Archives: 09/2007

The Mitt-Hillary “Connection,” Part IV

Mitt Romney devoted an entire article [$] in today’s Wall Street Journal to explaining how the law he signed as governor of Massachusetts is very different from Hillary Clinton’s new health plan

He’s right, you know.  Clinton proposes an individual mandate and an employer mandate.  Romney?  His Massachusetts law imposed … well, individual and employer mandates.  Clinton proposes subsidies for those who can’t afford insurance.  Romney?  Yeah, he had those too.  Clinton proposes expanding an existing government purchasing cooperative.  Aha!  Romney … um, created a new government purchasing cooperative.  Clinton wants to impose hidden taxes on the young and those who lead healthy lifestyles to subsidize older people and those who lead unhealthy lifestyles.  Romney?  Yeah, he did that too.  Clinton disingenously wraps her plan in free-market rhetoric.  Romney … umm …

The governor doth protest too much, methinks.

In related news … the Romney campaign plans to roll out a new TV ad that warns:

When Republicans act like Democrats, America loses.  It’s time for Republicans to start acting like Republicans.

Here’s a scary thought.  What if Republicans are acting like Republicans?

From the Why We Fight File

In Why We Fight: How Public Schools Cause Social Conflict, I explained that our public schooling system causes constant political and social battles because everyone, no matter what their values or educational goals, is forced to pay for the schools, but only the most politically powerful can control them. I also explained that the only viable way to defuse the situation is to give all parents school choice, so that they can take their children and the money intended to educate them to schools that share their values. Well, a story in this morning’s Chicago Tribune about a Windy City school engulfed in a battle over a required 7th grade reading book makes my point – and then some. Not only does it show the need to let parents choose their children’s schools because their values may differ, it also displays the arrogance that can come from school administrators who know that they have all the power:

Several dozen parents at a Southwest Side Chicago public school are calling for school officials to ban a controversial book they say is filled with references to sex and violence.

The book, “The Chocolate War,” which is required reading for 7th grade students, was blasted by parents at a Local School Council meeting Tuesday evening at the John H. Kinzie Elementary School in the Garfield Ridge neighborhood.

Nick Cortesi, who has a 2nd grader and a kindergartner at Kinzie, said school officials should remove the book because of its inappropriate content and adult themes.

“I’ll be dammed if they are going to be reading this filth,” Cortes said. “The issue is over whether it’s age-appropriate. What about the parents who are tax payers? Have we no say?”

At the meeting, Kinzie Principal Sean Egan told about 50 parents who showed up in the school’s cafeteria that he had informed public school administrators about their concerns and was told that officials thought the book was appropriate reading material.

“I don’t tell you how to run your family,” Egan told parents. “I support my teachers.”

After hearing from the district’s lawyers, the principal sent a letter to parents Monday informing them that the book would remain on the required reading list. He warned parents that if they directed their children not to read the book, it could “have a significant negative effect on the final course grade.”

“This book was selected for the very important, complex themes it covers, including conformity and the ethical implications of choices we make,” Egan wrote. “I want to assure you that the school has fully vetted this book. … A few parents have objected to the contents of the book, which addresses mature themes and contains some swearing. Decisions regarding the content of a school’s curriculum, however, lie with its educators and administrators.”

The True Leaders of Trade Liberalization

A great article today [subscription required] in the Financial Times reminds us that business deals, and not formally negotiated trade agreements, are driving globalization.

That’s not to say that a good outcome on the Doha round wouldn’t be welcomed (and things are looking up on that score). But preferential trade agreements are often not the historic breakthroughs that politicians make them out to be. They make great photo-ops, though.

Questions For And About Michael Mukasey

George Will has some terrific questions for the President’s nominee to be Attorney General, Michael Mukasey.  I’m glad that Will is drawing more attention to the administration’s startling claim that all of America is a “battlefield.”  In a recent article for Legal Times, I urged the next attorney general to disavow that claim.  (For more detail, go here, and read pp. 7-15).

Will also cites an important new book by the Boston Globe’s Charlie Savage, Takeover: The Return of the Imperial Presidency and the Subversion of American DemocracyHere is an excerpt from Will’s column:

The Constitution’s Framers, disliking the British sovereign’s “prerogative power” to set aside a law for a claimed public good, stipulated that the president shall “take care that the laws be faithfully executed.” But consider “signing statements,” whereby presidents, when signing legislation, attach statements sometimes directing the executive branch not to execute certain portions. This practice is, in effect, something the Constitution does not permit – a line-item veto. Savage, who won a Pulitzer Prize for his reporting on this president’s signing statements, writes that such statements were rare until the mid-1980s, when some conservatives urged frequent use of them as a means of maximizing presidential powers. Savage says: “If a president has the power to instruct the government not to enforce laws that he alone has declared to be unconstitutional, then he could free himself from the need to obey laws that restrict his own actions.” Is this a real danger?

Read the whole thing.

Also on the Washington Post editorial page is a piece by Bob Novak on the internal deliberations in the Bush White House regarding their pick for Attorney General.  Novak is very critical: “Mukasey is not well qualified to be attorney general by any rational standard.”

What Could Possibly Be Better than “Public Policy Values?”

Last week, the New America Foundation’s Sara Mead took issue with a blog entry I wrote wondering how her group could tout student loan auctions because they use “market forces” while simultaneously advocating for “the gargantuan market distortion that is the overall student aid system.” Mead replied with a “there you libertarians go again” argument, writing that Cato:

holds that unrestrained markets always produce the best possible outcomes. But McCluskey is confusing means and ends here. Harnessing market forces is often the most efficient way of getting to a particular end. But we believe that public policy should use market forces to achieve desirable ends based on public policy values.

Now, let’s not get bogged down in some very important questions like who defines “desirable ends,” or what, exactly, “public policy values” are. No, let’s get right to a bottom line with which it seems Mead and I might be able to agree.

Toward the end of her argument, Mead says that it is important to “increase college affordability and access…because among other reasons, a better educated population produces broader social benefits—more civic engagement, innovation, economic growth, etc.” I agree with at least part of this. Economic growth is a good goal to shoot for, because it tends to reflect both the innovation Mead values, and an increasingly efficient and effective allocation of societal resources.

So it turns out a funny thing happens when the market is subverted to spend more money on higher education: It actually hinders economic growth. As economist Richard Vedder found in Going Broke By Degree: Why College Costs Too Much, controlling for other factors impacting economic growth, the more states invest in higher education, the lower their rates of economic growth. That’s right: letting “public policy values” force money out of taxpayers’ pockets and into colleges and universities actually has a dampening effect on economic growth.

Why is this? Because if left alone, individual taxpayers will produce better results in the aggregate than government can. Individuals know what they want and need better than any government, and even more importantly, in a truly free market they have to balance their needs and desires against those of all the other people in society, resulting in the fairest, most efficient, aggregate outcome. Not so with government, where politicians can’t possibly divine and balance the needs of everyone in our impossibly complex society, and the people with the most lobbying power often get what they want specifically because they don’t have to balance their needs against everyone else’s.

In the case of higher education, this plays itself out with relatively well-off students often getting aid; students spending large amounts of time partying rather than focusing on graduation; professors devoting much of their time to esoteric, often government-funded research instead of teaching; and universities using resources very inefficiently. Meanwhile, taxpayers are doing without money they might have used to buy food, or invest in innovative young companies, or any number of other uses that would have been much more beneficial to society, but which politicians ignore because – unlike kids taking subsidized loans or bigger Pell Grants – their absence is invisible.

Thankfully, sometimes there are crystal-clear signs of government failure. Case in point: all those lenders – especially the federally created Sallie Mae  – that Mead and others despise for making billions of dollars off of student loans. How’d they do it? Not through “unrestrained markets,” but government-subsidized loan programs designed to circumvent market forces in pursuit of – you guessed it – “public policy values.”

Obama’s “Tax Policy”

Presidential candidate Barack Obama introduced his tax plan in a speech yesterday. Unfortunately, it overflowed with bad ideas. First, Obama’s plan to increase dividend and capital gains taxes is out of step with global tax realities. Virtually all of the 30 major industrial nations provide relief for capital gains and dividend taxes. Indeed, a dozen major nations have capital gains tax rates of zero percent. And if the current dividend tax cut expires, the United States would have the highest dividend tax rate among major nations.

Second, Obama hasn’t got his math right. He claims that there is “$1 trillion worth of loopholes in the corporate tax code.” That is ridiculous. The entire corporate income tax collected only $372 billion in 2007.

Third, Obama proposed special tax breaks for seniors, which would take 7 million more elderly completely off the tax rolls. But that would inject a very unfair element of age discrimination into the tax code. Old folks are already taking young folks to the cleaners in terms of federal fiscal policy. Obama would make the injustice worse, yet he had the chutzpah to claim in his tax speech: “It’s time to stand up to the special interest carve outs.”

Fourth, Obama proposed a new payroll tax credit, but the tax code already has a huge program designed to offset the payroll tax—the Earned Income Tax Credit. Adding a new low-income tax “cut” on top would result in millions of people who already don’t pay any income tax getting an added $500 check from the government. That’s not tax policy, that’s simply looting from the people who do pay the federal tax bill.

I’m amazed Obama found two former Treasury officials who signed on to his plan because this isn’t tax policy in the sense of following any rational economic principles. It’s just crass political pandering using the tax code to bait votes.