Some Sensible Thoughts on the REAL ID Act

Today I’ll be testifying on the REAL ID Act in a state legislature for the second time in two days. In the morning yesterday, I spoke to the Government Operations Committee of the Utah House of Representatives, along with the Committee’s Chairman Glenn Donnelson (R-North Ogden). His resolution to reject the REAL ID Act was passed unanimously by the committee and sent to the full House.

Mid-day, I flew from Salt Lake City to Boise, Idaho to speak on a panel about REAL ID convened in the capitol building by Representative Phil Hart (R-Athol). Today, Hart’s resolution opposing REAL ID will be heard in the House Transportation and Defense Committee.

Among the people on yesterday’s panel in Boise was Bill Bishop, Director of the Idaho Bureau of Homeland Security. You might think that a homeland security guy would support REAL ID. He doesn’t. Knowing full well he might be making it harder on himself the next time it comes time to getting grants from the U.S. Department of Homeland Security, he laid out his opposition to REAL ID.

Along with his philosophical objections to a national ID, he pointed out its practical weaknesses as a security tool. You can nail down the identity of everyone and you’ll be no better off in preventing something like a terrorist attack. And as soon as you come out with a highly secure, highly valuable ID like the REAL ID, the hackers and forgers will go to work on faking it or corrupting someone in order to get it. It’s a good security practice to diversify your protections rather than creating a single point of failure like the REAL ID Act does. You might make yourself less safe if you rely on a uniform ID system for your security.

What frustrates me about this kind of guy (I say, tongue firmly in cheek) is that I had to study security and risk management for a couple of years before I understood these concepts well enough to put in my book. The Bill Bishops of the world just kinda know it. Not fair.

Summarizing REAL ID’s utility as a national security tool, Bishop said: “I don’t believe in the Easter Bunny, I don’t believe in Santa Claus, and I don’t believe in the Lone Ranger. Which means I don’t believe in silver bullets.”

We ought to take advantage of this kind of wisdom, and the obvious benefits of local knowledge - maybe by coming up with some kind of decentralized governmental structure. I don’t know how you would do that. Just putting an idle thought out there.

Why the United States Must Leave Iraq

The U.S. military occupation of Iraq has already cost more than 3,000 American lives and $350 billion. In “Escaping the Trap: Why the United States Must Leave Iraq,” Cato scholar Ted Galen Carpenter argues for a rapid and comprehensive withdrawal from Iraq. “It is time to admit that the Iraq mission has failed and cut our losses. We need an exit strategy that is measured in months, not years.” Carpenter also examines alternative prescriptions offered by opponents of immediate withdrawal—gradual or partial withdrawal, escalation, and partitioning—and concludes that they are unrealistic, expensive, and insufficient to stem the violence in Iraq.

Swiss Leaders Defend Low Taxes, Reject Complaint from Brussels

The tax bureaucrats at the European Commission apparently believe that low tax rates and territorial taxation (the common-sense principle of only taxing income earned inside national borders) are a violation of free trade rules. The Swiss, not surprisingly, have a different perspective. This European fight has long-term implications for America. If the Euro-crats succeed in characterizing good tax policy as an unfair trade subsidy, it will be only a matter of time before high-tax nations use the same theory at the World Trade Organization. Ideally, Switzerland will hold firm and this will never happen. As explained by tax-news.com, the EU has very little leverage in this battle unless they are willing to impose protectionist barriers against Switzerland, but there are a number of low-tax EU nations that presumably would side with Switzerland and block any sanctions:

Switzerland has rejected criticism from the European Commission of corporate tax rates in some cantons, saying it will not yield its sovereignty over this issue. …Finance Minister Hans-Rudolf Merz shot down the EU proposal, saying in Bern that there was nothing to negotiate. …The commission wants the Swiss to change tax rules that it claims offer unfair advantages to firms operating out of Switzerland. It said low corporate taxes offered by cantons such as Obwalden and Zug violated a 1972 trade agreement, calling it a disguised state subsidy. …Merz said he does not fear a backlash from Brussels since so far all the talk is about negotiations. He reckons that sanctions are also unlikely, as some EU member states would probably not back them. The finance minister admitted though that the European initiative was aimed at stopping firms – and their tax money – leaving the union for Switzerland’s greener pastures.

Raise Price of Health Insurance, Senators Urge

Well, that’s not exactly how they put it. Nor is it how the journalists put it. The Wall Street Journal, for instance, explained it this way:

A bill introduced by a bipartisan group of senators – Pete Domenici (R., N.M.), Edward Kennedy (D., Mass.) and Mike Enzi (R., Wyo.) – doesn’t mandate that group health plans cover mental illness. Instead, it requires that plans, if they cover both mental and physical illnesses, treat both with “parity,” or similar benefits, such as deductibles, co-payments and treatment limitations.

AP story here. Neither the senators nor the journalists noted that such mandates drive up the cost of health insurance. So they didn’t have to address the question of why they would be seeking to make health insurance more expensive even as they decry the number of Americans without health insurance.

But it isn’t very hard to see why mandates would raise costs. The more things an insurance policy is required to cover, the more it’s going to cost. “Mental health” is especially vulnerable to cost inflation, as it can cover so many things.

It’s great to have an insurance policy that covers everything you might possibly need. But why should everyone be required to buy a Cadillac policy? Why shouldn’t people be allowed to buy Chevrolet policies if that’s what they want? As economist Merrill Matthews notes, “There’s a range of different things states have required health insurance to cover, including chiropractors, podiatrists, nurse midwives, drug and alcohol abuse counseling, and even, in a few states, hairpieces for people who’ve had cancer treatments.” People could save money if they could buy health insurance policies that didn’t cover some eventualities, such as pregnancy or drug rehab.

But don’t worry–as soon as the Mental Health Parity Act passes, senators will go right back to criticizing insurance companies for their high prices and calling for government to make insurance “affordable” for more people.

Time to Reform “Soviet” Road Pricing

A TCSdaily.com column explains why market-based pricing for road usage would be an improvement over the current system, which encourages congestion by charging the same price (zero) for trips at the peak of rush hour and in the middle of the night:

…congestion pricing is conservative economics at its best. For decades, conservatives have championed market-oriented solutions to highway problems as a means to allocate scarce resources. Congestion pricing gives consumers the opportunity to decide when it is in their economic interest to ride crowded roads, and whether the price charged for a given trip is worth their travel time savings. In the former Soviet-bloc states, the standard way to allocate scarce goods was to set the purchase price low enough for everyone to afford, but to make consumers wait in long lines to buy them. The real price depended on what value consumers placed on their time. This approach is the way we’ve always allocated access to most roadways in capitalist America - access is “free,” just like for a public park. But our real cost skyrockets when we consider the time we spend crawling along in bumper-to-bumper traffic and with no option to pay extra for a faster trip. And even without factoring in the cost of time frittered away listening to satellite radio, highways have never really been “free,” but subsidized by taxpayer dollars. Congestion pricing is not a tax increase, but a user fee, which, conservatives agree, is a better way to divide costs.

The author is right that congestion pricing is not a tax increase. But roads today currently are financed by taxes. So if congestion pricing is implemented, it should be accompanied by a tax cut of equal magnitude to prevent politicians from inadvertently having a new pile of money to waste on other government programs.

Another Bush?

Mitt Romney announced for president today. Listening on C-Span, he sounded to me just like any other politician, with applause lines to appeal to every faction in the Republican party. Here is the transcript.

Like Bill Clinton or George W. Bush on the campaign trail, Romney combines throw-away lines about how government is too big with appeals to fix health care, education, and many other things. “We” need to fix society. ”Our” schools and “our” children need help.  Paragraphs like this reveal a Bush-style policy mish-mash:  

We strengthen the American people by giving them more freedom, by letting them keep more of what they earn, by making sure our schools are providing the skills our children will need for tomorrow, and by keeping America at the leading edge of innovation and technology.

Does Romney think that freedom is something that government gives us? Isn’t Romney hinting that he wants the government to spend even more on schools and technology schemes, while also claiming that people ought to keep more of their earnings? 

Romney also said, “We must transform our government - to become a government that is smaller and less bureaucratic, one with fewer regulations and more freedom for our people.”  But how does he square that with his legislation that greatly increased health care regulation in Massachusetts and took away freedom from state residents as a result of his health insurance mandate?

Similarly, Romney said: “For some, healthcare is inadequate. Family expenses and government taxes take a larger and larger bite. America cannot continue to lead the family of nations if we fail the families at home.”

Taxes are too high, but isn’t Romney hinting that he wants to spend even more on health care? Isn’t he saying that the government is failing families by not helping them enough?

I’m not looking forward to another 21 months of this.   

Democratic Governor in Arkansas Pushes Big Tax Cut

Although national Democrats (and some Republicans) have a love affair with higher taxes, Mike Beebe in Arkansas has convinced legislators to approve a big tax cut. To boost growth and competitiveness, his tax cut should have focused on lower income tax rates rather than cherry-picking certain constituencies, but at least he is reducing the state’s total tax grab. The Wall Street Journal opines:

Arkansas Governor Mike Beebe may not be a man from Hope, but the newly elected Democrat is becoming a voice for tax relief within his party. Last year he campaigned on cutting in half his state’s 6% sales tax on groceries. Last week he made good on the promise by striking a deal with a reluctant Democratic legislature. His compromise also repeals income taxes on the poor and cuts sales taxes that manufacturers pay on their utility bills. All told, taxpayers will save $319 million over two years, or what the Governor calls “the largest tax decrease in the history of the state.” …The Tax Foundation reports that Arkansas is the 27th most taxed state in the nation with a heavier tax burden than neighboring Texas and Tennessee, neither of which has an income tax and rank 44th and 47th. The state is expected to have an $840 million surplus this year and could therefore afford additional cuts in its 6% general sales tax and 7% tax on income over $30,100.