Like my colleague Michael, I found “Seneca Falls, and Selma, and Stonewall” the best moment in President Obama’s address. It was unifying: by going far enough back in time, it summoned up (as a recitation of current controversies would not) a sense that in historical perspective, nearly all present-day Americans have come to agree on crucial fundamentals about not using the law to mistreat each other. I especially liked the touch of geographical obscurity. It makes me imagine a million explanatory conversations going on this week from Kalamazoo to Karachi: “Okay, so *that’s* why Americans still talk about Selma and Stonewall. Now what was Seneca Falls about?” That could be time well spent.

My opinion piece defending the filibuster appeared today in the Philadelphia Inquirer just as Senate leaders were reaching a deal that largely preserves the rule.

I would like to explicate this sentence in the op-ed:

In a polarized time, the filibuster tends to make Senate actions more representative of the nation as a whole.

Here’s the reasoning behind that conclusion. Assume the electorate forms a normal distribution with regard to policy preferences. Normally both parties would compete to attract the vote of the median voter thereby winning an election. In a polarized time for whatever reason, both parties might have programs some distance from the median voter. If a governing party acted on such non-median preferences, the resulting law would ignore the wishes of a substantial number of voters in the middle or “thick” part of the distribution. A filibuster would either 1) prevent a law from passing or 2) force a majority to accommodate the views of the most right- or left- leaning legislators in the minority party. The views of the legislators required by the filibuster would presumably reflect the views of many voters in the thick part of the distribution. In this way, the filibuster would require laws to become closer to what a majority wanted than the laws that a filibuster-free majority would have passed.

Of course, with regard to the theory, it makes no sense that polarization would exist to begin with: if either party varied from the wishes of the median voter, the other would swoop in and pick up those votes. However, polarization exists so I assume both parties govern somewhat off the median.

An effort is underway at the Department of Agriculture to reform the federal government’s mandatory country-of-origin labeling rules for beef. The current scheme was successfully challenged by Canada and Mexico as a violation of WTO obligations prohibiting protectionist regulatory discrimination. If the United States does not bring its law into compliance, Mexico and Canada will have the option of raising tariffs on U.S. goods in retaliation.

The supposed purpose of mandatory origin labels is to improve food safety by providing consumers with information. How does the country of origin of the cattle impact food safety? I surely do not know. If consumers want this information, why is a law needed to compel businesses to provide it? I don’t know that either.

The actual purpose of the law is to prevent Canadian cattle raisers from competing with American cattle raisers. The labeling scheme accomplishes this not by informing consumers that their beef is made from cattle that ate grass north of the 49th parallel, but by imposing on downstream processors the expense of keeping track of the cattle’s historical whereabouts. The meat packers can avoid this expense by purchasing only purely U.S. origin cattle. The price of American cattle goes up accordingly.

The extent of any reforms made this year will tell us how much the WTO ruling affected the balance of political power within the cow-to-hamburger value chain. The law’s existence is evidence that cattle raisers currently have more influence in Washington than meat packers, but the WTO ruling has already made a difference simply by prompting the initiation of a reform effort. The possibility of retaliation by Canada and Mexico spreads the negative consequences of the law to other politically relevant U.S. industries with a stake in North American trade. These industries will not sit idly by while their own businesses suffer in the name of expensive beef. 

Let the lobbying begin!

In his second inaugural address, President Obama made a series of direct and indirect references to the Declaration of Independence and other founding documents to make his case for collective (read: state) action. In doing so, he fell into the fallacy of argument ad antiquitatem – an illegitimate appeal to ages past in order to justify present and future actions.

Most people, including most Americans, would be surprised to learn that the word “democracy” does not appear in the Declaration of Independence (1776) or the Constitution of the United States of America (1789). They would also be shocked to learn the reason for the absence of the word democracy in the founding documents of the U.S.A. Contrary to what propaganda has led the public to believe, America’s Founding Fathers were skeptical and anxious about democracy. They were aware of the evils that accompany a tyranny of the majority. The Framers of the Constitution went to great lengths to ensure that the federal government was not based on the will of the majority and was not, therefore, democratic.

If the Framers of the Constitution did not embrace democracy, what did they adhere to? To a man, the Framers agreed that the purpose of government was to secure citizens in John Locke’s trilogy of the rights to life, liberty and property.

The Constitution was designed to further the cause of liberty, not democracy. To do that, the Constitution protected individuals’ rights from the government, as well as from their fellow citizens. To that end, the Constitution laid down clear, unequivocal and enforceable rules to protect individuals’ rights. In consequence, the government’s scope and scale were strictly limited. Economic liberty, which is a precondition for growth and prosperity, was enshrined in the Constitution.

The Bill of Rights establishes the rights of the people against infringements by the State. The only thing that the citizens can demand from the State, under the Bill of Rights, is for a trial by a jury. The rest of the citizens’ rights are protections from the State.

While invoking America’s founding documents and predecessors to justify collective action might appear as cleverness on the part of the President, it is a brazenly overused rhetorical instrument: an argument ad antiquitatem.

When liberals make reference to U.S. economic history, they typically: 1) downplay the role of entrepreneurs, 2) suggest that bold government action has driven growth, and 3) fail to mention the scandals and screw-ups caused by federal interventions.

President’s Obama’s inaugural address reflected some of those mistakes:

Together we determined that a modern economy requires railroads and highways to speed travel and commerce….

No single person can … build the roads and networks and research labs that will bring new jobs and businesses to our shores… Now, more than ever, we must do these things together, as one nation, and one people.

It is not true that America first invested in railroads and highways because “we determined” to do it through the federal government. In the 19th century, those investments were made by thousands of entrepreneurs and businesses. My new study on infrastructure notes:

Before the 20th century, for example, more than 2,000 turnpike companies in America built more than 10,000 miles of toll roads. And up until the mid-20th century, most urban rail and bus services were private. With respect to railroads, the federal government subsidized some of the railroads to the West, but most U.S. rail mileage in the 19th century was in the East, and it was generally unsubsidized.

Railroads, streetcars, bus systems, and, to an extent, roads were financed and developed over many decades by innovative businesses taking risks and making gutsy decisions in the marketplace.

The typical pattern has been for the private sector to experiment with new technologies, and then, once certain products or types of infrastructure take off, politicians want to get in on the action by subsidizing and regulating them. In turn, those interventions have usually led to distortions, scandals, and cost inflation.

Entrepreneurs, for example, had already put in place about 30,000 miles of railroads before the federal government started subsidizing them through the Pacific Railroad Act of 1862. And in an early illustration of the problems with such crony capitalism, the railroad subsidies led to the huge Credit Mobilier scandal of 1872.

It also turned out that America didn’t need subsidies for railroads. With his Great Northern Railway, entrepreneur James Hill showed that you could build a cross-country rail system without federal help. Federal involvement in U.S. transportation history is discussed further here and here.

So, no Mr. Obama, we don’t need Washington to build our “roads and networks and research labs.” Indeed, more than ever we should be encouraging entrepreneurs to take on those tasks. You and your economic advisors, for example, should check out the beautiful new Jordan Bridge in Virginia, which was constructed with $142 million of private funds.

Most of President Obama’s second inaugural address was painful. For libertarians. For those who understand the difference between science and opinion. For those who have tracked his administration’s relationship with openness and the rule of law. All of which cringe-inducing elements undermined the splendor of this gem:

We, the people, declare today that the most evident of truths – that all of us are created equal – is the star that guides us still; just as it guided our forebears through Seneca Falls, and Selma, and Stonewall; just as it guided all those men and women, sung and unsung, who left footprints along this great Mall, to hear a preacher say that we cannot walk alone; to hear a King proclaim that our individual freedom is inextricably bound to the freedom of every soul on Earth.

It’s not the first time the president has tied “Seneca Falls, and Selma, and Stonewall” together. Here’s hoping more politicians do.

“Gasoline taxes and tolls pay for only a third of state and local road spending,” claims a report released yesterday by the Tax Foundation, an independent, nonpartisan group. “The rest was financed out of general revenues.” According to the group’s calculations, users paid just $49 billion of the $155 billion cost of roads in 2010, the last year for which data are available.

I am the first to admit that highways are subsidized. But do subsidies cover more than two-thirds of the costs of roads? No way. The Tax Foundation, which strives to be “guided by the principles of sound tax policy: simplicity, neutrality, transparency, and stability,” is simply wrong.

First, the group counts federal aid to states as “general funds.” In fact, 100 percent of that federal aid comes from gas taxes and other user fees such as taxes on large trucks and tires.

According to the Federal Highway Adminitration’s Highway Statistics table HF-10, the feds collected $35 billion in gas taxes in 2010, of which $29 billion was given to the states for roads. For some reason, the Tax Foundation counts state gas taxes as user fees, it doesn’t count federal gas taxes as user fees.

Second, the Tax Foundation fails to count state motor vehicle registration fees, which amount to $33 billion a year and which are mostly dedicated to highways. Almost every state first created these fees as a way for users to help pay for roads.

Third, the Tax Foundation relies on secondary sources for at least some of its information rather than going to the original source. For example, citing a Census Bureau report, it says that state and local governments collected $37 billion in gas taxes in 2010. However, Highway Statistics tables SDF and LDF say that state and local governments received $40.3 billion (net of collection costs) in gas taxes in 2010.

Some of those gas taxes were diverted away from roads by politicians catering to various special interest groups, especially mass transit. But that doesn’t mean that users didn’t pay those fees. Some people think those diversions shouldn’t be counted as user fees. Is a fee paid by users still a user fee if some politician intercepts it for pork before it gets to the use the user paid for? I would say yes, but the Tax Foundation’s position isn’t clear.

In any case, total federal, state, and local gas taxes, tolls, registration fees, and other fees collected from highway users actually amounted to about $120.4 billion, of which less than $2.5 billion went to collection costs. That would have left nearly $118 billion for roads if politicians hadn’t diverted about $25 billion or so to mass transit and other activities. Even after deducting that $25 billion, the remainder is far more than the $49 billion the Tax Foundation says came from user fees.

Since total costs were $155 billion, there still must be a subsidy, right? Not necessarily. State and local governments sold $33 billion worth of bonds in 2010, most of which will eventually be repaid out of gas taxes and other user fees. Yet the Tax Foundation counts these as “general revenues.”

Finally, state and local governments received $13 billion in interest on the gas taxes and other user fees they had collected but not yet spent in 2010. The Tax Foundation erroneously counts such investment income as “general revenues.”

Altogether, then, users paid $118 billion; interest on their fees brought this to $131 billion; and bonds that will mostly be repaid out of user fees bring the total somewhere close to $164 billion. That’s $9 billion more than state and local governments spent on highways, roads, and streets in 2010.

This doesn’t mean there were no subsidies to roads. The states did spend about $13.9 billion of general funds on roads; but this is more than offset by $16.6 billion diverted by the states out of highway user fees to transit and general purposes. Congress in 2010 had to appropriate $30 billion to top off the Highway Trust Fund, mainly because it had mandated that roughly that amount be spent on transit out of the fund over the previous several years even if gas tax revenues weren’t sufficient to cover the spending (which, after 2007, they weren’t).

The real subsidies are at the local level. In 2010, cities and counties spent about $36.2 billion in general funds on roads and streets, while they diverted $1.2 billion in user fees to other purposes. The result is a net local subsidy of about $35 billion, which isn’t offset by federal and state user fees that weren’t spent on highways.

The way to end this subsidy is to give cities and counties an opportunity to collect user fees for roads. As I describe in my 2012 Cato Policy Analysis “Ending Congestion by Refinancing Highways,” the best way to do this is through vehicle-mile pricing.

Whatever reforms you support, it is important to get the numbers right. The Tax Foundation’s erroneous counting of federal gas taxes, vehicle registration fees, revenues from bonds that will be repaid out of user fees, and interest on saved user fees as “general revenues” effectively supports an anti-mobility agenda that dominates transportation policy in many states and metropolitan areas.