Topic: Government and Politics

DHS Shutdown

Policymakers are battling over a funding bill for the Department of Homeland Security (DHS) and its agencies, including the Federal Emergency Management Agency (FEMA). The disagreement over the bill involves the funding of President Obama’s recent immigration actions.

If a DHS funding bill is not approved, the department will partially shut down. The administration has been highlighting the negative effects of that possibility, but the battle illustrates how the government has grown far too large. Federal shutdowns may cause disruption, but that is because the government has extended its tentacles into activities that should be left to state and local governments and the private sector.

To the extent possible, we should move the most important activities in society out of Washington because the federal government has become such a screwed-up institution. Air traffic control, for example, is too crucial to allow it to get caught in D.C. budget squabbles, as it did in 2013. Air traffic control should be privatized.

We Should Only Trust the Government as Far as We Can Throw It

Vietnam vet Robert Rosebrock is 72 years old, but he’s still got enough fight in him to stand up for what he believes in. The Veteran’s Administration of Greater Los Angeles (VAGLA) and the U.S. Court of Appeals for the Ninth Circuit would prefer his fight to be in vain.

Rosebrock’s fight here is a protest against VAGLA’s use of a parcel of land deeded to the U.S. government for the care of homeless veterans for purposes other than that purpose.  For example, VAGLA leased parts of the land to a private school, an entertainment company, and a soccer club, and occasionally used it for hosting events. Every Sunday for 66 weeks, Rosebrock hung at least one and as many as 30 U.S. flags from a border fence on the VA property that he believed was being misused.

After seeing a celebrity gala event on the property one Sunday afternoon, Rosebrock started hanging flags with the stars down, signifying dire distress to life and property—the distress faced by LA’s homeless veterans. At this point, VAGLA started enforcing its policy against “displaying of placards or posting of materials on bulletin boards or elsewhere on [VA] property.” When Rosebrock continued, believing his First Amendment rights would protect him, he was issued six criminal citations. He then stopped hanging his flag upside down but was later allowed to hang it right-side-up—a clear if unusual example of viewpoint-based speech discrimination that violates the First Amendment.

When Wisconsin Officials Badger Their Political Opponents, It’s a Federal Case

SWAT teams—police units equipped with military-style weaponry and trained to deal with the most dangerous of criminals—were first created police realized that patrolmen equipped with revolvers and batons are generally able to keep the peace, they lack the resources and skills to deal with riots, urban terrorism, and other exotic crime. Since then, SWAT-style paramilitary units have been deployed to rescue hostages, end bank robberies, secure campuses after school shootings, and, in Wisconsin, to raid the houses and offices of people the state believed to be guilty of exercising their rights under the First Amendment.

That’s right: in the last few years, SWAT raids were part of a wide-ranging (politically motivated) investigation into whether certain unknown individuals—“John Does”—were violating campaign finance laws. Some of these John Does objected and challenged the validity of the subpoenas requiring them to turn over their records to the district attorney’s office.

The state trial court agreed and quashed the subpoena, finding that the state had no reason to believe that any violation of state law had occurred, or that the records taken would contain relevant evidence. Unsatisfied, the DA appealed the judge’s order. Rather than continuing this battle through the state courts, these John Does sued the state officials responsible for the investigation in federal court. They claimed that the investigation was a speech-chilling violation of their First Amendment rights and asked for a federal injunction preventing the state from pursuing the investigation.

The state argued that a federal law—the Anti-Injunction Act—prevents federal courts from ordering states to abandon in-progress criminal cases. Nevertheless, the district court issued an order stopping the SWAT-style fishing expedition, relying on a series of Supreme Court cases holding that the AIA doesn’t apply where the prosecution is known by the state to be baseless, is part of a campaign of harassment, or involves the enforcement of a blatantly unconstitutional law. The judge concluded that Wisconsin’s campaign-finance laws, as well as the methods used to enforce them, violated the First and Fourteenth Amendments.

The U.S. Court of Appeals for the Seventh Circuit reversed the district court’s order, however, concluding that since the state campaign-finance laws had not yet been declared unconstitutional—and their constitutionality was not directly before the district court—the AIA exceptions didn’t apply and the injunction was improper. In short, Wisconsin will be allowed to continue its investigation, the constitutionality of which is immune from legal challenge in federal court. In effect, the Seventh Circuit held that that under the AIA, the only time defendants can challenge the constitutionality of a state’s criminal laws is “when no state prosecution [is] pending.”

Cato has filed an amicus brief urging the Supreme Court to hear the plaintiffs’ appeal. We argue that regardless of whether Wisconsin’s election laws are unconstitutional, there was sufficient evidence suggesting that the sole purpose of the investigation was to harass the plaintiffs and discourage them (and others) from advocating a particular legislative agenda. Because the Supreme Court’s interpretation of the AIA allows federal judges to halt state enforcement of undeniably constitutional laws where there is evidence that a prosecution is being conducted for an improper purpose (like silencing political dissent), or in a manner that constitutes harassment, the district court had the power to issue an injunction regardless of whether or not Wisconsin’s campaign-finance laws are constitutional.

The fact that the constitutionality of those laws is in doubt—it happens to be one of the most heavily contested questions currently before the courts—only makes the district court’s decision all the more proper and the Seventh Circuit’s all the more worrying. If allowed to stand, the long-term effect of the Seventh Circuit’s ruling would be to give prosecutors carte blanche to do exactly what Wisconsin’s politically inspired prosecutors did: “investigate” perceived political threats for the very purpose of suppressing political speech. So long as arrests are never made and claims are never brought, the prosecutors are in the clear and no federal court can do anything about it. That can’t be the law.

The Supreme Court will decide this in the next couple of months whether to take the case of O’Keefe v. Chisholm.

Interventionist Wreckage: Kosovo and Libya

Proving that hawks never seem to learn, John McCain, Lindsey Graham, and the other usual suspects are advocating more substantial U.S. involvement in the civil wars convulsing such places as Iraq, Syria, and Ukraine. Before we head down that road again, we ought to insist that proponents of U.S. military crusades defend the results of their previous ventures. That exercise would cause all except the most reckless interventionists to hesitate.

It’s not merely the catastrophic outcomes of the Afghan and Iraq wars, which were pursued at enormous cost in both blood and treasure. The magnitude of those debacles is recognized by virtually everyone who is not an alumnus of George W. Bush’s administration. But even the less notorious interventions of the past two decades have produced results that should humble would-be nation builders. The current situations in Kosovo and Libya are case studies in the folly of U.S. meddling.

The United States led its NATO allies in a 78-day air war against Serbia to force that country to relinquish its disgruntled, predominantly Albanian province of Kosovo. In early 2008, the Western powers bypassed the United Nations Security Council and facilitated Kosovo’s unilateral declaration of independence. But today’s Kosovo is far from being a success story. In the past few months, there has been a surge of refugees leaving the country, fleeing a dysfunctional economy and mounting social tensions. Despite a massive inflow of foreign aid since the 1999 war, a third of the working-age population are unemployed, and an estimated 40 percent of the people live in dire poverty. Tens of thousands of Kosovars are now seeking to migrate to the European Union, ironically by traveling through arch-nemesis Serbia to reach European Union member Hungary.

Economic misery is hardly the only problem in the independent Kosovo that the United States and its allies helped create. Persecution of the lingering Serb minority and the desecration of Christian churches, monasteries, and other sites is a serious problem. Kosovo has also become a major center for organized crime, including drug and human trafficking.

Yet Kosovo is an advertisement for successful U.S.-led military crusades compared to the outcome in Libya. The Obama administration boasted of its “kinetic military action” (primarily cruise missile strikes) as part of the NATO mission to help insurgents oust dictator Muammar Gaddafi in 2011. Today, Libya is a chaotic mess. Once a major global oil producer, the country’s pervasive disorder has so thoroughly disrupted production that Libya faces financial ruin. Not only is Libya teetering on the brink of full-scale civil war, much of the country has become the plaything of rival militias, including an affiliate of ISIS. Journalist Glenn Greenwald concludes correctly that the Libyan intervention, which was supposed to show the effectiveness of international military action for humanitarian goals, has demonstrated the opposite.

Such sobering experiences confirm that U.S.-led interventions can often make bad situations even worse. Serbia’s control of Kosovo was hardly an example of enlightened governance, and Gaddafi was a corrupt thug who looted Libya. But as bad as the status quo was in both of those arenas, Western military meddling created far worse situations. That is the lesson that should be kept firmly in mind the next time armchair warhawks in Congress or the news media prod Washington to lead yet another ill-conceived crusade.

Europe: A Fiscal & Monetary Reality Check

Led by Alexis Tsipras, head of Greece’s newly-elected, left-wing coalition, some other leading political lights in Europe—Messrs. Hollande and Valls in France and Renzi in Italy—are raising a big stink about fiscal austerity. Yet they always fail to define austerity. Never mind. They don’t like it. The pols have plenty of company, too. Yes, they can trot out a host of economists—from Nobelist Paul Krugman on down—to carry their water.

But public expenditures in Greece, Italy and France are not only high, but growing as a proportion of the economy. One can only wonder where the austerity is. As the first chart shows, only five of 28 European Union countries now spend a smaller proportion of national income on government than they did before the current crisis. For example, Greece spent 47.5% of national output on government in 2007 and 58.5% in 2013, an increase of 11 percentage points. 

Government expenditures cut to the bone? You must be kidding. Even in the United States, where most agree that there is plenty of government largesse, the government (federal, plus state and local) still accounts for “only” 38.1% of GDP.

Bipartisan Baloney About Top 1 Percent Income Gains

In the State of the Union address on January 20, President Obama said, “those at the top have never done better… Inequality has deepened.”  The following day, Fox News anchor Brett Baier said, “According to the work of Emmanuel Saez, a professor at the University of California, Berkeley, during the post-recession years of 2009-2012, top earners snagged a greater share of total income growth than during the boom years of 2002-2007. In other words, income inequality has become more pronounced since the Bush administration, not less.” 

Senator Bernie Sanders agrees that “in recent years, over 99 percent of all new income generated in the economy has gone to the top 1 percent.”  And Senator Ted Cruz likewise confirmed that, “The top 1 percent under President Obama, the millionaires and billionaires that he constantly demagogued earned a higher share for our income than any year since 1928.” 

When any statistic is so politically useful and wildly popular among left-wing Democrats and right-wing Republicans you can be pretty sure it’s baloney.  Bipartisan baloney.

In November 2013, I wrote that, “Because reported capital gains and bonuses were…shifted forward from 2013 to 2012 [to avoid higher tax rates], we can expect a sizable drop in the top 1 percent’s reported income when the 2013 estimates come out a year from now. The befuddled media will doubtless figure out some way to depict that drop as an increase.” As predicted, the New York Times took one look at a 14.9% drop in top 1% incomes and concluded that “The Gains from the Recovery are Still Limited to the Top One Percent” That involved slicing the same old baloney very badly.

How Not to Spin a Big Drop in Top 1% Incomes

Pre-1944 method of estimating top 1% shares

When Thomas Piketty and Emmanuel Saez release their annual estimates of top 1 percent incomes, you can count on The New York Times to put it in a front page headline with additional hype on the editorial page.  This time, however, the news was that the top 1 percent had suffered a 14.9 percent decline in real income in 2013 if capital gains are included, as they always had been until now.  

The New York Times heroic spin was “The Gains From the Economic Recovery Are Still Limited to the Top One Percent.”  The author, Justin Wolfers of the Peterson Institute wrote, “Emmanuel Saez … has just released preliminary estimates for 2013. The share of total income (excluding capital gains) going to the top 1 percent remains above one ­sixth, at 17.5 percent. By this measure, the concentration of income among the richest Americans remains at levels last seen nearly a century ago.”

I will have more to say about this in another blog post.  For now, I just want to call attention to the artistic way in which the subject was changed.  Since 2008, Saez has been comparing changes in top incomes (for which he has preliminary IRS data) to incomes of the bottom 90 percent (for which IRS data are singularly inappropriate).   He always included realized capital gains because that makes the top 1 percent share both larger and more cyclical.