Topic: Government and Politics

Beam Me Up, Mr. (Ex-)Speaker!

By
Gene Healy

Say what you will about Newt Gingrich, but he has that rare political gift: he sounds captivating and forceful even while talking complete dreck.  I witnessed that up close a couple of years ago when I crashed a meeting of conservative activists, and saw Gingrich take the floor to urge everyone to get behind the president’s prescription-drug bill.  Given that the plan represented the greatest expansion of the welfare state since the Great Society, you’d think this would be a tough sell.  But to hear Gingrich tell it, signing onto the president’s bill would be a stroke of genius for limited government activists.  The bill would cause a “plate-tectonic shift in the continental architecture of the modern welfare state.”  Or something.  I didn’t understand what that meant then and I still don’t.  Yet so confident was the pitch, so bold the hand gestures, that Gingrich probably convinced a few people who knew better. 

Those talents were on display again yesterday morning, when the former Speaker appeared on Meet the Press to play coy about his presidential aspirations.  He may or may not be running; but as always, he’s pushing Big Ideas.  Among the highlights: “The only exit strategy in Iraq is victory.”  That’s right: and the only treatment for cancer is remission.  To be fair, Gingrich did go into a little more detail on how we win.  It had something to do with FDR’s Civilian Conservation Corps. 

He also talked a bit about his latest passion: creating some kind of bipartisan debate or series of debates that would in turn create “a wave of new ideas, a wave of new solutions. And see how that ferments.”  Apparently, the catchphrase for this crusade is “Real change requires real change.”   Which is less a slogan than a mind-blowing zen koan.  

Host Tim Russert pressed Gingrich to explain his remarks in Manchester, NH a couple of weeks ago, where, as the featured speaker at the “Nackey S. Loeb First Amendment award” dinner, Gingrich called for rethinking the First Amendment.  On Meet the Press, Gingrich wouldn’t back down:

FMR. REP. GINGRICH: You close down any Web site that is jihadist.

MR. RUSSERT: But who makes that judgment?

FMR. REP. GINGRICH: Look, I—you can appoint three federal judges if you want to and say, “Review this stuff and tell us which ones to close down.” I would just like to have them be federal judges who’ve served in combat.

Now depending on the details, this could mean a major overhaul of First Amendment doctrine in the areas of incitement and prior restraint.  But put that aside. “Three federal judges who’ve served in combat?”  What does that have to do with anything?  Is this a legal question or a military one?  What a stunningly illiberal non sequitur.    

And on it went, for more than half the program.  A half an hour of that sort of thing, and you’re almost ready to put up with Tom Friedman’s soundbitten wisdom in the “roundtable” portion of the program.  Did you know that in Iraq, “the shortest distance between two points isn’t a straight line?”

Topics: 
General, Government and Politics

What We Do Next Is Correct the “Powerful Perception”

By
Will Wilkinson

Reihan Salam comments on Alan Reynolds’ important op-ed in yesterday’s Wall Street Journal:

Anyway, even if Reynolds is right and we haven’t actually seen as big an increase in inequality as most observers believe, we still have a powerful perception that is driving political outcomes, including the drift of centrist Democrats away from pro-market policies. Merely pointing out that the statistics are somehow misleading (an important and valuable contribution if it’s true) won’t change that. So even if Reynolds is right, the political question — what do we do next? — remains an open question.

I find this a puzzling statement. The “powerful perception” of outsized increases in inequality is driven in large measure by the drumbeat of media rhetoric played to the time of misread inequality stats. If correcting that mistake cannot change the false perception driving political outcomes, then what can?

If Reihan believes, as I do, that Reynolds is right, then he ought to use his voice as a political commentator to help try to correct the misperception. If the correct belief about inequality becomes more widespread, then inequality will be seen as less of a problem and demand for policies meant to “fix it” will start to dry up. Then, maybe, what we do next won’t be misguided or counterproductive.

Topics: 
General, Government and Politics, Tax and Budget Policy, Trade and Immigration

More Special Rules for Fannie Mae?

By
David Boaz

A banner headline and photo in the Business section of the Washington Post show former Enron CEO Jeffrey Skilling reporting to prison to begin serving a 24-year term for fraud and conspiracy. (Note that federal sentences don’t allow for much parole; Skilling must serve at least 85 percent of his sentence.) Sidebars depict other jailed corporate executives: Bernard Ebbers of WorldCom, 25 years; Dennis Kozlowski of Tyco, 8 to 25 years; John Rigas of Adelphia, 15 years (being appealed).

On the same page, another story reports:

Three years ago, Fannie Mae assured lawmakers that it had the required capital to cope with a broad variety of business setbacks.

Since 1992, “Fannie Mae has met or exceeded our capital requirements in every year,” Franklin D. Raines, then its chief executive, testified in September 2003. “Indeed, we are one of the best-capitalized financial institutions in the world, when compared to the risk of our business.”

As it turns out, the assurance was false.

Will Raines and other executives face lengthy jail terms for their repeated and massive accounting misrepresentations, which resulted in multi-million-dollar bonuses for the executives? It doesn’t look likely. Criminal charges against the company itself have been ruled out. The government may seek to recover millions of dollars from executives who received massive bonuses on the basis of the manipulated earnings statements, but there seem to be no plans to pursue criminal prosecution of these sophisticated Washington insiders.

There may well be good legal reasons why Enron and WorldCom executives were guilty of crimes punishable by 25 years in jail, while Fannie Mae executives were guilty only of outrageous behavior. But one can’t help wondering if the difference is related to yet another tiny story in the Post’s Business section on the same day: “Fannie Breaks Record On Lobbying Outlay.”

Some background on the fundamental problems with Fannie Mae and other government-sponsored enterprises here.

Topics: 
Finance, Banking & Monetary Policy, General, Government and Politics, Regulatory Studies

Pork and Elections

By
Brandon Arnold

Representative Henry Bonilla (R-TX) lost his seat in Congress in a runoff election yesterday, thus increasing the number of defeated House GOP incumbents to 22 (Republicans lost a total of 30 House seats, but 8 Democratic pickups were in open seats without an incumbent seeking reelection).

Interestingly, 5 of the 22 defeated Republican incumbents, including Bonilla, were members of the powerful Appropriations Committee, which controls the federal government’s purse strings and is responsible for doling out pork.

The relatively large number of defeated appropriators might be surprising for some inside-the-beltway analysts because the committee is notorious for sending boatloads of pork to the districts of congressmen who serve on the committee or face tough reelection races. 

As The Hill notes:

In the Labor-HHS-Education bill for fiscal year 2007, more than $146 million in hometown projects is reserved for appropriators’ districts, placing roughly 30 percent of the earmarked money in the hands of 15 percent of the House members. If passed as written, the average appropriator’s district would get $2.25 million compared with averages of $1.35 million for the districts of 43 politically vulnerable lawmakers who are not appropriators and $663,000 for districts that are neither competitive nor represented by an appropriator.

It has long been conventional wisdom that these pork projects help to guarantee reelection. But is it possible that the public has soured on the appropriations process?

After all, former Representative Randy “Duke” Cunningham (R-CA) is now in jail because of his illegal activities on the Appropriations Committee.  And appropriations-related ethical issues factored heavily into last month’s defeat of Representative Charles Taylor (R-NC), who chaired the Interior Subcommittee of the Appropriations Committee. 

It’s probably too early to declare that pork projects have changed from a political asset to a liability, but the appropriations process has certainly drawn much more public scrutiny recently.  As a result, the Republicans adjourned the 109th Congress without finishing all of the fiscal 2007 appropriations bills, preferring to instead push the issue off onto the incoming Democratic majority.  And the Democrats have already announced their plans to kick the can further down the road and avoid the fiscal 2007 appropriations process.

For the time being at least, it seems congressmen have lost their taste for pork, but don’t expect this phenomenon to last long.

Topics: 
General, Government and Politics, Tax and Budget Policy

Be Wary of Late-Night Legislating

By
Michael F. Cannon

SANTA FE – I’ve received a few reports now that the bill Congress passed in the wee hours of this morning would increase the amount that most people can contribute to a health savings account (HSA). 

Most reports claim that the bill would let all those who qualify for an HSA (i.e., those with a high-deductible health insurance policy) contribute the maximum amount to their HSA ($2,850 for individuals and $5,650 for families; figures are for 2007), rather than set a lower contribution limit for those who have insurance deductibles lower than those maximum contribution limits. That’s probably a good idea, and moves HSAs in the direction we should be taking them.

However, the Washington Post reports this morning something different, and alarming.  Lori Montgomery writes:

The package also would repeal a $5,450 limit on contributions to health savings accounts, allowing taxpayers to shelter an unlimited amount of money as long as they choose certain insurance plans with high deductibles.

I doubt that description is accurate. But Thomas and the Government Printing Office don’t have copies of the full bill online yet, so you and I can’t check it out. 

If it is accurate, that means taxpayers would be able to put all their income into an HSA and only pay taxes on it when they withdraw funds for non-medical purposes. They would pay income taxes and a 10 percent tax on non-medical withdrawals. (That 10 percent tax would disappear after the account holder turns 65.) In many cases, they would pay no payroll taxes on those funds. Less money would flow into Social Security and Medicare, and many workers would accumulate fewer benefits under those programs.

All that sounds like good news to a libertarian. But it would be a messy change that would further complicate the tax code. And it would have been enacted with no public debate, which would make HSAs a prime target for the incoming Congress when Democrats might have otherwise ignored them.

But maybe what the Washington Post reported was inaccurate. I don’t know. And right now, I can’t find out. A populace that’s kept in the dark is just one of the perils of late-night legislating.

(In other health care news, that same bill would cancel a scheduled pay cut for doctors under Medicare, a prospect over which I’ve been unable to muster anything but, “So what?”)

Topics: 
Cato Publications, General, Government and Politics, Health Care

Don’t Know Much about Friedman

By
Michael F. Cannon

It took a little more than a fortnight for someone to appropriate the legacy of Milton Friedman in support of something that the Nobel Laureate probably would have opposed. 

In an article for National Review Online, former Speaker Newt Gingrich and his associate David Merritt call on the nation to “Renew Milton Friedman’s Conservatism.”  Whether chosen by the authors or the editors, that title betrays that someone missed Friedman’s point entirely.  In 1975, an interviewer asked Friedman whether it was fair to describe him as a “conservative economist.”  Here was Friedman’s response:

I never characterize myself as a conservative economist. As I understand the English language, conservative means conserving, keeping things as they are. I don’t want to keep things as they are. The true conservatives today are the people who are in favor of ever bigger government. The people who call themselves liberals today – the New Dealers – they are the true conservatives, because they want to keep going on the same path we’re going on. I would like to dismantle that. I call myself a liberal in the true sense of liberal, in the sense in which it means (inaudible) and pertaining to freedom.

Even more jarring is a policy proposal that the authors seem to associate with Friedman.  Gingrich and Merritt write:

We can transform health and health care to deliver more choices of greater quality at lower costs to every American. And government has a role to play. It can and should build an electronic infrastructure, much like government builds public school buildings.

I see two problems here.  First, Friedman often argued that it would be far preferable were government to stop providing education and instead just finance it.  That suggests he saw no need for government to build the schools.  Second, if Friedman ever took a stand on government provision of health information technologies such as electronic medical records, the lack of which is often regarded as a market failure, I’m not aware of it.  However, I have to suspect that left-leaning economist Brad DeLong more closely captured Friedman’s views on the subject when he wrote:

[Friedman] believed…that where markets failed there were almost always enormous profit opportunities from entrepreneurial redesign of institutions; and that the market system would create new opportunities for trade that would route around market failures.

That view is hardly supportive of having the feds provide health information technologies.

Gingrich and Merritt do not completely misappropriate Friedman’s legacy.  They do argue for a few free-market health care and education proposals. 

Topics: 
Education and Child Policy, General, Government and Politics, Health Care, Political Philosophy

Equality Isn’t Natural

By
David Boaz

A New York Times article from the day after Thanksgiving falls into a familiar trap of assuming that equality – among people, among regions, among growth rates, etc. – is a natural condition, so that any deviation from equality is not only worthy of note but a “problem.” Reporter Ian Austen writes:

But [Canadian finance minister Jim] Flaherty did not address a much broader economic problem that has been troubling people who follow the nation’s economy. Although Canada’s economy as a whole is expected to grow by a healthy 2.8 percent this year, there is an expanding gulf between the eastern and western halves of the country.

Indeed, in the past year economic growth has been stronger in oil-rich Alberta than in industrial Ontario, the largest province. Alberta remains the wealthiest Canadian province. But Ontario is not far behind, and it’s wealthier than the other western provinces. The main point is that it would be absurd to expect Canada’s provinces to show the same growth rate each and every year. Yet the Times calls disparity in annual growth rates ”a much broader economic problem that has been troubling people.”

The reality is that nothing is equal. The world is diverse and complex. Different provinces (or states or nations) have different resource endowments, different histories, different policies. Why would we expect them to have the same outcomes, annually or otherwise? The same is true for individuals; we’re all different in infinite ways, so it’s crazy to expect us to end up with the same incomes or assets or accomplishments. And crazy to think that Harvard or the NBA or the Wal-Mart workforce would “look like America.”

Footnote: Google isn’t helping any. When I searched for the New York Times headline “In Canada’s Economic Divide, West Surges While East Struggles,” Google responded:

Did you mean: In Canada’s Economic Divide, West Surges When East Struggles  

Topics: 
General, Government and Politics, International Economics and Development

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