European Politicians Continue Push for New Tax Powers

The tax burden in most European nations already is stifling growth and undermining competitiveness. Yet many European politicians – as well as the European Commission bureaucracy in Brussels – think that there should be a new pan-European tax. Currently, the European Union’s budget is financed by contributions from member states. This is bad enough, especially since it finances the highly protectionist and inefficient system of farm subsidies, but European politicians and bureaucrats doubtlessly would concoct even worse ways of spending money if they had their own tax. The EU Observer reports:

The commissioner argues that any new “own resources system” – where Brussels raises money directly – should be “simple and very transparent.” … One way of changing the EU’s financial system – supported by some in the European Parliament – would be introducing its own tax to replace member states’ donations. The idea came up several times after the bitter budgetary talks both in 2005 and previously in 1999, with for example senior French centre-right MEP Alain Lamassoure suggesting that the EU could levy a tax on SMS and email messages.

If Bush Is a Conservative, the Word Has No Meaning

Writing for National Review, Michael Novak of the American Enterprise Institute seems surprised that conservatives like Reagan but disapprove of Bush.

Conservatives have not been happy with George W. Bush. For each brand of conservatism, there is a different critique. Not so with Ronald Reagan, whom conservatives uniformly praise for various reasons. Seventy-nine percent of those in attendance at last week’s Conservative Political Action Conference said they would prefer a candidate who is a Reagan Republican. Three percent would go for a G. W. Bush Republican. One gets the impression that Bush isn’t even considered a conservative.

But maybe Novak is confused because he doesn’t understand conservatism. He assumes conservatives are upset about deficits and debt, when the anger is really because of wasteful government spending. He writes, “Some say that Bush’s budget deficits prove he is not a conservative.”

Novak then lists several Bush “accomplishments,” most of which expand the size and scope of government. Most conservatives, for instance, presumably think that families and private institutions should be responsible for moral teachings, yet Novak claims that Bush’s subsidies for abstinence education are a conservative victory: “He dedicated unprecedented funds to abstinence education through the Department of Health and Human Services.”

“He was the first president to sign a school-choice bill to give parents greater freedom in deciding where their children will be educated.”

Bush’s record on education is particularly disappointing, with record spending increases and more centralization, yet Novak claims Bush is a conservative because of a tiny school choice program (which shouldn’t be operated with federal dollars anyway).

“He has dedicated funding to prepare prisoners for productive lives after they leave prison.”

Novak praises Bush for programs that ostensibly rehabilitate prisoners, but it is unclear why this is a responsibility of the federal government. Nor is there any evidence that Bush’s rehabilitation strategy would work any better than the left’s rehabilitation approach.

“He signed the Deficit Reduction Act of 2005, which will curb Medicare/Medicaid spending by $11 billion over the next five years.”

Bush has increased federal spending more than twice as fast as needed to keep pace with inflation, and entitlements have been growing at three times the rate of inflation. But Novak thinks Bush is a conservative because a so-called Deficit Reduction Act that included $11 billion of savings. Yet this is the same president that added trillions of dollars of new Medicare spending by creating a prescription drug entitlement. Moreover the savings are only savings using the Washington definition – i.e., not increasing spending as fast as previously planned. After the “cuts,” for instance, the Medicaid budget was projected to grow 7.6 percent annually, compared to a projection of 7.8 percent before the legislation was adopted.

One of the many disappointments of the Bush presidency is an increase in regulation, particularly the hugely expensive Sarbanes-Oxley legislation, yet Novak makes a completely unsupported assertion that Bush believes in deregulation:

“He implemented deregulation across all government agencies.”

Perhaps the most amazing assertion in Novak’s article is that the creation of a new entitlement program is conservative. It also is interesting to note that Novak apparently believes that a program is conservative if it has popular approval. That means the looming minimum wage hike also is conservative (though not as conservative as the prescription drug entitlement, since only 70 percent of Americans foolishly think that government can raise the wage level). Moreover, the assertion that the program is “under budget” is rather odd. I wonder if he would be willing to bet (akin to the Ehrlich-Simon wager) whether the program 10 years from now will cost more than projected:

“He signed into law prescription drug assistance for the elderly — the first and only health-care reform in modern history to win a nearly 90-percent approval rating and to come in substantially under budget.”

To be fair, however, Novak was certainly correct when he wrote that “President Bush has defined a new kind of conservatism.” It may have nothing to do with limited government. It may be a complete reversal of Reagan’s policies, but it definitely is new (though Democrats surely can argue that they’ve been peddling these ideas for decades).

Overpaid Bureaucrats in Alabama

As Chris Edwards has shown, federal government bureaucrats are grossly overpaid. The same is true for government workers in Alabama. A report published by the Alabama Policy Institute finds that public sector workers gets 21 percent more compensation per hour than workers in the productive sector of the economy. But even this analysis understates the problem since many bureaucrats are involved in activities that are not legitimate functions of government: 

This report evaluates information available on Alabama state employee compensation, making comparisons to other states and to the private sector. Generally, the conclusion is that Alabama state employee pay is higher than in comparable states. More importantly, it is concluded that state employee compensation (that is, wages and employer-paid benefits) in Alabama is substantially higher than for equivalent employees in the private sector in the state. …an analysis of comparable state and private employees (equal education, equal skill), this discrepancy in pay is principally the result of the fact that the state, unlike the private sector, does not establish employee compensation using reliable market mechanisms. …State government employer-paid benefits are considerably higher than in the private sector. State government employee-benefit costs are estimated at 28.5 percent compared to wages and salaries. Private employee-benefit costs are estimated at 21.9 percent of wages and salaries. Thus, the employer-paid benefit factor for state employees is nearly one third higher than that of private employees. …State employees receive more paid time off than private employees in Alabama. On average, full-time state employees spend 10 percent fewer hours on the job for their compensation than private employees. State employees use more than twice as many annual sick days as private employees (10.2 compared to 4.4). It is estimated that state employees spend 1,726 hours per year at work. Private employees spend an average of 1,915 hours on the job. It is estimated that Alabama private employees are at work, on average, more than a month more each year than state employees (189 hours). Each month, the average state employee is paid for not working approximately two days that private employees would work. As a result, the average private employee is compensated $21.41 per hour worked. The average state employee is compensated $25.88 per hour worked, 21 percent more than the average private sector employee.

Big Day for Cato Books

On Sunday the New York Times Book Review ran a review of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution by Michael Tanner. Reviewer Jacob Heilbrunn wrote

By exposing Bush and the Republican leadership as apostates who foolishly believe big government can be employed for conservative ends, Tanner hopes to persuade the right to return to what he sees as its original ideals of limited government and individual responsibility….Tanner is a lucid writer and vigorous polemicist who scores a number of points against the Republican Party’s fiscal transgressions.

On the same day, the Washington Post Book World reviewed On the Wealth of Nations, the latest book from Cato’s H. L. Mencken Research Fellow P. J. O’Rourke. And in the Post and hundreds of other papers, George Will took note of John Samples’s new book:

According to John Samples of the Cato Institute (in his book ” The Fallacy of Campaign Finance Reform”), congressional Democrats began the process that culminated in criminalizing large contributions – the kind that can give long-shot candidates, such as Vilsack, a chance to become competitive. Yes, the initial aim of campaign “reforms” was less the proclaimed purpose of combating corruption or “the appearance” thereof than it was to impede the entry of inconvenient candidates into presidential campaigns. In that sense, campaign reform is a government program that has actually worked, unfortunately.

Finally, the Times Book Review also reviewed Infidel, by Ayaan Hirsi Ali, who spoke at Cato’s Annual Benefactor Summit a week earlier. Benefactors who attended the Summit got to hear from three authors a week before their books hit the big time. Don’t miss it next year!

Skyscraper Signals

The boldest skyscraper project the world has seen in 75 years is currently being contructed in Dubai. The Burj Dubai will apparently top 2,600 feet, which would be 56% taller than the current tallest building (in Taipei) and more than twice as tall as the Empire State Building.

The American has a good cover story this month on the current tall building boom.

And Wikipedia has some construction shots of the Dubai project.

If privately financed, skyscraper projects are an interesting indicator of business sentiment in a city or a nation and investor bullishness on growth. If you want to know what business and investors in Chicago, Paris, London, Hong Kong, or Sao Paulo think about growth prospects in those cities, check out the skyscraper construction market. You can do that at this amazing site.  

Even Ayn Rand would be impressed with the current explosion in cloud-topping building projects.

USA Today Goes 0-5 on REAL ID

This morning the Department of Homeland Security’s Office of Public Liaison was good enough to email me a copy of USA Today’s editorial supporting the REAL ID Act.  Curiously absent from the email was a copy of, or even a link to, ACLU Executive Director Anthony Romero’s opposing view.

It has been called unwise to argue with someone who buys ink by the ton, but USA Today’s praiseworthy adoption of “Web 2.0” interactivity on its Web site shows how ink is shrinking in relevance.  So let’s go ahead and see how the paper did in its point-by-point assessment of REAL ID.  Below, USA Today’s points are in bold.  My commentary in roman text:

Taking the arguments of Real ID opponents one at a time:

•It won’t make the nation safer. True, there’s no guarantee that the law would have stopped the 9/11 hijackers and that determined terrorists won’t find a way around the new requirements. Averting terror attacks, however, requires layers of security. Credible IDs are an important layer.

To be more clear, the law would not have stopped the 9/11 hijackers.  All of the 9/11 attackers could have gotten driver’s licenses legally had the REAL ID Act been the law on September 11, 2001.  Identification really doesn’t provide any security against committed threats.

“Layered security” is a legitimate way of thinking about things.  One shouldn’t rely on a single security system, because that creates a single point of failure.  However, security layering doesn’t end the inquiry.  Each layer must provide security that is cost-justified.  If creating a national ID doesn’t create a substantial protection - and it doesn’t - the national ID layer does more harm than good.  Speaking of cost …

•It costs too much. Motorists will have to spend an estimated $20 more, a relatively small sum for a standardized, tamper-proof license. For states, the costs are estimated at up to $14.6 billion over five years, offset by as much as $100 million in federal grants this year alone, on top of $40 million in federal aid already provided. Governors can make a case for more help, but cost-sharing arguments shouldn’t stop the program from going forward.

DHS’s own cost estimate is that REAL ID costs over $17 billion dollars.  That’s about $50 per man, woman, and child in the United States.  State government officials are probably not enthused to know that DHS is making available less than 1 percent of the costs to implement REAL ID.

•It violates privacy. The creation of large databases always is reason to be wary. But the new regulations don’t create a national ID card or giant Big Brother-like federal database. States will still issue the licenses and retain information used to verify identity. Making an existing database more credible threatens privacy far less than many private sector data collections do.

To most people, a nationally standardized, government-issued card that is effectively mandatory to carry is a national ID card.

No database, huh?  Here’s section 202(d) of the Act:

To meet the requirements of this section, a State shall adopt the following practices in the issuance of drivers’ licenses and identification cards: …

(12) Provide electronic access to all other States to information contained in the motor vehicle database of the State. 

(13) Maintain a State motor vehicle database that contains, at a minimum–

(A) all data fields printed on drivers’ licenses and identification cards issued by the State; and

(B) motor vehicle drivers’ histories, including motor vehicle violations, suspensions, and points on licenses.

As to private sector data collections, these, at least, people can prevent.  But if the private sector is wrong to do this, two wrongs don’t make a right.

It forces illegal immigrants to drive without licenses or insurance. Illegal immigrants won’t be able to get Real ID licenses, but states will be allowed to issue permits allowing them to drive and obtain insurance. In any event, the nation’s immigration problems require a comprehensive solution in Washington; they can’t be solved at state motor vehicle departments.

When the state of New Mexico de-linked driver licensing and immigration status, uninsured vehicle rates in the state dropped from 33 percent to 17 percent.  Unlicensed driving, hit-and-run accidents, and insurance rates probably followed a similar course.  It’s true that states will be allowed to issue non-federally-compliant IDs, including to illegal immigrants.  Knowing that such cards are “for illegals,” illegals are unlikely to get them.  Thanks to REAL ID, these drivers will kill innocent law-abiding Americans on the highways.

It’s too hasty. This is just absurd. DHS gave states until the end of 2009 to have programs in place to replace all licenses by 2013 — a sluggish 12 years after the 9/11 attacks.

Each day that driver’s licenses lack credibility is a day of needless vulnerability. As DHS Secretary Michael Chertoff told Congress last month, “If we don’t get it done now, someone’s going to be sitting around in three or four years explaining to the next 9/11 Commission why we didn’t do it.”

Few have made the argument that REAL ID is “too hasty.”  The Department of Homeland Security’s regulations didn’t make the law workable and neither can a delay.  The real problem is the law itself, and it needs to be repealed.

Careful observers noted the contrast between Secretary Chertoff’s urgency when speaking to Congress about REAL ID and his Department’s willingness to kick implementation down the road another year and a half, to December 2009.  Cards wouldn’t even be in everyone’s hands until 2013.  This puts the lie to the idea that a national ID is a security tool at all.

USA Today’s editorial page has been rather good on privacy issues in the past, and willing to call out government hypocrisy.  They took a winger on this one and got it wrong.

A Look Over the Horizon? Look All Around!

You don’t have to look far over the horizon to know what life in America would be like if we had a national ID.  On Saturday, the Associated Press reported that a mall in Wauwatosa, Wisconsin is considering requiring ID from youths before they can enter.  This is private ordering, of course, but private ordering doesn’t happen in a bubble.  Private actors will be much more likely to check IDs if there is a nationally uniform ID system.

With IDs and credentials of different designs and from different issuers in our hands today, ID checking is relatively rare, and rarely automated.  Nonetheless, companies like Intelli-Check are pushing electronic ID-checking systems for nanny-state purposes. They would have a much easier time if all of us carried the same card and it was effectively mandatory.  Keep in mind that more ID checking equals more personal data collection.

In tiny Earlville, Illinois, a woman named Joy Robinson-Van Gilder has started a one-woman crusade against her local public school which decided to use fingerprint biometrics to administer the purchase of hot lunches in the cafeteria.  Despite her wishes, they fingerprint-scanned her 7-year-old, for a time refusing to allow him hot lunches if he wouldn’t use their system. 

The starting point for this kind of program is using it to manage lunch payments, but the ending point is a detailed record of each child’s eating habits and the school usurping the role of parents.  It’s no wonder government schools are at the center of so much social conflict.

There is nothing inherently wrong with identification or with biometrics but, unless they are adopted through voluntary choice, they will be designed to serve institutions and not people.