Archives: 12/2010

The Smoking Police Go after Obama and Boehner

Tom Brokaw, former NBC News anchor and advocate of tolerance and cross-cultural appreciation, lowers the boom on President Obama and Speaker-to-be John Boehner:

In Washington and across the country there’s understandably a great deal of speculation on whether President Obama and the incoming speaker of the House, John Boehner, can work together and on what issues.

Here’s a suggestion on where to start.

Stop.

Stop smoking.

Yeah, that’s what the country needs to achieve cooperation in Washington and peace in the world:  tense and jittery leaders with a jones for a smoke.

Really, why is it any of Tom Brokaw’s business if the president has a cigarette?

Brokaw goes on to quote the dubious recent claims of Surgeon General Regina Benjamin:

“Tobacco smoke damages almost every organ in your body. One cigarette can cause a heart attack” in smokers with underlying heart disease.

Maybe it can. But if Boehner smokes a pack a day, I calculate he’s smoked 292,000 cigarettes in the past 40 years. I guess he hasn’t smoked that one bad one. Brokaw also mentions a study on the costs to society of smoking, a claim that other studies have rejected.

There are plenty of reasons to criticize Obama and Boehner. But can’t we leave their private habits alone? And then maybe in return they could stop nagging and legislating about our private habits.

Is Ron Paul Good for Monetary Policy?

Now that Ron Paul has gained the chairmanship of the Subcommittee on Domestic Monetary Policy, the spin has begun that this victory will be an empty one.  Some even suggest that libertarians should be, and are, opposed to Paul.

I have to admit I was a bit surprised when Dave Weigel of Slate placed me in that category.  While I expressed concern regarding Paul’s communications skills, the fact is that while he isn’t the best choice in Congress to take on the Fed, he is the only choice.  Any other Congressman would simply continue to ignore the long history of failure associated with the Fed.  Had Dave presented a fuller picture of our conversation, that would have been clear.

Back to the question at hand, Paul will ultimately be good for monetary policy because he will actually bring some oversight to the Fed, which has been sorely lacking.  Under the current Democrat Chair Mel Watt, this subcommittee has held a total of five hearings all Congress, and none of them were actually on monetary policy.  Two of these hearings weren’t even on areas under the jurisdiction of the Federal Reserve.  Republicans have not done much better when they were previously in charge. 

Much has been made of a recent Bloomberg poll showing that a majority of Americans want the Fed either abolished or reined in.  While that poll offers hope, those of us who ultimately want to end the Fed, should remember that only 16 % wanted the Fed abolished.  While 39% want the Fed to be more accountable, that does not constitute ending the Fed.  What Ron Paul can most accomplish over the next two years is helping to educate that 39% on why minor tweaks will not make the Fed accountable. 

Some have suggested that Ron Paul does not present the right face for taking on the Fed.  But the fact remains that if not Paul, who?  Given that Paul is about the only one in Congress willing to fight this fight, he merits support, even if that support is occasionally critical.

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Encouraging Polling Data on Spending Restraint vs. Deficit Reduction

When big-spending politicians in Washington pontificate about “deficit reduction,” taxpayers should be very wary. Crocodile tears about red ink almost always are a tactic that the political class uses to make tax increases more palatable. The way it works is that the crowd in DC increases spending, which leads to more red ink, which allows them to say we have a deficit crisis, which gives them an excuse to raise taxes, which then gives them more money to spend. This additional spending then leads to more debt, which provides a rationale for higher taxes, and the pattern continues – sort of a lather-rinse-repeat cycle of big government.

Fortunately, it looks like the American people have figured out this scam. By a 57-34 margin, they say that reducing federal spending should be the number-one goal of fiscal policy rather than deficit reduction. And since red ink is just a symptom of the real problem of too much spending, this data is very encouraging.

Here are some of the details from a new Rasmussen poll, which Mark Tapscott labels, “evidence of a yawning divide between the nation’s Political Class and the rest of the country on what to do about the federal government’s fiscal crisis.”

A new Rasmussen Reports national telephone survey finds that 57% of Likely U.S. Voters think reducing federal government spending is more important than reducing the deficit. Thirty-four percent (34%) put reducing the deficit first.  It’s telling to note that while 65% of Mainstream voters believe cutting spending is more important, 72% of the Political Class say the primary emphasis should be on deficit reduction. …Seventy-four percent (74%) of Republicans and 50% of voters not affiliated with either of the major parties say cutting spending is more important than reducing the deficit. Democrats are more narrowly divided on the question. Most conservatives and moderates say spending cuts should come first, but most liberals say deficit reduction is paramount. Voters have consistently said in surveys for years that increased government spending hurts the economy, while decreased spending has a positive effect on the economy.

I wouldn’t read too much into the comparative data, since the “political class” in Rasmussen’s polls apparently refers to respondents with a certain set of establishment preferences rather than those living in the DC area and/or those mooching off the federal government, but the overall results are very encouraging.

Oh, and for those who naively trust politicians and want to cling to the idea that deficit reduction should be the first priority, let’s not forget that spending restraint is the right policy anyhow. As I noted in this blog post, even economists at institutions such as Harvard and the IMF are finding that nations are far more successful in reducing red ink if they focus on controlling the growth of government spending.

In other words, the right policy is always spending restraint – regardless of your goal…unless you’re a member of the political class and you want to make government bigger by taking more money from taxpayers.

So we know what to do. The only question is whether we can get the folks in Washington to do what’s right. Unfortunately, the American people are not very optimistic. Here’s one more finding from Rasmussen.

Most voters are still not convinced, even with a new Republican majority in the House, that Congress will actually cut government spending substantially over the next year.  GOP voters are among the most doubtful.

Moral Decline or Moral Progress?

People worry a lot about declining moral values in our modern world. Commenter Evan at econlog offers a different perspective on that, in a vigorous debate about Bryan Caplan’s claim that average people today have more material comforts than George Vanderbilt, the builder of Biltmore, had:

One thing I haven’t heard anyone address yet is moral progress. The values of earlier time periods were sickeningly depraved. One reason I’d never want to have been born in the past, rather than today, even if my past status would have been higher, is that I enjoy being the kind of person who doesn’t burn witches, own slaves, participate in pogroms, or bash gays. I think if you asked most poor people if they’d rather be a wealthy slaveowner in the past, they’d all look at you with horror.

Killing Obama’s ‘Build America Bonds’ Is a Big Reason to Like the Tax Deal

There are plenty of reason to like and dislike the tax deal between President Obama and congressional leaders. On the plus side, we dodge a big tax increase for the next two years. We also replace a goofy and ineffective “make work pay” tax credit with a supply-side oriented reduction in the payroll tax rate (albeit only for one year, so there probably won’t be much economic benefit).

On the negative side, the deal extends unemployment benefits, which has the perverse effect of subsidizing unemployment. The deal is also filled with all sorts of corrupt provisions for various interest groups such as ethanol producers.

Then there are provisions such as the 35 percent death tax. Is this bad news, because it is an increase from zero percent this year? Or is it good news because it is much lower than the 55 percent rate that was scheduled to take effect beginning next year? That’s hard to answer, though I know the right rate is zero.

But here’s one bit of good news that has not received much attention. The tax deal ends the “Build America Bonds” tax preference, which was one of the most destructive provisions of Obama’s so-called stimulus. Here’s an excerpt from a Bloomberg report.

Senate Democrats backing the subsidy, which has helped finance bridges, roads and other public works, fell short in a bid to get the program added to a bill extending the 2001 and 2003 income-tax cuts. That failure was the latest in efforts to keep the Build America program alive beyond its scheduled end on Dec. 31. …While Obama and Democrats have supported prolonging the program, they have run into opposition from Republicans critical of the stimulus package. Extensions have twice passed the Democratic-controlled House only to stall in the Senate, where the Republican minority has sufficient power to block legislation. The U.S. government pays 35 of the interest costs on Build America bonds. …State and local governments, the U.S. Chamber of Commerce and representatives of the construction industry are among the program’s advocates.

Build America Bonds are a back-door handout for profligate state and local governments, allowing them to borrow more money while shifting some of the resulting interest costs to the federal government.

But states already are in deep trouble because of too much spending and debt, so encouraging more spending and debt with federal tax distortions was a very bizarre policy.

Moreover, the policy also damaged the economy by creating an incentive for investors to allocate funds to state and local governments rather than private sector investments.That’s a very bad idea, unless you somehow think (notwithstanding all the evidence) that it is smart to make the public sector bigger at the expense of the private sector.

In one fell swoop, Build America Bonds increased the burden of the federal government, encouraged a bigger burden of state and local government, and drained resources from the productive sector of the economy.

That’s stupid, even by Washington standards. So whatever we think of the overall package, let’s savor the death of this destructive provision.

A Bizarre Case That Could Make Some Good Law

Carol Anne Bond learned that her best friend was having an affair with her husband, so she spread toxic chemicals on the woman’s car and mailbox. Postal inspectors discovered this plot after they caught Bond on film stealing from the woman’s mailbox. Rather than leave this caper to local law enforcement authorities to resolve, however, a federal prosecutor charged Bond with violating a statute that implements U.S. treaty obligations under the 1993 Chemical Weapons Convention.

Bond pled guilty and was sentenced but now appeals her conviction on the ground that the statute at issue violates the Tenth Amendment – in that her offense was local in nature and not properly subject to federal prosecution. The Third Circuit declined to reach the constitutional question, holding that Bond did not have standing to raise a Tenth Amendment challenge and that, following Supreme Court precedent, a state actor must be a party to the suit in order to challenge the federal government for impinging on state sovereignty. Bond now seeks Supreme Court review on the ground that the statute, as applied to her, is beyond the federal government’s enumerated powers.

Cato joined the Center for Constitutional Jurisprudence in filing a brief supporting Bond’s request. We argue not only that a defendant clearly has standing to challenge the constitutionality of the statute under which she was convicted, but that lower courts’ assumption that both the power to make treaties and Congress’s power to make laws executing those treaties are unconstrained by the Constitution. This assumption is premised on a perfunctory acceptance of an overly broad interpretation of Missouri v. Holland, 252 U.S. 416 (1920). That reading of Missouri v. Holland, however, is contrary to precedent, has been undermined by subsequent Court decisions, and if allowed to stand, will seriously undermine the notion that the federal government is one of only limited, enumerated powers.

The Court’s recognition that the constitutional issues Bond raises warrant serious review would begin the process of reconsidering the meaning of Missouri v. Holland and its progeny. Beyond the obviously erroneous ruling on standing here, this case offers the opportunity to reinforce limits on the expansion of federal criminal law into areas that should be handled at the state and local levels.

Many thanks to Cato legal associate Trevor Burrus for his help with our brief, which you can read here.  The Court will be deciding early in the new year whether to hear the case.

Wikileaks and ‘Economies of Repression’

My onetime professor Jorge Castañeda—later better known as Mexico’s foreign minister under Vicente Fox—used to speak with grudging admiration about the “Economy of Repression” practiced by the long-reigning Partido Revolucionario Institucional. He used the phrase in a dual sense: It was repression carried out by economic means, as papers that strayed too far from the PRI line would suddenly find their lucrative government advertising revenue drying up, state-controlled suppliers jacking up prices, and PRI-linked union workers threatening strike. But it was also an economical (that is, a parsimonious)means of repression, operating indirectly and relatively invisibly, and allowing more heavy-handed mechanisms—the censor’s pen and the truncheon—to be used more sparingly.

Castañeda’s phrase has crossed my mind more than once over the past week, as we’ve witnessed an array of digital intermediaries and financial institutions cutting ties with Wikileaks in the wake of attacks on the controversial site by prominent politicians. Amazon booted the whistleblowing organization from its hosting service shortly after receiving a concerned call from the office of Sen. Joe Lieberman. Amazon officials say the timing is purely coincidental, but the company still won praise for the decision from a group of prominent senators. Visa and MasterCard—both recent beneficiaries of lobbying by the Obama administration—blocked donations to Wikileaks, as did online payment processor PayPal, explicitly citing a recent letter to Wikileaks from the State Department declaring the organization’s activities illegal. (Donations to the KKK, by contrast, are still allowed.)

Like many who generally favor greater transparency, I have serious reservations about the way Wikileaks operates. While it is clearly false to claim, as some have, that the site is dumping classified material online “indiscriminately,” I have serious doubts that the news value of much of the released material outweighs the potential security risks or the chilling effect on diplomacy. Nor do I have much sympathy with what appears to be Julian Assange’s “heighten the contradictions” strategy of forcing governments to clamp down on internal information sharing.

It would be far better if we didn’t have a system of endemic overclassification, so that genuinely sensitive material were not mixed in with routine reports available to thousands of contractors and fresh-faced junior military personnel. It would be better if whistleblowers within the Defense Department who tried working through internal channels did not face reprisals, as an oversight report recently found they too often do. And it would be better if traditional media outlets had been quicker to fill the niche Julian Assange’s organization now occupies.

Whatever concerns I might have about Wikileaks, however, I’m still more troubled to see political actors pressuring intermediary firms in an effort to throttle a media organization that has been convicted of no crime. Indeed, the State Department’s assertion notwithstanding, it’s not clear that Wikileaks could be convicted in light of the strong precedent set by the Pentagon Papers case. As a recent report from the Congressional Research Service put it:

We are aware of no case in which a publisher of information obtained through unauthorized disclosure by a government employee has been prosecuted for publishing it. There may be First Amendment implications that would make such a prosecution difficult, not to mention political ramifications based on concerns about government censorship.

In the heady days of the 1990s, it was widely assumed that the global Internet was, by its nature, an anarchic zone of untrammeled speech inherently immune from the control of governments quite apart from any formal legal constraints on censorship. But as political scientist Henry Farrell, among other scholars, has observed:

[A] small group of privileged private actors can become “points of control”–states can use them to exert control over a much broader group of other private actors. This is because the former private actors control chokepoints in the information infrastructure or in other key networks of resources. They can block or control flows of data or of other valuable resources among a wide variety of other private actors.

The freedom of the global Internet comes with an increased dependence on globalized intermediaries, over whom political actors in large and valuable markets will typically exert enormous leverage. A dissident publication running its own press may have an incentive to resist that political pressure—but a multinational credit card company or hosting provider, for whom the publisher is a relatively insignificant source of revenue—will often find its bottom line better served by compliance. As Farrell notes, we’ve already seen a similar strategy pursued against offshore gambling sites, whose payment processors were threatened with litigation by ambitious prosecutors.

It’s a sobering validation of Friedrich Hayek’s famous dictum that to be controlled in our economic pursuits—perhaps now more than ever—means to be controlled in everything. Whatever you think of Wikileaks, the idea that a controversial speaker can be so effectively attacked quite outside the bounds of any direct legal process, thanks to the enormous leverage our government exerts on global telecommunications and finance firms, ought to provoke immense concern for the future of free expression online.