"Facts do not cease to exist because they are ignored." -Aldous Huxley

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wThursday, March 07, 2002

STEALING OUR RESOLVE: As a fairly stubborn fiscal libertarian, I'm against subsidies in general - and in almost every possible specific instance - on principle. There are very few times, if any, when Joe Taxpayer's hard-earned money should be appropriated by politicians to buy off frustrated down-on-their-luck voters.

That said, subsidies are far far preferable to tariffs and President Bush's decision (here's the White House spin; here's a more realistic anticipatory view) to opt for tariffs over subsidies in the case of steel protection may rank as the worst decision of his administration. Yes, Cheney had promised West Virginia steelworkers that, unlike Clinton, Bush would bring real relief to the beleaguered metallurgists. Yes, the state had then gone Republican when it normally tilts Democrat, thus delivering Bush's margin of victory in the electoral college. Yes, it improves Bush's standing with labor. And, yes, the domestic steel industry was in real danger of losing out to foreign competitors (cry me a river). None of these considerations count as an adequate reason to impose tariffs.

Here is a brief catalog of the fallout: The domestic price of steel will rise substantially, thus boosting the cost of domestic cars and heavy equipment. The World Trade Organization will either be turned into a laughing stock if Bush ignores its ruling, or the Administration will work behind the scenes to procure a favorable ruling, thus rendering it useless as a tool for combating trade barriers. Trade agreements will be harder to negotiate and fewer in number. Bush's authority for restraining spending has been impaled: Frustrated congressmen who might otherwise be persuaded to make sacrifices for the war effort are now thinking, "If the prez can soak the whole of America to assure re-election, then, dammit!, so can we." Bush's credibility to call for any sacrifices in the war on terror has been greatly diluted.

The thing that irks so much is that this didn't have to happen. If ever an election promise deserved to be discarded, this was it. But even assuming that Cheney's pledge to deliver real help to the steelworkers was binding, why not simply shower them with enough cash to roll around in? It would have bought them off without costing the rest of us an absolute bundle. It would have avoided the international harrumphing and trade wars by countries complaining, legitimately, that America doesn't practice what she preaches. And it would have been quietly overturned a few years hence care of an unfavorable WTO ruling.

This should have been a slam-dunk, especially for a president whose partisans keep pointing to his stratospheric popularity ratings. But in putting the interests of West Virginia against the rest of the country Bush is signaling electoral vulnerability and causing the world to have grave doubts about his commitment to free trade. That's a tragedy that not even Ari Fleischer can spin his way out of.

posted by Jeremy at 3:16 AM