Archives: 05/2012

NYT Channels Monty Python’s Black Knight

America’s growing school choice movement is a bridge to educational freedom—an escape from our failing state school monopolies. And with all the tenacity (and veracity) of Monty Python’s Black Knight, the New York Times stands athwart that bridge, declaring: “None shall pass.”

The Times’ latest attempt to parry the thrust for educational freedom is this story attacking education tax credit school choice programs: “Public Money Finds Back Door to Private Schools.” No doubt this story has legs…but not for long.

Let’s begin with the title, which claims that private donations to private scholarship organizations are “public money” because they qualify for a tax credit. It’s a simple claim that is simply not true. As has been recently reported:

the genius of [tax credit programs] was that the money would never go into public accounts, making it less susceptible to court challenges…. As predicted, tax credits have thus far withstood legal challenges, most recently when the Supreme Court upheld Arizona’s program last year.

Perhaps the editors of the NYT were simply unaware of the report above—and unaware of the Supreme Court decision it cites (ACSTO v. Winn) explicitly stating that tax credited donations are not public money. But here’s the thing, the quote above is actually from the same story on which the Times slapped the “Public Money…” headline. So either the NYT’s editors don’t read their own stories, or they’re knowingly presenting a false statement to their readers in big, bold type. I can understand someone not wanting to read the NYT every day, but surely they’ve managed to find editors willing to do so?

Next, let’s talk about the story’s lede….

This is where a paper puts the bit that they expect to rouse the most reader interest or indignation. What we have is an anecdote about a single Georgia scholarship granting organization (SGO) that just might be allocating donations in a way that donors would not approve of. But here’s the thing: there are a lot of different SGOs. If you decide that you don’t like the way one SGO is using your donations… you can stop donating to it. You can then look at other SGOs to find one you think is well run. You can even stop donating to SGOs entirely if you don’t find a single one that meets your standards. The system is quite responsive to the donor/taxpayer’s concerns.

Now let’s compare that to the status quo in America, under which every taxpayer must pay for the state school monopoly in their area regardless of its performance, efficiency, or institutional ethics. How’s that workin’ out? Since we’re talking about Georgia, surely it’s relevant to bring up the epic cheating scandal that exploded in the Atlanta Public School District less than a year ago. The Georgia Bureau of Investigation found that 178 teachers and administrators had systematically defrauded children of an education by falsifying the students’ state test sheets to make it look as though they were really learning. Can taxpayers cut off their funding to the district? No. Can they expect swift and complete justice? Nope. Even though 82 of the perps had already confessed last July, only one had been fired as of 8 weeks ago.

So which system is better equipped to deal with inevitable human frailties; the one that lets donors pull funding as soon as they have the first hint of concern, or the one that they have to keep funding no matter how suffused with corruption it becomes? Hmm?

Next, the Times demonstrates remarkable cruelty to animals by trotting out the rhetorical jade that we live in a “time of deep cutbacks in public schools.” Perhaps they felt safe making this claim knowing that the federal government’s education statistics are usually 3 or more years out of date, and hence don’t cover the most recent years of our economic downturn. If so, they must have thought no one would give credence to the up-to-date numbers published by a well-known private organization: nominal public school spending increased every single year between 2001-02 and 2011-12—both in the aggregate and per-pupil. Even after the Great Recession, even after adjusting for inflation, we’re still spending 10.6% more per pupil than we were when we had just crested the tech boom back in 2001-02. What right-wing group came up with these astonishing numbers? Was it the left’s current bête-noire, ALEC? Actually, it was the N. E. A.

Finally, some paragraphs into the piece, the Times comes up with a concern that almost has merit: some private schools that serve scholarship-receiving students have a pedagogical emphasis that some taxpayers might disagree with. The examples offered are sports and religion, but many others could no doubt be suggested. And a strong case could be made that taxpayers in a free society should not be compelled to pay for the teaching of ideas they find objectionable. In fact, such a case was already made over two hundred years ago by Thomas Jefferson, who wrote that “to compel a man to furnish contributions of money for the propagation of opinions which he disbelieves… is sinful and tyrannical.” That quote comes from the Virginia Act Establishing Religious Freedom, enacted in 1786 and subsequently used as the model for state constitutional clauses all over the country banning such “compelled support.”

So why do I say that the Times’ concern “almost” has merit? Because it doesn’t apply to education tax credits. No one is compelled to support any SGO, and those who do choose to make a donation get to select the SGO that receives their money. What the Times seems not to have realized is that this concern actually does apply to… the public school system it is trying so ineptly to defend. Taxpayers’ options under state schooling are to keep funding the system or go to jail, but it is not hard to imagine that some taxpayers may disbelieve the ideas taught by public schooling. Consider the story from just a few days ago about the public school teacher who taught her students that they could be arrested for speaking ill of the President. Or consider the Times’ evident disdain for private schools that focus on sports to the perceived detriment of academics. No one has to fund such schools under an education tax credit system, but we all have to fund them under the government monopoly status quo. Is this news (that didn’t fit) to the New York Times?

Next, the Times laments that SGOs cost money to operate. “Hundreds of thousands of dollars… in some cases”! Let’s say, for the sake of argument, that you are a fiscal hawk just like the New York Times, and that you’re desperately concerned about the efficiency with which your education dollars are spent. Which system should you prefer, tax credits or the public school monopoly? As it happens, Florida’s k-12 scholarship tax credit is raising academic achievement at less than half the per pupil cost of the traditional state-run schools.

According to a statistical study commissioned by the Florida legislature and authored by David Figlio, students accepting scholarships to attend private schools under the state’s tax credit program enjoy improved academic achievement. According to a second study co-authored by Figlio and Cassandra Hart, the program also improves achievement of students who remain in public schools [see previous link].

Of course the Times story mentions that Figlio has studied Florida’s tax credit program… but it doesn’t report what he found. Apparently, a significant positive academic impact is not relevant to a NYT education story if it comes from a program outside the control of the state monopoly school system. Print readers are left entirely in the dark about these facts. The online NYT version of the article links to a .pdf file of one of the studies without comment, but even the subset of Web readers who take the time to click through and read it will only get half the story. Those who read the Times’ story on other on-line sites that lack links won’t get even that.

But what of the charge that “some of the programs have become enmeshed in politics.” Even coming from the NYT this line of argument is difficult to believe. Has it not occurred to them that state schooling has been soaking in politics since its inception? Are they unaware that the public school employee unions—whose funding comes entirely from compulsory taxation—spend more on federal politics than Chevron, Exxon Mobil, the NRA, and Lockheed Martin combined? Or that between 93 and 99 percent of those political contributions have gone to Democrats? Surely they must be aware of news coverage like this:

 If unions are the Democratic Party’s base, then teachers’ unions are the base of the base. The two national teachers’ unions — the American Federation of Teachers and the larger National Education Association — together have more than 4.6 million members. That is roughly a quarter of all the union members in the country. Teachers are the best field troops in local elections. Ten percent of the delegates to the 2008 Democratic National Convention were teachers’ union members.

But then again, maybe they haven’t read it. After all, it ran in the New York Times Magazine.

Against public schooling’s multi-generation legacy of arch political partisanship, the Times complains that businesses might endear themselves to politicians by… helping poor kids get a good education. They present no evidence of an illegal quid pro quo—just the haunting specter that someone in political office might be gratified if a business helps kids learn. They have it precisely backwards. The real problem is that there are so many in political office who would not be gratified by such an act, because their own political lives depend on teachers’ union donations coercively squeezed out of taxpayers thanks to the government-protected monopoly on k-12 schooling.

Years ago, we were told that the legacy media were distinguished by their “multiple layers of fact checking”. This NYT article, like most NYT articles on education, is certainly comprised of multiple layers of something… but it doesn’t smell like fact checking.

Public Financing of Vikings Stadium a Bad Deal for Fans, Taxpayers

The collusion between big business and big government that fleeces the rest of us has struck again – Tim Carney, iMessage your office – this time in the sports world. 

Minnesota governor Mark Dayton recently signed the midnight deal that state lawmakers struck with the owners of the state’s football team, the Minnesota Vikings, to build the team a new stadium.  This caused plenty of celebration in Minneapolis and elsewhere across the Gopher State.  Alas, the hangover is about to come for taxpayers regardless of their gridiron allegiance or level of fandom.

As former Cato legal associate (and Minnesotan) Nick Mosvick and I write in the Huffington Post, these stadium deals hurt most fans:

That’s because they lead to increased taxes and higher prices, squeezing the average fan for the benefit of owners and sponsors.  And that’s not even counting the overwhelming majority of taxpayers, regardless of fandom, who never set foot in these gladiatorial arenas.

Let’s look at this particular deal.  The stadium costs $975 million on paper, with over half coming from public funds, $348 million from the state and $150 million from Minneapolis—not through parking taxes or other stadium-related user fees, but with a new city sales tax.  In return, the public gets an annual $13 million fee and the right to rent out the stadium on non-game-days.

Vikings ownership, NFL commissioner Roger Goodell, and local politicians make a typical pitch for the deal: the stadium will attract investment to the area; local establishments will see a rise in game-day sales of $145 million; jobs will be created, including 1,600 in construction worth $300 million ($187,500 per job?!); tax revenues will increase $26 million; property values will rise; and, of course, the perennially underachieving team’s fortunes will improve.

Such arguments are always trotted out for these sweetheart deals, but the evidence regarding the economic effects of publicly financed stadiums consistently tells a different story.  For example, Dennis Coates and Brad Humphreys performed an exhaustive study of sports franchises in 37 cities between 1969 and 1996 and found no measurable impact on per-capita income.  The only statistically significant effects were negative ones because revenue gains were overshadowed by opportunity costs that politicians inevitably ignore.

An older study looked at 12 stadium areas between 1958 and 1987 and found that professional sports don’t drive economic growth.  A shorter-term study looked at job growth in 46 cities from 1990 to 1994 and found that cities with major league teams grew more slowly.  Even worse, taxpayers still service debt on now-demolished stadiums, including the $110 million that New Jersey still owes on the old Meadowlands and the $80 million that Seattle’s King County owes on the Kingdome.  And we shouldn’t forget that local governments often employ property-rights-trampling eminent domain to facilitate these money-squandering projects.

Read the whole thing.  It’s not a matter of ideology; we even quote Keith Olbermann approvingly!

The point is that these deals benefit team owners and the politicians who get to wrap themselves in team colors to the exclusion of taxpayers or fans (who are priced out of the games their increased taxes support).  If luxury stadiums were hugely profitable, why would the savvy businessmen who own the teams let the politicians in on the windfall?

House Appropriations Chairman Behind Military Pork

After the Republicans took back control of the House following the November 2010 elections, the GOP leadership went with Kentucky Rep. Hal Rogers—a.k.a. “The Prince of Pork”—to chair the powerful House Appropriations Committee. I wrote at the time that “The support for Rogers from House Republican leaders is a slap in the face of voters who demanded change in Washington.”

I haven’t changed my mind.

A recent article in the New York Times offers up another reminder that the 30-year House veteran’s priority is to funnel taxpayer money back to his district—not downsize the federal government:

In the 1980s, the military had its infamous $800 toilet seat. Today, it has a $17,000 drip pan. Thanks to a powerful Kentucky congressman who has steered tens of millions of federal dollars to his district, the Army has bought about $6.5 million worth of the “leakproof” drip pans in the last three years to catch transmission fluid on Black Hawk helicopters. And it might want more from the Kentucky company that makes the pans, even though a similar pan from another company costs a small fraction of the price: about $2,500…The Kentucky company, Phoenix Products, got the job to produce the pans after Representative Harold Rogers, a Republican who is now the chairman of the House Appropriations Committee, added an earmark to a 2009 spending bill. While the earmark came before restrictions were placed on such provisions for for-profit companies, its outlays have continued for the last three years.

According to the Times, Phoenix Products’ president and his wife have been “frequent contributors” to Rogers’s political committee and the company has spent at least $600k on a DC lobbying firm since 2005. Those efforts apparently haven’t gone unrewarded as Rogers “has directed more than $17 million in work orders for Phoenix Products since 2000.”

Readers should keep this story in mind the next time a Republican member of Congress calls for a Balanced Budget Amendment, complains about the growth in government under Obama, and then argues against “dangerous defense cuts.” The bedtime story that Americans often hear is that the federal government must spend gobs of money on defense in order to “keep us safe from our enemies.” I once believed that story—and then I spent some time in the U.S. Senate watching policymakers treat military spending like any other pot of taxpayer money.

[See here for more on downsizing the Department of Defense.]

After-Action Report on Cato’s Panel on the Future of the Navy Surface Fleet

Yesterday’s event on the U.S. Navy was a big success and generated a vigorous discussion. Ben Freeman from POGO spelled out his concerns about the littoral combat ship, specifically the Freedom (LCS-1) (documented here and here) and CBO’s Eric Labs raised a few additional ones pertaining to the program as whole. Under Secretary of the Navy Robert Work delivered an impassioned defense of the LCS within the context of the entire fleet design, drawing on examples from history to demonstrate how the Navy learns and adapts. Consistent with past practice, Work is confident that the fleet will put the LCS through the paces—two completely different ships—and figure out how to use them.

It was refreshing to engage in a serious discussion among people who are committed to a Navy that is second-to-none, and who care enough to raise questions designed to make it stronger. I focused my remarks on the LCS’s operating characteristics, but especially on the decision to buy two different LCS types. The original plan was for the Navy to select just one. The advantage of having two ships, Work stressed, was that the Navy would learn about each vessel’s unique capabilities. The disadvantage, as I see it, is the loss of economies of scale, including in parts, logistics and training.

I do think it is important to move past the specific technical problems identified in both LCS-1 and LCS-2. These are the first ships in the class, and such ships always have their share of problems (I was assigned to a first-in-class ship, USS Ticonderoga, from March 1990 to May 1993, and we were working through some problems nine years after the ship was launched). The blogger Galrahn (aka Raymond Pritchett) at Information Dissemination last week tweeted that the information in the POGO and Aviation Week reports was all old news, but that hadn’t stopped members of Congress from calling for another investigation. Under Secretary Work stressed that he believes the problems have been addressed, or will be, and he is committed to making this program successful.

But this discussion about fixing problems and learning as we go along reminds me of a conversation that I had a few months ago with a person who believes we should increase military spending. This individual is advising Gov. Romney, who has pledged to boost Pentagon spending quite substantially—perhaps as much as an extra $2.5 trillion over the next ten years, by my estimates—if he is elected president.

While talking, I raised the subject of the LCS, not the first time that the subject has come up between us. He was nonplussed and claimed that the problems with the ship could easily be fixed. More specifically, he said “It is nothing that money can’t fix.” That is pretty much a direct quote.

Nothing that money can’t fix.

There are two problems with that statement. First, Mitt Romney might not become the 45thpresident of the United States in January 2013—the polls say that it is basically a 50-50 proposition that he won’t—and I think it highly unlikely that the Navy’s shipbuilding budget will grow substantially if he isn’t elected.

Second, I seriously doubt that the Navy’s shipbuilding budget will grow very much even if Mitt Romney is elected president, and it certainly won’t grow enough to obviate any discussion of trade offs between different ships. Even if the Navy is handed billions or tens of billions of dollars more for shipbuilding, it is still the case that every ship that we build, or every new one proposed, is competing against one another. There are always opportunity costs, even when the topline budget grows. Navy warships compete against aircraft carriers. Navy surface ships compete with submarines. And the Navy competes with the Air Force. And the Air Force and Navy compete with the Army, etc.

For now, the Navy has chosen the LCS over possible alternatives. But there are alternatives. Eric Labs authored a good study a few years ago looking at the Coast Guard’s national security cutters (.pdf), but stated yesterday that the NSCs would be more costly than the LCSs. In the paper, “Budgetary Savings from Military Restraint,” Ben Friedman and I suggested retaining the Perry-class frigates for a few more years while we develop a different ship, perhaps a new class of frigates or corvettes that could do many of the same missions that the LCS is expected to perform, and, we believe, at less cost. At yesterday’s forum, Under Secretary Work stated that we could not purchase a new frigate for less than $750 million. While I respect the Under’s expertise, I plan to spend some time over the coming months scrutinizing that claim.

PoliceMisconduct.Net Launch

Today, Cato is launching a new web site, PoliceMisconduct.net, which is one component of our new National Police Misconduct Reporting Project. We will be tracking news stories concerning misconduct so policymakers can make more informed assessments of its nature and circumstances. Our objective is to identify policies that consistently uphold high standards of ethics, honesty, and professionalism from police officers and critique the policies that do not.

Here is a recent item from Denver, Colorado:  Alexander Landau was brutally beaten after a routine traffic stop. The City Council this month unanimously agreed to pay him $795,000 to settle his brutality lawsuit. What happened to Landau was awful, but even more disturbing from the news report is that the Internal Affairs Unit declined to begin a formal investigation after the incident, let alone a rigorous one. And note that two of the three officers involved in the Landau case were recently fired for lying on reports concerning other violent incidents!

Just the latest example of why a police misconduct tracker is needed.  Related item here.

Negotiations with Iran: What Has Changed?

May 23, the permanent five members of the UN Security Council, plus Germany (P5+1) will enter into talks with the Iranian leadership about the latter’s nuclear program. The Baghdad talks come on the heels of talks last month in Istanbul. A number of observers have raised expectations for the talks in Baghdad. The latest hopeful development is IAEA chief Yukiya Amano’s declaration, on the heels of his visit to Tehran, that he expects a structured agreement for inspections to be signed “quite soon.” Any progress toward a diplomatic solution would be preferable to backsliding or a collapse. Unfortunately, the talks are unlikely to live up to the high expectations.

Beyond Amano’s visit to Tehran, the big change since last month’s talks is French President Nicolas Sarkozy’s loss to the socialist, François Hollande, who appears less truculent on Iran than was Sarkozy. Previously, Sarkozy was the hardest-driving member of the P5+1, so Hollande’s victory is likely to bring the P5+1 into closer harmony. More broadly, the considerable anxiety over the prospect of an outright collapse of the Euro is likely to diminish European interest in focusing too much attention overseas.

Despite these changes, however, one wonders how the underlying calculus of negotiations has changed. The United States is still threatening to bomb Iran in order to prevent it from developing a nuclear deterrent. Israeli Prime Minister Binyamin Netanyahu is continuing to define “success” in a way such that it cannot realistically be achieved, and warning that anything less than total Iranian capitulation is failure. Like-minded U.S. legislators, such as Senator Lindsey Graham (R-SC), agree that the only acceptable Iranian move is immediate surrender. And high-ranking Iranian military officials are declaring that Iran is “standing for its cause that is the full annihilation of Israel.”

Given these two sets of developments, the question remains: Have sanctions by the United States and its partners caused enough pain and fear of instability in Iran that its leadership will forego a nuclear program that it likely feels is vital for its legitimacy and security? Most skeptics, this writer included, would like to be proved wrong, but they still appear to have the better of the argument.

Cross-posted from the Skeptics at the National Interest.

Should International Bureaucracies Get Taxing Powers or Direct Funding?

Over the years, I’ve strenuously objected to schemes that would enable international bureaucracies to levy taxes. That’s why I’ve criticized “direct funding” proposals, most of which seem to emanate from the United Nations.

Interestingly, the American left is somewhat divided on these schemes. House Democrats have expressed sympathy for global taxes, but the Obama administration has come out against at least certain worldwide tax proposals.

Unfortunately, proponents of global taxes are like the Energizer Bunny of big government, relentlessly pushing a statist agenda. If the world economy is growing, it’s time for a global tax. If the world economy is stagnant, it’s time for a global tax. If it’s hot outside or cold outside, it’s time for a global tax (since “global warming” is one of the justifications for global taxation, I’m not joking).

Given this ongoing threat, I’m glad that Brian Garst of the Center for Freedom and Prosperity has put together a two-page Libertas explaining why international bureaucracies should not get taxing powers or direct funding.

…it would be imprudent to give international bureaucracies an independent source of revenue. Not only would this augment the already considerable risk of imprudent budgetary practices, it would exacerbate the pro-statism bias in these organizations. …The issue of taxing powers and direct funding has become an important issue because international organizations are challenging the contribution model and pushing for independent sources of revenue. The United Nations has been particularly aggressive in pushing for global taxes, seeking to expand its budget with levies on everything from carbon to financial transactions.

He then highlights one of the most dangerous proposals, a scheme by the World Health Organization to impose a “Solidarity Tobacco Contribution.”

Another subsidiary of the United Nations, the World Health Organization (WHO), is also looking to self-fund through global taxes. The WHO in 2010 publicly considered asking for global consumer taxes on internet activity, online bill paying, or the always popular financial transaction tax. Currently the WHO is pushing for increased excise taxes on cigarettes, but with an important condition that they get a slice of the added revenue. The so-called Solidarity Tobacco Contribution would provide billions of dollars to the WHO, but with no ability for taxpayers or national governments to monitor how the money is spent.

I have to give the left credit. They understand that few people are willing to defend tobacco, so proposing a global tax on cigarettes sounds noble, even though the real goal is to give the WHO a permanent stream of revenue.

Brian explains, though, why any global tax would be a mistake.

What all of these proposals have in common – in addition to their obvious intended use in promoting statist policies – is that they would erode the influence of national governments, reduce international accountability, promote waste, and undermine individual sovereignty and liberty. …Before long, international organizations will begin proposing – no doubt in the name of efficiency or reducing the burden on nation states – that affected taxpayers withhold and transfer taxes directly to the international body. This would effectively mean the end of the Westphalian system of sovereign nation states, and would result in a slew of new statist policies, and increased waste and corruption, as bureaucrats make use of their greater freedom to act without political constraint.

He concludes by noting that a global tobacco tax would be the proverbial camel’s nose under the tent. Once the statists succeed in imposing the first global tax, it will simply be a matter of time before additional levies are imposed.

National governments should not be fooled. Any sort of taxing power or direct funding for international bureaucracies would undermine national sovereignty. More importantly, it will further weaken the ability of people to influence and control the policies to which they are subjected. Moreover, once the first global tax is imposed, the floodgates will be opened for similar proposals.

The point about fiscal sovereignty is also important. Not because national governments are keen to adopt good policy, but because nations at least have to compete against each other.

Over the years, tax competition among governments has led to lower tax rates on personal and corporate income, as well as reductions in the double taxation of income that is saved and invested.

Politicians don’t like being pressured to lower tax rates, which is why international bureaucracies such as the Organization for Economic Cooperation and Development, acting on behalf of Europe’s welfare states, are pushing to undermine tax competition. But so long as there’s fiscal sovereignty, governments will have a hard time imposing confiscatory tax burdens.

Any form of global taxation, however, cripples this liberalizing process since taxpayers would have no safe havens.