Archives: 04/2013

American Sugar Alliance Looks Brazilian Gift Horse in the Mouth

The American Sugar Alliance, the main lobby group for American sugar growers, released a report last week alleging that the subsidies given to Brazilian sugar growers are depressing the world price of sugar perhaps by 25 to 30 percent. But instead of thanking the Brazilian taxpayers for their gift of cheap sugar, apparently the ASA are suggesting that U.S. trade negotiators “add it to their agenda”, implying that they should challenge the subsidies using the World Trade Organization’s dispute settlement mechanism. From Inside U.S. Trade [$]:  

The American Sugar Alliance (ASA) this week released a report estimating that Brazil subsidizes its sugar industry so grossly that it may be depressing the world price for the commodity by as much as 25 to 30 percent. ASA is hoping the report will give further ammunition to its claim that eliminating the U.S. sugar program would be devastating to U.S. producers, even as sweetener users continue a fight to unravel the program through a variety of avenues. The report, authored by sugar and ethanol industry analyst Patrick Chatenay, estimates that Brazilian sugar producers benefit from as much as $2.5 billion in direct and indirect subsidies annually. Factored into that number are benefits accruing to the industry from the “economies-of-scale” for sugar production, which are driven by the heavily subsidized ethanol sector, the report argues. Jack Roney, ASA’s director of economics and policy analysis, said in a conference call with reporters that the $2.5 billion annual estimate may even be conservative. “This report underscores the importance of maintaining the current U.S. sugar policy, which was designed to fleece consumers and deny them access to cheap sugar shield consumers from foreign market manipulation and ensure an continuous flow of rents to sugar producers affordable, homegrown supply of a food staple,” he said. [Emphasis and snarky commentary added.]

I mean, really. This is getting awfully tiresome. The sugar lobby for years have been complaining that we need the sugar program, which keeps prices high for producers by keeping imports strictly controlled, in order to enable “reliable” (i.e., managed) access to sugar. Now they think sugar is too available (i.e., cheap)? For sure, if I was a Brazilian taxpayer, I would baulk at the thought of subsidising (if that in fact is the situation) the sugar addictions of my richer neighbours to my north, but as a consumer? Muito obrigado! The sugar lobby’s talking points are getting ever more creative. But none of them are valid. 

On the Capture of Tsarnaev

Over at the Guardian, Glenn Greenwald reacts to Senator Lindsay Graham’s call to keep Tsarnaev out of the criminal justice system and treat him as an “enemy combatant”:

It is bizarre indeed to watch Democrats act as though Graham’s theories are exotic or repellent. This is, after all, the same faction that insists that Obama has the power to target even US citizens for execution without charges, lawyers, or any due process, on the ground that anyone the president accuses of Terrorism forfeits those rights. The only way one can believe this is by embracing the same theory that Lindsey Graham is espousing: namely, that accused Terrorists are enemy combatants, not criminals, and thus entitled to no due process and other guarantees in the Bill of Rights. Once you adopt this “entire-globe-is-a-battlefield” war paradigm - as supporters of Obama’s assassination powers must do and have explicitly done - then it’s impossible to scorn Graham’s views about what should be done with Tsarnaev. Indeed, one is necessarily endorsing the theory in which Graham’s beliefs are grounded.

It’s certainly possible to object to Graham’s arguments on pragmatic grounds, by advocating that Tsarnaev should be eventually Mirandized and tried in a federal court because it will be more beneficial to the government if that is done. But for anyone who supports the general Obama “war on terror” approach or specifically his claimed power to target even US citizens for execution without charges, it’s impossible to object to Graham’s arguments on principled or theoretical grounds. Once you endorse the “whole-globe-is-a-battlefield” theory, then there’s no principled way to exclude US soil. If (as supporters of Obama’s terrorism policies must argue), the “battlefield” is anywhere an accused terrorist is found and they can be detained or killed without charges, then that necessarily includes terrorists on US soil (or, as Graham put it, using one of the creepiest slogans imaginable: “the homeland is the battlefield”)….

[I]t is worth noting that the US government previously did exactly what [Graham] advocated. In 2002, US citizen Jose Padilla was arrested on terrorism charges on US soil (at Chicago’s O’Hare International Airport), and shortly before he was to be tried, the Bush administration declared him to be an “enemy combatant”, transferred him to a military brig, and then imprisoned him (and tortured him) for the next 3 1/2 years without charges, a lawyer, or any contact with the outside world. That was the incident that most propelled me to start political writing, but it barely registered as a political controversy.

So as extremist as Graham’s tweets may have seemed to some, it was already done in the US with little backlash. That demonstrates how easily and insidiously extremist rights assaults become normalized if they are not vehemently resisted in the first instance, regardless of one’s views of the individual target.

Let’s recall that the police did not bypass the Bill of Rights with Oklahoma City bomber, Timothy McVeigh.  Before his execution, McVeigh got a lawyer, trial, and an appeal.  That’s our law–and there’s no fiddling with it.  And experience tells us there are very good reasons for placing limits on police questioning.  For related Cato work, go here and here.

Unexpected Praise for Australia’s Private Social Security System

As part of my “Question of the Week” series, I said that Australia probably would be the best option if the United States suffered some sort of Greek-style fiscal meltdown that led to a societal collapse.*

One reason I’m so bullish on Australia is that the nation has a privatized Social Security system called “Superannuation,” with workers setting aside 9 percent of their income in personal retirement accounts (rising to 12 percent by 2020).

Established almost 30 years ago, and made virtually universal about 20 years ago, this system is far superior to the actuarially bankrupt Social Security system in the United States.

Probably the most sobering comparison is to look at a chart of how much private wealth has been created in Superannuation accounts and then look at a chart of the debt that we face for Social Security.

To be blunt, the Aussies are kicking our butts. Their system gets stronger every day and our system generates more red ink every day.

And their system is earning praise from unexpected places. The Center for Retirement Research at Boston College, led by a former Clinton Administration official, is not a bastion of laissez-faire thinking. So it’s noteworthy when it publishes a study praising Superannuation.

Australia’s retirement income system is regarded by some as among the best in the world. It has achieved high individual saving rates and broad coverage at reasonably low cost to the government.

Since I wrote my dissertation on Australia’s system, I can say with confidence that the author is not exaggerating. It’s a very good role model, for reasons I’ve previously discussed.

Here’s more from the Boston College study.

The program requires employers to contribute 9 percent of earnings, rising to 12 percent by 2020, to a tax-advantaged retirement plan for each employee age 18 to 70 who earns more than a specified minimum amount. …Over 90 percent of employed Australians have savings in a Superannuation account, and the total assets in these accounts now exceed Australia’s Gross Domestic Product. …Australia has been extremely effective in achieving key goals of any retirement income system. …Its Superannuation Guarantee program has generated high and rising levels of saving by essentially the entire active workforce.

The study does include some criticisms, some of which are warranted. The system can be gamed by those who want to take advantage of the safety net retirement system maintained by the government.

Australia’s means-tested Age Pension creates incentives to reduce one’s “means” in order to collect a higher means-tested benefit. This can be done by spending down one’s savings and/or investing these savings in assets excluded from the Age Pension means test. What makes this situation especially problematic is that workers can currently access their Superannuation savings at age 55, ten years before becoming eligible for Age Pension benefits at 65. This ability creates an incentive to retire early, live on these savings until eligible for an Age Pension, and collect a higher benefit, sometimes referred to as “double dipping.”

Though I admit dealing with this issue may require a bit of paternalism. Should individuals be forced to turn their retirement accounts into an income stream (called annuitization) once they reach retirement age?

Scapegoating ObamaCare

Here’s how Ezra Klein spins Sen. Max Baucus’ (D-MT) preditions of an ObamaCare “train wreck”:

The GOP can try and keep the implementation from being done effectively, in part by refusing to authorize the needed funds. Then they can capitalize on the problems they create to weaken the law, or at least weaken Democrats up for reelection in 2014.

In other words, step one: Create problems for Obamacare. Step two: Blame Obamacare for the problems. Step 3: Political profit!

It never ceases to amaze me how people who want government to plan our lives are horrified when government then interferes with their plans. Here’s one way to summarize Klein’s attempt to blame ObamaCare’s opponents for ObamaCare’s failures:

Step one: Pass a law the public opposes.

Step two: Act surprised when the public continues to oppose it.

Step three: Blame the public for the law’s failures. 

Or:

Step one: Enact an immense law requiring lots of implementation funding.

Step two: Don’t include any implementation funding.

Step three: Blame opponents for not funding the implementation. 

Ooh, this is fun:

Step one: Give government new powers.

Step two: Express frustration when those powers fall into the hands of your political opponents.

Step three: Put your political opponents in camps.

I wonder if Mike Pompeo will pen a letter to Klein, too.

Press Release from Union Seeking Repeal of ObamaCare

From the Wall Street Journal:

WASHINGTON, April 16, 2013 /PRNewswire-USNewswire/ – United Union of Roofers, Waterproofers and Allied Workers International President Kinsey M. Robinson issued the following statement today calling for a repeal or complete reform of President Obama’s Affordable Care Act (ACA):

“Our Union and its members have supported President Obama and his Administration for both of his terms in office.

But regrettably, our concerns over certain provisions in the ACA have not been addressed, or in some instances, totally ignored. In the rush to achieve its passage, many of the Act’s provisions were not fully conceived, resulting in unintended consequences that are inconsistent with the promise that those who were satisfied with their employer sponsored coverage could keep it.

These provisions jeopardize our multi-employer health plans, have the potential to cause a loss of work for our members, create an unfair bidding advantage for those contractors who do not provide health coverage to their workers, and in the worst case, may cause our members and their families to lose the benefits they currently enjoy as participants in multi-employer health plans.

For decades, our multi-employer health and welfare plans have provided the necessary medical coverage for our members and their families to protect them in times of illness and medical needs. This collaboration between labor and management has been a model of success that should be emulated rather than ignored. I refuse to remain silent, or idly watch as the ACA destroys those protections.

I am therefore calling for repeal or complete reform of the Affordable Care Act to protect our employers, our industry, and our most important asset: our members and their families.

The United Union of Roofers, Waterproofers and Allied Workers, based in Washington, D.C., has 22,000 members participating in 9 regional district councils across the United States

www.unionroofers.com 

Pompeo to Baucus: You Wrote this ‘Train Wreck’

Rep. Mike Pompeo (R-KS) is having none of Sen. Max Baucus (D-MT) trying to dodge responsibility for the coming ObamaCare “train wreck.” Here’s a letter Pompeo sent to Baucus yesterday:

Dear Senator Baucus,

     I was stunned, and also saddened, to read of your complaint that Health and Human Services Secretary Kathleen Sebelius is doing an insufficient job informing the public about the Patient Protection and Affordable Care Act (PPACA), otherwise known as Obamacare.  My shock wasn’t because I disagreed: You’re right to say this legislation has led to great uncertainty for hard-working Americans, small business owners, and families.  No, I was shocked because you wrote this bill.  I was saddened because your acknowledgement of the harm caused by PPACA has come so late.

     Unlike you, the American people have opposed this law from the moment it was first introduced in Congress.  How hard was it to see that even the smartest government bureaucrats can’t competently plan something as complicated as America’s health-care sector?

     President Obama’s proposal to rescind the Medicaid disproportionate share hospital payments for 2014 is an admission that this law will not work as written.  The IRS is violating the clear language of this law by planning to spend more than half a trillion dollars and tax millions of employers and individuals without congressional authorization.

     No one in the country bears more responsibility for the complexity of this law than you.  When your supermajority couldn’t pass the bill using normal procedures, you and your Senate colleagues rammed through the final legislation by using parliamentary gimmickry.  Then, in the House, Speaker Pelosi cheerfully urged members to pass the legislation “in order to find out what’s in it.”

     This was not good policy-making, and now we’re seeing the consequences.

     Implementation is still going full steam ahead despite numerous problems—with your support.  Contrary to the legislation and the administration’s myriad promises, the SHOP exchanges have been delayed by a year.  Officials have admitted that they’ve gone from worrying over the color of fonts on a website to just making sure that the exchanges aren’t a “third world experience.”  Little to no information has been provided about how the exchanges will function.

     Each one of these problems results from legislation you authored and your colleagues supported.  And yet many Republicans, at every step of the process, issued warnings and condemnations based on exactly these inevitable problems. We warned that businesses would drop coverage. We warned that Americans would not be able to keep a doctor or plan that they liked. We warned that insurance premiums would increase.  

     Secretary Sebelius’s implementation of the law is certainly flawed, but the policy process produced a law that could not possibly be implemented successfully.  As legislators, it is our responsibility to write bills that clearly explain our meaning and have achievable goals.  By your own admission, this law is a disaster.

     Make no mistake.  Unless you act before it’s too late, the American people are going to hold you personally responsible for the failings of this law that negatively impact their jobs, their health, and their families.  You drafted it, you twisted arms to get it passed, and, until now, you have lauded it as a model for all the world.  Your attempts to pass the buck to President Obama’s team will not work, nor will they absolve you of responsibility for the harm that you have brought via this law.

     Republicans have repeatedly offered legislation to repeal PPACA and replace it with more sustainable reforms that would have bipartisan support.  Perhaps we can work together to fix this mess before it’s too late.  We stand ready to repeal the law and put forward legislation that will truly benefit patients and their doctors.

     I look forward to hearing from you.

     Sincerely,

     Mike Pompeo

     Member of Congress

     Kansas 4th District

Immigration: Government Can Only Regulate Legal Markets

Details about the Boston bombers are surfacing by the minute, but many opponents of immigration reform are already using it as an excuse to oppose reform. There is no reason to assume that continuing the status quo immigration policy will prevent future terrorist attacks.

Legalizing the peaceful and otherwise law-abiding unauthorized immigrants here will allow law enforcement to focus on legitimate national security and crime threats. It is more costly for the government to weed out criminals and national security threats when there is such a large and relatively peaceful unauthorized immigrant population. Shrinking the size of that immigrant black market quickly and cheaply through responsible legalization, and allowing more immigration of workers in the future, will channel scarce government resources toward legitimate security and criminal screenings and away from enforcing economic protectionism. Every minute that a government official currently spends raiding workplaces and checking whether immigrants will affect the wages of technology workers or Washington lawyers is a waste.

Removing peaceful people from the immigration black market and channeling future immigrants into a legal system—after security, criminal, and health checks—is likely to increase safety, not diminish it. The number of permitted immigrants should be determined based on the demands of the market, not the whims of politcs. The government should shed its economic protectionist role in immigration enforcement and instead devote its resources to weeding out the terrorist and criminal needles in an otherwise peaceful and productive haystack.