Archives: 02/2012

Corporate Tax Rates, CNN’s Narrow Sample

David Boaz was watching CNN on Friday and noticed a chart that looked suspicious.

President Obama and other policymakers have expressed concern about the high U.S. corporate tax rate, but this CNN chart shows that our rate isn’t too out of line with other countries. Indeed, CNN host Soledad O’Brien said to guest Jack Welch, “But when I look at the corporate tax rates around the world, we have a little graphic of this, I’ll throw it up. We see United States is at 35%, France is at 34%, Belgium at 33%, Spain at 30%, Japan at 30%, Mexico at 30%. It sounds like we’re kind of competitive, right?”

Alas Soledad, your CNN graphics experts led you astray. America is not “kind of competitive” on corporate taxes. Of the 34 high-income OECD countries, your graphics experts compared us with the 5 other countries that have the highest rates. The data appears to have come from the central government column in this table, and it is charted below.

For your interest Soledad, the average central government rate is just 23.6 percent, which is much lower than our 35 percent rate. Our rate is the highest in the OECD. You may also be interested to know that the rate in our largest trading partner, Canada, was just 16.5 percent in 2011 and was cut to just 15 percent in 2012. Canadian policymakers slashed the corporate rate to the current level from 29 percent in 2000.

Given President Obama’s interest in corporate tax reform, perhaps CNN viewers would be interested in a story about why the Canucks—in a bipartisan fashion—pursued that dramatic reform.

For more on corporate tax rates around the world, see Global Tax Revolution.

Federal Workers Aren’t Victims

Federal employee Jason Ullner portrays federal workers as victims in today’s Washington Post.

It seems that all I hear these days are the once and future leaders of our country tripping over themselves to denigrate the work we do. I’m tired of it, and I’m fed up.

Mr. Ullner complains that he endures long hours, high stress, pay freezes, and (supposedly) lower pay than he would receive in the private sector. “I have sacrificed,” he says. Ullner concludes: “So to all our politicians, I implore you: Stop using the government workforce as a political football. Just stop.”

Good grief! Doesn’t he think that private-sector workers have long hours, high stress, and pay freezes? Doesn’t he know that private-sector workers get sacked, lose their jobs when their companies go belly up, and suffer pay cuts during recessions?

The recent “sacrifice” of federal civilian workers includes a temporary pay freeze during the worst recession since World War II, and changes that require new hires to pay a bit more for their pension plans. That treatment is apparently so barbaric that it is driving Mr. Ullner to despair, and driving federal unions to claim an “outrageous injustice.”

I receive emails occasionally from federal workers who have different views than those of Jason Ullner. I received this note on Friday:

I am employee for the Department of Veterans Affairs. As federal employee I feel extremely fortunate to have a job … I care about the future of this country and I am disturbed by the waste and misuse of taxpayers’ money that I see daily as a federal employee. My issue is that the common sense factor has been taken out of the veterans claims process, and the amounts of money being paid to veterans for conditions that have nothing whatsoever to do with a veterans military service.

I have heard about this problem before. Apparently, the taxpayer costs of unjustified health and disability payments to veterans are rising rapidly. To highlight such problems is not to “denigrate” anybody, but to explore whether we can make reforms to reduce the government’s huge overspending problem.

A few weeks ago, I received a series of emails from an employee at the Bureau of Indian Affairs, which came in response to my recent article on that agency. This employee was deeply concerned about poverty on Indian reservations, but he was also outraged at the dysfunction, misspending, and nepotism he has found at the BIA. Here are a few of his comments:

I started to discover that the nepotism at the BIA in D.C. is out of control. There is a custom of parents getting their children jobs in the BIA and they have twisted loyalties to each other that span generations … It is so easy to turn a blind eye [to bad behavior] by a family member… A lot of the decisions the BIA has made have been based on these family connections that have allowed corruption to exist.

You have urban Indians who have never lived on a reservation who use their ethnicity to claim entitlement to their jobs and could care less about improving conditions on the reservations.

The Inspector General investigates and reports to the BIA leadership, which in turn stalls on doing anything about the corruption and turns a blind eye.

Many of the top people in the BIA have gotten their positions based on favoritism or nepotism and are not qualified for their jobs.

The way it works in the BIA is that you put in the years and you get promoted. The other way is you use your family connections to get the next promotion. I wish I had the power to fire unqualified, incompetent employees, and I would [only] have to hire about 1/2 of the employees of the whole agency…

In the WaPo today, Jason Ullner says of federal workers: “We don’t do our jobs for glory, or money or power. We do them — and do them well — because we take pride in our work and pride in representing the United States of America.”

That’s all very nice, but wrapping oneself in the flag doesn’t do anything to solve the ongoing dysfunction in many government agencies, nor does it help solve the government’s huge financial problems. on Gibson’s Ongoing Battle With the Federal Government has posted an excellent video on the continuing saga of the Justice Department’s war on Gibson guitars. In August, I blogged about the Justice Department’s latest raid on the Gibson guitar factory. Six months later, the company has yet to be charged with anything.

Gibson was allegedly importing wood for guitar fingerboards in violation of Indian law, which in turn violates the Lacey Act. The Lacey Act criminalizes the trafficking in certain goods that were taken in violation of other countries’ laws, and it was originally passed to make domestic trade in poached animals a crime in the United States.

But the Act has expanded far beyond its original purposes and it now is used to prosecute companies for violations that have nothing to do with environmental protection, such as labor laws. The Lacey Act is also inherently vague and malleable. It allows government officials to interpret foreign laws and, as I wrote in my original post and as Gibson CEO Henry Juszkiewicz points out in the video, it even permits US officials to ignore the other country’s interpretation of its own laws. As a result, the Lacey Act has been a major source of overcriminalization, which is an issue that Cato has been fighting for some time.

Check out the video below.

It’s Time to Cut Our Losses in Afghanistan

The mayhem unleashed after the burning of Qurans at a U.S. base outside of Kabul—intentional or not—has likely irreparably damaged the U.S. training mission in Afghanistan. Peace talks with the Taliban—a major policy shift for the insurgent movement—could be off the table, too. This is just the latest incident in the downward spiral of U.S.-Afghan relations. Washington’s policy must now shift dramatically toward an expedited withdrawal. The “hearts and minds” campaign was never likely to succeed in a country that views the United States as guests who have overstayed their welcome.

Some political leaders and military commanders will argue that cooler heads must prevail and that a long-term strategy demands America’s indefinite presence in Afghanistan. They will argue that any drawdown must be based on conditions on the ground. But conditions on the ground do not warrant staying the course, only for narrowing our mission and avoiding further tragedies.

Former 4-star General Jack Keane, who has traveled to Afghanistan four times within the past 18 months, says of the outrage and rioting that America in fact has a good relationship with the Afghan people. “We’ve forged an unusually strong relationship with those people. We’ve done it based on the values of the American people and our sensitivities to their culture. That’s what is so frustrating about this.” With all due respect, General Keane and other like-minded observers are wrong. The mission is a waste of money, effort, and, most importantly, lives.

The former heads of U.S. and NATO forces in Afghanistan, General Stanley McChrystal (retired) and General David Petraeus, both emphasized the importance of winning the “hearts and minds” of Afghans by treating them and their culture with respect. They believed the most helpful indicator of progress on the ground and the integration of political and military strategy is the protection of Afghan civilians.

But according to a recent report by U.N. mission in Afghanistan, 2011 was the fifth straight year in which civilian casualties rose. Of course, last year insurgents were responsible for 77 percent of Afghan civilian deaths. Despite this fact, after tripling the number of U.S. troops in that country—far fewer than the Pentagon asked for—President Obama made it America’s mission to protect the Afghan people.

A decade into the conflict the Afghan government still remains incredibly weak, widely distrusted, and underrepresented in poorly secured areas of the country. The roughly 180,000-strong Afghan army, whose performance and effectiveness remains questionable, has an officer corps teaming with ethnic fissures and competing sub-national interests. Meanwhile, the Afghan police force has developed a reputation for desertion, illiteracy, and rapaciousness. On top of limited and potentially unsustainable security improvements, the spiraling violence does not instill confidence in our victory.

Too many U.S. government planners forget that for Afghans we are their guests, and it is their country. We forget when back in 2010, Afghanistan’s President Hamid Karzai imposed a crackdown on alcohol consumption and closed a number of expat bars around Kabul because they were deemed offensive to Islam. The Afghan general who carried out the alcohol raids told the Los Angeles Times it was done for “Allah’s sake.” After that, violent demonstrations and inter-cultural hostility increased after Florida pastor Terry Jones promised to “stand up” to Islam and burn a Quran. The recent incident of U.S. Marines urinating on corpses was yet another provocative episode in the erosion of American-Afghan relations.

As I argued months ago, “Recent events in Afghanistan should be a wake-up call to how our 10-year occupation is actually being perceived. Rather than winning ‘hearts and minds,’ America’s civilizing mission has become increasingly associated with a Western cultural invasion.”

Many Afghans see outsiders constantly changing their mayors, their governors, and their customs. They are told how to dress their women, what is culturally acceptable, and what is culturally repugnant. Americans are infuriated when their politicians redistribute their taxes, yet they ignore how intrusive their own military and civilian planners have become to foreign peoples.

It’s no surprise that a report published last May by the Kabul-based Afghanistan Research and Evaluation Unit concluded that negative sentiments about democracy emerge from “the stated distaste among respondents for ‘Western culture’ and the potential threat it poses to ‘Afghan culture,’ traditional norms or values, and an Islamic identity.”

None of this should imply that the Quran burning or the grisly violence meted out against innocent people was justified. But the fact remains that America is widely scorned throughout the region—in both Afghanistan and Pakistan.

According to a poll from last summer by the Pew Research Center, 59 percent of Americans want a withdrawal from Afghanistan immediately—not two years from now, not six months from now. Immediately. Americans may finally be realizing what George Mason University’s Christopher Coyne has argued, which is that the historical record indicates “that attempts to spread liberal democracy via military occupation will fail more often than they will work.”

More money, more time, and more resources will not change these underlying realities. To continue to train and assist the Afghan national army and police when distrust remains this high risks more violent incidents like this, and this, and this. Rather than become Afghanistan’s perpetual crutch, Washington must cut its losses. The war is fiscally irresponsible and wasteful of U.S. taxpayer dollars. Most importantly, no more American or Afghan lives should be lost in pursuit of a strategy that is not in America’s national interest.

Cross-posted from the Skeptics at the National Interest.

The Modern Voting Rights Act Is Unconstitutional

I’ve written previously about how the current Texas redistricting saga – a decennial battle in that and many states – shows how the Voting Rights Act in its moden incarnation both doesn’t work and conflicts with the Constitution.  The Supreme Court’s ruling last month telling a three-judge district court in San Antonio to go back to the map-drawing board did not begin to the address these deeper issues, which will surface again, perhaps as soon as this fall in a case out of Shelby County, Alabama.

Today I published an op-ed on the subject in the National Law Journal.  Here’s an excerpt:

Originally conceived as a check on states where discrimination was prevalent in the 1960s, Section 5 [of the VRA] requires certain jurisdictions – a bizarre list that includes some of the Old Confederacy, plus Alaska, Arizona and certain counties or townships in eight other states, including (only) three New York City boroughs – to get federal approval before changing any election laws. To obtain this preclearance, these jurisdictions may propose only changes that do not result in “retrogression,” a reduction in minority voters’ ability to elect their “preferred” candidates.

Section 5 was a valuable tool in the fight against systemic disenfranchisement, but it now facilitates the very discrimination it was designed to prevent. Indeed, the prohibition on retrogression effectively requires districting that assures that minority voters are the majority in some districts – an inherently race-conscious mandate. The law, most recently renewed in 2006 for another 25 years, is based on deeply flawed assumptions and outdated statistical triggers, and it flies in the face of the 15th Amendment’s requirement that all voters be treated equally.

Read the whole thing, as well as Cato’s brief in Perry v. Perez and Roger Clegg’s article in the Cato Supreme Court Review on which one section of our brief heavily relied.

The Mystery of Khalid Aldawsari

Accused terror-plotter Khalid Aldawsari will not have access to classified materials detailing how and why he was monitored under the Foreign Intelligence Surveillance Act, a federal judge in Texas ruled earlier this month. Aldawsari had hoped to argue that the evidence against him derived from electronic surveillance and physical searches should be surpressed, either because the surveillance was improperly conducted or because the FISA warrants authorizing it were improperly obtained.

Aldawsari’s argument was straightforward: The broad powers available under FISA are only supposed to be used when the government is seeking “foreign intelligence” about an “agent of a foreign power.” Since Aldawsari is being accused of acting independently to plan an act of strictly domestic terrorism, only the usual tools available—under more stringent standards—for ordinary criminal investigations should have been available. Judge Sam Cummings rejected this argument following his own review of the classified evidence in closed chambers: Not only did the FBI have probable cause at the time of their investigation to believe Aldawsari was an “agent of a foreign power,” the judge found that Aldawsari did in fact meet FISA’s definition of an “agent of a foreign power.” The mystery is: How?

The natural answer is is the controversial “Lone Wolf” provision, allowing even a totally independent non-citizen who “engages in international terrorism or activities in preparation therefore” to be targeted under FISA as an “agent of a  foreign power.” Aldawsari would seem to be a natural.  But there are a few big problems. First and most importantly, the acting head of the Justice Department’s National Security Division testified after Aldawsari’s indictment that the provision had never been invoked. Second, it would at least be a legally disputable point whether Aldawsari’s alleged plot met the definition of international terrorism. Third, it would be unusual and arguably improper for the court to find not just that federal agents had probable cause to believe Aldawsari was engaged in international terrorism, but that he was engaged in international terrorism when this is precisely what the trial is supposed to prove. However damning the evidence, the court is not supposed to commit itself to Aldawsari’s guilt at this stage of the process: It would have been enough to rule that investigators had probable cause for this belief.

But if it’s not the Lone Wolf provision that qualified Aldawsari for FISA surveillance, what did? All the government’s public statements so far have hewed to the line that he acted alone, after all. One possibility is the he was part of some larger terror group, but the government is publicly pretending ignorance about this fact in hopes that the other members will be lulled into a false sense of security, under the mistaken belief that the government never obtained Aldawsari’s communications with them. This doesn’t seem likely—Aldawsari’s accomplices would have to be incredibly stupid for this stratagem to work—but it’s possible.

The final  possibility—and perhaps the most probable—is that Aldawsari really was acting alone, and qualifies as an “agent of a foreign power” for reasons completely unrelated to his planned terrorism. Aldawsari was in the United States on a  student visa and his studies were sponsored by a Saudi corporation that goes conspicuously unnamed in all the  court documents surrounding this case even though many other companies are specifically identified. The identify of that company is no mystery, though: Aldawsari noted on his blog, and it has been reported in the press, that the company in question is SABIC, a petrochemicals giant run and substantially owned by the Saudi royal family.  SABIC almost certainly counts as a “foreign power” for FISA purposes, since it is effectively controlled by a foreign state, even if we assume everything the company does is legal and legitimate. Aldawsari would then automatically qualify as an “agent of a foreign power” himself if he were regarded as an “officer or employee” of SABIC.  Since he was  receiving a stipend from the company to pursue studies that would naturally prepare him to work for SABIC, this characterization hardly seems like a stretch.

If this last scenario is correct, however, it ought to at least give us a bit of pause: If the basis for classifying Aldawsari as an agent of a foreign power susceptible to FISA is just that he was one of dozens of SABIC-sponsored students, then that would sound rather like finding a loophole to invoke FISA’s broad powers for what was ultimately a straightforward criminal investigation. That’s precisely the sort of thing many people worried about when the Patriot Act allowed FISA to be used whenever there was a “significant” foreign intelligence purpose for surveillance. The previous standard had required foreign intelligence—as opposed to ordinary criminal investigation—to be the “primary purpose.”

Obviously there’s a lot of missing information here: The judge and the government have facts about this case that the rest of us don’t, and there may well be a simple explanation for why this was a wholly unobjectionable use of FISA. But it is a reminder that people outside the government ultimately have no idea how  surveillance decisions under FISA are made in practice, and no opportunity to judge whether the standards employed are adequate to a free society under the rule of law.  Nor are we likely to have any idea soon: As Judge Cummings’ opinion notes, no court has ever allowed access to these materials—and indeed, only an absurdly tiny fraction of the people subject to FISA surveillance are ever indicted or tried at all. The general citizenry simply has to trust that the government is using these powers in a manner we would accept if it were subject to public scrutiny.

Don’t Arm Syria’s Rebels

With the death toll in Syria now climbing above 5,000, and graphic videos and images of the bloodbath flooding the internet, some in Washington have called for arming the Syrian resistance. That option, compared to other alternatives like a NATO-led no-fly zone, seems antiseptic. But America’s arming of rebels will amount to contributing to a worsening situation without a means of reaching a peaceful end state. Restraint, however unpalatable, is the most prudent option in an increasingly intractable situation.

First, there is no clear group in the resistance for Washington to provide arms to, even if that was the policy option chosen. Republican Senator John McCain of Arizona, who has argued most forcefully for arming the rebels, said, “It is time we gave them the wherewithal to fight back and stop the slaughter.” But Sen. McCain stopped short of calling for the direct supply of weapons by the United States, and didn’t mention to whom among the resistance he’d like to lend a helping hand.

No single group or leader speaks on behalf of Syria’s resistance, especially in a country where political loyalty tends to hew to one’s ethnicity, religion, sect, or clan. The Damascus-based National Coordination Committee (NCC), considered weak by some Syrian activists, is still willing to engage the regime in a power-sharing unity government.

The exile-based Syrian National Council (SNC) rejects all contact with the regime of President Bashar al-Assad. SNC seeks recognition from the West, but is viewed by some as a vehicle for monopolizing the uprising. The Free Syrian Army, a disorganized mash-up of disparate rebel groups and government soldiers who have switched sides, has declared its allegiance to the SNC.

The Syrian Muslim Brotherhood has said it’s open to foreign intervention, at first emphasizing Muslim Turkey. Meanwhile, a large portion of Syrian Kurds see Turkey as a primary threat. These rifts persist amid reports of Sunni jihadists entering Syria from Iraq, and fears that al Qaeda may hijack what for many is a struggle for a democratic Syria.

Furthermore, as George Washington University Professor Marc Lynch and others have argued, “boosting rebel fighting capacity” is likely to crystallize Syria’s internal polarization, and do little to weaken the Assad regime politically.

Flooding Syria with weapons, in a conflict the United Nations high commissioner for human rights has described as on the brink of civil war, might be used to justify a heavier government crackdown. U.S. assistance to rebels would vindicate Assad’s narrative that the revolt is a conspiracy of outside forces, including the U.S., Israel, and the Gulf states. It could also stir Sunni elites in Damascus and the relatively quiescent Aleppo to rally around Assad, strengthening his support, rather than weakening it.

Lastly, the civil war won’t end after arming one side. The most infamous instance of backlash was from the U.S. arming rebels in Afghanistan in the 1980s, a country that later turned into an al Qaeda sanctuary.

Today in Syria, the foreign frenzy of weapons pouring in has already resulted in a hot mess. Iranian and Russian arms, along with political support from Lebanon and Iraq, are going to the regime in Damascus and the large portion of minority Shia Alawites who support it. Arms and support from Qatar and Saudi Arabia back the majority Sunnis and other anti-Shia Islamist factions. Whatever this regional and international sectarian proxy war morphs into Washington would do best to stay out of it.

Syria’s deepening slide into civil war looks likely, which can be prevented only by either marshaling international opposition to the Assad regime, something Washington has already attempted to do, or encouraging more defections from within the regime, with the promise of resettlement and amnesty. The current diplomatic policy of waiting for the resistance to congeal and pledge to guard minority rights is prudent and should be pursued.

Sending weapons to rebels might satisfy the outside world’s moral urge to do something immediately, but it also might add to the mayhem, increase the loss of life, and push Syria further away from a stable future. Restraint is the more difficult choice, but the one that serves both the American and the Syrian people better in the long run.

Cross-posted from the Skeptics at the National Interest.