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Misplaced Priorities: Pandering on Gas Prices, Ignoring Genocide

The Journal Editorial Report

Paul Gigot: This week on "The Journal Editorial Report," charges of price gouging and corporate greed fly as Washington responds to rising gasoline prices. With midterm elections approaching, what can the president and Congress really do to keep costs under control? Plus, violence rages in Darfur, ahead of this weekend's peace deadline. With little hope for a truce, will the U.N. step up and contain the carnage? Those topics and our "Hits and Misses" of the week. But first, these headlines.

Gigot: Welcome to "The Journal Editorial Report." I'm Paul Gigot.

With pump prices passing $3 a gallon in many parts of the country, President Bush vowed this week to investigate oil companies for gouging consumers and announced some temporary measures to ease supply constraints. How much of the president's plan is good policy and how much is pure politics?

Former house majority leader and Freedom Works chairman Dick Armey joins me now from Dallas. Mr. Armey, thanks for being here. Before you were in Congress, you were a trained economist. You still are an economist. I want to get your reaction to some of the specific ideas that the Republicans are proposing on Capitol Hill. Start out with this idea of a hundred-dollar tax rebate per taxpayer. Is that good policy?

Armey: Well, I don't know that it's bad policy. It is only economic policy. It certainly is not going to affect the fundamentals of supply and demand as it affects the petroleum industry. But if the politicians in Washington want to do a tax rebate as a short-term measure for whatever their political purposes are, I don't think it'll affect much in these fundamental circumstances of what gasoline is available at the pump. It is certainly not policy that contributes to a solution to the problem, but it does probably give them some political standing with the people.

Gigot: What about the windfall profits tax, taxing the five big American oil companies on their recent big run-up in profits? Good idea?

Armey: No, it's a bad idea. It's just stupid. When, in fact, you have a shortage, as over and against a world's increase in demand, that causes profits to rise, that profit is the magnet that attracts other people to come into the industry, and you increase supply and bring the prices back down. So if you tax away the profits, you take away the incentive.

The fact of the matter is, what the government could better do is decrease the regulation, the red tape, the costs, and improve the chances for being able to, let's say, explore and develop refineries with less litigation costs. Just get out of way. But the windfall profits tax has always been a dumb idea and remains such.

Gigot: President Bush this week asked the Justice Department to investigate price gouging among the big oil companies. Is this something you'd expect to hear from a free-market president?

Armey: No, it's not something I would expect. I was disappointed to hear that. The fact of the matter is we all go into the marketplace, each and every one of us, whatever we sell, service or our wares, and we charge the price the market will bear. And the fact of the matter is, today, the market will bear these prices, and you cannot call it price gouging. It's just a ridiculous concept. And such an investigation is bound to be a politically defined operation, and politics almost always gets you to the wrong answer.

Gigot: The other thing we've heard is suspending the 18.4-cent-a-gallon federal gasoline tax. Now, you're known as somebody who doesn't like taxes. Is this a good idea? Politically it may be good. But is it good policy? Is it going to change much in terms of developing more supply?

Armey: No, it will not do anything to develop supply. This is, let's say, political policy. Again, they are at leave to do that. It won't change anything. It won't improve the situation. But again, when I hear that, I connect it back again, is that 18 cents supposed to be dedicated to building the roads and the infrastructure of the country? In fact, are you going to starve us in an area where we've starved ourselves for too many years in terms of necessary public policy? Again, I don't think it's a good idea in this case, unless you demonstrated that the money wasn't used for that purpose in the first place.

Gigot: OK, your former colleagues on Capitol Hill, Republicans, are getting smashed day after day by the Democrats on this gasoline price issue. What political advice would you give them to fight back? How should they fight back so they can get back on offense on this issue, stop playing defense?

Armey: Well, I think they ought to fight back by saying, all right, what we need to do is we need to open up avenues for exploration and development. We have the big controversy on offshore and ANWR--assert yourself on this. Talk about the real economic conditions that created it with, particularly, the critical shortages we have and burdens that we have on our limited ability to refine gasoline in America today, because of environmental regulations, litigation costs.

I can tell you, Paul, right now, if I were to put together a plan to build a refinery in America, I would have more money in my plan for lawyers than I would for construction workers. And we need to relieve that.

Gigot: So fight back against the Democrats by saying here's the restrictions you have put on our ability to drill and explore?

Armey: Absolutely right.

Gigot: OK. All right, thanks, Dick Armey. Thanks for being here.

Armey: Thank you.

Gigot: When we come back, more on the politics of rising gas prices. Political pandering on Capitol Hill has both parties scrambling to head off a voter backlash. Our panel dissects the proposals. Plus, a deadline for peace in Darfur as hopes fade for ending the violence, will the U.N. step in?

Gigot: Welcome back. With midterm elections approaching, high prices at the pump are leading to some political finger pointing on Capitol Hill.

Sen,. Hillary Clinton: We need an energy policy that moves us toward energy independence. We get rhetoric. We don't get budget priorities. We are living on borrowed time and borrowed money. We are one accident or one terrorist attack away from oil at $100 a barrel, not just $75.

Speaker Dennis Hastert: We passed an energy bill almost five years ago. It got stalled in the Senate by one vote on a parliamentary procedure. That didn't get done for another three years. That would have changed the energy supply that happened. That was a Democrat that blocked that vote.

Gigot: Joining the panel this week, Wall Street Journal columnist and deputy editor Dan Henninger, as well as Steve Moore and Kim Strassel, both Wall Street Journal colleagues who cover energy. Steve, craziness on Capitol Hill this week, as Congress tried to respond to the politics of gas prices. Are they doing anything useful, or is it all just making things worse?

Moore: No, just another example that what we need is remedial economics training for Congress.

[laughter]

Almost every idea that's come out of Capitol Hill, this week has been bad: everything from the windfall profits tax to the idea of giving people a $100 rebate, raising corporate average fuel efficiency standards. One of the things that--when you hear Hillary Clinton talking about, Why are we facing these high gasoline prices?, one of the things the Republicans should be saying is, look, for 20 years we've been trying to drill oil from Alaska, which is the largest untapped reserve in America. Democrats and some Republicans have consistently blocked that. They have blocked drilling in the outer continental shelf, where we have more oil available than Saudi Arabia has. So if you can't produce oil, guess what, folks? You're going to have higher prices.

Gigot: What's wrong with this idea of repealing the 18.4-cent federal gas tax, which both Democrats and Republicans are talking about, Dan? Is that a good idea? We don't like taxes. What's wrong with that?

Henninger: I don't see anything particularly wrong with it. When you add in state taxes, the per-gallon price is between 40 and 50 cents a gallon in taxes. The take from the gasoline taxes exceeds the profits of the oil companies. So perhaps we need a windfall tax on Congress.

[laughter]

You know, my own feeling on this is someone should tell the American people, "Stop whining about the price of gasoline." It's a market-driven phenomenon. It's not the Wizard of Oz or some weird fairy that's creating these prices. It's the fact that global growth has driven the demand for energy. This is the result, higher prices. And if we maintain these higher prices, this sort of conservation that Hillary Clinton and the Democrats want will come on stream as money flows into those alternatives.

Gigot: Windfall profits tax, another idea that's being talked about. But that would only increase our dependence on foreign oil, wouldn't it, if we reduce the profits of American oil companies?

Strassel: Yeah, and the perfect way to make sure these high prices remain high for 20 years to come is to do that. Because what you want these companies to do is take their profits and then invest them in new areas of drilling and new places where we aren't so dependent on places of political uncertainty at the moment, which is part of the reason why supply has been a bit constricted.

Moore: It goes back to Economics 101. We all understand that when you tax something, you get less of it. So what Congress is saying is, Let's tax the oil companies. Let's tax their profits on production. Well, if you do that, folks, you're going to get less oil production, and then, of course, price is going to rise.

Now, the other interesting thing about this debate is the hypocrisy on the Democrat side of the aisle. Because for 20 years, as long as I've been following the debate on energy policy, the liberals and the environmentalists have been saying, We want high gas prices. We don't like people using fossil fuels because of greenhouse gases. Now, we've got--you know, they've said, we like the fact that, in Europe, the price is $5.50 to $6 a gallon of gasoline. We're heading that way in America. Why aren't liberals applauding this? They've always wanted European levels of prices.

Gigot: Dan, the president joined the fun, this week--the political fun--by saying let's have an investigation by the Justice Department on price gouging.

Henninger: Yeah, I--

Strassel: And the state attorneys general, too. Don't forget that.

Henninger: Yeah, I think the president does an enormous disservice by legitimizing and dignifying a concept like price gouging. It just feeds into it the whole demagoguery that surrounds this issue. I think the president has really fallen down here.

This is a war presidency. Appropriately, the president has spent all of his time on the war. But he has reduced his cabinet to virtual irrelevancy. We have a political economy here that needs to be explained. He ought to have a Treasury secretary who's out front talking about why this is happening in the context of a growing economy. We just reported 4.8% growth this week. Now, someone should be explaining that to the American people. Instead, the president is dignifying price gouging.

Gigot: I'll tell you, though, Dan. I think this is what happens when you get a president whose approval rating is 36%. Because he has no political capital to spend. The folks on Capitol Hill aren't listening to him. And it's every man and woman for himself. And we still have six months to go before an election. So batten down the hatches, is what I can say.

All right. When we come back, actor George Clooney called on the U.S. government this week to work harder to end what he called the first genocide of the 21st century, in Darfur. What can the U.S. do, and where's the U.N.?

Gigot: The long-running peace talks to resolve the crisis in Darfur face a deadline this weekend, with little hope of ending the carnage. President Bush announced new sanctions this week against people suspected of aiding the genocide there. At estimated 200,000 people have died since the violence began three years ago. And more than two million have been driven from their homes. But without a U.S.-led intervention, is the U.N. prepared to respond?

We're back with Dan Henninger and Kim Strassel, and also joining the panel is editorial board member Bret Stephens. Bret, why don't fill in our viewers, first, on a little background of this conflict. Who's killing whom, and what's its nature?

Stephens: Well, big picture, the government of Sudan, in Khartoum, has been waging war on its provinces for about 50 years. And they did so over two very long wars against Sudanese Christians in the south. That was ultimately resolved by Bush administration diplomacy in January 2005. Not surprisingly, not long thereafter, this conflict began in the west, against Darfur.

Now, the government in Sudan is an Arab government, an Islamist government. Darfuris are Muslims, but they're blacks. And there have been traditional tensions because Sudan is just a very large country and probably should have never been one country in the first place.

Gigot: And the government-supported militia, supported by the government in Khartoum, has been waging war against these rebels.

Stephens: This is precisely the same practice that Milosevic used in Serbia in the Balkans during the conflict there. He uses a proxy to do his killing. And there's this Janjaweed militia, which reports to and responds to the government--although the government denies there is a connection--which is responsible for about 200,000 deaths and another two million or so Darfuris displaced in refugee camps.

Gigot: All right. President Bush has said this--the Bush administration has said this is genocide. Kofi Annan has said we must do something. Why isn't anything being done?

Stephens: Well, part of the problem--and this is really a problem for the left--is that they have decided that the arbiters of international intervention have to be the place where action is taken: the U.N. and NATO. And what's happening at the U.N.? Well, the Chinese are adamantly opposed to sanctions against Sudan. China gets 5% of its oil from Sudan, and China supplies a lot of Kalashnikovs to Sudan.

Gigot: Right.

Stephens: NATO is opposed to any kind of intervention. The Europeans don't want to get their hands dirty there. And so what's left? The question is, is the United States going to intervene in any meaningful way? And we're already overextended in Afghanistan, Iraq and elsewhere in the world.

Gigot: What about the Arab governments? Do we see any concern from them that these Muslims are being killed in parts of Africa?

Henninger: Yeah, the Arab League just held its most recent meeting, I believe, in Khartoum.

[laughter]

Gigot: In other words, they don't care at all.

Henninger: Yeah, well, they don't care. You know, that's kind of the bottom line here. The Arab League, the Europeans and the United Nations--it's like the old New York City headline, "The World to Darfur: Drop Dead." Because they simply not going to do anything unless the United States goes in there. And the United States will go in there and get into this kind of slaughterous situation with the militias. And then the whole moral opprobrium of the world will rain down on the head of the United States. I don't think the United States should even think about going in there, unless the Europeans go in first with a significant force.

Strassel: But the question is, who does it otherwise? I mean, if there is a situation that just shows the bankruptcy of the U.N., this is it. I mean, it's been the person that's been shepherding these peace talks going on for two years now, with absolutely no results. People have been dying in the interim. And yet when President Bush came out and said maybe we should think about NATO, the main U.N. envoy in Sudan came out and complained that this was bad diplomacy, and that if you talk about this, you're going to raise the specter of new colonialism. Well, who else is going to do something? When's it going to get done?

Stephens: But, you know, we have a template for a solution. And, again, it goes back to the Balkans. In the 1990s, the U.N. had imposed an arms embargo on the Balkans, which meant the victims of the genocide there couldn't defend themselves. We could do two things that could be very effective. We could help arm the Darfuris so they can defend themselves, and we can try to clear the airspace, so that the Sudanese government doesn't have an advantage--isn't able to strafe the Darfuris from the air.

That doesn't really involve the kind of on-the-ground intervention that could get the United States or NATO in trouble. But it could go very far towards arming the Darfuris, making them an effective force, and forcing the Sudanese to make the same kinds of concessions to them as they did to the Christians in the south.

Gigot: Dan, it seems to me that this is what the world looks like when you don't have American leadership, and Americans willing to use force, if need be, to stop these conflicts and stop these rogue regimes from behaving in this kind of way. I mean, you had had it in Rwanda. You had it in the Balkans, as Bret said. You had it for a long time with Saddam Hussein. When you leave it to the U.N., this is what happens.

Henninger: Yeah, exactly--or to the Europeans. Let's keep in mind that the Balkans--Yugoslavia was a genocide happening on European soil for the second time in the 20th century, and they were going to allow it to happen until the Americans intervened. Same thing is going on in Africa. Another genocide, and the only people who seem to be able to stop it are the United States.

Gigot: So once again, the American cowboy is called in to ride to the rescue. Except we're overextended, now, in Iraq and in Afghanistan. And it's very tough for us to do it. This is what you get.

All right, we have to take one more break. When we come back, our "Hits and Misses" of the week.

Gigot: Winners and losers, picks and pans, "Hits and Misses." It's our way of calling attention to the best and the worst of the week.

Item one, New York City graffiti artists take their case to court. Dan?

Henninger: Yeah. Remember when they used to make movies, like "Escape From New York" or "Death Wish?"

[laughter]

And one of the things they always featured was a subway car splattered with graffiti and all this ominous stuff?

Well, now, seven graffiti artists, led by a fashion designer, are suing to overturn the law which makes it illegal for anyone under 21 to possess a can of spray paint. Now, even their lawyer refers to the longstanding plague of graffiti in the city. And, in fact, graffiti is the reason that the people in Manhattan and New York finally elected a Republican mayor, Rudy Giuliani.

Now, there's a footnote to this. The fashion designer has his own video game, which features graffiti artists. So he may have a self-interest in it. I think the solution to all this is, to quote the old Rolling Stones song, paint this lawsuit entirely black."

[laughter]

Gigot: OK, Dan, thanks.

Next, the horrors of Sept. 11 hit the big screen this weekend. Kim?

Strassel: Yeah, there's lots of controversy about this new movie, "United 93," with Americans split on whether or not it's too early to show it. But I say well done to Universal. You know, partly because they seem to have done it with a lot of tact. They use no-name actors. And they're devoting some of the proceeds to a memorial in Pennsylvania, where the plane crashed.

But also, right now, with America continuing to be involved in this discussion about Iraq, I don't think it's ever too early to remind Americans about what happened that day. And I think the person who said it best was the father of Todd Beamer, who was actually on the airplane. And he wrote, the other day, that all Americans should see this film to remind them of the very real enemy that we face. And also to make them resolved to support our troops out in the field. And so I'm going to take his advice and go see it myself.

Gigot: OK, Kim, thanks.

Finally, it's reportedly the largest earmark in American history. And it's literally going nowhere. Steve?

Moore: I call this segment, "Who Let the Hogs Out." This is a story of an emergency spending bill for the troops in Iraq. Somehow, Congress put several dozen special interest earmarks in the bill, including the infamous railroad to nowhere in Mississippi, where $700 million will be spent to move this railroad to accommodate casinos and beachfront property.

Now, the antipork caped crusader of Congress, Tom Coburn, brought an amendment last week. It failed 48-49. The good news is he had another amendment to take out $20 million for shrimp and oyster farmers. That passed. One little victory in the war against pork.

Gigot: All right, Steve, thank you. That's it for this week's edition of "The Journal Editorial Report." Thanks to Dan Henninger, Kim Strassel and Steve Moore. I'm Paul Gigot. Thank you for watching. We hope to see you next week.


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