Mon Dieu! Smaller Government in France

In a step that could have a damaging effect on the jokes I tell when giving speeches, the Prime Minster of France has announced a plan to freeze government spending for five years. Some of the details are a bit unclear. As the Financial Times notes, Minister Fillon did not state whether spending would be frozen at current levels, or frozen after adjusting for inflation. A hard freeze would be the best option, but either choice would shrink the aggregate burden of government in France. To their credit, policy makers in Paris seem to understand the problem:

France is planning to freeze public spending for five years under its biggest programme of social and economic reform since the late 1960s, according to François Fillon, the prime minister. …The government has said it wants to eliminate its deficit and reduce spending as a share of national output – the highest in the EU at 53.5 per cent – during Mr Sarkozy’s first five-year term… Mr Fillon did not say whether he was planning a real-terms or nominal freeze, nor whether it would encompass France’s indebted social insurance system. He admitted that France would only eliminate its deficit “if we do the underlying structural reforms, which would allow us to reduce in a much more significant way public-sector employment and public spending”. …Mr Fillon has been credited with keeping Mr Sarkozy’s government focused on repairing France’s precarious public finances and cutting welfare and pension costs.

Assuming Sarkozy’s government fulfills this pledge, France will take a big step in the right direction. With any luck, maybe American politicians then would do something similar. The same policy, if adopted in America, would reduce the burden of federal government spending from more than 20 percent of GDP today to 15.9 percent of GDP (with a hard freeze) or 17.8 percent of GDP (with an inflation-adjusted freeze) after five years.

The Anti-Universal Coverage Club: One Big Tent

A new poll by the Kaiser Family Foundation and the Harvard School of Public Health asked likely Republican and Democratic primary voters their views on health care reform.  In particular, the poll asked whether respondents would prefer that a presidential candidate propose:

  1. “A new health plan that would make a major effort to provide health insurance for all or nearly all of the uninsured BUT would involve a substantial increase in spending
  2. “A new health plan that is more limited and would cover only some of the uninsured BUT would involve less new spending [or]
  3. “Keeping things basically as they are”

(“Don’t know” and “Refused” were also options.)

Nearly 70 percent of likely Republican primary voters rejected the universal coverage option (#1).  Forty-two percent said they preferred the more moderate, less universal option (#2), while 27 percent said they preferred to keep things as they are (#3).

Interestingly, nearly one-third of likely Democratic primary voters also rejected the universal coverage option: 22 percent said they would prefer the more moderate option, while 8 percent preferred the status quo.

Looks like there are candidates for the Anti-Universal Coverage Club on both sides of the political aisle.

A Core 9/11 Commission Afterthought

The Department of Homeland Security often invokes the 9/11 Commission when it discusses REAL ID. A recent DHS press release called REAL ID a “core 9/11 Commission finding.”

In fact, the 9/11 Commission dedicated about three-quarters of a page to identification security – out of 400+ pages of substance. See for yourself. Page 390.

Europeans Want Asian Financial Centers to Join Savings Tax Cartel

Politicians from Europe’s high-tax governments recognize that saving and investment are escaping to jurisdictions with less-punitive tax regimes. But rather than lower their oppressive tax rates, they are trying to gain the ability to track – and tax – flight capital.

A couple of years ago, they implemented the so-called savings tax directive, but this system is ineffective (from the perspective of politicians) since many financial centers are not part of the cartel and many types of investment vehicles are not covered. Not surprisingly, politicians from nations such as France and Germany want to expand the tax cartel to cover more nations and to capture more forms of saving and investment.

Fortunately, as Tax-news.com reports, the Asian financial centers are not favorably disposed to serving as tax collectors for Europe’s inefficient welfare states. As such, high-tax nations may feel compelled to reduce tax rates to keep capital from fleeing:

Senior EU tax officials, including European Tax Commissioner Laszlo Kovacs, are preparing to make a fresh approach to Asian financial centres, in a bid to have them included within the ambit of the European Savings Tax Directive. According to a report from Reuters, Kovacs is scheduled to visit Hong Kong later this month, while other senior officials will launch a new charm offensive in the territory of Macau and the city-state of Singapore. The directive, which extends to a number of ‘third countries’ such as Switzerland, the Channel Islands and Caribbean offshore territories, facilitates the exchange of information between EU tax authorities on certain types of savings and investments held by EU residents in their territory, so that interest earned can be taxed in the resident investor’s home state. …

[W]hile the EU was effectively able to bully smaller territories such as those in the Caribbean with colonial links to member states like the UK and the Netherlands, the Asian territories have no such ties binding them to Europe. Unsurprisingly, EU officials have already received frosty responses from Hong Kong and Singapore regarding the issue, and little is expected to have changed. In the case of Hong Kong, signing up to the savings tax directive could mean altering the Basic Law which safeguards the future of its financial centre under Chinese rule.

Singapore on the other hand, is known to be staunchly opposed to the idea of sharing bank account information with the EU, and has rejected European overtures to include information exchange provisions within a broader economic agreement. The European Commission is currently reviewing the operation of the savings tax directive and is likely to make several recommendations for tightening up the legislation that would make it harder for EU-based investors to legitimately side-step the law - for example by moving assets from bank accounts to vehicles such as companies and trusts - which weren’t included in the legislation - or by shifting money to accounts based in territories out of the reach of the directive’s information sharing provisions.

It Hurts to Be Called Ugly by a Frog - Especially When the Frog is Right

European politicians are complaining that government spending in the United States is too high according to the EU Observer. Since government consumes a bigger share of economic output in almost every European nation than it does in America (see Table 25), they are throwing rocks in a glass house. But that doesn’t change the fact that they are right. Government is too big in the United States, and it wastes too much money. The EU’s Economy Commissioner, Joaquin Almunia, also is right to brag about the performance of the European Central Bank. Compared to the Fed’s easy-money policy, the ECB is Friedman-esque rock of price stability:

The European Commission has pointed to unhealthy public spending in the US as the main cause of the current global market turbulences and urged Washington to cut expenditure and boost savings, while praising Europe’s own “solid and sound” economy and the positive effect of the common currency. …Mr Almunia suggested that US policy-makers should tackle the current crisis with measures that would secure “reducing the external deficit and the fiscal deficit, and increasing domestic saving in the US both in the public and the private sectors.” He maintained that Europe’s own previous reforms and pressure for cuts in public finances have paid off, leaving the fundamentals of the bloc’s economy - in contrast to the situation across the Atlantic - as “solid and sound”.

Hillary and the 22nd Amendment

Sen. Hillary Clinton has campaigned strongly on the theme that she is the most experienced candidate for president, “ready on day one” to handle the challenges of the world’s toughest job. As the New York Times says, “She has cast herself, instead, as a first lady like no other: a full partner to her husband in his administration, and, she says, all the stronger and more experienced for her ‘eight years with a front-row seat on history.’” I think she has a point. I’ve said for months that she can credibly claim to be the best-prepared presidential candidate since Franklin D. Roosevelt in 1940: she spent eight years in the White House, seeing the way politics and policies work from the eye of the storm. I accept that, more than any other First Lady, she was heavily involved in both policy and politics.

But then that raises a problem: If she does have eight years’ experience in the White House, and if we are once again going to get two presidents for the price of one, doesn’t that violate the spirit of the 22nd Amendment? After the FDR experience, Americans decided that we never again wanted one person to serve as president for that long. Indeed, it’s surprising just how fast they came to that conclusion. Roosevelt, we’re told, was a beloved president, the man who ended the Great Depression and won the war, who died before his final victory was complete. Yet within two years of his death Congress had passed the 22nd Amendment, and within another four years three-fourths of the states had ratified it. That’s how strongly people felt that we should never again let a president, no matter how great or how admired, serve more than eight years in the most powerful position in the world.

Today the Clintons campaign side by side, hailing the success of their eight years in the White House and promising to “get America back to the solutions business,” back to “the best economy that our country has seen in a generation.” There’s talk of “another co-presidency.” Just note how many news stories these days refer to “the Clintons” and their campaign and their policy agenda. There are no such references to “the Obamas” or “the McCains.”

Legally, of course, Hillary Rodham Clinton has not previously served as president. She is no less eligible for election to the presidency than was George W. Bush, the son of a president. But the intent of the 22nd Amendment, the spirit of a presidential term limit, is to ensure that no one person holds that vast power for so long. When the federal government and the presidency were vastly less powerful than today, George Washington thought that a republic should not be led by one man for more than eight years. His example set a standard for the American republic until that republic encountered the powerlust of Franklin D. Roosevelt, after which we made George Washington’s example a legal rule.

In weighing the candidates this year, we should consider whether “co-presidents” should be entitled to four terms in the Oval Office rather than the prescribed two.

NOTE: Click here for some reflections on governing teams Bill and Hillary Clinton, George and Lurleen Wallace, and Ma and Pa Ferguson.

DoJ’s Public Lobbying - A Legal Violation?

Here’s the language of 18 U.S.C. § 1913 (“Lobbying with appropriated moneys”):

No part of the money appropriated by any enactment of Congress shall, in the absence of express authorization by Congress, be used directly or indirectly to pay for any personal service, advertisement, telegram, telephone, letter, printed or written matter, or other device, intended or designed to influence in any manner a Member of Congress, a jurisdiction, or an official of any government, to favor, adopt, or oppose, by vote or otherwise, any legislation, law, ratification, policy, or appropriation, whether before or after the introduction of any bill, measure, or resolution proposing such legislation, law, ratification, policy, or appropriation; but this shall not prevent officers or employees of the United States or of its departments or agencies from communicating to any such Member or official, at his request, or to Congress or such official, through the proper official channels, requests for any legislation, law, ratification, policy, or appropriations which they deem necessary for the efficient conduct of the public business, or from making any communication whose prohibition by this section might, in the opinion of the Attorney General, violate the Constitution or interfere with the conduct of foreign policy, counter-intelligence, intelligence, or national security activities. Violations of this section shall constitute violations of section 1352 (a) of title 31.

Now here is some language from a Department of Justice Web site called lifeandliberty.gov:

FISA 101: Why FISA Modernization Amendments Must Be Made Permanent
FISA Amendments In The Protect America Act Of 2007 Remain Necessary To Keep Our Nation Safe

The Protect America Act modernized the Foreign Intelligence Surveillance Act (FISA) to provide our intelligence community essential tools to acquire important information about terrorists who want to harm America. The Act, which passed with bipartisan support in the House and Senate and was signed into law by President Bush on August 5, 2007, restores FISA to its original focus of protecting the rights of persons in the United States, while not acting as an obstacle to gathering foreign intelligence on targets located in foreign countries. By enabling our intelligence community to close a critical intelligence gap that existed before the Act became law, the Protect America Act has already made our Nation safer.

The tools provided by the Protect America Act are scheduled to expire in early February 2008 – it is essential that Congress act to make the legislation permanent. Congress must also pass legislation to provide meaningful liability protection to those alleged to have assisted our Nation following the 9/11 attacks.

A public DoJ Web site that says “it is essential that Congress act to make the legislation permanent” seems designed to influence Members of Congress. It was probably created and is maintained through the expenditure of appropriated funds. Did Congress expressly authorize this? Is a public Web site “proper official channels”? Did the Attorney General find that failing to advocate for this law would interfere with national security?

It looks like this Web site violates the law, but it’s hard bein’ a country lawyer here in the big city.