The IRS Believes All Bitcoin Users are Tax Cheats

The Internal Revenue Service has filed a “John Doe” summons seeking to require U.S. Bitcoin exchange Coinbase to turn over records about every transaction of every user from 2013 to 2015. That demand is shocking in sweep, and it includes: “complete user profile, history of changes to user profile from account inception, complete user preferences, complete user security settings and history (including confirmed devices and account activity), complete user payment methods, and any other information related to the funding sources for the account/wallet/vault, regardless of date.” And every single transaction:

All records of account/wallet/vault activity including transaction logs or other records identifying the date, amount, and type of transaction (purchase/sale/exchange), the post transaction balance, the names or other identifiers of counterparties to the transaction; requests or instructions to send or receive bitcoin; and, where counterparties transact through their own Coinbase accounts/wallets/vaults, all available information identifying the users of such accounts and their contact information.

The demand is not limited to owners of large amounts of Bitcoin or to those who have transacted in large amounts. Everything about everyone.

The Demise of Anti-War Liberals?

During the post-World War II period, opposition to U.S. militarism and involvement in dubious military conflicts has usually been stronger on the political left than the right.  Left-wing, anti-war sentiment reached its peak during the Vietnam War, when groups opposed to that conflict could sometimes mobilize tens of thousands of demonstrators.  Opposition to subsequent U.S. military crusades was less robust, but even as late as the Iraq War, there were sizable anti-war demonstrations in the streets.

There have been warning signs for some time, though, that opposition to unnecessary armed conflicts has lost its appeal to much of the political left.  For one thing, there was always a partisan bias to anti-war movements.  Even during the heyday of resistance to the Vietnam War, the criticism became more intense after Republican Richard Nixon took over the White House than it had been when Democrat Lyndon Johnson occupied the Oval Office.  The bias was even more apparent in later decades.  There was far more criticism of Republican George H.W. Bush’s Persian Gulf War than there was of Democrat Bill Clinton’s wars in Bosnia and Kosovo.  Indeed, a distressing number of prominent liberals found reasons to praise Clinton’s military crusades in the Balkans.

The partisan factor has grown even more intense in the twenty-first century.  Left-wing groups mounted a fairly serious effort to thwart Republican George W. Bush’s invasion of Iraq.  But when Democrat Barack Obama greatly escalated U.S. military involvement in Afghanistan and led a NATO assault to remove Libya’s Muammar Qaddafi from power, the reaction was very different.  Except for a few hard-left organizations, such as Code Pink, the sounds coming from the usual supposed anti-war liberal quarters were those of crickets.  Likewise, there has been little push-back to Obama’s gradual return of the U.S. military presence in Iraq or the entanglement of the U.S. military in Syria.

At Least as Good at a Fraction of the Cost? Some “Flop”!

A lot of well-intentioned people think it is not enough for families to be able to choose schools. They have to choose “good” schools. Those people often do not think private school choice programs that give parents a lot of control over which schools they select are up to par. Fine. But just because you don’t like something doesn’t make it a “clear flop.”

Writing at The 74, Richard Whitmire warns that we should beware Trumps bearing school choice gifts. He argues that President-elect Trump’s proposal to spend $20 billion on school choice could be dangerous not because of, say, federal rules that might be attached to unconstitutional largesse, but because the money might not be restricted to “great” schools. “Great,” presumably, should be defined by legislators or bureaucrats. After all, you don’t want to replicate the Milwaukee voucher program:

Those in the school reform movement learned the hard way that choice alone does not produce more seats in great schools. If that were the case, we’d all be praising the early voucher program in Milwaukee and the widespread charters in Ohio and Michigan. But in all those cases, choice alone produced nothing.

In Milwaukee, for example, which I visited repeatedly while researching my book On the Rocketship, about the creation of one best-in-class charter network, the more-than-two-decade-old voucher experiment proved to be a clear flop. (Note that I didn’t say unpopular. Who objects to free tuition for their kid’s parochial schools?)

Delete NSEERS Before Trump Takes Office

This week Kris Kobach, Kansas Secretary of State and Trump transition team adviser, told Reuters that Trump’s team had discussed his plan to restore a registry of immigrants from predominantly Arab and Muslim counties. The registry, which was part of the National Security Entry-Exit Registration System (NSEERS), operated from 2002 until 2011. The Obama administration suspended it, citing efficiency issues. Although NSEERS was suspended it could very easily be resuscitated and made worse. This is by design. A 2012 Department of Homeland Security Office of Inspector General (OIG) report reveals that the Department of Homeland Security (DHS) rejected a recommendation to terminate the NSEERS program, saying that the system would allow DHS to register “a category of aliens” in the future.

In the wake of 9/11 the Department of Justice (DOJ) built NSEERS. DHS took control of the program after it was established in 2003. Under NSEERS, nonimmigrant aliens from 25 countries were fingerprinted, interviewed, photographed, and required to check in with officials at regular intervals. Twenty-four of these 25 countries were majority-Arab and Muslim (North Korea was the other country).

Although in place for almost a decade, NSEERS was ineffective as an anti-terrorism tool. Because of the inscrutable rules associated with NSEERS, thousands of men and boys were deported while the system was up and running.

It shouldn’t come as a surprise, then, that in February 2012 a DHS OIG report found that, “The NSEERS program for special registration of certain categories of aliens from predominantly Arab and Muslim countries, and the database that supports this program, is obsolete and should be terminated.”

Go Big and Grant Milton Friedman His Wish

House Speaker Paul Ryan (R-Wis) held a press conference a few days ago where he said that GOP control of the Congress and White House afforded his party the opportunity “to go big, to go bold.”  There has been talk of rolling back regulations and Obamacare.  That’s good news, but Ryan should consider a bigger and bolder move: End federal income tax withholding. 

The “political establishment” has created a situation where the U.S. is trillions of dollars in debt.  How will the new Congress address that?  The fiscal scandal is too abstract for many voters to grasp so too many of them don’t think twice about supporting new spending measures, such as free college tuition or what have you.  To build the necessary political support for otherwise unpopular spending cuts, Ryan should quickly move to end federal income tax withholding.  If American households would stop viewing their tax refund checks as happy windfalls from politicians and instead better understood how much big government is costing them every year, one would expect to see louder demands to bring runaway spending under control and to downsize the scope of federal programs and operations.  The GOP honeymoon will be over in a few months.  Ending federal withholding will help build support for spending cuts over the next few years and perhaps beyond.

Ironically, it was the late, great Milton Friedman who helped devise the modern income tax withholding system when he worked in the Treasury Department during World War II.  He was fixated on tax collection efficiency at that time, not limiting the size of government.  Late in his life, Friedman said that he wished “there were some way of abolishing withholding now.”  Former congressman Dick Armey (R-Tex) proposed ending withholding when the GOP took control of the House in 1994, but Bill Clinton was never going to sign that measure into law.  Now that the GOP has both the Congress and the White House, it has a real opportunity to go big and bold.  Grant Friedman his wish and get our fiscal house in order.

For related Cato scholarship, go here.

“Unfettered” Free Trade? If Only…

“Trump has heaped scorn upon those Republicans who have worshiped at the alter of unfettered free trade.”  - Joe Scarborough, May 22, 2016

“I wouldn’t say that you know this free trade obsession is something that can’t get looked at in regard to making things more fair.” – Incoming White House Chief of Staff Reince Priebus, November 14, 2016

One of the most pervasive themes of the last year is the notion that America’s populist uprising, and the success of President-elect Donald Trump, has in large part been a direct response to the United States’ – and in particular the Republican Party’s – libertarian obsession with “unfettered” free trade.  MSNBC’s “Morning Joe” Scarborough, quoted above, has been a big cheerleader of this argument, which has been treated on his show and elsewhere in the media as obvious truth.  And now we see one of the few official members of the future Trump administration, Reince Priebus, repeating the notion, signaling to the country that America’s great free trade moment might be ending.  Clearly, the idea is prevalent and persuasive. 

But it is also dead wrong.

First, although the United States maintains a relatively low average import tariff of around 3 percent, it also applies high tariffs on a wide array of “politically-sensitive” (read: highly lobbied) products: 131.8% on peanuts; 35% on tuna; 20% on various dairy products; 25% on light trucks; 16% on wool sweaters, just to name a few.  (Agriculture is particularly bad in this regard.)  We also maintain a long list of restrictive quotas on products like sugar, cheese, canned tuna, brooms, cotton, and baby formula.  And although the U.S. has 14 free trade agreements (FTAs) with 20 different countries and is a longstanding member of the World Trade Organization (WTO), many of these same “sensitive” products have been exempted from the agreements’ trade liberalization commitments.  Free trade for thee, but not for me.

Second, while America’s tariffs and other “formal” trade barriers have indeed been declining for decades, they are only a small part of the overall story.  U.S. non-tariff barriers – export subsidies, discriminatory regulations, “buy local” rules, “fair trade” duties, etc. – have exploded in recent years.  In fact, according to a recent analysis by Credit Suisse, when you add up all forms of trade barriers imposed between 1990 and 2013, the biggest protectionist in the world isn’t China or Mexico but none other than… the United States:

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How President Trump Can Fix Veterans’ Benefits Once And For All

Another Veterans Day brought another round of lamentations about the Department of Veterans Affairs and promises to fix it.

President-elect Donald Trump promised to do so throughout the campaign. Paul Rieckhoff, founder and CEO of Iraq and Afghanistan Veterans of America, is skeptical. Veterans are “used to big promises and disappointing results,” he says. “Fixing the VA might be one of the biggest challenges for President Trump. Every president says they’re going to do it, yet we’ve still got a VA with backlogs and massive problems.”

If Trump tries to fix the VA the same way other presidents have, he will fail. But there is a way he can succeed.

Trump’s predecessors failed because they tried to work within a model of top-down, centralized economic planning. The Veterans Health Administration is America’s only purely government-run health system. Its closest analogue is probably the United Kingdom’s National Health Service. The VHA even produces the same results as the NHS: chronic shortages and long waits for care alongside idle and wasted resources, instances of horrific care, and often good care, you know, if you can get it.

Presidents can and have fixed such problems temporarily by moving resources from here to there, or investing in some new system. It never lasts, though. The VHA is a socialist enterprise. Unlike a market system, it has no price mechanism or competitive pressures that automatically fix such problems when they re-emerge. And not only do they always re-emerge, Congress usually takes forever to get off its duff. If Trump retains the VA’s basic structure, he will join a long line of presidents who have failed our nation’s veterans.

How to Privatize the VA 

Trump can distinguish himself from other presidents by working with Congress to create a system of veterans benefits that fixes problems automatically. Here’s how.

First, the federal government should increase military pay sufficient to enable workers to purchase–from private insurers at actuarially fair rates–a package of life, disability, and health benefits equivalent to what the VA provides. Benefits would kick in as soon as they leave active duty and cover veterans’ service-related disabilities or illnesses for life.

Second, having privatized the insurance component of veterans benefits, the federal government should then privatize the delivery component. It should incorporate the VHA as a private company and issue shares to active-duty personnel and veterans based on length of service or other criteria.

You read that right. Military personnel and veterans would literally own the VHA, including its many hospitals and other facilities. Privatizing the VA would both increase the pay of active-duty personnel, and create a massive wealth transfer to active-duty personnel and veterans. Veterans would be able to receive medical care from health systems owned and operated by veterans, for veterans.

Third, the federal government should give current veterans vouchers to purchase insurance and medical care from the insurers and health systems of their choice, including the new veteran-owned and -operated systems.

Privatization Means Better Benefits for Veterans 

Privatization would improve the quality of veterans’ benefits immeasurably.

The federal government promises veterans’ benefits to military personnel once they leave active duty. Only it’s not an explicit promise. And Congress doesn’t fund it. As a result, Congress can–and does–renege on that commitment.