RUTHFULLY YOURS

In a spate of executive actions on Monday, President Biden invoked his authority under the Defense Production Act (DPA) to declare that a variety of green-energy-related materials were “essential to national defense,” and that as a result, the government would be stepping in to increase their production.

Biden’s actions are an abuse of presidential power, and they have the potential to cause serious harm to the American economy in the long run.

In five separate presidential memoranda, Biden said he was using his authority under Section 303 of the DPA to mandate that the government stimulate the production of materials critical to the green-energy sector, including: electrolyzers, fuel cells, and platinum group metals; solar photovoltaic modules and module components; transformers and electric-power-grid components; electric heat pumps; and insulation.

Per the Congressional Research Service (CRS), Section 303 grants the president much broader authority than the section of the law Biden invoked last month in an effort to address the nationwide baby-formula shortage: It allows the government to make purchase commitments for the resources named, directly subsidize their production, and install and purchase equipment used for their production in either government or privately owned facilities. To unlock those considerable economic powers, the law says that the president has to determine that the resource is “essential to national defense,” that U.S. industry won’t produce enough of the resource in a timely manner, and that the actions taken are “the most cost-effective, expedient, and practical alternative method for meeting the need” for the resource.

Given the broad authority available to the executive under Section 303, the law has a financial limit: Projects authorized under Section 303 that cumulatively cost over $50 million require congressional approval. In the past, very few such projects have ever exceeded that threshold, the CRS notes. But the president does have the authority to waive that financial limit if the actions he authorizes are, in his judgment, “necessary to avert an industrial resource or critical technology item shortfall that would severely impair national defense capability.”

Biden waived that limit in each of yesterday’s five memoranda, meaning the executive branch now has the power to spend and subsidize as much as it wants without any input from Congress whatsoever.

You might be wondering how green-energy materials suddenly became so vital to national defense that the president is using powers designed to address critical industrial shortfalls in wartime to increase their production. The answer is that they aren’t. Biden’s actions here are way out of line and make a mockery of the rule of law in a market economy.

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. Unable to get the increased federal green-energy subsidies he seeks through Congress as part of the Build Back Better plan, Biden has chosen to bypass the legislative branch and will them into existence by claiming power that isn’t rightfully his, much as President Trump tried to do to will his border wall into existence.

If Biden wants the federal government to subsidize green energy more than it already does, he needs to persuade Congress to pass a bill that does that. He needs to make the economic case that the subsidies would be worthwhile. He can’t propose them to Congress, have Congress decline to pass them, and then abuse his powers under the DPA to get them anyway.

The president is not a king, and his abuses must be checked, lest they go unopposed and chip away at our republican form of government.