What You Should Be Reading: October 2024

Welcome back to “What You Should Be Reading,” a monthly blog series in which the Taxpayers Protection Alliance weighs in on what every politician, policy analyst, and television talking head across America is fixated on – the day’s most consequential political, legal, and regulatory issues, of course! Nothing else of import happened this week, did it?

October’s edition includes Congress’s merry abdication of its trade powers, and how it ought to reclaim them; the siren song of Washington, D.C.’s central planning efforts, energy subsidies; and misguided efforts to muck up a well-functioning market in rent seekers’ behalf.

So, without further ado…

Cato Institute: “Presidential Tariff Powers and the Need for Reform”

If one were, during the uproar of the ratification debates of 1787 and 1788, to tell Americans that the nation’s executive would one day dictate a major element of the nation’s tax policy unilaterally, the proposed constitution’s chances of ratification would have vaporized. Luckily, that seemed an impossibility, as the Constitution proposed to vest these powers explicitly in Congress.

But somehow, nearly two and a half centuries on, the president (not Congress) drives U.S. tariff policy. Tariffs (which are, in fact, taxes) marry tax policy to trade policy, another constitutional prerogative of the Article I branch. For the Founders, the modern presidentially dominated status quo would demand a record scratch, a freeze frame, and the obligatory “you’re probably wondering how I got here.”

A new issue brief from the Cato Institute’s Clark Packard and Scott Lincicome plumbs this history. Congress has systematically shed its trade authority, delegating it to the executive in a series of statutes (mostly) enacted in the 20th century’s latter half. Put differently, Congress chose to remove debates over trade policy from the political arena, preferring to shunt it into the dark and unaccountable offices of bureaucrats.

Making matters worse, the legislature imposed few checks on the president’s newly granted legislative powers. By no mechanism can it, or the courts, resist meaningfully should the president, e.g., ignore his own defense secretary’s analysis to impose “national security” tariffs on steel and aluminum to gratify domestic metal manufacturers.

Current law “provide[s] the president with vast and discretionary authority to unilaterally impose sweeping trade restrictions, and no institution – not Congress, not domestic courts, not US international agreements – provides a quick, surefire check on such actions,” Packard and Lincicome write. “Thus, while the durable implementation of broad and damaging US tariffs is not guaranteed, its risk – and related economic and geopolitical risks – will remain real and substantial until US law is changed to limit presidential tariff powers.”

When initially delegating authority to the White House, Congress had good reason – most pressingly, the Smoot-Hawley Tariff Act – to distrust legislatively set tariff schedules. However, as a matter of political hygiene, and to make trade freer, Congress must now discover the will to reclaim its constitutional prerogative to make trade policy.

Read the full piece here.

Texas Public Policy Foundation: “The Siren Song that Never Ends: Federal Energy Subsidies and Support from 2010 to 2023”

There is much state-generated static in the price signals that run through energy markets. Washington, D.C. has deployed nearly every regulatory or subventionary hustle, hoodwink, gambit, flimflam, stratagem, and bamboozle in the playbook to induce Americans to adopt its favorite energy sources.

A new report from the Texas Public Policy Foundation’s Life: Powered initiative sketches in painful detail the federal scheme of energy subsidization. “[T]his analysis finds that cumulative energy subsidies from 2010 to 2023 for solar, wind, oil and gas, and coal were $76 billion, $65 billion, $33 billion, and $20 billion, respectively,” writes the author, Brent Bennett. “Nuclear received about $26 billion, and hydropower and geothermal each received just over $2 billion.”

Despite their outsized consumption of taxpayer dollars, wind and solar produce just a fraction of U.S. energy. Bennett reports that “wind and solar have received much more in subsides per unit of electricity generated than oil and gas: wind 48 times more and solar 168 times more” even though “wind compris[ed] 3.5% and solar compris[ed] 2% of total U.S. energy production in 2023.” He estimates that wind generators in the largest American markets profit only a little more from doing business than from reaping subsidies.

Subsidization begets subsidization. When federal dollars propel one energy source, competitors will require similar generosity to keep pace. In the end, uncompetitive industries will remain afloat, prices will rise, and energy will become scarcer and less dependable. “Instead of correcting supposed flaws in energy markets, energy subsidies exacerbate and enable the creation of more flaws by fostering industries and subindustries that depend on government support for their existence and profitability,” Bennett argues. “As with all forms of cronyism, energy subsidies benefit politically connected businesses at the expense of taxpayers who do not notice the effects enough to demand changes.”

Read the full piece here.

Amici in Brief: Breaking Open Mobile App Ecosystems

Of late, central planning quite often masquerades as competition. In the guise of rooting out “anticompetitive” conduct, enforcers and judges undertake to rearrange whole industries to better suit their biases. Successful companies find themselves attacked for ordinary business practices, while their less successful competitors enjoy the benefits of their persecution.

In a recent amicus brief, trade groups NetChoice and Chamber of Progress caution the U.S. Court of Appeals for the Ninth Circuit to stay a lower court injunction that would effect just such a rearrangement of Android app markets. “[T]he court ordered Google to affirmatively distribute rival app stores through the Google Play store and to give those rival app stores access to Google’s entire library of apps,” the brief explains. “The court identified no instances where a court required a company to not only host and disseminate its competitors but also stock the shelves of their virtual stores.”

The groups predict that the injunction, if left in place, will stifle innovation. “A homogenized app store landscape is the opposite of meaningful competition,” they write. “But that is what the injunction will produce.”

Many overeager antitrusters give little thought to the unintended consequences of their interventions. They all too happily – and, likely, unwittingly – pursue policies with startling opportunity costs – to be paid in innovation and economic growth, and in freedom and prosperity.

Read the full brief here.

Note: TPA highlights research projects that contribute meaningfully to important public-policy discussions. TPA does not necessarily endorse the policy recommendations the featured authors make.