Topic: Government and Politics

Federal Ban on Internet Gambling Marches On

Yesterday, I spoke with an aide to a Republican congressman who, as far as congressmen go, is somewhat libertarian. The aide told me that much to his chagrin, said congressman will be backing the ban on Internet gambling. What’s more, the aide said the congressman actually understands the economics of prohibitions, he just thinks that this will be the one time they don’t apply.

“For some reason, he thinks this is one instance where government can actually pull it off,” the aide said.

Unbelievable.

Internet gambling is already illegal, of course. That’s why gaming sites set up and operate offshore (several are actually traded on the London Stock Exchange). Yet, it’s still a $12 billion industry in the U.S. That means government already is trying, and failing, to prohibit it.

I guess the thinking is — as it is with the drug war — that if we try just a bit harder, spend just a bit more, harass private citizens just a bit more, and give government a bit more power, we’ll be able to buck history and finally make a vice prohibition stick.

Or perhaps lawmakers know it won’t work, and don’t care. The symbolism of trying to take a moral stand against gambling is more important than the policy actually working.

According to the New York Times, the gambling ban moves to the House floor for a vote next week, where it’s almost certain to pass. Here’s the kicker:

The majority leader, Representative John A. Boehner, Republican of Ohio, announced a few days ago that the measure would be voted on this summer as part of what the Republicans call their American Values Agenda.

So because the Republicans have garnered public scorn for the unethical, corrupt, morally bankrupt way they’ve governed over the last decade, they’ve decided to make a last-ditch attempt to hold on to power by passing judgment on the morals of their constituents (most of whom, polls show, oppose the bill).

Super.

The Times piece also looks at the free trade implications of Internet gambling prohibition, often overlooked in the debate. The Goodlatte-Leach bill will certainly exacerbate existing trade tensions between the U.S. and the 80 or so countries that allow online gambling. But many of those tensions have been bubbling over for years.

This bill brings up some new problems.

Because the bill effectively deputizes banks to sniff out and eradicate gambling among their customers (the creepy privacy implications of that alone ought to kill this bill), it amounts to a piece of blatantly protectionist legislation. Its practical effect will be to shield a domestic company (PayPal, which is owned by eBay) from foreign competitors like FirePay and Netteller.

I’ve explained a bit more about how this will work here.

Thus far, when countries like Antigua have challenged the U.S. gambling ban on free trade grounds, the Bush administration has fought tooth and nail to preserve its right to police the private behavior of American citizens. That means the administration has used millions of taxpayer dollars to prevent more liberty-minded countries from making too much freedom available to U.S. taxpayers over the Internet.

Of course, kicking Antigua around is one thing. When Britain mounts a challenge, as it likely will, this will all get much more interesting.

Gotta love the party of limited government.

Mexico’s Thin Margin

NPR keeps reporting that conservative Felipe Calderon seems to have won the Mexican presidential election “by the thinnest of margins.” Thin, yes. But I wouldn’t call it “the thinnest.” At this writing, Calderon leads by 243,000 votes, about 0.5 percent in an electorate of 40 million.

John F. Kennedy defeated Richard Nixon in 1960 by about 118,000 votes out of 69 million cast, or 0.15 percent. (And that’s if you give Kennedy about 320,000 Democratic votes in Alabama, even though only five of Alabama’s 11 Democratic electors intended to vote for Kennedy. If you don’t credit the Alabama votes to Kennedy, then he would win the electoral college vote while losing the popular vote.) Nixon got his revenge eight years later, defeating Hubert Humphrey by about 500,000 votes, or 0.70 percent in an electorate of 73 million. And then of course there was George W. Bush, whose popular vote margin was about minus 500,000 in 2000.

Calderon’s margin is thin, but it is “the thinnest” only by Mexican standards, not when compared to U.S. presidential elections.

Jefferson v. Stevens

Justice John Paul Stevens recently dissented from the majority opinion in Randall v. Sorrell, the case involving campaign finance restrictions imposed by Vermont. Stevens has long argued that money is not speech, and thus restrictions on money cannot raise First Amendment issues.

Robert Bauer offers a devastating critique of Stevens’ opinion. Bauer justly says Stevens’ dissent will be “cited, for years to come, as a prime example of carelessness, close in nature to fecklessness, in treating the First Amendment issues raised by campaign finance regulation.” Bauer’s blog, his website, and his book, More Soft Money Hard Law, are essential reading for anyone who care about free speech or the future of American politics.

Thomas Jefferson once wrote, “The natural progress of things is for liberty to yield and government to gain ground.” It’s a pity a long-serving Supreme Court justice thinks government gaining ground in free speech is a good thing and even worse that he projects his own statist sympathies onto the Founders, who were nothing if not defenders of liberty.

Negative Ads Inform Voters

Last week the New York Times roiled the upcoming U.S. Senate election in New Jersey by reporting that Repubican Thomas Kean Jr. planned to produce a film claiming that his opponent, Sen. Robert Menendez (D-NJ), was implicated in a corruption investigation twenty years ago.

Critics sometimes deplore such “negative advertising” and call for restrictions on such speech or the money that funds it. Under such a scenario, the government would gain the power to approve the content and tone of electoral advertising.

The Supreme Court, however, has never recognized “improving speech” as a legitimate reason for regulating money in politics. That’s a good thing.

The Kean film, if produced, will give New Jersey voters important information. If Kean’s claims about Menendez’s past are true, surely voters would want to know that. On the other hand, if Kean is making wild charges, the voters could also draw their own conclusions about his fitness for office.

The best solution to abuses of free speech is more speech, not government control over politics.

Russ & John’s

From The Onion:

Citing a longstanding need to “restore honor and dignity to the American food-service industry,” Sens. John McCain (R-AZ) and Russ Feingold (D-WI) announced the public debut of their joint business venture Monday, a chain of integrity-themed restaurants which opened in 12 locations nationwide.

The new Russ & John’s chain, which the two senators funded privately via small financial donations of no more than $2,000 per investor, was founded on the idea that “today’s customers want quality food without all the lies and exaggerations that all too often accompany it,” according to McCain.

[…]

In an effort to avoid the “thinly veiled bribery” found in the majority of restaurants, Russ & John’s prohibit tips, disparaging them as “the worst kind of soft money,” according to the “Message From The Founders” on the restaurant’s menu. Instead, management will distribute company-issued “server grants,” intended to prevent undue influence on the waitstaff’s performance and ensure that every customer receives the same quality service.

McCain said the staff has been trained to deliver “straight talk” to customers.

“Our servers are not there to just tell you what you want to hear,” McCain said. “If a customer asks how the Zesty Three-Cheese Ranch Chicken Platter is, and if it’s not particularly good, they’re going to be up-front with you and say, ‘Frankly, the chicken is not that good.’”

“Same goes for the Lasagna Rollups, which, to be perfectly honest, are terrible,” McCain added.

The restaurants are apparently not doing well. They’re losing customers to “McConnell’s Pork Barrel,” the BBQ joint.

Whither the Budget Hawks?

Congressman Jeff Flake of Arizona is on a crusade against wasteful pork barrel spending. During the consideration of Congress’s annual spending bills, he introduced dozens of amendments that would defund ridiculous pork projects such as swimming pools, retail markets, and aquariums. He even brazenly targeted a pet project in Speaker Denny Hastert’s Illinois district.

You’d think Flake’s efforts would attract the support of the many self-proclaimed budget hawks in both major political parties. But you’d be wrong; his efforts have failed miserably, sometimes barely garnering support from a tenth of the House. 

His amendments haven’t even consistently drawn the vote of his colleagues in the Republican Study Committee — a group of more than 100 supposed fiscal conservatives. For instance, only about a third of RSC members supported Flake’s recent amendment to cut funding for the Southern and Eastern Kentucky Tourism Development Association.

The Blue Dog Coalition — a group of about 35 moderate to conservative House Democrats — has been even less frugal than the RSC. Though the coalition claims to advocate a balanced budget and fiscal restraint, only three of the Blue Dogs have consistently supported Flake’s efforts to cut pork spending.

Of course, pork only makes up a small fraction of the overall budget. But as Chris Edwards notes, it is illustrative of the reckless spending that pervades Congress, even amongst some of the supposed proponents of limited government.

Uncle Sam Wants to Sell You a Latte

In a college town like Madison, Wisconsin, I suspect you can’t throw a copy of Das Kapital without hitting a coffee shop or a drum circle.  But the federal government insists upon subsidizing that city’s grandé mocha makers.  (It hasn’t found a way to subsidize the drum circles … yet.)

First, some background:  Every year, the federal government socks taxpayer money into the Community Development Block Grant program.  According to the program’s website, the goal is to encourage “viable urban communities” and expand “economic opportunities” across the nation and, in particular, within “entitled communities.”   

This is done by funneling loan guarantees and direct grants to local businesses.  It’s considered a form of “economic development.”  Or, to translate from bureaucratese into plain English, it’s a form of grass-roots corporate welfare.   

In 2004 the CDBG program funded loan guarantees for projects such as the Tempe Market Place project in Arizona (described as “a retail facility anchored by six nationally known retailers”) to the tune of $7 million.  It gave guarantees in the amount of $1.9 million to the Noah Hotel project in Kingston, New York, to build a 50-room “boutique hotel,” with a 16,500-square foot ballroom, a restaurant, meeting rooms, and commercial retail space.  $2.5 million went to a downtown parking garage in Watsonville, California, and $2.2 million to the redevelopment of the 427-acre Colorado Industrial Park in Lorain, Ohio.

Now back to Madison, Wisconsin.  As the Mercatus Center’s Eileen Norcross explained today in testimony to Congress, last year the feds spent roughly $1.5 million on loan guarantees to help underwrite two coffee shops, a bakery, and a restaurant in that city, just to name a few. 

How do the HUD managers justify this sort of thing?  They claim the money helps “create” jobs for low- and middle-income residents.  And who do those residents happen to be?  As Norcross notes, they are college students who are classified as below the poverty line because the money they receive from their parents while attending school in Madison doesn’t count as income. 

So, if you’re a local business owner it sounds like a pretty good deal, eh?  Now you can open your doors in a college town and get loan guarantees from the government to hire the kind of employee (read: college students) you would have probably hired anyway.

Many members of Congress will ask, “How can we fix this program?”  Only a handful – including Sen. Tom Coburn of Oklahoma, the head of the subcommittee that held the hearing on CDBG this afternoon – ever ask, “Why do we even fund this stuff in the first place?”