James Pethokoukis

The only people in Manhattan who are probably eager for a Sarah Palin presidential run are the supposed comedy writers at “Saturday Night Live.” Wall Street bankers, on the other hand, not so much. Big Money has been snarkily dismissive of Palin’s recent opining on monetary policy, the dollar and the dangers of inflation. But guess what? A “free-market populist” campaign in 2012 would likely further highlight that Palin’s not too big a fan of them, either. And her economic musings are yet another sign she’s running

In a speech and a pair of Facebook postings this week, Palin unexpectedly warned her followers about the inflationary dangers of the Federal Reserve’s “pump-priming addiction” — a reference to the latest round of bond-buying by the U.S. central bank, known as quantitative easing. That’s hardly a novel or unreasonable critique. Many conservatives, and even some Fed officials, share Palin’s unease.

It’s the politics and timing rather than the substance that is raising eyebrows. Avid Palin-watchers see her move into economic commentary as further evidence of a run for the White House. Indeed, the campaign team for putative Republican frontrunner and former banker Mitt Romney is assuming she will be in the race. And her upcoming, much-hyped reality television show, “Sarah Palin’s Alaska,” will no doubt play like an extended campaign commercial. And polls certainly hint she would be right in the thick of the fight with Romney and Mike Huckabee, if he runs (via CNN):

In Iowa, it appears Mike Huckabee’s still got a base: the former Arkansas governor is tied with Mitt Romney at 21 percent, with Sarah Palin close behind at 18 percent, and Gingrich nabbing single-digit support. In New Hampshire, former Massachusetts governor Romney displays his home court advantage: he draws more support, at 39 percent, than the rest of his top rivals combined. Palin once again nabs 18 percent.  And in the key early-voting state of South Carolina – where Sarah Palin and Mitt Romney both endorsed Gov.-elect Nikki Haley in the GOP primary this year – Palin, Huckabee and Romney are again neck-and-neck.

If Palin does get in the game, her views leave her — not for the first time — well positioned to exploit the zeitgeist. Voters right now seem dubious of Big Anything, be it Government, Business or Money. In her 2009 book, “Going Rogue,” Palin offered a remix of 1980s-style Reaganomics — low taxes, less government spending, strong dollar. That’s all perfectly sync with her recent Fed-bashing. But she also attacked “corporatism” in which government and business conspire against entrepreneurs and consumers. This view fuels Palin’s critique of Obama’s financial reform plan, which she portrays as a creation of Wall Street designed to perpetuate bank bailouts. As she wrote on Facebook:

Of course, the big players who can afford lobbyists work the regulations in their favor, while their smaller competitors are left out in the cold. The result here are regulations that institutionalize the “too big to fail” mentality. … The president is trying to convince us that he’s taking on the Wall Street “fat cats,” but firms like Goldman Sachs are happy with federal regulation because, as one of their lobbyists recently stated, “We partner with regulators.” …  You’ll find the name Goldman Sachs on many an Obama administration résumé, including Rahm Emanuel’s and Tim Geithner’s chiefs of staff. We need to be on our guard against such crony capitalism.

Palinomics, embryonic as it is, seems to be rooted in “free-market populism,” a version of conservative thinking that is pro-market rather than pro-business. It says the role of government is to help markets function more fairly and efficiently for everyone, encouraging competition and “creative destruction” (which Palin specifically mentioned in her book).  Pro-business policies, by contrast, can end up subsidizing favored companies, raising barriers to entry and otherwise entrenching the status quo.

Palin is also familiar with one of the champions of free-market populism, the University of Chicago’s Luigi Zingales, linking to his writings from her Facebook page. It’s easy to imagine her campaigning against corporate tax breaks, say, or in favor of limiting the size of banks under the belief that as long as they are ginormous, government will find a way to bail them out. That agenda might not attract much campaign cash from Manhattan bankers or Washington lobbyists, but it could be a compelling formula in the new Tea Party-infused Republican party. Then again, bankers who care about cutting government spending and keeping taxes low might want to take a second look.

Looks like Tea Party America has busted a cap in cap-and-tax. Following sweeping Republican election victories, President Barack Obama has conceded his cap-and-trade plan to cut carbon emissions is dead for the foreseeable future. “I think there are a lot of Republicans that ran against the energy bill that passed in the House last year, Obama said at a Nov. 3 press conference. “And so it’s doubtful that you could get the votes to pass that through the House this year or next year or the year after.”

Yet Obama added that cap-and-trade  “was just one way of skinning the cat.” You see, the president has a plan B: Let the Environmental Protection Agency work its magic on American business. The EPA would begin regulating pollution from large factories and power providers starting in January. Now Obama acted like the agency has no choice. “The EPA is under a court order that says greenhouse gases are a pollutant that fall under their jurisdiction,” he added.

But that isn’t quite true. The Supreme Court ruled in 2007 that the EPA had the right to regulate emissions of greenhouse gases under the Clean Air Act – but it was not mandated to act. Even regulators admit this alternative is more economically harmful than a system where companies can offset carbon use by purchasing tradable permits. (And a straight carbon tax offset by payroll tax cuts would be even better.) But that drawback is a desirable feature to the White House. They’ve been hoping the threat of onerous EPA action would spur business to bring Republicans around.

The GOP response earlier this year was to try and strip the EPA of its relevant authority. The effort didn’t work, but it might next year. Republicans could try the same approach or attempt to cut funding for what it now mocks as the Employment Prevention Agency. Either measure would easily pass the GOP-controlled House. The Senate, still run by Democrats, would be a tougher slog. But between six additional Republicans and a dozen nervous red-state Democrats up for reelection in 2012, an anti-EPA bill might have the 60 votes needed for passage.

Obama could still veto the bill, of course. But legislation that merely forestalled EPA action until the economy perked up might stay his hand.  Or Republicans could attach it to some more important spending measure, reducing the chances of a veto. And the threat of defunding — and endless Capitol Hill hearings — could make the EPA think twice

If all else fails, business has its own Plan C: tie the agency up in court. The EPA’s last big clean air effort inspired a decade of legal challenges. One tactic works regardless of which party is in power: If you can’t legislate, litigate.

For Sarah Palin, it’s Tea Party first, Republican Party second:

Some in the GOP, it’s their last shot, it’s their last chance. We will lose faith, and we will be disappointed and disenchanted from them if they start straying from the bedrock principles. … If they start straying, then why not a 3rd party?

A few observations:

1. She’s in, but not as a third-party spoiler. Let me reiterate that I think Palin is almost certainly running for president as a Republican. So does the Romney campaign. So does Weekly Standard reporter and Palin expert Matthew Continetti:

I do [see her running]. I see her endorsing candidates and joining them on the trail, raising money through her political action committee, establishing a national voice through her books and upcoming television series, and engaging the Obama administration through television appearances, Facebook, and Twitter. Palin sees her influence in Republican circles, sees her continued popularity among Republicans, sees the potential weaknesses in Obama, and sees the potential parallels between the 1980 election and the 2012 election. She’s getting ready.

2. She has a shot. I also think she can certainly win the GOP nomination and presidency. The media-created caricature of her has created such a low competence hurdle that she only needs to be as well-spoken/well-versed on policy as the typical member of Congress to clear it.  In fact, she may already be there. And don’t underestimate the Dancing with the Stars factor.  Bristol Palin’s time on the show is allowing America to see a whole another side of the Palin family, one that seems firmly in tune with middle-American culture.

And the bigger the GOP primary field — and it is looking like it could be quite crowded right now — the better it is for her (and Mitt Romney). As for the general, two more years of abnormally high unemployment — twice as high as the typical level for the past generation — has created  for vulnerability for Obama that is hard to measure. But the midterm results will give a big hint.

3.  She has a potent potential agenda. If I were plotting a Palin campaign, I would encourage her to run on a free-market populist agenda. That would mean pushing free trade agreements while attacking Obama for being soft on Chinese protectionism. That would mean advocating less cumbersome financial regulation while attacking Obama for not breaking up the big banks on Wall Street. That would mean advocating lower corporate taxes but reducing corporate loopholes and subsidies. In short, portray Obama as soft on banks, China and big business.  That, and him being a big spender and taxer who has failed to turn around the U.S. economy, natch.

4. She’s Ronald Reagan — at least a smidge. Palin frequently invokes the name of the 40th president. Of course, she can’t match his decades of debating public issues before winning the presidency in 1980. But like RR, Palin has been maligned and downgraded by the media and punditocracy. But when Reagan stood next to Jimmy Carter and got to make his case in his own words, opinions changed.

From pollster Rasmussen:

Running under the Tea Party brand may be better in congressional races than being a Republican.

In a three-way Generic Ballot test, the latest Rasmussen Reports national telephone survey finds Democrats attracting 36% of the vote. The Tea Party candidate picks up 23%, and Republicans finish third at 18%. Another 22% are undecided.

Among voters not affiliated with either major party, the Tea Party comes out on top. Thirty-three percent (33%) prefer the Tea Party candidate, and 30% are undecided. Twenty-five percent (25%) would vote for a Democrat, and just 12% prefer the GOP.

Among Republican voters, 39% say they’d vote for the GOP candidate, but 33% favor the Tea Party option.