Federal Subsidies Miss Target

The Wall Street Journal today discusses how the growth in federal subsidies for college has contributed to the growth in college costs for students. Cato scholars have been arguing for years that rising grants and loans are not so much helping students, but causing bloat in college administration costs, including wages, benefits, and excess building construction.

It is a similar story in other policy areas. Federal subsidies cause unintended effects that undermine the stated purpose of interventions, and often end up lining the pockets of people not targeted. Farm subsidy advocates want you to believe that struggling farmers are aided by billions of dollars in annual subsidies, but the real beneficiaries are mainly wealthy landowners. Housing subsidies are supposed to reduce housing costs for people with low incomes, but–to an extent—programs such as Section 8 and the Low Income Housing Tax Credit fatten the wallets of landlords and developers.

#Cato2016—Cato Scholars Ground National Debates in Solid Policy Analysis

As my colleague Jeff Milyo wrote somewhat recently, the national sport isn’t baseball; it’s politics. With Americans across the nation loyally cheering on either Team Red or Team Blue (or, for a growing few, Team Purple), the discussion around key political events can seem somewhat superfluously shallow. That’s where the Cato Institute comes in.

#Cato2016

Throughout the 2016 campaign season, Cato scholars will be injecting insightful commentary and hard-hitting policy analysis into the national conversation using the Twitter hashtag #Cato2016. 

We’ll be off to a running start with not, one, not two, but three major nationally televised events this week.

Tonight at 7 p.m. EST, the Voters First Forum will be held at the Dana Center at Saint Anselm College and broadcast nationwide on C-SPAN. Featuring Ben Carson, Chris Christie, Ted Cruz, Carly Fiorina, Lindsey Graham, Bobby Jindal, John Kasich, Jeb Bush, Rick Perry, Scott Walker, Rand Paul, Marco Rubio, Rick Santorum, and George Pataki, the forum will be the first time the majority of the GOP presidential primary contenders will be sharing one stage.  Tune in on Twitter for commentary from Emily Ekins, Jonathan Blanks, Adam Bates, and more. You can find a full list of participating scholars and follow their accounts here.

Then, on Thursday, August 6th, Fox News will host two nationally-televised debates featuring candidates for the GOP nomination for the 2016 presidential elections. The first of these debates—to be held at 5:00 p.m. EST—will be an opportunity to hear from some of the lesser-known contenders, while the second of these debates—to be held at 9:00 p.m. EST—will feature those candidates who place in the top 10 of an average of the five most recent national polls, as recognized by FOX News, leading up to the debate. Tune in on Twitter for commentary from Emma Ashford, Alex Nowrasteh, Patrick Eddington, Michael Cannon, Jason Bedrick, and more. You can find a full list of scholars participating in the 5. pm  and 9 p.m. debates via the @CatoEvents Twitter account.

Tuning into the debates (or simple wondering how they might impact the policy debate)? Join the conversation on Twitter with #Cato2016. 

Jailed for Pamphleteering?

Mark Iannicelli has been charged with 7 counts of jury tampering.  He did not pressure jurors in a case to vote one way or the other.  All he did was set up a booth near the courthouse and distribute pamphlets that contained information about jury nullification–the idea that jurors should be able vote according to their conscience.  Prosecutors were so outraged by this that they want Mr. Iannicelli imprisoned.  Free speech is nice, but they apparently think the supreme law does not apply as you approach the, er, courthouse.  Hmm.

Are the prosecutors aware that judges in other jurisdictions have dismissed charges in such circumstances?  If so, this could be just a thuggish attempt to intimidate people from exercising their right to talk about jury nullification.

To learn more about this subject, check out the Cato Institute book, Jury Nullification by Clay Conrad.  But Denver residents had best be careful about where they take the book and talking about it above a whisper.

Sen. Tim Kaine at Cato: A Year (and Counting) of Unauthorized War

This week marks the first anniversary of our latest war in the Middle East, but after some 5,000 airstrikes in two countries, and with 3,500 U.S. troops on the ground, we’ve yet to have an up-or-down vote in Congress on authorization for the use of military force against ISIS.

We’re recognizing—“celebrating” isn’t the right word—that unhappy anniversary at Cato with a talk by Senator Tim Kaine (D-VA), who holds the unfashionable view that Congress ought to vote on the wars we fight, and has been waging a (sometimes lonely) battle to get his colleagues to live up to their most important constitutional responsibility. The event runs from 9:00-10:00 AM on Thursday, August 6, so you can hear about the erosion of congressional war powers and grab your morning coffee without getting to work too late; RSVP here.  

President Obama announced the first wave of airstrikes in Iraq on August 7, 2014, and expanded the campaign against ISIS to Syrian territory in September. But it took him six months to send Congress a draft Authorization for the Use of Military Force—along with a message insisting that “existing statutes provide me with the authority I need” to wage war anyway.  Since then, as Senator Kaine recently noted, “Congress has said virtually nothing.” Recent headlines make that all too clear: “Congress avoids war debate as ISIL advances” (Politico, 5/28); “Islamic State War Authorization Goes Nowhere, Again” (Bloomberg, 6/9); “House kills measure to force debate on military force against ISIS” (The Hill, 6/11)…and so on. 

In the debate over the 2016 National Defense Authorization Act last month, Senator Kaine noted that, in the bill, Congress addresses military minutia in “excruciating detail,” but, at the same time, “we don’t want to vote on whether the nation should be at war.” When Kaine cosponsored (with Senators Jeff Flake (R-AZ) and Joe Manchin (D-WV)) an amendment to the NDAA “expressing the sense of the Senate that we should have an authorization debate about whether we should be at war with ISIL,” it was ruled out of order: “so barracks mold, yes; vehicle rust, yes; the athletic programs at West Point, yes;” he sums up, but “whether we should be at war, nongermane to the Defense authorization act. Interestingly, we even took a vote on the floor of the Senate in the NDAA about whether we should arm the Kurds in a war that Congress has not authorized that we could debate and vote on; but whether we should be at war we have not debated and voted upon.”

The president’s claim that he already has all the authority he needs to wage war with ISIS is, as Senator Kaine put it in an earlier speech, “ridiculous.” Its principal basis is the AUMF Congress passed three days after the 9/11 attacks and was intended to be used against those who “planned, authorized, committed or aided” the September 11 attacks or “harbored” those who did. Its main targets were, obviously, Al Qaeda and the Taliban, yet now, nearly 14 years later, the administration insists it serves as legal justification for a war of at least three years, in at least two countries, against a group that is not only not a “cobelligerent” with Al Qaeda, but is engaged in open warfare against the group. Building on the Bush administration’s expansive interpretation of the 2001 authorization, the Obama administration has turned the 9/11 AUMF into an enabling statute for an open-ended globe-spanning war. “This is unacceptable,” Senator Kaine argues, “and we should be having a debate to significantly narrow that authorization” as well. 

The decision to go to war is among the gravest choices a constitutional democracy can make. The Framers erected firebreaks to hasty action, designed to force deliberation and consensus before the resort to deadly force. As James Wilson put it to the Pennsylvania ratifying convention, “this system will not hurry us into war; it is calculated to guard against it. It will not be in the power of a single man, or a single body of men, to involve us in such distress; for the important power in declaring war is vested in the legislature at large.’’ Join us Thursday as we explore how Congress can take that power back. 

You Ought to Have a Look: Hillary and Jeb Offer Climate Opinion

You Ought to Have a Look is a feature from the Center for the Study of Science posted by Patrick J. Michaels and Paul C. (“Chip”) Knappenberger.  While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic.  Here we post a few of the best in recent days, along with our color commentary. 

This week, the royal families of Clinton and Bush offered up their 2016 campaign insights on climate change.  People have been very interested in what they would say because, as Secretary of State, Clinton gave hints that she was even more aggressive on the issue than her boss, and Bush is the son of GHW Bush, who got us into this mess in the first place by going to Rio in 1992 and signing off on the Climate Treaty adopted there.*

Hillary Clinton unveiled her “climate plan” first.  As feared, it’s a step-up over Obama’s, with an impossibly large target for electricity production from renewable energy. While her fans were exuberant, noticeably absent from her plan were her thoughts on Keystone XL pipeline and a carbon tax.

Manhattan Institute scholar Oren Cass (whose take on the carbon tax we’ve featured previously) was, overall, less than impressed. Calling Hilary’s climate plan a “fake plan” in that it really would have no impact on the climate. Cass identifies what Hilary’s “real” plan is—pushing for a $100+ billion annual  international “Green Climate Fund”  (largely populated with U.S. dollars) to be available to developing countries to fight/prepare for climate change. 

Reserve Requirements Basel Style: The Liquidity Coverage Ratio

Over the last couple of decades, reserve requirements all but vanished as a means of bank regulation and monetary control. But now a new variation on reserve requirements is being introduced through the capital controls of the Basel Accords.

Canada, the UK, Sweden, Australia, New Zealand, and Hong Kong have all abolished traditional reserve requirements. In many other countries, reserve requirements have become a dead letter. In the U.S., for instance, the Fed under Alan Greenspan reduced all reserve requirements to zero except for transactions deposits (checking accounts), while permitting banks to evade reserve requirements on transactions balances by using sophisticated computer software to regularly “sweep” those balances into money market deposit accounts, which have no reserve requirement. In 2011 Congress went a step further by allowing the Fed to eliminate all reserve requirements if it so desired. The Eurozone, for its part, began with a reserve requirement of only 2 percent, which was reduced to 1 percent in January 1999.

There were good reasons for this deregulatory trend. Economists consider reserve requirements an implicit tax on banks, requiring them to hold non-interest earning assets, while central banks considered changes in such requirements too blunt an instrument for monetary control. The Fed discovered the latter shortcoming when, in the midst of the Great Depression, having just gained control over the reserve requirements of national banks, it doubled them, contributing to recession of 1937.

Boston Beats Beijing in Olympics Contest

News comes this morning that Beijing has been awarded the 2022 Winter Olympics, beating out Almaty, Kazakhstan. Which touches on a point I made in this morning’s Boston Herald: 

Columnist Anne Applebaum predicted a year ago that future Olympics would likely be held only in “authoritarian countries where the voters’ views will not be taken into account” — such as the two bidders for the 2022 Winter Olympics, Beijing and Almaty, Kazakhstan.

Fortunately, Boston is not such a place. The voters’ views can be ignored and dismissed for only so long.

Indeed, Boston should be celebrating more than Beijing this week. A small band of opponents of Boston’s bid for the 2024 Summer Olympics beat the city’s elite – business leaders, construction companies, university presidents, the mayor and other establishment figures – because they knew what Olympic Games really mean for host cities and nations:

E.M. Swift, who covered the Olympics for Sports Illustrated for more than 30 years, wrote on the Cognoscenti blog a few years ago that Olympic budgets “always soar.”

“Montreal is the poster child for cost overruns, running a whopping 796 percent over budget in 1976, accumulating a deficit that took 30 years to repay. In 1996 the Atlanta Games came in 147 percent over budget. Sydney was 90 percent over its projected budget in 2000. And the 
Athens Games cost $12.8 billion, 60 percent over what the government projected.”

Bent Flyvbjerg of Oxford University, the world’s leading expert on megaprojects, and his co-author Allison Stewart found that Olympic Games differ from other such large projects in two ways: They always exceed their budgets, and the cost overruns are significantly larger than other megaprojects. Adjusted for inflation, the average cost overrun for an Olympics is 179 percent.

Bostonians, of course, had memories of the Big Dig, a huge and hugely disruptive highway and tunnel project that over the course of 15 years produced a cost overrun of 190 percent.

Read the whole thing.

Pages