Archives: 05/2015

Problematic Prairie Pup Protections Put “Propriety” In Perspective

The U.S. Fish and Wildlife Service, exercising power purportedly delegated to it pursuant to Congress’s power to regulate interstate commerce, has classified the countless Utah prairie dog, which has no commercial value and has never dug holes in any lands beyond southwestern Utah, as “threatened” under the Endangered Species Act (ESA), thereby prohibiting the “take” of said prairie dogs—which essentially means doing anything that disturbs the little rodents’ habitat. If the varmints invade their property, human residents cannot build homes, start or operate certain businesses, or, in the case of Cedar City, protect playgrounds, an airport, and a local cemetery from their burrowing and barking.

Joining as People for the Ethical Treatment of Property Owners (PETPO), and represented by the Pacific Legal Foundation, residents filed suit, claiming that the “take” rule for the noncommercial, intrastate Utah prairie dog exceeds Congress’s power to regulate interstate commerce. Congress has the power to regulate “commerce among the states,” not species. PETPO’s suit argues that the ESA cannot reach activities that are intrastate and noncommercial—activities, for example, like filling holes in your lawn or otherwise developing land where prairie dogs might live. The federal district court agreed and therefore struck down the “take” regulation. The case is now before the Tenth Circuit Court of Appeals.

Joined by constitutional law professors Jonathan H. Adler, James L. Huffman, and Josh Blackman, Cato has filed a brief supporting the landowners. We argue, consistent with prior Supreme Court precedent, that the Constitution’s Commerce Clause affords Congress the power to regulate only items, channels, or instrumentalities of interstate commerce. If Congress wants to regulate activities that “substantially affect” interstate commerce, that power rests in the Necessary and Proper Clause, which gives Congress the means to regulate interstate commerce—provided those means are both necessary and proper. But the prohibited activities do not substantially affect interstate commerce. Moreover, the “take” rule is not necessary for regulating interstate commerce; Congress can regulate that commerce without prohibiting these residents from using their property. Nor is the rule proper since the power to regulate uses of property that do not affect interstate commerce belongs to the states. For those several reasons the “take” rule as applied to the Utah prairie dog exceeds the powers the Founders and the Founding generation delegated to Congress.

Corporate Welfare by James T. Bennett

Across my desk this morning: James Bennett’s new book, Corporate Welfare: Crony Capitalism That Enriches the Rich.

Bennett is a highly regarded George Mason professor of economics and a prolific author of public policy books. His new book opens with a discussion of corporate welfare in the Early Republic, and then provides four case studies on more recent issues. The case studies are the Supersonic Transport (SST) project of the 1960s, state and local economic development subsidies, the use of eminent domain in Detroit to benefit General Motors, and the Export-Import Bank.

The last item is timely given the current battle over Ex-Im between the fiscal reform and business-subsidy wings of the Republican Party. It is an important battle because a win for reform on Ex-Im might generate momentum to wean American businesses off of other types of subsidies. I also think that ending Ex-Im would make recipient businesses more competitive and efficient in the long run. Subsidies produce industrial weakness, not strength.

Here’s what I said about Corporate Welfare on the book’s dust jacket:

Professor Bennett begins his excellent new book about corporate welfare with Alexander Hamilton’s misguided schemes. Fortunately, those schemes were mainly blocked in the early Republic by the Jeffersonian party. The problem today—as Bennett skillfully documents—is that business subsidies are a bipartisan disease, chronic at all levels of government. Few politicians stand up for the taxpayer, despite citizen opposition to hand-outs from across the political spectrum. Hopefully, Bennett’s stomach-turning stories will convince more people of the evils of crony capitalism.

United States Should not Confront China over Other Nations’ Territorial Disputes

The Asian order is under strain as the People’s Republic of China has become an economic colossus with growing military might and diplomatic influence. The PRC is asserting territorial claims once considered impractical or worthless. Brunei, Japan, Malaysia, Philippines, and Vietnam all stand opposed to these claims. 

Washington is not a claimant, but has sparred with the PRC over the U.S. Navy’s legal right to engage in intelligence gathering in Chinese waters. More important, America has a formal military alliance with Japan which, the president declared, covers disputed territories. Washington’s military relationship with Manila is looser, but Philippine officials are seeking a similar territorial guarantee.

The Obama administration has escalated U.S. involvement by sending American aircraft over islands reclaimed by China and discussing joint patrols with the Japanese.

Most of the islands are intrinsically worthless and provide little security value. Maritime rights are affected but, in peacetime, the difference wouldn’t matter so much. In wartime, everything would depend on the capabilities of the contending navies.

The economic benefits from control are real but still relatively small compared to the economies of most of the claimants. For most of the countries, national ego is the primary issue.

Trade Promotion Authority and the Trans-Pacific Partnership: The Heavy Lifting Lies Ahead

On Friday night of Memorial Day weekend, the U.S. Senate passed the Bipartisan Congressional Trade Priorities and Accountability Act, better known as Trade Promotion Authority (TPA), by a vote of 62-38.  In light of what appeared to be formidable opposition pressing difficult demands that could have seriously prolonged the Senate TPA debate or derailed the Trans-Pacific Partnership (TPP) negotiations altogether, passage of the bill in relatively short order is a credit to the commitment of Majority Leader McConnell, Finance Committee Chairman Orrin Hatch, and Finance Committee Ranking Member Ron Wyden to getting it done.  But proponents of the trade agenda still have a long road ahead.

When Congress reconvenes next week, debate and consideration of a similar TPA bill will be one of the first orders of business in the House of Representatives.  Getting to 218 votes will test the persuasive powers of Ways and Means Chairman Paul Ryan, Speaker John Boehner, and President Obama, who will need to woo Democratic support without losing Republican support in the process. The goal is to pass TPA in a form that is sufficiently similar to the Senate version to avoid the need to reconcile different versions in conference, which would necessitate a second vote in the House. 

Meanwhile, with trade negotiators seeing some progress on TPA, the TPP talks appear to have begun to move into the “end-game” phase.  Although it is uncertain how long this phase of the negotiation might last – because it remains unclear how many issues are outstanding, how much distance there is between the parties, and whether unexpected demands requiring alterations to previously settled parts of the agreement will be made – it is now evident that the soonest Congress could vote to implement the TPP is early 2016, with the distinct and growing possibility that the matter will fall to a lame duck Congress and president or, even, to the next president and the 115th Congress.

Stay tuned for an analysis that fleshes out some of the issues likely to affect the direction and outcome of the trade agenda, including some possible hurdles and other twists and turns in the road.

Pataki’s Fiscal Record

George Pataki, the governor of New York from 1995 to 2006, is expected to announce the launch of his presidential campaign tomorrow. Pataki joins an already crowded Republican field and is expected to highlight his record as governor to win support. A review of Pataki’s record presents a question: which Pataki will be running for the presidency?

Pataki’s first several years in office showed promise, from a small-government perspective. He proclaimed that his administration was “overthrowing all the unworkable liberal abstractions of the past and replacing them with a revolution of conservative ideas.” His actions matched his claims. His first two budgets included a number of spending cuts. New York general fund spending decreased five percent in his first year.  He eliminated 12,000 of the state’s 200,000 government jobs. In total, spending was cut by $2 billion. Pataki coupled his spending cuts with tax cuts. He cut the personal income tax by 25 percent

His actions during those two years earned him an “A” on Cato’s Fiscal Policy Report Card on America’s Governors in 1996. The authors of the report said that Pataki “had far and away the most impressive fiscal record in his first two years” among the 20 new governors covered in the report.

Pataki seems to have lost his zeal for fiscal restraint after his first two years. He supported a 55 cent increase to the cigarette tax and followed it with another 39 cent increase in the tax. He pushed for a $1.5 billion bond issue for infrastructure. General fund spending increased by seven percent from fiscal year 1998 to fiscal year 1999. It continued to grow after that. It grew five percent from fiscal year 2004 to 2005, nine percent from fiscal year 2005 to 2006, and an astounding 10.6 percent from fiscal year 2006 to 2007. 

Double Standards in American Policing

Over at the Huffington Post, Ryan J. Reilly reports that St. Louis was one of the cities to receive MacArthur Foundation grants to improve the relationship between the police and the public. When discussing the award, the police chief made some frank admissions about the double standard that infects policing in the greater St. Louis area:

In an interview ahead of the announcement, St. Louis County Police Chief Jon Belmar called the reform effort a “positive that came out of a tragedy.”

[…]

Belmar… said it is simply unrealistic for law enforcement to be able to enforce the hundreds of thousands of outstanding warrants in the county, many of them in connection with missed court dates for minor violations of municipal codes.

“I’m looking at cities that have 50,000, 39,000, 30,000 outstanding warrants today. You’re never going to catch up to that,” Belmar said. “You might have a city like Pine Lawn, which is 360 acres, that has 30,000 outstanding warrants. How can that be? The math doesn’t work.”

Belmar acknowledged that the protests in Ferguson have given a voice to populations that had been overlooked in the past.

“If you went to a very affluent area in St. Louis County, how long do you think a program would last where speed cameras were put up on arterial roads coming into subdivisions, and people were given letters saying they were going to be arrested? It would last about five hours,” Belmar said.

Balanced Budget Requirements Don’t Work as Well as Spending Limits

When I first came to Washington back in the 1980s, there was near-universal support and enthusiasm for a balanced budget amendment among advocates of limited government.

The support is still there, I’m guessing, but the enthusiasm is not nearly as intense.

There are three reasons for this drop.

  1. Political reality - There is zero chance that a balanced budget amendment would get the necessary two-thirds vote in both the House and Senate. And if that happened, by some miracle, it’s highly unlikely that it would get the necessary support for ratification in three-fourths of state legislatures.
  2. Unfavorable evidence from the states - According to the National Conference of State Legislatures, every state other than Vermont has some sort of balanced budget requirement. Yet those rules don’t prevent states like California, Illinois, Connecticut, and New York from adopting bad fiscal policy.
  3. Favorable evidence for the alternative approach of spending restraint - While balanced budget rules don’t seem to work very well, policies that explicitly restrain spending work very well. The data from Switzerland, Hong Kong, and Colorado is particularly persuasive.

Advocates of a balanced budget amendment have some good responses to these points. They explain that it’s right to push good policy, regardless of the political situation. Since I’m a strong advocate for a flat tax even though it isn’t likely to happen, I can’t argue with this logic.

Regarding the last two points, advocates explain that older versions of a balanced budget requirement simply required a supermajority for more debt, but newer versions also include a supermajority requirement to raise taxes. This means - at least indirectly - that the amendment actually is a vehicle for spending restraint.