Archives: June, 2012

Political Support for Energy’s Loan Guarantees

Several weeks ago, 127 House Republicans joined 155 Democrats to defeat an amendment introduced by Rep. Dennis Kucinich (D-OH) and Rep. Tom McClintock (R-CA) that would have shut down the Department of Energy’s Title 17 loan guarantee program. That’s the program that gave birth to Solyndra, which has come to symbolize the failure of the Obama administration’s crony capitalist policies.

Why would members of Congress, and Republicans in particular, continue to support this federal boondoggle incubator? A new paper from Cato adjunct scholar Veronique de Rugy that looks at the Energy loan guarantees explains:

One reason is it serves three powerful constituencies: lawmakers, bankers, and the companies that receive the subsidized loans. Politicians are able to use loan programs to reward interest groups while hiding the costs. Congress can approve billions of dollars in loan guarantees with little or no impact to the appropriations or deficit because they are almost entirely off-budget. Moreover, unlike the Solyndra case, most failures take years to occur, allowing politicians to collect the rewards of granting a loan to a special interest while skirting political blame years later when or if the project defaults. It’s like buying a house on credit without having a trace of the transaction on your credit report.

Veronique notes that most of the money for the loan guarantees issued under section 1705 of Title 17 have gone to large and established companies:

These include established utility firms, large multinational manufacturers, and a global real estate investment fund. In addition, the data shows that nearly 90 percent of the loans guaranteed by the federal government since 2009 went to subsidize lower-risk power plants, which in many cases were backed by big companies with vast resources. This includes loans such as the $90 million guarantee granted to Cogentrix, a subsidiary of Goldman Sachs. Currently, Goldman Sachs ranks number 80 on the list of America’s Fortune 500 companies.

In recent testimony before the House Budget Committee, Chris Edwards and I also discussed the crony nature of the president’s “green” energy subsidies:

President Obama’s green energy programs illustrate how corporate welfare creates corrupting relationships between businesses and politicians. The Washington Post found that “$3.9 billion in federal [energy] grants and financing flowed to 21 companies backed by firms with connections to five Obama administration staffers and advisers.” It also noted that the “main players in the Solyndra saga were interconnected in many ways, as investors enjoyed access to the White House and the Energy Department.” According to the New York Times, Solyndra “spent nearly $1.8 million on Washington lobbyists, employing six firms with ties to members of Congress and officials of the Obama White House.”

American businesses, of course, have a right to lobby the federal government. But given that reality, Congress throws fuel onto the corruption fire by creating business subsidy programs. When subsidy money flows out the door from Washington to businesses at the same time that money flows back from businesses to Washington for lobbying, it’s no surprise that we get influence-peddling. Corporate welfare undermines honest and transparent governance, and Americans are sick and tired of the inevitable scandals.

Unfortunately, most members of Congress apparently aren’t sick and tired of it.

More on Disclosure and Intimidation

Today Politico Arena asks:

Are conservatives hypocritical to argue for eliminating campaign finance restrictions and disclosure requirements, which they once supported, or does their argument regarding donor harassment carry some weight?

Roger Pilon made some good points about conservative donors facing harassment, which might explain shifts in conservative sentiment on the issue. In my own response, I tried to remind readers that people on all sides of controversial issues have reason for concern about disclosure and intimidation:

There are good arguments for disclosure, especially with regard to contributions to candidates: Let the voters see who might be influencing a candidate. Of course, there are lots of people who have influence without being major donors - mayors and governors, leaders of voting blocs and interest groups, editors and publishers. Maybe they should all be identified, too.

The case for disclosure is even weaker when it comes to supporters and opponents of initiatives. In that case there is no officeholder to influence. Once the law is passed, it’s the law. And we do know that there have been instances of bullying and intimidation based on donor disclosure. In the past both the NAACP and the Socialist Workers Party have petitioned to protect their donors from publicity and resulting abuse. Many businessmen shied away from supporting term-limits efforts to avoid offending incumbent officeholders. A couple of decades ago, people didn’t want to be known as contributors to gay-rights causes; these days, it may be worse to be known as an opponent of gay rights. In either case, disclosure has a chilling effect on political involvement.

The problems with disclosure may be greater today because of the increased polarization of politics and the role of the internet in both encouraging polarization and making it easy to identify and expose donors. Disclosure is a complex issue, but we should not ignore the chilling effect it can have on political engagement.

Supreme Court Finally Resists Temptation to Cite Foreign Law When Interpreting the U.S. Eighth Amendment

The Supreme Court decided more than just the Arizona immigration and Montana campaign-finance cases yesterday; by a 5-4 margin, it struck down state laws that impose mandatory sentences of life-without-parole (LWOP) on juveniles who have committed murder.  The Court left open the possibility of discretionary juvenile LWOP sentences, provided that the sentencing judge takes into account the defendant’s youth and maturity.

I don’t have much to say about this ruling—Eighth Amendment jurisprudence is too hopelessly subject to national surveys, multi-factor balancing tests, and the whims of Justice Kennedy to begin to discuss here—other than to point out one glaring ray of light: unlike past such cases, the Court did not cite foreign law as support for its ruling.  I’ve pointed out the problems with doing that many times before, and Cato even joined a brief two years ago specifically on this issue in the case involving juvenile LWOP  for non-homicide crimes.  Suffice it to say, whatever you think about “cruel and unusual punishment,” the only society whose ”evolving standards of decency” are relevant to interpretations of the U.S. Constitution’s Eighth Amendment is the United States.

More on this point from Hans Bader over at CEI’s blog.

Campaign Finance, Disclosure, and Intimidation

Today Politico Arena asks:

Are conservatives hypocritical to argue for eliminating campaign finance restrictions and disclosure requirements, which they once supported, or does their argument regarding donor harassment carry some weight?

My reply:

Let’s just say that conservatives and libertarians have responded to events. When Obama singles out Romney donors for shame for “betting against America” and implicitly threatens them with investigation and more, when corporations that support the work of the American Legislative Exchange Council are harassed until they withdraw their support, and when petition signers in Los Angeles and Washington State are “outed” and then harassed and threatened by opponents, we’ve reached a new low in our political discourse. It’s not enough to disagree about a political issue: you’ve got to silence and even destroy your opponent.

And for what? So we’ll know that the Koch brothers support Republican candidates and free-market causes, or that George Soros supports Democratic candidates and collectivist causes? As if we didn’t know that already. The rationale for disclosure is as phony as the corruption-prevention rationale for our myriad federal and state campaign finance restrictions. Long before those restrictions were enacted, quid-pro-quo corruption was effectively prohibited by our ordinary laws, as it still is today in about half of our states. In the rest, and at the federal level, restrictions work simply to benefit incumbents and, where disclosure is required, to enable those who are so inclined to harass and intimidate their opponents.

The rationale for the confidentiality of campaign contributions is no less persuasive than the rationale for the secret ballot. Would proponents of disclosure want to eliminate the secret ballot, so we know who’s voting for whom? (There’s an opportunity for intimidation!) Then why treat contributions any differently? Sure, rich people can contribute more than poor people. But for every Wall Street there’s a Hollywood, for every corporation there’s a union (with unique advantages), so no one has a corner of contributors—unless, of course, campaign finance laws rig the game in one direction. And so we’re back to incumbent protection, the dirty little secret of the “reform” game.

The Balloon Effect in Cocaine Production in the Andes

The Wall Street Journal has a lengthy story today [requires subscription] about the booming cocaine business in Peru, where production has skyrocketed in recent years. The report serves a reminder of the balloon effect in U.S.-led efforts to eradicate cocaine production in the Andean region. Gil Kerlikowske, the Obama administration’s drug czar, has repeatedly pointed out that production in Colombia dropped by 61 percent between 2001 and 2009. But as the graph below illustrates, cocaine manufacturing has just moved back to Peru, which according to some estimates, might already be the world’s largest producer of cocaine:

* Average range of total production in the Andean region.
Source: United Nations Office on Drugs and Crime.
 

As we can see, Peru was the world’s largest source of potential cocaine production back in the early 1990s, but production of coca moved to Colombia once the regime of Alberto Fujimori cracked down on drug trafficking. By 2000, Colombia was by far the largest producer. However, due to eradication efforts by then president Álvaro Uribe under the U.S.-sponsored Plan Colombia, production came down in that country. But it didn’t go away, it just moved back to Peru. Overall, the World Drug Report by the UN Office on Drugs and Crime estimates that cocaine production levels in the Andes are pretty much the same as a decade ago.

Mr. Kerlikowske should present the whole picture next time he boasts about declining cocaine production in Colombia.

Secret Cell Phone Tracking in the Sunshine State

The South Florida Sun-Sentinel provides us with one more data point showing the growing frequency with which police are using cell phones as tracking devices—a practice whose surprising prevalence the ACLU shone light on in April. In fiscal year 2011-2012, the first year Florida kept tabs on cell location tracking, state authorities made 171 location tracking requests—and apparently hope to expand the program.

The article alludes to a couple of specific cases in which location tracking was employed—to find a murder suspect and a girl who was thought to have been kidnapped—both of which are perfectly legitimate uses of the technology in principle. In general, if there’s enough evidence to issue an arrest warrant, the same evidence should support a warrant for tracking authority when the suspect’s location isn’t immediately known. In cases where police have a good faith belief that there’s a serious emergency—such as a suspected kidnapping—it’s even reasonable to allow police to seek location information without a court order, as is standard practice with most other kinds of electronic records requests. But the Sun-Sentinel report is also unsettlingly vague about the precise legal standard followed in non-emergency cases. According to a law enforcement official quoted in the story, the Florida Department of Law Enforcement’s Electronic Surveillance “always seeks judicial approval to trail someone with GPS,” while the written policy only “instructs agents to show probable cause for criminal activity to the department’s legal counsel to see if a court order is necessary,” implying that it sometimes is not necessary.

The term “court order,” however, is quite broad: the word that’s conspicuously absent from these definitions is “warrant”—an order meeting the Fourth Amendment’s standards. In the past, the Justice Department has argued that many kinds of location tracking may be conducted using other kinds of authority, such as so-called “pen register” and “2403(d)” orders. Unlike full-fledged search warrants, which require a showing of “probable cause” to believe the suspect has committed a crime, these lesser authorities require only “reasonable grounds” to believe the information sought would be “relevant” to some legitimate investigation. That is, needless to say, a far lower hurdle to meet.

Police refusal to discuss the program with reporters is also part of a larger pattern of secrecy surrounding location tracking. As Magistrate Judge Stephen Smith observes in a recent and important paper, such orders are often sealed indefinitely—which in practice means “forever.” Unlike the targets of ordinary wiretaps, who must eventually be informed about the surveillance after the fact, citizens who’ve been lojacked may never learn that the authorities were mapping their every move. Such secrecy may be useful to police—but it also means that improper use of an intrusive power is far less likely to ever come to light.

Location tracking can be a valuable tool for an array of legitimate law enforcement purposes—but especially in light of the Supreme Court’s unanimous decision in United States v. Jones, it has to be governed by clear, uniform standards that satisfy the demands of the Fourth Amendment.

The Trouble with Centralization

Jay P. Greene’s discussion of national education standards in the Wall Street Journal applies to more than just education:

Proposing that all children meet the same standards is essentially proposing a nationalized system of education. Some reformers may argue otherwise, but the truth is that standards drive testing, which in turn drives what material is covered, as well as how and when it is taught.

Such uniformity would only make sense if: 1) there was a single best way for all students to learn; 2) we knew what it was; 3) we could be sure the people running this nationalized education system would adopt that correct approach; and 4) they would remain in charge far into the future. But that isn’t how things are.

Those are good cautions to keep in mind when we discuss centralized and mandatory plans for anything, from subsidizing green energy to nation-building in Afghanistan.