March 15, 2007 8:54AM

An Extra $15 Billion for Farm Programs

Further to David's post yesterday, some telling details about the Senate Budget Committee's ideas for "fiscally responsible" farm policy. Starting on page 54 of this document, section 306 the "Deficit-Neutral Reserve Fund for the Farm Bill" (which is a cute name -- what chances do you give of this staying a "reserve fund"?) states that:

The Chairman of the Senate Committee on the Budget may revise the allocations, aggregates, and other appropriate levels and limits in this resolution for a bill, joint resolution, amendment, motion, or conference report that- 

  1. reauthorizes the Food Security and Rural Investment Act of 2002;
  2. strengthens our agriculture and rural economies;  
  3. provides agriculture-related tax relief; 
  4. improves our environment by reducing our Nation’s dependence on foreign sources of energy through expanded production and use of alternative fuels; or 
  5. combines any of the purposes provided in paragraphs (1) through (4); 

by the amounts provided in that legislation for those purposes up to $15,000,000,000 over the total of fiscal years 2007 through 2012, provided that such legislation would not increase the deficit over the total of the period of fiscal years 2007 through 2012.

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March 15, 2007 8:36AM

Ohio Governor Seeks to Kill Voucher Program

In his State of the State address on Wednesday, Ohio governor Ted Strickland called for the elimination of the statewide voucher program aimed at students in public schools deemed to be failing. He is also seeking to prevent the creation of any new charter schools and to outlaw for-profit firms from managing charter schools.

He went on to say that no new grocery stores should be opened in Ohio, that grocery stores should not be permitted to operate for profit, and that the state would be withdrawing from the federal foodstamps program.

Okay, I made that last paragraph up. But the only reason you knew that is because we are all familiar with the advantages of a competitive market for grocery stores, and with the fact that government can subsidize access to food without actually running its own supermarkets.

Researchers who study school governance structures in an international and historical perspective know that the same things that are true of the grocery business are also true of the education sector. Members of the public who frequent Cato's website or read our publications know this as well.

Tragically, at least one very influential man from Ohio is wholly ignorant of these facts.

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March 15, 2007 8:34AM

Tax Harmonization Equals Higher Taxes

The politicians and bureaucrats in Brussels argue that taxes have to be equalized to improve the “efficiency” of the market. They make this rather absurd claim and then vehemently deny that tax harmonization has anything to do with making taxes higher. So why, then, does every tax harmonization decision in Europe inevitably result in higher taxes? The latest effort to increase the minimum diesel tax in the European Union, as reported by the EU Observer, is ample proof that tax harmonization is about giving politicians more money and power:

The European Commission has tabled a controversial bill to raise the minimum duty on diesel from 2012, aimed at stamping out so‐​called fuel tourism … Mr Kovacs’s paper suggests harmonizing the minimum level of excise duties at €359 per 1,000 litres of diesel in 2012 and subsequently at €380 in 2014, something which would force 21 EU states to increase their current rates. …fuel tourism cost Germany – believed to be the strongest advocate of the tabled proposal — €1.9 billion in 2004, as excise duties represent roughly between 30 to 60 percent of the pump price and are responsible for six to 18 percent of the running costs of a road haulage business.

March 15, 2007 8:31AM

No People in Washington, D.C.?

The majority opinion in last week's federal Appeals Court ruling striking down D.C.'s stringent gun ban has garnered considerable attention from both the media and the public. Much less attention has been given to the court's dissenting opinion (which begins on p. 59 of this .pdf), authored by Judge Karen LeCraft Henderson. I suppose that's not surprising, given that her opinion "lost." 

But part of the dissenting opinion should be very troubling to D.C. residents: according to Judge Henderson, they're not "people" in the eyes of the Bill of Rights.

Judge Henderson states in her 5th footnote (p. 5 of her opinion, p. 63 of the .pdf):

[J]ust as the Tenth Amendment ties the rights reserved thereunder to "the people" of the individual "States," thereby excluding "the people" of the District, ... the Second Amendment similarly limits "the people" to those of the States....

Do you get it? According to Judge Henderson, Second and Tenth Amendments' protections extend only to "people" living in the "States." As D.C. is not a state, reasons Judge Henderson, District residents are not covered by those protections. 

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March 15, 2007 8:29AM

Tax Competition Forces Lower Tax Rates in Germany

The Wall Street Journal celebrates the putative announcement of a nine percentage point reduction in Germany’s corporate tax rate. There is a dark lining to this silver cloud since there are hidden tax increases included in the proposal. The initiative also leaves in place some loopholes that could have been used to finance even lower tax rates, but it is nonetheless encouraging to see that one of Europe’s biggest cheerleaders for tax harmonization is being forced to join the tax‐​cutting bandwagon: 

Europe’s vibrant tax competition has finally reached Germany, which usually prefers to sit back and tut‐​tut while its neighbors cut taxes and grow their economies. Chancellor Angela Merkel’s cabinet today is expected to slash the top corporate tax rate to 29.8% (the average federal‐​municipal rate) from 38.7%. That’s still a far cry from flat‐​tax Slovakia’s 19% or Ireland’s 12.5%. But it would move Germany from the third‐​highest corporate tax rate in the OECD, after Japan and the U.S., to a more comfortable middle position. …The Finance Ministry missed the opportunity to simplify the tax system in one go. Getting rid of tax exemptions for corporations — thereby broadening the tax base — would have been a useful move. It would have had the added benefit of giving Berlin more room to cut rates beyond the planned nine percentage points. …Over the long run, the corporate tax cuts will likely increase revenues by encouraging economic activity and tax compliance.

March 14, 2007 5:10PM

How Dumb Do They Think We Are?

For the past six years Democrats have railed against President Bush’s gimmicky, deceptive, wildly unbalanced budgets. Now that they control Congress, they have the power to write their own budgets. And what have they come up with? As the Washington Post explains,

Senate Democrats unveiled a spending blueprint yesterday that envisions a massive expansion of the nation’s health‐​insurance program for children, as well as billions of additional dollars for other domestic priorities such as public education, veterans’ health care and local police. 


Despite the additional spending, Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, said the proposal would virtually erase the federal deficit within four years without raising taxes and produce a surplus of $132 billion by 2012.

It’s not true that politicians never learn anything. Conrad and his colleagues have learned a great deal from Bush and his budget spinners.

March 14, 2007 5:09PM

The Government Is Not the Country

The Washington Post reports,

“Three of the last five years, there’s been no budget for this country,” [Sen. Kent] Conrad said in an interview.

Actually, for the past 218 years, there’s been no budget for this country. The country is a vast, sprawling nation of 300 million people, millions of businesses, and more than 100 million households. The country is not a corporate entity, and it has no budget.


On the other hand, there is supposed to be a budget for the federal government, and Congress is indeed derelict in failing to pass one. But politicians should not forget the distinction between the country and the government.