Anybody who reads us regularly knows that we try to give Trump a fair shake. But we have always warned that the President likes crony capitalism too much.
Many Trump supporters will no doubt support the below measures. They shouldn’t however. The president should refrain from inserting himself and the government into these industries. Let the market work. We are supposed to be a capitalist country aren’t we?
According to reports from Bloomberg and E&E News, the Trump Administration has been exploring another way to help coal and nuclear generators: the Defense Production Act of 1950.
The Act was passed under President Truman. Motivated by the Korean War, it allows the president broad authority to boost US industries that are considered a priority for national security. On Thursday, E&E News cited sources that said “an interagency process is underway” at the White House to examine possible application of the act to the energy industry. The goal would be to give some form of preference to coal and nuclear plants that are struggling to compete with cheap natural gas.
We should be happy that coal is getting hammered by natural gas. This is a good thing. Natgas is cheap, it is abundant in the USA, and it is relatively clean. The market has shown us the way and right now natural gas is a big part of that way.
If coal was dying just because of Obama’s heavy handed regulation, that’d be one thing. But it’s not primarily. Natural gas is just a better product at a lower price. Coal has been eclipsed by the market, and this is a good thing.
I say this as someone who has family in Roanoke Virginia, one of the great coal hubs of America. I understand completely how hard times have gotten in coal country. But time, and the market, have simply moved on. It stinks for some who are in coal country I understand. But that is reality. Times have changed. The market has changed. Trying to reignite the coal fire with subsidies and protections is foolish and ultimately warps the economy.
As for MORE nuclear subsidization, that’s just flat out ridiculous. Nukes are already subsidized on the front end (with special taxpayer backed financing) and then on the back end with limits of liability. Nuclear energy doesn’t work within the market at all actually and it certainly shouldn’t be getting yet more support from taxpayers.
The (Defense Production) Act was used in the 1970’s to keep the then-struggling Chrysler Corporation on a project building tanks for the US Department of Defense. It was used again in 2001 when President George W. Bush ordered that electricity and natural gas receive priority delivery to California utilities during the state’s electricity crisis. It was invoked again in 2003 “to prioritize supply of Precision Lightweight Global Positioning System Receivers to British military forces operating in Iraq,” the CRS report states.
So, crony, and crony, and crony. The Defense Production Act is basically a crony capitalist tool. Got it.