Stop using the Defense Production and Antitrust Act to solve problems created by the government

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Washington Democrats have a problem, and not because polls indicate they will be swept from Congress in November. They recognize that rapidly rising inflation combined with a crippled supply chain is keeping the economy sluggish. And yet the only solutions they seem able to come up with are to use the Defense Production Act and Antitrust.

The Defense Production Act (DPA), first approved in 1950, states that it is imperative that the national industrial base “provide materials and services for national defence”. It specifically mentions military conflicts, domestic terrorism and preparedness for national or man-made disasters. The president can use the DPA to control domestic distribution if it is “rare and critical materiel essential to national defense.” It also allows the White House to offer incentives to private companies to increase their production capacity if it is for “the execution of the national security strategy of the United States”. Clearly, this law is meant to benefit the Pentagon above all else.

President Joe Biden first invoked the DPA in March 2021 on precious metals. The White House said the order helps “strengthen our clean energy economy by reducing our dependence on China and other countries” for metals and minerals used for clean energy. It seems that relying on Canada, Brazil and Australia has failed as administration policy. Whether that means the federal government will approve or re-approve two precious metals projects in Minnesota remains to be seen.

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The next target of Biden’s Defense Production Act was infant formula. The White House became concerned months after Abbott Nutrition issued a voluntary recall due to five cases involving possible Salmonella Newport and/or Cronobacter sakazakii contamination. Nothing was found in Abbott’s tests except traces of Cronobacter sakazakii in the “contact zones without product”. But, since the deaths of two babies, the Food and Drug Administration (FDA) has temporarily closed the plant for investigation despite not knowing the source of the contamination.. (Health and Human Services (HHS) is reviewing the FDA’s decision to close the plant.)

The president appeared baffled weeks later that the DPA implementation did not immediately resolve the issue. Infant formula makers told the White House they knew the recall and plant closure would lead to shortages and empty shelves. The Biden administration has faulted Abbott Nutrition for taking too long to agree to a plan to reopen the factory. But the administration has also sent mixed messages about exactly when the White House began working on the formula shortage.

Biden’s last three DPA statements came this month regarding green energy. He said America’s future hinged on its ability to manufacture solar panels, insulators, electrolyzers and batteries. The order includes more clean energy projects on public lands and artificially boosts demand for solar panels for about “one gigawatt of locally produced solar modules in the near term.”

Now the White House can use DPA on oil prices. Rep. Democrat Raja Krishnamoorthi Told CNN that “we are refining about a million fewer barrels of oil per day than before the pandemic.” He wants the DPA used to reopen eleven shuttered refineries in the United States, and Biden is apparently considering it.

Why did the closures take place?

Stricter federal and global regulations are the culprit, according to a report by credit rating agency and economic forecaster Fitch Solutions Country Risk & Industry Research sent to Rigzone, a site covering the oil and gas industry. Fitch analysts said the moves have pushed Big Oil to look more to clean energy to stay in business. This transition has exacerbated gasoline prices, which have been rising since May 2020, combined with soaring inflation.

It is debatable whether any of these DPA statements fall within the purview of national defense. Biden’s precious metals and green energy order does not mention how the military benefits from the use of electric vehicles, solar panels and charging stations. They can benefit from the stationary storage sector, but a study by Dutch financial institution Rabobank determined that lithium-ion batteries only last four hours. It could be a decade before large-scale energy storage works from a cost and feasibility perspective. The Pentagon admitted last year that it will take time to develop more clean energy technologies.

What about formula milk? How the hell does that equate to national defense? It’s not like the Department of Defense is suddenly going to start employing baby soldiers to fight wars.

“The DPA is primarily a tool to tell certain manufacturers to prioritize government contracts or get certain easier favorable terms on things to get things done quickly,” said Eric Gomez, director of policy studies at defense at the libertarian-leaning Cato Institute, when asked about the use of DPA on the production of infant formula. “The link to defense is often tenuous…things like the formula charge have nothing to do with national defense” The formula charge has nothing to do with national defense.

Gomez’s concern is that the DPA will become a short-term crutch for the federal government. “It allows us to ask bigger questions about what could either solve this problem in a more lasting way or lead us to make bigger changes that we should be making to our policies,” Gomez said. He also notes that the government tends to ignore problems when there is no crisis. Republican Senator Pat Toomey raised his own concerns about the overuse of the DPA, to suggest it was time for Congress to intervene to limit its mission drift.

Biden’s use of the DPA is also tied to the administration’s and congressional Democrats’ desire for more antitrust as a tool against inflation. Democrats — and many Republicans — want to use the antitrust used to dismantle Big Tech, cut shipping costs and target drugmakers for what the Federal Trade Commission (FTC) has called illegal rebate programs. This includes Democratic Sens’ anti-price gouging bill. Elizabeth Warren and Tammy Baldwin, who insists corporate greed is the reason prices have surged. The Consumer Financial Protection Bureau (CFPB) also uses antitrust, though critics call their measures too vague.

It’s a theory that Joshua Withrow, a fellow at the free-market proponent R Street Institute, sees as another ridiculous example of politicians playing the so-called “do something” game. “It’s just a squirrel they want the public to hunt,” Withrow told The Daily Beast, blaming the federal government’s 2021 spending spree. He added, “It’s not that some lawmakers don’t sincerely want to use antitrust because they’re afraid of corporate “greatness” for its own sake, but I think the [administration] especially wants distraction.

What is particularly noteworthy is that leftist economists also view this antitrust push as ridiculous.

I’m pro-second amendment. But if the Libs want to get rid of it, here’s what they should do.

Former Obama administration official Austan Goolsbee joked, “How are we back on this?” in a recent survey by The Initiative on Global Markets on gas price controls. Larry Summers, former Secretary of the Treasury in the Clinton administration slammed the Biden administration’s antitrust push as counterproductive, tweeting that the policies “could reduce efficiency and, by lengthening supply chains, reduce resilience.” The Washington Post‘s Catherine Rampell has written that using antitrust to fight what Biden, Warren and others call “greed” yields to a conspiracy theory because of the amount of money currently in the market.

Perhaps the most frustrating thing is that solutions exist to reduce inflation and increase supply, but they are overlooked for politics. The administration could lower some Trump administration tariffs. It’s a good start, but not enough. The more tariffs need to disappear, the sooner the better. The Federal Reserve must continue to raise interest rates and sell its balance sheet. Congress and the White House cannot continue to spend money at an exorbitant rate because it further centralizes power within the federal government.

A weaker government, not a stronger one, fixes this mess.

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