How could they? In three important recent policy moves, the Bush Administration has betrayed its conservative principles and undermined the long-term strength of the economy. For an Administration that deeply believes in free markets and free trade, these moves are simply dumbfounding. There is time to back off from all three, and we urge the President to do so.
Protecting American steelmakers with tariffs is the most egregious error. This political move to garner union support for the GOP in upcoming congressional and Presidential elections totally undermines the President's moral authority on free trade. It hurts efforts to expand the Free Trade Agreement of the Americas, raises prices needlessly throughout the economy, and sets up the U.S. for retaliation from Europe and Japan. Bush should have listened to his economic adviser, Lawrence B. Lindsey, not his political consigliere, Karl Rove. Big mistake.
The President isn't being served by his Federal Communications Commission Chairman Michael K. Powell, either. Powell is about to reward the Baby Bells for their past monopolistic behavior by expanding their broadband business. The Bells have circumvented the Telecommunications Act of 1996 by crushing all new competition in their old markets. They've paid hundreds of millions in fines for unfairly squeezing competitors. Now they are, in effect, being given more monopoly power in new markets. Powell isn't boosting competition, he's extending the Bells' monopoly power.
Which brings us to the Securities & Exchange Commission. At a time when the Bush Administration is howling about litigiousness, it is, in effect, privatizing enforcement by underfunding the SEC and pushing conflicts into the court system in the form of shareholder suits. If the SEC had the money to do its job properly, it could police companies that pump up earnings and hide assets long before investors get burned. Free markets demand cops, just as a free society requires police. Fund the SEC.
It's time for the Bushies to return to first principles.