Tag: regulation

Transparency for Thee but Not for Me

It appears that the Obama administration is high on transparency for everyone but its own allies.  There are a lot of good reasons to reduce federal regulation, but if the Labor Department is going to push coercive unionism, it should require unions to disclose their activities and finances to their members.

Not in today’s world, however.  The Obama administration is moving backwards.  Reports the Washington Times:

The Obama administration, which has boasted about its efforts to make government more transparent, is rolling back rules requiring labor unions and their leaders to report information about their finances and compensation.

The Labor Department noted in a recent disclosure that “it would not be a good use of resources” to bring enforcement actions against union officials who do not comply with conflict of interest reporting rules passed in 2007. Instead, union officials will now be allowed to file older, less detailed conflict reports.

The regulation, known as the LM-30 rule, was at the heart of a lawsuit that the AFL-CIO filed against the department last year. One of the union attorneys in the case, Deborah Greenfield, is now a high-ranking deputy at Labor, who also worked on the Obama transition team on labor issues.

The only people served by this move are union officials who want less oversight over their use of dues payments, much collected from unwilling workers.  The new policy certainly runs counter to the president’s promise to set a new tone in Washington.

(Hat tip to Philip Klein.)

Obama the Planner

New Republic editor John Judis has a couple of insights about the Obama administration’s economic and social goals. He points out that, for more than a century, Progressive and free-market forces have gone through cycles of “reform and reaction.”

The Progressives — who my friend John Baden calls the “American counterrevolutionaries” — have repeatedly sought to increase the size and scope of government: railroad regulation, public land agencies, and the income tax in the 1900s; Social Security, low-interest home loans, and government ownership of power plants in the 1930s; Medicare, the war on poverty, and environmental laws in the 1960s.

In between, friends of free markets tried to roll back those reforms, but were never completely successful. Thus, each successive reform era has further increased government power and reduced free markets.

This reminds me of the basic strategy used by the wilderness movement (in which I was active from about 1975 through 1993). Wilderness activists basically considered land that had already been preserved as wilderness or some other classification to be “theirs,” while all remaining land was “potentially theirs.” Successive congressional land-use bills or presidential decrees would put more land in “their” category, but no matter how much they got, it was never enough.

At the time, I called this the “scorched earth policy,” meaning wilderness advocates embedded so many poison pills in the protected lands that no one would ever try to declassify them. This isn’t necessarily a deliberate strategy, just an effect of our political system.

Judis goes on to outline the ways in which Obama wants to build on past reforms. First, he wants to use “the budget to shift the locus of industrial production toward ‘green’ jobs and products.” He also wants to “make dramatic changes in transportation with [government’s] intervention in the auto industry and in its funding of high-speed rail.” Finally, he wants to institute a form of “national planning” in order to “reverse existing trends” towards “suburban housing [and shopping] malls.”

People who are attracted to such policies tend to judge them based on their intent rather than their results. In fact, these interventions have nearly all either backfired or had huge unintended consequences.

Railroad regulation was imposed just as trucks appeared on the scene in 1907, leaving railroads helpless against growing competition. “Progressive” income taxes ended up with so many loopholes that they weren’t really progressive. The federal loan companies, such as Fannie Mae and Freddie Mac, played a key role in the current crisis when they succumbed to political pressure to buy increasingly risky loans.

Social Security is a giant Ponzi scheme that is also one of the most regressive taxes on the books, not to mention that it has provided billions of dollars of surpluses for Congress to borrow with little hope of ever paying it back. Medicare is an even bigger Ponzi scheme, while the war on poverty created a semi-permanent underclass that has been all but forgotten by the liberals who claim to care most about them.

Environmental laws produced many benefits when they focused on technical solutions, but they failed miserably when they attempted to change people’s behavior. As transportation expert Alan Pisarski recently told the Institute of Transportation Engineers, technical solutions to air pollution are responsible for 95 to 105 percent of the improvements in air quality in the past 40 years, while behavior solutions produced only minus 5 to 5 percent of the improvements — minus 5 meaning some behavioral solutions made pollution worse.

Unfortunately, Obama’s plans are all about changing behavior. This means two things: they will be expensive — especially when counting the unintended consequences — and they won’t work. High-speed rail and urban revitalization, for example, are all about redesigning the country for yuppy elites, not ordinary Americans. The question for free-market advocates is: how can we minimize the damage now and roll back the reforms later?

Our Troubling Tax System

The U.S. tax code gets more complex every year. It violates civil liberties and, left unchanged, will leave the United States at a powerful competitive disadvantage in years to come, say Cato scholars in this new Cato video.

According to tax expert Chris Edwards, the tax system is growing at startling levels — there are now about 70,000 pages of tax regulations and $300 billion in compliance costs — and it’s only going to get worse.

New at Cato

Here are a few highlights from Cato Today, a daily email from the Cato Institute. You can subscribe, here

  • The new edition of Regulation examines the Employee Free Choice Act (EFCA), the legal drinking age and climate change policies.
  • In The Week, Will Wilkinson argues that the Obama administration should rethink its drug policy and that prominent marijuana users should “come out of the closet.”
  • Gene Healy points out in the Washington Examiner why the Serve America Act (SAA) is no friend to freedom.
  • The Cato Weekly Video features Rep. Paul Ryan discussing the Obama administration’s budget.
  • In Wednesday’s Cato Daily Podcast, Patri Friedman discusses seasteading and the prospects for liberty on the high seas.

Taxpayer Financing of Campaigns Returns

Taxpayer financing of congressional campaigns has returned.

Yesterday Senators Richard Durbin (D-IL) and Arlen Specter (R-PA) introduced a modified version of their public financing bill first proposed in 2007, now as then called the Fair Elections Now Act (FENA).  The older version included “free media vouchers” and discounted ad rates for television; the new model focuses more on small contributions and matching funds from the federal treasury.

These bills to finance campaigns with government revenue are often introduced in Congress and rarely make any headway, much less pass either chamber.  Their perennial failure is not difficult to understand. Members are interested in campaign finance regulations that make it more difficult for challengers to raise money.  They are not interested in giving candidates federal revenue to run against incumbents. Members are especially unwilling to fund campaigns because the public takes a dim view of  using taxes in this way.

FENA tries to avoid public opposition by creating the appearance that taxpayers do not actually fund this scheme.

As Politico reports:

In the Senate version, the public money would come from assessing the country’s largest government contractors with a small surcharge… In the House, the money would come from the sale of broadcast spectrum.

But the question should be asked: if public financing of campaigns will actually achieve all the great things claimed by its proponents, shouldn’t the public be asked to pay the bill? After all, the public can expect to receive the promised benefits. Why should the bill be financed by government contractors and the sale of public assets?

We know the answer to these questions. Durbin and Specter have to obscure the role of taxes in these schemes because the public would oppose the bill if taxpayers were on the hook for the funding. Yet the senators obscure rather than eliminate the role of the taxpayer who will have to pay higher levies to fund more expensive government contracts or to replace the money that might have been obtained from the sale of the spectrum.  Once the FENA lunch turns out not to be free, will voters feel like paying the tab?

The rationale for the new program also merits attention. In the past, advocates of taxpayer financing argued that private financing of campaigns corrupted representation, policymaking, and the general political culture.  Replacing private contributions with public financing would, it was claimed, remove private interests and end corruption.  That rationale appealed to most of the supporters of  public financing; they tend toward the left politically and had little trouble believing the Republicans running Congress – all of them – were corrupt.  But 2006 brought the Democrats back to power, and general claims of corruption no longer fit the background assumptions of both powerful legislators and supporters of public financing. So we now hear little about corruption and a lot about how FENA will free up legislators to “tend to the people’s business.”

Will “tending to the people’s business” be enough to convince Americans to spend tax dollars funding congressional campaigns at a time of record public sector deficits brought about by reckless spending on bailouts and much else?

The question answers itself.

Tax Havens Have Stronger Governance Standards

Congratulations to The Economist for reporting on a new study showing that so-called tax havens actually have the strongest laws to weed out shady money. The article cites new research by an Australian political scientist, who conducted real-world tests to confirm that it is much easier to set up anonymous structures in nations such as the United States and United Kingdom than it is to set up similar structures in places such as Bermuda and Switzerland:

…with a budget of $10,000 and little more than Google (and the ads at the back of this paper), [Jason Sharman, a political scientist at Australia’s Griffith University] showed how easy it was to circumvent prohibitions on banking secrecy, forming anonymous shell companies and secret bank accounts across the world. In doing so he has uncovered an uncomfortable truth for many of the leaders of Group of 20 nations meeting on April 2nd to discuss, among other things, sanctions against offshore tax havens. The most egregious examples of banking secrecy, money laundering and tax fraud are found not in remote alpine valleys or on sunny tropical isles but in the backyards of the world’s biggest economies. …A money-laundering threat assessment in 2005 by the federal government found that corporate anonymity offered by Delaware, Nevada and Wyoming rivalled that of familiar offshore financial centres. For foreigners, America is a particularly attractive place to stash cash, because it does not tax the interest income they earn. Thus with both anonymity and no taxation, America offers them all the elements of a tax haven. …America is not the only rich nation Mr Sharman tested. He tried to open anonymous shell companies and bank accounts 45 times across the world. These were successful in 17 cases, of which 13 were in OECD countries. One example was Britain, where in 45 minutes on the internet he formed a company without providing identification, was issued with bearer shares (which have been almost universally outlawed because they confer completely anonymous ownership) as well as nominee directors and a secretary. …In contrast, when trying to open accounts in Bermuda and Switzerland, he was asked for documentation such as notarised copies of his birth certificate. “In practice OECD countries have much laxer regulation on shell corporations than classic tax havens,” Mr Sharman concludes.

Regulations We’ve Got. Geithner’s Seeking Something Else

Another day, another mad power grab by Treasury Secretary Tim Geithner.

Only in government does failure bring more responsibility.

Federal agencies have long had extensive regulatory powers over commercial banks, but allowed the banking crisis to develop despite those powers.

It was a failure of will, not an absence of authority.

If the authority is extended over more institutions, there is no reason to believe we will have a different outcome.

This power grab is designed to divert attention away from the manifest failure of, first, the Bush Administration, and now the Obama Administration to devise a credible plan to deal with the crisis.