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Jewish World Review May 24, 2001 / 2 Sivan, 5761

Jack Kemp

Jack Kemp
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A supply-side energy plan --
SUCCESS in politics, as in governing, requires getting the big things right, and President George W. Bush succeeds in getting the big things right in his sweeping new energy plan. He understands that our energy challenge lies on the supply side, and he and Vice President Dick Cheney therefore move decisively on many fronts to free up energy production currently hamstrung by regulation, taxation and government interference at just about every level.

Bush and Cheney seek to remove barriers to putting new power plants on-line and strike the right balance between ecological values and surging energy demand. They understand that energy and the environment don't need to be at war with each other, whether in the Alaskan wilderness, on the Outer Continental Shelf or in siting new pipelines and transmission capacity. The controversy over oil exploration in Alaska concerns only 2,000 acres of a 19 million-acre reserve - about the size of Dulles Airport.

The key is to strike a balance, and for too long the scale has been weighted against increasing energy output and production. The fact is we are using energy with infinitely more efficiency than when I went to Congress in 1971, allowing us to do more with less. Per unit of production, we use 74 percent less energy than we would have used at 1972 levels. At the same time, we're well behind the curve in preparing for the future.

The administration seeks to reverse this trend by removing the obstacles to energy production while balancing production needs with environmental concerns. Exploration on public lands, expanding trade in energy, opening up ownership of transmission lines and spurring technological innovations that enable us to continue using energy more efficiently all are truly "green" approaches to the energy problem. So, in a way, is nuclear power, which Bush wants to revive as a viable source of new production by tackling safety, disposal and regulatory issues head-on.

The most important aspect of the president's energy plan may be its broad battery of initiatives that will both increase energy supply and reduce the energy intensity of each unit of economic growth. Wisely, both Bush and Cheney stress removing barriers to market forces in advancing these twin objectives.

Unfortunately, they also bow to political correctness by adding to the mix a bunch of subsidies and tax credits, i.e. "incentives" to conserve energy and produce more energy from what I call "boutique renewables" - wind, solar, biomass - all of which have failed to demonstrate market viability despite massive government subsidies since the so-called energy crises of the 1970s. Even worse, the plan calls for still more "appliance efficiency standards" that could price labor-saving devices beyond the means of needy households without producing any tangible benefit.

These gestures to hard-left environmentalists haven't bought the administration any friends on the left. The New York Times called the president's proposals "a nod to the conservationists whom Vice President Cheney has been belittling - the plan does little for efficiency or renewable energy." The Times, which relies heavily on fossil fuels to produce its products, calls the whole plan a concession to the fossil fuels industries: the same industries that have made huge contributions to our economy and well-being over the years.

The "Left Coasties" at the Times deny we have an energy crisis on our hands and claim we can conserve our way into energy solvency without throttling the economy. But if conservation and renewables were the key to energy abundance, California would be the showplace of the future, not the national embarrassment it has become where energy policy is concerned. Gov. Gray Davis may try to shift the blame to Washington all he wants, but no one's suggesting the rest of the nation emulate California!

As Kim Strassel pointed out in the Wall Street Journal, conservation per se does absolutely nothing to ease our energy problems. As she puts it, "Energy consumption hasn't gone down; rather, it has stubbornly risen by an average of about 1.7 percent a year since the early 1980s, despite the increasing weight of conservation policies."

Conservation, that is less waste in energy use, is indeed desirable, but it's a natural consequence of price mechanisms. When costs go up, as they've been doing lately, people are more prudent in using energy. As well as providing incentives for exploration and development, markets allocate capital efficiently while government misallocates costs.

The president has given us a bold and sound energy plan, not a perfect one. But for now, let's give the administration two thumbs up for resisting the trend Thomas Jefferson feared where liberty inevitably yields and government gains ground. To their great credit, Bush and Cheney have chosen to side with the forces of free markets, free enteprise and free people. Knowing the history of the 20th century, freedom works!

Jack Kemp is co-director of Empower America and Distinguished Fellow of the Competitive Enterprise Institute. Comment by clicking here.


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