Taxpayers Picking Up the Tab for a Bigger Bailout Thanks to Republican Lobbyists

The Associated Press reports on the various former Republican politicians who got fat contracts and enriched themselves in exchange for lobbying on behalf of Freddie Mac. Unfortunately for taxpayers, these amoral lobbyists were successful and the government-created entity was able to dig itself even deeper into a hole - which taxpayers are now responsible for filling.

When the Washington Nationals played their first-ever baseball game in the nation’s capital in April 2005, two congressmen who oversaw mortgage giant Freddie Mac had choice seats — courtesy of the very company they were supposed to be keeping an eye on. …The Nationals tickets were bargains for Freddie Mac, part of a well-orchestrated, multimillion-dollar campaign to preserve its largely regulatory-free environment, with particular pressure exerted on Republicans who controlled Congress at the time. Internal Freddie Mac budget records show $11.7 million was paid to 52 outside lobbyists and consultants in 2006. Power brokers such as former House Speaker Newt Gingrich were recruited with six-figure contracts. Freddie Mac paid the following amounts to the firms of former Republican lawmakers or ex-GOP staffers in 2006: Sen. Alfonse D’Amato of New York, at Park Strategies, $240,000. Rep. Vin Weber of Minnesota, at Clark & Weinstock, $360,297. Rep. Susan Molinari of New York, at Washington Group, $300,062. Susan Hirschmann at Williams & Jensen, former chief of staff to House Majority Leader Tom DeLay, R-Texas, $240,790. …The tactics worked — for a time. Freddie Mac was able to operate with a relatively free hand until the housing bubble ultimately burst in 2007.

Interestingly, at least one of these former politicians is contemplating a return to the political arena. He even portrays himself as a friend of the taxpayer. It is unclear, though, how much of a friend he really is considering that the story reveals that, “Freddie Mac enlisted prominent conservatives, including Gingrich…, paying [him] $300,000 in 2006, according to internal records.”

George ‘Herbert Hoover’ Bush

According to Politico.com, Vice President Dick Cheney lobbied Republican senators to support the bailout of auto companies, arguing that it would be “Herbert Hoover time” in the absence of government intervention.

Cheney is right, but for the wrong reasons. To the extent that it is “Herbert Hoover time,” it is because the current administration has repeated many of the mistakes that were made by President Hoover. There was a huge expansion in the burden of government spending under Hoover, up 47 percent in just four years. There’s been an equally huge increase in government spending under Bush. Hoover dramatically increased government intervention with everything from schemes to prop up wages to protectionism. Bush’s intervention takes a different form, with mistakes such as steel tariffs, Sarbanes-Oxley, and bailouts.

Hoover’s legacy is statism. Bush’s legacy is statism. The only unanswered question is whether Obama will be the new Roosevelt — i.e., someone who compounds the damage caused by his predecessor with further expansions in the burden of government.

Does Obama Know Blagojevich?

At the top of the front page of the Washington Post, Eli Saslow’s article is headlined “Obama Worked to Distance Self From Blagojevich Early On.”

The article assures us that they’re very different kinds of Chicago politicians, and they barely know each other. Obamaphile Abner Mikva says, “Obama saw this coming, and he was very cautious about not having dealings with the governor for quite some time.”

But Saslow never mentions a very interesting statement from Obama’s incoming chief of staff, Rep. Rahm Emanuel, that had been reported by ABC, the Wall Street Journal, and other sources in the past few days. Emanuel told The New Yorker earlier this year that six years ago he and Mr. Obama “participated in a small group that met weekly when Rod was running for governor. We basically laid out the general election, Barack and I and these two [other participants].”

Original New Yorker story here. True, one of those other two participants, strategist David Wilhelm, said that Emanuel had overstated Obama’s role. But Rahm Emanuel, a totally connected Chicago pol who is now Obama’s White House chief of staff, says that he and Obama were key strategists for Blagojevich. And that statement had been widely reported. How could Saslow and his editors not mention it?

Sometimes the article’s a bit mysterious. For instance, this paragraph is supposedly about how Obama kept his distance from Blago, but the facts seem to be more about Blago keeping away from Obama:

Long before federal prosecutors charged Blagojevich with bribery this week, Obama had worked to distance himself from his home-state governor. The two men have not talked for more than a year, colleagues said, save for a requisite handshake at a funeral or public event. Blagojevich rarely campaigned for Obama and never stumped with him. The governor arrived late at the Democratic convention and skipped Obama’s victory-night celebration at Chicago’s Grant Park.

And this paragraph? Shouldn’t the phrase “Even though” actually be “Because”?

Even though they often occupied the same political space — two young lawyers in Chicago, two power brokers in Springfield, two ambitious men who coveted the presidency — Obama and Blagojevich never warmed to each other, Illinois politicians said. They sometimes used each other to propel their own careers but privately acted like rivals.

Race-Based Government in Paradise?

The current Supreme Court term is a bit of a letdown for those of us who track and comment on the machinations of One First Street; a steady diet of technical statutory interpretation questions without many “meaty” constitutional issues. Well, yesterday Cato filed its first amicus brief of the term in a case that itself is fairly sui generis — the issue is whether Hawaii can sell certain state lands without getting approval from a weird racialist commission called the Office of Hawaiian Affairs (OHA). But the case has broader ramifications for the Court’s equal protection jurisprudence. Moreover, as Cato’s resident Hawaii expert (we have a low bar here for that niche), I can say that the case threatens to set a terrible precedent for a state that has otherwise been a model of racial harmony.

In the 2000 case of Rice v. Cayetano, the Supreme Court held that a race-based scheme allowing only statutorily defined “Hawaiians” to vote for the OHA’s trustees was unconstitutional. Despite Rice, and despite Justice John Marshall Harlan’s dissenting statement in Plessy v. Ferguson 112 years ago that “[o]ur Constitution is color-blind, and neither knows nor tolerates classes among citizens,” the OHA continues to view Hawaiian citizens through racial lenses. This practice has spawned numerous lawsuits, including the present legal crisis in which the state’s sovereign authority to manage its land for the good of all of its citizens has been replaced with a court-imposed duty to hold the land for the benefit of one racial class.

Specifically, the Hawaii Supreme Court blocked the sale of certain state lands based on a mistaken (and race-based) interpretation of a joint resolution that Congress passed in 1993 to apologize to Hawaiian people for the overthrow of the Kingdom of Hawaii — which was itself based on a slanted view of history. Cato’s brief, joining with the Pacific Legal Foundation and the Center for Equal Opportunity, argues that race-based government is impermissible under the Fourteenth Amendment’s Equal Protection Clause, that the Constitution’s Indian Commerce Clause does not provide a basis for laws that grant preferences to “Native Hawaiians,” and that the Apology Resolution neither amended nor rescinded the federal laws that gave the State of Hawaii full control over the disputed land.

For other filings in the case, see here. Argument is scheduled for February 25.

Sen. Coburn Releases ‘Worst Waste of the Year’ Report

This morning, Sen. Tom Coburn (R-Okla.) issued a report detailing some of the more wasteful uses of taxpayer money by the federal government in 2008. (Read the report here.) By the time I was done reading, I felt physically nauseated. Any taxpayer with the slightest bit of concern as to how Washington blows money will likely feel the same. I won’t go through the numerous examples in the report, but I do have to admit that the $15,000 in HUD Community Development Block Grants for a voice mail service for the homeless left this already cynical budget observer dumbfounded.

I was pleased to see that the report does an ample job of tying in the obvious examples of waste with the big-picture spending problem in Washington. It notes that outrageous spending is occurring “despite the fact that by the end of the fiscal year the federal government spent nearly $3 trillion, but racked up a $455 billion budget deficit — the largest in the nation’s history. If the surpluses from Social Security and Medicare are not included, the true federal deficit was $639 billion. The current national debt stands at more than $10.6 trillion, which must be repaid with interest.”

More ominously:

Driving a substantial portion of the federal budget each year is the government’s social insurance programs: Medicare, Medicaid and Social Security. Estimates prepared by the Government Accountability Office (GAO) — the investigative arm of Congress — show that the projected cost to the government of paying for these programs in the future will be at least $52.7 trillion. More simply, every American currently owes at least $410,000 to pay for the commitments made by the government in these areas, though that figure is on the rise.

Frighteningly, the responsibility for heading off this looming fiscal disaster is in the hands of people who tossed $100,000 of taxpayer dollars at a study of American and Chinese video game habits.

The report’s cover has a picture of Santa Claus with dollars in his hand. It immediately reminded me of one of Chris Edwards’ favorite books: Congress as Santa Claus, which was written by constitutional scholar Charles Warren in 1932. Toward the end, Warren cites a paragraph from a book comparing ancient Rome with the U.S. that’s worth reflecting upon:

Little by little, the State let itself be persuaded to do for each of its cities what it had done for Rome…. With a view to easing the misery of the urban proletariat, it took public works in hand in every direction, regardless of their utility. It distributed victuals free or at half price…. But all these schemes cost money…. The intensification of the evil was met by an increase in the dose of the very remedy which aggravated it — useless expenditure in the cities, ruinous taxes on agriculture. Matters went from worse to worse, until the system reached the limit of its elasticity, and the whole social fabric collapsed in a colossal catastrophe.  This is precisely the mistake which modern civilization must learn to avoid.

Bye Bye, Budget Witch!

Thanks to all the bailouts and stimuli, higher ed folks are singing “Hail, hail, the witch is dead! Which old witch? The Budget Witch!”

Yesterday, a whole slew of ivory-tower advocacy groups called on Congress to furnish big increases in Pell Grants and work-study as part of any upcoming stimulus package. And that’s probably just the beginning of the rampant Treasury-looting (or is it looting future generations?) in which they intend to partake. 

Explained Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers:

“I think everybody is going to fight for their fair share,” Nassirian says of the current budget climate.

As a result, long-time concerns about deficit spending and limited resources have all but vanished. “The budget always has checkmated many policy ideas we presented in the past,” Nassirian says. Of the abrupt shift in tone in Washington, he says, “It’s extraordinary.”

We’re not in Kansas anymore, Toto.

Predicting Alarmism

Here’s the punchline from the report released last week by the Commission on the Prevention of WMD Proliferation and Terrorism: “It is more likely than not that a weapon of mass destruction will be used in a terrorist attack somewhere in the world by the end of 2013.”* That prediction was the lead in hundreds of news reports that the report generated last week.

The trouble is, in over 100 pages, the report’s authors never justify their alarming claim. It’s not that they do a poor job explaining how they arrived at the “more likely than not” in five years figure. They simply make no attempt to explain how they got there, other than to say that they talked to lots of experts.

They missed some. For a sober assessment of terrorists’ utterly failed efforts to develop biological weapons, see Milton Leitenberg. On nuclear terrorism, see John Mueller or Michael Levi. Note that even Mueller’s critics tend to agree that the odds of nuclear terrorism are generally overstated. See also Brian Jenkins and Michael Krepon.

Readers of the report should know that Commissioner Graham Allison has been making these sorts of predictions for some time, as John Mueller has noted:

[Allison] proclaims his “considered judgment” in his book: “on the current path, a nuclear terrorist attack on America in the decade ahead is more likely than not” (2004, 15). He repeats that judgment in an article published two years later without reducing the terminal interval to compensate — apparently the end date is an ever-receding target (2006, 39). Actually, he had been in the prediction business on this issue at least as early as 1995 when his imagination induced him boldly to pronounce, “In the absence of a determined program of action, we have every reason to anticipate acts of nuclear terrorism against American targets before this decade is out.”

It would have been helpful if the authors offered some analysis of why past dire predictions have not come true before issuing new ones.

For more on this issue, come to Cato’s upcoming counterterrorism conference. On January 12 and 13, a variety of experts will be here discussing the danger of terrorism and the danger of overreacting to it. I’m running a panel on terrorists’ ability to use nuclear and biological weapons with Mueller, Leitenberg, Randy Larsen and a soon-to-be-named fourth expert.

*As I have written before, we should abolish the term, “weapons of mass destruction.” It confuses the lethality of the weapons it subsumes and policy discussion. On the silliness of the phrase, read Owen Cote.