Topic: Government and Politics

Margaret Thatcher: A Brief Personal Recollection

For many people, Margaret Thatcher’s resignation (and now her death) will be one of those moments that they will never forget. Like the Kennedy assassination for the previous generation, many will always remember what they were doing when they heard the sad news.  

It was November 22, 1990 and I was about to leave my parents’ apartment in Zilina, Czechoslovakia, to meet a friend. Walking out of the door, I heard the radio announce the shocking news - Margaret Thatcher has resigned. How could it be? Wasn’t she a great success at home and a titan on the world stage? To us – the people of Eastern Europe who were enjoying their first year of freedom – she was much more than the first female British Prime Minister.  

She was an outspoken voice against communist oppression and a fearless promoter of the free markets. The communist media in Eastern Europe (and socialist media in Britain, one might add) spewed poison against her with obsessive regularity. For us that was very reassuring: if they hated her, she must have been good.  

Growing up behind the Iron Curtain, I never thought I would leave my hometown, let alone travel abroad and meet her. But meet her I did. It was October 5, 2002 and I was on a layover in London. Next day, I would board a plane for Washington and begin my work at the Cato Institute.  

My friends - Roger Bate, now at the AEI, and Richard Tren, now at the Searle Foundation – invited me to a dinner celebrating the launch of the Frederic Bastiat prize for free market journalism. One of the winners, coincidentally, was Amity Shlaes, whom I will have the pleasure of introducing at a Cato event this Thursday.   As Margaret Thatcher arrived – descending the stairs together with Denis - there was a sudden hush followed by great applause. By that time, she no longer made speeches and her public appearances were increasingly rare. Still, her presence added gravitas to the proceedings and launched a great prize that continues to this day.  

My friend Veronique De Rugy sat next to Mrs. Thatcher throughout the dinner and so, at some point, I walked over to say hello. Thatcher shook my hand and asked where I was from. When I said that I came from Czechoslovakia, she seemed genuinely delighted. I reminded her that people of Eastern Europe had a genuine affection for her and were grateful for what she did to bring about the end of communism. “You know,” I said, “the communists really hated you.” “Good, good,” she laughed, “I’m glad they did.” Then she gave me one of her piercing looks and said, “We won in the end.”

Yes you did, Margaret.

Spinning the News

A headline in Roll Call, the newspaper and website that has been “the source for news on Capitol Hill since 1955,” over an article by long-time journalist and editor David Hawkings, reads

D.C. Could Take Lessons From Hartford on Gun Control Deal

What’s the lesson? That when legislators buckle down and work hard, they can pass “the strongest gun control law in the nation.”

This reflects two articles of faith that seem to be devoutly held by mainstream journalists:

1. Passing laws is good. Passing more laws is better. The purpose of a legislative body is to pass laws.

2. Gun control is good.

On the first point, just consider the large number of stories, especially this past December and January, on “the least productive Congress in history.” The assumption is that “productivity” for Congress is passing laws—laws that in most cases will raise taxes, raise spending, increase regulation, and/or intrude the federal government into more aspects of our lives. 

As for gun control, the enthusiasm of the national media for such measures is pretty obvious. I was struck by NPR’s hourly news roundup last week, which began: 

More than 100 days after the shootings in Newtown, Connnecticut, that killed a total of 28 people including 20 elementary school students, Congress has still not passed new gun registration legislation.

“What are they waiting for?” the news anchor implies. I suppose the news report could have begun:

Just five years after the Supreme Court ruled that the Second Amendment protects the individual’s right to bear arms, members of Congress are seeking to pass gun control legislation.

But I’m not holding my breath. It’s just a reminder that the language used even in straight news stories can frame the issue in the minds of readers and listeners.

A Bait-and-Switch Budget Plan?

Are we about to see a new kinder-and-gentler President Obama? Has the tax-and-spend president of the past four years been replaced by a fiscal moderate? That’s certainly the spin we’re getting from the White House about the president’s new budget. Let’s look at this theme, predictably regurgitated in a Washington Post report.

President Obama will release a budget next week that proposes significant cuts to Medicare and Social Security and fewer tax hikes than in the past, a conciliatory approach… [T]he document will incorporate the compromise offer Obama made to House Speaker John A. Boehner (R-Ohio) last December in the discussions over the “fiscal cliff”—which included $1.8 trillion in deficit reduction through spending cuts and tax increases. …[U]nlike the Republican budget that passed the House last month, Obama’s budget does not balance within 10 years.

Since America’s fiscal challenge is the overall burden of government spending, I’m not overly worried about the fact that Obama’s budget doesn’t get to balance. But I am curious whether he truly is proposing a “conciliatory” budget. Are the tax hikes smaller? Are the supposed spending cuts larger? Actually, there are no genuine spending cuts, since the president’s budget is based on dishonest baseline budgeting. At best, we’re simply talking about slowing the growth of government.

Politico Has Been Reading My Email

From today’s Politico Pulse:

OBAMACARE LAWSUIT RECRUITMENT 101: START WITH THE INTERNS - Cato Institute’s libertarian mastermind Michael Cannon appealed to former interns of the right-leaning group to join an “exciting” legal challenge to Obamacare. Cannon is among the top proponents of a legal theory that suggests the health law forbids federal subsidies to people accessing insurance through a federally run insurance exchange.

—”To see if you might qualify, have a look at this checklist,” Cannon writes in a “Dear former Cato Intern” letter. “There are income criteria, plus you must live in one of 33 states, prefer to purchase no health insurance (or low-cost catastrophic insurance), et cetera. If you believe you meet the criteria for at least one of the three categories, email me … to learn more about how you can get involved in this exciting legal challenge, and jump on this chance to make history. Feel free to forward this email to others who may be interested.” The checklist: http://bit.ly/12lJ8Yb.

Thanks, guys. Might as well tell everybody, now. (And “right-leaning”? Seriously?)

“Lockdown High”: Brought to You by the NRA

Yesterday, the “National School Shield Task Force,” a 12-member study group commissioned by the National Rifle Association, released its recommendations [.pdf] for heightened school security in the aftermath of the Sandy Hook Elementary School shootings. The Washington Post’s coverage quotes the head of Children’s Defense Fund, who accuses the NRA of “prey[ing] on America’s fears” and trying to turn the nation’s schools “into armed fortresses.” 

Not long ago, I’d have been shocked to find myself agreeing with Marian Wright Edelman over Wayne LaPierre, but in this case, the lady has a point. Since  last December, the NRA leader has outdone left-leaning “children’s advocates” in fomenting legislative hysteria “for the children.” As I noted in Tuesday’s Washington Examiner:  

The NRA head opposes new gun laws, but he’s otherwise been [President Obama’s] partner in panic, breathlessly demanding an “armed good guy” in every school—a federally funded expansion of “America’s police force.” 

The Post notes that the National School Shield Task Force is “ostensibly independent” of NRA direction, and for what it’s worth, the report’s tone is less hysterical, the recommendations somewhat less sweeping, than LaPierre’s. But, like LaPierre’s public statements, it lacks any intelligent assessment of relative risks, instead making the very possibility of harm to children a rallying cry for opening the checkbook and summoning the security consultants. The entire project seems designed to enhance the paramilitarization of public institutions, allowing the Homeland Security mentality of institutionalized overreaction free rein in American schools.

Five of the twelve task-force members work for “Phoenix RBT Solutions,” a security consulting firm that “offer[s] schools vulnerability assessments, innovative security solutions, and reality-based training for security personnel”–and so just might have some skin in the game.  

Among the remaining members are a former Secret Service director, a former top military security official, a Department of Homeland Security veteran, and, for good measure, a “Former Assistant Administrator of U.S. Transportation Security Administration (TSA).”  Woe betide the poor parent who just wants to drop off her kid’s lunch. 

“Prior to the Sandy Hook incident,” the National School Shield Report chides, “most schools took the view that ‘it probably won’t happen here.’”  “Most schools” is too broad a generalization, given that, as documented in Annette Fuentes’ excellent Lockdown High, the trend toward the TSA-ification of American schools long predated the Newtown massacre.  

Still, for any particular school, “it probably won’t happen here” is an accurate assessment of the risk. One estimate, published in the journal Educational Researcher (“What Can Be Done About School Shootings?” January 2010), is that any given school in the United States can expect a school shooting every 6,000 years.  

To put “armed police officers in every school,” as LaPierre has frantically demanded that Congress do, would require hiring over 100,000 new cops. But if your goal is to prevent kids from getting murdered, the schools are about the last place you’d put new police, since 98 percent of youth homicides occur off school grounds.

 

[Source: “Indicators of School Crime and Safety: 2011,” National Center for Education Statistics.]

Rough estimates of what LaPierre’s proposal would cost range from $5.5 billion to $34 billion a year. How can we justify that sort of expense in what’s supposed to be an era of belt-tightening? “You justify it because it’s necessary,” says Asa Hutchinson, the former DEA chief and Homeland Security official who’s heading up the NRA’s school safety initiative. But it’s not necessary, and it’s not wise.

The National School Shield Task Force is less bullish on federal funding than is NRA’s leadership (in December LaPierre called on Congress “to act immediately, to appropriate whatever is necessary … and to do it now, to make sure that blanket of safety is in place.” Though the NSS Report calls for making federal Homeland Security grants available for school security programs, it states that “federal funding has proved unreliable as a long-term solution to the school safety and security needs of our nation” and concedes that “Local school authorities are in the best position” to determine “whether an armed security guard is necessary.”

That’s an improvement over what NRA’s leadership has recommended. Unfortunately, as I’ll discuss in a separate post, I can’t say the same for what the rest of the report has to say about school safety.  

Identifying the Right “Depreciation” Tax Policy

I’m normally reluctant to write about “depreciation” because I imagine eyes glazing around the world. After all, not many people care about the tax treatment of business investment expenses.

But I was surprised by the positive response I received after writing a post about Obama’s demagoguery against “tax loopholes” for corporate jets. So with considerable trepidation let’s take another look at the issue.

First, a bit of background. Every economic theory agrees that investment is a key for long-run growth and higher living standards. Even Marxist and socialist theory agrees with this insight (though they foolishly think government somehow is competent to be in charge of investments).

Let’s look at two remarkable charts, starting with one that shows the very powerful link between total investment and wages for workers.

 

As you can see, if we want people to earn more money, it definitely helps for there to be more investment. More “capital” means that workers have higher productivity, and that’s the primary determinant of wages and salary.

Our second chart shows how the internal revenue code treats income that is consumed compared to how it penalizes income that is saved and invested. Simply stated, the current system is very biased against capital formation because of the combined impact of capital gains taxes, corporate income taxes, double taxes on dividends, and death taxes.

Indeed, one of the reasons why the right kind of tax reform will generate more prosperity is that double taxation of saving and investment is eliminated. With either a flat tax or national sales tax, economic activity is taxed only one time. No death tax, no capital gains tax, no double tax on dividends in either plan.

All of this background information helps underscore why it is especially foolish for the tax code to specifically penalize business investment. And this happens because companies have to “depreciate” rather than “expense” their investments.

The Making of a Japanese Ambassador

The Washington Post keeps telling us that the Japanese will love Caroline Kennedy as an ambassador, because they appreciate the honor of our sending an ambassador of vast experience and respect. As Jason Horowitz put it:

Diplomatic sources said that the Japanese tend to be flattered when the American ambassador is a person of great renown, because it confirms their importance to the United States. Past ambassadors to Japan have included former Senate majority leaders Mike Mansfield and Howard Baker, former vice president Walter F. Mondale, and former House speaker Tom Foley.

Well, let’s see. Each one of those ambassadors had previously served more than 20 years in high public office. Caroline Kennedy is the daughter of a president and a major supporter of the incumbent president’s first campaign. I suspect the Japanese are thinking this week, “One of these things is not like the others.”