./p pHow bad could this get? I get the sinking feeling that we will soon find out.

UPDATE: The Dow plummeted 778 points today, the worst single-day drop in history. Yes, people don’t like the idea of bailing out large corporations. If that’s their position, then they should not be surprised when those large corporations can’t afford to pay them their payrolls.

I don’t much like economic hyperbole, but this time it’s true: we could be staring into the maw of a crippling economic depression. It won’t necessarily be like the Great Depression, but it could be the worse downturn in most of our memories. If Obama gets elected and follows his policy instincts, it will probably get worse.