John Edwards to drop out:

DENVER — Democrat John Edwards will exit the presidential race Wednesday, ending a scrappy underdog bid in which he steered his rivals toward progressive ideals while grappling with family hardship that roused voter’s sympathies but never diverted his campaign, the Associated Press has learned.

Scrappy? How about ugly, divisive and ultimately on all fronts, a failure? Our version:

Democrat John Edwards will exit the presidential race Wednesday after years of trying to divide America into two warring camps. Labor unions and trial lawyers had poured millions into support for Edwards, whom they viewed as the candidate most willing to increase government spending and regulation to the benefit of their special interests.

Here’s something to ponder, reported last weekend by Bob Novak:

WASHINGTON, D.C. — Illinois Democrats close to Sen. Barack Obama are quietly passing the word that John Edwards will be named attorney general in an Obama administration.

Installation at the Justice Department of multimillionaire trial lawyer Edwards would please not only the union leaders supporting him for president but organized labor in general. The unions relish the prospect of an unequivocal labor partisan as the nation’s top legal officer.

Megan McArdle, a blogger at the Atlantic, has been writing about the pharmaceutical industry the last few days, that profits make R&D possible and increased government controls will work against pharmaceutical innovation. She does a fine job of refuting the usual arguments meant to undermine pharma: Government will replace the R&D, we should get Europe to pay more, the companies can just reduce advertising, etc.

Here’s a basic point that too often gets ignored by the statists, populists and well-meaning simplifists:

I don’t think of R&D as a budgeting problem; I think of it as an investment problem. After all, even if the pharmaceutical industry has no profits right now, they can borrow the money in the financial markets at fairly attractive rates.

The main obstacle to R&D, then, is not the current state of pharmaceutical industry profits; it is the potential return on the investment in R&D. After all, Merck doesn’t have to make drugs; it could generate a nice, safe return of 5% a year in government bonds. Or it could get into some other business, such as making soap. If you drive down the profits on new drugs too far, it stops making sense to invest in new drugs, even if there is a small profit to be made on current production.

Posts here, here, here and here.

(Hat tip: Glenn Reynolds)

Interesting nuance in the AP story on yesterday’s economic reports:

NEW YORK (AP) — Orders to factories for big-ticket manufactured goods jumped unexpectedly in December, good news amid signs that the U.S. economy may be tipping toward a recession.

Still, analysts said the 5.2 percent growth in orders — while potentially boosting industrial output in coming months — likely came from overseas demand and that domestic growth faced continuing threats from tight credit and mortgage markets that have forced consumers to retrench.

A supernumerary “still,” don’t you think? One that diminishes the good news?

Bloomberg tells it straight in this story, and we appreciate the third paragraph:

“This report is a relief,” said Ian Morris, chief U.S. economist at HSBC Securities USA Inc. in New York. “The fear was that capital spending could collapse, which could then see jobs plunge.”

Both stories quote the National Association of Manufacturers’ chief economist, David Huether, from the NAM’s news release. We highlight this quote (not in the stores):

“Manufacturers of big ticket items such as machinery, communications equipment and aircraft, are seeing a pickup in demand,” Huether said. “In December we saw the second consecutive monthly rise in durable goods orders and the fastest increase since last July. A large amount of these American made products are being shipped overseas thanks to solid economic growth abroad, free trade agreements that lower barriers for domestic manufacturers, and a more properly aligned dollar that makes U.S. manufactured goods more competitive globally.

UPDATE (10:15 a.m.):

The American economy expanded by a surprisingly weak 0.6 percent from October to December, the government reported Wednesday, offering the latest indication that the United States is already in the midst of a substantial slowdown and perhaps a recession.

Slowdown, yes, agreed. But under what definition can “expanded” and “perhaps a recession” be reconciled? A recession is two consecutive quarters of declining GDP.

A quick, temporary climb-down as the February 1 expiration proved too tough to meet, procedurally. The White House indicates President Bush will sign the measure.

The National Review editorialized on the issue today.

Americans want security from mass-murderers. FISA reform will increase our security, while aligning the responsibilities of different parts of our government with their capacities. Congress should enact that reform — permanently.

The fight over telecom immunity is really about the political power of the trial attorneys and their campaign contributions, the editors argue.

The House today passed H.R. 5140, the economic stimulus package, by a vote of 385-35 (roll call vote). Washington Post story here, and the Politico reports that House Speaker Nancy Pelosi and Rep. Charlie Rangel (D-NY) are calling on the Senate to tread lightly or risk losing the bipartisan package.

We offer this slogan: 5140 or Fight!

Somewhere in Williston, N.D., there’s a person who sold a few too many carbon offsets. The locals are definitely not happy that they get stuck compensating for everyone else’s C02 profligacy.

No? Offsets don’t work that way? They don’t work at all?

Well, a debate worth having, a little accountability worth seeking. Rep. Joe Barton (R-TX) raised the issue of $89,000 of House offsets today at a Heritage Foundation lunch, but we note he’s brought the question of efficacy before. Earlier this month, Barton and Rep. John Shimkus (R-IL) asked the GAO for a “thorough inquiry” into the carbon offset market, on which companies spend some $300 million annually.

“The generic concern is that you or I or anybody could start selling carbon offsets,” Shimkus’s spokesman Steven Tomaszewski said in an interview. “There’s no accountability. There’s no regulation, so it’s a matter of how are these offsets being certified.”

To the extent carbon offsets are a stalking horse for an economy-killing cap-and-trade system, accountability is the least the public should demand.

UPDATE (9:35 p.m.) Brian Faughnan looks at the issue at The Weekly Standard’s blog. And we note that Divide Williams County, N.D. — county seat, Williston — is a stronghold of the North Dakota Farmers Union, which accounted for some of the House’s offsets. Brrr…it’s cold up there.

Rep. Joe Barton (R-TX), ranking member of the House Energy and Commerce Committee, was today’s guest at the Heritage Foundation’s weekly blogger meeting. Along with plenty of very smart commentary about energy, global warming, the economy and politics, he also questioned Speaker of the House Nancy Pelosi’s program to make the House “carbon neutral.”

The Washington Post reported Monday that the House purchased $89,000 of carbon offsets in November, but the money went to projects that would have happened anyway, or had already stopped.

Heritage’s Conn Carroll asked Barton about the story, and the Congressman said he wants to know more about the House program.

I’m sending a letter, if I haven’t already sent it, to Mrs. Pelosi, Mr. Reid, Mr. Boehner, Mr. McConnell, and saying what the heck’s going on. I can’t say I’m adamantly opposed to carbon offset programs, but if we’re going to spend congressional money, we ought to at least buy offsets that are real. And apparently this was just a pure scam.

Barton did not reject all offset programs, seeing some legitimacy, for example, in those involved in a cap-and-trade regime. But too many of them appear to be paying people to just think about not doing something, he observed.

We’ve tried to track down some of these ‘Look at me and my carbon offsets that I purchase’ groups, and we’re having real trouble finding that they’re really buying carbon off…some of them just talk about it. They put it in their goals and aspirations, which they’d like to do. I guess if you’re of that mentality, if you say you want to do it, it’s almost is the same as if you really do it. But we’re having really trouble tying down a program that is legitimate. And again, you know, in a theoretical sense, you can have a legitimate carbon offset program. It’s not impossible, but we ought to make sure that it’s legitimate, in my opinion.

Seems so. As the NAM’s Dena Battle noted yesterday, it is the taxpayers’ money, isn’t it? You might get a warm feeling from buying carbon offsets, but does that justify the money?

UPDATE The sound file from Barton’s Heritage appearance is here, an .mp3 file. His remarks about carbon offsets occur about 21 minutes in.

Late-evening news releases have a way of slipping into the ozone, the ether, the media miasma, but rather than impose a haphazard system of state-based regulation, we simply bring attention to the statement issued by NAM President John Engler on the State of the Union.

The President is clearly focused on the economy which is very much on everyone’s mind…We are all agreed on the need to keep our economy strong. The bi-partisan $150 billion growth package is a good start. And President Bush emphasized several other issues vital to the economy – among which are energy independence, tax reduction, promoting exports through more Free Trade Agreements and increased reliance on health care information technology.

The focus on clean-coal technology and nuclear energy were also welcome, as was the discussion of Health Savings Accounts. And on taxes …

We are particularly focused on reducing the capital gains and corporate income tax rates, as well as making the R&D tax credit permanent. Also, an enhanced capital-cost recovery system allowing companies to expense capital equipment in the tax year purchased would lower the after-tax cost of investment and provide a powerful incentive to help keep the economy growing.

Also, the previous news release on pro-growth tax propsals.

Investor’s Business Daily takes an editorial whack at the Republican presidential candidates for their timidity toward developing tremendous oil and natural gas potential in the Gulf of Mexico. Campaigning in Florida has apparently rendered them mute about realistic — and environmentally safe ways to achieve energy security — including expansion of our domestic energy production.

Cuba and China have longer-term goals:

Cuba’s state-run oil company, Cubapetroleo, has inked a deal with China’s Sinopec to explore for oil in its half of the Florida Strait and is using Chinese-made drilling equipment to conduct the exploration. Since oil fields do not respect international boundaries, Cuba and others will be pumping petroleum that should be ours.

Enviro-leftists who oppose drilling in the gulf should know that none other than Fidel Castro is taking advantage of the Outer Shelf. Cuba has gleaned $1.7 billion from oil and gas drilling as close as 60 miles from the Florida coast since 2004, according to Rep. John Peterson of Pennsylvania, and “is drilling closer to sovereign American property than we are.”

Just as the Democratic candidates bowed to anti-Yucca Mountain shibboleths in Nevada, Republicans are shaking before the anti-domestic-energy crowd in Florida.

Energy security would be nice, but right now, we’d settle for just a little energy confidence.

We’d been waiting to see what Andrew McCarthy had to say about FISA reform (S. 2248); McCarthy directs the Center for Law & Counterterrorism at the Foundation for Defense of Democracies and is a clear thinker on national security issues. We agree with him, usually, and on the question of telecom immunity, definitely.

From his column in today’s National Review:

The NSA program was a proper exercise of the president’s constitutional power. Even if one disagrees with that, however, any ire should be directed at the president, not telecoms which cooperated in good faith during a time of undeniable crisis. And if one is insistent that national-security surveillance needs court oversight, the solution is exactly what we’re talking about: to improve FISA by legislation so the need for future warrantless surveillance is unlikely. The answer is not to drag the telecoms through lawsuits (expenses for which are passed on to consumers) and disincentivize them from cooperating when we most need their expertise. Such suits, in any event, are just gambits by which privacy extremists and jihadi apologists seek to have courts impose what they can’t persuade the public’s elected representatives to enact.

The other colloquialism of the day: Don’t let opponents kick the can down the road, hoping to achieve their legislative goals — more multibillion-dollar lawsuits, less legal surveillance — through delay and obstructionism.

Blogging on the issue yesterday, columnist Michelle Malkin also cites the warnings against “kicking the can” with terrorist surveillance. And thank you for the citation (from the conference call with Sen. Bond).