Tag: Barack Obama

The RTTT Made Me Do It!

Adopting national curriculum standards – the so-called “Common Core” – is voluntary for states. That is what we’ve long been told, and that is what the text of a new report looking at implementation of the standards repeats. But within that report is powerful evidence of how involuntary and federally led Common Core adoption has truly been.

According to the report, which furnishes results of a November 2010 survey of state education officials, the vast majority of states that had adopted the Common Core as of November had done so at least in part because of “the possible effect” of doing so “on success of our Race to the Top application.” Race to the Top, you might recall, was a $4.35 billion federal contest for education funding, and to maximize their chances of winning states had to adopt national standards.

The report tries to downplay this revelatory finding by emphasizing that a slightly larger number of states – 36 versus 30 – cited “the rigor” of the Common Core in their adoption decisions. But what state education official is going to say that adoption was only about money and not also at least some educational considerations? On the flip side, that officials in any, much less thirty, states were willing to concede the importance of ugly federal-dollar chasing says a ton. In particular, it says what reasonable observers have been stating all along: National standards have largely been bought by Washington, not “voluntarily” adopted by states.

The Incredible Expanding Afghan War

This simple chart dramatizes something that I don’t think most Americans realize: the tripling of U.S. troops in Afghanistan by President Obama.

U.S. Troops in Afghanistan

Now it’s true that when candidate Barack Obama vowed, “I will bring this war to an end in 2009,” he was talking about Iraq. In July 2008 he suggested that he would send two more brigades – about 8000 troops – to Afghanistan. He has far exceeded that, and we can only wonder whether the voters who responded to his antiwar message anticipated that he would increase the number of troops in Afghanistan by almost as much as he reduced the number in Iraq.

Obama’s Afghanistan War Plan

President Obama released his Afghanistan war review today. It highlights progress on the battlefield against insurgents, the success of Special Forces operations and drone strikes, and achievements in training the Afghan security forces.

I have four thoughts on the matter:

First, scattered throughout the document are passages such as “al-Qa’ida’s senior leadership in Pakistan is weaker,” “[a]l-Qa’ida’s senior leadership has been depleted,” and “al-Qa’ida’s leadership cadre have diminished.” However, can we deter more jihadists than our efforts help to inspire? After all, “fighting them over there so they don’t fight us here” did not deter Pakistani-American Faisal Shahzad and his incompetently constructed bomb in Times Square. “Fighting them over there so they don’t fight us here” did not deter failed British “shoe-bomber” Richard Reid. “Fighting them over there so they don’t fight us here” did not deter Umar Farouk Abdulmutallab, the so-called “underwear bomber,” who tried to blow up a Detroit-bound airliner on Christmas Day.

Second, although there is a persuasive case to be made that the United States should disrupt, dismantle, and defeat al Qaeda in Afghanistan and Pakistan, the administration never clarifies explicitly how it will encourage Pakistan to do more to fight militants that frequently attack U.S. forces in Afghanistan. The review claims “improved understanding of Pakistan’s strategic priorities,” but policy considerations seem to fail to take into account that no amount of pressure or persuasion will affect Pakistan’s decision to tackle extremism, particularly when its strategic priorities are tied directly to reinforcing Islamist bonds across its borders as a buffer against Indian encirclement.

The third core reality ignored in the review is the importance of regional actors, namely Iran, India, Saudi Arabia, Russia, China, and Afghanistan’s Central Asian neighbors (this list is not meant to preclude the inclusion of other countries). As long as the United States is at war, regional rivalries and insecurities will play out in Afghanistan at the expense of Afghan civilians and coalition forces.

Lastly, if the United States insists on pursuing the so far fruitless mission to create a viable Afghan government and economy, then U.S. officials should stop saying that the United States is not nation building in Afghanistan (and stop using the oft-repeated euphemism “capacity building”). After all, what is nation building? Perhaps in the words of Secretary of State Hillary Clinton it is providing Afghanistan’s pervasively corrupt and predatory government with “economic, social and political development, as well as continued training of Afghan security forces.”

Overall, modest and ephemeral tactical gains have given the administration cause for optimism. It also gives the military a chance to buy more time, which means that the president will stick to his pledge to begin withdrawing troops in July 2011. But a residual U.S. troop presence will remain in the country long after that official date.

Any policy, including war, makes sense only insofar as the United States and its citizens receive significant benefits in exchange for that policy’s political and economic costs. The Afghan War’s current cost-benefit disparity would call for a scale-down in mission objectives and correspondingly in troop presence. But for now, the United States would rather fixate on pipe dreams and on asserting America’s permanent role in Central Asia.

Promoting Free Trade—Sort Of

The U.S. and South Korean governments have agreed to changes in the free trade agreement negotiated by the Bush administration. The president rightly lauded the FTA as a good deal for Americans:

“This agreement shows the U.S. is willing to lead and compete in the global economy,” the president told reporters at the White House, calling it a triumph for American workers in fields from farming to aerospace.”

Approving the FTA has taken on added urgency after the European Union negotiated a similar accord with the South. Once that agreement takes effect, Europeans would have better access than Americans to the world’s 13th largest economy. Protectionism is always foolish, but especially so when one’s competitors are promoting open markets.

The accord also offers important geopolitical benefits. With much nervousness in the U.S. and throughout East Asia over an increasingly assertive China, Washington should work to break down barriers to Americans trading with China’s neighbors. Already Koreans do more business with China than the U.S. While the FTA won’t reduce the appeal of products from next door China in South Korea, it will allow American producers to compete more freely in that market.

The president deserves credit for pushing the agreement forward, but he also needlessly held up ratification by two years. Moreover, his “fix” punishes American consumers. As the official government fact sheet explains:

Car Tariff Elimination: The 2007 agreement would have immediately eliminated U.S. tariffs on an estimated 90 percent of Korea’s auto exports, with remaining tariffs phased out by the third year of implementation. The 2010 supplemental agreement keeps the 2.5 percent U.S. tariff in place until the fifth year. At the same time, Korea will immediately cut its tariff on U.S. auto imports in half (from 8 percent to 4 percent), and fully eliminate that tariff in the fifth year.

Truck Tariff Elimination: The 2007 agreement would have required the United States to start reducing its tariff on Korean trucks immediately and phase it out by the agreement’s tenth year. The 2010 supplemental agreement allows the United States to maintain its 25 percent truck tariff until the eighth year and then phase it out by the tenth year – but holds Korea to its original commitment to eliminate its 10 percent tariff on U.S. trucks immediately.

That is, the Obama administration forced a delay in the reduction of U.S. auto tariffs. This obviously hurts Korean exporters, but the highest price will be paid by American consumers. The provision is simply a special interest payoff to the auto industry, which already has benefited from a big federal financial bail-out. So much for bringing “change” to Washington.

Free trade is good for Americans. That means bringing down foreign trade barriers. It also means bringing down U.S. trade barriers.

Taxes and Uncertainty

It looks like Republicans and Democrats may have made a deal on blocking the tax increases that loom on January 1. No details yet, but reports are that they will extend the current tax rates for one to three years. That means investors and businesses will face continuing uncertainty and the real prospect of a tax increase in one to three years.

Unfortunately, pundits continue to use terms like “extending the Bush tax cuts” or “tax breaks for the wealthy.” In reality, American taxpayers have faced a particular range of personal income tax rates for the past eight years. If the 2001 and 2003 tax laws are allowed to expire, then Americans will see increased tax rates on income, dividends, capital gains, and estates. So the issue is not “tax cuts” or “tax breaks,” it’s whether we should increase taxes in 2011.

And as I noted before, President Obama understands this. He said in mid-November, “I want to make sure that taxes don’t go up for middle class families starting on January 1st.”

The president’s got it right. Taxes are about to go up, and the debate in Congress is whether that’s a good idea. Unfortunately, President Obama does want taxes to go up for business owners, corporate executives, and investors on January 1, the very people whose decisions have the most immediate impact on economic growth and job creation.

And that’s the issue we should be debating: Is it a good idea, especially in a time of continuing high unemployment and slow growth, to raise taxes on investors and entrepreneurs. And even if Congress delays the decision, is it a good idea to leave investors uncertain about what tax rates they’ll face in a year or two?

Let’s hope Congress and the Obama administration soon learns that higher taxes, more regulation, a larger share of GDP shifted to government, fears of Fed monetization of soaring debt — not to mention newspaper reports of Obama budgeteers “flipp[ing] through the tax code, looking for ideas” and threats of “an array of actions using his executive power to advance energy, environmental, fiscal and other domestic policy priorities” — can only discourage employers, investors, and entrepreneurs. Robert Higgs has cited the role of “regime uncertainty” in prolonging the Great Depression, as investors worried about what FDR might do next. Will Wilkinson points to Treasury Secretary Tim Geithner’s saying “businesses want certainty. They need certainty so they can make long-term plans today.” Unfortunately, Will says, “Creating completely irresponsible, economically chilling regime uncertainty would appear to be the basic modus operandi of the Obama administration.” A temporary extension of today’s tax rates, with a continuing threat of a rate hike in a year or two, is entirely in keeping with a regime of uncertainty.

Deficit Reduction Commission Says Military Spending Can and Must be Cut

President Obama’s Fiscal Commission’s report is out and they have wisely kept military spending on the table. Having not seen the accompanying list of specific cuts, it seems that rather than micromanage DoD’s decisions with respect to which weapons systems to cut or keep, the commissioners have laid down a different marker: find the cuts that make sense, but understand that the business-as-usual of the past decade is over.

The report fixes on a number of spending cuts and reforms that Benjamin Friedman and I call for in the Cato Policy Analysis “Budgetary Savings from Military Restraint” including cuts to the civilian workforce (see recommendation 1.10.4). They also hold fast to the proposition that all spending must be on the table, and reject out of hand the notion that military spending must be held sacrosanct. This is bad news for the “defending defense” crowd.

I am not going to comment on the Commission’s other proposals with respect to taxes, social security, health care, etc.  As for specific military spending cuts, this report is less detailed than the preliminary report issued a few weeks ago by Co-chairs Bowles and Simpson. It is appropriate, however, to task the Department of Defense with identifying additional savings (as they do in recommendation 1.11). Responsible cuts can be made if the Pentagon and the White House adopt a strategy of restraint, one that husbands American resources, focuses on a few core missions vital to U.S. national security, and requires other countries to take primary responsibility for their defense.

Happy National Entrepreneurs’ Day?

President Obama has proclaimed today to be National Entrepreneurs’ Day. The president who has brought us regime uncertainty, more regulations, more government intrusion into the economy, more debt, and is proposing to raise taxes on productive businesses and individuals wants to celebrate entrepreneurship?

I was alerted to National Entrepreneurs’ Day via an email (not online) from the Department of Commerce’s Economic Development Administration. The EDA email makes it clear that the administration wishes to celebrate political entrepreneurship, not market entrepreneurship.

In his book, The Myth of the Robber Barons, historian Burton Folsom explains the difference:

A key point about the steamship industry is that the government played an active role right from the start in both America and England. Right away this separates two groups of entrepreneurs — those who sought subsidies and those who didn’t. Those who tried to succeed in steamboating primarily through federal aid, pools, vote buying, or stock speculation we will classify as political entrepreneurs. Those who tried to succeed in steamboating primarily by creating and marketing a superior product at a low cost we will classify as market entrepreneurs. No entrepreneur fits perfectly into one category or the other, but most fall generally into one category or the other. The political entrepreneur often fits the classic Robber Baron mold; they stifled productivity (through monopolies and pools), corrupted business and politics, and dulled America’s competitive edge. Market entrepreneurs, by contrast, often made decisive and unpredictable contributions to American economic development.

As Obama administration achievements, the EDA touts increased Small Business Administration subsidies and a smorgasbord of industrial planning contained in last year’s stimulus package:

The American Recovery and Reinvestment Act served as the cornerstone for this new foundation by pumping $100 billion into the economy to help us tackle some of the grand challenges of the 21st century in diverse fields from healthcare IT and health research, to clean energy, to smart grids, and high speed trains. Recovery Act investments are creating a virtuous cycle of investment, innovation, and job creation that have so far led to the creation of 3 million new jobs.

Wrong. The stimulus has fueled an unvirtuous cycle of political entrepreneurship in which business interests chase federal hand-outs for endeavors sanctioned by inside-the-Beltway planners. Political entrepreneurs have less incentive to innovate and are naturally reluctant to criticize the government because they don’t want to bite the hand that’s feeding them. As Chris Edwards puts it, they become “tools of the state.”

If the administration were really interested in promoting entrepreneurship, it would repudiate the anti-market policies it has pursued thus far. That’s obviously not going to happen, so it’s going to be up to congressional Republicans to repudiate their own history of supporting federal subsidies. In other words, the GOP’s re-found fondness for limited government rhetoric is going to have to actually be matched by action.