Topic: General

Presidents Barack Obama and Xi Jinping Chart the Future of U.S.-China Relations

As the 1970s dawned, the People’s Republic of China was a closed, forbidding society. Then came the famed opening to the West. Reforms unleashed the creativity of the Chinese people, causing the PRC to go from isolated backwater to emerging giant; which is changing the international order. 

Chinese President Xi Jinping is meeting President Barack Obama in California this week. Much is at stake in their administrations forging a working relationship.

As I explained in my latest Forbes online column:

There is abundant cause for misunderstanding and disagreement across a range of issues. Treating each other as adversaries, as advocated by some in both countries, would be disastrous. Neither nation, nor Asia and the world, would benefit from conflict between the two.  In contrast, much could be achieved if the world’s superpower and incipient superpower develop a cooperative relationship.

Chinese officials with whom I spoke last week in Beijing spoke of a new “great power relationship” to reshape ties between Beijing and Washington.  Despite obvious differences in important areas, Liu Jieyi, Vice Minister of the Communist Party’s International Department, rightly argued that “there are many issues where we have common interests and common responsibilities.” What sets today apart from the Cold War struggle with the Soviet Union is the fact that current differences don’t constitute “structural and irreconcilable conflicts and problems,” in Liu’s words.

That doesn’t mean the gaps separating the two countries on questions ranging from human rights to security policy are small. Obviously, it is easier to call for cooperation than to practice it. 

Nevertheless, there is no necessity for conflict. Peace requires cooperation when possible and accommodation when necessary. That means the willingness on both sides to negotiate and compromise. Most critical is to avoid the temptation to treat the other side as an enemy, which could turn into a self-fulfilling prophecy.

Even Americans should celebrate in China’s “rise,” which has raised countless numbers of people out of poverty. But there are legitimate reasons why other nations worry about China’s dramatic entry into the world system

The U.S. and China must find a way to work together not only for themselves, but also for the rest of Asia and the world. The most important relationship in coming years will be that between America and China. We all must make it a century of cooperation rather than confrontation.

A Brief Civil Liberties Quiz

See if you can spot the civil-liberties victory:

  1. The Supreme Court says the government can put your DNA in a national database, even if you were wrongly arrested.
  2. The State of Mississippi imposes mandatory collection of the DNA of babies born to teenage moms, neither of which is suspected of a crime.
  3. The Department of Justice is tracking and threatening to prosecute reporters, for the crime of reporting.
  4. The National Security Agency is collecting everyone’s phone records, even if they suspect you of nothing.
  5. The U.S. Senate kills a bill that could lead to a registry of law-abiding gun owners.

Answer: #5. 

Those crazy senators are looking less crazy all the time. 

California Officials Deliberately Mislead Public on Obamacare Rate Shock

Ever since Obamacare became law, I have been counseling states not to establish the law’s health insurance “exchanges,” in part because:

to create an Exchange is to create a taxpayer-funded lobbying group dedicated to fighting repeal. An Exchange’s employees would owe their power and their paychecks to this law. Naturally, they would aid the fight to preserve the law.

California was the first state both to reject my advice and to prove my point.

Officials operating California’s exchange–which the marketing gurus dubbed “Covered California“–recently and deliberately misled the entire nation about the cost of health insurance under Obamacare.

They claimed that health plans offered through Covered California in 2014 will cost the same or less than health insurance costs today. “The rates submitted to Covered California for the 2014 individual market,” they wrote, “ranged from two percent above to 29 percent below the 2013 average premium for small employer plans in California’s most populous regions.”

See? No rate shock. California’s top Obamacare bureaucrat, Peter Lee, declared his agency had hit “a home run for consumers.” Awesome!

Unfortunately, anyone who knows anything about health insurance or Obamacare knew instantly that this claim was bogus, for three reasons.

  1. Obamacare or no Obamacare, health insurance premiums rise from year to year, and almost always by more than 2 percent. So right off the bat, the fact that Covered California claimed that premiums would generally fall means they’re hiding something. 
  2. Obamacare’s requirement that insurers cover all “essential health benefits” will force most people who purchase coverage on the “individual” market (read: directly from health insurance companies) to purchase more coverage than they purchase today. This will increase premiums for most everyone in that market.
  3. Obamacare’s community-rating price controls (also known as its “pre-existing conditions” provisions) will increase premiums for some consumers (i.e., the healthy) and reduce premiums for others (i.e., the sick). So it is misleading for Covered California to focus on averages because averages can hide some pretty drastic premium increases and decreases.

Did John McCain Provide Material Support for Syrian Terrorists?

One of the more far-reaching federal rules targets people who provide “material support” for terrorists. In principle, it’s hard to disagree with such an approach: terrorism is bad, so no one should support terrorists.

However, what does “material support” mean? You can go to jail for 10 years if convicted, so it would be nice to know what is prohibited.

There is more than a little nervousness in the non-governmental organization community over the rule’s reach. Warned the Center for Constitutional Rights, the law criminalizes “activities like distribution of literature, engaging in political advocacy, participating in peace conferences, training in human rights advocacy, and donating cash and humanitarian assistance, even when this type of support is intended only to promote lawful and non-violent activities. Nonetheless, the Supreme Court recently upheld the government’s broad reading of the statute to criminalize speech in the form of coordinated political advocacy.” Could I be imprisoned if I wrote a column on a group tagged as terrorist by Washington?

Unfortunately, the Washington authorities have routinely misused the concept. In separate context, the federal government denied refugee status to a teen deemed as providing “material support” for Colombian communist insurgents who murdered his parents because he was forced at gunpoint to bury some of their victims. A Liberian woman was deemed to have provided “material support” for guerrillas who had raped her because she was forced at gunpoint to cook for them. 

If the rest of us are vulnerable to extreme interpretations of the law, then lawmakers who approved the law should be subject to the same legal risks. Consider Sen. John McCain (R-Ariz.), who has been campaigning for war in Syria, just as he previously promoted war most everywhere else around the globe.

During his recent visit to Syrian rebels, he would seem to have provided “material support” to terrorists. Reports Reuters:

CBO’s Tax Expenditure Report Uses Wrong Benchmark, Overstates Loopholes

As a long-time advocate of tax reform, I’m not a fan of distortionary loopholes in the tax code. Ideally, we would junk the 74,000-page internal revenue code and replace it with a simple and fair flat tax - meaning one low rate, no double taxation, and no favoritism.*

The right kind of tax reform would generate more growth and also reduce corruption in Washington. Politicians no longer would have the ability to create special tax breaks for well-connected contributors.

But we won’t get to the right destination if we have the wrong map, and this is why a new report about “tax expenditures” from the Congressional Budget Office is so disappointing.

As you can see from this excerpted table, CBO makes the same mistake as the Tax Policy Center and assumes that there should be double taxation of income that is saved and invested. As such, they list IRAs and 401(k)s as tax expenditures, even though those provisions merely enable people to avoid being double-taxed.

Likewise, the CBO report assumes that there should be double taxation of dividends and capital gains, so provisions to guard against such destructive policies also are listed as tax expenditures.

CBO Tax Expenditure List

The Real Reason Politicians Want a Bigger Bite of Apple

Earlier this month, I explained four reasons why the Apple “tax avoidance” issue is empty political demagoguery.

And Rand Paul gave some great remarks at a Senate hearing, excoriating some of his colleagues for trying to pillage the company.

But this Robert Ariail cartoon may be the best summary of the issue.

Arial Apple Cartoon

What makes this cartoon so effective is that it properly and cleverly identifies what’s really driving the political class on this issue. They want more revenue to finance a bigger burden of government spending.

When I did my contest for best political cartoonist, I picked a cartoon about Greece and euro for Robert Ariail’s entry. While I still think that was a very good cartoon, this Apple cartoon would probably take its place if I did a new contest.

The IRS Has Already Abused Its Powers under ObamaCare

Over at Bloomberg, National Review’s Ramesh Ponnuru writes about the Obama administration’s disregard for the rule of law, including the IRS’s $800 billion power grab:

The Patient Protection and Affordable Care Act, the sweeping health-care law that Obama signed in 2010, asks state governments to set up health exchanges, and authorizes the federal government to provide tax credits to people who use those exchanges to get insurance. But most states have refused to establish the online marketplaces, and both the tax credits and many of the law’s penalties can’t go into effect until the states act.

Obama’s IRS has decided it’s going to apply the tax credits and penalties in states that refuse, even without statutory authorization. During the recent scandal over the IRS’s harassment of conservative groups, many Republicans have warned that the IRS can’t be trusted with the new powers that the health law will give the agency. They are wrong about the verb tense: It has already abused those powers.

For more, read my article (with Jonathan Adler), “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.”