State of the Earmarks

Last night’s State of the Union address didn’t contain much in the way of new policy proposals. As I note in a podcast (Subscribe!), this is largely a reflection of President Bush’s limited political capital because of his lame duck status, low approval ratings, and the Democratic majority in Congress.

But one issue Bush did indicate he will tackle is the rampant earmarking on Capitol Hill. Bush said he would take a couple actions on this front – and while these might be modest steps in the right direction, the results will be far from earth shattering.

First, Bush will “issue an Executive Order that directs Federal agencies to ignore any future earmark that is not voted on by the Congress.” This is good step and one that fiscal conservatives on Capitol Hill have been urging for years. The President can ignore certain earmarks because Congressional appropriators routinely exclude them from the legislative text of spending bills. Instead they “airdrop” many earmarks into conference reports at the last minute. These reports are not technically part of the law, but serve as accompanying documents to inform the Executive Branch of Congress’s intentions. Appropriators do this to circumvent transparency measures and make questionable earmarks immune to points of order or striking amendments by critical members. Because the Executive branch has always played along, it has never been necessary for Congress to act otherwise.

Until now.

With the new Executive Order in place, Congress will presumably be forced to include earmarks in legislative text rather than putting them in nonbinding conference reports. This will likely increase transparency to some degree, but it’s unlikely to have a significant impact on earmarks beyond that. Enough support resides in Congress to continue to earmark funds and easily defeat procedural hurdles along the way. Furthermore, Bush missed a huge opportunity here. He could have applied the Executive Order to the current 2008 fiscal year and wiped out thousands of earmarks in the process.

Bush also indicated that he would veto appropriations bills that do not reduce the number or cost of earmarks by 50 percent. This might encourage appropriators to cut earmarks per the president’s request. But there is a danger here – rather than shooting for a significant reduction in earmarks, Congressional leaders could instead dole out more money for members’ pet projects in order to build a vested voting block large enough to override a veto. In terms of passing the annual spending bills, this could be an easier path for Congress to follow, as most spending bills already pass with large majorities. The result could be a net increase in earmarks.

Still, President Bush has made a good faith effort toward improving the earmarking process. And by discussing earmarks during his final State of the Union address, he brought a national spotlight to the issue. But few significant improvements will occur until members of Congress stop coveting earmarks and voters stop returning earmarkers to Congress.

My Least Favorite False Note on Trade in Last Night’s SOTU

My colleague Dan Griswold has a post below about some of the good things President Bush said in his State of the Union address last night (transcript here). While the President deserves praise for the remarks he made about the importance of trade to the American economy, he made much of the importance of exports and of opening markets overseas, with only a cursory glance at the benefits of imports.

That mercantilist rhetoric, in my opinion and in the opinion of my colleague Brink Lindsey, has boxed the administration and other lawmakers into a corner: people now erroneously assume that if the exports fail to materialize, or if the trade deficit worsens, then the trade policies have been a failure. The present skepticism about trade deals (even allowing for the fact we are in fully-fledged campaign mode) is a direct consequence of that flawed thinking.

Putting aside my ranting about the general state of public discourse about trade, though, there was one part of the SOTU address that particularly struck me as misguided. In making the case for trade deals, President Bush talked about the negative effects of trade liberalization on some workers and made a pitch for renewing trade adjustment assistance:

for some Americans, trade can mean losing a job, and the federal government has a responsibility to help.

Wrong.

Laffer Curve Video

Working in Washington can be very exasperating, and few issues are as frustrating as the Laffer Curve. Even market-friendly lawmakers frequently misinterpret the relationship between tax rates, taxable income, and tax revenue. The other 90 percent of politicians are even worse. Using straw-man arguments, they defend a revenue-estimating system that is based on the absurd notion that tax policy never has any impact on economic performance. I’ve complained vociferously (see here, here, and here), but that hasn’t worked.

It’s time to try something new. Regular readers of this blog may have seen the videos I narrated on tax competition and the corporate income tax. These videos, produced by the Center for Freedom and Prosperity, will never compete with Pamela Anderson, but they seem to get a decent amount of traffic by public-policy standards. So the Center has now released a video on the Laffer Curve with yours truly (a.k.a., the George Clooney of the free market movement) again serving as narrator. Indeed, this video is the first of a three-part series.

I sent the video to Art Laffer, who was kind enough to say, “This video is a great common-sense tutorial that shows the real relationship between tax rates, taxable income, and tax revenue. I hope it is widely viewed so that more people understand the need for pro-growth tax policy.” But I also want negative feedback. As in previous cases, I would welcome suggestions on how to make these videos more effective. Needless to say, feel free to share all of them with your friends and colleagues.

The Need for Judicial Oversight of Domestic Intelligence Gathering

I’m always hesitant to disagree with a fellow Cato scholar, especially one with a resume as impressive as Roger Pilon’s. But I thought Roger’s op-ed in the Wall Street Journal yesterday on the FISA debate missed a couple of important points.

Let me start with a couple of points on which everyone in the FISA debate agrees. First, no one disputes that the president has the authority to conduct purely foreign intelligence-gathering without court oversight. And as Ryan Singel has ably documented purely foreign eavesdropping has always been unregulated by FISA. If the NSA wants to splice into a fiber optics cable off the coast Great Britain, bribe a Syrian telephone employee for access to the telephone network, or install eavesdropping equipment on every cell phone tower in Iraq, FISA has nothing to say on the subject.

Second, virtually everyone agrees that changes are needed to allow the interception of foreign-to-foreign communications as they pass through infrastructure in the United States without judicial interference. Indeed, the Democratic House passed legislation to that effect back in October. We would not be having this debate today if the president had not threatened to veto that legislation.

The dispute is over what safeguards are appropriate to ensure that the intelligence community’s surveillance activities here in the United States are limited to genuine foreign intelligence. Roger’s position appears to be that neither the courts nor Congress may place any restrictions on domestic surveillance activities that the president declares to be related to foreign intelligence gathering. But that’s not good enough. Without judicial oversight, there is no way to know if the executive branch is properly limiting its activities to spies and terrorists, or if they’ve begun to invade the privacy of petty criminals or even law-abiding individuals. This is no hypothetical scenario. The FBI conducted extensive surveillance of Martin Luther King Jr. and other civil rights and anti-war leaders in the 1960s and 1970s, which was one of the reasons Congress enacted new safeguards in the first place.

The White House complains that the process for obtaining permission from the Foreign Intelligence Surveillance Court is too burdensome. But as our own Mark Moller has explained, most of the paperwork burden that the White House now complains about so bitterly was created by the administration’s own procedures for approving FISA applications. The paperwork required by FISA itself was fairly light. And not only did the Foreign Intelligence Surveillance Court reportedly almost never turn down an eavesdropping application, but the law also included an emergency wiretapping provision that allowed intelligence officials to wiretap first and then get a warrant afterwards.

In short, FISA gave the intelligence community plenty of flexibility to perform the domestic wiretaps they needed to keep Americans safe. But crucially, the government had to tell the court who it was spying on, so that the court could verify that the law was being followed. That’s an important safeguard that ensures that the president doesn’t exceed his constitutional authority and encroach on the privacy of law-abiding citizens. The Protect America Act severely crippled that protection, and it would be a serious mistake for Congress to make the damage permanent.

President Bush Keeps the Faith on Trade, Immigration

There was much for libertarians and small-government conservatives to pick apart in President Bush’s State of the Union speech last night, but the president deserves hearty applause for his two passages on trade and immigration.

On trade, Bush urged Congress to approve pending agreements that would lower trade barriers between the United States and Colombia, Panama, and South Korea. He reminded Congress that the agreements would reduce barriers to U.S. exports and deepen our commercial and diplomatic ties to friendly nations and their 100 million citizens.

Those non-economic factors loom especially large in the Colombia agreement. As the president told Congress:

These agreements also promote America’s strategic interests. The first agreement that will come before you is with Colombia, a friend of America that is confronting violence and terror, and fighting drug traffickers. If we fail to pass this agreement, we will embolden the purveyors of false populism in our hemisphere. So we must come together, pass this agreement, and show our neighbors in the region that democracy leads to a better life.

The president even reminded Congress, albeit subtly, that the gains from trade are not just about exports when he said. “Trade brings better jobs and better choices and better prices.” Yes, it’s about time somebody in high office put in a good word for the consumer benefits of more robust import competition!

On immigration, President Bush stood on equally solid ground. He touted the beefed up border security under his administration, but then reminded Congress that enforcement without reform is not enough:

… we also need to acknowledge that we will never fully secure our border until we create a lawful way for foreign workers to come here and support our economy. This will take pressure off the border and allow law enforcement to concentrate on those who mean us harm.

We must also find a sensible and humane way to deal with people here illegally. Illegal immigration is complicated, but it can be resolved. And it must be resolved in a way that upholds both our laws and our highest ideals.

In 89 words, President Bush effectively summarized what I’ve been saying and writing all along about the right way to reform our broken immigration system and protect our security.

Atilla Yayla Found Guilty

Atilla Yayla, the courageous leader of the Association for Liberal Thinking in Turkey, who has spoken at the Cato Institute and taken part in Cato conferences and programs, has been found guilty of allegedly insulting the founder of the modern Turkish state, Mustafa Kemal Ataturk. The 15 month prison sentence was suspended.

Background from my previous blog posts here and here.

The New York Times ran a piece on Friday on the likely direction for freedom of speech in Turkey, “Turkey to Alter Speech Law,” which focuses on Atilla’s case.

Atilla is a brave man and a friend of the liberty of everyone. Please write to the Turkish Ambassador in your country, respectfully (please) requesting that proceedings be undertaken to void the sentence. Here is the info for the Turkish Embassy in the USA.

Wiretapping Laws Violated

Government agents are rarely prosecuted when they violate the wiretapping laws.  Instead, the government uses those laws against the people!  Massachusetts police, for example, arrested a law student who used his cell phone to record a drug arrest

It is bad enough when a cop loses his temper and makes a false arrest.  It is much worse when prosecutors calmly decide to press forward with the case and set a legal precedent.