OPINION: OBAMA'S CHINA SYNDROME

[ Another article that proves my point that the world should not be
worried over Global Warming but rather that the world's education systems
are such disasters that people believe in Global Warming. In the US and
most countries in Europe barely 7 percent of students can get passing marks
on standardized tests in math and science and yet they feel they
are competent to bankrupt the world on a scientific problem.

Jack ]

OPINION: OBAMA'S CHINA SYNDROME

Washington Examiner, 27 March 2009
http://www.washingtonexaminer.com/opinion/blogs/Examiner-Opinion-Zone/Obamas-China-Syndrome-42015262.html

Iain Murray

It is looking less and less likely that President Obama will be able to
institute his vaunted cap-and-trade scheme for greenhouse gas reduction
through the back door of the budget reconciliation process. This places him
in a very awkward situation internationally in the run-up to the Copenhagen
conference on emissions reduction in December. Moreover, it forces him to
confront face-to-face the biggest problem in any attempt to reduce
greenhouse gases worldwide: China.

It seems that the President's initial plan was quite simple: use the
economic crisis as a pretext to push a cap-and-trade scheme through
Congress, then use that to push for action in Copenhagen. It hasn't worked
out that way. The problem with any cap-and-trade scheme is that it hurts
middle America, because it works by making energy more expensive. The
greatest users of energy are the manufacturing states. Furthermore, the
poor use greater proportions of their incomes on energy than those above
them on the social ladder. Cap-and-trade schemes therefore come with a huge
cost attached. This has not escaped Senators and Congressmen from states
that would be badly affected, which is why it looks like the scheme will be
pulled from the budget reconciliation process.

This makes things much more difficult for the President's plans. The virtue
of the reconciliation process from his point of view is that it passes on a
simple majority, and is not subject to filibuster. Now he will have to seek
the 60 votes necessary to back a stand-alone cap and trade bill, which will
be far more difficult. In order to secure passage, he may have to water the
proposal down considerably (he has already talked about regional schemes to
lessen the effect), which will in turn reduce the measure's effectiveness at
reducing emissions. Moreover, a stand-alone bill will be subject to the
lobbying of rent-seekers like the US steel industry.

Which is where China starts to enter the picture. Energy Secretary Steven
Chu has told Congress that if the international effectiveness of American
industry is hampered by having to pay for carbon reduction, then the
Administration would have to look at leveling the playing field with foreign
countries that are not so hampered by introducing tariffs, and that is
something Big Steel is looking for. Interestingly, in itself this is a
repudiation of the famous agreement reached at Kyoto that is more intense
than anything advanced by the Bush administration. President Bush simply
said he wasn't going to aim for the Kyoto targets, which were agreed to
affect only developed nations. Now, if Secretary Chu is to be believed, not
only will the US not meet its targets (the cap and trade scheme will achieve
nowhere near the reductions Kyoto demands of the US), but it will punish
countries that the US agreed in 1997 should not have to reduce their
emissions for fear of harming their development efforts. China is unlikely
to be impressed by this threat of a carbon trade war.

And this is the rub for Obama. Without an agreed domestic emissions
reduction program, he cannot go to Copenhagen and call for other
high-emitting countries exempt from emissions reduction under Kyoto -
countries like China, India and Brazil - to pull their weight. Yet there are
only two ways he can get a domestic emissions reduction program in place.
Either those other countries must agree to reduce their emissions (which
places the President in Catch-22) or there must be sanctions on those other
countries, which will ruin any chance of them agreeing to emissions
reduction at all.

Something has to give if emissions reductions are to be achieved. Either the
President and Congress must between them be willing to sacrifice American
industry to preserve China's competitive advantage in an
emissions-restricted world, or they must be willing to turn their backs on
the benefits of free trade and retreat into a protectionist wind-powered
cocoon, and thereby destroy the already weakened American economy in another
way. Neither sounds attractive.

Thought of in this way, the prospects for any truly historic agreement on
emissions at Copenhagen are small. Of course, every such conference since
Kyoto has been hailed as the historic breakthrough, even as emissions have
risen and temperatures stayed the same. Given his options, it may be best
for the President to find a pressing reason to stay away from Copenhagen,
and try his luck with the reconciliation process next year. The Chinese,
meanwhile, can continue to blame America for failing to show leadership. At
least they'll be happy.

Iain Murray is Senior Fellow in Energy, Science and Technology at the
Competitive Enterprise Institute and blogs at www.openmarket.org.

Copyright 2009, Washington Examiner

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