Topic: Government and Politics

Continuing Constitutional Difficulties in Implementing the Voting Rights Act

Sue Evenwel is a citizen of the United States and of the state of Texas. She is a registered voter in Titus County and regularly votes in local and state elections. How is it, then, that Ms. Evenwel’s vote in a Texas state senate race is worth only about half that of certain other voters? The answer lies somewhere at the intersection of bad law and even worse politics that the modern Voting Rights Act has become. 

The VRA, as you may recall, was the heroic civil rights legislation that finally put a stop to the most blatant and invidious forms of racial discrimination impairing the fundamental right of racial minorities to vote. It has been several decades now since this important and proud work but now, sadly, the heroic VRA has lived long enough to see itself become a villain. As Cato has warned before—in our amicus briefs in Perry v. Perez and Shelby County v. Holder—the courts are at a “bloody crossroads” when interpreting what have become the conflicting mandates of the VRA.  To give one example, the courts have found that Section 2 requires race-based redistricting to prevent loss of minority voting power, while at the same time, the Fifteenth Amendment (and the currently inoperable VRA Section 5) prohibits discrimination in voting on the basis of race.

Another Petty Dispute Involving U.S. Allies

Alliances tend to entangle America in confrontations that have little or no relevance to the security and liberty of the republic.  A prime example of that problem is the ongoing, bitter dispute between Japan and South Korea over some largely uninhabited rocks and the waters surrounding them.  Tokyo and Seoul cannot even agree on the correct name of the islands or the body of water.  Japanese call the islands Takeshima, while South Koreans insist on the name Dokdo.  For Japanese (and most of the world), the spits of rock are located in the Sea of Japan, but South Koreans hate that name and instead call it the East Sea.

As I discuss in a recent National Interest Online article, outsiders might be tempted to snicker at such a parochial feud, but it has significant policy implications.  U.S. officials are seeking to strengthen Washington’s alliances with both Japan and South Korea to counter China’s growing power in East Asia.  A key component of that strategy is to encourage closer bilateral military cooperation between Tokyo and Seoul.  The Takeshima/Dokdo dispute is a major impediment to such cooperation.  Beijing has been quick to take advantage of the animosity by actively courting South Korea.  

Japanese and South Korean leaders also pressure Washington to take sides in the controversy.  Such efforts should be rebuffed firmly.  Which country has sovereignty over the islands and the surrounding fishing waters should be a matter of profound indifference to all Americans.

There is a larger lesson in this petty territorial dispute.  As my colleague Doug Bandow has correctly observed, Washington collects allies with less thought and discrimination than most people collect Facebook friends.  In doing so, we also collect all of the disputes and feuds that those “friends” wage with other parties.  That is an unnecessary and unwise policy for a superpower.

Audit the Fed: What Would Milton Friedman Say?

Senator Rand Paul (R-KY) introduced a bill (S.264) which is popularly known as “Audit the Fed” (ATF). The bill picked up 30 initial co-sponsors. Although the Fed is already extensively audited in the accounting sense of the term, the ATF bill would expand the scope and scale of Fed auditing. Indeed, monetary policy decisions, which have been exempt from any sort of “auditing” since 1978, would see their auditing exemption lifted if the bill becomes law.

There is popular support for the idea that the Fed should be audited. More than three-quarters of registered voters would give the general idea of auditing the Fed a green light. It’s no surprise, then, that there has been bipartisan support for similar proposals in the past. However, none of these have become law because the push-back from Fed officials and other “experts” has been strong. Today is no different, with the Fed and the Obama White House all singing the same tune: “It’s Dangerous.” 

The real issue at stake is whether the Fed should be independent. The opponents of the ATF bill naturally think that the law would imperil the Fed’s autonomy and that this would be objectionable.

What would Milton Friedman say? Well, we don’t know for certain because unfortunately he is unable to read S.264. That said, Friedman weighed in on the issue of central bank independence on several occasions. Indeed, an essay he penned in 1962 was titled “Should there be an Independent Monetary Authority?” (In: In Search of a Monetary Constitution, edited by Leland B. Yeager, Harvard University Press). Friedman concluded that “The case against a fully independent central bank is strong indeed.”

Milton Friedman’s position on this issue was quite clear at the time. There is little doubt as to whether he would see the situation at hand any differently. 

Grading the Rubio-Lee Tax Reform Plan

In my 2012 primer on fundamental tax reform, I explained that the three biggest warts in the current system:

  1. High tax rates that penalize productive behavior.
  2. Pervasive double taxation that discourages saving and investment.
  3. Corrupt loopholes and cronyism that bribe people to make less productive choices.

These problems all need to be addressed, but I also acknowledged additional concerns with the internal revenue code, such as worldwide taxation and erosion of constitutional freedoms an civil liberties.

In a perfect world, we would shrink government to such a small size that there was no need for any sort of broad-based tax (remember, the United States prospered greatly for most of our history when there was no income tax).

In a good world, we could at least replace the corrupt internal revenue code with a simple and fair flat tax.

In today’s Washington, the best we can hope for is incremental reform.

But some incremental reforms can be very positive, and that’s the best way of describing the “Economic Growth and Family Fairness Tax Reform Plan” unveiled today by Senator Marco Rubio of Florida and Senator Mike Lee of Utah.

Obamacare’s Fate Turns on Whether Roberts and Kennedy Think State and Federal Exchanges Are the Same

It all depends on what the meaning of “by” is.

The four liberal justices clearly believe that an exchange established “for” or “in” a state by the federal government is the same as an exchange “established by the state,” to quote the relevant statute. Justices Scalia and Alito (and presumably the silent Thomas) equally firmly believe that words mean what they say.

So this case, as expected, turns on the views of Chief Justice Roberts and Justice Kennedy, who gave very little away at oral argument. If the government wins here, then not only will Obamacare continue to be rewritten by the IRS, but any executive agency – and any future president – will be able to rewrite any law. Accordingly, for the sake of the rule of law, I fervently hope that Roberts and Kennedy decide to enforce the Affordable Care Act as written and let Congress clean up its own mess.

Bottom 90% Pretax Pretransfer Income is no Proxy for Median After-Tax Income

bottom 90 percent vs CBO median

This graph illustrates a few points made in my recent Wall Street Journal article.  First of all, the Piketty & Saez mean average of bottom 90% incomes per tax unit is not a credible proxy for median household income, particularly since the big reductions in middle-class taxes from 1981 to 2003.

Second, the red bars claiming bottom 90% incomes in the past six years have been no higher than they were in 1980 (Sen. Warren) or even 1968 (see the graph) is literally unbelievable.  If that were true then all other income statistics – including GDP – would have to be completely false.  

If You Want Good Fiscal Policy, Forget the Balanced Budget Amendment and Pursue Spending Caps

Back in 2012, I shared some superb analysis from Investor’s Business Daily showing that the United States never would have suffered $1 trillion-plus deficits during Obama’s first term if lawmakers had simply exercised a modest bit of spending restraint beginning back in 1998.

And the IBD research didn’t assume anything onerous. Indeed, the author specifically showed what would have happened if spending grew by an average of 3.3 percent, equal to the combined growth of inflation plus population.

Remarkably, we would now have a budget surplus of about $300 billion if that level of spending restraint continued to the current fiscal year.

This is a great argument for some sort of spending cap, such as the Swiss Debt Brake or Colorado’s Taxpayer Bill of Rights.

But let’s look beyond the headlines to understand precisely why a spending cap is so valuable.