Free Speech v. The Federal Election Commission

The so-called Citizens United case offers the Supreme Court a chance to severely curtail the free speech abuses of the Federal Election Commission. John Samples, Director of the Cato Institute’s Center for Representative Government, Institute for Justice Senior Attorney Steve Simpson and George Mason University law professor Allison Hayward weigh in. You can subscribe to Cato’s YouTube videos here and our Weekly Video podcast here.

Jim DeMint’s Freedom Tent

Sen. Jim DeMint (R-SC) has been a leader in the fight for fiscal responsibility in Congress. He’s even led on issues that many elected officials have shied away from, such as Social Security reform and free trade. Recently he said that he would support Pat Toomey over Arlen Specter in a Republican primary, which may have prompted Specter’s party switch. DeMint was widely quoted as saying, “I would rather have 30 Republicans in the Senate who really believe in principles of limited government, free markets, free people, than to have 60 that don’t have a set of beliefs.”

It may have been feedback from that comment that caused DeMint to write an op-ed in the Wall Street Journal on his vision of a “Big Tent” Republican party. He makes some excellent points:

But big tents need strong poles, and the strongest pole of our party – the organizing principle and the crucial alternative to the Democrats – must be freedom. The federal government is too big, takes too much of our money, and makes too many of our decisions….

We can argue about how to rein in the federal Leviathan; but we should agree that centralized government infringes on individual liberty and that problems are best solved by the people or the government closest to them.

Moderate and liberal Republicans who think a South Carolina conservative like me has too much influence are right! I don’t want to make decisions for them. That’s why I’m working to reduce Washington’s grip on our lives and devolve power to the states, communities and individuals, so that Northeastern Republicans, Western Republicans, Southern Republicans, and Midwestern Republicans can define their own brands of Republicanism. It’s the Democrats who want to impose a rigid, uniform agenda on all Americans. Freedom Republicanism is about choice – in education, health care, energy and more. It’s OK if those choices look different in South Carolina, Maine and California.

That’s a good federalist, or libertarian, or traditional American conservative vision. But is it really Jim DeMint’s vision?

DeMint says “that centralized government infringes on individual liberty and that problems are best solved by the people or the government closest to them.” And he says it’s OK if “choices look different in South Carolina, Maine and California.” But marriage is traditionally a matter for the states to decide. Some states allow first cousins to marry, others don’t.  Some states recognized interracial marriage in the early 20th century, others didn’t. And in every case the federal government accepted each state’s rules; if you had a marriage license from one of the states, the federal government considered you married. But Senator DeMint has twice voted for a constitutional amendment to overrule the states’ power to grant marriage licenses to same-sex couples. In his op-ed, he writes, “Republicans can welcome a vigorous debate about legalized abortion or same-sex marriage; but we should be able to agree that social policies should be set through a democratic process, not by unelected judges.” That’s a reasonable argument, but the amendment that DeMint voted for would overturn state legislative decisions as well as judicial decisions.

Does Jim DeMint believe that “it’s OK if choices [about marriage] look different in South Carolina, Maine, [Vermont, New Hampshire], and California”? If so, he should renounce his support for the anti-federalist federal marriage amendment. If not, then it seems that he opposes the Democrats’ attempts to “impose a rigid, uniform agenda on all Americans …  in education, health care, energy and more,” but he has no problem with Republicans imposing their own “rigid, uniform agenda on all Americans” from South Carolina to Vermont.

It might be noted that Senator DeMint also supported the federal attempt to overturn Florida court decisions regarding Terri Schiavo, but we can hope all Republicans have learned their lesson on that bit of mass hysteria.

New at Cato Unbound: Ten Years of Code

Code and Other Laws of Cyberspace, Lawrence Lessig’s seminal work on Internet law, turns ten this year. To mark the occasion, Cato Unbound has invited a distinguished panel of Internet law experts to discuss the book’s enduring significance: What did it get right? What did it get wrong? And where do we go from here?

Joining us will be Adam Thierer, Jonathan Zittrain, and Lawrence Lessig himself. The lead essay, up this morning, is by Declan McCullagh. Readers of Code will recall that McCullagh was called out by name in the book’s final chapter, and his “do-nothing” cyberlibertarian views were criticized at length. Ten years later, is it time to reconsider? Join us and find out.

Obama Taking on ‘Tax Havens’

Jeff Zeleny at the New York Times Caucus Blog reports, “President Obama will present a set of proposals on Monday aimed at changing international tax policy, calling for the elimination of benefits for companies and wealthy individuals that harbor their cash in offshore accounts.”

Cato scholars have long made arguments in defense of tax havens. In The Wall Street Journal, Senior Fellow Richard Rahn outlined the policy the federal government should be taking instead:

The correct policy for the United States to follow is to reduce its corporate tax rate to make it internationally competitive, and to move toward a tax system that does not punish savings and productive investment so severely. We know from the experiences of many countries that reducing tax rates and simplifying the tax code improve both tax compliance and economic growth. Tax protectionism should be rejected because it is at least as destructive to economic growth and job creation as are tariffs on goods and services.

Cato scholar Daniel J. Mitchell narrated a three part video series on the subject, presenting the economic and moral cases for tax havens, and a final video that punctured myths associated with the practice.  

Mitchell spoke on Capitol Hill last month about the role of tax havens and in Foreign Policy magazine, Mitchell explained why tax havens are a blessing.

Obama ‘Offshore’ Tax Plan Will Cost U.S. Companies Business and Jobs

The Obama administration is ready to follow through on campaign promises to crack down on U.S. companies that “ship jobs overseas.” The administration announced this weekend that it would seek to raise taxes on the so-called active earnings of U.S.-owned affiliates abroad. According to a front-page story in this morning’s Wall Street Journal:

Under current law, U.S. companies can defer taxes indefinitely on the many of the profits they say they have earned overseas until they “repatriate” that money back to the U.S. The administration seeks to sharply limit the tax deductions that companies taking advantage of deferral can take.

Of course, there is a perfectly good reason why we don’t tax what U.S. companies earn and keep abroad: those companies are already paying taxes in the countries where their affiliates are located, and at the same rates that apply to multinationals from other countries competing in the same markets.

As I pointed out in a Cato Free Trade Bulletin in January, locating affiliates in foreign markets is now the chief way that U.S. companies reach new customers outside the United States. If we sock them with the relatively high U.S. corporate rate, U.S. companies will be less able to compete against German and Japanese multinationals in the same markets who need only pay the (almost always) lower corporate rate assessed by the host country. And as I noted in January, any jobs created at affiliates abroad tend to promote more employment at the parent company back in the United States.

This demagogic grab for more revenue will only cripple the ability of U.S. companies to expand their sales in global markets, putting in jeopardy the U.S.-based jobs that support their foreign affiliates.

With ‘Cramdown’ Rejection, Is Senate Ready to Respect Marketplace Contracts Again?

After rejecting the proposed ‘cramdown’ changes to the bankruptcy code, the Senate may be slowly waking up to the need to respect contracts.  One cannot rebuild trust and confidence in our markets, while at the same type trying to destroy the trust that underlies contractual relations.  Were the cramdown legislation approved, the message to investors, or any market participants, would be that the enforceability and terms of your private agreements will be subject to the direction of the political winds.

Proponents of cramdown claimed that the bankruptcy code favored one’s vacation home or yacht over one’s primary residence, as the mortgages on these assets could be reduced to reflect their current value.  Such a claim is at best misleading, if not outright false.  One’s primary residence is already the most favored asset in bankruptcy – due to the very simple fact that one generally gets to keep their home, while one usually has to give up their boat or vacation home in order to satisfy one’s debts.  There simply is no ‘yacht-stead’ exemption.  In fact, under Chapter 13, primary residences whose equity values are greater than the homestead exemption are crammed-down, and the home is transferred to the lender.

Our economy will only turn around once families, investors, entrepreneurs and other market participants believe the rules of the game will be fair and certain, and not constantly subject to political manipulation.  Voluntary consensual agreements are one of the basic pillars of our society, and should be respected as such.  They should not be written solely as a means of taking from one groups of citizens and giving to another.