Archives: 10/2009

The Czar Will Rule

President Obama’s real czar, “pay czar” Ken Feinberg, who has real power, brushes aside such claims even as he prepares to issue his Gosplan-style edicts on future and even past pay agreements:

The Obama administration’s pay czar says negotiations over executive compensation with the seven companies that received the biggest federal bailouts have been “a consensual process’’ - not a matter of forcing decisions on them.

“I’m hoping I won’t be required to simply make a determination over company objections,’’ veteran Washington attorney Kenneth Feinberg told the Chicago Bar Association in a speech.

But note: he’s “hoping” he won’t have to impose his own view. He’s hoping the companies will accede to his power without complaining. But the fact remains, he doesn’t have to get their consent. He “has sole discretion to set compensation for the top 25 employees of each of those companies,” and his decisions “won’t be subject to appeal.” Or, as Feinberg himself puts it,

The statute provides these guideposts, but the statute ultimately says I have discretion to decide what it is that these people should make and that my determination will be final. The officials can’t run to the Secretary of Treasury. The officials can’t run to the court house or a local court. My decision is final on those individuals.

That’s power. So where is Doonesbury? We need him to update his classic 1970s “energy czar” strips.

Doonesbury

Cato Launches New Web Site Exposing Wasteful Government Spending

Did you know that the average American family spends $1,000 each year on the U.S. Department of Agriculture, whether or not it consumes that agency’s services?  Or that the federal government annually spends $1,500 per household on net interest costs alone?

In an ongoing effort to shed light on runaway government spending and expose wasteful government programs, Cato launched a new Web site today that examines the federal budget department-by-department to see which agencies can be reformed or terminated. DownsizingGovernment.org describes which programs are wasteful, damaging and obsolete in an era of trillion-dollar deficits.

The research exposes that many public outlays—though vigorously defended by the politicians who created them and the constituencies they purport to help—are remarkably ineffective at achieving their core aims.

Here are just a few examples:

Appearing on CNBC Monday, DownsizingGovernment.com editor Chris Edwards explained more about the site:

Plus, keep track of where your tax dollars are going by following DownsizingGovernment.com on Twitter (@DownsizeTheFeds) and Facebook.

NYT Columnist, Meet NYT Reporter

In the New York Times this weekend, columnist Thomas Friedman wrote, “[W]e may be tired of this ‘war on terrorism,’ but the bad guys are not. They are getting even more ‘creative.’”

On September 26th, the New York Times reported in a story by Scott Shane:

Many students of terrorism believe that in important ways, Al Qaeda and its ideology of global jihad are in a pronounced decline — with its central leadership thrown off balance as operatives are increasingly picked off by missiles and manhunts and, more important, with its tactics discredited in public opinion across the Muslim world.

Who’s right? Should we be more concerned or less?

Well, the statements are not inconsistent. But unlike the analysts cited in the news story, columnist Friedman uses loaded terms and broad generalizations like “war on terror”, “bad guys”, and “creative” to misconstrue the nature of the terrorist threat.

Friedman says “war” a dizzying seventeen times in his short column, misdescribing the many different efforts that go into suppressing terrorism, dissuading terrorist recruits, and capturing or killing terrorists.

He lumps all terrorists together as “bad guys” despite expert counsel against assuming they have similar aims and motives, or that they collaborate.

And “creative”?—well, putting a bomb in your keister is creative, but it is not an effective way to harm anyone other than yourself.

But don’t jump to the wrong conclusion. The point is not to dismiss terrorism as a threat. It’s to know that terrorists are fallible, al Qaeda is on the wane, and law enforcement is on the case. In terrorism, we are not confronted by anything close to an existential threat.

Friedman’s column is a reach, and it does a distinctly bad job of working with any of these subtleties. (The only reason I feel compelled to call them “subtleties,” I suppose, is because they seem to remain beyond the grasp of an otherwise intelligent and thoughtful New York Times columnist.)

Revenge of the Laffer Curve, Part II

An earlier post revealed that higher tax rates in Maryland were backfiring, leading to less revenue from upper-income taxpayers. It seems New York politicians are running into a similar problem. According to an AP report, the state’s 100 richest taxpayers have paid $1 billion less than expected following a big tax hike. The story notes that several rich people have left the state, and all three examples are about people who have redomiciled in Florida, which has no state income tax. For more background information on why higher taxes on the rich do not necessarily raise revenue, see this three-part Laffer Curve video series (here, here, and here):

Early data from New York show the higher tax rates for the wealthy have yielded lower-than-expected state wealth.

…[New York Governor David] Paterson said last week that revenues from the income tax increases and other taxes enacted in April are running about 20 percent less than anticipated.

…So far this year, half of about $1 billion in expected revenue from New York’s 100 richest taxpayers is missing.

…State officials say they don’t know how much of the missing revenue is because any wealthy New Yorkers simply left. But at least two high-profile defectors have sounded off on the tax changes: Buffalo Sabres owner Tom Golisano, the billionaire who ran for governor three times and who was paying $13,000 a day in New York income taxes, and radio talk-show host Rush Limbaugh.

…Donald Trump told Fox News earlier this year that several of his millionaire friends were talking about leaving the state over the latest taxes.

Carper: We Trust Our Staff So You Can Trust Us

A deep fissure between federal lawmaking practices and the Internet-fueled expectations of the people is just starting to open.

Here’s a fascinating interview with Senator Tom Carper (D-DE), in which he justifies not reading the legislation that he votes on.

He’s right that the bills Congress passes are almost incomprehensible, but he draws the wrong conclusion from it. It’s not OK to pass bills that you can’t read and literally don’t understand.

Congress and the bureaucracy will come to learn a lesson that other parts of our society have learned: The Internet changes things.

Because it is now possible to see legislation before Congress passes it, Americans now expect to see legislation before it passes. And they will come to expect that their representative understand it—in detail.

A machine has grown up in Washington over the past two hundred years where representatives rely on colleagues who rely on staff to write bills. This has not produced a desirable body of federal law, and it is not a process that the public will accept for much longer.

A New Court Term: Big Cases, Questions About the New Justice

Today is the first Monday in October, and so is First Monday, the traditional start of the Supreme Court term.  The Court already heard one argument – in the Citizens United campaign finance case – but it had been carried over from last year, so it doesn’t really count.

In any event, continuing its trend from last term, the Court has further front-loaded its caseload – with nearly 60 arguments on its docket already.  Fortunately, unlike last year, we’ll see many blockbuster cases, including:

  • the application of the Second Amendment to state gun regulations;
  • First Amendment challenges to national park monuments and a statute criminalizing the depiction of animal cruelty;
  • an Eighth Amendment challenge to life sentences for juveniles; a potential revisiting of Miranda rights;
  • federalism concerns over legislation regarding the civil commitment of “sexually dangerous” persons;
  • a separation-of-powers dispute concerning the agency enforcing Sarbanes-Oxley;
  • judicial takings of beachfront property; and
  • notably in these times of increasing government control over the economy, the “reasonableness” of mutual fund managers’ compensation.

Cato has filed amicus briefs in many of these cases, so I will be paying extra-close attention.

Perhaps more importantly, we also have a new justice – and, as Justice White often said, a new justice makes a new Court.  While Sonia Sotomayor’s confirmation was never in any serious doubt, she faced strong criticism on issues ranging from property rights and the use of foreign law in constitutional interpretation to the Ricci firefighters case and the “wise Latina” speeches that led people to question her commitment to judicial objectivity.  Only time will tell what kind of justice Sotomayor will be now that she is unfettered from higher court precedent – and the first term is not necessarily indicative.

Key questions for the new Court’s dynamics are whether Sotomayor will challenge Justice Scalia intellectually and whether she will antagonize Justice Kennedy and thus push him to the right.  We’ve already seen her make waves at the Citizens United reargument – questioning the scope of corporations’ constitutional rights – so it could be that she will decline to follow Justice Alito’s example and jump right into the Court’s rhetorical battles.

In short, it’s the first day of school and I’m excited.