Sending the wrong signal
Twelve days after they first rolled in, Russian tanks are still in Georgia and show no signs of pulling out. A small column left the strategic town of Gori yesterday, but Russian troops were still in the Black Sea port of Poti, taking 20 Georgian servicemen at gunpoint, and still encamped at Igoeti, 27 miles from the capital, Tbilisi. Nor is this likely to change. Having signed a ceasefire agreement which requires it to pull back to the position it occupied before the Georgian attack on Tskhinvali on August 7, Russia continues to dismantle Georgia's military machine. Russian forces have not only occupied the areas of South Ossetia which were previously under Georgian control but drilled a large "security zone" around the enclave, occupying villages like Igoeti which were wholly Georgian.
Every day this occupation continues, Russia undermines its own case - which was to stop Georgia's ethnic cleansing of Ossetia. Every day Russian tanks rumble around Georgia, or greater Ossetia, is another day when Georgia's leaders claim that the real object of Russia's invasion is to dismember an independent and sovereign state. Dmitry Rogozin, Russia's ambassador to Nato, wrote in yesterday's International Herald Tribune that the Russian military did not "subject civil objects and civilians on the territory of Georgia to deliberate attacks". There are countless smouldering Georgian villages that say otherwise.
All of which obscures Georgia's historic aim to seize its breakaway provinces back by force. Georgia's previous attempts to solve its separatist conflicts with tanks and bombardments (they did it to South Ossetia in 1990-92 and Abkhazia in 1992-93) are glossed over by those who cast this conflict as a demonstration of Russian imperialism. Zviad Gamsakhurdia, Georgia's first post-Soviet president, claimed Ossetians only appeared in Georgia on the coat-tails of the Red Army's invasion in 1921. Georgia's current president, Mikheil Saakashvili, said in an interview with the BBC that the only Russian citizens in South Ossetia were the ones that Russia had just created by handing out passports. Each Georgian leader peddles the same myth, which is to deny Ossetians or the Abkhaz their history, identity and land.
Widen the field of vision, and what happened in South Ossetia could be repeated and amplified in the Crimea, a pro-Russian enclave that has always disputed its inclusion into Ukraine. Pull back the lens still further, and there are more than 8 million ethnic Russians in Ukraine, and 1.2 million in the Baltic states, where they are significant minorities in the populations of Estonia and Latvia. Old memories die hard. Last year a man was killed in a Russian demonstration in Tallinn after the Estonian authorities moved a Soviet-era war memorial. When former Baltic leaders write that Europe must stand up to Russia, what does that mean for sizable portions of their own populations? Sovereignty is not the only principle at stake. How successfully independent states cope with the legacy of their history also matters.
There was no international settlement when the Soviet Union broke up. The map could easily be redrawn again, and it is in no one's interests that it is done either by Russian tanks or by western security guarantees. Nato's eastward expansion must not only be judged by the benefits enjoyed by its new members, but by the reaction it causes elsewhere. It may have just shifted the line of confrontation eastwards. Without Russia's participation, Nato's ability to solve conflict in the Caucasus is limited. Its ability to spread it, however, is unlimited. Nato's decision yesterday to create a special consultative council for Georgia, and to suspend the one it has with Russia, may appear today to be a useful diplomatic lever. But in the long term the exclusion of Russia from the collective security arrangements of a region where millions of ethnic Russians live is a recipe for conflict.
What Did We Expect?
Thomas Friedman
If the conflict in Georgia were an Olympic event, the gold medal for brutish stupidity would go to the Russian prime minister, Vladimir Putin. The silver medal for bone-headed recklessness would go to Georgia’s president, Mikheil Saakashvili, and the bronze medal for rank short-sightedness would go to the Clinton and Bush foreign policy teams.
Thomas L. Friedman
Let’s start with us. After the collapse of the Soviet Union, I was among the group — led by George Kennan, the father of “containment” theory, Senator Sam Nunn and the foreign policy expert Michael Mandelbaum — that argued against expanding NATO, at that time.
It seemed to us that since we had finally brought down Soviet communism and seen the birth of democracy in Russia the most important thing to do was to help Russian democracy take root and integrate Russia into Europe. Wasn’t that why we fought the cold war — to give young Russians the same chance at freedom and integration with the West as young Czechs, Georgians and Poles? Wasn’t consolidating a democratic Russia more important than bringing the Czech Navy into NATO?
All of this was especially true because, we argued, there was no big problem on the world stage that we could effectively address without Russia — particularly Iran or Iraq. Russia wasn’t about to reinvade Europe. And the Eastern Europeans would be integrated into the West via membership in the European Union.
No, said the Clinton foreign policy team, we’re going to cram NATO expansion down the Russians’ throats, because Moscow is weak and, by the way, they’ll get used to it. Message to Russians: We expect you to behave like Western democrats, but we’re going to treat you like you’re still the Soviet Union. The cold war is over for you, but not for us.
“The Clinton and Bush foreign policy teams acted on the basis of two false premises,” said Mandelbaum. “One was that Russia is innately aggressive and that the end of the cold war could not possibly change this, so we had to expand our military alliance up to its borders. Despite all the pious blather about using NATO to promote democracy, the belief in Russia’s eternal aggressiveness is the only basis on which NATO expansion ever made sense — especially when you consider that the Russians were told they could not join. The other premise was that Russia would always be too weak to endanger any new NATO members, so we would never have to commit troops to defend them. It would cost us nothing. They were wrong on both counts.”
The humiliation that NATO expansion bred in Russia was critical in fueling Putin’s rise after Boris Yeltsin moved on. And America’s addiction to oil helped push up energy prices to a level that gave Putin the power to act on that humiliation. This is crucial backdrop.
Nevertheless, today we must support all diplomatic efforts to roll back the Russian invasion of Georgia. Georgia is a nascent free-market democracy, and we can’t just watch it get crushed. But we also can’t refrain from noting that Saakashvili’s decision to push his troops into Tskhinvali, the heart of Georgia’s semiautonomous pro-Russian enclave of South Ossetia, gave Putin an easy excuse to exercise his iron fist.
As The Washington Post’s longtime Russia watcher Michael Dobbs noted: “On the night of Aug. 7 ..., Saakashvili ordered an artillery barrage against Tskhinvali and sent an armored column to occupy the town. He apparently hoped that Western support would protect Georgia from major Russian retaliation, even though Russian ‘peacekeepers’ were almost certainly killed or wounded in the Georgian assault. It was a huge miscalculation.”
And as The Economist magazine also wrote, “Saakashvili is an impetuous nationalist.” His thrust into South Ossetia “was foolish and possibly criminal. But unlike Putin, he has led his country in a broadly democratic direction, curbed corruption and presided over rapid economic growth that has not relied, as Russia’s mostly does, on high oil and gas prices.”
That is why the gold medal for brutishness goes to Putin. Yes, NATO expansion was foolish. Putin exploited it to choke Russian democracy. But now, petro-power-grabbing has gone to his head — whether it's invading Georgia, bullying Western financiers and oil companies working in Russia, or using Russia’s gas supplies to intimidate its neighbors.
If it persists, this behavior will push every Russian neighbor to seek protection from Moscow and will push the Europeans to redouble their efforts to find alternatives to Russian oil and gas. This won’t happen overnight, but in time it will stretch Russia’s defenses and lead it to become more isolated, more insecure and less wealthy.
For all these reasons, Russia would be wise to reconsider Putin’s Georgia gambit. If it does, we would be wise to reconsider where our NATO/Russia policy is taking us — and whether we really want to spend the 21st century containing Russia the same way we spent much of the 20th containing the Soviet Union.
THE CULTURE OF HAPPINESS
This is a supplement to my article from Demember 2006 titled The Culture of Success. In that article, I make a detailed case on how certain cultures are far more likely to produce economic prosperity than others. A recent chart from The Economist, however, adds another dimension to this thesis. Economic prosperity is not always a guarantee of happiness. So which cultures generate greater happiness?
It appears that happiness corelates moderately, but not exactly, with economic prosperity, as Japan and South Korea are less happy than Brazil. However, happiness certainly does corelate with Western values. The oldest Democracies, such as the US, Britain, Denmark, etc. are also the happiest countries.
India warrants special mention. While India is a genuine democracy, human development indicators reveal India to be one of the least successful societies in terms of wealth creation, even as it was once the world's wealthiest society for over two thousand years. However, we additionally see from the above chart that India is one of the unhappiest societies in the world. Suffice it to say that Indian culture, with thousands of years of accumulated baggage calcifying into a rocklike rigidity, has mutated into the most efficient machine imaginable for stripping away human happiness. One could scarcely invent a more sophisticated infrastructure for extinguishing the basic joys of life if they tried. The typical American, Australian, or Dane cannot even begin to imagine the sheer variety of obstacles to the pursuit of happiness that can be constructed around the human soul.
CAPITALIST NEXUS
You Must Be On Crack!
That was the reply from a super smart, politically aware, democratically loyal and very close friend of mine after I sent him a text saying that Obama will not win after watching the discussion he and McCain had with Pastor Rick at Saddleback, and he will likely pick Hillary as his VP to stem his bleeding in the polls. I wanted to note a few of my thoughts as I think they will become ongoing themes as these two appear together in debates this fall. The transcript of the entire event is available here.
1. The age/smooth contrast between Obama and McCain will work against Obama if McCain continues to look as relaxed and react as quickly as he did during this event. Obama is clearly at his best when he has a prepared script in front of him and speaks from tele-prompter. He has a wonderful voice with amazing inflection that he draws on to speak with authority, conviction, and inspiration. Who is not moved as he says, “We are the ones we have waited for”. That is powerful stuff. But once he moves outside of a script he transforms himself into a form of George W. Bush with his English as Second Language stop and go speech pattern. I think a good bar game during the debates will be to take shots each time Obama utter an Um or Ah. Smart bar owners will sell copious amounts of tequila and be seen as promoting the civic good by encouraging citizens to watch the debates. As the public sees more of his debate performance outside of a scripted environment, Obama’s star will continue to fade. To date conventional wisdom has evaluated McCain in comparison to Obama, as a speech giver - which he does very poorly. In general he seems pasty, uncomfortable, stiff, uninspired, and tired. But in a conversational setting McCain is able to quickly and decisively discuss points in detail and with conviction. McCain does not tend to straddle issues and thus makes it fairly easy for people to make a choice for or against his aggregate stances - making it easier for him argue that he and he alone can institute the changes required to restructure and make Washington more effective if he is elected, which is ultimately what this election is about.
2. Obama does not offer a compelling reason to be President of the United States of America. After listening to him for an hour, there was nothing compelling in his history that called out and said, “Yes, this man is the chosen one to return America to greatness”, as Nancy Pelosi may have said or ” This man can bring Washington together”, as Obama followers claim. But what has he accomplished, or what groups has he bridged? Sadly, the answer is for the most part not much or none. He lists among his personal narrative, his keen judgment not to invade Iraq, and the sacrifices he made by not pursuing high paying jobs after college and law school to work with unemployed steel workers, and to pursue government positions to advance the greater good. While questionably admirable, those are arguable not the experiences required to run the world’s largest economy and mankind’s most powerful military force. Since being elected to the US Senate, he has arguably abdicated his responsibility as a freshman senator, as he has basically been running for President full time since entering the Senate, with little to show for his efforts there. His record has essentially been one of a hard leaning liberal with few bipartisan accomplishments and fewer instances of taking risky positions against his party to effect bi-partisan solutions, which would indicate a willingness to work with Republicans on key issues. In contrast, McCain’s currency is experience, especially foreign policy, having served years in congress in various intelligence capacities and traveled extensively to Iraq, Afghanistan, and Georgia in official capacities. In addition, McCain has consistently gone against his party’s wishes to work with Democrats on controversial legislation earning him a reputation among the media as a “Maverick” and among many Republicans as a “Judash“. In an era where change is the buzz word, McCain has a track record of effectively working inside and outside his party to make change happen, while up to now Obama has only delivered speeches that tend to talk in ideal tones that are short on details. In the end, facts are friends and while Obama is not too young to be President, he is simply too inexperienced and offers no compelling reason to claim to the office.
3. The substance contrast between Obama and McCain, without trying to insult Obama, is simply that between a man and a boy. On issue after issue, Obama struggled to reach a coherent answer. When asked to name which Supreme Court Justices he would not have appointed, Obama sought refuge in the old liberal clinches about Thomas not being smart or experienced enough (though a Wall Street Journal editorial today clearly shows why such a statement was foolish), rather than squarely discussing that he voted against Roberts and Alito. When asked about when life begins, he answers that such a question is “above my pay grade”, odd for someone who will set the agenda on such issues. When asked about his most difficult personal decision, Obama spoke to his decision to oppose the war in Iraq, an issue for which he had no real accountability, as he was a state senator and thus his thoughts were of minor consequence. Thus on one of the most important questions of the night, Obama basically avoided the question, which is typical of how he has handled himself on tough issues over the past year. McCain by contrast was very direct on his answers. Asked when life starts he answered at conception. Asked what judges he would not appoint to the Supreme Court, he effectively said the four liberal ones, as they are legislating from the bench. Asked about his toughest personal decision, he answered about his experience as a POW, where he was offered an early release due to a family connection but instead he chose to honor the POW code of first in first out, which kept him as a prisoner for another three years at great physical and mental harm. The contrast in which these men answer questions clearly and directly together on stage in a debate will shock most people expecting Obama to be a smooth, cool, intellectual operator.
4. A question asking each candidate for the wisest three people he knows and that he will rely on heavily during his administration led to a rambling, non-informative, non-binding reply from Obama versus a direct and relevant reply from McCain. Obama would basically go to solve the world hot spots bending his ear to his wife, his grandmother, and Senators:Ted Kennedy, Richard Luger, and Tom Coburn. As with most things Obama, he tends to run like the Platte River, a mile wide and an inch deep. No one believes, Kennedy, Luger or Coburn will serve a meaningful role in an Obama administration, making such a reply patronizing to those that take the time to follow what he actually says. Further, he cannot even limit his answer to three people as the simple question requests, displaying the arrogance he is becoming famous for lately. Is it that hard to just follow the rules? Contrast Obama’s choices to McCain’s. He named, General Patreas, John Lewis, and Meg Whitman. General Patreas is the world’s foremost military expert, Lewis represents all that is right in the struggle for civil rights, and Whitman captures the innovation and spirit of that capitalist spirit that has given America its world leading lifestyle. Further, it is easy to see both Patreas and Whitman serving in a McCain Administration, indicating his answer represents more than just a short-term story to placate the immediate audience, as he did offering pro-life Senator Coburn. Again this question illustrates how these men differ in substance versus style, a point made vividly clear when they are in close proximity to one another.
As a bonus discussion point, I will just touch on another topic that tends to consistently bother me, namely the comparison between Obama and Regan.
5. Some argue that Ronald Reagan was short of specifics in his speeches, and short on experience in his life, but then was able to transform the country, and Obama will be able to do something similar through the force of his personality. Ronald Reagan was very clear that given the chance he would like to make government as small as possible with as little intrusion into everyone’s life as possible, with a very strong national defense to defeat Communism around the world. His message was very simple and very consistent with long held American ideals of individual self reliance, independence, hard work, freedom, and pride in our country. He returned a sense of pride to being an American after the disaster known as Jimmy Carter. Before he ran for President, Ronald Reagan debated Bobby Kennedy, and effectively knocked him back on his heels and sent a message that he was a political force to be dealt with. For years he delivered a series of radio addresses that carried a basic, consistent theme of individual freedom, limited government, and free markets. Reagan also served very successful terms as Governor California. Contrast this to Barrack Obama, who generally refuses to make any of his core ideas or ideals clearly known. Unlike Reagan, who clearly articulated a case for less government for all to weigh, Obama will not admit that his solutions require a much larger government, or that his ideals require everyone to sacrifice personal freedoms, or that personal property clearly has to be limited, or his view of the world sees a medical system as innovative as the post office. Reagan’s values preached being as successful as you can be, Obama’s emphasizes taking from those with more than you; Reagan’s values preached being self reliant, Obama’s emphasizes turning your care over to the government; Reagan wanted a government that encouraged all of us to reach for the best within us to produce more, Obama’s approach is punish those that have success and discourage others from seeking it. Obama believes from ones ability to ones need, that ones efforts belongs to the government to tax as needed. The politics of Obama is nothing more than to slice up the electorate into pieces and promise each part something from the other. That is very scary to me. Reagan the politician worked, because even if you are a ditch digger in America you know your kids can attend a community college, transfer to a state college, attend medical school, and then make hundreds of thousands of dollars a year. Opportunity in America is open to anyone that is willing to work hard and apply oneself. Under variously proposed Obama plans, that doctor would have a 65% tax rate - is it worth the effort to become a doctor? Reagan understood such a tax policy made no sense, and went against America’s history and ideals, and he wanted your kids and every other American to keep their money. Obama the politician wants your kids money, and as this becomes better understood, it is unlikely that most Americans will agree to give it to him.
Ultimately as the nation turns its full attention to these candidates, it will be evident that Obama is not ready for the job.
American housing 1
Home economics
Behind the housing gloom is an improving backdrop
THE American housing market has deteriorated so sharply in the past two years that it is easy to fall prey to profound pessimism. Recent weeks have brought yet more bad news. To protect their thin capital, Fannie Mae and Freddie Mac, the big mortgage agencies, said they would limit the volume of new mortgages that they buy. JPMorgan Chase announced $1.5 billion in mortgage-related write-downs and gave warning of worsening housing conditions. Meanwhile, the Federal Reserve found that mortgage-underwriting terms were tightening by the greatest extent since the early 1990s.
Amid the despondency, however, supply and demand are moving towards balance. Sales of new homes, which had plunged nearly 60% from their average level of 2005, have been stable since March. Sales of existing homes stopped falling last autumn. Julia Coronado of Barclays Capital says that construction of homes built for sale, not counting units that already have a buyer, had dropped to 13% below the level of new-home sales in the first quarter (see chart 1). She thinks second-quarter data, due out on August 19th, will show the gap growing to 18%. That is why the inventory of unsold homes, though still near recent highs relative to monthly sales, has fallen sharply in absolute terms.
By the standards of previous cycles, residential construction should be nearing the bottom. Karl Case, a housing expert at Wellesley College and one of the creators of the S&P/Case-Shiller home-price indices, notes that in three previous housing cycles, residential investment peaked at about 5.5% of GDP and hit bottom at around 3.5%. In the latest cycle it peaked at 5.5% in 2006 and by the second quarter had fallen to 3.1% of GDP, below the troughs of 1975, 1982 and 1991. He does not expect much rebound. But like hitting yourself with a hammer, house building need only stop falling for the economy to feel better. Most forecasters expect construction to fall further in coming quarters but since that will be from a shrinking base, the impact on overall economic growth will diminish.
Finally, since home prices have dropped about 18% from their mid-2006 peak (based on the S&P/Case-Shiller composite of 20 cities) and incomes have steadily grown, homes are returning to more typical levels of affordability in some regions. Mr Case estimates that in Los Angeles, the ratio of home prices to annual income per person doubled from 2001-06 to 16, and has since fallen to 11. In Boston, it rose from nine to 12, and has since fallen back to nine.
There are numerous caveats, however. First, the scale of the housing boom means history is a flawed guide to how big a retrenchment is in store. As Mr Case succinctly puts it, “We really overdid it.” David Seiders, chief economist at the National Association of Home Builders (NAHB) in Washington, DC, thinks that in normal times, 3.6% of America’s housing stock—including owner-occupied homes, rental units and builders’ inventory—should be vacant. The figure is now 4.8%. That translates into 1.5m “excess” vacant units, one reason Mr Seiders thinks construction is going to keep falling until the second quarter of next year.
Some believe that with banks and other lenders dumping huge numbers of foreclosed homes, prices could fall well below equilibrium. That is debatable. A recent paper by Charles Calomiris of Columbia University and Stanley Longhofer and William Miles, both of Wichita State University, argues that foreclosure sales will impact prices less than commonly thought. They examined state-level data from 1981 to 2007 and found that even large increases in foreclosures have only a small marginal impact on prices, perhaps because they occur late in the cycle when the supply of newly built homes is shrinking.
Most serious is the prospect of a further squeeze on credit. The fate of the mortgage market has increasingly rested on the shoulders of Fannie Mae and Freddie Mac, as well as Ginnie Mae, their wholly government-owned counterpart. But they may not have much more staying power; last month, their issuance of mortgage-backed securities plunged by 41% from June, according to Inside Mortgage Finance, a newsletter (see chart 2). Even if Fannie and Freddie’s capital constraints do not stop them guaranteeing mortgages, they have tightened their underwriting terms. Banks, which lack capital themselves, are passing these tighter terms on to customers. Mortgage rates have risen by half a percentage point since early June.
This has left both optimists and pessimists pinning hopes for a rebound on the federal government. Last month’s housing-rescue law offers up to $7,500 to first-time homebuyers, a feature that the NAHB has been heavily promoting. The law also made the government’s implicit backing of Fannie and Freddie explicit, if necessary by injecting capital into them. Ms Coronado admits her optimistic case goes out of the window if the two firms can no longer do their job. Which is why, she says, the government will ensure that they can.
The Idiocy of Energy IndependenceBy John Stossel
It's amazing how ideas with no merit become popular merely because they sound good.
Most every politician and pundit says "energy independence" is a great idea. Presidents have promised it for 35 years. Wouldn't it be wonderful if we were self-sufficient, protected from high prices, supply disruptions and political machinations?
The hitch is that even if the United States were energy independent, it would be protected from none of those things. To think otherwise is to misunderstand basic economics and the global marketplace.
To be for "energy independence" is to be against trade. But trade makes us as safe. Crop destruction from this summer's floods in the Midwest should remind us of the folly of depending only on ourselves. Achieving "energy independence" would expose us to unnecessary risks -- such as storms that knock out oil refineries or droughts that create corn -- and ethanol -- shortages.
Trade also saves us money. "We import energy for a reason," says the Cato Institute's energy expert, Jerry Taylor, "It's cheaper than producing it here at home. A governmental war on energy imports will, by definition, raise energy prices".
Anyway, a "domestic energy only" policy (call it "Drain America First"?) is a fantasy. America's demand for oil is too great for us to supply ourselves. Electricity we could provide. Not with windmills and solar panels -- they are not yet close to providing enough -- but coal and nuclear power could produce America's electricity.
But cars need oil. We don't have nearly enough.
That doesn't keep the presidential candidates from preying on the public's economic ignorance.
"I have set before the American people an energy plan, the Lexington Project -- named for the town where Americans asserted their independence once before," John McCain said. "This nation will achieve strategic independence by 2025".
Barack Obama, promising to "set America on path to energy independence," is upset that we send millions to other countries. "They get our money because we need their oil".
His concern that "they get our money" is echoed in commercials funded by Republican businessman T. Boone Pickens, who wants government subsidies for alternative energy. He tries to scare us by saying, "$700 billion are leaving this country to foreign nations every year -- the largest transfer of wealth in the history of mankind."
Don't Obama and Pickens realize that we get something useful for that money? It's not a "transfer"; it's a win-win transaction, like all voluntary trade. Who cares if the sellers live in a foreign country? When two parties trade, each is better off -- or the exchange would never have been made. We want the oil more than the money. They want the money more than the oil. They need us as much as we need them.
And Obama is wrong when he implies that America imports most of its oil from the Mideast. Most of it comes from Canada and Mexico.
McCain and Obama talk constantly about how much they will "invest" -- with money taken from the taxpayers, of course -- to achieve energy independence. "[W]e can provide loan guarantees and venture capital to those with the best plans to develop and sell biofuels on a commercial market," Obama said.
What makes Obama think he's qualified to pick the "best plans"? It's the robust competition of the free market that reveals what's best. Obama's program would preempt the only good method we have for learning which form of energy is best.
Has he learned nothing from the conceits of his predecessors? Jimmy Carter, saying that achieving energy independence was the "moral equivalent of war," called for "the most massive peacetime commitment of funds ... to develop America's own alternative". Then he wasted billions of our tax dollars on the utterly failed "synfuel" program.
McCain promises a $300-million prize to whoever develops a battery for an electric car. But the free market already provides plenty of incentive to invent a better battery. As George Mason University economist Donald Boudreaux writes, "Anyone who develops such a device will earn profits dwarfing $300 million simply by selling it on the market. There's absolutely no need for any such taxpayer-funded prize".
Democrats and Drilling
It took a few months, and more than a few polls, but Democrats have concluded that they've lost the debate against more oil-and-gas drilling. The surrender became official on Saturday, when House Speaker Nancy Pelosi announced that even she was ready to "consider opening portions" of the Outer Continental Shelf to oil exploration.
That's great news, assuming she and her fellow Democrats really mean it. It wasn't too many days ago that the anticarbon Speaker lampooned drilling as "a hoax on the American people," while Barack Obama called it "another Washington gimmick." Now the Democratic Presidential candidate has also said he might be willing to change his mind and tolerate the exploitation of domestic energy resources. The good news for converts like Ms. Pelosi and Mr. Obama is that they have immediate opportunities to quiet Republicans and other skeptics and prove their new pro-drilling bona fides.
![[Democrats and Drilling]](http://s.wsj.net/public/resources/images/OB-CC445_oj_1de_20080819190239.jpg) |
| AP |
| Oil opponents: Rep. Mark Udall and Sen. Ken Salazar. |
They can start with the 2008 Democratic Party platform, the policy outline for the election campaign that delegates will endorse at next week's Denver convention. Let's just say the draft now reads as if it was written before Speaker Pelosi's conversion on the road to ExxonMobil.
For example, the platform draft now says that "We know we can't drill our way to energy independence." Then there's the bit about ending "the tyranny of oil," which will require "far more than simply expanding our economic and political resources to keep oil flowing steadily" from overseas and elsewhere. There's also no mention of drilling offshore, much less in Alaska, and nothing about exploiting our vast domestic supplies of oil shale.
Fortunately, Democrats have time to fix these political oversights. If they are serious, surely Democrats will have someone rise on the convention floor next week and offer an amendment that endorses offshore drilling and pledges not to extend the Congressional ban on drilling that expires on September 30. Come to think of it, Democrats should offer this amendment in prime time. How better to steal the drilling issue from Republicans?
Speaking of that moratorium, Congress will return from recess after the conventions and needn't wait until the end of September to act. Both Speaker Pelosi and Majority Leader Harry Reid can allow quick votes to repeal the ban so the feds can immediately open the bidding on more oil-and-gas drilling leases. The longer Congress waits, the longer it will take to get any of those energy resources to consumers.
The fossil-fuel love-in could also extend to oil shale. Abundant on federal lands in the Mountain West, these deposits could yield more than seven times more fuel than Saudi Arabia has crude oil reserves. While extraction technology is still a work in progress, the immediate hitch is that a pilot leasing program was deliberately killed last year in legislation offered by Colorado's Democratic Senator, Ken Salazar. His partner in imposing that exploration ban was none other than House Democrat Mark Udall, who is now running for Colorado's open Senate seat.
Mr. Udall recently had his own pro-drilling epiphany, after weeks of getting pounded on the issue by his Republican opponent, Bob Schaffer. Mr. Udall's lead in the polls has vanished. "We've got to produce our own oil and gas here in our country," he now says in a new TV spot. But a campaign ad isn't enough. Surely, Mr. Udall will now want to acknowledge his mistake of a year ago and fight to lift the oil-shale ban on the House floor next month. That is, unless his new pro-drilling rhetoric is merely campaign triangulation that he doesn't really believe.
We'll know Democrats are not serious if they limit their drilling support only to the so-called Gang of 10 proposal in the Senate. The bipartisan Gang would allow drilling only offshore of four states -- Virginia, Georgia and the Carolinas -- and only if it is farther than 50 miles out. It would leave the most promising areas off limits, especially in the Arctic and the Gulf of Mexico.
And in return for this de minimis drilling, the Gang wants to spend $84 billion more in subsidies for ethanol and other "alternatives," while hitting the oil industry with a $30 billion tax increase. This proposal is a trick designed to give Democrats political cover while opening up very little new land or offshore area for drilling.
No doubt any or all of these three actions would enrage the green lobby, but politics is about choosing. In this case, the Democratic choice is between sticking with an anticarbon theology that opposes all new drilling, or siding with American consumers who want more energy supplies so they don't have to pay $4 for gas and blow their family budget to keep the lights on. We'll soon find out whether Democrats have found religion on drilling, or if they're merely doing an election-year incantation.
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