Archives: 12/2009

Iran Tottering Towards the Brink?

More demonstrations and more deaths in Tehran over the weekend.  It’s a nasty situation and we should offer hopes and prayers for those fighting for a free Iran.

Rouzbeh and Trita Parsi, with the European Institute for Security Studies and National Iranian American Council, respectively, speculate on how close Iran might be to the brink:

With the government growing increasingly desperate—and violent—the new clashes on the streets in Iran may very well prove to be the breaking point of the regime. If so, it shows that the Iranian theocracy ultimately fell on its own sword. It didn’t come to an end due to the efforts of exiled opposition groups or the regime change schemes of Washington’s neo-conservatives. Rather, the Iranian people are the main characters in this drama, using the very same symbols that brought the Islamic Republic into being to close this chapter in a century-old struggle for democracy.

Revolutions are never easy to forecast and the forces of repression in Iran retain many tools.  But let us hope that the Iranian people are able to free themselves, and to do so without the brutality and violence reflected in so many other revolutions.

Will Generation T Reject the T Party?

A reporter for the Canadian Financial Post posits:

We’re largely familiar with Generation X and Generation Y. But perhaps it is time to brace for the emergence of another generation in the United States– Generation T, where T stands for tax. This group can be described as young Americans, maybe aged 16 to 30, stuck with forking over higher taxes to pay off the debt legislators built up in the years leading up to the great recession and then allowed to swell substantially in a bid to save the economy from disaster. The American members of Generation T are likely to be hit with taxes their parents were lucky enough to avoid. Among the types they will get quite acquainted with is the VAT, or value-added tax.

Whether young people become the Tax Generation is largely up to them. They voted last time in overwhelming numbers for the T party, the Democrats. They have the electoral strength to send a message in coming election cycles that they don’t want to become tax slaves, bailing out their elders for their profligate ways.

Young people need to figure out that the big government policies of both parties in recent years are particularly disastrous for them. Big governments kill job opportunities, kill new industries, kill innovation, kill dynamism, and kill growth. The young need to stand up and defend themselves against the fiscal insanity in Washington, else they will  be crushed by a tidal wave of taxes never seen by any generation in American history.

The Real Healthcare “Chart of the Day”

Andrew Sullivan posted the following chart, which he found in National Geographic, and he noted, with considerable justification, that this was evidence of an insane and inefficient health care system in America.

Sullivan Healthcare

The chart shows that America spends a lot more than other nations without a concomitant increase in life expectancy. Let’s set aside whether the right side of the chart is a bit misleading because American life-expectancy numbers are influenced by things that have nothing to do with the quality of the health care system, such as highway fatalities, homicides, and obesity, and focus on Andrew’s claim that Obama’s proposal will make things better because of its “cost-control measures.” Since the Administration’s own experts have predicted that Obama’s proposal will increase total health care spending, one can only wonder what he’s talking about. Does he actually think a new government entitlement program will lead to lower costs, when all the evidence suggests otherwise?

If he really wanted a chart that captures what’s wrong with America’s health care system, he should have gone to the Centers for Medicare and Medicaid Services’ national health expenditures data website and downloaded the figures showing how rampant third-party payment has resulted in consumers directly paying for less than 12 percent of health care costs. And when people are purchasing something with (what is perceived to be) other people’s money, it’s understandable that they don’t pay much attention to cost. My homemade chart does not compared to the one produced by National Geographic, but it does identify the real problem. Sadly, Obama’s plan (like Bush’s Medicare expansion, and everything else politicians have done for the past 50 years) will exacerbate the third-party payment problem and lead to even higher costs and more inefficiency.

200912_blog_mitchell42

Market Liberalism at the Washington Post

Three years ago a Washington Post editorial conceded: “Sometimes libertarians deserve to win an argument.”

“Gee, thanks,” I wrote at the time. ”I’m glad libertarian arguments against over-regulation made sense to the editorial writer in this case. But I’m disappointed in the suggestion that this is a rare occasion.” After all, libertarians and Post editorial writers no doubt agree on a lot of basic principles – private property, markets, the rule of law, limited constitutional government, religious toleration, equality under the law, a society based on merit and contract not status, free speech, free trade, individual rights, peace – though of course we disagree a lot over just how closely public policy should adhere to such principles.

And indeed, the three editorials in Sunday’s Post demonstrate some of the market-liberal values that libertarians and Post editorial writers share. A strikingly good lead editorial, “Redefining human rights,” raps Secretary of State Hillary Clinton for saying that the Obama administration would “see human rights in a broad context,” in which “oppression of want – want of food, want of health, want of education, and want of equality in law and in fact” – would be addressed alongside the oppression of tyranny and torture. “That is why,” Ms. Clinton said, “the cornerstones of our 21st-century human rights agenda” would be “supporting democracy” and “fostering development.” The Post sternly warns:

This is indeed an important change in U.S. human rights policy – but the idea behind it is pure 20th century. Ms. Clinton’s lumping of economic and social “rights” with political and personal freedom was a standard doctrine of the Soviet Bloc, which used to argue at every East-West conference that human rights in Czechoslovakia were superior to those in the United States, because one provided government health care that the other lacked. In fact, as U.S. diplomats used to tirelessly respond, rights of liberty – for free expression and religion, for example – are unique in that they are both natural and universal; they will exist so long as governments do not suppress them. Health care, shelter and education are desirable social services, but they depend on resources that governments may or may not possess. These are fundamentally different goods, and one cannot substitute for another.

Precisely (though we probably disagree about whether it is desirable for such services to be provided by government)! A second editorial deplores flaws in the criminal justice system that continue to send innocent people to jail, including two men who were released this month after spending more than 25 years in prison. It’s a topic that Cato media fellow Radley Balko has been covering regularly. And finally, an editorial on the Federal Trade Commission’s antitrust case against chipmaker Intel. The Post is by no means as critical of antitrust law as libertarians often are, but it does warn that “the agency’s actions are aggressive and potentially worrisome.” And it concludes, more cautiously than I would, but still by noting that consumers have been prospering during this alleged anti-consumer behavior:

The chip market is highly concentrated, and Intel has long been the dominant force. Yet year after year, consumers have benefited from more powerful and cheaper computers. The FTC is right to keep a close eye on the industry and on Intel, in particular, but it must use its power wisely and with restraint. 

As David Kirby and I wrote in “The Libertarian Vote,” the United States is “a country fundamentally shaped by libertarian values and attitudes.” Despite all the assaults on liberty of the past decade, that’s a point that politicians and pundits should keep in mind. And editorials like these remind us that the ideas of individual rights, the rule of law, and competitive markets are still widely held.

An “Attempted Act of Terrorism”

Along with learning the factual details, it remains to be seen whether the effort by a Nigerian traveler to ignite some type of explosive on a U.S.-bound flight was an “attempted act of terrorism”—as it has been characterized by the White House—or a successful act of terrorism. 

Though it certainly helps, terrorism doesn’t require explosions and fatalities to work its will. If public fear produced by this incident drives the U.S. toward self-injurious overreactions—abandonment of plane travel, overwrought and poorly directed security measures, and so on—then it will be a successful act of terrorism.

The behavior of the Obama administration, political leaders in Congress, and the media will determine whether this is a successful act of terrorism. One early commentator has framed this event as a “desperate bid for relevance” on the part of al Qaeda, chastising the “permanently hysterical” Rep. Peter King (R-NY) for promoting overreaction.

We will be reviewing the first year of the Obama administration’s counterterrorism policies at a Cato Institute policy forum on Wednesday, January 13, 2010—a follow-on to our hugely successful counterterrorism conference in January 2009, the week before President Obama’s inauguration. Along with an impressive line-up of commentators, the event will feature a keynote address by Daniel Benjamin, Coordinator for Counterterrorism at the State Department.

This most recent event will surely be a focus as we review the Obama administration’s first year in counterterrorism. Register here.

Blank-Check Bailout for Fannie and Freddie Means Taxpayers Get a Lump of Coal from Obama

Even though politicians already have flushed $400 billion down the rathole, the Obama Administration has announced that it will now give unlimited amounts of our money to prop up Fannie Mae and Freddie Mac, the two government-created mortgage companies. While President Obama should be castigated for this decision, let’s not forget that this latest boondoggle is only possible because President Bush did not do the right thing and liquidate Fannie and Freddie when they collapsed last year. And, to add insult to injury, Obama’s pay czar played Santa Claus and announced that that a dozen top “executives” could divvy up $42 million of bonuses financed by you and me. Not a bad deal for a group of people that more properly should be classified as government bureaucrats. Here’s an excerpt from the Washington Post about the Administration’s latest punch in the gut for taxpayers:

The Obama administration pledged Thursday to provide unlimited financial assistance to mortgage giants Fannie Mae and Freddie Mac, an eleventh-hour move that allows the government to exceed the current $400 billion cap on emergency aid without seeking permission from a bailout-weary Congress. The Christmas Eve announcement by the Treasury Department means that it can continue to run the companies, which were seized last year, as arms of the government for the rest of President Obama’s current term. But even as the administration was making this open-ended financial commitment, Fannie Mae and Freddie Mac disclosed that they had received approval from their federal regulator to pay $42 million in Wall Street-style compensation packages to 12 top executives for 2009. The compensation packages, including up to $6 million each to Fannie Mae and Freddie Mac’s chief executives, come amid an ongoing public debate about lavish payments to executives at banks and other financial firms that have received taxpayer aid. But while many firms on Wall Street have repaid the assistance, there is no prospect that Fannie Mae and Freddie Mac will do so.

Merry Christmas from the IRS

Here are a few stories to bring holiday cheer for taxpayers. First, we have an Associated Press report that several hundred thousand federal bureaucrats have serious tax delinquencies. The Department of Housing and Urban Development always ranks high on the list of government entities that should be abolished, so it’s interesting to see that HUD bureaucrats are most likely to be dodging their taxes:

More than 276,000 federal employees and retirees owed back income taxes as of Sept. 30, 2008, according to data from the Internal Revenue Service. The $3.04 billion owed was up from $2.7 billion owed by federal employees and retirees in 2007. Among cabinet agencies, the Department of Housing and Urban Development had the highest delinquency rate, at just over 4 percent.

This rampant nonpayment is especially outrageous since federal bureaucrats “earn” twice as much compensation, on average, as those of us laboring in the productive sector of the economy. One might think they would go out of their way to comply since their bloated salaries come from tax collections. Speaking of outrage, the internal watchdogs at the Treasury have just published a report showing that it is almost impossible to verify eligibility for the special interest tax breaks in the so-called stimulus. As Investor’s Business Daily opines, this is an invitation to fraud:

A new report from the Treasury Department’s Inspector General for Tax Administration counts 56 tax provisions in the bill having a potential cost of $325 billion. Of those, 20 are tax breaks for individuals and 36 are for businesses. The problem, the Inspector General says, is the IRS can’t verify taxpayer eligibility “for the majority of Recovery Act tax benefits and credits.” For individual taxpayers, 13 of the 20 benefits and credits can’t be verified; for businesses, it’s 26 of 36. …To suggest, as Treasury does, that the biggest chunk of the $325 billion in stimulus package tax breaks can’t be adequately followed violates the pledges of openness and fairness made when the stimulus was passed last February. As the government-stimulus-oversight Web site, recovery.gov, notes, last year’s package “requires that taxpayer dollars spent under the Act be subject to unprecedented accountability.” We wouldn’t call being unable to verify upwards of two-thirds of the $325 billion handed out as “unprecedented accountability.” Sounds more like an invitation to fraud, all at the expense of the taxpayers.

To be fair, even a competent government agency might have trouble making a bad law work, and the $787 boondoggle was rushed through the legislative process with very little – if any – attention paid to anything other than funneling other people’s money to special interest groups. That being said, the IRS has trouble even with routine tasks. According to another IG report, the agency has a staggering 70 percent error rate in its processing of taxpayer identification numbers for individual taxpayers:

The Treasury Inspector General for Tax Administration (TIGTA) today publicly released its review of the IRS’s processing of applications for Individual Taxpayer Identification Numbers (ITINs). TIGTA reviewed a sample of ITIN applications and found that almost 70% contained significant errors and/or raised concerns that should have prevented the issuance of an ITIN. The IRS estimates that it has issued more than 14 million ITINs as of December 2008. ITINs are intended to provide tax identification numbers to resident and nonresident alien individuals who may have U.S. tax reporting or filing obligations but do not qualify for Social Security Numbers, which generally are only issued to U.S. citizens and individuals legally admitted to the U.S. …”The number of individual income tax returns filed using ITINs and reporting wage income has increased by 247 percent from 2001 to 2008,” commented J. Russell George, the Treasury Inspector General for Tax Administration. “If the IRS continues to issue ITINs without proper verification, the risk of fraudulently filed returns – along with fraudulently claimed refunds – will continue to rise,” added Inspector General George.

Just think how much fun it will be when the IRS is in charge of determining those of us who should get fined or jailed for noncompliance with government-run healthcare! No wonder so many taxpayers put a flat tax or national sales tax on their Christmas lists.