Topic: Government and Politics

Week in Review

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Cato Leads Opposition to Fiscal Stimulus

In reaction to statements from Obama administration officials who say “all economists agree” that the only way to fight the economic recession is to go on a massive government spending spree, the Cato Institute took out a full page ad in the nation’s largest newspapers that showed that those words were not true. Signed by more than 200 economists, including Nobel laureates and other highly respected scholars, the statement was published this week in The New York Times, The Washington Post and many other publications.

On the day the ad ran in The New York Times, Cato executive vice president David Boaz added more names to the list of economists who are skeptical of the spending bill.

Commenting on the principles behind the stimulus, Cato adjunct scholar Lawrence H. White and fellow economist David C. Rose discuss why we can’t spend our way out of this mess:

You can’t solve an excessive spending problem by spending more. We are making the crisis worse.

In The Wall Street Journal, Cato senior fellow Alan Reynolds examines the numbers and discovers that each government job created  will cost taxpayers a staggering $646,214 per hire.

The stimulus package now moving through Congress will spend nearly $1 trillion that the government does not have. With the nation already $1.2 trillion in the hole, Cato director of Tax Policy Studies Chris Edwards discusses the sheer illogic behind pushing for stimulus at a time like this:

If I get up in the morning and drink five cups of coffee and that doesn’t stimulate me, I don’t go and drink another five. I’d recognize my addiction problem and start reforming my bad habits. Federal policymakers should do the same.

For more on the stimulus plan, read Edwards’s Tax and Budget Bulletin, “The Troubling Return of Keynes,” (PDF) co-authored by Ike Brannon, former senior adviser to the U.S. Treasury.

During the House vote on the stimulus bill, just 11 Democrats voted against it, leaving Boaz to ask, “What Happened to the Blue Dog Democrats?

“Blue Dogs supported fiscal responsibility at some vague point in the misty past, and they will strongly support fiscal responsibility at some vague point in the future,” writes Boaz. “But right now they’re going to vote to put their constituents another $825 billion in debt.”

Obama Promises to Close Guantanamo Bay Detention Center

Cato legal policy analyst David H. Rittgers explains why he approves of Obama’s choice to shut down the prison at Guantanamo Bay and offers advice on how to proceed with the plan:

The Founders wrote the Bill of Rights after a violent insurgency brought on by government oppression, and the principles contained therein are no weaker while countering today’s terrorists. Using national security courts to try the detainees in Guantanamo opens the door to closed and classified trials of domestic terror suspects. This degradation of essential liberties is unwise and avoids the social function of trials.

Listen to a Cato Daily Podcast interview with Rittgers to learn more about the future of the Gitmo detainees.

In the forthcoming Cato Handbook for Policymakers, Timothy Lynch, director of Cato’s Project on Criminal Justice, lays out a plan for the future of our government’s strategy for dealing with terrorism. (PDF)

Gore Global Warming Hearing Goes on Despite Snowstorm

Undeterred by a snowstorm that shut down schools and gave federal workers “liberal leave,” the Senate Foreign Relations Committee held a hearing on global warming this week with star witness Al Gore. Gore promoted ways to end climate change through cap-and-trade legislation and investment in renewable energy, reported U.S. News and World Report.

In a Cato Policy Analysis, author Indur Goklany offers his commentary on how government should handle climate change.

Cato senior fellow in environmental studies Patrick J. Michaels offers his analysis on climate change, and how the international community should react.

Appearing on Fox News, Michaels, who is a former Virginia state climatologist, asserts that when it comes to climate change, there is no immediate emergency. For more, don’t miss Michaels’s new book, Climate of Extremes: Global Warming Science They Don’t Want You to Know, co-authored with Robert C. Balling Jr.

Flowers Aren’t Enough

“Small Government Returns as [Republican] Maxim,” headlines the Washington Post.

The unanimous vote by House Republicans against President Obama’s stimulus plan provided an early indication that the GOP hopes to regain power by becoming the champion of small government, a reputation many felt slipped away during the high-spending Bush years.

But small-government voters may not be persuaded that the GOP has returned to its principles on the basis of one vote against a bill proposed by the other party, which happens to be, in the words of Republican whip Eric Cantor, likely “the largest spending bill in history.”

Like a wife whose husband has strayed dozens of times over the past eight years, small-government voters may not feel that one Valentine’s Day present is enough to restore trust. Especially when some of the prodigal Republicans are even now saying that they might vote for the largest spending bill in history on final passage.

Political Prevaricators

As the Illinois Senate prepared to remove Gov. Rod Blagojevich from office, Republican state senator Mike Murphy said that Blagojevich “is an unusually good liar.”

Not that good, apparently. Not good enough to stay in office. As opposed to another controversial politician of whom those same words were said a few years ago.

“Clinton is an unusually good liar,” Senator Bob Kerrey (D-Nebraska) once told Esquire magazine. “Unusually good.”

Better than Blago, it would seem.

Stimulus Package = The Dems’ PATRIOT Act

That’s what Steve Horwitz says here.  Like the PATRIOT Act, it’s a preexisting wishlist of initiatives being rammed through in an atmosphere of hysteria. Where the Obama administration has, to its credit, backed away from the language of war and crisis when it comes to international affairs and homeland security, the Obama team seems all too willing to revert to Bush-style fearmongering in the service of greater state involvement in the economy.

Yesterday’s coverage in the New York Times (of all places) suggests that the stimulus package is a Trojan Horse effort designed to make dramatic and likely permanent changes in the federal role in health care and education, among other things:

For Democrats, [the stimulus package] is also a tool for rewriting the social contract with the poor, the uninsured and the unemployed, in ways they have long yearned to do….

Altogether, the economic recovery bill would speed $127 billion over the next two and a half years to individuals and states for health care alone, a fact that has Republicans fuming that the stimulus package is a back door to universal health coverage…. The federal share of Medicaid spending now ranges from 50 percent in higher-income states like New York and Connecticut to more than 73 percent in poor states like Mississippi and West Virginia. Under the House bill, the federal share would be increased by at least 4.9 percentage points in every state, and by much more in states with large increases in unemployment.

Critics and supporters alike said that by its sheer scope, the measure could profoundly change the federal government’s role in education, which has traditionally been the responsibility of state and local government…. In recent years the federal government has contributed 9 percent of the nation’s total spending on public schools, with states and local districts financing the rest. Washington has contributed 19 percent of spending on higher education. The stimulus package would raise those federal proportions significantly. The Department of Education’s discretionary budget for the 2008 fiscal year was about $60 billion. The stimulus bill would raise that to about $135 billion this year, and to about $146 billion in 2010. Other federal agencies would administer about $20 billion in additional education-related spending. “This really marks a new era in federal education spending,” said Edward Kealy, executive director of the Committee for Education Funding, a coalition of 90 education groups.

Does the Trojan-Horse theory sound cynical? Well, as my colleague Will Wilkinson points out, what this country needs, now and ever, is a healthy dose of constructive cynicism:

“There are some who question the scale of our ambitions, who suggest that our system cannot tolerate too many big plans,” President Obama observed in his [inaugural] address. “Their memories are short,” he said, “for they have forgotten what this country has already done, what free men and women can achieve when imagination is joined to common purpose and necessity to courage.”

This is a tediously familiar and dangerous message. Can you recall the scale of our recent ambitions? The United States would invade Iraq, refashion it as a democracy and forever transform the Middle East. Remember when President Bush committed the United States to “the ultimate goal of ending tyranny in our world”? That is ambitious scale.

Not only have some of us forgotten “what this country has already done … when imagination is joined to a common purpose,” it’s as if some of us are trying to erase the memory of our complicity in the last eight years—to forget that in the face of a crisis we did transcend our stale differences and cut the president a blank check that paid for disaster. How can we not question the scale of our leaders’ ambitions? How short would our memories have to be?

So What Is Wrong with “Ideology?”

In its lead editorial today, the New York Times dismisses criticism of the stimulus bill that passed the House last night as “mostly ideological.” Similarly, a McClatchy News story about the economists who signed Cato’s newspaper advertisement opposing the stimulus bill, dismissed signers as “ideologically opposed” to government spending. This is part of a trend we’ve seen since President Obama’s election. Opposition to Obama’s programs is dismissed as “ideological,” whereas the belief by President Obama and Congressional Democrats in ever bigger and more activist government is, in the word’s of EJ Dionne, “anti-ideological.”

After all, President Obama has called for “a new declaration of independence, not just in our nation, but in our own lives — from ideology and small thinking, prejudice and bigotry.”

Apparently then, to believe in free-markets, limited government, and individual liberty is to be “ideological,” on a par with being a small-thinking bigot. On the other hand, to believe that government should run more and more of our lives, that government functions better than markets, and that government should redistribute wealth is…what? 

This country was founded by men who believed in such ideological ideas as “all men are created equal”  and are “endowed by the creater with certain unailenable rights.”  Since when is that a bad thing?

Trade Lessons Unheeded

Leaving aside the many other disastrous implications of the pork-laden “stimulus” bill, here are some thoughts about its impact on international trade. For all practical purposes there is no difference between the Smoot-Hawley tariff bill of 1930 and the “Buy American” provisions in the $819 billion spending bill that passed the House Wednesday.

Smoot-Hawley was the catalyst for a pandemic of tit-for-tat protectionism around the world, which helped deepen and prolong the global depression in the 1930s.  “Buy American” provisions will no doubt inspire similar trade barriers abroad and will have the same effect of reducing global trade—and therefore prospects for economic recovery.  It is not unreasonable to say that U.S. policymakers are on the verge of taking us down that same disastrous path.

The bill that passed the House includes the following language:

None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron and steel used in the project is produced in the United States.

The version currently before the Senate contains the same language, which would seem to indicate that scrapping the provision won’t be necessary to reconcile the two versions in conference.  So, unless the “Buy American” clause is dropped in the final Senate bill or is somehow defused during conference, the U.S. will have fired the first shot in what could evolve into a much wider trade war.

It’s usually better to be circumspect and to issue such dire warnings sparingly, but I see little room for alternative conclusions here.