Archives: 12/2008

Obama’s Not-So-Centrist Cabinet

Journalists continue to insist that President-elect Obama has named a largely centrist Cabinet. But they’re clinging to a storyline that might have been true two weeks ago but no longer is. Obama’s national security team — Hillary Clinton, Robert Gates, and James L. Jones — and his economic team — Lawrence Summers, Tim Geithner, Christina Romer, and Bill Richardson — could be regarded as centrists, or at least as centrist Democrats.

But as the Cabinet selection process went on, Obama increasingly named left-wing activists to jobs in which they could carry out his ambitious plans to “transform our economy” and be the 21st-century Franklin Roosevelt. Tom Daschle at HHS wrote a book on how we need a Federal Health Board to manage and regulate every aspect of our health care. Hilda Solis at Labor is a sponsor of the bill to eliminate secret ballots in union authorization elections and of heavy regulatory burdens on business. She opposed the Central America Free Trade Agreement and generally opposes free trade. Shaun Donovan worked on affordable housing issues in the Department of Housing and Urban Development during the Clinton administration — just the policies that led to the mortgage crisis and then the general financial crisis. His reward for a job well done? He’s coming back as secretary of HUD.

White House science adviser John Holdren is an old-time “running-out-of-resources” Paul Ehrlich cohort who disdains economics and famously lost a bet with Julian Simon on whether the prices of natural resources would rise, reflecting growing scarcity. He and Steven Chu as Secretary of Energy; former New Jersey Department of Environmental Protection chief Lisa Jackson as the head of the Environmental Protection Agency; and Carol Browner, former administrator of the Environmental Protection Agency under President Bill Clinton, as the White House’s “energy/climate czar,” are all global-warming catastrophists who see an urgent need to impose crushing burdens on the economy in the name of influencing the climate a century from now.

The choice of Tom Vilsack to be secretary of agriculture is said by the Washington Post to be an example of Obama’s moderation and intention to balance competing interests. You see, he’s popular with “groups representing big agricultural interests, which praise him for his support of biotechnology and subsidies for corn-based ethanol.” But also with groups that want to shift Ag dollars to smaller farms. So the question to be decided is who gets the gravy, not whether the gravy will be ladled out by Washington. There doesn’t appear to be anyone in the Obama Cabinet who will speak for the taxpayers’ interest. Or who will argue that it would best for the whole country to let the market work and not have the government pick any winners or losers.

Sometimes journalists just don’t seem to reconcile the “centrist” claim with their own understanding of Obama’s intentions. The Los Angeles Times, for instance, begins its article, “The Cabinet that President-elect Barack Obama completed on Friday is a largely centrist and pragmatic collection of politicians and technocrats without a pronounced ideological bent.” But two paragraphs later the authors note:

Obama wants this Cabinet to market and put in place the most dramatic policy changes in the country since Franklin D. Roosevelt’s New Deal: a mammoth program to improve roads and bridges; a healthcare system that covers more sick people at less cost; limitations on fossil fuels and greenhouse gases that contribute to global warming; big investments in energy efficiency; middle-class tax cuts along with a tax hike on wealthy Americans.

That doesn’t sound like the agenda for a pragmatic and non-ideological administration. That’s what you would expect from a bunch of statist ideologues who have been waiting years or decades for an election and a crisis that would allow them to fasten on American society their own plan for how energy, transportation, health care, education, and the economy should work. That’s not centrist, it’s a collectivist vision hammered out by Ivy Leaguers and activists over the past couple of decades. In its more idealistic formulation, it’s based on the premise that smart people know what the people need better than the people themselves do, and that command and control work better than markets and individual choice. In its more practical application, it’s interest-group rent-seeking dressed in the trappings of public interest.

The proof will be in the pudding, of course. It’s the policies that matter, not the people. But these are people who weren’t selected for the misty dream of listening “not to your doubts or your fears but to your greatest hopes and highest aspirations” but rather for their determination to ensure that “generations from now, we will be able to look back and tell our children that this was the moment when we began to provide care for the sick and good jobs to the jobless; this was the moment when the rise of the oceans began to slow and our planet began to heal; this was the moment … when we came together to remake this great nation.” And for their commitment to use “this painful crisis [as] an opportunity to transform our economy.”

And for the rest of us, this is a time to remember that limited constitutional government and free markets sustain life, liberty, and the pursuit of happiness better than collectivist agendas carried out by powerful states.

More Power to State

The New York Times reports on Hillary Clinton’s efforts to reassert the State Department’s power over US foreign policy. This is, in one sense, good news. A bloated budget and far flung combatant commanders have allowed the Pentagon to trample over Foggy Bottom in recent years. That is bad not because diplomats are inherently wiser than generals, but because the competition of relatively balanced bureaucratic powers is generally conducive to wise policy.

The trouble here is the idea, hinted at in the Times story, that increased State Department capacity will bring success in state-building missions. A peculiar hubris of Democratic foreign policy analysts is their confidence that they have discovered a science of nation-building by watching the Bush Administration screw up. They see errors on the road to chaos during the occupation of Iraq and assume causality.  They read a little about counter-insurgency and the Small Wars Journal blog. Avoid the errors, apply the best practices, and you are gold, they say. So: more troops, better plans, more interagency coordination, more reconstruction, and so on – and, presto, you can “fix” failed states that you occupy, like Afghanistan, or even states you don’t occupy, like Pakistan.

As I wrote here and said last week, this would-be science provides leaders with confidence they should not have to undertake dumb wars or to establish excessive goals for sensible wars. Hopefully, I will be proved wrong in Afghanistan, where we are about to test this kind of thinking.

David Spade versus the Mexican Cartels

News outlets are reporting that actor David Spade donated $100,000 to the Phoenix Police Department to purchase AR-15 rifles for patrol officers. 

If the police officers in the Southwest are outgunned, it is likely because former Mexican soldiers have been recruited by the drug cartels.  As the War on Drugs has ballooned north from Colombia to Mexico, military incursions on American soil are becoming more common, Mexican soldiers are being killed and beheaded, and police officers are being assassinated (warning: violent content). 

This is one more way that the War on Drugs is nonsensical policy.  For more on this topic, click here, here, or here.

Fallows on Security

On the Atlantic blog, James Fallows has a few thoughts about security.

In sharing them, he compliments Cato’s own “precocious” Ben Friedman, and endorses our January counterterrorism conference: “I hope that everyone who can possibly be in Washington on Jan 12-13, including [DHS Secretary-designee Janet] Napolitano, will attend this conference, at Cato, about rational and non-hysteric ways to keep America secure.”

You can learn more and register here.

No Medicaid Bailouts

Claiming hardship due to _________ (noun), state governors and legislators are demanding that Congress give them more money for their _________ (noun) programs.  Of course, the states do this every time a _____________ (frequent, predictable occurrence) happens.

This time, the states want more money for their Medicaid programs.   Again.  The states claim their Medicaid rolls are swelling due to the economic downturn.  Yet economic downturns are predictable – completely so,  even if the timing isn’t predictable.  The effect of an economic downturn on Medicaid enrollment is also predictable.  Thus, bailing out the states right now would essentially reward them for not planning for the future.

Here’s how the AP reported my take:

Medicaid insures nearly 1 in 6 …  people in the United States. The program typically covers the very poor and about half of enrollees are children. Spending came to $333 billion in the budget year ending Sept. 30, 2007. Washington picks up about 57 percent of that; the states cover the remainder.

Michael Cannon, director of health policy studies at the Cato Institute, a libertarian think tank, sympathizes with new families now relying on Medicaid. Still, he disagrees that the federal government should reward states that did not plan adequately for the bad times. Better planning would mean setting aside more money for rainy-day funds and not expanding the scope of Medicaid during the good economic times, he said.

“The states make these promises they know they can’t keep and then they run to Congress to bail them out,” Cannon said. “And Congress typically ends up bailing them out.”

Cannon said the net result is that the government gradually is becoming more responsible for paying for health insurance coverage.

As I wrote last year, the states play the same game with funding for the State Children’s Health Insurance Program:

States such as Georgia sometimes spend all of their allotted SCHIP funds before the end of the fiscal year.  The CBO estimates that 11 states will do so in 2007.  Typically, those states then petition the federal government for additional funding.  So far, Congress has twice bailed out such states, effectively rewarding states that commit to spend more federal dollars than they have been allotted.

To stop this racket, we need Medicaid/SCHIP reform.  A federal balanced budget amendment wouldn’t hurt, either.

Good Argument for Tax Havens, Part II

Hugo Chavez is one of the world’s most despicable politicians, and he recently solidified his low rating by confiscating a major mall being developed in Caracas. The rule of law has been shredded in Venezuela and the government now acts like a thief. Given these conditions, productive people have no choice but to escape – or to at least to move their money someplace where it can’t be stolen by the thugs that rule the nation. This is why tax havens are so critical, not just for economic liberty, but for personal protection from tyrants as well (for more information, see here, here, and here). The Associated Press has the sordid details about Chavez’s kleptocracy:

President Hugo Chavez ordered construction halted on a major shopping mall in Caracas on Sunday, saying the government will expropriate the unfinished building. The Venezuelan leader said it would be out of line with his government’s socialist vision to allow the new Sambil mall to take up precious urban real estate – and that unbridled consumerism isn’t his idea of progress either. … “We’re going to expropriate that and turn it into a hospital – I don’t know – a school, a university,” Chavez said to applause during his Sunday television and radio program, “Hello, President.” … The president also has urged Venezuelans to shed their materialism and their taste for designer clothes, sport utility vehicles, Scotch whisky and plastic surgery.

Good Argument for Tax Havens, Part I

When people ask why I am such a strong defender of tax havens (see here, here, and here), I explain that we need low-tax jurisdictions and financial privacy so that productive people have protection from greedy and venal governments. A good example comes from Germany, where a politician wants the government to force people to “invest” in government bonds. Fortunately, this idea does not look like it will happen today, so hopefully more Germans will have time to put their money someplace hidden from the kleptocrat political class. The Spiegel reports:

Thomas Schäfer-Gümbel, a little-known Social Democrat candidate fighting to be governor of the western German state of Hesse in an election on January 18, has come up with an unconventional idea that is attracting the – presumably desired – attention of the media. He says wealthy people with cash and real estate assets exceeding €750,000 ($1.04 million) should be forced to lend the state two percent of their assets for a period of 15 years, and at an interest rate no higher than 2.5 percent. “A compulsory state bond would be a rapidly effective instrument to mobilize additional funds to overcome the economic crisis,” Schäfer-Gümbel, 39, told Bild newspaper on Monday. “That would be very fair because only the very wealthy would be drawn on.”