Topic: Government and Politics

New York Times: Less Difference between Candidates on Foreign Policy than Meets the Eye

Today’s Times features an article by David Sanger discussing the two campaigns’ claim that the candidates have “sharply different views about the proper use of American power.”  Sanger tallies the ledger and finds “contradictions that do not fit the neat hawk-and-dove images promoted by each campaign.”

Much of what Sanger covers, and his general conclusion, appeared in my Policy Analysis published earlier this month, “Two Kinds of Change: Comparing the Candidates on Foreign Policy.”  But Sanger points to an interesting contradiction within the McCain camp on Iran.  Sanger writes:

Questions to both campaigns in the past few weeks have yielded another example of role reversal. While Mr. McCain seems willing to consider that Iran might someday be trusted to produce its own nuclear fuel, Mr. Obama does not. The director of foreign policy for the McCain campaign, Randy Scheunemann, said that if Iran was in compliance with United Nations resolutions, “it would be appropriate to consider” letting it produce uranium under inspection, which Iran has said is its right.

This is interesting.  As I wrote in my paper,

In response to a two-question questionnaire sent to the candidates by the Institute for Science and International Security, McCain indicated that “there can be no such thing as an adequately controlled nuclear fuel cycle in Iran.”He went on to propose that Iran rely on foreign sources of fuel, and claimed that “There is no circumstance under which the international community could be confident that uranium enrichment or plutonium production activities undertaken by the current government of Iran are purely for peaceful purposes.”

Here (.pdf) is the ISIS report in question.  I’m not fond of the “flip flop” gotcha game, but this appears to be an interesting shift on the part of the McCain camp.  Something an enterprising journalist might want to follow up on.

Alan Reynolds’ Critique of Obama and McCain Tax Plans

Peter Ferrara writes that, “Obama’s tax increases will not produce nearly enough revenue to finance all his lavish spending proposals, as shown by a brilliant new paper from Alan Reynolds of the Cato Institute.” Brilliant or not, it’s serious paper I prepared for a Hillsdale College conference, which is now online (at the link to my name).

How Much Racism in the Campaign?

At the Guardian I point out that “Liberal journalists are combing the back roads of America looking for evidence of the resurgent racism being generated by the prospect of a black man becoming president. The striking thing is how little they’ve turned up.” Despite headlines like “Ugly reception for Obama” and “Racist attacks on Obama growing more heated,” the journalists have had to go to Danville, Va., and the Arkansas-Missouri border to find a few individual instances of racist attacks. Nothing like what the Catholic JFK faced in 1960.

Bloomberg Tries to Buy Himself Another Term

New York mayor Michael Bloomberg, who spent $158 million on his two elections, now thinks he should stay in office despite the city’s two-term limit. So far it’s much cheaper–he’s just pressuring all the civic groups and charities in town that have received donations from him, or from the taxpayers, to get themselves down to City Hall and testify to his indispensability in a time of financial crisis. The voters have twice endorsed term limits, but the mayor doesn’t see any need to ask them again; he wants the City Council to overrule the voters.

Of course, as Nicole Gelinas of the Manhattan Institute has shown, New York’s revenues have risen 41 percent under Bloomberg, while he has jacked up spending even faster, so it’s not clear why he’s the man you need in a financial crisis.

But the striking thing about the plutocrat mayor is the way he’s using his personal wealth–and the city’s tax dollars–to pressure people to support his bid to stay in office. The New York Times reports:

The mayor and his top aides have asked leaders of organizations that receive his largess to express their support for his third-term bid by testifying during public hearings and by personally appealing to undecided members of the City Council. …

The requests have put the groups in an unusual and uncomfortable position, several employees of the groups said. City Hall has not made any explicit threats, they said, but city officials have extraordinary leverage over the groups’ finances. Many have received hundreds of thousands of dollars from Mr. Bloomberg’s philanthropic giving and millions of dollars from city contracts overseen by his staff.

Sounds like a lot of overlap between his personal philanthropy and the city’s own spending, and the Times doesn’t seem to find anything odd about that aspect of the story. And then the New York Post found that the mayor’s tax-funded “slush fund” was being enlisted in the campaign, too:

Mayor Bloomberg showered cash on key City Council members with the power to kill a term-limits extension bill in the last year.

Members of the council’s Government Operations Committee have received millions from Hizzoner’s slush fund, a once-secret pot of taxpayer money the mayor doles out to favored lawmakers for their pet causes….

Five members of the committee secured $3.1 million from the $5.3 million stash in Bloomberg’s 2008 budget. Only three other council members received funds from the mayor in the last year.

And the New York Daily News noted that everyone working for Bloomberg at the City Council hearings is on Mayor Mike’s payroll one way or another:

There was the mayor’s legal counsel and the city’s corporation counsel, both paid with tax dollars, testifying that Bloomberg can and should get another term.

There were aides from the mayor’s Community Assistance Unit, who rounded up pro-Bloomberg speakers from the community and religious and civic groups they work with all day long - many of which thrive on city grants.

There were the dozens of “Ready, Willing and Able” guys from the Doe Fund, which gets funding from the city - and used its vans to bring people to the hearing.

No doubt it’s all just chump change compared to another $80 million if he wins the right to run again.

Personally, if the Council does decide to give the mayor another term, I hope they do just that. Don’t get rid of term limits. Just do like the Romans used to do in an emergency. Name Bloomberg “dictator,” an extraconstitutional position with extraordinary authority but limited duration. Then you keep the rules, you just make an exception. And I’m sure Bloomberg would be willing to addressed as Dictator for the duration of the emergency powers.

“Small” Businesses Not Getting “Fair Share” of Government Cheese

The decades long battle over what constitutes a “small business” for purposes of government contracting set-asides (and subsidies for that matter) continues in today’s Washington Post.  Once again, it appears that the federal government has been negligent in making sure the “big” guys aren’t swiping slices of the “small” guys’ cheese.  Oh dear.

With regard to set-asides, regardless of who gets the government contract, taxpayers lose because they foot the bill.  Because set-asides effectively limit the competition for a government contract, taxpayers can end up paying even more – especially when economies of scale would have allowed a larger business to offer a lower-cost alternative.  Thus, I had to chuckle at the bereaved “small” defense contractor cited by the Post who bizarrely claims that these set-asides “keep down the cost to the taxpayers.”

Not to be outdone, the ever-excitable defender of small business set-asides, Lloyd Chapman, told the Post that the economy has been damaged by small businesses not getting their “fair share.”  Lloyd heads up a group called the “American Small Business League,” which sounds innocuous until one discovers that it’s just another special-interest outfit fighting to secure a suckling position on the federal underbelly.

The federal government’s flagship promoter of the small business plight, the Small Business Administration (SBA), has been “helping” small businesses since the 1950s.  However, Cato adjunct scholar, Dr. Veronique de Rugy, has found that “no more than 1 percent of [all] small business loans each year are SBA loans.  The private sector finances most loans without government guarantee and, hence, the SBA is largely irrelevant in the capital market.”  Moreover, because SBA financed loans have below market rates, small businesses who aren’t subsidized by the government are placed at a competitive disadvantage.  (Read de Rugy’s entire piece here.)

So how does a bureaucracy that is a detriment to the interest it is supposed to promote still alive?  The simplest reason is that, like thousands of other unnecessary government programs, the SBA has developed a vocal constituency.  The small minority of businesses on the SBA dole obviously have an interest in its survival.  Banks lobby for the SBA’s existence because SBA-backed loans guarantee lenders up to 85% repayment in case of default (i.e., SBA loans represent welfare for bankers).

Historian Jonathan J. Bean touched on additional reasons for SBA’s survival during his 2006 testimony before a Senate subcommittee hearing on the agency.  The context is the Reagan administration’s failed attempt to abolish the SBA in the 1980s (click here for entire testimony):

“To a large extent, the SBA is a “creature of Congress.”  Why was Congress so interested in the SBA?  Many members were sincerely interested in small business issues.  Others used their committee membership to strengthen ties with the business community.  The SBA was a useful conduit for the constituent work of the Small Business Committees, a dumping ground for politicos, and a “petty cash drawer” for the pet schemes of Congress. The agency’s extensive field structure served many congressional districts; the field directors were “often as loyal to their district Congressman as to the agency.”  It is little wonder, then, that Congress was so fond of the SBA.”

Set-asides and subsidies aren’t good for small businesses – they’re only good for politicians and taxpayer-dependent special interests.  If Congress really wants to help, it should drastically reduce the tax and regulatory burden that inhibit a small business’s ability to compete and prosper.  Heck, just doing away with the SBA would be a plus.

Obama Tax Plan and IRS Data

Senator Obama wants to “restore fairness to our tax code” by raising taxes on those earning more than $250,000. Let’s look at the most recent IRS income tax data for 2006 to see what we can learn about tax fairness.

See line 42 in this IRS table, which shows data for those earning less than $200,000 (the closest income breakpoint). This group paid 9.7 percent of their adjusted gross income in federal income taxes.

Now scroll down to line 58 in the table. Those earning more than $200,000 paid 21.8 percent of their income in income tax, thus paying more than twice the tax rate of the other group.

Is that fair?