September 18, 2008

Waiting for Other Tariff to Drop

By Peter Blake

Democrats have long demanded "energy independence" and simultaneously voted against drilling offshore and in the Arctic National Wildlife Refuge without a pang of either conscience or consistency.

Their passage late Tuesday of a House bill that would allow exploration 50 to 100 miles off the Atlantic and Pacific coasts - but not closer in, nor in the Gulf of Mexico, where the known oil is - was an eyewash measure designed only to appease unhappy motor- voters. It stands little chance in the Senate, and even less chance of a presidential signature.

Not that George W. Bush has been a hero in the effort to lower gasoline prices. He sounded like the Sierra Club when he referred to our oil "addiction" in his 2006 State of the Union address, and his somnolent fellow Republicans began urging "Baby" to drill only when they discovered it worked as a campaign slogan.

We import almost 70 percent of our oil, some of it from unfriendly, or at least politically unstable, nations. But how important is energy independence to national security? Is it more important than, say, footwear independence?

Shoes are literally the foundation of civilized society, perhaps even more essential than oil. About 95 percent of them are made beyond our borders, but so far, no lawmaker has expressed any concern. Shouldn't we be worried? If there is a falling out with our trading partners, won't the nation become one big Valley Forge every winter, with all of us tromping on naked feet through the bloody snow?

Our dependence on foreign shoes popped up in the news the other day because there is an effort to repeal, or at least reduce, a heavy tariff on imported shoes. It was originally established by the infamous Smoot-Hawley Act of 1930 for the benefit of a thriving domestic industry that no longer exists.

The levy, which raises almost $2 billion a year, falls heaviest on the poor, since the rate is highest on low-cost rubber-soled sneakers with fabric tops.

Leading the drive to end the tariff is a coalition of shoe retailers and importers. They have considerable congressional support, but according to The Wall Street Journal, House Ways and Means Chairman Charles "What? My rental income is taxable?" Rangel is moving slowly because the $2 billion in lost revenue must be replaced by higher taxes or lower spending, neither a popular move in an election year. Congress is very strict on the dollar-out, dollar-in principle except when it comes to waging war or bailing out banks, insurance companies and mortgage lenders.

If Congress reduces the tariff, and it should, it would indicate that the nation doesn't worry much about where our shoes come from. Nor should it. Every nation consumes or exports the goods it can produce the most efficiently, and imports the rest. Shoes, at this point, are made more efficiently elsewhere. If the dollar keeps declining, domestic production might be revived.

Lawmakers should likewise let the market decide where our energy comes from. "Energy independence" is an empty, even fraudulent, political slogan.

Even our enemies are going to sell it to us - if not directly, because of domestic political motives, then through third parties. What else are they going to do with their oil - drink it? Oil, like water, will flow toward money. Trade happens.

Of course we should drill more domestically, if the oil companies find it profitable. It won't eliminate imports, which will be with us forever, but it will reduce the price of fuel.

It's not for the government, state or national, to choose favorites in the competition to supply energy by creating subsidies or tax breaks for one industry and not for another. Nor should it rule that a certain percentage of energy must be derived from one source or another, as Colorado has done with electricity generation. That's foolishness.

All government is supposed to do is level the playing field.

Originally published by Peter Blake, Rocky Mountain News.

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