Event This Week at Cato

Tuesday, March 3

12:00 PM (Luncheon to Follow)

POLICY FORUM: Should Government Deliver Comparative-Effectiveness Research – or Can It?

Studies comparing the effectiveness of medical treatments have the potential to reduce health care costs by helping purchasers, such as Medicare, eliminate low-value services. Health care analysts generally agree that current institutions underproduce comparative-effectiveness research, which would seem to be a public good. Many, therefore, want Congress to fund such research. But is market failure really the culprit? And would taxpayer-funded research solve the problem, or would it lead to government rationing? Or would it have no effect on health care costs?

Featuring Shannon Brownlee, Visiting Scholar, NIH Clinical Center, Dept. of Bioethics, and also Senior Fellow at the New America Foundation; Scott Gottlieb, M.D., Resident Fellow, American Enterprise Institute; and Michael F. Cannon, Director of Health Policy Studies, Cato Institute.

Check back here to watch the forum live online.

Switzerland Should Stiff-Arm the IRS

In a classic display of arrogant imperialism, the Internal Revenue Service is running roughshod over existing treaties and demanding that a Swiss bank disgorge confidential client data to American tax collectors. As a former U.S. ambassador to Switzerland warns in the Financial Times, this is a remarkably ill-considered approach to bilateral relations:

When Eveline Widmer-Schlumpf, the Swiss federal councillor in charge of police and justice, meets Eric Holder, US attorney-general, the final item for discussion – according to her ministry’s press release – will be US demands for data on American holders of accounts at UBS, the Swiss bank. …intense anger has…been directed at the US government, which – via the justice department and the Internal Revenue Service – rode roughshod over two bilateral agreements to which it is a signatory. That is, the US ignored formal, negotiated understandings with a long-time friend, a constitutional federal republic where rule of law is enshrined… The Swiss Confederation’s first experience with the new administration is of a superpower exerting raw Goliath power, ignoring its own diplomatic undertakings and taking advantage of Switzerland’s size and the stereotypical misunderstanding of Swiss bank secrecy laws. US authorities are seen in this instance as being once again arrogant and bullying. …UBS and Swiss officials were stunned when the IRS, within days, filed a civil complaint that included a demand for information on 52,000 American UBS customers. A Swiss financial oversight court has ordered UBS not to fulfil this demand. Thus the bank is in the awkward position that its officers would have to violate Swiss banking law to fulfil the US demand.

The more fundamental issue, of course, is how to solve the conflict between America’s bad tax system (with its pervasive double taxation of saving and investment, and its taxation of “worldwide” income) and Switzerland’s admirable human rights policy of protecting financial privacy. The obvious answer is that the U.S. should fix its bad tax system. For instance, the conflict between the U.S. and Switzerland would disappear if the Internal Revenue Code was replaced with a simple and fair flat tax (which taxes income only once and taxes only income earned inside U.S. borders).

If the IRS prevails in this battle, it will be terrible news for people in all nations. As I explain here, here, and here, the ability to escape bad tax policy is a critical restraint on the power of politicians to fleece taxpayers.

School Choice in D.C.: Does Obama Care as Much as Bartlet?

As the Washington Post sternly notes this morning, Democrats in Congress are trying to quietly force nearly 2,000 children back into the D.C. public schools. One parent whose children are using the federally funded D.C. voucher program to attend Sidwell Friends School along with the Obama daughters told the Post, “The mere thought of returning to public school frightens me.” But some people just can’t stand to think that kids might get educated outside the grasp of the government. 

The most honest, decent, and thoughtful Democratic president of modern times, Jed Bartlet, was surprised to find himself supporting vouchers on an episode of NBC’s “The West Wing.” Bartlet’s staff summoned the mayor of Washington, D.C., to the White House to plot strategy for his veto of a Republican-backed bill to provide vouchers for a few students in D.C. schools–and was stunned to discover that the mayor and the D.C. school board president both supported the program, as indeed Mayor Anthony Williams and School Board President Peggy Cooper Cafritz did in real life. Why? the president asked the mayor. “After six years of us promising to make schools better next year,” the mayor replied, “we’re ready to give vouchers a try….We spend over $13,000 per student – that’s more than anywhere else in the country – and we don’t have a lot to show for it.” (As Andrew Coulson wrote recently in the Washington Post, the real cost is actually much higher than that.)

Then the president summons his young personal aide to testify to the merits of D.C. public schools and gets another surprise:

Faced with the evidence, President Bartlet decided to do the right thing. He gave children a chance. Will Congress?

Disincentives to Work — Remember Those?

The president wants to increase taxes only on those earning above $250,000. Since most of us aren’t there — I keep waiting, but for some reason no one yet has offered me what I think I’m worth to express my opinions on current policy and events — who cares, right? 

Well, it turns out that raising taxes reduces the incentive to work. Which hits the rest of us too. Reports ABC News:

A 63-year-old attorney based in Lafayette, La., who asked not to be named, told ABCNews.com that she plans to cut back on her business to get her annual income under the quarter million mark.

“We have to find a way out where we can make just what we need to be just under the line so we can benefit from Obama’s tax plan,” she added. “Why kill yourself working if you’re going to give it all away to people who aren’t working as hard?”

Dr. Sharon Poczatek, who runs her own dental practice in Boulder, Colo., said that she too is trying to figure out ways to get out of paying the taxes proposed in Obama’s plan.

“I’ve put thought into how to get under $250,000,” said Poczatek. “It would mean working fewer days which means having fewer employees, seeing fewer patients and taking time off.”

“The motivation for a lot of people like me – dentists, entrepreneurs, lawyers – is that the more you work the more money you make,” said Poczatek. “But if I’m going to be working just to give it back to the government — it’s de-motivating and demoralizing.”

Now that’s going to help us get out of the recession! Punish hard-working professionals and convince them to cut back services for the rest of us. Great thinking Mr. President.

Or, to paraphrase George W. Bush:  Heck of a job, Barack!

Where Has “War on Terror” Gone? (Long Time Paaassing …)

Who cares? It’s just gone.

On Fox News Sunday this weekend, Chris Wallace pressed the Chairman of the Joint Chiefs of Staff, Admiral Michael Mullen, on why the new administration no longer uses the phrase “war on terror.”

Wallace: … a lot of people have noticed that both the president and top advisors very seldom talk about the “war on terror.” Why is that? From your conversations with him, does he see our fight against Islamic radicals differently than President Bush did?

Mullen: It’s very clear in my engagement with him that he is very focused on the terrorist extremist threat. And my guidance is to continue to pursue that in every possible way.

Wallace: Do you have any explanation as to why he doesn’t talk about the “war on terror”?

Mullen: No I don’t. I mean, I don’t. I just told you, what he’s told me to do is focus very specifically on this threat, lead by Al Qaeda. But certainly it’s a top priority to focus on terrorism and terrorists and the extremists that are out there who would do us harm.

Wallace: Last question: As the nation’s top military man, do you believe that you are still leading a “war” against terrorism.

Mullen: There are an awful lot of elements of terrorists and terrorism which threaten us, and we continue to very clearly pursue them. And we will until they’re no longer a threat.

Government officials can use elements of military power against terrorism selectively, appropriately, and in a balanced way if they avoid the “war on terror” metaphor.

Declining to use the needlessly frightening phrase, Admiral Mullen conveys the authority, competence, and confidence that will lead our country back from self-defeating overreaction, which is the terrorism strategy doing its work.

It’s fascinating to see this essential rhetorical shift. It’s benefits might be revelation to some. When will they ever learn?

A rich trove of strategic counterterrorism thinking was on display at our conference on the subject in January.

Don’t Mourn the Passing of Business Models

With newspaper closures making … (wait for it) … (wait for it) … headlines lately (rimshot!), it’s worth giving a second read to a TechKnowledge piece from last summer titled, “The Future of News: A Golden Age for Free Speech?” The news business as we know it today is just a historical contingency and in no way essential to democracy or an informed society.

In fact, there is an incredible media explosion underway. The new problems are sifting through all the different sources of news and information, and deciding which to credit. It’s a more complex information environment, but in no sense ill-suited to the maintenance of an informed and aware populus. As with so many things, more choice is better, and we’re up to the task of choosing.

Cato alumnus Adam Thierer has done extensive reporting on the state of the media marketplace, and has some current thinking and links up on the Tech Liberation Front blog. I don’t share his concern with the passing of the home-delivered daily newspaper, and have utter confidence that the future of news is very bright indeed.

Chait vs. Realism

Jon Chait makes a common mistake in an op-ed for Saturday’s Washington Post.* Joining various neoconservatives to attack Charles Freeman, just-appointed chairman of the National Intelligence Council, Chait writes that Freeman is a realist and therefore doesn’t care about morality in U.S. foreign policy. I don’t know enough about Freeman to know if the article is fair to his views (he seems like a great pick), but it shows a misunderstanding of realism.

Modifying a noun with “moral” does not make it so. Realists argue that idealism – ignoring realities that encourage tradeoffs among competing goods – is foolish, and there is nothing moral about doing foolish things in the name of morality. Realists believe that our foreign policy should be governed by an ethic of responsibility, where you do things that actually lead to good consequences, starting at home. They see the promiscuous use of power as destructive of it and therefore of all the goods it serves, including the ideological sort.

Those with even passing familiarity with leading realists like E.H. Carr, Hans Morgenthau and Reinhold Niebuhr know that their goal was to create a moral foreign policy in an anarchic world. They saw idealists who thought they could escape realist concepts like the balance of power as a source of catastrophic wars. Given the nature of international relations, they saw idealism – seen in undo faith in international institutions and later military adventurism meant to spread liberalism – as wasteful, dangerous, and therefore immoral.

Realists are partially to blame for this misconception. They have been too reluctant in recent decades to state their moral case. They too often allow people to get the impression that phony beltway realists like Henry Kissinger are the real deal – as if thrashing around Southeast Asia and South America in service of confused ideas about the balance of power was consistent with realist thought.

A realist U.S. defense policy would be moral for at least three reasons. It would stop squandering wealth on futile missions and allow it be used for worthier ends. It would not offend our values by embracing militarism and empire (in fact if not in intent) and restore the United States to its position as a model of liberalism, not its vindicator. It would keep us out of unnecessary wars, which are bad for liberty at home and only rarely conducive to moral ends abroad.

*It is typical of the Post to publish a column like this. Their op-ed page is home to about 10 advocates of militarized liberalism in foreign policy. The distinction between the neoconservatives and the liberal internationalists is largely academic.