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September 07, 2011

Four Good Moves by the Obama Administration

The President and his administration are on a roll. I doubt if he sees it that way, but he and his team have actually had a very good week of doing good things for America and its struggling economy despite outrage from both the left and the right. Press coverage has concentrated on the politics and political ramifications of these actions; so let's take a look at the substance.

  1. The Justice Department sued to prevent the planned acquisition of T-Mobile by at&t. The US economy already suffers from substandard wireless service and high prices due to the near duopoly held by Verizon Wireless and at&t. Even if antitrust weren't a legitimate government function (which I believe it is), in this particular case the power of the duopoly is reinforced by its control of a public asset – radio spectrum required to provide wireless service. Poor policy decisions by the FCC and Congress have let these two companies corral way too much of the available spectrum; the at&t bid for T-Mobile – by their own account – is about giving at&t control of even more spectrum. The alternative to antitrust action is constant micro-managing of the duopolists and the entire industry to prevent anticompetitive actions.


    T-Mobile has been a feisty and pesky competitor. No other competitor can arise to take their place if at&t ends up owning the spectrum which T-Mobile used to offer its service. Note that co-duopolist Verizon does not object to this merger. But #3 trying-harder Sprint, which would suffer if the duopoly grows stronger, does object and has filed their own suit.


    Some commentary has concentrated on the jobs that would be lost in a merger because of "efficiencies" between the two companies. Wrong jobs to look at. The real problem is the jobs that could exist and should exist in all the communications-dependent industries in America and won't exist unless we have the best communication infrastructure in the world.


    BTW, both The Wall Street Journal and the Communications Workers of America hate this actionby Justice. The WSJ thinks that the government is thwarting at&t's attempt to serve its customers better and the CWA cares more about folding non-union T-Mobile workers into its at&t contracts than either the overall loss of jobs within the two companies or in the broader economy.


  2. The President suspended a pending EPA rule on ozone, which would have stymied development of many kinds in many regions of the country and forced some shutdowns out of proportion to possible health benefits. According to the New York Times (which disapproves of this action):

    "Cass R. Sunstein, who leads the White House office that reviews all major regulations, said he was carefully scrutinizing proposed rules across the government to ensure that they are cost efficient and based on the best current science. He said in a letter to [EPA Administrator] Ms. Jackson that the studies on which the E.P.A.'s proposed rule is based were completed in 2006 and that new assessments were already under way."

    This is certainly a change of heart for the administration since major rules don't reach the White House for final and public review unless the administration is already bought in. Critics are particularly outraged because this rule, although nominally aimed at ozone, was largely a backdoor way to reduce CO2 emissions without actually saying so.


  3. The Federal Housing Finance Agency sued 17 leading banks which sold nearly $200 billion of securities backed by subprime mortgages to Fannie Mae and Freddie Mac. We, the people, have already spent over $150 billion just bailing out Fannie Mae and Freddie Mac, not to mention the bailouts to the banks themselves. Past time to try to get some of it back; we need it and there need to be consequences for bad-acting.


  4. The State Department issued a final Environmental Impact Statement saying that the proposed Keystone XL pipeline poses "no significant impacts" to resources along its route. Although this does not constitute final approval of the 830,000 barrel per day pipeline from Canada to Texas, it's a huge step forward towards a more secure and friendly source of a significant amount of oil. Opponents argue that tar-sands oil, which is what the pipeline will deliver, produces significantly more CO2 than other sources given its methods of production; not so, says the report – only 2% more CO2 than produced by the Venezuelan crude currently refined on the Gulf Coast. This argument is silly, anyway, since the Canadians are developing this huge resource whether we like it or not and will simply ship the oil from their West Coast ports to China if we don't want it. The energy could then power more job creation in China.


Yeah, you can debate the politics of all these actions until the cows come home. Sure, political advisors probably looked at them from every possible angle. But the important question is not "will these decisions help Obama get elected?"; it is "were these the right things to do for the country?". I think they were.

Related posts:

America's Industrial Revival

AT&T Bids to Shut Down Mobile Competition

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