Archives: January, 2010

Ideological Arrogance

Today Politico Arena asks:

The road ahead for the White House? Are the Clinton and Reagan lessons useful for Obama?

My response:

Are the Clinton and Reagan lessons useful for Obama?  Sure – if he paid them any heed.  Reagan had a game plan from day one, grounded in reality, and he stuck with it even after the modest but expected electoral set-backs of 1982:  Lower taxes, less regulation, and, with those signals, the economy would correct itself, as it did.  Clinton was less focused and therefore was able eventually to shift when reality, in the form of the 1994 elections, forced itself upon him:  He finally accepted the welfare reform congressional Republicans had crafted, admitted that “the era of big government is over,” and the stability that Reagan had secured after the turbulent Carter years continued.

So far, however, there are few signs that Obama will heed such lessons.  He’s perhaps the most ideologically driven president we’ve ever had, but his ideology comes out of the left, which means that it clashes with the real world and with the larger part of the American electorate, once they’ve come to see it in practice.  In that respect, in fact, a single example sometimes captures the character of an entire administration.  Although there’s no shortage of such examples in this case, the eminent historian James Q. Wilson discusses one such in this morning’s Wall Street Journal – the administration’s decision to try confessed 9/11 mastermind Khalid Sheikh Mohammed and his four al-Qaeda cohorts in a civilian court in downtown Manhattan.

Set aside the profound legal questions that decision has raised – classified evidence, confrontation rights, finding an impartial jury, speedy-trial rights, protecting witnesses and jurors, pre-trial prejudice (Obama: “when he’s convicted and when the death penalty is applied to him”; AG Holder: “failure [to convict] is not an option”), procedural compromises needed to convict spilling over to ordinary trials, to cite just a few – Wilson asks a simple question:  Will Washington pay for the terror trials?  He starts with the nonmonetary costs, zeroing in on the actual real estate at play in the “inner perimeter” – the government buildings, churches, apartment buildings, public garages:  Everyone who wants to get to one of those, he notes, ”will face road blocks, car searches, radiation monitors and pedestrian checks,” for the year the trial is expected to last.  And the monetary costs, excluding those of the federal government, are estimated to be $216 million, for a city that has lost over 6,000 officers in recent years due to budget cutbacks.  And here’s the kicker:  The decision to hold this trial not before a military commission on a secure army base but in crowded downtown Manhattan was made with no consultation with city officials.

The indifference to the practical, to say nothing of the legal and political, problems surrounding this decision bespeaks an arrogance so surpassing that it can be explained only by an ideologically driven vision of the world – an arrogance that in other hands and other centuries has led to human tragedies of incalculable proportions.  We’re fortunate in America that we have constitutional checks on such power, as we saw yesterday, when the Court put a halt to congressional incumbents’ efforts to hobble challengers, and on Tuesday, when the people themselves put a halt to machine politics as usual.  So will Obama learn?  Not likely, but if he doesn’t, we are not without recourse.

EDA’s Delusions of Grandeur

The U.S. Department of Commerce’s $400 million Economic Development Administration provides grants and loans to state and local governments, nonprofit groups, and businesses in regions that are supposed to be economically distressed. The EDA is a relic of the 1960s belief that the federal government can solve the problems of distressed urban centers. Its legacy is one of wasteful and politicized spending. Former EDA director Orson Swindle called it a “congressional cookie jar,” and the legendary anti-pork Democrat Senator William Proxmire argued that it “deserves to die.”

But the EDA did not die and its spending is as wasteful as ever. The EDA’s current administrator, John Fernandez, recently gave a speech on economic development under the Obama administration:

Over the past decade, we let our infrastructure crumble … our schools languish … our small businesses fend for themselves. Instead of building foundations, we chased bubbles.

Obama administration officials frequently blame current problems on the previous administration, and to some degree they are right. But it’s fallacious to imply that the Bush administration financially short-changed state and local infrastructure, schools, and small businesses — all of which are activities the federal government shouldn’t be funding to begin with. As Chris Edwards demonstrates, George W. Bush was the biggest spender since LBJ.

Fernandez continues:

By acting decisively, President Obama and his team pulled us back from the brink. Independent economists have just confirmed that the Recovery Act has saved or created more than 1.5 million jobs. The jobs picture is still sobering, but the unemployment trend is nowhere near as bad as it was when President Obama took office. One year ago, our economy was shrinking at rate of 6 percent. Today, it’s growing at a rate of 3 percent.

Regarding these claims, this graph says it all:

Here’s more lofty rhetoric from Fernandez:

As the president points out, we need to do more than get America back on its feet… We need to take big steps: we need to modernize our education system, revitalize our infrastructure, invest in industries of the future, and create a new entrepreneurial culture in which innovation can flourish… For centuries, we’ve attracted, developed, and nurtured the world’s best talent, and given our citizens a chance to build a better life for themselves and their families.

By “we need” Fernandez means the federal government, not the private sector. Yet this country didn’t become an economic powerhouse because of the Department of Commerce or any other federal bureaucracy. America’s rise to prosperity was fueled by entrepreneurship and the vast investment of private capital initially unhindered by a small and distant federal government. The “big steps” Fernandez wants to take would mean more taxes and debt, which would kill the entrepreneurship and innovation that he lauds.

Fernandez discusses the idea that state and local governments should think of economic development from a regional perspective. Competition for industry and jobs between neighboring jurisdictions should be subordinated to regional economies “planned” by government officials in conjunction with business and civic leaders. He makes a curious statement in this regard:

Our political system rewards mayors, members of Congress, and governors for how much good they did for their constituents in the short term — you don’t get credit for fostering long-term growth. And in recent years, a virtual cottage industry has developed in ranking states on how attractive they are as places to do business: who’s got the lowest labor costs, who’s got the lightest tax load or regulatory burden, and so on.

He would have a point if he were talking about narrow tax loopholes and government subsidies for companies to locate to a particular state or city. But broad-based reductions in tax and regulatory burdens most certainly foster long-term growth. And inter-jurisdictional competition over tax and regulatory burdens is an important factor promoting government restraint.

Unfortunately, the growing centralization of power at the state level at the expense of local autonomy, and similar unhealthy relationship between the federal government and the states, inhibits this healthy competition.

Although he denies it, it’s planning and centralization that Fernandez seems to view as the ideal. State and local officials should be “collaborating” on regional economic development because the real competition is foreigners. And who better to deal with foreigners than Uncle Sam?

[F]or the past decade, federal support for these regional efforts has been too limited. Too fragmented. Too inconsistent. The federal government has not been a reliable partner… What Washington can do — and under President Obama, what Washington has begun to do — is to facilitate collaboration. To provide a framework for that discussion among all the stakeholders. To help regions assess their competitive strengths. To help them design a strategy to bring together the technology, the human capital, and the financial capital it will take to compete. And to provide seed money for turning a region’s unique strategy into reality.

According to Fernandez, this is “where the Economic Development Administration comes in.” On cue, he proceeds to provide a litany of all the wonderful things his agency is doing. None of it is worth quoting, as it’s the same warmed-over subsidy ideas we’ve been hearing from federal officials for decades. The fact is the EDA is a $400 million economic development program in a $14 trillion economy. Even though that’s $400 million taxpayer dollars too many, it nonetheless amounts to a pothole on the nation’s economic superhighway.

See this essay for more on why the Economic Development Administration should be abolished.

Debating the Libertarian Vote

They’re having a lively time with our study “The Libertarian Vote in the Age of Obama” over at the Corner. Ramesh Ponnuru says our results show that “libertarians moved in nearly perfect opposition to the public at large, which was swinging toward the Republicans from 2000 through 2004 and against them from then through 2008.” Guess he didn’t buy our argument that “Libertarians seem to be a lead indicator of trends in centrist, independent-minded voters,” and they’re currently leading independents in a flight from the Obama agenda.

Jonah Goldberg says there aren’t many consistent libertarians, and they don’t vote as a bloc, or swing. Veronique de Rugy kindly posted a response by me:

Jonah says consistent libertarians are rare. Sure. So are consistent conservatives who would affirm every tenet of the Sharon Statement, or an updated Ten Principles of Conservatism for today, complete with policy specifics. What we are saying, and what I think no one has actually countered, is that there are some millions of voters — maybe our 14 percent, maybe Gallup’s 23 percent, maybe even Zogby’s 44/59 percent — who don’t line up either red or blue. They don’t buy the whole package from Rush or Keith, McCain or Obama, NR or TNR. They have real libertarian tendencies on both economic and personal issues.

Does that mean they want to abolish public education and legalize drugs? Of course not. But they do oppose both health care “reform” and restrictions on abortion, or they like both lower taxes and gay marriage or civil unions. According to the 2004 exit polls, 28 million Bush voters supported either marriage or civil unions. And neither party typically offers that program. Which means that some of those people — like eight Seattle entrepreneurs who visited Cato today — are uncomfortable with both parties and don’t vote consistently for either.

Jonah says, “most of the talk about ‘libertarians’ switching sides has been exactly that, talk.” Maybe he should read the study, or at least read Table 2 on page 8. A group of people who are identifiably outside the red/blue boxes did swing toward the Democrats in 2004 and 2006, and then swung back against Obama.

Veronique’s post also linked to Ilya Somin at the Volokh Conspiracy, who makes similar points in rather more scholarly language. For more debate, Katherine Mangu-Ward’s report on the study drew more than 100 comments at reason.com.

Citizens United and Corporate Money in Politics

As several of my colleagues noted yesterday, the Supreme Court handed down its landmark decision in Citizens United v. FEC. While I regarded the decision as a victory for free speech, a large number of folks on the left — many of whom support free speech in other contexts — were aghast at the decision, arguing that it would vastly enhance the influence of large corporations in the political process.

Part of my disagreement with these guys is that I’m just a free speech zealot. The First Amendment says “Congress shall make no law … abridging the freedom of speech,” and I don’t see how that language can be squared with a statute that limits the distribution of a political documentary. The best you can say, I think, is that limiting corporate influence is a “compelling state interest” sufficient to overcome the First Amendment’s ban on speech abridgment, but that’s just another way of saying that you don’t care about free speech very much.

Second, I think it’s important to remember that “corporations” encompass much more than large, for-profit businesses. They also include a wide variety of non-profit and advocacy groups, including the ACLU, the NRA, and NARAL, that are, by any reasonable definition, grassroots organizations advocating the views of large numbers of voters. Indeed, as the ACLU pointed out in its amicus brief, the Bipartisan Campaign Reform Act (BCRA) prohibited the ACLU from running ads criticizing members of Congress who voted for the awful FISA Amendments Act of 2008. Even if you think it’s appropriate for Congress to regulate the speech of Exxon-Mobil and Pfizer, I think it’s awfully hard to square the First Amendment with a law that limits the ability of NARAL or the NRA to advocate for its members’ views.

But more fundamentally, I don’t buy the idea that limiting corruption is a state interest sufficiently compelling to overcome the First Amendment interest in free speech. I think supporters of BCRA misunderstand how corporations wield influence and dramatically overestimate the power of television advertisements. It’s true, of course, that a corporation prepared to spend $1 million on ads criticizing a particular legislator will get that legislator’s attention. But there’s nothing unique about this. It can also get his attention by hiring a lobbying firm that employs a former staffer. It can get his attention by arranging $100,000 in bundled contributions from executives, clients, and friends of the company. It can get his attention by creating astroturf organizations. And there are probably lots of other mechanisms I haven’t thought of.

The key difference between independent expenditures and the other mechanisms is that independent expenditures are the most open and transparent. To run an effective “issue ad,” a corporation has to make an argument that is persuasive to voters. I don’t want to sugar coat the situation; sometimes independent expenditures finance ads that are sleazy and misleading. But given a choice between corporations spending their money on ads about how Senator Smith hates America or spending their money on K Street, I’ll take the ads, because at least voters still get the final decision.

Moreover, I think we’re moving toward a world in which traditional high-dollar advertising campaigns will become increasingly ineffective. One smart liberal compares the post-Citizens United world to a debate in which “you get 10 seconds to make your case. I’ll take an hour.” This description of the world had a certain plausibility when most people got their news from newspapers and television — media characterized by severe, technologically imposed bottlenecks. These bottlenecks meant that those willing to spend more money could get a significantly bigger soapbox.

This is a lot less true online where users have practically unlimited choices. The web is littered with lavishly funded corporate propaganda that gets a fraction of the traffic of grassroots blogs like Boing Boing. When people have lots of choices, they aren’t likely to stick around very long at a site that dishes up corporate talking points. So while deep pockets will always be an asset in politics, they won’t give 21st century corporations the huge advantages they gave to 20th century corporations.

So I’m not thrilled at the idea of Fortune 500 companies spending a ton of money on bogus “issue ads.” But I think the dangers of such ads are frequently exaggerated. I’m far more worried about preserving the right of organizations like the ACLU to spread their message. And I don’t see any plausible way to stop the former without seriously restricting the latter. So I’m glad to see the Supreme Court take the words of the First Amendment — “Congress shall make no law” — literally.

Secretary Clinton on Free Speech

Secretary of State Hillary Clinton gave a major speech on Internet freedom today. The text has been posted on the State Department web site, and Adam Thierer has a review of it up on the TechLiberationFront blog.

As a signal to other governments, it was a good speech. It placed the United States government on the side of freedom movements around the world and extolled how technology empowers them.

From a domestic perspective, it was nothing special. References to the liberating power of the Internet were carefully caveated with cautions about online dangers that could justify government intrusion on the Internet. Secretary Clinton was particularly equivocal about online anonymity.

The irony, of course, was provided by the breaking news of the day: the Supreme Court’s decision in Citizens United, discussed by my colleagues here, here, and here, as well as in this podcast. The case dealt with speech critical of Secretary Clinton produced by a corporation during her candidacy for the presidency. It reversed precedents allowing a ban on corporate and union speech about political candidates.

The Court said in Citizens United:

Speech is an essential mechanism of democracy, for it is the means to hold officials accountable to the people. The right of citizens to inquire, to hear, to speak, and to use information to reach consensus is a precondition to enlightened self-government and a necessary means to protect it.

The fact that speech issues from people organized as corporations or unions makes no difference.

In her speech, Secretary Clinton echoed similar themes. “Countries that censor news and information must recognize that from an economic standpoint, there is no distinction between censoring political speech and commercial speech.” Perhaps she was trying to distinguish between economic consequences of speech and other consequences, but later she said:

[C]ensorship should not be in any way accepted by any company from anywhere. And in America, American companies need to make a principled stand. This needs to be part of our national brand. I’m confident that consumers worldwide will reward companies that follow those principles.

The Citizens United case is the product of a company taking such a stand, though not in the way Secretary Clinton meant it.

Later in the day, the White House issued the following statement about the Citizens United free speech case:

With its ruling today, the Supreme Court has given a green light to a new stampede of special interest money in our politics. It is a major victory for big oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans. This ruling gives the special interests and their lobbyists even more power in Washington–while undermining the influence of average Americans who make small contributions to support their preferred candidates. That’s why I am instructing my Administration to get to work immediately with Congress on this issue. We are going to talk with bipartisan Congressional leaders to develop a forceful response to this decision. The public interest requires nothing less.

So much for free speech.

Pinocchio Rove Strikes Again

George Bush ranks as one of America’s most fiscally irresponsible presidents. He increased overall spending from $1.8 trillion to $3.5 trillion and most of that new spending was used to create or expand domestic programs (no-bureaucrat-left-behind education spending, pork-filled highway bills, sleazy Wall Street bailouts, corrupt farm spending, new Medicare entitlements, etc.) that are not legitimate functions of the federal government. So it is galling to see his former senior adviser writing columns complaining about Barack Obama being a big spender. Many of the criticisms about the Obama Administration in his latest WSJ column are correct, to be sure, but Karl Rove has zero moral authority to make those arguments. Moreover, Rove once again engages in sloppy or dishonest (you choose) analysis by blaming Obama for some of Bush’s mistakes. In the excerpt below, he blames Obama for any of the Fiscal Year 2009 debt that was incurred after January 20 of last year. But as I’ve already explained, 96 percent of the spending in FY2009 is the result of Bush’s policies:

Consider that from Jan. 20, 2001, to Jan. 20, 2009, the debt held by the public grew $3 trillion under Mr. Bush—to $6.3 trillion from $3.3 trillion at a time when the national economy grew as well. By comparison, from the day Mr. Obama took office last year to the end of the current fiscal year, according to the Office of Management and Budget, the debt held by the public will grow by $3.3 trillion. In 20 months, Mr. Obama will add as much debt as Mr. Bush ran up in eight years. …Mr. Bush’s deficits ran an average of 3.2% of GDP, slightly above the post World War II average of 2.7%. Mr. Obama’s plan calls for deficits that will average 4.2% over the next decade. Team Obama has been on history’s biggest spending spree, which has included a $787 billion stimulus, a $30 billion expansion of a child health-care program, and a $410 billion federal spending bill that increased nondefense discretionary spending 10% for the last half of fiscal year 2009. Mr. Obama also hiked nondefense discretionary spending another 12% for fiscal year 2010.

Correction: In an earlier post on one of Rove’s columns, I incorrectly claimed that Bush never vetoed a bill because it spent too much.That was wrong. He did veto a handful of bills once Democrats took control of Congress.

Trouble in Massachusetts

Yesterday, Cato released a new study, “The Massachusetts Health Plan: Much Pain, Little Gain,” which showed that official estimates overstate the gains in health insurance coverage resulting from a 2006 Massachusetts law by at least 45 percent.  The study also finds: supporters understate the law’s cost by nearly 60 percent; government programs are crowding out private insurance; self-reported health improved for some but fell for others; and young adults are responding to the law by avoiding Massachusetts.

Given that the Massachusetts health plan bears a “remarkable resemblance” to the Obama plan, the study should serve as a warning sign to members of Congress, says Michael Cannon, director of health policy studies.

The study has received coverage in Investor’s Business Daily, The Wall Street Journal, The Washington Post, Detroit News, The Washington Times, the Reason Foundation and the Pioneer Institute.