Archive for July, 2007
Meet the New Farm Bill
Prepare to pay more for your food. The House Agriculture Committee on Thursday unanimously passed a 2007 farm bill that, in the words of a committee press release, “makes historic investments in conservation, nutrition and renewable energy while maintaining a strong safety net for America’s farmers and ranchers.”
For “investments,” read “spending increases,” and for “a strong safety net,” read “subsidies and trade barriers to keep commodity prices and production artificially high.”
Sadly, the new 2007 farm bill looks a lot like the old 2002 farm bill that is due to expire on September 30. No real changes were made in the Title 1 commodity programs that lavish production subsidies on farmers who grow corn, wheat, cotton, and other program crops. Trade barriers remain against imports of lower-priced sugar, rice, and dairy products.
As we have pointed out in a number of recent Cato studies on farm policy, tens of millions of American families will continue to pay for these programs through taxes and higher prices at the grocery store. Once again, members of the House Agriculture Committee, Democrats and Republicans alike, have demonstrated that they represent a small number of farmers rather than the general interests of the American people.
Wherein I Discuss the Anti-Universal Coverage Club
In today’s Cato Daily Podcast [mp3], Caleb Brown and I discuss why I went and created the Anti-Universal Coverage Club.
A Scolding from the EC
The bureaucrats in Brussels may not be able to solve Europe’s demographic problems. They may not be able to promote economic liberalization in Europe’s welfare states. And they may not be able to provide any guidance to nations failing to assimilate large numbers of immigrants. But they can scold European men about not doing the housework.
The EU Observer reports on the latest farce from Brussels:
The European Commission is calling on Europe’s menfolk to help out more at home as a first step to improving women’s career prospects and ending the gender pay gap across the bloc. …EU employment commissioner Vladimír Spidla said, addressing a press conference in Brussels on Wednesday, “It is not possible to reduce the gender pay gap if we do not help out more at home.”
…In the communication, the Commission sets out ways in which the EU can bridge the gender pay gap. It wants the 27 member states to set objectives and deadlines to eradicate the gap, and will also push for equal pay to be made a condition for winning public contracts.
Treasury Secretary Highlights Importance of Competitive Corporate Tax System
Writing for the Wall Street Journal, Secretary of the Treasury Henry Paulson, Jr. warns that America now has an uncompetitive corporate tax system. Mr. Paulson explains that other nations have been slashing their tax rates — and reaping big rewards — while the United States has been sitting on the sidelines. This means less investment in America, which translates into lower wages for American workers:
[T]he U.S. is once again a high corporate tax country. We now have, on average, the second-highest statutory corporate tax rate (including state corporate taxes), 39%, compared with an average rate of 31% for our top competitors… Ireland, for example, has engineered its own economic miracle, in large part due to a reform program that cut corporate tax rates to a level one-third that of the U.S. And the trend continues. Germany will reduce its total rate from 38% to 30% in 2008. France, Japan and the United Kingdom have signaled they may also lower their corporate rates.
…Business tax policy levers, such as the corporate tax rate, depreciation rates and investor taxes, as well as the taxes levied on small businesses through the individual income tax, should strive towards a similar purpose: to encourage economic growth by reducing the tax burden on additional investments. Yet, the current tax code distorts capital flows, hurting productivity, job creation and our global competitiveness. Take just a few examples. Taxes on capital income raise the price of future consumption and discourage saving and capital formation. Reduced capital formation gives labor less capital to work with and lowers labor productivity, reducing real wages and income.
…Over the past two decades, while U.S. tax law has grown more complicated and our statutory corporate income tax rate has increased, other nations have been reducing their rates to replicate our miracle. A study by Treasury economists estimated that a country with a tax rate one percentage point lower than another country’s attracts 3% more capital. It’s not surprising then, that average OECD corporate tax rates have trended steadily downward.
Bush Waxes Philosophical on Health Care
People sick of the big-government conservatism practiced by the Bush administration might be excited at the headline in today’s Washington Post: “Bush: No Deal On Children’s Health Plan/President Says He Objects On Philosophical Grounds.” But President Bush’s philosophical objection to the proposed expansion of the State Children’s Health Insurance Program is in no way a reversal from his stance that big spending is okay as long as Republicans can take credit.
What philosophy does Bush subscribe to? Apparently, it’s the philosophy that says the federal government should only expand the welfare state by billions of dollars, instead of tens of billions of dollars: “The president said he objects on philosophical grounds to a bipartisan Senate proposal to boost the State Children’s Health Insurance Program by $35 billion over five years. Bush has proposed $5 billion in increased funding and has threatened to veto the Senate compromise and a more costly expansion being contemplated in the House.”
Later in the article Bush is quoted as saying, “I think it’s going to be very important for our allies on Capitol Hill to hear a strong, clear message from me that expansion of government in lieu of making the necessary changes to encourage a consumer-based system is not acceptable.”
He also said, “I’m worried that there will be a strong incentive for people to switch from the private sector to the government.”
If only the president had adopted a similar attitude when he approved a $1.2 trillion expansion of Medicare in 2003 in lieu of consumer-based approaches.
Filed under: General; Government and Politics; Health Care; Tax and Budget Policy
Save Wal-Mart, Save Class Action Law?
I’ve got a short Regulation Magazine piece on the notorious (or glorious, depending on your perspective) Dukes v. Wal-Mart case–a gender discrimination class action composed of as many as 2 million women, according to some estimates. You can read more about the case here and download my Regulation piece here.
Many believe the case is headed to the Supreme Court–if not this upcoming term, then the next. If it does, and if the Court takes up Wal-Mart’s constitutional arguments against certification, then, I argue, it might just set the stage for some far-reaching, and overdue, conceptual changes in the way we think about the constitutional rights of class action defendants. My piece uses Dukes as a springboard for sketching some of these defenses–admittedly quite adventurous–which just might become a bit less exotic if Wal-Mart succeeds.
Cost Overruns, More Liars
“Liar” is not a very scholarly word, but I don’t know how else to describe some of the comments that come from public officials. It’s not just the farm bill, check out this paragraph from a Washington Post story today on the Virginia highway project:
“Project officials hailed the interchange as ‘on time and under budget.’ But although the mid-2007 target date for completion was met, the final cost was nearly three times what was first projected. A more recent cost estimate of $676 million was ultimately met.”
Well, of course, the final estimate was met because it’s the final estimate. Obviously, what’s important for taxpayers is that politicians and government agencies stick to the numbers that they agree to when they first vote to approve projects.
It is my view that in many, but certainly not all, large government projects there is deliberate subterfuge about ultimate project costs. Many projects balloon in cost 50 percent or more.
Yochai Benkler and the Libertarian Center
If you haven’t been reading Cato Unbound this month, you should be. Brink Lindsey defends his notion of libertarian centrism from left, right, and, um, Julian.
I found Jonah Goldberg’s follow-up contribution particularly interesting. He points out that much of what was wrong with the progressive movement of the early 20th century was due to its infatuation with centralizing institutions that were ascendant at the time: the army, heavy industry, and later, large-scale scientific endeavors like the Manhattan Project. Bigness and centralization were in, and intellectuals believed that the entire country should be governed in a similarly hierarchical fashion.
Goldberg thinks liberals will just discard the economic argument for central planning and move on to another one: public health, the environment, whatever. But I wanted to point out that there are also some liberals who are adopting a more appropriately skeptical attitude toward central planning itself.
One reason to think the 21st century is going to be more libertarian than the 20th is that the defining technology of our generation, the Internet, is radically decentralizing. After a century in which our cultural and economic lives were dominated by large, vertically-integrated corporations, we’re entering an era in which decentralization and disintermediation are the dominant trends. Instead of producing components in house, they develop networks of independent suppliers, knit together by sophisticated supply chains. And instead of vertically-integrated media companies like the New York Times and NBC, we’re increasingly moving toward a world in which writers, musicians, and other creators can reach their audiences directly.
Word Abuse
In Washington, no word is more overused and abused than “reform.” But a Washington Post story today shows the abuse taken to new heights:
Farm bloc lawmakers yesterday offered the U.S. fruit and vegetable industry $1.8 billion in new federal grants over the next five years as part of a farm bill that would leave in place far larger subsidies for grain, cotton and dairy producers.
The concessions were part of a balancing act by House Democrats to craft a bill that will satisfy politically powerful farm interests while also bearing a Democratic imprint of reform. The House Agriculture Committee was set to vote on the legislation late last night or today.
The package, unveiled yesterday by Committee Chairman Collin C. Peterson (D-Minn.), also increases funding for land conservation, wetlands protection and nutrition programs — popular with environmental groups and urban lawmakers.
House Speaker Nancy Pelosi (D-Calif.) called the package ‘a good first step toward needed reform.’
Let’s see: Congress is keeping all the old programs, creating new subsidies for fruits and vegetables, increasing funding for conservation and nutrition programs. That’s reform?
The story title is also worthy of The Onion: “Farm Bill Leaves Some Subsidies.” Some subsidies?!
Great Moments in Local Government, Part I
I became a libertarian in high school and college thanks to Ronald Reagan’s eloquent commentary against big government. I remain a libertarian because of Virginia’s Department of Motor Vehicles. Several years ago, I had to make four trips to the DMV to get my son his learner’s permit (I don’t remember all the details, but I periodically have flashbacks about Social Security cards, birth certificates, and DNA samples).
Today, I began a new odyssey in an attempt to renew the registration on one of my vehicles.
Theoretically, DMV was supposed to send something in the mail, but that never arrived and I was unaware that my registration expired until one of DC’s finest recently pulled me over (to his credit, he gave me a warning rather than impounding the car, which ostensibly is the law in such situations). So I went online to find out about renewing the registration, and was horrified to discover that I had to make a visit to DMV because my registration had lapsed (needless to say, I can’t think of a single reason why this should require an in-person visit).
Resigned to an unpleasant experience, I woke up early so that I could avoid a three-hour line at the DMV office and managed to see someone after a wait of just 15 minutes. But when I attempted to register, I was told that Fairfax County had placed a hold on my registration because of unpaid taxes. I would like to claim that I was being a principled tax protester, but I meekly pay my car taxes…at least when I’m aware that a bill is due. I don’t know whether to blame the Post Office or the vehicle bureaucracy, but there are no letters from Fairfax County in my inbox.
In any event, the logical next step should have been for me to pull out a credit card and take care of both the unpaid tax and the registration. Silly me. Not surprisingly (and this may be a good thing), there is no coordination between Fairfax County and the state government. So I had to surrender my spot at the counter and go look at a sign with numbers for various local tax offices. I called Fairfax County’s automated system, filled with naive thoughts about making an automated payment and then taking care of my registration.
Farm Fibs
My toddlers have recently been having fun with the phrase “liar, liar, pants on fire.” I’d like to set them loose on the farm bill debate in Congress.
Take a comment today in a Michigan news source by Rep. Timothy Walberg, a member of the House Agriculture Committee: “We want our food cheap, and we’ve become used to that, and that’s where the farm bill comes in. It guarantees cheap and plentiful food.”
But numerous farm programs raise food prices. I’ll give you three: milk, sugar and related products such as chocolate, and infant formula. And don’t forget about federal ethanol policies, which are pushing up prices for corn and derived products.
Heck, Why Not Just Burn Him At The Stake?
Just when you thought partisan idiocy in Washington couldn’t get any worse, the House voted last night to cut off the salary of Andrew Biggs, the new Deputy Commissioner of Social Security. No one doubts Biggs’ qualifications for this position. But his sin is having supported proposals to allow younger workers to privately invest a portion of their Social Security taxes through individual accounts. Apparently holding a position that Democrats disagree with is now so abhorrent that it disqualifies you from public office.
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