Drop the Soda, or Else!

Government is busy trying to protect us from ourselves.  It tosses nearly a million people in jail every year for marijuana offenses.  City councils, state legislators, and Congress all add ever more restrictions on cigarette smoking.  Legislators demand action to stop steroid use by athletes.  And the Senate Finance Committee is considering a “fat tax” on sugared drinks.

This isn’t the first time legislators have considered trying to squeeze a little money out of us while micro-managing our lives.  Editorializes the Boston Herald:

Earlier this year Gov. Deval Patrick proposed a 5 percent tax (more if the sales tax is raised) on sweetened drinks and candy bars under the pretext of battling obesity (while thinning out our wallets). Happily we haven’t heard much about it lately. But yesterday on Capitol Hill the Senate Finance Committee heard testimony about helping to fund President Barack Obama’s massive health care expansion in part with a similar tax.

The Congressional Budget Office estimates that a 3-cent tax per 12-ounce sweetened drink - including sports drinks and iced teas - would bring in $24 billion over four years.

“Soda is one of the most harmful products in the food supply,” said Michael Jacobson, head of the Center for Science in the Public Interest, which gives you some idea of the mindset here. Jacobson would also like to raise taxes on alcoholic beverages.

If the American people don’t start saying no, there won’t be much liberty left to preserve.

National ID Mission Creep

It’s a given that, once in place, a national ID would be used for additional purposes.

In case you needed proof, on Wednesday, Senator David Vitter (R-LA) offered an amendment to H.R. 627, the Credit Cardholders’ Bill of Rights Act of 2009, requiring the Federal Reserve to impose federal identification standards on the opening of new credit accounts. Among the limited forms of ID credit issuers could accept are REAL ID cards, produced under the moribund national ID law. (Vitter may not realize that REAL ID is in collapse.)

To compound things, his amendment would require credit issuers to run new credit card applicants past terrorist watch-lists. The sense of normalcy, efficiency, and common sense that makes airports so pleasurable to visit today would infect our financial services system. Oh joy.

“Gangster Government” at Work

With the Obama administration preferring to rely on politics rather than the law to “fix” the auto industry, bondholders have discovered that the new politics of this administration is quite a bit more brutal than the old politics practiced by the Bush administration.

Henry Payne and Richard Burr write of “gangster government” using not just demagogic public attacks on greedy bondholders but apparent threats of regulatory sanction to get its way in bankruptcy court.  They explain:

The holdout debtholders sought the refuge of the courts, where decades of bankruptcy law promised that secured lenders would receive just compensation for their investment. But then Obama called in his fixers.

In his April 30 news conference, Obama singled out Chrysler’s self-described “non TARP lenders” as “speculators” who sought to imperil Chrysler’s future for their own benefit. “I do not stand with them,” Obama thundered. “I stand with Chrysler’s employees and their families and communities… . (not) those who held out when everybody else is making sacrifices.” Michigan Democratic allies like Sen. Debbie Stabenow and Rep. John Dingell piled on, calling the lenders “vultures.”

Then, on Detroit radio host Frank Beckmann’s show May 1, a lawyer for the lenders, Tom Lauria, chillingly revealed how “one of my clients was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight.”

Lauria later confirmed the threats came from Rattner and that the target was Perella Weinberg, which had suddenly withdrawn its opposition after the president’s April 30 press conference.

The White House denied the threats, but Business Insider subsequently reported that “sources familiar with the matter say that other firms felt they were threatened as well. None of the sources would agree to speak except on the condition of anonymity, citing fear of political repercussions.”

“The sources, who represent creditors to Chrysler,” continued the Insider story, “say they were taken aback by the hardball tactics that the Obama administration employed to cajole them into acquiescing to plans to restructure Chrysler. One person described the administration as the most shocking ‘end justifies the means’ group they have ever encountered… . Both were voters for Obama in the last election.”

The idea of the White House–with the IRS and SEC at its disposal–threatening investment firms should have sent off alarm bells in America’s newsrooms. Inexcusably, the media establishment largely ignored the hardball tactics. This is the same media that has doggedly reported on President Bush’s U.S. attorney firings and the post-9/11 interrogations of terrorist suspects.

I have no opinion on who should get what as part of Chrysler’s bankruptcy – other than that the taxpayers shouldn’t be paying for America’s version of lemon socialism so common around the world.  But crude political interference by the political authorities in Washington in a bankruptcy case erode the rule of law and administration of justice.  If Obama and company believe that the end justifies the end when it comes to handing the auto companies over to favored interests, who among us is safe from similar action by this or another administration in the future?

Two Terrible Tastes That Taste Even Worse Together

Few things irk me more than human-interest anecdotes parading as objective journalism, or college students/graduates complaining about how much money they owe – and think someone else should pay – for their educations.

Perhaps in a bid to break some sort of irritation record, yesterday the USA Today combined these two odious phenomena into one wretch-inducing article about how just cruelly difficult it can be to rid oneself of the student debt one freely entered into.

I won’t go into a detailed dismantling of the piece. Read it for yourself and you’ll see that it really is nothing but a long series of anecdotes delivered with way too little information to have any idea why the debtors shouldn’t, you know, take responsibility for debt they freely incurred. I’m just going to highlight one vignette that sickly typifies just how rationally and morally bankrupt (pardon the pun) both the sentiments of some debtors, and the article, are:

Lenders often fail to offer relief to the neediest borrowers, says a report issued last month by the National Consumer Law Center.

“I feel like it’s a real shame that people like me are coming out of college, weighed down by all this debt,” says Austin Light, 24, a journalist for The Mecklenburg Times in Charlotte. He and his wife have $100,000 in student loans. “My dream is to be a full-time children’s book author and illustrator, and if I wasn’t shackled with this debt, I would be pursuing that.”

In how many ways is this galling?

  • We don’t know anything about why Mr. and Mrs. Light have $100,000 in student debt, but we are supposed to become morally indignant just because they feel “weighed down” by it? Did they go to very expensive schools? Did it take them each seven beer-soaked years to graduate? Who knows, but since average student debt for graduates who have any debt is only about $20,000, the rational conclusion must be that they did nothing to control their costs.
  • We don’t know what these two studied, but we do know that Mr. Light really wants to be a children’s book author and illustrator. Well, you don’t need to go to college for that, especially one so expensive you incur a debt that even Stephen King – much less a neophyte kiddie lit author – might have trouble paying back.
  • Given the overall context of the article, readers are presumably supposed to feel that it should be easier for the Lights to discharge their debts in bankruptcy. But why should people who lent them the money, especially taxpayers who have no choice but to back federal loans, have to take losses on loans that these two freely agreed to pay back when they took them? Isn’t the word for that “stealing”?

Unfortunately, this seems all-too representative of the growing sense of entitlement exuded by many student interest groups. Students should get all the benefits of an education, but someone else should pay for it! And their will is being done in Washington, with several pieces of aid-enhancing, loan-forgiving legislation (which I sketch out here) having been passed in the last couple of years; the Serve America Act – which includes taxpayer-funded education stipends for qualifying “volunteers” – enacted in April; and Senator Dick Durbin (D-IL), according to the USA Today article, planning to re-introduce legislation that would allow private student loans to be discharged under bankruptcy.

And we wonder why higher ed costs, among other things, seem to be out of control…

Former FBI Agent: Torture Sucks. Don’t Do It.

The Senate Judiciary Committee hearings produced an ugly picture of the role torture played in interrogating Al Qaeda leaders. The testimony of former FBI agent Ali Soufan shows how traditional intelligence techniques worked on Abu Zubaydah and “enhanced” techniques did nothing to advance national security interests:

Immediately after Abu Zubaydah was captured, a fellow FBI agent and I were flown to meet him at an undisclosed location. We were both very familiar with Abu Zubaydah and have successfully interrogated al-Qaeda terrorists. We started interrogating him, supported by CIA officials who were stationed at the location, and within the first hour of the interrogation, using the Informed Interrogation Approach, we gained important actionable intelligence.

We were once again very successful and elicited information regarding the role of KSM as the mastermind of the 9/11 attacks, and lots of other information that remains classified. (It is important to remember that before this we had no idea of KSM’s role in 9/11 or his importance in the al Qaeda leadership structure.)

Soufan then recounts a tug-of-war between the interrogators and the contractors brought in to apply the third degree. The intelligence and law enforcement professionals struggled to reestablish rapport with Zubaydah after each iteration of harsh interrogation tactics.

The new techniques did not produce results as Abu Zubaydah shut down and stopped talking. At that time nudity and low-level sleep deprivation (between 24 and 48 hours) was being used. After a few days of getting no information, and after repeated inquiries from DC asking why all of sudden no information was being transmitted (when before there had been a steady stream), we again were given control of the interrogation.

We then returned to using the Informed Interrogation Approach. Within a few hours, Abu Zubaydah again started talking and gave us important actionable intelligence.

The enhanced interrogation techniques were not only inferior to traditional interrogation techniques, they proved counterproductive. The use of illegal techniques resurrected the “wall” between the CIA and the FBI with regard to these detainees. This prevented FBI experts who knew more about Al Qaeda than anyone else in the government from questioning them. Plus, as Soufan recounts, coercive techniques make detainees tell you what you want to hear, whether it is true or not. As Jesse Ventura says, “you give me a waterboard, Dick Cheney, and one hour, and I’ll have him confess to the Sharon Tate murders.”

Torture did not advance the work of picking apart Al Qaeda, it disrupted it.

New at Cato

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  • In The Washington Times, Richard Rahn explains how the current tax crackdown could deepen the country’s economic woes.
  • In the Washington Examiner, Gene Healy discusses Wanda Sykes’ speech at the White House Correspondents’ Dinner and the lost pastime of making fun of the president.
  • Nat Hentoff cries foul on the new “hate crimes” legislation that is currently advancing through Congress.
  • On NPR.org, Michael Cannon explains why 2009 will not be a good year for health care reform.
  • At National Review online, Jerry Taylor contends that Jack Kemp’s political career ultimately did the cause of limited government more harm than good.
  • In Wednesday’s Cato Daily Podcast, Mark A. Calabria discusses the president’s plan for regulating credit card companies.
  • Watch Chris Edwards on CNN discussing why the pay gap between government and private workers is rapidly growing wider.

A Dialogue on School Choice, Part 2

The South Carolina legislature is currently considering a tax credit bill intended to give parents an easier choice between public and private schools. It would do this by cutting taxes on parents who pay for their own children’s education, and by cutting taxes on anyone who donates to a non-profit Scholarship Granting Organization (SGO). The SGOs would subsidize tuition for low income families (who owe little in taxes and so couldn’t benefit substantially from the direct tax credit). Charleston minister Rev. Joseph Darby opposes such programs, and I support them. We’ve decided to have this dialogue to explain why. Our initial comments were posted Tuesday. The next installment is here.


Rev. DarbyRev. Joe Darby

First Response

Since this is a “dialogue,” let me focus on something that Andrew said in his first installment – that public education “…has failed because it lacks the freedoms and incentives that drive progress in every other field.” I take that as a defense of the “free market,” where competition allegedly leads to quality and success. I don’t think that the “free market” is the best model for education. To quote African Methodist Episcopal Church Bishop John Hurst Adams, one of my mentors, “the free market has limitations when it comes to the human condition, because it’s an amoral concept that ‘lets the market decide’ who swims and who gets swept away.” That’s applicable to the standard argument that private school choice would improve public schools through “competition.”

The first schools established for African-Americans following the Civil War were private schools. They sometimes, however, exclusively accepted the children of the black upper and middle economic classes while excluding the children of former slaves who struggled economically to survive. Public schools for African-Americans were decidedly and intentionally inferior, and the irony is that the opponents of quality public education in Charleston, South Carolina in that era included affluent African-Americans who saw good public schools as a threat to their private schools.

Public funds going to private schools would revive that tradition, for every tax dollar that “follows” a child to private schools in tough economic times will lead to understaffed and under-equipped public schools. Public school funding is set by legislators who are well aware that their constituents without children in the schools are loathe to fund them, and who’ve catered to those constituents by cutting funding for public education. There can be no true “competition” between public schools that only receive public funds and private schools that would have public and private funds at their disposal, for the free market turns on available capital.

The economic crisis now rocking markets in our nation and the world is also instructive. That crisis was, at least in part, created by policies that deregulated the free market and promoted not only innovation, but sheer greed which crafted a shaky, “house of cards” economy that has collapsed and taken people down with it. The lesson now, as it was during the Great Depression, is that unregulated free market activity can have disastrous results. I believe that the current financial crisis is also an element in the push for Private School Tuition Tax Credits. Many private schools are hurting because parents who can no longer afford high tuition are considering public school alternatives – private schools are hungry for the “bailout” that the pending South Carolina legislation would provide.

America makes the lofty claim in our Pledge of Allegiance to be “one nation under God.” If we’re serious about that, then we should heed the words of the Jesus who is seen as the Messiah by Christians and as God’s prophet by Jews and Muslims. He said that the Creator’s standard for right behavior includes equitable treatment for all people. That equity is at the heart of public education but is not a factor in free market competition, where the vagaries of the market decide outcomes and impact success in life. I said so six years ago in one of my conversations with my friend Mark Sanford, the Governor of South Carolina. He laid out his argument for private school choice over more funding for public schools in familiar, logical and compellingly Libertarian free market terms, but he never answered one question that I asked – why can’t we provide good public schools because it’s simply the right thing to do?

***

The Rev. Darby is senior pastor of the AME Morris Brown Church in Charleston, and First Vice President of the Charleston Branch of the NAACP.

Andrew CoulsonAndrew Coulson

First Response

Glad you brought up the objective studies, Joe, but you only mentioned one of them. I recently collected every scientific study I could find comparing outcomes between public and private schools (Journal of School Choice, vol. 3, no. 1). I came up with 65 studies that compare student achievement, cost-effectiveness, parental satisfaction and other measures. The results overwhelmingly favor private schooling. What’s more, the least regulated, most-market-like school systems stand out as the best of all (here’s an earlier version of the paper).

Interestingly, there’s one study I couldn’t include because it wasn’t released ‘til a few weeks ago. It’s the 3rd year DC voucher study (the successor to the one you mentioned), and it shows that students who’d been attending private schools for the full 3 years are 2 school-years ahead of their public school peers in reading! Even including the kids who’ve only been in the program for 1 year, the vouchers are now producing significant gains.

And there’s no evidence that school choice weakens the public schools. Professor Jay Greene looks at this question in his book Education Myths. He finds that public schools either improve under school choice programs, or are unaffected. So even the families that don’t choose to attend private schools will likely be better off, and certainly no worse off, than they are now.

Who would be the biggest beneficiaries of the SC education tax credit bill? Low-income kids. As noted in the preamble at the top of this column, only low-income families would be eligible for tuition aid from Scholarship Granting Organizations (SGOs). The amount of aid each family could receive from an SGO is not capped, so that assistance can be allocated based on individual need. Pennsylvania already has such a tuition-assistance program, serving over 40,000 students with bi-partisan support.

Parents who earn enough to owe state taxes would be eligible for direct tax credits to offset their own kids’ education costs, but those credits are explicitly capped (at around $2,800, if their kids are not zoned to attend a “failing” public school – more if they are).

It’s certainly reasonable to wonder how poor families would cope with transportation and any non-tuition costs, but we can just look at how scholarship tax credit programs are working in states like Pennsylvania and Florida: some schools provide transportation, some are within walking distance, some families form carpools, and others use public transportation. Tens of thousands of poor children manage to get to their private schools under these programs every day, and to obtain uniforms for the schools that require them. Many others do so even without scholarships.

As for wanting to start by fully funding public schools… we’re already there. The 2007-08 budget for Charleston public schools lists total expenditures at over $548 million (p. 21) for 40,202 students (p. 4). That’s $13,650 per pupil – more than the state and national averages, which are both about $12,000. These numbers are vastly higher than the median U.S. private school tuition, which the Department of Education reported as $3,500 in 2003-04 [the most recent year available]. And only about a fifth of private school revenue comes from sources other than tuition. Even if tuitions have doubled since then, they’d still be barely half of Charleston’s per pupil spending.

I’ll have to wait ‘til next time to address your concern about the history of school choice, since I’ve run out of word count. In the meantime, here’s a thought:

There’s nothing wrong with trying to fix the public schools. But you don’t lock kids in a burning building while you try to put out the fire.

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Andrew Coulson is director of the Cato Institute’s Center for Educational Freedom, and author of Market Education: The Unknown History.