Oprah and the Tomnibus

For those not keeping close tabs on Congress, throughout this session Senator Tom Coburn (R-OK) has used procedural tactics to stop dozens of spending bills that would normally breeze through the Senate. Frustrated to no end, Senate Majority Leader Harry Reid (D-NV) bundled many of these bills together in an omnibus package, sometimes referred to as the “Tomnibus”.

Despite his attempt at political logrolling, Reid’s omnibus failed in July when senators voted to reject a motion to proceed to consideration of his legislation.

But now it’s back, thanks to Oprah Winfrey. On her television program, Oprah made an emotional lobbying pitch for the package. Her interest stems from the inclusion of one program that would spend a billion dollars to combat child exploitation.

With Oprah’s weight behind him, Reid will soon make another attempt to pass the Tomnibus, which would cost taxpayers roughly $10 billion and create at least 35 new programs.

Can Oprah have the same effect on legislation that she’s had on so many books?

Stay tuned.

Obama: Tax Cutter or Tax Hiker?

A colleague asked me whether Obama actually supports tax cuts or tax hikes, as he had heard contradictory information in the media. The answer is that it depends on what you compare his proposed policies to–tax rules in place for 2008 or the official “baseline” of projected future revenues.

The official baseline assumes that all recent tax cuts (income tax cuts, capital gains tax cuts, and estate tax cuts) expire at the end of 2010. It also assumes that alternative minimum tax relief is not extended, with the results that 20 million households are handed a whopping tax hike compared to how much they currently pay.

Obama is proposing a tax increase compared to tax policy in place this year, but a tax cut compared to the official baseline.  You can get the details in this analysis by the Urban/Brookings Tax Policy Center (see page 28).

My view is that the official baseline is a silly starting point for tax comparisons. For one reason, hardly any fiscal experts think that Congress won’t extent current AMT relief.

More importantly, the true tax “baseline” for the tens of millions of U.S. taxpaying families is how much they currently pay. If current tax cuts expire, they will have less to spend on their own priorities–such as food, housing, and gasoline–because they will have to send more cash to the government. If Obama wins the election and puts his policies into place, Americans would pay higher federal taxes than they do today.

But more important than the additional revenue that would be collected under a President Obama are the two main features of his tax approach:

1. Obama would increase marginal tax rates on wages, interest, dividends, capital gains, small business profits, and estates. Increasing marginal rates is the single most damaging way to raise taxes.

2. Obama would introduce a slew of new targeted tax credits that would distort the economy, treat Americans unequally, and increase Washington’s micromanagement of the economy. Further, many of his proposed special tax breaks would be refundable, meaning that they are actually spending increases and not tax cuts.

Abuse of Power, Big Time

This week, the Washington Post ran two excerpts from Barton Gellman’s new book Angler: The Cheney Vice Presidency, which describes the fight over warrantless wiretapping in greater detail than we’ve had before. We still don’t know the precise reach of the original (pre-2004) program, nor do we have the classified legal analysis prepared by John Yoo. But Gellman’s account makes you wonder just how far the program and the legal theory went, given that it horrified men like Attorney General John Ashcroft, Deputy A.G. James Comey, and Office of Legal Counsel head Jack Goldsmith–all staunch conservatives who were perfectly comfortable with ambitious theories of executive power, all of whom (along with FBI Director Robert Mueller and sundry other top Justice officials) were ready to resign over the original warrantless wiretapping program. (Marty Lederman made a similar point last year, when Comey testified before the Senate Judiciary Committee).

Ashcroft’s record on civil liberties and executive power is fairly well known. And keep in mind who Goldsmith and Comey are. Goldsmith says plainly that he’s “not a civil libertarian,” and he got the OLC job on John Yoo’s recommendation. And as a US Attorney in New York, James Comey was quite comfortable with pushing the law to its limits and beyond. He prosecuted Martha Stewart for misleading federal investigators about behavior that wasn’t a crime, and he even seriously considered pursuing mail and wire fraud charges against disgraced reporter Jayson Blair for the hitherto unknown crime of making stuff up in the New York Times (Bill Kristol, beware). But the original program was a bridge too far even for them.

Gellman describes a “come to Jesus” meeting orchestrated by David Addington, Alberto Gonzales and Dick Cheney, to get the Justice Department to reauthorize the surveillance program:

Comey, Goldsmith and Philbin found the titans of the intelligence establishment lined up, a bunch of grave-faced analysts behind them for added mass. The spy chiefs brought no lawyers. The law was not the point. This meeting, described by officials with access to two sets of contemporaneous notes, was about telling Justice to set its qualms aside.

The staging had been arranged for maximum impact. Cheney sat at the head of Card’s rectangular table, pivoting left to face the acting attorney general. The two men were close enough to touch. Card sat grimly at Cheney’s right, directly across from Comey. There was plenty of eye contact all around.

This program, Cheney said, was vital. Turning it off would leave us blind. Hayden, the NSA chief, pitched in: Even if the program had yet to produce blockbuster results, it was the only real hope of discovering sleeper agents before they could act.

“How can you possibly be reversing course on something of this importance after all this time?” Cheney asked.

“I will accept for purposes of discussion that it is as valuable as you say it is,” Comey said. “That only makes this more painful. It doesn’t change the analysis. If I can’t find a lawful basis for something, your telling me you really, really need to do it doesn’t help me.”

“Others see it differently,” Cheney said.

There was only one of those, really. John Yoo had been out of the picture for nearly a year. It was all Addington.

“The analysis is flawed, in fact facially flawed,” Comey said. “No lawyer reading that could reasonably rely on it.”

Gonzales said nothing. Addington stood by the window, over Cheney’s shoulder. He had heard a bellyful.

“Well, I’m a lawyer and I did,” Addington said, glaring at Comey.

“No good lawyer,” Comey said.

Bonus Angler revelation: Former House Majority Leader Dick Armey suggests that Cheney lied to him to keep Armey from going all wobbly on the Iraq War vote:

The threat Cheney described went far beyond public statements that have been criticized for relying on “cherry-picked” intelligence of unknown reliability. There was no intelligence to support the vice president’s private assertions, Gellman reports.

Armey had spoken out against the coming war, and his opposition gave cover to Democrats who feared the political costs of appearing weak. Armey reversed his position after Cheney told him, he said, that the threat from Iraq was “more imminent than we want to portray to the public at large.”

Cheney said, according to Armey, that Iraq’s “ability to miniaturize weapons of mass destruction, particularly nuclear,” had been “substantially refined since the first Gulf War.”

Cheney linked that threat to Hussein’s alleged ties to Al Qaeda, Armey said, explaining “we now know they have the ability to develop these weapons in a very portable fashion, and they have a delivery system in their relationship with organizations such as Al Qaeda.”

“Did Dick Cheney … purposely tell me things he knew to be untrue?” Armey said. “I seriously feel that may be the case… . Had I known or believed then what I believe now, I would have publicly opposed [the war] resolution right to the bitter end.”

Senate Showdown on Earmarks

Senate leaders invoked cloture on the defense authorization bill Tuesday afternoon, setting up a showdown Wednesday on whether earmarks in the bill should be in the legislative text or in a committee report attached to the bill.

This battle is an arcane fight over legislative procedure, but it has consequences for how the Senate handles earmarks in the future. This is the first major challenge to an executive order issued by President Bush in January, which allows executive agencies to ignore earmarks in report language. Earmarks included in report language cannot be amended or challenged on the Senate floor and are not included in the bill when presented to the president for his signature.

Committee reports currently do not have the force of law, but legislators use implicit and explicit threats to executive agencies that ensure most, if not all, projects are funded according to their guidelines. Earmark defenders note that this allows agencies to reprogram funds for projects of greater urgency or to divert money from failed projects (although that rarely happens).

Sen. Carl Levin (D-Mich.) circumvented the executive order by inserting a provision in the bill (Section 1002) that incorporates the report language into the bill by reference — essentially giving the earmarks the force of law even though they’re absent from the statutory language.

Majority Leader Harry Reid (D-Nev.) used a parliamentary procedure called “filling the tree” to limit the amendments offered in order to thwart an amendment by Sen. Jim DeMint (R-S.C.) to strike the section of the bill that incorporates the earmarks. DeMint’s staff is hopeful he can offer the amendment Wednesday on the Senate floor.

Earmark critics like DeMint, Sen. Tom Coburn (R-Okla.) and Russ Feingold (D-Wis.) charge that this end run foils earmark transparency because earmarks included in the report language rather than the bill text are not subject to debate, amendment or other Senate points of order.

Advocacy group Citizens Against Government Waste blasted Levin in a release today:

This provision continues a practice of using committee reports to hide earmarks and make them difficult to eliminate by offering amendments to authorization and appropriations bills.  It certainly does not qualify as “reform” of the earmarking process.  It would prevent open debate and votes on earmarks and reduce transparency and accountability.  The “incorporation” language sets a precedent for other fiscal year 2009 legislation.  If it is not removed from the bill, it would demonstrate that the Democratic leadership of Congress has no intent of ever getting earmarks under control.

Sen. John Warner (R-Va.) also tried to offer an amendment that would shift the earmark language to the bill’s text, rather than the committee report. In a stunning display of hubris, Levin has told staffers that the Government Printing Office does not have the software to incorporate the earmark tables into the bill, according to Senate Republican staffers. Levin also told CongressDailyPM today ($) that adding the earmarks to the bill would take too long and would prevent the bill from sailing through Congress:

Levin said today that the process of adding the tables to the printed bill would take four days and could ultimately jeopardize efforts to quickly reach a conference agreement with the House and pass a final bill by the end of the month.

Cutting and pasting takes four days?

Last week, the White House issued a veto threat to the bill if the provision remains intact. The White House also expressed concerns about several other sections in the bill.

The legislation is S. 3001, the National Defense Authorization Act for Fiscal Year 2009. The earmarks in the bill total $5.9 billion. If Levin gets his way, it will set a terrible precedent for future authorization and appropriations bills. If that happens, defense funding will likely continue to be doled out based on seniority, geography of important members and lobbying clout instead of a merit-based test of what’s best for national priorities.

Bow Down Before the One You Serve

Last week, I wrote about the presidential candidates’ September 11 confab on state-subsidized “service.” Today, in the Wall Street Journal, Shika Dahlmia makes the case that even though both candidates hector us ceaselessly about national service, Obama has more detailed, and more troubling, plans:

Mr. Obama would create several new corps of his own: a Classroom Corps to help teachers and students in underperforming schools; a Health Corps for underserved areas; a Clean Energy Corps to weatherize homes and promote energy independence. The last is separate from his Global Energy Corps, to promote low-carbon energy solutions in developing countries.

Mr. Obama calls all this his “Plan for Universal and Voluntary Citizen Service.” It might live up to its “universal” billing, given that it would prod Americans of all age groups – from preteens to retirees – to sign up. But as to its voluntariness, the plan will make generous use of Uncle Sam’s money – and muscle.

By Mr. Obama’s account, he will make federal education aid conditional on schools requiring that high-school and even middle-school students perform 50 hours of service each year. He will also offer college students $4,000 every year for doing 100 hours of public service. That works out to $40 an hour – a deal that only the very wealthy could refuse. (The Obama campaign puts the price tag for this alone at $10 billion.) He promises to provide older Americans who perform civic service with “additional income security, including assistance with retirement and family-related costs, and continuation of health-care coverage.” But a government that links benefits to service can take away benefits for nonservice.

Neither candidate explicitly endorses mandatory national service. But of course, if you can’t graduate high school without a stint in Obama’s Power Rangers, that’s hardly voluntary.

U.S. Slips in Economic Freedom Rankings

Economic freedom around the world remains on the rise but it has declined notably in the U.S. since the year 2000, according to the Economic Freedom of the World: 2008 Annual Report, released by the Cato Institute in conjunction with the Fraser Institute of Canada. In 2000 the U.S. was ranked the second-freest economy, but has fallen to 8th place this year. “The rule of law, government spending, and regulation are the areas where the United States saw the most troubling declines in its ratings this decade,” comments Cato scholar Ian Vasquez.

Be Afraid — Be Very Afraid

Light rail is on the ballot this November in Kansas City and Seattle. Commuter rail is on the ballot in Sonoma and Marin counties, California. BART heavy rail is on the ballot in San Jose.

These rail plans will cost billions of dollars each (hundreds of millions in the case of Sonoma-Marin), yet take few to no cars off the roads. The energy, pollution, and greenhouse gases generated during construction will vastly outweigh any operational savings, which in some cases will be nil. The plans are supported by a baptists-and-bootleggers combination of rail nuts and companies, like Parsons Brinckerhoff, that expect to make millions during construction.

But the real ballot measure to fear is California’s proposition 1A, which would authorize the sale of nearly $10 billion in general obligation bonds to build a high-speed rail network from Sacramento and San Francisco to Anaheim and San Diego. This $10 billion, combined with $10 billion from the feds and $5 billion in private money, was supposed to pay for the $25 billion system. The plan was to turn the system over to the private investors, who would operate it and keep 100 percent of the profits.

The first problem is that even the California High Speed Rail Authority admits that the real cost will be at least $43 billion. Considering the history of similar megaprojects – and this would be the largest state-sponsored megaproject in history – the final cost will probably be at least $60 billion.

The second problem is that the Authority has probably overestimated demand. It projects the system will carry 3 to 6 times as many passengers as Amtrak carries on its Northeast Corridor trains, which serve a higher population.

If the costs are high, the benefits are minuscule even if rail attracts the projected number of riders. The environmental impact statement for the project projects that it will take, at most, 3.8% of cars off the road, reduce air pollution by about 1%, and reduce transport-related greenhouse gases by 1.4%.

Considering the underestimated costs and overestimated ridership, it seems unlikely that private investors will put up $5 billion, much less a 20 percent share of whatever the final cost turns out to be. The danger for California taxpayers is that the Rail Authority will spend its $10 billion building as far as it can and then ask for more money. How far will $10 billion go? Not much further than San Francisco to San Jose.

Nor is there any guarantee that Congress will match the state’s money. But the danger for non-California taxpayers is that it does match the money – which will lead to demands for high-speed rail support from the rest of the country. Ten other high-speed corridors have received official recognition from the Federal Railroad Administration. Then there are various ad hoc proposals, such as Albuquerque to Casper and even Fargo to Missoula.

The likely cost of a national high-speed rail network will be in the hundreds of billions of dollars. Except to the contractors that build it, the benefits will be largely imaginary. We can see that by looking at high-speed rail elsewhere.

Japan’s bullet trains were a feather in that country’s technological cap, but they sent the formerly profitable Japanese National Railways (JNR) into virtual bankruptcy. The government was forced to absorb $200 billion in high-speed debt. Meanwhile, far from attracting people out of their cars, high-speed rail accelerated the growth in driving as JNR raised fares to cope with its losses.

Europe’s record with high-speed rail hasn’t been much better. Though nations in the European Union spend an estimated $100 billion per year subsidizing intercity rail, rail has slowly but steadily lost market share since Italy opened the continent’s first high-speed line in 1978. Today, less than 6 percent of passenger travel goes by rail.

We car-crazy Americans drive for 85 percent of our travel. Europeans drive for 79 percent. Spending several hundred billion dollars to get, at best, 5 or 6 percent of people out of their cars is not worthwhile. The real impact of high-speed rail is that it replaces private air service with heavily subsidized rail service.

Rail is not just a waste of money, it is an intrusion on personal freedom. That’s because it is inevitably accompanied by restrictions on people’s property rights. Buses and airlines can follow demand by changing routes. Rails cannot, so rail agencies conspire with land-use planners to reshape society and make it more “rail friendly.” That means upzoning areas near rail stations to higher-than-marketable densities while downzoning other areas to keep developers from building the kind of low-density housing most Americans prefer.

For more information about high-speed rail, see the Antiplanner, which is blogging about it in a series of nine posts.