Upcoming G20 Summit in Seoul Raises Stakes for U.S.-Korea Trade Deal
The next G20 Summit, to be held November 11-12 in South Korea, is right around the corner. For free traders, the summit has taken on added meaning because of the promise President Obama made during the most recent G20 Summit held last June in Toronto to advance the U.S.-Korea free trade agreement (FTA):
The last time I was in Korea, I said that I would be committed to moving [the FTA] forward. And today I indicated to President Lee that it is time that our United States Trade Representative work very closely with his counterpart from the ROK to make sure that we set a path, a road, so that I can present this FTA to Congress…. I want to make sure that everything is lined up properly by the time that I visit Korea in November. And then in the few months that follow that, I intend to present it to Congress. It is the right thing to do for our country.
We agree, Mr. President. To help policymakers understand the high stakes and potential gains of the agreement, Cato Senior Fellow Doug Bandow has authored the new Cato Trade Briefing Paper, “A Free Trade Agreement with South Korea Would Promote Both Prosperity and Security,” released today.
A preview of Doug’s analysis also was published yesterday in the Daily Caller, under the title “South Korea Free Trade Agreement Key to Prosperity and Security.”
Waiting for Realityman
The edu-documentary Waiting for ‘Superman’ continues to generate lots of noise about fixing American education. Unfortunately, like the film itself, most of the noisemakers ultimately ignore reality: The only way to make educators truly put children first is to require that they satisfy parents — the customers — to get their money. And that can mean only one thing: transforming our education system into one in which parents control education funding and educators have to earn their business.
You would think that would be clear to members of the U.S. Chamber of Commerce. Think again: In a new report, the Chamber demonstrates that what’s really needed is not a visit from Superman, but for Realityman to give it a superpowered kick to the rear so that it will demand universal school choice, not the milquetoast tweaks of the government monopoly it meekly champions.
What follows are just a few examples of where the Realityman Signal shines brightly in the report — where the Chamber clearly sees the diabolical work of government monopoly, but ultimately fails to identify the culprit – calling out for our hero to save the Chamber.
First, the paper notes that “successful businesses use well-documented management and leadership practices that result in lean, accountable, flexible, high-achieving organizations.” Meanwhile, “these practices are often absent in school management. State [sic] and districts are not held accountable for their academic outcomes relative to their expenditures….”
No kidding: Businesses have to become ever-more efficient and effective or they’ll lose customers to better, cheaper competitors. Public schools, in contrast, have no real competition and get paid no matter what.
Next, if you aren’t happy with the state of your schools, the Chamber advises getting “tough with candidates and elected officials…. Call candidates, conduct town hall forums and invite the press, write op-eds, and call your local newspaper reporters who work on education issues.”
Now, is this how most businesses work? If a firm isn’t happy with a supplier, does it call its congressman, hold fora, pen op-eds, badger reporters, all in the hope of eventually persuading the supplier to change? Of course not: If the supplier doesn’t improve, the firm just finds a new one and moves on!
Finally, the Chamber laments that “other industries are changing, adapting, and harnessing the power of new technologies, but our education system resists change.”
There’s a simple explanation for this: Public schooling isn’t an “industry.” WordNet defines “industry” as “the organized action of making of goods and services for sale [italics added].” But public schools don’t sell anything. They simply take, and because they don’t have to earn any business they have little incentive to adapt new technologies.
Surely most businessmen recognize the forces that push them to do their best. Why can’t they see the desperate need for the same forces in education?
Save us, Realityman!
Heritage and Prop. 19
Over at the Huffington Post, I scrutinize a recent Legal Memorandum published by the Heritage Foundation on the Prop. 19 ballot initiative.
Here is an excerpt:
The Heritage memorandum claims that if Prop 19 were approved, it would conflict with the federal criminal statute, the Controlled Substances Act and thus “invite litigation that would almost certainly result in [Prop 19] being struck down” as unconstitutional. This legal claim is dead wrong. While it is true that the supremacy clause of the Constitution makes it clear that federal law will override a conflicting state law, that clause simply has no application here. The federal law on marijuana remains in force, but that does not mean that a state government is under any obligation to assist the feds. As the Supreme Court noted in New York v. United States (1992), the state governments are neither “regional offices nor administrative agencies” of the federal government. Let’s take another example. Suppose Congress were to criminalize, say, cotton candy–would California be in violation of the Constitution because its police agents are not now empowered to arrest people producing and possessing cotton candy? No. Nor could Congress compel the California legislature to move against cotton candy producers and consumers. Here again is the Supreme Court: “Even where Congress has the authority to pass laws requiring or prohibiting certain acts, it lacks the power directly to compel the States to require or prohibit those acts.” (New York v. United States, 505 U.S. 144, 166 (1992)). Prop 19 is consistent with the constitutional principle of federalism.
For additional Cato scholarship on drug policy, go here and here.
Cost-Slashing? No, Cost-Shifting.
Here’s a poor, unsuccessful letter I sent to the editor of the Los Angeles Times:
Three and a half million Californians may become eligible for subsidized private health insurance in 2014 under ObamaCare [“3.5 million Californians would be eligible for healthcare tax credits, study finds,” October 6], but those subsidies will not “slash the cost” of their health insurance. As ObamaCare causes health insurance premiums to rise by as much as 30 percent, the private-insurance subsidies will shift those costs to taxpayers. A bipartisan majority of Americans opposes ObamaCare in part because such shell games increase costs rather than reduce them.
Yes, We Do Bribe Kids!
While politicians probably support many policies for college students in part because they think the policies will be educationally or otherwise beneficial, vote buying is no doubt also important. Of course, it’s hard to find a politician who will actually cop to the latter. On this morning’s Today show, however, Democratic National Committee Chairman Tim Kaine came about as close to doing that as you could possibly hope for.
Responding to interviewer Ann Curry’s observation that President Obama has aimed a lot of campaigning at college students lately, Kaine noted that young people voted for Obama in record numbers in 2008, and “the message to young voters is pretty simple… we’ve done the largest expansion of the student loan program in American history… we’ve done a health care reform that allows youngsters to stay on their family insurance policy until age 26, and we’ve done important credit card reform that has helped young voters. So we have their attention….”
Translation: Kids, vote the right way, and keep that free stuff coming!
The False Choice Between a VAT and Impossible Spending Cuts
Governor Mitch Daniels of Indiana has triggered a spat among policy wonks with his recent comments expressing sympathy for a value-added tax (VAT). Kevin Williamson of National Review is arguing that a VAT will probably be necessary because there is no hope of restraining spending. Ryan Ellis of Americans for Tax Reform jumped on Williamson for his “apostasy,” arguing that a VAT would be bad news for taxpayers. From a policy perspective, I’m very much against a VAT because it will finance bigger government, as explained in this video.
That being said, Kevin Williamson makes a good point when he says that some supply-siders have neglected the spending side of the fiscal ledger. And it certainly is true that Republicans don’t seem very interested in curtailing the growth of government. But does this mean, as Williamson argues, but that our choices are limited to 1) a 36 percent spending cut, 2) catastrophic deficits and debt, or 3) a European-style value-added tax.
I actually think it would be a great idea to reduce the budget by 36 percent. That would bring the burden of federal spending back down to where it was in 2003. Notwithstanding the screams from various interest groups that this would generate, nobody was starving in the streets when the budget was $2.3 trillion rather than today’s $3.5 trillion. But Kevin is unfortunately correct in noting that this type of fiscal reform won’t happen.
Kevin is wrong, however, in saying that we therefore have to choose between either Greek-style deficits or a VAT. According to the Congressional Budget Office, tax revenues over the next 10 years will increase by an average of about 7.3 percent each year – and that’s assuming the tax cuts are made permanent and the AMT is adjusted for inflation. Reducing red ink simply requires that politicians exercise a tiny bit of restraint so that spending grows by a lesser amount. This video walks through the numbers and shows how quickly the budget could be balanced with varying levels of spending discipline.
By the way, it’s worth pointing out that the VAT has not prevented gigantic deficits in nations such as Greece, Japan, Ireland, Spain, England, etc, etc. Politicians in those nations implemented VATs, usually with promises that the money would be used to reduce other taxes and/or lower red ink, but all that happened was more spending and bigger government (this cartoon makes the point in a rather amusing fashion). In other words, Milton Friedman was right when he wrote that, ”In the long run government will spend whatever the tax system will raise, plus as much more as it can get away with.”
Washington State Regulator Can’t Prevent ObamaCare from Destroying Child-Only Market
ObamaCare has touched off a battle between Regence Blue Cross Blue Shield and Washington State Insurance Commissioner Mike Kreidler. From the commissioner’s press release:
Kreidler orders Regence BlueShield to cover children
OLYMPIA, Wash. – Insurance Commissioner Mike Kreidler ordered Regence BlueShield this morning to stop illegally denying insurance to children, effective immediately.
“Regence is in clear violation of state law that prohibits insurers from denying insurance to people on the basis of age,” said Kreidler. “I was shocked and deeply disappointed when Regence announced its decision last week to stop selling insurance to kids.”
The Affordable Care Act requires all health plans to cover kids with pre-existing conditions…
Regence Blue Shield, the largest health insurer in the individual market, notified Kreidler on Sept. 27 that, effective Oct. 1, it would no longer sell individual health insurance policies to kids.
From Regence’s press release:
We were shocked by the Commissioner’s action and press statement this morning. This gross politicization of such a complex regulatory problem does not help address the very real economic challenges of providing coverage to Washingtonians seeking individual insurance policies, especially children.
Over the past several months, we have had at least five separate conversations with the Commissioner and his staff regarding planned changes to how we would cover children under age 19. Our goal in those discussions was and continues to be a solution that would allow us to serve all of our individual members – including children – without exacerbating costs and increasing coverage risks for the entire pool. Never once did the Commissioner or his staff express any concern that these changes might violate state law. We’re disappointed that the Commissioner appears to have suddenly changed his perspective…
We’ve been very clear that we will insure kids during open enrollment periods when the child is not the sole subscriber — and we will do so regardless of health status. Dozens of carriers across the country have found it necessary to adopt similar policies.
We disagree with the Commissioner’s action today and will consider how it might impact our ability to offer coverage to all individuals across the state. While more than ten carriers have deserted Washington’s individual market — leaving three today — Regence has continued to insure these members despite losses of more than $33 million in the last three years. While we remain committed to our individual members, we simply cannot expose our broader membership to greater risk. Therefore, we believe the changes we made are in the best interest of the nearly one million Washingtonians we serve today.
Washingtonians want and need an equitable, stable insurance market that people can afford. We want to avoid the mistakes of the 1990′s when a small minority was allowed to game the insurance system by purchasing insurance only when they were sick, which led to rate spikes and the collapse of the individual market.
Either way, the child-only market is toast.
Anti-Obamacare Rulings a Trend or Just Coincidence?
I’m fond of saying that lawsuits don’t proceed at Internet speed — meaning that people are disappointed when I tell them that a new constitutional challenge to uphold property rights or free speech or individual liberty generally will take years to get through the courts, or that we’ll have to wait several months for a court to issue an opinion in some front-page case. But lately it does seem that developments from the ongoing legal challenges to Obamacare are coming faster and faster, as if the train has now left the station and, to badly mix metaphors, it’s snowballing to an eventual collision at the Supreme Court.
That “gaining speed” phenomenon is mainly coincidence — given the more than 20 Obamacare lawsuits out there, briefing schedules, hearings, and rulings are bound to overlap at some point — but it has been interesting to compare and contrast the events of the last 10 days. To recap some of the high points, this summer Judge Henry Hudson denied the government’s motion to dismiss Virginia’s law suit (read my comments here and Cato’s brief here). Then two weeks ago, Judge George Steeh granted a similar motion in a case brought by the Thomas More Law Center in Michigan — in a cursory opinion I react to here and critique in this op-ed.
Last Thursday, Judge Roger Vinson issued a 65-page opinion allowing most of the lawsuit brought by 20 states, the National Federation of Independent Business, and two individuals to proceed (my reaction here). This is an important ruling spelling out the unprecedented nature of the power Congress purports to assert here, with the individual mandate of course but also in potentially commandeering state officials and coercing them with strings attached to Medicaid funds and other regulatory burdens.
Finally, yesterday Judge Hudson held a hearing in Richmond on the parties’ cross-motions for summary judgment — which means both sides agree that no material facts are in dispute and the court should go ahead and rule on the law without having a trial. (Cato filed a brief for this stage of proceedings as well.) By all accounts, the hearing went well for Virginia; Judge Hudson was skeptical of the government’s argument that individual decisions not to enter the insurance marketplace was the sort of “local economic activity that has a substantial effect on interstate commerce” that the Supreme Court has said marks the outer bounds of Congress’s power under the Commerce Clause. The judge also indicated that he would issue an opinion by the end of the year.
This is all heartening news — the courts that are seriously grappling with these lawsuits (and especially the highest profile cases brought by the 21 states) actually think the Constitution places limits on federal power. Then again, I can’t believe that question is even up for discussion! Stay tuned — and keep track of all the lawsuits at healthcarelawsuits.org.
Federal Reserve Bank Pay Soars
The public is concerned that governments are providing excessively generous compensation to their workers. Attention has focused on the high salaries and benefits of federal civilian employees and the often lavish pensions paid to state and local workers.
The compensation policies of the Federal Reserve System also deserve scrutiny. The chart compares average wages of workers in the U.S. private sector and workers in the 12 Federal Reserve Banks. In recent years, the average wage in the Fed’s regional banks has soared, reaching $84,054 in 2009, or 67 percent greater than the private sector average wage of $50,462. Meanwhile, the average wage of the 2,100 workers in the Fed’s Board of Governors in Washington reached $116,030 in 2009. (Federal Reserve Bank data is from this annual report table. Private sector pay is from the BEA, as discussed here).
However, there is a major caveat to this Federal Reserve Bank data. Bank employment has fallen from a stable level before 2002 of about 23,000 to just 17,398 in 2009. One reason is that a major Fed activity—check processing—is rapidly declining due to technological changes. Thus, it is likely that many lost Fed jobs were at relatively lower salary levels.
Nonetheless, despite a 26 percent workforce reduction since 1995, overall Fed Bank compensation costs (wages and benefits) have grown just as fast as the overall economy. Fed compensation costs doubled between 1995 and 2009 as U.S. GDP doubled. The Fed’s total current operating expenses—including compensation, buildings, etc—also doubled during this period. (The Fed’s expenses are from this table in its annual reports. I excluded the new “interest on reserves” expense).
In 2009, total average wages and benefits of Fed Bank workers was $124,974, or more than double the $61,051 average compensation in the U.S. private sector. Fed workers have very generous benefits, including rare perks such as subsidized cafeteria meals.
Let’s look at top end of the Fed’s workforce. In 2009, the average salary of the Fed’s 12 regional presidents was $340,323. In addition, there were 1,183 “officers” in the Fed Bank system with an average salary of $198,960, which is up 94 percent from the average officer salary in 1995.
Also note that the number of these high-paid “officers” in the 12 Fed Banks increased 25 percent between 1995 and 2009 (950 to 1,183), even as the number of overall Fed employees fell 26 percent, as noted. The system is thus becoming very top-heavy.
Federal Reserve annual reports are available online back to 1995. But a 1996 report from the Government Accountability Office discussed the fairly rapid rise in Fed operating expenses during the 1988 to 1994 period, thus indicating that rising costs have been an issue for some time.
How does this affect the general public? Rising costs result in fewer central bank profits being transferred to the U.S. Treasury. That means higher federal deficits or taxes. The GAO explains:
“The Federal Reserve is a self-financing entity that deducts its expenses from its revenues and transfers the remaining amounts to the U.S. Treasury. Because an additional dollar of Federal Reserve cost is an additional dollar of lost federal revenue, the costs of operating the Federal Reserve System are borne by U.S. taxpayers just like the costs of any federal agency.”
As a monopoly immune from competition, the Fed will tend to have a bloated bureaucracy. That makes oversight by Congress very important so that technological efficiencies gained in Fed functions such as check-clearing are passed along to taxpayers, and not gobbled up, for example, by rising numbers of high-paid officers. As the Congress next year looks for ways to reduce the budget deficit, it should look for cost savings at the Fed.
Policymakers might consider whether the Fed really needs 12 regional bank organizations, each with huge fortress-like buildings in cities across the nation. They should ask why the number of high-paid “officers” has increased, even as the number of overall Fed workers has fallen. And they should ask whether Fed employees really need such generous benefit packages—including, for example, both a defined contribution and a defined benefit plan.
I’m not convinced that we need a monopoly central bank. But until policymakers explore alternatives such as free banking, they should try to reduce costs at the Fed as they scour the entire budget for savings.
(Assistance was provided by intern Michael Nicolini).
A Less-Than-Rigorous ObamaCare Fact Check
Kaiser Health News and The Washington Post have posted a piece titled “Campaign Claims: Health Law Myths And Facts,” which examines these common criticisms of ObamaCare:
- “The law amounts to a ‘government takeover’ of health insurance and health care.” The article’s conclusion: “it falls far short of a government takeover.” That conclusion rests largely on the fact that “Medical care will be provided by private hospitals and doctors.” But as I explain in this study, “it is irrelevant whether we describe medical resources (e.g., hospitals, employees) as ‘public’ or ‘private.’ What matters—what determines real as opposed to nominal ownership—is who controls the resources.” Obama health official Jeanne Lambrew acknowledges as much: “the government role in socialized medicine systems [can include] public financing of private insurance and providers.” And as I concluded in this study, “Compulsory ‘private’ health insurance would give government as much control over the nation’s health care sector as a compulsory government program.” I wonder if the article’s authors spoke to anyone who raised this perspective.
- “The law will gut Medicare by cutting more than $500 billion from the program over 10 years; seniors will lose benefits and won’t be able to keep their doctors.” Conclusion: “The gutting of Medicare claim goes too far…What this means for seniors is a bit murkier.” True enough: even if ObamaCare’s implausible Medicare cuts take effect, they clearly would not “gut” Medicare. (BTW, click here or here for a politically sustainable way to restrain Medicare spending.) The authors also note that Medicare Advantage enrollees would lose some benefits. But when the article claims that ObamaCare will not eliminate any “basic” Medicare benefits, it neglects to mention that Medicare’s chief actuary estimates that the law could cause 15 percent of hospitals, home health agencies, and other providers to stop accepting Medicare patients. If your hospital no longer accepts your Medicare coverage, is that not a benefit cut?
- “The law will cause 87 million Americans to lose their current coverage.” Conclusion: “How true is it? Partly, at best. But evidence is limited.” The House Republicans’ Pledge to America claims that ObamaCare “will force some 87 million Americans to drop their current coverage.” The word drop is a bit strong; it’s more accurate to say that many Americans will have to switch to another plan, even if it’s just a more-expensive version of their current plan. Indeed, HHS estimates that 69 percent of employer plans will have to do so by 2013. Yet some people are being dropped from their current health insurance. When Principal Financial Group leaves the market, its nearly 1 million enrollees will lose their current health plan. Industry analysts expect more such departures. Why no mention of that?
- “The law is driving up costs and premiums and will continue to do so over the next several years.” Conclusion: “There may be very small increases initially.” Here the article is kinder to ObamaCare than even ObamaCare’s supporters are. May be? Even ObamaCare’s supporters admit the law will increase premiums for some people. Very small increases? Even HHS estimates that the requirement that consumers purchase unlimited annual coverage could increase premiums for some by 7 percent. (There’s no mention of Blue Cross and Blue Shield of Connecticut, which says ObamaCare will increase premiums for some of its customers by nearly 30 percent.) And why only initially? Do the authors expect that there will be no premium increases when HHS eventually stops issuing waivers? Or when HHS sets a minimum level of coverage that Americans must purchase in 2014? Or that ObamaCare has solved the tragedy of the commons? For support, the article claims, “the Obama administration, citing [various] estimates…says the law isn’t responsible for any increase greater than 1 to 2 percent.” Actually, that’s not what the administration says — it’s what they want you to think they’re saying. Read this letter and other administration utterances carefully. They say “1-2 percent” when speaking of ObamaCare’s average effect on premiums, and “minimal” when speaking of anything other than the average effect. (The administration’s threshold for “minimal” is presumably somewhere north of 7 percent.)
- “The law’s expansion of Medicaid will put massive pressure on state budgets at a time when many are already in crisis.” Conclusion: “The impact will probably be small, but it’s hard to say for sure.” The article only cites figures generated by supporters of the law, who say the impact will be small. Why just mention that there are figures from the other side? Why not include them?
- “The new law uses tax dollars to pay for abortions.” Conclusion: “Open to interpretation.” This was a missed opportunity to examine two crucial questions. First, would federal insurance subsidies truly be segregated from the separate premiums that consumers in ObamaCare’s exchanges would have to pay for elective-abortion coverage? Or would this just be an accounting gimmick? What would happen, for example, if there were more abortions than an insurer anticipated, and those separate premiums proved insufficient to pay for them? How would you keep one side of the ledger from spilling over into the other? Second, would the availability of federal subsidies for health insurance plans that make elective-abortion coverage available as a rider increase enrollment in those plans? If so, wouldn’t that implicitly subsidize elective abortions? Rather than examine those questions, the article punted.
On the whole, I’d say this fact check may have been very kind to the new law.
It’s a Little Late to Be Discussing National Standards Governance
What do you do when you’re asked your opinion about how to implement something you don’t like? Do you use the opportunity to say why you think implementation will fail, and how to minimize the damage, even if doing so might make you look like a collaborator? Or do you say nothing and just let bad stuff happen?
A couple of months ago, I was presented with that dilemma by the people at the Thomas B. Fordham Institute — you might have seen me discuss them once or twice — who were putting together a report on how to govern national standards and tests. They asked me, along with several other people who’d thought long and hard about national standards, to send them answers to several questions to help inform their thinking. Today, Fordham is releasing that report, and I have just a few notes about it.
First, you will see me quoted twice in the paper, and from those quotes you could get the impression that I’ve gone all Vichy on national standards. I don’t think Fordham authors Chester Finn and Michael Petrilli intended to do that, nor do the context of the quotes necessarily support that conclusion, but one could get that impression nonetheless. Fortunately, Fordham kindly posted my entire questionnaire – as well as those of several other respondents — on the report’s Web page, and you can go there for my complete thoughts. If you don’t want to do that, though, I’ll summarize (stop me if you’ve heard this before): As long as government runs and funds schools rather than giving parents control of education money and educators full freedom, standards-and-accountability regimes, no matter how strong they start off, will ultimately be rendered meaningless by politics.
My second note is that the overall report is aggravating because it is impossible to concretely discuss the governance of standards that almost no one knows about, and accountability systems that don’t exist. The Fordham authors acknowledge this problem, but acknowledging it doesn’t make it any less enervating. It also highlights that we’ve skipped a critical, much more fundamental debate: Even if you think centralized standards are a good idea — and almost everything we know about markets, competition, and innovation says they aren’t — how do you, really, keep politics from gutting standards and accountability? It’s a debate we needed to have long before states started to adopt national standards, largely in the pursuit of federal dough.
All that said, there is one, small part of the report that I find quite satisfying. A few months ago, Fordham President Chester Finn called people like me and Jay Greene “paranoid” for arguing that national standards would be hollowed out by politics. Well, in the report, while it is not explicitly identified as such, you will find what I am going to take as an apology (not to mention a welcome admission):
How will this Common Core effort be governed over the long term?…This issue might seem esoteric, almost philosophical in light of the staggering amount of work to be done right now to make the standards real and the assessments viable. But we find it essential—not just for the long-term health of the enterprise, but also to allay immediate concerns that these standards might be co-opted by any of the many factions that want to impose their dubious ideas on American education. You don’t have to be a conspiracy theorist to worry about this possibility [italics added]…
No, you don’t.
That Conway Ad and Social Liberalism
The infamous Conway attack on Rand Paul may be found here. Most people have focused on religion and politics in talking about the ad. I want to examine a part that has been overlooked.
We often hear that contemporary liberalism comprises a big state role in economic regulation combined with a small state regarding social and civil liberties. Maybe not.
Look at the disclaimer at the beginning of the ad. Who is standing behind Jack Conway? Those two gentlemen would police officers, probably Kentucky state police. Why are they there? After all, Conway could have put his loving wife and dear children in the background. But he choose police officers. Conway is saying: “I stand with the forces of order.” Not a very socially liberal message.
Why are the police willing to be in Conway’s ad? After all, the forces of order usually endorse the Republican candidate. Not this time. The Fraternal Order of Police in Kentucky endorsed Jack Conway. Why? Rand Paul suggested the drug war in Kentucky might be paid for in Kentucky. This had two effects. First, it cast doubt on the holiness of the anti-drug crusade. By putting the police officers behind him, Jack Conway is saying: “I will fight the drug war no matter what.” Not good for social liberalism or civil liberties.
Of course, the police have a material interest in the drug war in Kentucky. They believed that Dr. Paul’s call for federalism would mean lower salaries and less resources for the drug war in Kentucky. Conway is saying here: no budget cuts for my friends, the forces of order. Thus does the drug war bring the Kentucky State Police and the Daily Kos into a political alliance.
Like most politicians, Jack Conway is doing whatever is necessary to win a senate seat. He could end up as the pivotal vote for a Democratic Senate majority, at least in partisan matters.
If he votes as he ran, Conway will be a reliable vote for the policy status quo on the drug war, against civil and social liberties, and for a politics that always and everywhere covets victory “by any means necessary.” He should fit in well in Washington, especially with the more authoritarian parts of the GOP.
The Tea Party Continues to Freak Out Intellectuals
Peter Baker reports in the New York Times:
To better understand history, and his role in it, Obama invited a group of presidential scholars to dinner in May in the living quarters of the White House.* Obama was curious about, among other things, the Tea Party movement. Were there precedents for this sort of backlash against the establishment? What sparked them and how did they shape American politics? The historians recalled the Know-Nothings in the 1850s, the Populists in the 1890s and Father Charles Coughlin in the 1930s.
I’m struck by the historians’ choices (or maybe President Obama’s recollection of their choices)? Who are the Tea Partiers like? The Know-Nothings and Father Coughlin’s left-wing, anti-capitalist, anti-semitic Union for Social Justice. (And the Populists, which is a more interesting comparison, being a mass movement that arose mostly spontaneously. But it was primarily a political party, which reflects the confusion that the term “Tea Party” seems to generate.) Nobody thought of, say, the antiwar movement of the 60s or the tax revolt of the 70s? Or even the counterculture and feminist movements, both of which pioneered the cultural-reform style that Jonathan Rauch finds in the Tea Party:
Raise consciousness. Change hearts, not just votes. Attack corruption in society, not just on Capitol Hill.
With a few rare exceptions like Rauch and John Judis, non-conservative intellectuals are just freaked out by a mass movement against big government. Jill Lepore, Sean Wilentz, E. J. Dionne, Frank Rich — they just can’t imagine that real middle-class Americans could honestly oppose President Obama’s tax-and-spend agenda and march in the streets against it — just like, you know, they did against the war and stuff. It’s got to be racism, billionaires, extreme libertarianism, extreme authoritarianism, the John Birch Society, something. And so they tell the president that the Tea Party is reminiscent of “the Know-Nothings and Father Coughlin.” Why oh why can’t we have better historians?
*It’s not clear if this dinner is different from the widely reported July 2009 dinner with historians.
Charitable Donations to the Government
The New York Times took a look at people who voluntarily send money to Washington in order to help pay down the federal debt. Last year, the Bureau of the Public Debt received $3.1 million in such donations. Looking at the federal budget, I found a total of $241 million in “gifts and contributions” for fiscal year 2010.
Charitable donations to the federal government are insignificant when compared to donations made to private charities. A Cato essay on welfare spending points out that Americans contribute more than $300 billion a year to organized private charities and volunteer more than 8 billion hours a year to charitable activities, which can be valued at about $158 billion.
Thus when given the choice, people overwhelmingly entrust their donations to private charities not the government. One can only imagine what donations to private charities would be if government at all levels didn’t confiscate trillions of our dollars in taxes every year.
Warren Buffett, one of the richest men in the world, decided several years ago to leave most of his fortune to private charities. Buffett is notorious for advocating tax increases to support government spending. Yet, when he made the decision to donate his wealth, Buffett went with the private sector instead of the government.
A frustrating aspect of today’s public policy debate is that many pundits seem oblivious to the fact that the private sector could take care of those people truly in need if it was allowed to retain more of its earnings from the clutches of government. The government “crowds out” all kinds of private efforts and resources. If the government were to recede, private sector efforts to aid the needy would expand.
The Cuba Embargo at 50
Fifty years ago Tuesday, the United States began to impose sanctions on Cuba in what would turn into a comprehensive U.S. trade, finance and travel embargo.
Though the embargo is not the cause of Cuba’s dismal and deteriorating economic and social conditions, neither has it worked to change Cuban policies or even lead to regime change.
It is time to lift the embargo. Doing so will not save communism from its inherent flaws; that system collapsed spectacularly elsewhere around the world in places where the West maintained or established trade. Keeping the sanctions will only further allow the dictatorship and its sympathizers to explain away the regime’s own failings. It would be better for Cubans and the world to see the unraveling of Cuban communism without U.S. intervention. When a free Cuba is eventually born, it will more easily flourish if enemies of the open society cannot rely on a false narrative about how the colossus of the North finally killed off the island’s socialist experiment.
A good way to start would be by lifting the travel portion of the embargo. That measure would expose ordinary Cubans to hundreds of thousands of American citizens, thus inevitably expanding Cuba’s informal economy and establishing innumerable relationships that would make Cuban citizens more independent of the state. The regime may try to reap the benefits of increased revenues, but it will have unleashed a social dynamic that will be difficult to control.
A Market Rescue in Chile
The Chilean mine accident and subsequent dramatic rescue of 33 miners in Chile has prompted criticism of capitalism from the usual quarters. Happily, there is an increasing recognition of the real story, as noted by Dan Henninger in the Wall Street Journal: capitalism saved the miners. Chile, long Latin America’s freest economy and now the fifth freest economy in the world according to the Economic Freedom of the World report, was able to rely on the latest technology and expertise provided by capitalist companies from around the world to execute a rescue that would not have been possible before the current era of globalization. The Washington Post also editorialized to that effect, saying, “Thanks to Chile’s openness to the world and embrace of entrepreneurship, it was able to effectively deploy cutting-edge technologies.” Here, commentator Star Parker writes about the miners and Chile’s remarkable transformation that began in the 1970s.
The ‘Every Economist’ Myth
Just days after we rapped Rep. Betsy Markey (D-CO) for claiming that “every economist from the far left to the far right was saying the government needs to step in because there was absolutely no private sector investment,” Rep. Gerry Connolly (D-VA) tells the Washington Post,
You’re darn right I voted for the stimulus. Every economist, including [some] Republican economists . . . said, for God’s sake, don’t let it go off the cliff.
This is the myth that just won’t die. Markey and Connolly are echoing similar claims by President Obama, Vice President Biden, and even the notoriously unreliable Robert Reich. When Biden said it, Harvard economist Greg Mankiw asked if he was “disingenuous or misinformed” and pointed out:
That statement is clearly false. As I have documented on this blog in recent weeks, skeptics about a spending stimulus include quite a few well-known economists, such as (in alphabetical order) Alberto Alesina, Robert Barro, Gary Becker, John Cochrane, Eugene Fama, Robert Lucas, Greg Mankiw, Kevin Murphy, Thomas Sargent, Harald Uhlig, and Luigi Zingales–and I am sure there many others as well. Regardless of whether one agrees with them on the merits of the case, it is hard to dispute that this list is pretty impressive, as judged by the standard objective criteria by which economists evaluate one another. If any university managed to hire all of them, it would immediately have a top ranked economics department.
When Robert Reich tried to claim that “economic advisers across the political spectrum support Obama’s plan,” I pointed out that that claim depended on exactly two names and that the Washington Post had demonstrated that neither of them was in fact a Republican supporter of the $787 billion stimulus bill.
In fact, of course, hundreds of economists went on record against the stimulus bill. The Cato Institute’s full-page ad with their names appeared in all the nation’s major newspapers. The ad and the economists were featured on dozens of television programs.
Which brings us back to the question that Mankiw asked of Biden and that I asked of Markey. Is Representative Connolly really unaware that there was vigorous debate among economists about the so-called stimulus bill, and that hundreds of economists expressed their opposition in every major newspaper? Connolly has lived in Washington his entire adult life. He spent 19 years on a Senate committee staff. He served for 14 years on the Fairfax County Board. He worked as vice president at two large government contractors. Is it possible that he doesn’t read the Washington Post — or the Wall Street Journal, or the New York Times, or Roll Call, the newspaper of Capitol Hill? If so, then maybe he really believes that “every economist, including Republican economists” endorsed the stimulus. Someone should ask him: misinformed or disingenuous?
Colbert on Proposition 19
Stephen Colbert quips, “If Proposition 19 were a human, it would be the most popular candidate in California.”
The Tea Party and Foreign Policy
There has been an on-going discussion recently about the Tea Party’s foreign policy views and how this might influence the upcoming election and new members of Congress. In an essay at the Daily Caller last week, the Heritage Foundation’s Jim Carafano addressed this question and the claim that the new “Defending Defense” initiative— led by Heritiage, AEI, and the Foreign Policy Initiative—is aimed at co-opting the Tea Party movement (for more on the substance, or lack thereof, of “Defending Defense,” see Justin Logan’s response here).
Over at The Skeptics blog, I take issue with Carafano’s assessment of the Tea Party’s foreign policy views:
With respect to Carafano’s assessment of the Tea Partiers’s views on foreign policy and military spending, most of what he puts forward is pure speculation. Little is actually known about the foreign policy views of a movement that is organized primarily around the idea of getting the government off the people’s backs. It seems unlikely, however, that a majority within the movement like the idea of our government building other people’s countries, and our troops fighting other people’s wars.
Equally dubious is Carafano’s claim that the Tea Party ranks include “many libertarians who don’t think much of the Reagan mantra ‘peace through strength’” but an equal or larger number who are enamored of the idea that the military should get as much money as it wants, and then some. Carafano avoids a discussion of what this military has actually been asked to do, much less what it should do. By default, he endorses the tired status quo, which holds that the purpose of the U.S. military is to defend other countries so that their governments can spend money on social welfare programs and six-week vacations.
Tea Partiers are many things, but defenders of the status quo isn’t one of them. This movement is populated by individuals who are incensed by politicians reaching into their pockets and funneling money for goo-goo projects to Washington. It beggars the imagination that they’d be anxious to send money for similar schemes to Brussels, Paris, Berlin and Tokyo, and yet that is precisely what our foreign policies have done — and will do — so long as the United States maintains a military geared more for defending others than for defending us.
Click here to read the entire post.
Jack Conway’s Ugly Campaign
Kentucky attorney general Jack Conway’s Senate campaign, previously chided here for a TV ad’s “dishonest twisting of [Rand] Paul’s statements,” has released another one that is so bigoted it caused even liberal partisan Jonathan Chait of the New Republic to blanch. Chait writes,
The trouble with Conway’s ad is that it comes perilously close to saying that non-belief in Christianity is a disqualification for public office. That’s a pretty sickening premise for a Democratic campaign. [Not that Rand Paul has in fact demonstrated any non-belief in Christianity, but Conway is dredging up allegations from Paul's college days.]
Here’s the ad:
It puts one in mind of Bob Schieffer’s stunned question to David Axelrod: Is that the best you can do?
Rand Paul is not a perfect libertarian, as Cato colleagues and others have noted. And surely Jack Conway could engage him in robust debate on legitimate issues from Obamacare to the national debt and the Iraq war. But looking at the actual ads Conway has chosen to run, I’ll repeat what I said about the previous ad: “the attorney general of the Commonwealth of Kentucky should be embarrassed.”
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