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Thursday

26

September 2013

Serious Liberal Thinkers™ Compare Accepting 2,000 Page Legislative Monstrosity to Moral of Children’s Story

Written by , Posted in Health Care, Welfare & Entitlements

In one of the more bizarre public policy debates in recent memory (and that’s saying something), Serious Liberal Thinkers™ responded to Senator Ted Cruz’s 21+ hours of floor speech against Obamacare not with facts or substantive arguments, but by analyzing a children’s book. Seriously.

As is often the case for filibusters (or filibuster-like speeches, as this was), Sen. Cruz had a lot of time to fill. Those in similar situations have sometimes opted to read the phone book, for instance, but he chose instead to at one time recount some of the best quotes from TV ratings juggernaut Duck Dynasty, as well as read his little girls a bedtime story through the TV since he wasn’t going to be home to do it in person. While most Americans might find the latter to be endearing, liberals instead seized upon the parental act as an excuse to sidestep the many substantive arguments Sen. Cruz made against Obamacare, or the letters he read from anguished citizens (and Obama supporting unions!) already feeling its ill effects.

Serious Liberal Thinker™ Matt Yglesias got right to the heart of our healthcare debate at Slate by explaining to us “what Ted Cruz doesn’t understand about Green Eggs and Ham.” His brilliant observation? It’s about trying things!

The Democrats’ bet on the Affordable Care Act is that it’s like green eggs and ham—they’re convinced the public will like it when they try it.

Conservatives like Cruz claim that this is wrong. That Americans will taste the green eggs and ham and they’re going to hate it. But their actions speak otherwise. They’re desperate to repeal the law before it’s implemented. …Because deep down they fear that Dr. Seuss was right.

Or maybe they just think it’s a bad idea and are doing their jobs by seeking to undo it before it does any more harm? You know, exercising their legislative judgment as they were elected to do.

Matt Yglesias has a point of view and it would be awfully convenient for him if his opponents adopted silly governing philosophies like “try it and you might like it” that enable him to get what he wants without opposition. I get it. But that’s a silly way to run a country – which I suppose explains its appeal to the left where those who say they “would not, should not” try the latest fad are just anti-progress fuddy-duddies. Back in the land of reality, lawmakers would not, should not pass laws just to see what happens.

Yglesias was hardly the only offender advocating government by children’s book. Serious Liberal Thinker™ Rachel Maddow also admonished Cruz because “he apparently didn’t understand the story.” Serious, Elected Liberal Thinker™ Senator Chuck Schumer even threw some faux-outrage into the mix by declaring he was “appalled” by Ted Cruz’s refusal to exercise his Constitutional duties without first checking that his actions pass the Dr. Seuss test.

In making his case, Yglesias referenced favorably Nancy Pelosi’s declaration that they had to pass Obamacare so the rest of us could find out what was in it. But I’m reminded of another of her quotes – specifically her remark in 2006 before assuming the speakership that “The gavel of the speaker of the House … will be in the hands of America’s children.”

It’s hardly hidden knowledge that laws put into place are harder to undo, for a myriad of reasons, than laws not yet fully implemented. Matt Yglesias sees recognition of this fact as deep seated fear among Obamacare opponents. I, on the other hand, see his and other liberals’ widespread decision to sidestep via childish antics any form of serious debate over an unpopular law already proving to be deeply destructive to the economy, as well as to the quality of the service it was purporting to benefit, as evidence that they would not, could not win that debate on the merits.

Monday

23

September 2013

End the Federal Subsidy for Big State Governments

Written by , Posted in Big Government, Liberty & Limited Government, Taxes

The relationship between federal and state governments – the division of power between the two levels being known as federalism – is an integral part of the American constitutional system. Federalism uses separate and competing spheres of sovereignty to check the growth and power of government as a whole.

Unfortunately, that system has been steadily eroded by a series of policies that have empowered the federal government, weakened states, made states dependent upon the largess of Washington, or encouraged excessive growth of state governments. As Curtis Dubay of the Heritage Foundation writes in a recent Issue Brief, the latter is accomplished in part through a federal deduction for state and local taxes that shields residents in high tax states from feeling the full cost of their bloated local governments.

Dubay writes:

The tax code allows taxpayers to deduct certain state and local taxes, including income taxes, sales taxes for residents of states that (wisely) go without an income tax, real estate taxes, and personal property taxes. State and local income taxes makes up about 95 percent of all state and local tax deductions.

…The harmful unintended consequence of the deduction is that it encourages state and local governments to raise their taxes. Higher taxes allow state and local governments to grow larger because they spend up to the maximum amount of revenue they can collect.

The deduction encourages state and local governments to raise their taxes because it transfers a portion of their tax burdens from their residents to the federal government. For instance, for every dollar a state taxes a family paying the 33 percent federal marginal tax rate, the family effectively pays only $0.67 of the state tax, because the deduction on the family’s federal taxes reduces their federal tax bill by $0.33.

This reduction in the “price” of the state’s taxes encourages states to raise their taxes higher than they otherwise would, because taxpayers offer less resistance since they do not pay the full cost of the higher taxes. Taxpayers are more willing to accept higher taxes because of the deduction in the same way consumers are more willing to buy a product or service when prices fall.

Dan Mitchell has similarly pointed to the faults in the state and local tax income tax dedication, as well as potential wrong headed solutions to its distortions:

Under current law, state and local income taxes are fully deductible, but state and local sales taxes are only temporarily deductible. The right policy is to get rid of any deductibility for any state and local tax…

Not surprisingly, the crowd in Washington doesn’t take this approach. Instead, they want to extend deductibility for the sales tax. And they may even be amenable to raising other taxes to impose that policy.

…This is a very misguided policy. It means that greedy politicians such as Governor Brown of California or Governor Cuomo of New York can raise tax rates and tell voters not to get too upset because they can deduct that additional burden. This means that a $1 tax hike results in a loss of take-home pay of as little as 65 cents.

But you don’t cure one bad policy with another bad policy. A deduction for state and local sales taxes just augments the IRS-enforced preference for bigger government at the state and local level.

Dubay further explains how eliminating the deduction would benefit tax competition and limited government:

These data show that while taxpayers in high-tax states pay a hefty amount of state and local taxes, they also see that burden reduced the most because of the deduction. If tax reform eliminated the deduction, these taxpayers would see the biggest increase in their effective state and local taxes. They would likely put the most pressure on their state and local governments to stop tax increases and apply the most pressure on those governments to reduce their high taxes.

Like Mitchell, he also notes that offsetting elimination of the deduction is essential to reform:

Eliminating the state and local tax deduction should be done only within the context of overall tax reform. Congress should not eliminate it (for instance, through “loophole closing”) without other offsetting tax changes. To do so would be an unnecessary tax increase.

The state and local tax deduction is just one of many policies distorting the federalist system and encouraging excessive government growth. Federal mandates, grants, handouts and other tax preferences also undermine tax competition and need reform.

Monday

16

September 2013

DC’s Latest Harebrained Idea

Written by , Posted in Big Government, Economics & the Economy

Of all the bad ideas to come out of DC, this may yet be the worst:

Before you join the cynics and naysayers who airily dismiss the notion that Washington should bid to host the 2024 Olympics, hear the counsel of a man intimately familiar with both our city and Olympics success.

Andrew Altman headed the District’s Office of Planning from 1999 to 2005 under Mayor Tony Williams, where he won praise for pushing redevelopment of the Anacostia waterfront. More recently, Altman headed a British public corporation that planned the rebirth of London’s blighted East End after it hosted the 2012 Olympics.

Does he think the Olympics could help revitalize struggling neighborhoods in the District (and elsewhere) in similar fashion, at the same time that it united our fragmented region around common goals?

You bet.

“I think it would be fabulous for Washington, having lived in Washington and loved it,” Altman said. “The Olympics are a great motivator to mobilize people regionally around a vision for future growth.”

Let the chorus say, “Amen.”

Count me among those “cynics and naysayers.” Trying to host the Olympics in DC would not only make life miserable for those of us here (DC’s transportation infrastructure is stretched to the limit already), but it would be a massive money sink for the area.

As Veronique de Rugy points out, the economic impact of sports subsidies never lives up to the hype. The result is always a net loss for taxpayers. The Olympics in particular have proven quite costly for host cities.

Though, Kyle Smith makes a good argument for why the DC is an appropriate host for the Olympics. As the Olympics are typically beneficial to only select businesses and industries at the expense of the broader taxpaying public, thee games are symbolically appropriate for the world’s premiere practitioner of crony capitalism.

Thursday

5

September 2013

Syrian Intervention Reveals Central Foreign Policy Divide

Written by , Posted in Foreign Affairs & Policy

When Obama was elected, I noted that his soon-to-be Ambassador to the U.N and now National Security Advisor, Susan Rice, had previously argued for unilateral military action in Darfur and represented a kind of left-wing humanitarian interventionism that those preoccupied only with the most current of events might not have been familiar with:

Left-wing interventionists are actually more common than right-wing ones. Before the neoconservatives had won the day in establishing Republican policy, there was Secretary Madeliene Albright, who asked Colin Powell, “What’s the point of having this superb military you’re always talking about if we can’t use it?” The ironic difference between the left and right interventionists is this: on the left they only want to use force when U.S. interests are non-existent. Boondoggle that Iraq was in many ways, at least there was a debatable, though certainly plausible, claim of serving U.S. national interests in deposing Saddam. One can’t even make a pretense of serving U.S. interests in Darfur.

I assumed this information would come as a surprise to many given the dominant opposition rhetoric of the Bush years. Many had also forgotten that Bush ran a campaign opposed to interventionism and nation building, which contrasted with Clinton’s international adventures as world police. But like so many politicians, Bush reversed position upon entering office.

We’ve since witnessed Obama’s unilateral interventionism in Libya, an adventure conjured for the specific purpose of revitalizing the image of humanitarian interventionism post-Iraq. And now we see the same thing happening with Syria, where once again there is no credible argument of a U.S. interest at stake. Matt Welch at Reason does an excellent job of exposing the administration’s dissembling via Secretary of State John Kerry, who was against military mistakes before he was for them.

While the public overwhelming opposes a pointless strike on Syria, Republicans are nevertheless providing the President political cover. Speaker Boehner and House Majority Leader Cantor have endorsed a strike, while John McCain is once again one of the loudest voices calling for insertion of the United States into a Middle Eastern civil war, suggesting it would be “catastrophic” should Congress decline authorizing force.

The position of Republican leadership and the GOP old guard contrasts with more stridently small government newcomers Rand Paul, Ted Cruz and Justin Amash, and they’re joined by true anti-war liberals (as opposed to those, like Nancy Pelosi, who apparently just took positions for convenience because they were against Bush). All of this makes for a lot of political intrigue surrounding the vote over a resolution of force.

Sunday

25

August 2013

Holder Rattles the Sabers

Written by , Posted in Economics & the Economy, The Courts, Criminal Justice & Tort

Tough talk from the nation’s top legal obstructionist:

Attorney General Eric Holder on Tuesday put Wall Street on notice with a vague threat, saying that the Justice Department may be gearing up for civil or criminal prosecutions against those responsible for the 2008 financial meltdown.

“My message is, anybody who’s inflicted damage on our financial markets should not be of the belief that they are out of the woods because of the passage of time,” Holder said in an interview with The Wall Street Journal.

Holder didn’t expound on the nature of the charges or whom the DOJ might have in its crosshairs.

If Eric Holder both actually meant what he said and understood who is properly to blame, the DC governing class would be running for the hills. But they’re not. The politicians that repeatedly voted for bad policies or propped up Fannie and Freddie get a pass. The bubble-inducing Fed gets a pass. But if you’re some middling banker in New York, watch out! I have to imagine that as the criminal cabal occupying the White House becomes increasingly exposed for repeated, persistent resistance to any legal or constitutional controls, they’ll be seeking scapegoats and distractions. Eric Holder may have just tipped his hand in terms of who those scapegoats are likely to be.

Thursday

22

August 2013

Bono Stumbles On Truth About Poverty

Written by , Posted in Economics & the Economy, Foreign Affairs & Policy, Free Markets

I’ve always liked Bono. Not only does he make good music, but unlike so many in Hollywood he actually seems to care about his chosen causes. Rather than strut and preen for the cameras or play partisan political games, he just goes about his business trying to help in the way he judges best. That’s respectable regardless of whether I share his policy approach, and I rarely do.

But now I have even more reason to like him.

Speaking at Georgetown University about the state of economic reality in Africa, Bono had this to say about poverty:

“Aid is just a stopgap. Commerce [and] entrepreneurial capitalism take more people out of poverty than aid. Of course we know that.”

Sadly, many of the college students present likely do not know that. And while we can ask ourselves why it matters what some musician says about economics and policy, the fact that it is coming out of Bono’s mouth will do more to get them to challenge their own assumptions than it would from someone like me. Culture, even of the popular sort, matters.

Though what was most likely a shocking realization for Bono after decades of experience with impoverished peoples is rather pedestrian for those of us in the free market movement. The failure of aid  has been well covered by folks like Dambisa Moyo. She points out the perversion international aid system, whereby holding on to power in developing countries is a function of pleasing foreign aid givers, rather than their citizens. It is disincentive, in other words, for political accountability. Keeping the aid spigot open is more beneficial for those who desire power than improving that lot of the people.

Nor is how to improve the lot of the people a great mystery. Though it is hard. Essentially, it requires neoliberal institutions to provide the legal and political frameworks necessary to enforce basic rights – with property rights being among the most critical in terms of encouraging economic growth. Hernando de Soto did a great job examining the importance of property rights and access to honest and efficient legal system to encouraging wealth creation.

And let’s be clear about this point. Wealth is created. It is not the natural state of mankind. It is not something that absence of which is explained by some civilizational theft, exploitation, or the spread of capitalism, as it is fashionable to believe in certain circles. To paraphrase Tom Palmer, who delivered the most cogent argument on poverty I have yet heard, poverty does not need explanation. It is the natural state of mankind. The vast majority of humans that have ever existed have lived in grinding poverty. Wealth requires explanation. Only in very recent times in a historical sense have regular people had any wealth to speak of. And it hasn’t grown slowly, it as exploded. Explaining that is much more interesting than explaining poverty.

Thursday

8

August 2013

Bradley Manning is No Hero

Written by , Posted in Foreign Affairs & Policy

Bradley Manning was recently found guilty of 20 charges (and acquitted of “aiding the enemy”) stemming from his decision to release hundreds of thousands of classified documents to Wikileaks. Many, even some bright and sensible people, have defended Manning’s actions and portrayed him as a brave whistle-blower exposing government misconduct. But this view is misguided and not supported by the facts.

The basis for holding up Manning as a hero seems to stem from his exposure of the so-called “Collateral Murder” video, which showed two U.S. helicopters killing 12 Iraqi’s, but also 2 Reuters employees. Perhaps this video was worth exposing. I don’t know all the facts surrounding the event – the military found no cause for discipline due to the reporters’ “close proximity” to “armed insurgents.” But that could just be cover.

The thing is, it doesn’t really matter what the facts are in the video because Manning didn’t expose only it. Evaluating whether or not it was an egregious crime for which he was justified blowing the whistle thus misses the point. Even if it were, it doesn’t absolve him of his decision to release hundreds of thousands of diplomatic cables that he could not possibly have read. And since he did not bother to determine what was on them, he can claim no valid reason to release them. Rather, he showed a clear disregard for the damage they could cause – to agents identified by the documents, for instance.

That is not the behavior of a hero.

There is always tension between the need for operational secrecy as part of the government provision of defense – a primary purpose for the state – and  the need to hold government accountable. So it’s understandable why many question whether leaking classified information should always been condemned, even if it is a crime. Exposing governmental abuses, for instance, is a valid reason to leak classified info. But that’s not what happened in this case, and the indiscriminate release of sensitive information is not done to hold government accountable, but rather to harm both it and its citizens. Except for those who take the absurd position that nothing should ever be classified, there is no sound defense of Manning’s actions.

P.S. It’s worth noting that the question above is entirely separate from that of Manning’s treatment while in custody leading up to his trial, which has been deplorable and for which there was no excuse.

Sunday

28

July 2013

Picture Too “Rah-Rah American” for 9/11 Memorial Director

Written by , Posted in Culture & Society

Should someone so seemingly hostile toward accurately presenting the subject matter of a museum be its creative director?

This iconic picture of firefighters raising the stars and stripes in the rubble of Ground Zero was nearly excluded from the 9/11 Memorial Museum — because it was “rah-rah” American, a new book says.

firefighters flag

Michael Shulan, the museum’s creative director, was among staffers who considered the Tom Franklin photograph too kitschy and “rah-rah America,” according to “Battle for Ground Zero” (St. Martin’s Press) by Elizabeth Greenspan, out next month.

“I really believe that the way America will look best, the way we can really do best, is to not be Americans so vigilantly and so vehemently,” Shulan said.

…Shulan told The Post he didn’t know that the way Greenspan described the discussion about the photographs “is the way that I would have.”

“My concern, as it always was, is that we not reduce [9/11] down to something that was too simple, and in its simplicity would actually distort the complexity of the event, the meaning of the event,” he said.

Shulan appears intent on ensuring that America is properly blamed, in his mind, for 9/11. He doesn’t want anything “rah-rah” American because that might evoke pride in the country from the museum’s visitors. America would be better off, rather, if her citizens didn’t insist upon being so damned American. They should heed instead his advice “to not be Americans so vigilantly and so vehemently.” What exactly that means is anyone’s guess.

What is clear is that Shulan does not believe ordinary Americans are suitably equipped with his level of sophistication to be allowed to experience the most iconic and recognizable photograph of the event at a museum purporting to memorialize it. Otherwise, they might mindlessly wave their flags and celebrate American liberty and individualism, actions which annoy the cultural elite and would no doubt embarrass Shulan at cocktail parties. He would much prefer Americans understand the necessary “complexity” in the murder of 3,000 noncombatant Americans by radical Islamic extremists, and take from that the proper “meaning,” i.e. that America is not a place to be celebrated.

Saturday

27

July 2013

When Data Misleads

Written by , Posted in Economics & the Economy

Data is important in public policy. In many situation, the right piece of information can settle a dispute, though even then it probably won’t. But sometimes data can mislead, especially if the interpreter lacks any theoretical basis upon which to judge the information.

Let me give an example. Better yet (for me), let me borrow one from Don Boudreaux, though I’ll present the information in a slightly different order.

Suppose a new business opens in the area, let’s call it Mal Wart, and it employs mostly low skilled labor and pays low wages. Sometime after the business opens, a new survey finds that average wages in the area have declined. Has Mal Wart made the people around it worse off?

Looking just at the data I described, many would say yes. But they would most likely be wrong. Consider Boudreaux’s example:

Suppose that only just yesterday did some clever entrepreneur – seeking only to increase his own material wealth – figure out a way to profitably employ workers each of whom contributes (say) $10.00 or less per hour to any employers’ revenues.  Until this entrepreneur – let’s call him Wally Marsh – devised this new business plan (or technological breakthrough), no employer in the United States has ever before found it profitable to employ any workers whose productivities are so low.

Profit-grabbing capitalist that he is, Wally implements his innovation and hires scores of low-skilled workers, paying each of these workers wages commensurate with their productivity, with none of these newly hired workers being paid more than $10 per hour.

What happens to the average and median wage rate in the U.S. as a result of Wally’s innovation?  (Answer: it falls.  Before Wally’s innovation, only workers who produced $10.01 per hour or more were employed; no worker, therefore, was paid an hourly wage less than $10.01.)

The data in this case is not wrong, but realizing what it measures and what it does not is crucial to properly interpreting the information. A person with a theoretical foundation in economics is likely to properly see what the data measures and means than a person without such a foundation. This is why theory matters and not everything can easily be reduced to a simple empirical test.

Boudreaux’s post brought to mind another good example of frequently misinterpreted data involving income mobility. This video from LearnLiberty explains:

 

Thursday

18

July 2013

Harry Reid’s Filib(l)uster and the NLRB

Written by , Posted in The Courts, Criminal Justice & Tort

The big news yesterday was that Republicans apparently caved on their opposition to several Obama administration appointees, a deal which will stave off Harry Reid’s plan to invoke the so-called “nuclear option” to end filibusters on presidential appointments. There are two things I find of interest in this whole brouhaha – the administration’s abuse of recess appointments to circumvent the Senate’s role to provide Advice and Consent, and the implications should Harry Reid go through with the “nuclear option.”

Here’s what I previously said about President Obama’s “recess” appointments:

What’s interesting to me is how ridiculous is much of the rhetorical justification for the move. The argument I frequently see goes something like this: Republicans blocked Obama’s appointments, therefore he just had to act.

This line of reasoning renders meaningless the entire concept of Advice and Consent. What is the point of even requiring Senate confirmation if the refusal of the Senate to do so just means that the President should go around them? If the Senate is expected to be nothing more than a rubber stamp, then the whole process is a massive waste of time.

The appointments have since been found by multiple courts to be invalid, the most recent of which being the Fourth Circuit in a ruling issued just yesterday afternoon. The Obama administration has insisted they were legitimate appointments, and the issue is now before the Supreme Court in NLRB v. Noel Canning.

The exact fallout from the rulings remains uncertain at least until Noel is decided, due largely to the fact that the legality of rulings issued thanks to Obama’s invalid appointments are in question, though many other challenges are currently proceeding.

Bruce McQuain raises an interesting question regarding how the deal to avoid Harry Reid’s bombing of Senate rules plays into the issue. President Obama and Democrats responded to the rulings against the NLRB by insisting they were legal appointments, yet now are promising two new appointments. McQuain writes:

If the Democrats agreed to have two new appointments made to the NLRB, aren’t they at least tacitly admitting the current two appointments are illegal?  And if so, what does that make any rulings the current NLRB made during that time it was illegally constituted?  Common sense says those rulings should be invalidated, don’t you think?

We’ll see how the issue shakes out with upcoming cases, but it’s worth pointing out that this mess is the direct result of the President’s novel insistence that he knows better than the Senate when they are in session or not.

The other issue of interest regarding the deal is the nature and structure of the Senate itself. Harry Reid has essentially said he and 50 other Senators can change the rules at any time to read as they please. If that is going to be the case, why even bother with rules? Just make it a majority rules, anything goes body and be done with it.

This contrasts with the purpose and understanding of the Senate as constructed. Senators were given longer terms and their elections staggered (not to mentioned originally not even determined by popular vote) in order so that it would serve as a counter-weight to the fickle nature of popular opinion that would hold greater sway in the House of Representatives.

Senator Lamar Alexander did a pretty good job with this argument in yesterday’s Washington Times:

This week’s “nuclear option” debate about whether U.S. senators should be permitted to filibuster presidential nominations was not about filibusters.

It was instead about whether a majority of senators should be able to change the rules of the Senate anytime for any purpose. Former Sen. Arthur Vandenberg of Michigan once offered the precise trouble with this idea: “If a majority of the Senate can change its rules at any time, there are no rules.”

…Over the years, there have been seven sub-Cabinet nominees blocked by filibuster — three Republicans and four Democrats, all since 1994.

…So, what were Democrats complaining about?For many Democrats, getting rid of the filibuster for nominees is the first step in turning the Senate into an institution where the majority rules lock, stock and barrel.

The Senate would become like the House of Representatives, in which a majority of only one vote could establish a Rules Committee with nine members of the majority and four of the minority. Every meaningful decision would be controlled by the majority. The result: The minority, its views and those it represents would become irrelevant.

It would be an unfortunate development if the Senate were to be turned into just a smaller House of Representatives. For those of us that welcome Congressional gridlock as a means to stay the worst impulses of knee-jerk legislators, the role of the Senate is essential. Though it’s worth pointing out that when the power shifts, many on both sides of the debate will switch sides. It may in the future be Lamar Alexander and his colleagues crying foul over minority obstructionism while Harry Reid demands respect for minority party rights. It wouldn’t be the first time.

 

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About Me

profileI serve as Vice President of the Center for Freedom and Prosperity, a non-profit think tank dedicated to preserving tax competition and free markets. This site features my personal views, which are not reflective of CF&P.

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