Archives: 03/2009

Obama’s First Tax Hike Hits the Poor

It is curious that President Obama keeps claiming that he is not raising taxes on lower-income Americans, yet a tax hike that will impose a disproportionately large burden on the poor goes into effect Wednesday

In February, Obama signed into law a large tax hike on cigarette consumers. The federal tax on cigarette consumers is jumping from 39 cents per pack to $1.01 per pack – a huge 159 percent increase. If you smoke two packs per day, President Obama has raised your taxes by a $453 annually.

Next on the Obama low-income tax hike agenda: global warming taxes of about $80 billion per year, as revealed in the Obama budget, which equals an annual tax boost of $700 for every household in the United States.

Amusing, but Tragically Accurate, Video on Ag Subsidies from the U.K.’s Taxpayers Alliance

It is unclear whether European Union agriculture policy is more absurd or less absurd than American agriculture policy. Both systems reward special interests. Both systems distort markets. Both systems deprive people in the developing world. Both systems are bad news for taxpayers. The real issue is whether it is possible to reverse these terrible policies. Maybe a bit of satire will do the trick. Our friends at the Taxpayers Alliance in England have put together a video which uses humor to explain the absurdity of Europe’s so-called common agricultural policy.

After watching this video, I’m feeling a bit envious. My mini-documentaries on economic issues (see examples here, here, and here) have received some good feedback, but perhaps we could change more minds in America by using mockery instead of wonkery.

Events This Week

Tuesday, March 31, 2009

POLICY FORUM - Can the Market Provide Choice and Secure Health Coverage Even for High-Cost Illnesses?

12:00 PM (Luncheon to Follow)

In a study recently published by the Cato Institute, economist John Cochrane argues that the market can solve a huge piece of the health care puzzle: providing secure, life-long health insurance and a choice of health plans to even the sickest patients. The key, Cochrane explains, is to eliminate government policies that force the healthy to subsidize the sick, such as the tax preference for employer-sponsored coverage and other attempts to impose price controls on health insurance premiums.

Featuring John H. Cochrane, Myron S. Scholes Professor of Finance, University of Chicago Booth School of Business Research Associate, National Bureau of Economic Research; Bradley Herring, Assistant Professor, Johns Hopkins Bloomberg School of Public Health; moderated by Michael F. Cannon, Director of Health Policy Studies, Cato Institute.

Please register to attend this event, or watch free online.


Friday, April 3, 2009

PglennOLICY FORUM - Drug Decriminalization in Portugal

12:00 PM (Luncheon to Follow)

In 2001, Portugal began a remarkable policy experiment, decriminalizing all drugs, including cocaine and heroin.

In a new paper for the Cato Institute, attorney and author Glenn Greenwald closely examines the Portugal experiment and concludes that the doomsayers were wrong. There is now a widespread consensus in Portugal that decriminalization has been a success. The debate in Portugal has shifted rather dramatically to minor adjustments in the existing arrangement. There is no real debate about whether drugs should once again be criminalized. Join us for a discussion about Glenn Greenwald’s field research in Portugal and what lessons his findings may hold for drug policies in other countries.

Featuring Glenn Greenwald, Attorney and Best-selling Author; with comments by Peter Reuter, Department of Criminology, University of Maryland; moderated by Tim Lynch, Director, Project on Criminal Justice, Cato Institute.

Please register to attend this event, or watch free online.

Topics:

Tax Havens Have Stronger Governance Standards

Congratulations to The Economist for reporting on a new study showing that so-called tax havens actually have the strongest laws to weed out shady money. The article cites new research by an Australian political scientist, who conducted real-world tests to confirm that it is much easier to set up anonymous structures in nations such as the United States and United Kingdom than it is to set up similar structures in places such as Bermuda and Switzerland:

…with a budget of $10,000 and little more than Google (and the ads at the back of this paper), [Jason Sharman, a political scientist at Australia’s Griffith University] showed how easy it was to circumvent prohibitions on banking secrecy, forming anonymous shell companies and secret bank accounts across the world. In doing so he has uncovered an uncomfortable truth for many of the leaders of Group of 20 nations meeting on April 2nd to discuss, among other things, sanctions against offshore tax havens. The most egregious examples of banking secrecy, money laundering and tax fraud are found not in remote alpine valleys or on sunny tropical isles but in the backyards of the world’s biggest economies. …A money-laundering threat assessment in 2005 by the federal government found that corporate anonymity offered by Delaware, Nevada and Wyoming rivalled that of familiar offshore financial centres. For foreigners, America is a particularly attractive place to stash cash, because it does not tax the interest income they earn. Thus with both anonymity and no taxation, America offers them all the elements of a tax haven. …America is not the only rich nation Mr Sharman tested. He tried to open anonymous shell companies and bank accounts 45 times across the world. These were successful in 17 cases, of which 13 were in OECD countries. One example was Britain, where in 45 minutes on the internet he formed a company without providing identification, was issued with bearer shares (which have been almost universally outlawed because they confer completely anonymous ownership) as well as nominee directors and a secretary. …In contrast, when trying to open accounts in Bermuda and Switzerland, he was asked for documentation such as notarised copies of his birth certificate. “In practice OECD countries have much laxer regulation on shell corporations than classic tax havens,” Mr Sharman concludes.

Jim Webb and Criminal Justice

Senator Jim Webb (D-Va) is calling for a national commission to review the American criminal justice system from top to bottom.    Good for him.  With more than seven million people under criminal justice supervision (prison, parole, probation), a thorough review is desperately needed.  You can tell that Webb is new to the Congress because he is raising a subject that most of the long term incumbents would rather not discuss.  As Glenn Greenwald observes:

For a Senator like Webb to spend his time trumpeting the evils of excessive prison rates, racial disparities in sentencing, the unjust effects of the Drug War, and disgustingly harsh conditions inside prisons is precisely the opposite of what every single political consultant would recommend that he do.  There’s just no plausible explanation for what Webb’s actions other than the fact that he’s engaged in the noblest and rarest of conduct:  advocating a position and pursuing an outcome because he actually believes in it and believes that, with reasoned argument, he can convince his fellow citizens to see the validity of his cause.  And he is doing this despite the fact that it potentially poses substantial risks to his political self-interest and offers almost no prospect for political reward.  Webb is far from perfect – he’s cast some truly bad votes since being elected – but, in this instance, not only his conduct but also his motives are highly commendable.

Read the whole thing.

And speaking of Glenn Greenwald, he will be here at Cato this Friday to discuss his new study for Cato, Drug Decriminalization in Portugal.  Portugal is treating drug use as a health problem, not a crime problem, and it is working rather well.  When Senator Webb’s commission gets assembled, this report ought to be at the top of  its reading list.

To register for the Greenwald forum, go here.  For a discussion on mass incarceration, go here.  For more Cato work on crime and drugs, go here and here.

How Progressive Are You?

I’m two weeks late coming to this, but the “Democratic Wing of the Democratic Party” Obama Administration Farm Team Center for American Progress has developed a quiz aiming to answer the question, “How Progressive Are You?“  The quiz asks you to rank, on a 10-point scale, how much you agree with 40 different statements.  Now, I won’t quibble here with the misuse of the word “progressive” – having debased the term “liberal” (which in any other country pretty much means what Cato supports), the Left moves on to its next target – but the quiz highlights the false dichotomy between “progressive” and “conservative.” 

The fallacy of this linear political spectrum forces people to wring their hands and call themselves “socially liberal, fiscally conservative” – does anyone call themselves “fiscally liberal” even if they are? – or “moderate” (no firm views on anything, huh?) or anything else that adds no descriptive meaning to a political discussion.  Where do you put a Jim Webb?  A Reagan Democrat?  A Ross Perot voter?  A gay Republican?  A deficit hawk versus a supply-sider?  Let alone Crunchy Cons, Purple Americans, Wal-Mart Republicans, South Park Conservatives, NASCAR dads, soccer moms, and, oh yes, libertarians. 

And the statements the quiz asks you to evaluate are just weird.  I mean, yes, “Lower taxes are generally a good thing” (I paraphrase) gets you somewhere, but what does “Talking with rogue nations such as Iran or with state-sponsored terrorist groups is naive and only gives them legitimacy” get you?  Or “America has taken too large a role in solving the world’s problems and should focus more at home”?  What is the “progressive” response to these statements?  The “conservative” one?  I think I know what the Bush response and the Obama response would be to the first one, but how does either fit into any particular ideology? 

The Institute for Humane Studies at least gives you a two-dimensional quiz, so you can see how much government intervention you want in economic and social affairs (the “progressive” view presumably being lots of intervention in the economy, none on social issues).  And IHS poses classical debates in political philosophy rather than thinly veiled leading questions relating to current affairs.  

In any event, when you finish the quiz, it tells you your score and that the average score for Americans is 209.5.  How do they get this number?  A selectively biased survey of people who frequent the CAP website would surely score much higher on the progressive scale.  No, it’s based on a “National Study of Values and Beliefs.”  Well, ok, but, again, if those are the types of questions you ask people – or, even worse, the quiz designers code the survey responses – I’m not sure how much I care about the result.   (Incidentally, the survey reveals that “the potential for true progressive governance is greater than at any point in decades.”  Great, that’s either a banal formulation of the fact that Democrats have retaken the political branches or a self-serving conclusion.  Or both.)

In case anyone cares, I scored 100 out of 400, which makes me “very conservative.”  I suppose that won’t come as a surprise to my “progressive” friends, but then I’m always talking to them about how bad the bailouts/stimuli are for the economy, how we should actually follow the Constitution, etc.  All the folks who over the years have called me a libertine or hedonist, however, will not be amused to learn that I’m actually one of them…

The State of Play in the Bomb-Iran Debate

Via Philip Weiss, I see that last week Karim Sadjadpour and Martin Indyk debated Elliott “Get Down Out of Those Trees and Be Democrats” Abrams and Joshua Muravchik on the proposition: “America cannot tolerate a nuclear Iran and must go to any lengths to prevent it.”  It’s a topic that’s been of interest to me for some time now.

Indyk and Sadjadpour acquitted themselves rather well, but it made me chuckle to see Abrams and Muravchik throwing some very familiar-smelling handfuls of argument into the discussion.  I thought it might be worth passing a few of them along.

Muravchik responds to the argument that bombing would merely delay an Iranian nuclear capability by a period of years by saying that we’ll just keep bombing them, then:

muravchikif we bomb and do wholesale damage to its nuclear weapons program, then the clock starts running on the next round.

And I donʹt see any reason to assume that, technologically, Iran is going to beat us in the next round. That is, they will be trying to find new ways to fortify and hide and whathave‐you, their rebuilt nuclear weapons program, if, in fact, they do attempt to rebuild it.

And we, in turn, will move forward with developing better bunker‐busting bombs or whatever else we need, and with additional intelligence, to find out where those things are and to have the capability to hit them …

Note in that last paragraph that we’re supposed to accept, arguendo, perfect intelligence and military technology endowed with borderline-magical powers.  This is a variant of the “I don’t know, the military will have to figure that stuff out” argument.

Elliott Abrams, freshly minted as a senior fellow at the Council on Foreign Relations, argues that if Iran acquires nuclear weapons and is poised to cause trouble in the Middle East, it’s possible that the countries in that region will lay down and decline to defend themselves:

if the Arab states look at Iran growing in power and see that what the United States has done, to prevent it from going nuclear, is nothing or something that failed, itʹs not at all clear that they will then further side with the United States against Iran, they may appease Iran.

Abrams then reaches for a 2003-vintage “greet us as liberators” selection, proposing that the Iranians might thank us for bombing their country by overthrowing their government for us:

abrams-cheneywe are not talking about the Americans killing civilians, bombing cities, destroying mosques, hospitals, schools. No, no, no – weʹre talking about nuclear facilities which most Iranians know very little about, have not seen, will not see, some quite well hidden.

So they wake up in the morning and find out that the United States if attacking those facilities and, presumably with some good messaging about why weʹre doing it and why we are not against the people of Iran.

Itʹs not clear to me that the reaction letʹs go to war with the Americans, but rather, perhaps, how did we get into this mess? Why did those guys, the very unpopular ayatollahs in a country 70 percent of whose population is under the age of 30, why did those old guys get us into this mess.

When Indyk protests that this reasoning didn’t pan out terribly well for the Israelis in Gaza recently, Abrams shrugs that he’s “not persuaded” that Gazans blame Israel for the IDF killing between a thousand and two thousand Palestinians during their incursion.

Then Muravchik reaches for the trump card: “our talks with North Korea have completely failed but if we bomb Iran they may well succeed the next day.”

It goes on and on like this.  If you’re interested in these type of arguments, I’d encourage you to pick up a copy of Jack Snyder’s Myths of Empire.  These sorts of arguments are literally straight from the pages of Myths, a book where Snyder attempts to generalize the “myths” that empires endorse as they overexpand.