A lovely article about Sen. Robert C. Byrd (D‑WV) by Michael Grunwald in Sunday’s Washington Post shows the limits of Democrats’ fealty to pluralism, of Republicans’ devotion to limited government, and of the ability of congressional pork to lift a state out of poverty.

Last week, I wrote about the Public Company Accounting Oversight Board (PCAOB). Here’s an update:

Last week, the Securities and Exchange Commission appointed an obscure member of the Federal Reserve Board as chairman of the PCAOB, increasing his annual salary from $165,200 with the Fed to $615,000. 

Again, Congress ought to use this occasion to question the purpose and structure of one of its recent creations. 

This week, House lawmakers “approved” a $3,300 increase to their current $165,200 salaries. Most appalling about this increase is not its fiscal impact, which is very small relative to the federal budget. Rather, it is the despicably clandestine process by which it is routinely passed.

Because of a 1989 law that makes congressional pay raises automatic, Congress very rarely actually votes to increase lawmakers’ pay. They can voluntarily block the raise and did so five times in the ’90s. But since 1999, they have accepted the automatic increase every year and used procedural tactics to table any discussion or vote on the matter.

In March, the Senate tried to go one step further, approving a measure that would deny pay raises to any individual senator or congressmember who votes against a pay increase. The measure would have also denied pay raises to members who opposed the procedural vote to block consideration of the pay raise.

Sound complicated? Well it is. Congress has quite intentionally shrouded the entire process to keep the public from paying attention. And they can hardly be blamed. Given their track record of late, does anyone actually believe these guys deserve more money?

Be forewarned that money you spend on tickets for Al Gore’s cinematic lecture will be used to clone our former vice president and to unleash said clones on Rotary clubs, junior high schools, and unsuspecting gardening clubs throughout the land. Imagine: a thousand Al Gore mini-me’s! They came, they saw, they managed slide shows.… 

This is an ongoing debate regarding the Starve the Beast theory of federal government finance — do reductions in revenues lead to less spending and increases in revenues to more spending?

A casual look at data in a new report by the National Association of State Budget Officers indicates a clear Starve the Beast pattern at the state level. (See Table 2 on page 3.)

In years when revenue growth was slow — early 1980s, early 1990s, and early 2000s — state legislators moderated their spending increases (they are generally required to balance their budgets each year). In years when the economy was booming — late 1980s, late 1990s, and now — revenues flooded into state coffers and legislators spent with abandon. To correct for the excessive budget expansions we see during booms, there is a movement in many states to impose tighter caps on overall budget growth so that revenue booms trigger automatic tax reductions.

By the way, with state budget increases of 6.5 percent last year and 7.6 percent this year, isn’t it time state politicians started returning some of the current revenue gusher to the people through major tax cuts? 

Congress should pay attention to what is happening with one of their recent creations. The Securities and Exchange Commission will soon appoint two members of the Public Company Accounting Oversight Board (PCAOB), a private monopoly that was created by the Sarbanes-Oxley Act of 2002. This board is unnecessary, expensive, and probably unconstitutional.

This board was created to establish auditing standards for all public accounting firms and to monitor the performance of these firms, based on the presumed failure of Arthur Andersen, one of the formerly Big 5 public accounting firms, to adequately audit the financial reports of Enron. The Sarbanes-Oxley Act, however, left in place a major conflict of interest affecting these firms: The public accounting firms continue to be paid by the companies that they audit. Instead of correcting this conflict of interest, Congress established a new board to regulate all of the public accounting firms, although only a few such firms have ever been charged with a major breach of auditing standards. Congress could have corrected this conflict of interest by shifting the payment for audits from the audited firms to the stock exchanges on which the firms are listed; the stock exchanges would then recover the audit payments in their listing fees. In this case, the PCAOB would be unnecessary, an overreaction to what was apparently a rare breach of the existing auditing standards.

The PCAOB is outrageously expensive. The chairman is paid an annual salary of $615,000, and each of the other four members are paid an annual salary of $500,000 — in both cases, a multiple of the salary of the President of the United States who has many more serious problems to worry about.

Moreover, all of the candidates for the two open positions are current or former federal officials for whom a much lower salary was a sufficient incentive.

As a private monopoly with both regulatory powers and taxing powers, the PCAOB is probably also unconstitutional. The PCAOB sets its own budget that is financed by a mandatory fee on all public listed corporations. A case has already been filed that challenges the constitutionality of the PCAOB, which if successful would probably invalidate the whole of the Sarbanes-Oxley Act. So much the better.

For an update, see here.

David Primo and Jeff Milyo have just published an op-ed in Roll Call. Advocates have long argued that restrictions on campaign spending, which can be direct spending or contributions, enhance electoral competition. In Vermont they convinced the state legislature to pass spending limits, the constitutionality of which are now before the U.S. Supreme Court. Primo and Milyo correctly note “the most current and best scientific evidence flies in the face of the promises” made by these advocates. Indeed, “the court jurisprudence upholding campaign finance laws is built on a shaky empirical foundation.” They continue: “In fact, we are aware of no scholarly studies that yield consistent evidence of large and statistically significant effects of campaign finance regulations on electoral competitiveness.”

I go into the shaky philosophical and empirical foundations of campaign finance law in my upcoming book, The Fallacy of Campaign Finance Reform.