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Cato Daily Dispatch for March 23, 2004

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It's Nearly Tin Cup Time at the Postal Service
High Court Ponders Identification Case
Maryland Legislature Proposes $1 Billion in New Taxes

It's Nearly Tin Cup Time at the Postal Service

"There is trouble at the post office," according to The Washington Post. "The U.S. Postal Service's financial outlook is bleak and getting bleaker, according to members of Congress, a presidential commission, the General Accounting Office and postal officials themselves. It is bad enough that some federal officials are warning of a huge taxpayer bailout -- or dramatic increases in postal rates -- if Congress does not reorganize the $67 billion-a-year entity soon to help it operate more efficiently."

Privatization, not a taxpayer-funded bailout, is the solution, according to Cato Adjunct Scholar Edward Hudgins, editor of the Cato book, Mail @ the Millennium: Will the Postal Service Go Private? In "Postal Ploy: 'Give Us Your Money or Don't Get Your Mail!'" he writes that "a private Postal Service, without special privileges, would have an incentive to operate efficiently and to offer innovative services that profit its stockholders, provide opportunities for its workers, and give customers the best service for the best prices."

"First-class mail, the major USPS cash cow, is stagnant," Hudgins writes in "Privatize the Postal Service." "More people in the future will be paying bills electronically, further reducing postal revenues. The postal service will lose more than a billion dollars every year for at least the next decade."

High Court Ponders Identification Case

"Do you have to tell the police your name? Depending on how the Supreme Court rules, the answer could be the difference between arrest and freedom," according to The Associated Press. "The justices heard arguments yesterday in a first-of-its-kind case that asks whether people can be punished for refusing to identify themselves. "The court took up the appeal of [Dudley Hiibel,] who was arrested after he told a deputy that he had done nothing wrong and didn't have to reveal his name or show ID during an encounter on a rural highway four years ago."

According to the friend-of-the-court brief filed by the Cato Institute, the case offers the Court the "opportunity to declare a clear, simple and just rule of law: An American citizen cannot lose his liberty for simply declining to speak with a police officer."

"This case raises profound questions regarding the power of government and the constitutional rights of the citizenry," says Timothy Lynch, director of Cato's Project on Criminal Justice, who co-wrote the amicus brief with attorney Christine Klein. "Hiibel, like most Americans, believed that he had a right to decline to answer questions posed by police officers. But when Hiibel invoked his 'right to remain silent' he was arrested and taken to jail.... Can it really be a crime for a citizen to quietly decline to answer questions?"

Maryland Legislature Proposes $1 Billion in New Taxes

"Democratic leaders of the Maryland House of Delegates yesterday proposed more than $1 billion in new taxes, including a temporary surcharge on the income of wealthy Marylanders and the first increase in the sales tax in nearly 30 years," The Washington Post reports. "Yesterday, [Maryland House Speaker Michael] Busch argued that raising taxes now to avoid the looming crisis is 'the responsible thing to do' -- and would provide a far more stable source of revenue than legalizing slot machine gambling, as Ehrlich has proposed."

If state legislatures truly wanted to be responsible, they would not have allowed the rapid growth of tax revenue of the 1990s to lead to an unsustainable spending surge, according to Cato Director of Fiscal Policy Chris Edwards, Cato Senior Fellow Stephen Moore, and Phil Kerpen of the Club for Growth in "States Face Fiscal Crunch after 1990s Spending Surge."

"Between fiscal years 1990 and 2001, state tax revenue grew 86 percent -- more than the 55 percent of inflation plus population growth," they write. "If states had limited spending growth to that benchmark, budgets would have been $93 billion smaller by FY01, representing savings roughly twice the size of today's state budget gaps. If revenue growth higher than the benchmark had been given back to taxpayers in permanent tax cuts and annual rebates, rebates could have been temporarily suspended during FY02 and FY03 to provide a cushion with which to balance state budgets."

Wyatt Dubois, editor, wdubois@cato.org