Topic: Government and Politics

Rebate Folly

I was exploring some old CBO reports for information on dynamic budget scoring and I came across this nugget:

If a tax cut—such as a rebate or a higher standard deduction—does not reduce the tax on income from an extra hour of work, the additional income will create an incentive for people to cut back their working hours and spend more time at home. Not everyone will respond, but some people (especially second workers in a family with one full-time earner) may decide to leave the labor force to care for children or aging parents or to pursue other interests.

(Supplement to CBO’s May 9, 2002, Testimony on Federal Budget Estimating May 2002 CONGRESSIONAL BUDGET OFFICE, page 9)

We are about to receive a rebate in May this year as part of the economic stimulus that Congress passed in February. I suppose the folks at the CBO would have pointed out that although a rebate may stimulate consumer spending, it is also likely to reduce labor supply. The net impact, therefore, would not necessarily involve any increase in national output but it would certainly induce stronger inflationary pressures—adding fuel to the inflationary fire the Fed’s apparently stoking by cutting interest rates so rapidly. So it’s perhaps not surprising that the dollar’s value took a nosedive during February this year.

Higher rebate-induced debt and higher inflation implies higher future interest rates and, therefore, increased cost of financing consumer and investment spending. Rebate recipients will benefit today, but everyone will lose in the long-term as the economy becomes more sluggish.

Bottom line: Politicians gain by appearing to be doing something – and most of us lose!

At Least He’s Good on Trade

My colleagues Gene Healy and Justin Logan catalogue some of Sen. John McCain’s less admirable policies below, but at the risk of being the skunk at the dinner party, today I have released a paper arguing that John McCain’s trade policy position is much preferable to that of either of the Democratic candidates.

Over his career in the Senate, McCain has been a consistent free trader, voting against increases in trade barriers 88 percent of the time, and against subsidy increases 80 percent. Senators Clinton and Obama, on the other hand, have only managed 31 (Clinton) and 36 (Obama) on tariffs and 14 (Clinton) and zero (Obama) on subsidies. (For all congresscritters’ trade votes, see here).

To his credit, Senator McCain has also avoided the easy and politically tempting practice of railing against trade deals on the campaign trail, including in Michigan where the political prize probably required it. Both the Democratic candidates, however, turned to an unseemly debate on who hated NAFTA the most in Ohio, and may be tempted to do so again while campaigning in Pennsylvania.

Expect the Democratic candidates’ rhetoric on trade policy to degenerate, by the way, as economic conditions worsen.

“A Cause Greater”

John McCain courted controversy recently with a new campaign slogan that some saw as a thinly veiled attack on Barack Obama’s eclectic background and upbringing. I don’t know if that interpretation is right, but McCain’s new tagline sounds like something out of Team America or Steven Colbert: “The American President Americans Have Been Waiting For” (And So Can You!).

Less ridiculous, and perhaps more unsettling, are McCain’s repeated appeals to “a cause greater than self-interest,” and his attacks on “cynicism,” which, as a determined cynic, I take very personally.

In his speeches, McCain periodically sneers at American opulence and suggests that leaving Americans alone to pursue their own visions of happiness is a narrow and ignoble goal for government. As I point out in my new book The Cult of the Presidency, that’s a common sentiment among the American intelligentsia, and one that’s been used repeatedly to concentrate power in the executive branch:

Like intellectuals the world over, many American pundits and scholars, right and left, view bourgeois contentment with disdain. Normal people appear to like “normalcy,” Warren Harding’s term for peace and prosperity, just fine. But all too many professional thinkers look out upon 300 million people living their lives by their own design and see something impermissibly hollow in the spectacle.

McCain’s campaign speeches reflect that theme. Here he is in a recent speech at the Naval Academy in Annapolis, telling his audience that if you “sacrifice for a cause greater than yourself, [you’ll] invest your life with the eminence of that cause, your self-respect assured.” Here he is on his campaign webpage, insisting that “each and every one of us has a duty to serve a cause greater than our own self-interest.”

I’m not a Randian, so I’m not inclined to condemn this stuff as whim-worshipping altruism. In the abstract, I agree with the statement that when you turn away from your own self-interest, narrowly construed, and adopt a higher purpose than your own pleasure (which purpose need not, and ought not, have anything to do with service to the state), you’re likely to end up a happier person.  But why is any of this McCain’s business? The president is supposed to be a limited constitutional officer, not a national life coach-cum-self-help guru.

Making the case for “a cause greater” in the Naval Academy speech, McCain declared that

when healthy skepticism sours into corrosive cynicism our expectations of our government become reduced to the delivery of services. And to some people the expectations of liberty are reduced to the right to choose among competing brands of designer coffee.

Oh my, not “designer coffee”! The reflexive contempt for peace and prosperity McCain displays here is the essence of National Greatness Conservatism, and, as Matt Welch has pointed out in Myth of a Maverick, his devastating critique of the Arizona senator, John McCain is to National Greatness Conservatism as Barry Goldwater was to conservatism proper: the electoral standard bearer for the philosophy.

In his book, Welch quotes a May 1999 commencement address McCain gave at Johns Hopkins University, warning that America was threatened by a “pervasive public cynicism” toward government “as dangerous in its way as war and depression have been in the past.” In the same speech McCain mused, “With every new Dow Jones record, something gnaws at my conscience that we should not be lulled into unfeeling contentment.” (There’s a bright side to our current economic woes I guess: McCain’s conscience is spared that old gnawing feeling.)

McCain’s sometime ideological guru and op-ed page cheerleader, David Brooks, expresses similar themes in his writings. Even in Bobos in Paradise, Brooks’s foray into “comic sociology,” he warns darkly of “the temptations that accompany affluence.” “The fear is that America will decline not because it overstretches, but because it enervates as its leading citizens decide that the pleasures of an oversized kitchen are more satisfying than the conflicts and challenges of patriotic service.” (As a young man, Brooks served abroad with the Wall Street Journal Europe.)

Designer coffee, oversized kitchens, Belgian beer, and iPods–you might embrace such things because they make life more pleasant, but as Brooks and McCain point out, that’s precisely the problem. These products of prosperity are the lures that plague us, the temptations that make us soft and weak, that keep us from true National Greatness.

What can we Bobos do to make ourselves tougher, to save ourselves from the wonderful distractions capitalism continually creates? John McCain provided an answer in a little-noticed article in the Washington Monthly, written shortly after 9/11. In it, McCain called for a quasi-militarized domestic national service corps as a way to address a “spiritual crisis in our national culture.” What Senator McCain envisioned was, well, rather creepy–a sort of jackbooted Politics of Meaning.

McCain praised City Year, an AmeriCorps initiative operating in 13 cities: “City Year members wear uniforms, work in teams, learn public speaking skills, and gather together for daily calisthenics, often in highly public places such as in front of city hall.” He also endorsed the National Civilian Community Corps, “a service program consciously structured along military lines,” in which enrollees “not only wear uniforms and work in teams… but actually live together in barracks on former military bases.” McCain calls for expanding these two initiatives and “spread[ing] their group-cohesion techniques to other AmeriCorps programs.”

“Group cohesion” and calisthenics in front of city hall reflect a version of patriotism, to be sure, albeit one that seems more North Korean than American. But all in all, the article provides further evidence of Welch’s claim that McCain has an essentially “militaristic conception of citizenship.”

Some have compared McCain to JFK, and there’s something to that comparison. But Milton Friedman said everything that needs to be said about the notion that service to the state ought to be the lodestar of presidential politics. In Capitalism and Freedom, Friedman wrote that neither half of JFK’s “ask not what your country can do for you; ask what you can do for your country” “expresses a relation between the citizen and his government that is worthy of the ideals of free men in a free society.” As Friedman put it:

To the free man, the country is the collection of individuals who compose it, not something over and above them. He is proud of a common heritage and loyal to common traditions. But he regards government as a means, an instrumentality, neither a grantor of favors and gifts, nor a master or god to be blindly worshipped and served. He recognizes no national goal except as it is the consensus of the goals that the citizens severally serve. He recognizes no national purpose except as it is the consensus of the purposes for which the citizens severally strive.

All of which gives us another reason to admire Milton Friedman: before National Greatness Conservatism was invented, Friedman was against it.

[cross-posted from genehealy.com]

Memo to the New York Times: John McCain Is a Neocon

One of the funnier press tics of this campaign is when reporters rend themselves in two, agonizing over completely contrived complexity that they imagine exists inside John McCain. Today’s NYT has the latest example, a 1,600 word thumbsucker about how McCain is buffeted between two discrete factions of his foreign policy advisers. It’s complete, unadulterated nonsense.

The narrative Elisabeth Bumiller and Larry Rohter are advancing is that Senator McCain has two different factions within his foreign policy advisory: dyed-in-the-wool war-loving neocons like Max Boot and Robert Kagan on the one hand, and on the other hand, “pragmatists” who are later described in the article as “realists,” best characterized by people like Henry Kissinger, Lawrence Eagleburger, and Richard Armitage. According to Bumiller and Rohter, there are big differences between the two camps.

There are degrees of difference among these advisers, to be sure, but to imply that they represent fundamentally different camps is completely inaccurate. First off, there’s a big difference between academic realists, who overwhelmingly opposed the war in Iraq before it started, and most people who gallivant around the Beltway proclaiming themselves realists. (Beware, in particular, anyone who uses realist with a modifier, as in “idealistic realist.” Only accept the genuine article.) A huge majority of the Beltway foreign policy establishment–including every member except one of the “pragmatist” faction in the Times story–promoted the war and still have failed to grasp the reasons for its failure.

Bumiller and Rohter then roll out the one prominent figure within the DC foreign policy establishment who did oppose the war, Brent Scowcroft, Bush père’s national security adviser. They describe his opposition to the war and list him as a member of the realist camp within McCain’s advisory. But here’s the thing: If Bumiller and Rohter had dug around a bit, they could have discovered that McCain consigliere Randy Scheunemann, famous for his stalwart promotion of Iraqi charlatan Ahmed Chalabi (a topic that goes totally unexplored in the piece) told the New York Sun in 2006 that “I don’t think, given where John has been for the last four or five years on the Iraq war and foreign policy issues, anyone would mistake Scowcroft for a close adviser.”

Reading the Times piece, you’d believe that there are the war-crazed neocons on the one hand, and the prudent anti-war realists on the other hand. In reality, you have the war-crazed neocons on the one hand, and pro-war realists like Henry Kissinger (who is pro-war first and a realist second) on the other. They present Scowcroft, the one opponent of the war, in order to create the impression that there’s a difference of views on the question, but then fail to mention that he’s been dismissed as a peripheral figure by McCain’s closest foreign policy adviser.

I don’t know whether the Times is trying to make up for the Vicki Iseman story with this, but it makes John McCain look a lot less wedded to perpetual war than anybody who’s been paying attention could easily tell you.

Maybe the Surge Isn’t Working

Via Glenn Greenwald, a Rasmussen poll released yesterday indicates that support for withdrawing from Iraq has reached an all time high. 26% of Americans support leaving “immediately,” 39% want U.S. troops home within one year, not contingent on conditions, and 31% want to stay until “the mission is complete.” So 65% of Americans want US troops out of Iraq within–at the outer bound–one year. 31% support the McCain strategy of staying indefinitely.

Two main purposes of the Surge were, in the words of Thomas Donnelly, to “redefine the Washington narrative,” and as White House adviser Peter Feaver put things, to “develop and implement a workable strategy that could be handed over to Bush’s successor.” This can’t look too good for these folks. It speaks volumes, on the other hand, about the wisdom of the American people.

McCain the Burkean?

Jonathan Rauch has a fascinating short essay in the May edition of The Atlantic (not yet available online) labeling John McCain as a solid conservative, with his seeming anti-establishmentarian iconoclasm nothing more than another indicia of the G.O.P.’s desertion of its core values.

McCain, you see, is a true follower of Edmund Burke, who was “[t]radition-minded but (contrary to stereotype) far from reactionary,” believing in “in balancing individual rights with social order” and advocating only incremental, thoughtful reform. Modern conservatives (or at least Republicans), on the other hand, disdain “small ball” and want to blow up the government.

It’s a clever analysis, especially the contrast of conservative ideas with conservative temperament (though a candidate whose temper is often said to be an Achilles heel is hardly the best vehicle for making that distinction). Ultimately Rauch is too clever by more than half, however, torturing McCain’s policies until they confess to the writer’s thesis. For example, even if it were true that McCain’s campaign finance work ultimately “produced a reform that was mostly modest in its aims,” the Senator’s attack on free speech is a square peg that cannot be forced into a round Burkean hole. And McCain’s latent support for the extension of the Bush tax cuts can much more easily be attributed to presidential politics than to a convoluted notion that after a few years a policy “becomes well established and woven into everyday life” (and therefore must continue lest societal stability be torn asunder).

“McCain,” Rauch concludes, “is an antirevolutionary, not a counterrevolutionary.” That may be true in some sense – and McCain’s views on many issues are genuinely conservative (just as others are libertarian and yet others herald a trust-busting populism) – but it doesn’t make him Burkean.