First, Biden needs to be asked to justify his actions under the law. He claims in one memorandum that “insulation is an industrial resource, material, or critical technology item essential to the national defense.” The U.S. already has plenty of dubious national-defense justifications for tariffs and subsidies, but these seem to go beyond even those. The DPA requires the president to make such determinations “with appropriate explanatory material and in writing.” The administration should be required to actually make the case, preferably in a federal court, that green-energy-technology production is a national-defense emergency.
Second, as an economic matter, invoking emergency powers to tackle non-emergencies hurts our preparedness for actual emergencies. As economist Josh Hendrickson recently pointed out, if private industry knows that the government will use emergency powers to divert resources into the production of critical supplies, what incentive does it have to invest in critical supplies before then? The smarter business decision is to invest elsewhere, because the government will swoop in and save the day when it actually counts. That leads to chronic underinvestment in supplies that are actually needed in emergencies, as Hendrickson demonstrated in a paper from the early days of the pandemic emergency.
If the government believes a resource will be chronically underproduced, Hendrickson argues, it would be better off just subsidizing the industry that makes the resource in question during ordinary times, so that we’ll have a sufficient supply when we need it, rather than having to use emergency powers to frantically ramp up production after a crisis hits.
But that is a secondary problem; the more immediate concern is that Biden’s actions further upset the constitutional balance of powers.
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