Tag: corruption

How Government Actually Works, Especially Unaccountable, Multi-Jurisdictional Government

In my book Libertarianism: A Primer, I have a chapter of pop public choice called “What Big Government Is All About.” The Metropolitan Washington Airports Authority isn’t really big government, just a local D.C.-Virginia-Maryland authority to run a couple of airports. But it demonstrates some of the problems you can expect from economic entities that don’t face a market test. Here’s how the Washington Post story today begins:

Meet the Kulle family: mom Helen, daughter Ann Kulle-Helms, son-in-law Douglas Helms, son Albert, daughter-in-law Michele Kulle and Michele’s brother, Jeffrey Thacker.

They all worked for the Metropolitan Washington Airports Authority. All at the same time.

And what about Dad, I wonder. No job for Dad?

Anyway, officers of the agency don’t seem perturbed by the story.

“There were no clear-cut guidelines,” said MWAA board member H.R. Crawford, who will leave the board next month when his term expires.

Crawford, who has had at least three relatives, including a daughter-in-law, work at the agency, said family members are employed frequently, particularly among board members.

“If you ask a third of those folks, their relatives work there,” he said. “I never thought that we were doing anything wrong.”…

“This is a government town and an agency town,” Crawford said. “If there’s a possibility that you can hire a relative . . . it was the norm.”…

“This is not a patronage mill,” said Davis, whose daughter worked in the fire department for two months in 2011. “Dozens of employees’ kids worked there.”

At this point the response of good-government liberals is always: Pass an ethics law. Yeah, that ought to work.

MWAA’s ethics code prohibits employees from hiring, supervising or working with relatives. They also cannot supervise family members — directly or indirectly — or “have influence over their work.”

Why the United States Might Never Leave Afghanistan

In autumn 2001, America’s initial purpose in Afghanistan—which made perfect sense—was to destroy or incapacitate al Qaeda and punish the Taliban government that hosted it. This was accomplished 11 years ago. Today, the purpose of the U.S. mission is ill-defined, but clearly involves nation building. What the coalition desperately needs is an achievable, realistic endgame, not an indefinite timeline that commits thousands of U.S. troops to Afghanistan until or beyond 2024.

A common argument is that America and its allies must create an effective Afghan state that can rule the country and prevent the return of the Taliban and, by extension, al Qaeda. Aside from the fact that al Qaeda can exist anywhere, from Hamburg to Los Angeles, it’s not at all clear that the coalition can either eradicate the Taliban or come close to creating an effective Afghan state.

As a Department of Defense Report declared earlier this year, “The Taliban-led insurgency remains adaptive and determined with a significant regenerative capacity, and retains the capability to emplace substantial numbers of [improvised explosive devices] and conduct isolated high-profile attacks that disproportionately field a sense of insecurity.”

Arguments that the coalition must eradicate the Taliban lose sight of what the term “insurgency” actually means. Guerillas typically fight when the opportunity is ripe. They can melt easily into a population, making it difficult for conventional troops to distinguish friend from foe. Combined with the Afghan insurgency’s ability to retreat to sanctuaries in Pakistan, coalition gains can be quickly undone by such systemic factors that make insurgents resilient. Additionally, reporters Dexter Filkins and Kelly Vlahos provide excellent analyses that draw out the ethnic divisions and political factionalism posed by Afghan warlords, many of whom are regrouping and could potentially touch off a civil war in the years ahead.

As for the common contention that America must stay until Afghans can police and govern themselves, the current state of Afghan institutions ensure that it would take a decade or more before coalition forces could withdraw, with little promise of success.

detailed report released last year by the Commission on Wartime Contracting found that the U.S. government contracted for dozens of clinics, barracks, hospitals, and other facilities that exceed Afghan funding capabilities. For instance, the $82 million Afghan Defense University will cost $40 million a year to operate, which is well beyond the Afghan government’s financial capacity to sustain, according to DoD officials. Long-term operations, maintenance, and sustainment costs for the Afghan National Security Forces could continue through 2025. Similar findings were uncovered by auditors at the Office of the Special Inspector General for Afghanistan Reconstruction.

The expectation is that the United States will maintain a presence of some 10,000 personnel in Afghanistan after 2014, while the World Bank estimates that Afghanistan will need $3.9 billion a year through 2024 for economic development. Ironically, when foreign policy planners in Washington make clear that they never intend to abandon Afghanistan, it’s their ambition to create a centralized state that will perpetuate that country’s dependency on foreigners.

Written Testimony on the Illegal IRS Rule to Increase Taxes & Spending under Obamacare

The written testimony that Jonathan Adler and I submitted for the House Oversight Committee hearing on the Internal Revenue Service’s unlawful attempt to increase taxes and spending under Obamacare is now online. An excerpt:

Contrary to the clear language of the statute and congressional intent, this [IRS] rule issues tax credits in health insurance “exchanges” established by the federal government. It thus triggers a $2,000-per-employee tax on employers and appropriates billions of dollars to private health insurance companies in states with a federal Exchange, also contrary to the clear language of the statute and congressional intent. Since those illegal expenditures will exceed the revenues raised by the illegal tax on employers, this rule also increases the federal deficit by potentially hundreds of billions of dollars, again contrary to the clear language of the statute and congressional intent.

The rule is therefore illegal. It lacks any statutory authority. It is contrary to both the clear language of the PPACA and congressional intent. It cannot be justified on other legal grounds.

On balance, this rule is a large net tax increase. For every $2 of unauthorized tax reduction, it imposes $1 of unauthorized taxes on employers, and commits taxpayers to pay for $8 of unauthorized subsidies to private insurance companies. Because this rule imposes an illegal tax on employers and obligates taxpayers to pay for illegal appropriations, it is quite literally taxation without representation.

Three remedies exist. The IRS should rescind this rule before it takes effect in 2014. Alternatively, Congress and the president could stop it with a resolution of disapproval under the Congressional Review Act. Finally, since this rule imposes an illegal tax on employers in states that opt not to create a health insurance “exchange,” those employers and possibly those states could file suit to block this rule in federal court.

Requiring the IRS to operate within its statutory authority will not increase health insurance costs by a single penny. It will merely prevent the IRS from unlawfully shifting those costs to taxpayers.

Related: here is the video of my opening statement, and Adler’s and my forthcoming Health Matrix article, “Taxation without Representation: the Illegal IRS Rule to Expand Tax Credits under the PPACA.”

Emails Show PhRMA Bought and Paid for ObamaCare

Remember that guy?

Well today, the Wall Street Journal reprints a series of emails showing how his administration colluded with drug-company lobbyists to pass ObamaCare. Never mind the nonsense about Big Pharma making an $80 billion “contribution” to pass the law. An accompanying Wall Street Journal editorial explains that Big Pharma “understood that a new entitlement could be a windfall as taxpayers bought more of their products.”

The money quote from these emails comes from Pfizer lobbyist/Republican/former George W. Bush appointee Anthony Principi. Even though the drug companies were donating to all the right politicians and pledging to spend hundreds of millions of dollars on pro-ObamaCare advertising campaigns and grassroots lobbying, President Obama still accused unnamed ”special interests” of trying to stop ObamaCare in order to preserve “a system that worked for the insurance and the drug companies.” Principi was indignant:

We’re trying to kill it? I guess we didn’t give enough in contributions and media ads supporting hcr. Perhaps no amount would suffice.

The nerve. I smell a campaign slogan. “Barack Obama: a Politician Who Cannot Stay Bought.”

The Journal adds:

[Former Energy and Commerce Chairman Henry] Waxman [D-CA] recently put out a rebuttal memo dismissing these email revelations as routine, “exactly what Presidents have always done to enact major legislation.” Which is precisely the point—the normality is the scandal.

And which critics have argued from the beginning. As I wrote more than two years ago, ObamaCare is corruption:

Each new power ObamaCare creates would be targeted by special interests looking for special favors, and held for ransom by politicians seeking a slice of the pie.

ObamaCare would guarantee that crucial decisions affecting your medical care would be made by the same people, through the same process that created the Cornhusker Kickback, for as far as the eye can see.

When ObamaCare supporters, like Kaiser Family Foundation president Drew Altman, claim that “voters are rejecting the process more than the substance” of the legislation, they’re missing the point.

When government grows, corruption grows.  When voters reject these corrupt side deals, they are rejecting the substance of ObamaCare.

Fortunately, voters so detest ObamaCare that there’s a real chance to wipe it from the books. This video explains how state officials can strike a blow against ObamaCare/corruption:

Security Pact Ensures America’s Presence in Afghanistan

President Obama’s arrival in Afghanistan and signing of the strategic partnership agreement with President Karzai supposedly represents yet another corner turned in our nearly eleven year (and counting) war. The commander-in-chief’s arrival in secrecy, under darkness, and without live coverage of the signing is reminiscent of Bush the Younger’s many trips to war-torn Iraq and displays just how bad security is in Afghanistan. Indeed, despite the administration’s talk about drawing-down, the strategic partnership agreement signed today in Kabul extends Washington’s military and financial support to the endemically corrupt Karzai regime well beyond 2014.

The Taliban’s most powerful narrative is that foreigners are occupying Afghanistan and supporting its corrupt centralized government. That is more than mere propaganda. It is reality. Transparency International was correct—save for North Korea and Somalia, Afghanistan is the most corrupt country in the world. The Karzai cartel and its band of thugs and warlords are the embodiment of social injustice. The nation-building mission in Afghanistan is a failure not of democracy promotion, but the result of bringing injustice and crony capitalism to a desperate and war-ravaged people.

As America climbs out of the worst financial crisis in a generation, the American people pour tens of billions a year into a poverty-stricken narco-stateaccording to the late-Richard Holbrooke—while the Karzais and their cronies build mansions in Dubai. The American people’s hard-earned tax dollars are funding Afghanistan’s “1%.” As I said last week about the agreement, it is nation building by another name. The American people have come to realize that the nation-building mission in Afghanistan is a needless waste of blood and treasure and unnecessary for our vital security interests. U.S. officials should recognize this and expedite our withdrawal, rather than continue to tread water in a desperate attempt to stave off disaster.

A senior administration official today warned of repeating the mistake of allowing the Taliban to reemerge in Afghanistan. In the process, however, the United States is repeating a mistake that experts contend helped to contribute to the devastating terrorist attacks of September 11, 2001unwavering economic support and political cover to the Muslim world’s most corrupt and illegitimate regimes. Some will argue that America has a moral obligation to prevent the reemergence of reprehensible groups like the Taliban. But America never made a substantive policy shift toward or against the Taliban’s misogynistic, oppressive and militant Islamic regime when it controlled Afghanistan in the 1990s. Thus, the present moral outrage against the group can be interpreted as opportunistic. Sadly, Washington’s current embrace of the kleptocratic Karzai regime not only contradicts the basic moral principles that America purports to impose on the rest of the world, but also does little to advance our security, drives foreigners to commit terrorist acts, and is detrimental to our long-term goal of advancing our country’s most cherished values.

Revolt of the Irish Tax Slaves

I wrote last year about a backlash from long-suffering Greek taxpayers. These people - the ones pulling the wagon rather than riding in the wagon - are being raped and pillaged by a political class that is trying to protect the greedy interest groups that benefit from Greece’s bloated public sector.

We now have another group of taxpayers who are fighting back against greedy government. My ancestors in Ireland have decided that enough is enough and there is widespread civil disobedience against a new property tax.

Here are the key details from an AP report.

Ireland is facing a revolt over its new property tax. The government said less than half of the country’s 1.6 million households paid the charge by Saturday’s deadline to avoid penalties. And about 5,000 marched in protest against the annual conference of Prime Minister Enda Kenny’s Fine Gael party. Emotions ran raw as police backed by officers on horseback stopped demonstrators from entering the Dublin Convention Centre. …One man mistakenly identified as the government minister responsible for collecting the tax had to be rescued by police from an angry scrum. Kenny said his government had no choice, but to impose the new charge as part of the nation’s efforts to emerge from an international bailout. …The charge this year is a flat-fee €100 ($130) per dwelling, but is expected to rise dramatically next year once Ireland starts to vary the charge based on a property’s estimated value. Anti-tax campaigners have urged the public to ignore the tax demand, arguing that the government doesn’t have the power to collect it.

What makes this new tax so outrageous is that Irish taxpayers already have been victimized with higher income tax rates and a more onerous value-added tax. Yet they weren’t the ones to cause the nation’s fiscal crisis. Ireland is in trouble for two reasons, and both deal with the spending side of the fiscal equation.

1. The burden of government spending exploded last decade, more than doubling in less than 10 years. This wiped out all the gains from fiscal restraint in the 1980s and 1990s.

2. Irish politicians decided to give a bailout not only to depositors of the nation’s failed banks, but also to bondholders. This is a grotesque transfer of wealth from ordinary people to those with higher incomes.

It’s worth nothing that academic studies find that tax evasion is driven largely by high tax rates. This makes sense since there is more incentive to hide money when the government is being very greedy. But there is also evidence that tax evasion rises when people perceive that government is wasting money and being corrupt.

The serfs are fighting back

Heck, no wonder the Irish people are up in arms. They’re being asked to cough up more money to finance a bailout that was both corrupt and wasteful.

Let’s close by looking at American attitudes about tax evasion. Here’s part of a column from Forbes, which expresses surprise that Americans view tax evasion more favorably than behaviors such as shoplifting and littering.

A new survey suggests Americans consider cheating on their taxes more socially acceptable than shoplifting, drunk driving or even throwing trash out the window of a moving car. …only 66% of  the participants said they “completely agree” that “everyone who cheats on their taxes should be held accountable”  and only 72% completely agreed that “it’s every American’s civic duty to pay their fair share of taxes”–suggesting, as the Shelton study does, that perhaps disapproval of tax evasion is not as strong as, say, disapproval of stealing from private businesses.

I’m not sure, though, why anybody would be shocked by these results. We have a government in Washington that is pervasively corrupt, funneling money to scams like Solyndra.

These same people want higher tax rates, which will further encourage people to protect their income.

If we really want to promote better tax compliance, whether in the U.S., Ireland, or anywhere in the world, there are two simple answers. First, enact a simple and fair flat tax to keep rates low. Second, shrink government to its proper size, which will automatically reduce waste and limit opportunities for corruption.

But none of this is in the interests of the political class, so don’t hold your breath waiting for these reforms.

Judge Mark Wolf, Criminal Informants, and the FBI

Judge Mark Wolf  gets some well-deserved recognition in a New York Times editorial today for his spectacular effort to bring some accountability to the FBI scandal involving gangster informants.  Here’s an excerpt:

The judge uncovered that John Connolly Jr., the F.B.I. agent who was their handler, had protected Mr. Bulger, a 15-year informant, and Mr. Flemmi, a 25-year informant, as they committed murder and conspired with the Mafia, in exchange for leads about the Mafia. It was Mr. Connolly who tipped off Mr. Bulger that he was about to be indicted and sent him on the lam. Judge Wolf testified against the F.B.I. agent at a 2002 trial before another judge. Mr. Connolly was sentenced to 10 years for racketeering, obstruction of justice and making false statements to investigators….

Judges are supposed to dispense justice but rarely root out crimes. As a result of Judge Wolf’s courage and persistence, the government has paid more than $100 million in claims to families of people murdered by informants shielded by the F.B.I. There is no good evidence that the F.B.I. has set up independent oversight of its informants program like what the judge called for. It’s high time.

It’s a good editorial that’s on the mark.   Of course, in a just world, Judge Wolf’s picture should have been on the cover of the Times, not the fugitive who is thought to be responsible for countless crimes.

And in a just world, the corrupt FBI agent, John Connolly, would have had to pay for his own legal expenses.  Even though he had more than a million dollars in assets (pensions, vacation home, power boat, etc), a federal magistrate said he was “indigent” and that taxpayers should pay for his legal defense.  Not a public defender, mind you, but a top law firm in Boston.   Just one of the many sordid aspects of the whole affair.

Here’s a link to Judge Wolf’s exhaustive ruling.  Here’s a link to a Cato event that I hosted on this scandal.