Right-Wing Think Tank Review - 1/22/07

So this may become another regular feature, probably on Mondays. It'll be more limited in scope (and less snarky) than the regular Friday roundup of conservative magazines. I only want to sample some of what is being churned out in the intellectual factories of the right - all the better to recognize the ideas when they reappear in the National Review or the Weekly Standard (and later on Fox News and in the right-wing radio/blogosphere). I'll stick to papers that seem to be seriously about advancing new conservative policies and strategies, as opposed to those which merely repeat old arguments for the record, or which are in danger of becoming quickly irrelevant. Thus, for instance, I won't be commenting on any of the numerous pieces attacking the Democrats' minimum wage bill, since the success of the bill is at this point almost a foregone conclusion. The point is not to rebut, but to observe.

With that, our first piece:


American Enterprise Institute (Sourcewatch profile here)

"A New Direction for Bush Administration Climate Policy"

Article by Samuel Thernstrom, former Director of Communications at the Bush administration's White House Council on Environmental Quality, and Lee Lane, former executive director of the Climate Policy Center.

This article represents a substantially different conservative position on global warming than the traditional denial. Written in anticipation of President Bush's State of the Union - which is expected to include initiatives to limit greenhouse gas emissions - the piece is aimed at encouraging the lame-duck Bush administration to develop climate policies that will preclude Bush's successor "from reengaging, in some form or another, with the Kyoto system."

The authors do not deny the reality of global warming - possibly indicating that the right is shifting to an understanding that such denial is no longer politically tenable. Instead, the point is to develop a conservative approach to dealing with global warming. This approach is twofold:

1. Emphasize the long term.

At least three times, the authors use the phrase "the long-term challenge of climate change." As they say, "a long-term alternative to Kyoto may help lessen its appeal."

"Rapid emissions reductions," such as those called for in the Kyoto Protocol and the McCain-Lieberman Stewardship Act, are criticized as not doing enough to confront the problem - in other words, the argument is that, while global warming is real, near-term emissions reductions would not have enough impact on warming to justify their economic cost. Rather, the authors focus on technology development as the key to solving the problem (though they also mention, more than once, geoengineering or even just trying to figure out how to "adapt" to global warming). They propose a major commitment to clean energy technology research and development - interestingly, they argue that this is an area in which government investment is more appropriate than private-sector efforts.

2. Coopt the emissions debate by proposing a carbon tax as an alternative to emissions trading.

While the primary effort is to recast global warming as a long-term problem to be solved primarily through technological development, in the short term the authors realize that "politics demand action ... [A] 'do nothing until the technology ripens' policy is simply not credible." Thus, the best option is to adopt an emissions policy while conservatives can still count on having a conservative in the White House:

[I]f for no other reason than to cut off momentum toward economically inefficient Kyoto-style emissions trading policies, the Bush administration needs to reconsider its long-standing opposition to mandatory greenhouse gas emissions controls. Federal emissions limits are now inevitable; the only question is which president will craft them.

To this end, the authors recommend a tax on emissions - a carbon tax - instead of allowing a market in emissions trading. This, too, represents an interesting development, since conservatives have vocally opposed a carbon tax in recent years (for more on this, see Tim Noah's piece at Slate). To Thernstrom and Lane,

a carbon tax would apply moderate, even pressure across the economy to limit emissions ather than selectively raising the cost of politically unpopular forms of energy production and consumption, such as automobiles and power plants.[7] A carbon tax may seem anathema to the Bush administration, but as several economists (including AEI’s Kevin A. Hassett) have noted, carbon tax revenues could be used to finance reductions in the marginal rates of other taxes.[8] The net result would be a revenue-neutral tax reform, not increased taxation.

Properly structured, such a tax reform could stimulate the economy, rather than depress it as emissions trading would.

The authors also suggest that, if emissions trading is inevitable, Bush should insist on a "safety valve" provision that would set a limit on the cost of emissions credits.


Hoover Institution (Sourcewatch profile)

"Legislate in Haste, Repent at Leisure"

Article by Stephen M. Bainbridge, Professor of Law at UCLA

Bainbridge's article comes as part of a new wave of conservative attacks on the Public Company Accounting Reform and Investor Protection Act ("The Sarbanes-Oxley Act," or SOX). (To be fair, it isn't only Republicans who have been calling for at least some "reform" of SOX provisions.) His principle criticism is that the Act - and particularly its Section 404, which requires internal control disclosures to be included in corporations' annual reports - is imposing an undue financial burden on firms. In public corporations, Bainbridge argues, directors now have incentive to insure themselves against liability by overspending shareholders' money on "hiring corporate governance consultants, lawyers, investment bankers, auditors, and so on" to advise on SOX compliance. This means that compliance costs - especially auditing - have skyrocketed, a burden which especially affects "smaller public companies."

Bainbridge concedes that many of these were one-time costs taken on to get corporate procedures into initial compliance with SOX, but argues that "many will recur year after year," as corporations work to maintain their internal control paper trails.

Additionally:

On the one hand, SOX has discouraged privately held corporations from going public. On the other hand, many publicly held corporations are going private. SOX thus reduces investor choice, makes many investments less liquid, and in the long run likely discourages entrepreneurship by denying start-ups access to financing in the capital markets. By raising the cost of access to the capital markets, SOX will likely retard economic growth.

[Update: See this piece by Robert Reich at the American Prospect for a contrary view on the "going private" claim.]

Bainbridge's other complaint is that, by federalizing and standardizing laws regulating corporate governance, SOX discourages state-by-state "experimentation" and imposes a "one-size-fits-all" model for internal controls on companies whose own "needs" may differ.

Bainbridge also responds to a defense of SOX by New York Times columnist Joseph Nocera - though Bainbridge does not address all of Nocera's points.

The sustained assault on SOX - which also includes critics who argue that the Act is driving businesses out of American capital markets - seems to be having an effect, as "reform" of the law is widely anticipated, though Reuters notes that the regulatory reforms under consideration may provide some relief for small companies, but are unlikely to reduce costs significantly for large corporations.


Heritage Foundation (SourceWatch profile)

"Congress Should Reject New Taxes and Curb Exploding Entitlements"

Article by Stuart M. Butler, Vice President of Domestic and Economic Policy Studies at Heritage and described by Sourcewatch as "the 'mastermind' of privatisation during the 1980s" and Alison Acosta Fraser, director of the Roe Institute for Economic Policy Studies.

This 'Web Memo' is a conservative wish list for the 110th Congress - Congress won't adopt Butler and Fraser's recommendations, but they do help frame the conservative economic platform in the post-100 Hours phase of the new Congress.

The recommendations are:

• Reject tax rate increases and impose no new taxes;
• Reject any increase of the Social Security wage cap;
• Make the Bush tax cuts permanent; and
• Fix and then repeal the Alternative Minimum Tax (AMT).

Grappling with the AMT is going to be a difficult but necessary task for Congressional Democrats, and it's worth noting a conservative position on the question. Butler and Fraser argue for providing immediate relief by indexing the tax to inflation, which would limit the number of families falling under the AMT in the upcoming year.

In the longer term, they propose simply abolishing the AMT - a position they share with the liberal Center for American Progress. The difference is that Butler and Fraser oppose any effort to replace the lost revenue - which could cost $1 trillion over the next ten years, severely worsening federal deficits. Is this simply "starve the beast" rhetoric or an effort to stake out a position that will insulate wealthy taxpayers from absorbing the cost of fixing the AMT?

Labels: American Enterprise Institute, AMT, global warming, Heritage Foundation, Hoover Institution, Right Wing Think Tank Review, Sarbanes-Oxley, taxes

  ¶ Posted by Paul Curtis 10:18 AM