Cato Daily Dispatch for March 25, 2003
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Bush Administration: War Price Tag $75 BillionSupreme Court to Review Police Arrest Powers
Japan's Central Bank Fails to Reform Monetary Policy
Bush Administration: War Price Tag $75 Billion
"The Bush administration put a $75 billion price tag on the early costs of the war with Iraq yesterday," according to Newsday.
"Hoping for quick congressional approval, President George W. Bush met with congressional leaders late yesterday and previewed his request for the military campaign, for foreign assistance and for additional homeland protection."
As Congress grapples with finding room for the cost of the war in the federal budget, it might do well to consult the Cato Institute's recently published "Handbook for the 108th Congress", which lists many programs that Congress could consider cutting in order to finance a $75 billion war.
Among them are NASA, $14.5 billion; the Federal Highway Administration, $28.7 billion; the Department of Energy, $5.9 billion; the Farm Services Agency, $23.7 billion; the Drug Enforcement Administration, $1.5 billion; and the Export-Import Bank, $1 billion.
Cato Fiscal Policy Studies Director Chris Edwards observes in the Handbook that, "The administration is under the shortsighted illusion that it can have bigger government in the selected areas it wants, such as defense, agriculture, education, and Medicare prescription drugs, but have tight limits on spending elsewhere. But that strategy leads to larger government everywhere because Congress is spurred to demand higher spending for all its favorite programs. Both Congress and the administration must end their shortsighted jostling for more taxpayer cash. Not only is the government running huge deficits again, but the looming explosion in entitlement costs demands that all aspects of the federal spending empire be overhauled."
Supreme Court to Review Police Arrest Powers
According to USA Today, "The Supreme Court said Monday it will consider the scope of police power to arrest all occupants of a car during a traffic stop, agreeing to look at a case in which everyone in a car denied knowledge of drugs and a roll of cash found inside.
"The case from Maryland continues a line of Supreme Court cases clarifying when officers have probable cause and can apprehend someone without a warrant. In this case, the court will consider whether it was an unconstitutional stretch for the officer to link the front-seat passenger to drugs found in a back armrest, and then to arrest all three people in the car."
In a Cato Institute Policy Analysis, "A Society of Suspects: The War on Drugs and Civil Liberties", Steven Witotsky describes in detail the freedoms Americans have ceded to the federal government in the battle against illegal drugs.
"Most Americans have yet to appreciate that the War on Drugs is necessarily a war on the rights of all of us," writes Witotsky. "It could not be otherwise, for it is directed not against inanimate drugs but against people--those who are suspected of using, dealing in, or otherwise being involved with illegal drugs. Because the drug industry arises from the voluntary transactions of tens of millions of people--all of whom try to keep their actions secret--the aggressive law enforcement schemes that constitute the war must aim at penetrating the private lives of those millions. And because nearly anyone may be a drug user or seller of drugs or an aider and abettor of the drug industry, virtually everyone has become a suspect. All must be observed, checked, screened, tested, and admonished--the guilty and innocent alike.
"As Peter Rodino, former chairman of the House Judiciary Committee, said in expressing his anger at the excesses of the Anti-Drug Abuse Act of 1986, 'We have been fighting the war on drugs, but now it seems to me the attack is on the Constitution of the United States.'"
Japan's Central Bank Fails to Reform Monetary Policy
The Associated Press reports that "Japan's central bank kept monetary policy unchanged Tuesday in an emergency meeting under its new governor that was aimed at helping the country's fragile economy through the impact of a war in Iraq. It is boosting spending to purchase commercial bank shares.
"Japan faces the unusual threat of deflation, a continuing downward spiraling of prices that slashes profits and income and deadens economic activity."
According to distinguished economist Allan Meltzer, in an article written for the Cato Journal, "Falling prices and appreciating currency suggest that wealth-owners (at home and abroad) want to hold more Japanese money balances than the Bank of Japan has provided. The public can not create more yen balances, but they can increase the real value of their yen balances by demanding yen. Their demands force the price level down and appreciate the yen-dollar exchange rate.
"If the Bank of Japan increased the growth rate of money," says Meltzer, "it would help to achieve four important goals: (1) stop current and expected future deflation of wages and prices; (2) convert an excess demand for money into an excess supply, encouraging spending; (3) stop the fall in housing and land prices, thereby strengthening the financial system and ending the erosion of real wealth; and (4) depreciate the exchange rate, improving the competitive position of Japanese producers in world markets."
Christopher Kilmer, editor, ckilmer@cato.org