Archives: 05/2009

Bank ‘Stress Tests’ Need Transparency

As the bank stress tests are released, it is vital that the public receive specific and detailed information on each financial institution.  The Administration’s and the Federal Reserve’s continued policy of attempting to disguise the differing health of each bank has been a failure.  What is best for the taxpayer and the investing public is sufficient information to separate the good banks from the bad.

For those institutions which lack sufficient capital to remain solvent, they should seek private capital or else be closed and resolved.  Too many taxpayer dollars have already been wasted keeping alive failed institutions.  The Administration’s policy of keeping failed institutions on taxpayer-financed life-support only serves to retard the market’s ability to move assets away from those who do not, or cannot, make productive use of them toward those who can.  It is time to remember that the unparalleled wealth-creating engine of the market depends as much on allowing failure as it does in encouraging success.

Banks passing the stress tests should be allowed and encouraged to re-pay their TARP funds as soon as possible, and with no additional strings attached.  More importantly, the Administration should use any returned TARP funds to pay-down the increasing government debt, rather than be diverted to bailing-out other failed companies.

Torture? No.

Charles Krauthammer’s recent column tells us that the wisdom of torture is undeniable. According to Krauthammer, there are two situations where torture is justified: the ticking time bomb scenario and when we capture high-ranking terrorists and conclude that giving them the third degree may save lives. Furthermore, it would be “imprudent” for anyone who would not use torture to be named the commander of Central Command (CENTCOM), the military organization in charge of American forces in the Middle East.

The generals who have been in charge of CENTCOM and other national security officials disagree.

Here is a video of General Petraeus, current commander of Central Command, saying that American forces cannot resort to torturing prisoners:

The open letter Petraeus mentions in the video is available here. He admonishes our troops to treat prisoners humanely. “Adherence to our values distinguishes us from our enemies.”

Former CENTCOM commanders Anthony Zinni and Joseph Hoar don’t endorse torture either, evidenced by their open letter (along with dozens of other former general officers) to Congress asking that the CIA abide by the Army interrogation manual.

Hoar and former Commandant of the Marine Corps Charles Krulak wrote separately to denounce torture:

As has happened with every other nation that has tried to engage in a little bit of torture – only for the toughest cases, only when nothing else works – the abuse spread like wildfire, and every captured prisoner became the key to defusing a potential ticking time bomb.

So, once we sign off on the ticking time bomb scenario, the rationalization spreads to whenever we think it may save lives.  Sound familiar?

These former commanders are not alone.  Colonel Morris Davis, former chief prosecutor at Guantanamo Bay, also had some words on the subject. “We can never retake the moral high ground when we claim the right to do unto others that which we would vehemently condemn if done to us.”

Malcolm Nance, former head of the Navy’s Survival, Evasion, Resistance, and Escape course (where sailors are trained in resisting interrogation techniques, including waterboarding), seems to know a thing or two about the topic. “I have personally led, witnessed and supervised waterboarding of hundreds of people.” He roundly denounces the use of waterboarding as wrong, ineffective, and counterproductive.  Just for the record, water actually enters the lungs of a waterboarding victim.  This is not simulated drowning, but controlled drowning. Read the whole thing.

Krauthammer’s column gives the impression that all national security experts support making torture our national policy. Wrong.

Free Speech v. The Federal Election Commission

The so-called Citizens United case offers the Supreme Court a chance to severely curtail the free speech abuses of the Federal Election Commission. John Samples, Director of the Cato Institute’s Center for Representative Government, Institute for Justice Senior Attorney Steve Simpson and George Mason University law professor Allison Hayward weigh in. You can subscribe to Cato’s YouTube videos here and our Weekly Video podcast here.

Jim DeMint’s Freedom Tent

Sen. Jim DeMint (R-SC) has been a leader in the fight for fiscal responsibility in Congress. He’s even led on issues that many elected officials have shied away from, such as Social Security reform and free trade. Recently he said that he would support Pat Toomey over Arlen Specter in a Republican primary, which may have prompted Specter’s party switch. DeMint was widely quoted as saying, “I would rather have 30 Republicans in the Senate who really believe in principles of limited government, free markets, free people, than to have 60 that don’t have a set of beliefs.”

It may have been feedback from that comment that caused DeMint to write an op-ed in the Wall Street Journal on his vision of a “Big Tent” Republican party. He makes some excellent points:

But big tents need strong poles, and the strongest pole of our party – the organizing principle and the crucial alternative to the Democrats – must be freedom. The federal government is too big, takes too much of our money, and makes too many of our decisions….

We can argue about how to rein in the federal Leviathan; but we should agree that centralized government infringes on individual liberty and that problems are best solved by the people or the government closest to them.

Moderate and liberal Republicans who think a South Carolina conservative like me has too much influence are right! I don’t want to make decisions for them. That’s why I’m working to reduce Washington’s grip on our lives and devolve power to the states, communities and individuals, so that Northeastern Republicans, Western Republicans, Southern Republicans, and Midwestern Republicans can define their own brands of Republicanism. It’s the Democrats who want to impose a rigid, uniform agenda on all Americans. Freedom Republicanism is about choice – in education, health care, energy and more. It’s OK if those choices look different in South Carolina, Maine and California.

That’s a good federalist, or libertarian, or traditional American conservative vision. But is it really Jim DeMint’s vision?

DeMint says “that centralized government infringes on individual liberty and that problems are best solved by the people or the government closest to them.” And he says it’s OK if “choices look different in South Carolina, Maine and California.” But marriage is traditionally a matter for the states to decide. Some states allow first cousins to marry, others don’t.  Some states recognized interracial marriage in the early 20th century, others didn’t. And in every case the federal government accepted each state’s rules; if you had a marriage license from one of the states, the federal government considered you married. But Senator DeMint has twice voted for a constitutional amendment to overrule the states’ power to grant marriage licenses to same-sex couples. In his op-ed, he writes, “Republicans can welcome a vigorous debate about legalized abortion or same-sex marriage; but we should be able to agree that social policies should be set through a democratic process, not by unelected judges.” That’s a reasonable argument, but the amendment that DeMint voted for would overturn state legislative decisions as well as judicial decisions.

Does Jim DeMint believe that “it’s OK if choices [about marriage] look different in South Carolina, Maine, [Vermont, New Hampshire], and California”? If so, he should renounce his support for the anti-federalist federal marriage amendment. If not, then it seems that he opposes the Democrats’ attempts to “impose a rigid, uniform agenda on all Americans …  in education, health care, energy and more,” but he has no problem with Republicans imposing their own “rigid, uniform agenda on all Americans” from South Carolina to Vermont.

It might be noted that Senator DeMint also supported the federal attempt to overturn Florida court decisions regarding Terri Schiavo, but we can hope all Republicans have learned their lesson on that bit of mass hysteria.

New at Cato Unbound: Ten Years of Code

Code and Other Laws of Cyberspace, Lawrence Lessig’s seminal work on Internet law, turns ten this year. To mark the occasion, Cato Unbound has invited a distinguished panel of Internet law experts to discuss the book’s enduring significance: What did it get right? What did it get wrong? And where do we go from here?

Joining us will be Adam Thierer, Jonathan Zittrain, and Lawrence Lessig himself. The lead essay, up this morning, is by Declan McCullagh. Readers of Code will recall that McCullagh was called out by name in the book’s final chapter, and his “do-nothing” cyberlibertarian views were criticized at length. Ten years later, is it time to reconsider? Join us and find out.

Obama Taking on ‘Tax Havens’

Jeff Zeleny at the New York Times Caucus Blog reports, “President Obama will present a set of proposals on Monday aimed at changing international tax policy, calling for the elimination of benefits for companies and wealthy individuals that harbor their cash in offshore accounts.”

Cato scholars have long made arguments in defense of tax havens. In The Wall Street Journal, Senior Fellow Richard Rahn outlined the policy the federal government should be taking instead:

The correct policy for the United States to follow is to reduce its corporate tax rate to make it internationally competitive, and to move toward a tax system that does not punish savings and productive investment so severely. We know from the experiences of many countries that reducing tax rates and simplifying the tax code improve both tax compliance and economic growth. Tax protectionism should be rejected because it is at least as destructive to economic growth and job creation as are tariffs on goods and services.

Cato scholar Daniel J. Mitchell narrated a three part video series on the subject, presenting the economic and moral cases for tax havens, and a final video that punctured myths associated with the practice.  

Mitchell spoke on Capitol Hill last month about the role of tax havens and in Foreign Policy magazine, Mitchell explained why tax havens are a blessing.