By The Numbers

Note: contents of this post is after the jump due to its political nature.

I was just noting to Jennifer yesterday a couple of days ago that my biggest frustration with the debate about Palin’s transparent misrepresentations about earmarks is that they shouldn’t even be the issue. The big lie here is that earmarks, for as vile as they may be, aren’t going to actually make a difference to the country’s fiscal situation. As I returned from a client site on Friday and fired up my RSS reader for the first time in a week, I found that (as usual) Mark Thoma is already on the case, aptly pointing out in a single post that McCain’s “economic policy” prescriptions to date amount to little more than misdirection in the face of what can only be described as a foreclosure crisis, a market melt-down, a flagging dollar which threatens our unique position as the world’s reserve currency, huge inflationary pressure due to moribund energy policy, and yawning fiscal deficits (which, yes, have a lot to do with an ill-advised war and deeply regressive tax cutting). The over-compensating assessment by Thoma is that 0.58% of the budget is directed toward earmarks. Will someone please wake me when McCain starts talking about spending priorities which might actually matter?

To see if the McCain campagin was just making hay over a perceived weakness of the opponent, I checked out John McCain’s website for his economic “policy”. You can’t get very far in most of it before noting that it’s all about oil and drilling. To wit, even when describing the need to “eliminate wasteful government programs” the McCain policy statement doesn’t name a single program to be trimmed. Looking for a detailed set of policy priorities on the McCain site is a dead-end. The oft-repeated claim that a McCain administration’s encouragement of drilling as a way to “send a signal to the market” regarding the price of oil is, by all industry accounts, laughable. As the graph (via Mark Thoma, via Grist) makes clear, drilling ain’t gonna get us there either:

Claims regarding the encouragement of nuclear power generation capacity completely gloss over the complexities of permitting, time-to-build, and financing these projects, not to mention the as-yet un-finished business of long-term waste disposal, a topic that McCain himself seems to be of two minds about. Solar and other renewables actually have the property of being feasible on a much smaller scale, allowing them to be implemented gradually. For all intents and purposes, even if nuclear were cheaper per KW/hr (it’s not), it would still be a risky capital investment (likely borrowed) for any utility – therefore the cost of servicing debt becomes a major factor in the ability for nuclear to take off. Why would any utility exec take the risk on a 5 to 10 yr project with a high likelihood of failure with many of the dominant costs of both construction and operation completely up in the air when you can just additively expand your capacity with solar or wind with lower up-front costs, no waste-disposal risk, and the potential to start producing in the 1-2 yr timeframe? And given this reality, why doesn’t the McCain energy policy acknowledge that these alternatives need the same level of government support as drilling and nuclear? And why would McCain not do the easy thing and support the existing (paltry) support that the government offers to these incremental, renewable energy sources?

In reading the McCain policy statments, I’m left with a long list of things that a McCain administration will somehow accomplish without any credible details regarding how these goals will be met. The message here is that John McCain, through completely un-specified means, will meet all of the lofty goals outlined in his policy wish-lists (which, given the lack of detail, is what they amount to). Perhaps we’re supposed to believe that his personal character and skill as a politician will somehow overcome the yawning credibility gulf of his statements and the reality that he’ll be dealing with a Democratically controlled congress should he win. No politician should, in the heat of a campaign, box themselves in too far by promising specific agendas which they may not be able to deliver on, but the lack of coherent supporting details by the McCain campaign goes directly to the issues of candor and credibility. While I would have voted for him in 2000, there’s no way that I can justify supporting a candidate now who is willing to push fairy tales about the economic realities and forces which drive our economy. Seriously, the McCain website still includes the much-derided “gas tax holiday” proposal. When high-school economics is enough to destroy the credibility of your policies, then you’re either pandering (a form of lying) or are simply ignorant. What we’ve got here is not a failure to communicate by the McCain campaign, it’s a failure to face reality head-on. It’s voodoo economics all over again.

It’s no wonder that the McCain campaign is trying to make this election about something other than issues…the senator’s written-by-lobbyists policies just won’t stand up to anything like the level of scrutiny that the Obama plans will. Is the Obama plan for the economy a slam dunk? No, but it’s a damn sight better than McCain’s fairy tales.


  1. Posted September 14, 2008 at 5:40 pm | Permalink

    Re offshore drilling, I’ve always wondered why the fear and rhetoric is so hyperbolic wrt foreign oil dependency.

    If you look at the US govt’s own numbers on how the foreign oil is broken down by source country (see, you’ll see that about half of it comes from Canada and Mexico. Many of the other big sources are still fairly strong US allies (altho it’s starting to look like Venezuela could be a bigger potential threat to US oil dependency than Iraq by a long shot).

    It seems to me that at worst between 20 and 25% of the complete US consumption can be construed to be coming from sources that are at risk of instability due to political relations. A concern, yes, but not a crisis.

    Even promotion of modest consumption reduction measures such as keeping tires inflated (reportedly 3%) and regular maintenance (4%) could together cut foreign source requirements by a third. Building and promoting high-mileage cars could eliminate the risky part of foreign requirements entirely. There’s certainly no need for people to be killing each other over an issue that could be managed in so many other ways.

  2. Posted September 14, 2008 at 5:48 pm | Permalink

    Hey Brent:

    So I think the big issue isn’t “friendly supply” so much as it is a dawning realization that as a fungible global commodity, the supply of energy (and therefore America’s economic fortunes WRT the “productive economy”) are ever further linked to unstable regions. If our reliance on foreign sources of energy is minimized, the impacts of fluctuations in those supplies will buffet the economy much less, leading to more efficient long-term allocation of capital (the pareto-optimal outcome).

    I’m 100% w/ you on the conservation thing. It seems the most reasonable, rational, sale-able thing we can do in the first world and it needn’t imply huge decreases in the standard of living. That Obama is nailing this (your tire pressure example) and McCain/Palin/Bush simply chortle at it as some sort of buffonish, backwards recipe which won’t ever fly w/ the American people says volumes. When I hear McCain go on and on about an “all options on the table” energy policy, it really does make me excited, but then when I dive into the details of what he has supported and what he’s proposing, it becomes clear that it’s just so much posturing.

    I’m afraid his sell-by date was probably sometime in ’00.


  3. Posted September 14, 2008 at 8:35 pm | Permalink

    There are quite a few things America can be doing to secure or strengthen its economic future from within without having to look to managing oil price fluctuations. Of course, being a large source of those fluctuations, it’s also hard to see the US being motivated to quell them.

    The real reason to need to control foreign oil producers is to keep them from shifting the oil trading currency from the buck to the euro, which will remove the one plank that supports the fiat dollar and expose the fact that it’s vapor-backed paper printed at will with no reserves.

    There seems to be some seismic activity in the economic world of late – Merrell Lynch selling to Bank America, Fannie/Freddie, etc. Even Greenspan is suggesting there’s a long way to go. It’s going to be an interesting ride, to be sure.

  4. Posted September 14, 2008 at 11:32 pm | Permalink

    In a recent NPR interview, Tom Friedman discusses the topic of energy focusing on both McCain and Obama. Pretty good interview (if you are interested):

  5. Posted September 15, 2008 at 8:11 am | Permalink

    A follow-up on the NPR interview:

  6. Posted September 16, 2008 at 9:21 am | Permalink

    I’ve come to the belief that nuclear power should be revisited as part of our long-term power strategy. My understanding is that with the right technology we can burn up most of the currently stockpiled nuclear waist and be left with little needing disposal.

    Most if not all of our power generating technologies have waist products or other side effects that have long-term impacts. This is especially true of the fossil fuels but even includes hydroelectric.

    France cleverly went nuclear after the first oil crisis in 1974 and is quite energy independent now.

    “As a result of the 1974 decision, France now claims a substantial level of energy independence and almost the lowest cost electricity in Europe. It also has an extremely low level of CO2 emissions per capita from electricity generation, since over 90% of its electricity is nuclear or hydro.”

    You can read more here: