Sunday, February 13, 2011

Mitch Daniels Is a Serious Politician, but Not A Serious Contender for the Republican Nomination (and He Is Not Serious At All about Environmental Protection)

In his keynote speech to CPAC a couple of evenings ago, Indiana Governor Mitch Daniels burnished his fiscal-conservative credentials by calling for "bariatric surgery" for the "morbidly obese" federal government (see here). Whether or not one agrees with his diagnosis and prescription, Daniels deserves credit for bravery.

In stark contrast to the other 2012 presidential hopefuls appearing at the conservative conference, Daniels virtually leaped onto the "third-rail" of politics, explicitly recommending dramatic changes in the structure of Medicare and Social Security. That, along with Daniels's argument that the "culture wars" should, at least for the time being, take a backseat to fiscal reforms, separates him from virtually every other potential candidate in the Republican field, including both heartfelt social conservatives and mere panderers.

The sharp intensity of Daniels's focus on fiscal reform and shrinking the size of the federal government - a focus Daniels seemed to lack when he was Director of the Office of Management and Budget under George W. Bush (see here) - is a two-edged sword. It marks him as an unusually serious politician, but at the same time virtually guarantees that he will not be a serious contender for the Republican nomination.

Putting to one side his "nominatability," and conceding his earnestness about policy, Daniels's laissez-faire attitude toward the economy (sometimes tinged with a corporatist flavor, especially on matters of energy policy) provides reason for concern. That attitude is more than evident in his contemptuous treatment of environmental protection and the Indiana Department of Environmental Management (IDEM) during his tenure as governor of Indiana (on which see my earlier blog post here). A November 2009 editorial in the Post-Tribune of Northwest Indiana provided the following list of Daniels's environmental "accomplishments" as governor:
  • Closed the IDEM office of enforcement.
  • Weakened enforcement rules, making it necessary to demonstrate environmental degradation before state takes action.
  • Ended contracts with local air pollution monitors.
  • Removed nearly all references about global warming in the state's educational material for kinds.
  • Appointed a coal industry attorney as IDEM's lead counsel.
  • Fast-tracked the BP Whiting expansion permit, weakening it in the process and potentially endangering the much-needed capital project

Daniels's speech at CPAC this past week, where he called for large-scale reductions in government regulations, confirmed that he would bring the same anti-environmental attitude to the White House. His call for large-scale deregulation is consistent with a recent op-ed Daniels published in the Wall Street Journal (here), calling for (among other things):
A "freedom window." Might we try some sort of regulatory forbearance period in which the job-killing practice of agonizingly slow environmental permitting is suspended, perhaps in favor of a self-certification safe harbor process? Businesses could proceed with new job creation immediately based on plans that meet current pollution or safety standards, or use best current technology, subject only to fines and remediation if a subsequent look-back shows that the promised standards were not met.
On a simplistic analysis - the only one Governor Daniels has yet provided - deregulation seems a natural way to spur the economy and job-creation. After all, whatever funds businesses are not required to expend on complying with environmental and other onerous regulations, are available for investment in productive activities; and increased production would likely lead (at some point) to more jobs. But this logic ignores pollution and other externalities from industrial production that impose very real costs on society. A careless deregulation of environmental protection would, in fact, reduce the overall productivity of the American economy and net social welfare (see, for example, this report by Harvard economist Dale Jorgenson and Northeastern University economist Richard J. Goettle on the net positive productivity and welfare effects of the Clean Air Act).

The reflexively pro-business Daniels seems blind to the very real distinction between efficiency-enhancing regulatory reforms (a good thing) and the false economies of radical deregulation (a bad thing). In that respect, at least, he is just like the other potential Republican nominees for 2012.

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