Cato Daily Dispatch for October 7, 2004
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Chief Weapons Inspector: No WMD in IraqHouse, Senate Agree on Corporate Tax Bill
Fannie Mae CEO Defends Finances
Chief Weapons Inspector: No WMD in Iraq
The Washington Post reports: "The 1991 Persian Gulf War and subsequent U.N. inspections destroyed Iraq's illicit weapons capability and, for the most part, Saddam Hussein did not try to rebuild it, according to an extensive report by the chief U.S. weapons inspector in Iraq that contradicts nearly every prewar assertion made by top administration officials about Iraq. "Charles A. Duelfer, whom the Bush administration chose to complete the U.S. investigation of Iraq's weapons programs, said Hussein's ability to produce nuclear weapons had 'progressively decayed' since 1991. Inspectors, he said, found no evidence of 'concerted efforts to restart the program.'" In "Bush Must Account for WMD Allegations," Cato Senior Fellow Doug Bandow writes: "The point is not that the administration is necessarily guilty of misbehavior, but that it should be forced to defend its decision-making process.
"Pointing to substitute justifications for the war just won't do. Deputy Defense Secretary Paul Wolfowitz notes that the alleged al-Qaeda connection divided the administration internally, and humanitarian concerns did not warrant risking American lives. Only fear over Iraqi possession of WMD unified the administration, won the support of allies, particularly Britain, and served as the centerpiece of the administration's case. If the WMD didn't exist, or were ineffective, Washington's professed case for war collapses."
House, Senate Agree on Corporate Tax Bill
"A major rewrite of corporate tax law that would end a nasty trade dispute with Europe won approval Wednesday from congressional negotiators after House Republicans beat back efforts to increase regulation of tobacco," the Associated Press reports.
"The measure would repeal a tax break for thousands of American exporters that has been ruled illegal by the World Trade Organization. As a replacement, the proposal offers more than $140 billion in tax breaks for a wide range of businesses."
In "Corporate Tax Tangle," Chris Edwards, Cato director of tax policy studies and author of "Replacing the Scandal-Plagued Corporate Income Tax with a Cash-Flow Tax," calls the bill "the worst show of special interest tax lobbying in years."
Edwards recommends that Congress "start fresh with a simple across-the-board corporate tax rate cut. That would provide a direct competitive response to the recent decline in tax rates around the world."
Fannie Mae CEO Defends Finances
"Fannie Mae CEO Franklin Raines defended his stewardship of the housing finance giant Wednesday, as a former employee said Raines ignored warnings of accounting problems," USA TODAY reports. "The developments came during a heated House hearing on a report by the Office of Federal Housing Enterprise Oversight (OFHEO), which said Fannie flouted accounting rules to ensure executives received bonuses and to smooth out earnings."
In "Fannie Mae, Freddie Mac, and Housing Finance: Why True Privatization Is Good Public Policy," New York University economist Lawrence J. White, a former Freddie Mac board member, argues in favor of the privatization of Fannie Mae and its sister corporation Freddie Mac.
"The special governmental links that apply to Fannie Mae and Freddie Mac yield little that is socially beneficial, while creating significant potential social costs," White argues. The best way to cut down on those costs and risks is privatization, he adds. "This would imply that the two companies would no longer enjoy any special privileges, but would no longer be restricted to their current narrow slice of the financial world. How these companies and their owners would fare in that scenario would then be a matter for markets, and not the Congress or OFHEO, to decide."
Wyatt Dubois, editor, wdubois@cato.org
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