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Cato Dispatch for August 6, 2007

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(Links to outside sources were active as of the date of this dispatch; however, not all news sources maintain links to current stories indefinitely. Some links also may require registration.)

Bush Signs Law to Widen Legal Reach for Wiretapping

"President Bush signed into law on Sunday legislation that broadly expanded the government's authority to eavesdrop on the international telephone calls and e-mail messages of American citizens without warrants," reports The New York Times. "Congressional aides and others familiar with the details of the law said that its impact went far beyond the small fixes that administration officials had said were needed to gather information about foreign terrorists. They said seemingly subtle changes in legislative language would sharply alter the legal limits on the government's ability to monitor millions of phone calls and e-mail messages going in and out of the United States. They also said that the new law for the first time provided a legal framework for much of the surveillance without warrants that was being conducted in secret by the National Security Agency and outside the Foreign Intelligence Surveillance Act, the 1978 law that is supposed to regulate the way the government can listen to the private communications of American citizens." 

In the Cato-@-Liberty blog post "Bush, Congress, and Terrorism," Tim Lynch, director of Cato's Project on Criminal Justice, says about this law:

"Last year President Bush was able to rush the dubious Military Commission Act through the Congress.  This year he was able to rush through another surveillance measure.  In my view, the President's legislative 'achievements' have little to do with persuasion.  It is about the politics of anti-terrorism legislation.  That is, if a member of Congress does not support the proposal under consideration, it means he or she is too 'soft.'  Even though we're about six years past 9/11 and even with the track record of Attorney General Gonzales, most legislators put their reservations aside, curl up into the fetal position and say 'I am against the terrorists too,' as they vote in favor.  Last year, Senator Specter went so far as to say that he hoped the courts would strike down as unconstitutional the bill he just voted for.  Whatever one thinks about the legislative details of the Patriot Act, the Military Commission Act, or this 'Protect America Act of 2007,' all friends of liberty ought to be disturbed by this political climate.  The question is: When will this vicious cycle of anti-terrorism legislation stop?  In a Giuliani administration?  In a Clinton administration?"

Montana Gov. Declares Fire Emergency

"A state of emergency was declared in Montana on Sunday because of several large wildfires, including one that has crept to within a mile of several homes and destroyed at least one," reports The Washington Post. "Higher humidity and clouds were helping firefighters contain that nearly 28-square-mile blaze, which began Friday and rapidly grew, leading to evacuation orders for residents of about 200 homes." 

In "The Perfect Firestorm: Bringing Forest Service Wildfire Costs Under Control," Cato senior fellow Randal O'Toole writes: "Blessed and cursed by a Congress that gives it a virtual if not literal blank check for fire protection, the Forest Service's fire spending is out of control. Prodded by a centralized planning and budgeting process, the agency's expensive, onesize- fits-all approach to wildfire does not fit the extremely diverse 193 million acres of national forests. The Forest Service's program -- which consists of spending close to $300 million per year treating hazardous fuels and as much as $2 billion a year preparing for and suppressing fires -- will not restore the national forests to health or end catastrophic fire in most of those forests. In many forests it may do more harm than good."

House OKs New Taxes on Oil Companies

"Declaring a new direction in energy policy, the House on Saturday approved $16 billion in taxes on oil companies, while providing billions of dollars in tax breaks and incentives for renewable energy and conservation efforts," reports The Washington Post. "Republican opponents said the legislation ignored the need to produce more domestic oil, natural gas and coal. One GOP lawmaker bemoaned 'the pure venom ... against the oil and gas industry.' The House passed the tax provisions by a vote of 221-189. Earlier it had approved, 241-172, a companion energy package aimed at boosting energy efficiency and expanding use of biofuels, wind power and other renewable energy sources."

Cato senior fellow Jerry Taylor comments on this law:  "I am all for eliminating oil subsidies, but the House bill does not really do that.  The House bill prevents the oil and gas industry from claiming a tax deduction made available to every other U.S. manufacturer.  That deduction -- which was established in 2004 -- had the practical effect of reducing the corporate income tax by 3 percentage points for manufacturers (broadly defined).  While you can make a good argument for eliminating the manufacturers deduction based on the proposition that the federal government should not be distorting the economy by taxing some economic sectors at higher rates than others (or, alternatively, broadening the deduction so that it applies to all corporations), selectively eliminating that deduction for the oil and gas sector may well make the economic distortions produced by that tax break even worse.

"Regardless, the practical effect will be to reduce oil and gas production in the United States by reducing the returns available to domestic producers.  We've been down that road before with the Windfall Profit Tax of 1980.  Analysts at the Congressional Budget Office believe that the tax hikes imposed on the industry in 1980 reduced domestic production by 3-6 percent and increased foreign oil imports by 8-16 percent."  

Laura Osio, editor, losio@cato.org